American Numismatic Society
American Numismatic Society

Drachmas, Doubloons and Dollars: The History of Money

The Enlightenment: The 18th Century


The 18th century was an age of frequent and costly warfare between the states of Europe and, in the case of Great Britain, between mother country and colony. The immense expense of fighting against the American Revolution and, later, against Napoleon created such a shortage of precious metal coinage that from 1797 to 1821, the Bank of England would not redeem paper notes for coinage.

Despite the fighting, the period was also one of great expansion for the European powers. Trading companies from Britain, France and the Netherlands brought their goods to India and Indonesia, and to the Native peoples of North America, thereby establishing a presence in lands formerly untouched by Europeans. European expansion in Eastern areas often hastened, or was occasioned by, the decline of the great empires of the Ottoman Turks, the Safavid Persians and the Mughals of India.

The Physiocrats, a circle of Enlightenment philosophers, developed the modern science of economics in this period. In opposition to the heavy trade restrictions of earlier merchantilist theory, they promoted free market economies with little government intervention. Their most famous successor, Adam Smith (1723-1791), theorized that the free market leads people to unintentionally promote society's interests while pursuing their own.

The period was also notable for several ill-advised economic schemes. Such as the South Sea Bubble (1717-1721) and the Mississippi Scheme (1720). Excessive speculation combined with the issue of stock certificates and bank notes without proper financial backing led to ruin when the investment "bubbles" bust.