US Platinum Eagle coins

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GREAT COLLECTIBLES at GREAT PRICES

 In this connection the varying rates of foreign exchange during the circulation of the Continental money are extremely interesting.  The following table is compiled from authentic sources, and shows how many dollars of paper money, in computing exchange, were reckoned to be equal to one dollar in coin: -

Table of the Current Rates of Foreign Exchange at Philadelphia During the War of Independence, Showing How Much Paper Money Was Equal to One Spanish (silver) Dollar.  (Inflation Depreciation Chart)

  See related chart on the amount of paper money issued - click here.

Certain writers have recently told us that, whatever the state of exchange and appreciation of gold, a paper currency cannot be in excess if it be in such active demand that there are no large unemployed masses of it in the great business centres of the country.  This is a fallacy.  They forgot that the demand may be factitious.  The circulation of the Continental currency was never more active than when its value was five hundred for one.

On the return of peace no attempt was made to cancel the original obligation by redeeming the bills; for, as the depreciation had been slowly progressing while the paper money was gradually circulating, it was obviously impossible to measure the exact loss each holder had suffered.  To pay the last holder in full would only have aggravated the injustice, by taxing the nation again to give him more than his due, while his predecessors, whose loss was greater than his own, were left without any compensation whatever.  It was strongly urged that the depreciation of the paper money ought to be considered as a tax, inasmuch as the issue was made only to relieve the people from the necessity of paying tax.  Each person through whose hands the money had passed parted with it again at a small loss, according to the quantity he held and the time for which he held it.  As the currency circulated among the whole people - the rich and the poor holding it, and suffering from its depreciation in proportion to the respective amounts of their cash purchases nearly in just proportion to their ability and liability to pay tax.  The payment of the whole value borne on the face of the bill to one who had received it, perhaps at the rate of one hundred for one, could have been fairly and heavily taxed by its depreciation.

How far the depreciation of the Continental money might have been checked or prevented, had some means for its absorption been contrived, either by the payment of taxes or by investment in public stocks, it is impossible to say.  Both these methods of diminishing the volume of the circulations, and thus checking the tendency to depreciate, are, however, in operation at present.  Hence, we may fairly infer that our second nations experiment in paper money will throw as much light on these new financial principles as was thrown by the Continental money on the great fundamental principle, that paper money will not depreciate, except it be excessive in quantity, and that the rate of depreciation is usually proportional to the amount of excess in the issue.    End

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