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Currency 2/16/07 9:53 AM

The paper currenct did not depreciate against specie. In an extreme case, RI
currency depreciated against specie 26:1 £1=$26 erhode island dollars
a market starts to develop for a foreign exchange
th Pennsylvania currency did not depreceiate as badly about £3:$1
a conflict between the currency’s face value and its market value became an
issue and did impede on trade but the colonies did manage
in the end, there was not a shortage of monety in th colonial era as first
thought because the colonists used substitutes for specie
in addition,
•the colonial economy was able to grow in real terms
•long term prices were increasing and shortage of currency would
cause prices to fall
currenct would cause prices to fall
•interest rates were not extremely high and usury laws did not have to
be enacted
•*it was the first tie sicne 1500 that a western nation used paper
currency successfully*
Comparative advantage and profitability
•Virginia/ Maryland both were comparatively advantaged in wheat and
tobacco , but, profits were greater in growing tobacco, Virginia/
Maryland grew tobacco eve at the risk of starvation
•Assumption : cost remains constant
oprice of both tobacco and wheat is $10
oprice of tobacco increases to $20, what happens graphically and
explain verbally both tobacco and wheat production

Verbal explanation: Price of tobacco increases, that cause farmers to

produce more and is represented by a movement along the supply curvec
called a change in quantity supply
• Because the price of the related good has increased , which are
substitutes, the supply curve shifts in and this is called a change in
some important features of the american
revolutionary war 2/16/07 9:53 AM
after the war, we write the articles of confederation -> constitution
the constitution has a big impact on property rights and businesses
it represented the tradition to modern liberalism
•the idea of competitive individualism free enterprise ad limited
•loss of british military assistance judicial/government expertise and
financing of wars
othis meant economic consequences of taxes
•with regards to slavry
odenounced it
ocalled for its eventual elimination but did not state when and
how it was going to be done
oagaain, economics overrides social/ppolitical equality
Land laws
•problem: what to do with the land that lay northwest of the ohio
•answer:Land ordinance og 1785/87
•the idea was tha land east of the Mississippi river and northwest of
the ohio river should be sold off to pary for the national debt
•the land would be surveyed before sale and settlement. This would
abvoid confusion and lawsuits
•congeress of the confederation passed a foresighted piece of
legislation the land called the old northwest would be public domain
and acquired rom the states
•divided townships sectioned off in 6X6 mile sections of one
mle each based on colonial Vermont
•one suare mile would be sused forpublic services
•dealt with some very important issues for the new nation
odealt with stathood. First the federal governmnt would establish
land as a territory. One 60,000 people woud become a state
othere would be free states, a farsighted provision
olaid the furture for capitalism because the land oassed into
private hands and simultaneously solved the problem that
arises with public lands
oprovide a great source of financing by selling the land and
delaying having a federal income tax
oable to pay soldiers who fought in the revolutionary war
oprovided for expansion of American democracy
2/16/07 9:53 AM