Virginia and the Currency Act of 1764

The Currency Act of 1764 extended to the other American colonies restrictions placed on New England in 1751 that prohibited the emission of paper money as legal tender and required the retirement of existing emissions on the dates set forth by the colonial assemblies. Although other southern colonies engaged in the practice, Virginia was the principal offender, having by 1764 placed hundreds of thousands of pounds in circulation, mostly to pay for fighting the French in the Seven Years War. Unlike paper money issued by other colonies, and even notes of the Bank of England, the Virginia Assembly made their currency legal tender for the payment of all debts throughout the British world except royal quitrents. Moreover, Virginians repeatedly refused calls from London officials to recall their currency in spite of the fact that the real value of Virginia's money had, by 1759, depreciated to a third of the British pound sterling.

Virginians were bitter at British merchants for pressuring Parliament and the Board of Trade to take action to force the colonies to retire their depreciated currency. A young Virginia planter, Robert Beverley, complained in 1763 about the "Machinations of those very Merchants who draw their Subsistence, as it were from our very Vitals." To make matters worse, poor tobacco prices and poor crops in the 1750s and early 1760s had not prevented many Virginians from incurring greater debts by importing goods. Yet Virginians expressed no opposition to the Currency Act itself. In fact, many were relieved that the act had not gone as far as the merchants wished by requiring immediate retirement of all colonial currency.

The Currency Act of 1764 showed that imperial administrators, such as George Grenville, at best did not understand colonial economic problems. By removing already scarce mediums of commercial exchange, the Currency Act fostered a transatlantic trade recession that deepened a serious but brief post-war depression.