The Currency Act of 1764

The Currency Act of 1764 extended to the nine colonies south of New England a prohibition on the emission of paper money and required that all existing colonial currency be withdrawn, although not immediately. It was a compromise measure between colonial planters who wanted to defend their right to issue their own currency, London merchants who did not want to see debts incurred in pounds sterling paid with colonial currency worth much less, and Scottish traders who needed local currency to ensure the payment of debts owed to them in the Chesapeake. It was not seen by Americans as a grievance at the time, mainly because colonials were relieved that the measure did not go as far as the merchants had demanded. But after the Stamp Act crisis it became a symbol of British attempts to restrict the freedom of colonials to legislate for themselves.

British authorities had never been enthusiastic about the colonies' issuance of paper money because of the havoc it could wreak on an imperial economy based on transatlantic webs of credit. Responding to the concerns of merchants and public officials on both sides of the Atlantic, Parliament prohibited emissions of paper money as legal tender in the New England colonies in 1751. The southern colonies continued to issue large amounts of paper money to pay for the men and materiel necessary to fight the Seven Years War. Virginia, for example, issued £20,000 worth of currency in 1755. In 1759 the British ministry began to urge the Virginians to address the problem on their own. When the Virginia Assembly ignored calls to mend its ways, Parliament passed the Currency Act, signed into law by George III on April 19, 1764. Believing that a more broadly applicable law better than one that singled out two provinces, Parliament prohibited all the colonies south of New England from issuing paper currency as legal after September 1, 1764. The act also required that all such currency circulating at the time of the act be taken out of circulation on the dates specified in the colonial laws under which the paper money was issued.