America's First Economic Stimulus Package: Paper Money and the Body Politic in Colonial Pennsylvania, 1715–1730

Abstract

ABSTRACT From 1715 to 1730, Pennsylvania's provincial legislature passed economic reform that transformed the colony into an enviable commercial center. Provisions enacted included liquor duties, flour inspection laws, and feme sole statutes, but the crowning achievement was a public loan office that issued loans to farmers in the form of paper money. Historians have shown how the Pennsylvania General Loan Office improved business conditions in the colony following an economic depression. Scholars have paid less attention to the implications of financial innovations such as paper money for economic thought and culture conceived broadly in early America. Using Pennsylvania as a case study, this article argues that paper money issued by public land banks in the British colonies not only improved colonial economic conditions, but also formed the basis of a fiscal and constitutional order founded on legislative control over local currencies and an extrinsic notion of value that pegged economic worth to the provincial community.