In novels and film, we often come across the exchange of colonial money whose odd assortment of names and values are confusing at best. This exchange of colonial currency lends authenticity to period romantic novels (you know -the ones whose cover has some hunk who misplaced his shirt), or historical colonial dramas set in the eighteenth century (a favorite of the BBC). From America’s discovery, to the Revolutionary War and even decades later, money in colonial America had several overlapping currencies that were all linked to the English monetary system. Today, there is one unit of legal tender in the United States, the dollar, and a clear-cut decimal system that breaks it down into smaller units. This can be traced to Spanish doubloons[1] or more specifically, Spanish dollars. These Spanish dollars remained in use right up to the Wild West days of outlaws Jesse James and the Daltons, who often absconded with satchels of cash that included Spanish dollars. This brief article is intended to explain the intricacies of finances during colonial America and cast some light on a misty topic that for many of us, is like trying to understand a foreign language.
Monetary System Based on Three Basic Units. The American colonies, as in England, based their monetary system on three basic units; the pound, the shilling and the penny (pence). The penny was the smallest unit. Twelve pence equaled one shilling and twenty shillings made up one pound. Many other names were used to describe either a portion of these three units, a larger number of, or a combination there of; i.e.: a farthing was a quarter pence (quarter penny), a crown was five shillings, and a guinea was one pound and one shilling. This English system of money developed during the Middle Ages, and as the name pound indicates, was tied up in measures of weight. The formal name of pounds was referred to as pounds sterling, because a monetary pound was originally worth one pound of sterling silver. The symbol then, as now, for the pound is £ based on the Latin libra, which for both Rome and England, is the basic unit of weight.
Logic to Multiple Divisions of its Standard. Though the pound system is more complicated than the dollar, there was a useful logic to a system that included twelve divisions of a shilling and twenty divisions of a pound. Because a pound was worth 20 × 12 pennies, it could be divided evenly by 2, 3, 4, 5, 6, 10, 12, 15, and 20. By contrast, the dollar cannot be divided three ways allowing only 2, 4, 5, 10, and 20. A wider division of money allowed those with limited income to afford their needs. In other words, you could buy more when the currency was broken down or combined into several more possibilities which the buyer and seller could then agree upon. This was helpful in an age that richly valued barter and exchange of commodities for cash. Also, that which was true throughout the colonial period and even up to the opening of the 20th century, education in America was minimal at best. Few people used formal accounting, relying on mental calculations for all their transactions. It just proved far easier and convenient to have a currency that could be evenly divided in as many ways as possible.
Understanding Symbols. The pound, as mentioned, was abbreviated by the symbol £. Shillings were indicated by the letter s though not for shilling, but for solidus, which was a Roman coin. Pence (or penny) was abbreviated by the letter d, this for the denarius, which was a smaller Roman coin. [In Spanish dinera means money]. And very rarely, the letter p stood for pounds [however since 1971 when the pound was converted to a decimal system, p has become more common]. The following is a typical illustration of these abbreviations; £15 10s 6d, which stood for fifteen pounds, ten shillings and sixpence. When referencing money in colonial journals, diaries, accounting ledgers, or casual letters, a shorthand using decimals was often used. The aforementioned value would read £15.10.06. This could also be written using colons – £15:10:06. Here are a few examples of abbreviations and their value:
- £4.08.06 Four pounds, eight shillings, sixpence
- 8s 4d Eight shillings, four pence
- 25. Twenty-five pounds
- £10:08:00 Ten pounds, eight shillings, no pence
Unique Names and Values. Just as the dollar uses other names for its divisions; quarters, dimes, and nickels with buck as slang for the dollar (taken from the early value of a buck deer’s hide equaling a dollar), the English system had its divisions. Yet as mentioned, so too the colonial usage also had coins and names for larger amounts of their three basic units of pound, sterling, and pence as well as combinations. Here is a breakdown of colonial English currency; their names and values are listed from least to most. Some are still in use today:
- Farthing – ¼ penny
- Half penny (ha’penny) ½ penny
- Penny (pence) – 1 penny or pence
- Tuppence. – This is not an actual coin. It is used when speaking of ‘two pence’ pronounced ‘tuppence’. It is written as tuppence.
- Treepenny bit – 3 pence
- Sixpence – 6 pence
- Tanner – 6 pence
- Shilling – 1 shilling or 12 pence
- Bob – 1 shilling
- Half crown – 2 shillings and 6 pence
- Crown – 5 shillings
- Half sovereign – 10 shillings in a gold coin
- Mark – 2/3 pound (13 shillings 4 pence). No coin was minted as it was used for accounting only.
- Quid – Slang for a pound
- Guinea – 21 shillings. This amounted to 1 pound and 1 shilling. The coin was labeled a guinea because it was made of gold from Guinea, West Africa, famously used in trading slaves. At auctions, all bids were placed in guineas. Of the sale, the seller received all pounds and the auctioneer or merchant conducting the sale (which would also include ship’s captains), received the number of shillings of the sale as commission.
- Guinea Divisions – There were also gold coins minted in divisions and larger numbers of guineas. They were labeled: 5 Guineas, 2 Guineas, Half Guinea, One Third Guinea, and One Quarter Guinea.
- Spanish Dollar and Doubloons – Besides England, Spain had a unique influence on colonial America’s monetary system that has had a lasting effect. Spanish dollar was in use as well as less frequently, the doubloon, a two-escudo (or double) gold coin worth approximately four Spanish Dollars.
Shortage of Money. Colonial America had a monetary system based on England’s standard of the pound, but what if there wasn’t enough of this hard coinage in circulation to pay for what you needed? This was the dilemma that faced many American colonials throughout the 1700’s. There just wasn’t enough cash obtainable to cover the value of all the goods and services that were available to be bought and sold. Today, the U. S. Federal Reserve manages the money supply so there is always enough for the economy and individual needs. However, in colonial America, nothing of the sort existed. In fact, England’s practice of what has been termed mercantilism proved to be the main reason for this shortage.
Mercantilism. The prevailing economic philosophy of the seventeenth and eighteenth centuries held that to be financially healthy, nations needed to hoard as much gold and silver as possible. This was accomplished by exporting more goods than what was imported. England saw their colonies, particularly America, as a great market to export their finished goods while limiting the colonists to only export raw materials to their mother country. For example; colonials could only export raw iron (molded into bars called pig iron) back to England whose furnaces and factories molded the iron into finished products which were in turn sold back to the colonists at exorbitant prices. The same was true in the textile industry. Factories that manufactured raw materials were not permitted in America. This exchange of money that heavily favored England over the colonies led to this shortage of hard cash, forcing colonials to find other means to pay for goods.
Proclamation Money. Shortage of hard currency, silver and gold coinage, was a financial burden faced by colonial people throughout the world; America was no exception. To get around this quandary, individual colonists used and accepted whatever foreign specie they could get their hands on (such as the Spanish Dollar). But so too, local governments printed paper money. In America there were three basic types of legislative organizations that formed the original colonies; Royal – colonies owned by the king, Proprietary – huge land grants from the British government that were awarded to wealthy individuals who would supervise and govern in return for political favors from the king, and Self-Governing – originally formed by a joint-stock company that was grated a charter by the king which set up its own government independent from the crown. Each colony set an official value for the paper cash in pounds, shillings, and pence that could be used for legal tender. Today, global trading in currency sets the exchange rates. But in the eighteenth century, there were no international banks to do this. Because the value of these paper currencies was set by proclamation, they were labeled Proclamation Money.
Barter, Trade, and Rated Commodities. Another solution to the cash shortage problem which also benefited the small, cash starved farming population, was simply to barter or trade goods. The value of the trade was based on the need or desire of one or both parties. A wagon of hay could fetch specific farming tools or household furnishings. But what if a farmer wished to purchase a similar wagon of hay, and didn’t have anything the seller desired in trade? There was a solution. Certain popular commodities, such as tobacco, was accepted as currency. Because tobacco had a ready and consistent market, anyone would take it in exchange for goods, for they could easily turn around and sell it. Some exchanges resulted in futures in tobacco production, whereas the buyer would receive the traded goods in exchange for later production. But these small-scale transactions that set the value of exchanges on individual needs were difficult to keep track of, especially for large plantations who dealt with local farmers and merchants both at home and overseas. There needed to be a set value on commodities to balance the books on sales, purchases, and debts. Here too, proclamation money was the solution. The local government stepped in proclaiming a set value on raised and raw goods such as tobacco, rice, and lumber. These was called rated commodities. This meant that exchanges conducted, for example, in tobacco could be accounted for by a specific amount in pounds, shillings, and pence. This also enabled farmers, especially small-scale agriculturists, to pay their taxes to government officials in whatever produced goods they had on hand.
Borrowing and Lending. There were no banks in cash poor Colonial America, therefore an informal system of credit developed. Middling farmers frequently needed extra grain to feed their livestock throughout the winter, or to purchase another plot of land to grow more crops. They could not turn to a financial institution; they didn’t exist. Here’s where the ‘well ballasted’ neighbor stepped in. These were successful merchants or wealthy land owners whose vast holdings allowed a surplus of ready cash or commodities to be loaned out, often providing the cash or goods in exchange for promised future crops. And as so often, proclamation money stepped in. The loaner would proclaim the value of the debt acceptable by the borrower in pounds, shillings, and pence. And what if hardship struck the borrower, either in personal tragedy, as if in sickness or death of family members, or natural, as if in a devastating drought? A scenario occurred that has been played to the hilt in period novels and on the screen. The wealthy loaner forced the payment of debts either in whatever crops and materials were available or even the forced sale of the farm.
But so too, wealthy planters took advantage of credit. Rarely from other colonials, but that offered by British merchants only too happy to sell goods to reliable colonists. Because of mercantilist policies that did not allow local manufacture, the fancy goods rich American land owners and merchants craved could only be purchased and shipped from England; items like expensive clothing in silks and linens, china, fine wines, and elaborately carved furnishings and trappings. Planters obtained all this on lines of credit based on anticipation of the following year’s tobacco, rice, grain, or other similar crops that would be shipped to England. These Scottish and English merchants who handled the planter’s trade, allowed upper class colonials to purchase whatever they wanted. And just as today’s use of credit cards, most planters couldn’t really afford all the things they bought on credit. Many ended up in high debt to England merchants. And just like the small farmer who experienced unfortunate hardships or death, the loans were called in, resulting in the sale of the planter’s estate.
Money to Obtain Political Power. Not all of this behavior can be traced to mercantilism and the money shortage, but in the absence of established financial institutions and sufficient cash to conduct a growing economy, political power in the colonies came to be made up of these complex, personal networks based in part on borrowing and lending money.[2] The chronic money shortage and the desire for luxury goods thus meant that colonists both rich and poor were bound up in webs of debt. Poorer colonists borrowed from wealthier colonists; the wealthy borrowed from British merchants and from one another. As a result, wealthy planters who had cash could accumulate a great deal of power and influence by lending money, or threatening not to. Unlike today’s banks, wealthy planters could discriminate any way they pleased, and they could use a debt as leverage over someone. All of this business might be conducted very politely, but even so, someone who lent his friends and neighbors money could easily call in favors. For example, this might occur whenever a wealthy loaner stood for election as a judge or representative in a legislature. There were no secret ballots in the 1700s as voting was conducted by voice. And everyone knew who his supporters were. At the same time, someone holding public office could easily borrow money from his constituents. Today, we’d call this corruption and bribery, but in the 1700s it was perfectly common to use public office for personal gain, and vice-versa.[3]
Probate Inventory. As mentioned, wealthy planters often accrued enormous debt over many years. Even if they were frugal in their purchases of manufactured goods from England, the fluctuations in the commodities market many times followed a steep downward trend forcing the planter to pile up debt to make ends meet. If the debt was not paid upon the planter’s death, his goods and even estate would be listed in probate inventory valued in pounds, sterling, and pence. Merchant creditors were quick to act so to recoup the debt incurred by the planter when he[4] was alive. To satisfy the debt, a public auction was held to pay off the estate’s creditors. This occurred before the family could inherit the property. Often lawsuits resulted as the process as the courts would be called into play to sort out who owned whom money, especially when written records of a debt might be only a note on a piece of paper.
Income and Expenses of Small Family Farm of Four The following is a list of basic needs for a small farming family of four’s weekly expenses:[5]
- Bread flour or oatmeal – 3s 4d
- Yeast and Salt – ½ d
- Bacon or Pork – 10d
- Tea, sugar, and butter – 10d
- Soap – 2 ½ d
- Candles – 1 ½ d
- Small beer (colonials often drank watered down beer instead of water) – 3 ¼ d
- Milk – 6d
- Potatoes 4d
- Thread and worsted – 1 ½ d
Taking the same small farming family of four, the yearly expenses are as follows:[6]
- Provisions as above – £17 12s 1d
- Rent – £2 10s
- Fuel; coal, wood, and peat – £2
- Clothing – £2
- Births, burials, sickness – 2s
Total income and expenses for a small farming family of four:[7]
- Total Expenses per year – £24 2s 1d
- Total Income per year – £22 19s 4d
This indicates that the average colonial farming family had a negative surplus or ran in the red £1 2s 9d each year, meaning that the average family struggled every year to just pay for the basic necessities of life.
Colonial Salaries Effected the Value of Goods. How much money an individual earned determined what merchants and sellers could expect to get for their products and salaries both in the 18th century and now. A study of average weekly salaries of workers in 1768 showed that of men – 9s (sterling) 6d (pence), women – 4s 7d , and children – 2s 8d.[8] This would calculate to an annual salary for men – £28 16s, women – £13 1s, and children – £8 8s. Comparing the average yearly salary (using only the male average) to the average annual salary of manufacturing workers in 2020:
- Annual Salary in 1768 – £28 16s
- Annual Salary in 2020 – $31,864
- A pound sterling in 1768 equates to approximately $1,108 in 2020.
In the late 1700’s, a pound of meat cost approximately 7d (pence). In 2020, the average cost is $4.12. Since there are 240 pence per pound, then the cost of a pound of meat in 1768 was equivalent to approximately 3% of a pound sterling. Based on the above salary comparisons between colonial and today, in relationship to the percentage of the salary necessary to purchase a pound of meat, we would have to pay, by today’s standard, $33.24 for that same pound of meat! In 1768, colonials paid nearly eight times more for one pound of meat than we do today. Perhaps we should stop complaining about the cost of food as it was and could be far worse off than we ever thought possible.
Quick Note on “Two bits”. Spanish dollars were exchanged as currency in the United States throughout the colonial years on up to the late 1800’s. The Spanish dollar was divided into eight smaller coins or reales (royals). Americans lacked these small coins and often cut the Spanish dollar into eight smaller pieces or what were called ‘bits.’ Two bits were one quarter of a Spanish dollar and Americans began to refer to the U.S. quarter as ‘two bits’. So too, right up until the 1990’s, the New York Stock Exchange counted stock values in eights of a dollar.
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RESOURCES
Holt, Frank L. When Money Talks, A History of Coins and Numismatics. 2021: Oxford University Press, New York, NY.
Walbert, David. “Value of Money in Colonial America” Ancor, North Carolina History Online Resource. https://www.ncpedia.org/anchor/value-money-colonial-america
Weatherford, Jack. The History of Money from Sandstone to Cyberspace. 1997: Three Rivers Press, New York, NY.
Young, Edward. Labor in Europe and America: A Special Report On the Rates of Wages, the Cost of Subsistence, and the Condition of the Working Classes in Great … Also in the United States and British America. 1875: S. A. George and Company, Philadelphia, PA.
ENDNOTES
[1] Doubloons comes from the Spanish doblon or ‘double’ or ‘double escudo’. They were two-escudo gold coins each with a value of four Spanish Dollars.[2] The Value of Money in Colonial America by David Walbert.
[3] Ibid.
[4] Legally, women could not be held in account for the debt, however neither could they claim the estate prior to the sale of goods and or estate to satisfy the debt.
[5] Ibid, pg. 163.
[6] Ibid.
[7] Ibid.
[8] Labor in Europe and America…pg. 159.