Colonial Pennsylvania's Money: Paper Pounds, Copper Coins & Foreign Silver

Pennsylvania ran one of the most successful colonial monetary systems—its own paper currency (1723–1775), backed by land and loan office assets, not just specie.

Pennsylvania Pound (Paper)

• First issue: 1723 — £15,000 in 1, 2, 5, 10, 20s denominations.
• Backing: Not gold/silver directly. Loan office mortgages — borrowers pledged land, received notes; interest paid in notes; land sales retired notes.
• Legal tender: For public debts (taxes, quitrents) — private acceptance voluntary but widespread.
• Stability: Managed issues (1723, 1729, 1739, 1746, 1756, 1771, 1775) — generally held value vs. sterling until Revolution financing collapsed it.
• Benjamin Franklin: Printed 1729, 1739, 1746, 1756 issues; advocated "land bank" theory.

Copper Coins

• Pennsylvania Penny (1722) & Halfpenny (1723): Struck in England (Bristol), shipped over. Copper, ~1/2 oz & 1/4 oz.
• Purpose: Small change — paper notes too large for daily market.
• Circulated alongside: British halfpence, Irish coppers, French liards, Portuguese coins.

Foreign Coinage in Daily Use

• Spanish Milled Dollar (8 Reales): "Piece of eight" — de facto dollar, cut into "bits" (12.5¢ each).
• British Sterling: Guineas, crowns, shillings — legal tender at proclaimed rates.
• French Livres / Louis d'or: Canadian trade, Caribbean connections.
• Portuguese Joannes (4000 reis): Gold, ~36s — West Indies trade.

Why It Worked (Until War)

1. Land-backed loan office = credible anchor (land = real, illiquid, local).
2. Quaker merchant elite — disciplined issuance, redemption discipline.
3. No royal governor veto on currency (proprietary colony — Penn family).
4. Diverse economy: grain, lumber, iron, shipping, trade → real demand for medium.

Collapse

1775: Continental Congress issues Continentals; Pennsylvania issues £200K+ for war. Hyperinflation by 1780. 1792: US Mint, federal dollar replaces state currencies.

Pennsylvania's system was the most sophisticated in British America—a land-backed fiat experiment that worked for 50 years. Franklin called it "a machine that does its work."