World Library  
Flag as Inappropriate
Email this Article

Bill of credit

Article Id: WHEBN0020654937
Reproduction Date:

Title: Bill of credit  
Author: World Heritage Encyclopedia
Language: English
Subject: United States Constitution, Currency, Confederate States dollar, British America, Fiat money
Publisher: World Heritage Encyclopedia

Bill of credit

Bill of credit is a phrase from Article One, Section 10, Clause One of the United States Constitution. It refers to a document similar to a banknote that is issued by a government and designed to circulate as money. Because the framers of the Constitution sought to limit the issuance of currency, it explicitly prohibits the states from issuing bills of credit. The restriction of emitting bills of credit was extended to Congress as well, because the power to "emit bills and borrow money on credit" during the previous Articles of Confederation was struck out and revised in the Constitution to only "borrow money on the credit (Article I, section 8).[1]

British colonies in North America would issue bills of credit in order to deal with fiscal crises, although doing so without receiving them as revenue in like amounts would increase the money supply, resulting in price inflation and a drop in value relative to the pound sterling. The documents would circulate as if they were currency, and colonial governments would accept them as payment for debts like taxes. They were not always considered legal tender for private debts.

Colonial decisions on the issuance of bills of credit were also frequently the subject of disputes between differing factions within the colony, and with royally appointed governors. Between 1690 and 1750 the matter was regularly debated in the Province of Massachusetts Bay, where merchants and lenders stood to lose value when new bills were issued, and borrowers stood to gain, because they could repay their debts with depreciated bills. The Massachusetts bills were finally retired in 1749 when the province received a large payment in coin for its financial contributions to the 1745 Siege of Louisbourg. The Province of New Jersey issued bills of credit beginning in the 1710s, but successfully managed to avoid significant inflationary effects.[2]

During the American Revolutionary War the Continental Congress frequently issued bills. Because of inflation they rapidly declined in value, leading to the unfavorable comparison that something was "not worth a Continental".

Federal Reserve Notes and United States Notes as obligations of the United States, are examples of Bills of Credit.


  1. ^ p.18
  2. ^ Fleming, pp. 29-30


  • Fleming, Thomas. New Jersey: A History. New York: Norton. 1984.

External links

  • , by Westel Woodbury WilloughbyThe Constitutional Law Of The United States"Bills of Credit" section of

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from Hawaii eBook Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.