The Freeman 1972 - The Ludwig von Mises Institute

422 THE FREEMAN Julying, to reduce as his own expense,from the value of the bills continuallypassing among themselves,a sum, equal to nearly what theexpense of the war was for fiveyears."2 Thomas Paine was, asusual, an adept pleader of specialcauses, but he was no scholar, andcertainly not an economic historian.His statement that everybodyconsented is simply not true, andhe ignores both the ruinous trainof consequences following uponthe inflation and the question ofwhether or not it was effective inits object of providing for thearmed forces.It is not necessary, however, toexplore the theoretical impact ofthe inflation further; it unfoldsin the story of the financing ofthe war. The 'Congress and thestates did attempt to finance thewar effort primarily by the issuanceof paper money. Congressissued what is known as Continentalcurrency. The notes didnot bear interest, as such currencysometimes did, but they were supposedto be redeemed by the statesat a later date. Just how much wasissued from the first issue in 1775until an entirely new currency wasissued in 1780 is in doubt. Theestimates range from $191,552,­380 3 to $242,100,176 4 • It is commonlybelieved today to have beenover $200 million 5 • Even if an exactfigure could be agreed upon,however, we would still not knowhow much of the currency was incirculation, for it was extensivelycounterfeited. There were domesticcounterfeiters; and the Britishgovernment, as a matter of policy,attempted to destroy the currencyby introducing counterfeit money.()All accounts agree, however,that Congress issued more andmore of the currency over theyears through 1779. A recent estimateof the sums issued goes asfollows :71775 $ 6,000,0001776 19,000,0001777 13,000,0001778 63,500,3001779 90,052,380This process of issuing moreand more set in early. The initialissue was to have been for $2 million,but before it had been accomplishedCongress authorized another$1 million.R Before the endof the year $3 million more wasissued.!) This despite the fact thatCongress had intended only oneissue at the beginning. And, therewere those who attempted to preventthe escalation. BenjaminFranklin said : "After the firstemis-sion I proposed that wesholl1d stop, strike no more, butborrow on interest those we hadissued. This was not then approvedof, and more bills wereissued."loThe process of issuing more and