Wars cost money — for arms and ammunition, for food and uniforms, for soldiers’ pay, for provisions for prisoners. The Continental Congress printed money, but its value quickly deteriorated because the congress held no precious metals to back the currency. The dollar eventually bottomed out at one-fortieth of its face value. States, too, were printing paper money to pay for wartime expenses, further complicating the economy.

As the currency depreciated, the congress turned to other means to procure supplies and labor. One method was to borrow hard money (gold or silver coins) from wealthy men in exchange for certificates of debt (public securities) promising repayment with interest. The certificates of debt were similar to present-day government bonds. To pay soldiers, the congress issued land grant certificates, written promises of acreage usually located in frontier areas such as central Maine or eastern Ohio. Both the public securities and the land grant certificates quickly became forms of negotiable currency, but they too soon depreciated.

Depreciating currency inevitably led to rising prices, as sellers compensated for the falling value of the money. The wartime economy of the late 1770s, with its unreliable currency and price inflation, was extremely demoralizing to Americans everywhere. In 1778, in an effort to impose stability, local committees of public safety began to fix prices on essential goods such as flour. Inevitably, some turned this unstable situation to their advantage. Money that fell fast in value needed to be spent quickly; being in debt was suddenly advantageous because the debt could be repaid in devalued currency. A brisk black market sprang up in prohibited luxury imports, such as tea, sugar, textiles, and wines, even though these items came from Britain. A New Hampshire delegate to the Continental Congress denounced the trade: “We are a crooked and perverse generation, longing for the fineries and follies of those Egyptian task masters from whom we have so lately freed ourselves.”

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