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Bills of Credit

BILLS OF CREDIT

BILLS OF CREDIT are non-interest-bearing government obligations that circulate as money. In the mid-eighteenth century, the term was commonly used to describe issues by the colonies and, later, by the Continental Congress and states during the Revolutionary War. Since the establishment of the national government, such issues have been known as treasury notes or United States notes.

Bills of credit in the colonies began with an issue of £7,000 (shortly increased to £40,000) in Massachusetts in 1690. This was followed by similar actions by New Hampshire, Rhode Island, Connecticut, New York, South Carolina, and New Jersey before 1711, North Carolina in 1712, Pennsylvania in 1723, Maryland in 1733, Delaware in 1739, Virginia in 1755, and Georgia in 1760. In most cases the bills were issued to excess and depreciated sharply in value. Parliament finally prohibited such paper currency in New England in 1751 and in the other colonies in 1764.

As soon as the colonies broke away from England, they again began to emit bills of credit in large amounts. The Continental Congress, unable to obtain necessary funds from other sources, authorized $241,552,780 of bills from 1775 to 1779, while the various states put out $209,524,776 of bills during the same period.

BIBLIOGRAPHY

Ferguson, E. James. The Power of the Purse: A History of American Public Finance, 1776–1790. Chapel Hill: University of North Carolina Press, 1961.

Hall, Arthur P. "State-Issued Bills of Credit and the United States Constitution." Ph.D. diss., University of Georgia, 1991.

Frederick A.Bradford/a. r.

See alsoDebts, Revolutionary War ; Legal Tender ; Revolution, American: Financial Aspects .

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Bills of Credit

BILLS OF CREDIT

Non-interest-bearing promissory notes issued by the government and backed by its faith and credit to be paid when presented by their holders, which are in the form of currency and are intended to be circulated and exchanged in the community as money.

The federal government, acting through the federal reserve banks, issues bills of credit in the form of dollar bills that are promises to pay the specific denominations indicated on them to the bearer of such paper on demand. Article I, Section 10 of the Constitution, in order to provide a uniform standard of money throughout the United States, prohibits states from issuing their own bills of credit for circulation as currency.

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