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Source link: http://archive.mises.org/5738/the-revolutionary-war-and-the-destruction-of-the-continental/

The Revolutionary War and the Destruction of the Continental

October 11, 2006 by

Certain historical cases of inflation have become sufficiently notorious to become textbook examples of government printing presses run riot. In the twentieth century the classic episode was the German hyperinflation of 1923.

The eighteenth century affords us the cases of the American and French Revolutions, and the monetary debasement for which those countries’ governments were responsible. In the American case, the continental currency lost so much of its value that it became common to describe something as worthless by saying it was “not worth a Continental.”

Financing for the American War for Independence included loans and subsidies from the French government as well as the modest sums Congress received as a result of its requisitions upon the states. But paper money played a central role in Revolutionary War finance.



Dennis Sperduto October 11, 2006 at 9:19 am

Given this country’s experience with the Continental and the plain meaning of the word “coin”, I do not believe it is a semantic issue that the authors of the U.S. Constitution only provided the federal government the power to “coin” money. The use of the word “coin’ was deliberate. Arguably, the printing of paper money by the federal government is blatantly unconstitutional.

PJ October 11, 2006 at 10:48 am

If this country has been vollying with this issue for 230+ years, what solution are you recommending?

Reactionary October 11, 2006 at 11:04 am


The solution is the simple, old-fashioned one: allow the market to decide on the medium of exchange. That way when bankers issue more notes than they can honor, the fraud will be abundantly clear instead of hidden and spread out disproportionately among millions of taxpayers. That way, bankers who commit fraud will get what they actually deserve: dragged out into the street in front of their weeping families while their house is ransacked and burnt to the ground instead of getting the Federal Reserve to increase liquidity.

Tony Immarco October 11, 2006 at 12:46 pm

How did our ancestors, if ever, recover from the demise of the continental? Yours is a depressing article which nonetheless is appreciated for its timeliness. TIA
Tony Immarco

Tony Immarco October 11, 2006 at 12:46 pm

How did our ancestors, if ever, recover from the demise of the continental? Yours is a depressing article which nonetheless is appreciated for its timeliness. TIA
Tony Immarco

Mike Sproul October 11, 2006 at 1:06 pm


If you’re going to discuss the continental dollar, then post a picture of the continental dollar. The picture you posted was a paper shilling. You can find a picture of a continental dollar here:


It’s on the last page.
And don’t be so hard on governments that issue paper money in wartime. If the choice is between borrowing by the issue of money or losing the war, most of us would issue the money. Massachusetts did it in 1690, and not only did the issue of paper shilling get them out of a payments crisis, it also stimulated the economy without causing inflation.

quasibill October 11, 2006 at 2:21 pm

Seems to me, if the government could borrow the money in the first place, they wouldn’t have to print more. The problem seems to be, as Woods, by quoting Mises, clearly shows, that the wealth necessary doesn’t actually exist, and therefore can’t be “borrowed”. Monetary manipulations serve only two purposes -1) to separate the unsophisticated from their justly earned savings, and 2) to allow for government actions that the citizenry doesn’t feel is worth the price. After all, they could *voluntarily* “lend” their future production to the state during the course of the war if they in fact valued winning the war enough…

Mark Brabson October 11, 2006 at 2:23 pm

Mike Sproul:

Murray Rothbard seemed to come to a different conclusion regarding Massachusetts paper money scheme in the 1690′s (and beyond). Unfortunately, I don’t have his work “Concieved in Liberty” in my posession at the moment. But I suppose I could make a run to the public library and get it so that I could accurately summarize his views. As I don’t have the volume, I will not attempt to rebutt your comment, since I don’t feel I could accurately summarize Rothbard’s views from memory. Beyond the very general statement that Massachusetts paper money issue had a bad effect.

Mark Brabson October 11, 2006 at 2:26 pm

In a market, commodity money economy, I do feel that purely defensive wars could be paid for by ordinary borrowing or bond issues, without resort to emitting bills of credit. Of course, when the government goes on a war mongering rampage, ordinary borrowing would be insufficient. Another reason, by the way, to eliminate paper money. This would help to eliminate a government’s ability to wage aggressive war.

Mark Brabson October 11, 2006 at 2:38 pm

Tony Immarco:

Fortunately, there were many other currencies and mediums of exchange, other than the continental. The continental was issued by the Continental Congress, mostly as pay for troops and compensation for war supplies. It was not used in private transactions or transactions with state governments, so its bad effect was to some degree limited.

Tom Woods October 11, 2006 at 4:02 pm

Actually, the Continentals were not bought up by speculators and redeemed at face value. The federal government never redeemed them at par. They really did simply go out of existence.

What was redeemed at par, and became the foundation of the later debate in the early 1790s surrounding the funding of the debt, were loan certificates that had been issued as another mechanism of inflation alongside the Continental.

Daniel M. Ryan October 11, 2006 at 4:36 pm

It is surely some kind of sociological law that the state always blames actors other than itself for the unpleasant consequences of its own activities.

There is an easy-to-forget corollary to this law: “men of state” who are currently in the outs are just as blame-evasive as the “men of state” who are currently in charge. The out-group are jealous of current government officials, for their power to duck out of blame being assigned for their own actions. This addition to Dr. Woods’ sentence is as essential as the “Great men are always bad men” coda to Lord Acton’s power-corrupts maxim.

If you bump in to someone who seems to blame the State for his or her own failings, be cautious. You may have bumped in to someone whose “hatred” of the state is mere jealousy of its current rulers.

Gem Hudson October 11, 2006 at 4:41 pm

Man, you said it. Print dose make money more paper than a store of value. Sell to the customers their money worth. You have traded for exchange value for goods and now the money becomes a store of value.

F L Light October 11, 2006 at 5:31 pm

A statutory terror of intense
Inflation may in every war commence.

JD October 11, 2006 at 6:22 pm

Pelatiah Webster is quoted: “. . . .Trade, if left alone, will ever make its own way best, and like an irresistible river, will ever run safest, do least mischief and do most good, suffered to run without obstruction in its own natural channel.”

Someone should advise him to stick to the subject and not digress about the New Orleans’ breached levees when talking about the problems of unbacked paper money.

“. . . .Another reason, by the way, to eliminate paper money. This would help to eliminate a government’s ability to wage aggressive war.

Mark Brabson is correct.

If the true axis of evil (The Federal Reserve Act (with amendments) and the sixteenth amendment to the US Constitution) was undone offensive war would quickly become impossible. (read my lips: by a first puppet proclamation, not needed)

Nick Bradley October 12, 2006 at 4:43 am


“After all, they could *voluntarily* “lend” their future production to the state during the course of the war if they in fact valued winning the war enough…”

Many patriots in fact did that. Hundreds of great men spent their entire fortunes and died broke funding the overthrow of the British.

Perhaps that is why we were able to defeat the British Empire on a shoe-string budget (partial private funding, partial private forces via militias).

Heraclitus October 13, 2006 at 2:01 pm

“If it is possible to avoid the total annihilation of a nation’s freedom and culture by a temporary abandonment of sound money, no reasonable objection can be raised against such a procedure. It would simply mean preferring a smaller evil to a greater one.” – Mises

By this concession, Mises, practically speaking, abandoned the field to the impassioned bearers of the flag and the eagle. Would he could have anticipated this degraded age of perpetual war for perpetual peace. But, he didn’t. So it is left to us to show the necessity of sound money to success in war.

The clue to proof is in the adjective “temporary” and in the phrase “the total annihilation”, which Mises gave us.

If we are to preserve our freedom and culture, this proof must be made and communicated until by force of reason and logical necessity, it becomes policy.

Cristy October 1, 2008 at 11:11 pm

i think we don’t need to know about the past, the only thing that matters is the future, plus why do we need to know about some people that are already dead?

Page Ciesemier October 7, 2008 at 10:53 pm

from Mises:

“All these things can be done if the majority of citizens are firmly resolved to offer resistance to the best of their abilities and are prepared to make such sacrifices for the sake of preserving their independence and culture…. The great emergency can be dealt with without recourse to inflation” – or for that matter coerced “patriotism”

I am a huge admirer of Dr. Woods. Mises response above, I believe, is consistent with my own theory of English Liberty in America being an “conservative/aboriginal” move or event. Native persons during the 7 years war, abandoned the field to return to their families. Native people in the West after 1865, never submitted to a “governing mind” that informed them of the necessity that they vomit up their own conscience and fight until the bitter end – hence avoiding complete extermination. Mises’s comment implies that the majority might also chose peace – if afforded that opportunity – as the most efficient means to retain their culture, their independence, indeed, their happiness

Pat Henry June 26, 2009 at 2:36 pm

Great analysis, which serves as a modern parable. To wit: We can do the same as colonists did to the Continental; refuse to use Federal Reserve Notes for your private contracts (business).

A handy-dandy calculator to facilitate this practice is found at http://www.SilverAndGoldAreMoney.com . Those who start and get up to speed before the hyper-inflation hits the prices stand to benefit the most (by losing the least value of all current dollar-denominated holdings and contracts for payment).

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