A Project of the Robert H. Gore, Jr. Numismatic Endowment
University of Notre Dame, Department of Special Collections
by Louis Jordan

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James C. Spilman and the Colonial Newsletter Foundation

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FAQ: The Puchasing Power of Money (paper and coin) during the Revolutionary War


John J. McCusker, How Much is that in Real Money? A Historical Commodity Price Index for Use as a Deflator of Money Values in the Economy of the United States, New Castle, DE: Oak Knoll Press, 2001.

ISBN 1-929545-01-0. This work was published in August 2001, 132 pages, hardcover at $15.00. Oak Knoll Press, 310 Delaware Street, New Castle, DE 19720
Further, you should first look at the brief explanatory essays listed on the bottom of our colonial currency site at:


Especially relevant are the essay on The Value of Money in Colonial America, the essay on Devaluation (during the revolution) and the 1702 Assay.

First you must realize a payment for two pounds may not mean the individual paid with two pounds in paper money of the colony in question but rather thay may have used various foreign coins or commodities equal to two pounds. That is, accounts were usually kept in a standard money of account but transactions were made with whatever was available.

The pound rate fluctuated regularly. John J. McCusker in his book Money and Exchange in Europe and America 1600-1775 lists the rate month by month for each colony. For an example I have used Virginia. In Virginia during 1774 the rate fluctuared from 132 Virginia pounds beig equal to 100 British pounds sterling in January to 127.5 Virginia pounds being equal to 100 pounds sterling in March with continual fluctuations so that in December 133.3 Virginia pounds was equal to 100 pounds sterling. In 1775 the rate dropped averaging about 120 Virginai pounds per 100 pounds sterling (but dropping as low as 115 VA pounds per 100 pounds sterling in April through May).

The McCusker chart stopped in 1775 because during the war inflation was rampant and money was measured against Spanish dollars rather than British sterling. Theoretically, a Spanish dollar was valued at 4s6d sterling, while in Virginia money of account a Spanish dollar was 6s. Thus, a pound sterling would be just under 4.5 Spanish silver dollars while a Virginia curreny money a pound (that is 20 shillings current money) would be 3.3 Spanish dollars. I mention this because the Revolutionary war inflation rates are calculated in dollars. Note that in 1776 Virginia changed from printing currency in pounds and shilling to printing currency in Spanish dollars (see our VA currency examples).

In VA the rate of exchange went from $4 in paper currency for one silver spanish dollar in January of 1778 to $6 in paper for a Spanish dollar by December. Infaltion was much worse the following year. In January 1779 the rate was up to $8 in paper for one silver dollar and by December it had jumped to $40 paper dollars per silver dollar.

You might wish to see our commodity money section in our Colonial Coin site for the use of barter and inflation during the revolutionary war. It is at: http://www.coins.nd.edu/ColCoin/ColCoinIntros/Commodity.intro.html

Two additional books books that can help are Eric Newman, The Early Paper Money of America, 4th edition, Iola, WI : Krause Publications, 1997 see the charts on pp. 471-478. and the standard reference: John J. McCusker, Money and Exchange in Europe and America, 1600-1775: A Handbook, North Carolina: U of NC at Chapel Hill, 1978, 367pp.