State "Currencies" and the Transition to the U.S. Dollar: Clarifying Some Confusions

Farley W. Grubb's recent papers on the early U.S. monetary system would be important contributions to the common currency area literature were not most of their historical assertions questionable and their key assumption—that the medium of exchange can be inferred from the unit of account— dubious. We contend that after 1781 most Americans eschewed government paper money in favor of full-bodied coins and convertible bank liabilities and that, contrary to Grubb's claim, bankers did not foist the constitutional clause banning state emissions onto an unsuspecting public.