Episode #33
The Continental Dollar: The Default That Built American Credit | S1E33 AAR
Did America default deliberately on the paper that financed its Revolution? The history most Americans learned blames the Continental dollar’s collapse on reckless printing and runaway inflation—but these notes functioned more like tax-backed bonds. Soldiers were paid in these promises and bore their plummeting value; then, in 1790, the new federal government settled the remaining dollars at 100 to 1, although it could have afforded a far more generous conversion. At that rate, holders converted only $6 million of the roughly $80 million still outstanding; the remaining $74 million was never redeemed, while the resulting default erased a massive liability, helped turn the new nation’s net worth positive, and strengthened American credit in Europe. Interview transcript & takeaways About My 228th Guest: Dr. Farley Grubb Dr. Farley Grubb is a professor of Economics and history at the University of Delaware, and a former research associate at the National Bureau of Economic Research. He is the author of "The Continental Dollar: How the American Revolution was Financed with Paper Money", which we discuss in this interview. ****************** ▶️About Featured Image: Image of Adel Aali (program host) and his guest, Dr. Farley Grubb, superimposed on the Betsy Ross flag, along cover image of “The Continental Dollar: How the American Revolution was Financed with Paper Money”. ***** Explore AAR ️ Image Gallery ️Thematic Collection Take the AAR IQ Quiz ***** Follow AAR: ️ YouTube ️ Spotify AAR's Newsletter ***** Video Chapters: 00:00 Selected Highlights 02:26 Guest Introduction 03:44 The Continental Dollar Myth 06:25 What Gives Money Value? 17:46 Colonial Bills Become Dollars 26:49 Financing War Without Taxes 35:10 Soldiers Paid in Bonds 54:17 Time, Not Inflation 1:01:52 Soldiers, Speculators, and Default 1:13:36 Default Builds American Credit 1:23:57 Financial Crisis, European Intervention 1:29:18 Who Created the Myth? 1:44:36 Just One Point ***** ️This video is made with Filmora. ☑️Image Attributions: All images are in the Public Domain Music Attributions: "Yankee Doodle" in our videos: ► Choral, U.S. Army Band (Public Domain) We incorporate parts of this fabulous performance in the beginning and end of our videos. ✅ Subscribe to our YouTube channel Support AAR: We appreciate your financial support of our program. *****
