For Americans in the colonial and revolutionary periods, ready money consisted almost exclusively of coins from other countries, primarily Spain.
In accord with the mercantile economic practices of the time, Great Britain did not allow its North American colonies to mint their own coinage, nor did they allow the export of British currency to America. An elaborate system of credit had developed for use in major transactions, both within the colonies and between them and the mother country; but for smaller, everyday purchases and sales the accepted currency was foreign coins.
The Value of Coins
Coins of any nation were accepted as currency by almost all other nations because they were made of gold or silver, metals which had an intrinsic value – an ounce of silver of a certain fineness was worth the same amount, whether it was in the form of a coin or a spoon. Almanacs published in the colonies each year contained tables listing the current values of various weights of gold and silver. Because it was the weight of the coin that determined its value, coins were often cut into pieces for smaller transactions.
The Sources of Coins
Neither Great Britain nor its American colonies had natural sources of silver or gold. The Spanish colonies in Mexico and Peru, however, did – and in massive quantities, enough to supply most of the world for over two centuries. Twice a year, great fleets would assemble in Havana to carry the precious metals back to Spain. As the ships sailed north along the American coast with the help of the Gulf Stream, their purchases of supplies along the way distributed some of that silver and gold throughout the British colonies.
The Dutch also acquired large amounts of silver and gold, in their case from the East Indies; and since they were engaged in worldwide trade, their coins too were dispersed among the other nations. Dutch coins became even more common in America once the Dutch established a colony at the mouth of the Hudson River in 1624.
Other currencies in use in the American colonies originated in Portugal, France, the Italian and German states, and the Middle East – even British coins were part of the mix. Where a coin was minted, or when, made no difference; as long as its gold or silver content was of standard purity, all one needed to determine its value was a coin scale and an almanac.
The Dispersal of Coins
The official exchange of currency for goods was not the only way in which foreign coins reached American shores – it was not even the primary way. Much more significant were transactions involving smuggled goods. To avoid various tariffs and other taxes, the American colonists and their Spanish, Portuguese, Dutch, French, and British counterparts in the Americas had a flourishing underground economy. Thus, legally or illegally, foreign coins became a staple of colonial Americans’ lives. Nor did these coins quickly drop out of use once the newly independent United States began minting its own coins in the 1790s. Foreign coins were considered legal tender until Congress officially ended their acceptance in February 1857.