Definition of the 1764 Currency Act

The 1764 Currency Act was a law passed by British Parliament to regulate the issue and legal tender status of paper money in the colonial economy. This act was an extension of the 1751 Currency Act that applied to New England colonies, the 1764 Currency Act applied the same principles to all British colonies in America.

Why was the 1764 Currency Act passed?

British law banned the minting of coins and the issue of official government money in America. To avoid this restriction colonial governments issued “bills of public credit”, legally not official money. Bills of credit were backed by tax collection and privately, by land and property.

Debts, either private or public, require money for payment. Gold and silver coins that flowed into the colony from export transactions were promptly used to pay for imports leaving very little currency for local business. This shortage of currency encouraged colonial governments to accept a wide variety of specie as form of payment for taxes. Private businesses such as merchants and shopkeepers had no choice but to accept payment in whatever form.

Eventually there was a vast amount of paper bills with different purposes, for instance some bills were used to pay private debts to British merchants, others to pay public debt for government services, and others to pay taxes. British merchants trading in the middle colonies soon got concerned about the value of their colonial debts and investments observing a continuous loss of value in their holdings due to inflation. British parliament decided to extend the previous New England Currency Act passed in 1751 to the rest of the colonies.

What did the 1764 Currency Act do?

The Act banned colonial paper money as legal tender in private transactions.

Colonial paper money was accepted for public debt payments such as provincial taxes.

It prohibited the extension of paper bills beyond its date of redemption.

The Currency Act did not place limits on the amount of paper money in circulation and on the period of redemption.

Consequences of the 1764 Currency Act

Opposition to the 1764 Currency Act started immediately. Colonial governments petitioned its repeal as the postwar economic slowdown was being felt in most colonies. In 1770 Parliament revised the Act and allowed New York to issue bills as legal tender for all types of debt. In 1773 parliament allowed colonial legislatures to print bills to cover costs and to be used as legal tender.

Read Text of 1764 Currency Act

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