Shore Collectibles
By Douglas Keefe
Picking a fight with Britain over our independence was like pocking a stick in the eye of a giant. Britain had a large standing army and navy plus more money, which was the chief challenge to the colonists. The national government, the Continental Congress did not possess the ability to levy taxes under the Articles of Confederation. And the state governments, although with the ability were reluctant to levy taxes as this was one of the complaints about Britain, their taxes. The Revolutionary government resorted to printing paper money, known as Continental currency. By 1780, the value of this paper money declined to the extent the $241,550,000 which had been issued up to that point was virtually worthless and ceased to circulate.
Loans of hard money were difficult to come by, and some countries such as Holland, Spain and France came through to varying degrees. This was necessary for making payment to foreign merchants who would not accept Continental or state issued paper. Other funding came from domestic loans and promissory notes which were more secure that the paper currency.
By 1790, long after the war’s end, the federal government owed $40 in domestic debt and $12 million in foreign debt. The states owed an additional debt of $25 million, bringing the United States total Revolutionary War debt to a huge sum of $77 million.
Who paid these debts, the states or Congress? This became the central issue between the states and central government. In a struggle for power, the states wanted to assume the federal debt and Congress wanted to assume the states debt. The winner of this struggle would be granted the power of taxation. Proponents of a strong central government wanted Congress to assume the debts as a way of insuring a strong union. Those opposing the central governments assumption of the debt wanted a weak central government.
The federal government derived the authority to levy taxes through the 1787 draft of the Constitution. And Alexander Hamilton, the first Secretary of the Treasury succeeded in the federal government’s assumption of the state debt, giving more power to the central government.
Hamilton’s plan was for all holder of debt certificates were to be paid full value in specie(gold/silver), which was controversial because these certificates were trading on the open market at less than full value. Under Hamilton’s plan, old debt certificates would be exchanged for newly issued bonds and public revenue was pledged for paying interest on the debt. Interest was paid until the face value of the note was redeemed. Hamilton’s plan was approved in 1790, but it took several years for the states’ debts to be settled. It actually took until 1837 for the federal government to pay off the majority of the debt.
Some of the state’s debts were to pay merchants for purchases of goods or for the back pay due soldiers were involved in our struggle for independence. The fact that they did not receive final payment in some cases until 1795 shows a degree of patience.
The note shown below was issued by the state of Connecticut to acknowledge indebtedness to the individual listed on the note. The wavy cut on the left side was used to match the note to the book from which it was cut. Each cut was different, so a match meant it was an authentic note. The hole in the middle indicates the note was redeemed – paid in full.
Collectors of these and other Revolutionary War money have the feeling of touching something that was actually handled by a participant.
Douglas Keith is the President of Beachcomber Coins, Inc. He and his wife Linda operate Beachcomber Coins and Collectibles, formally located in the Shore Mall and now located at 6692 Black Horse Pike, Egg Harbor Township in the old Wawa building. They also have satellite offices for buying only in Brigantine (Saturday), and in Absecon (Tuesday). Between them, they have over 70 years of experience buying and selling coins, collectibles in precious metals. They are members of the American Numismatic Association, the Industry Council of Tangible Assets, the Numismatic Guarantee Corporation, the Certified Coin Exchange and the Professional Coin Grading Service. Visit their website at www.beachcombercoinsinc.com for video and information.
