The year 1692 is infamous in Massachusetts history. It was then that, in Salem, hundreds of women—and men too—were accused of witchcraft, and 20 were tried and executed for an imaginary crime. In the same year, another momentous event took place in the colony, though it has nothing of the same notoriety: The Puritan leadership that had overseen the Salem Witch Trials—responding to some of the same social pressures that had fueled the witch craze—perfected a financial instrument that would prove to be the template for modern currency. In brief, they reimagined money primarily as legal tender for taxes, a conceptual revolution that makes the government’s authority the only source of a currency’s value. This is the basis of the monetary system that prevails throughout the world today under the reign of the Almighty Dollar.
Dror Goldberg’s “Easy Money” provides an engrossing narrative account of this lesser-known crucible. Although scholarship about the first American colonies could fill the Mayflower, Mr. Goldberg’s chronicle is the first book-length attempt to explain why a defining concept in our global financial system emerged within a desperate theocracy on the fringes of the British Empire.
Unlike Virginia and other early colonies in the New World, Massachusetts was led not by aristocratic adventurers but by the upwardly mobile middle classes of English society. And, as Mr. Goldberg points out, the colony was founded at precisely the moment when England was beginning the leap from an agricultural to a capitalist economy. Devout religious motives led the Puritans to Massachusetts, but financial ingenuity allowed their pious enterprise to survive and thrive.
Lacking the institutional structures that reinforced social order in the Old World, Massachusetts’s leaders relied on consensus and consent. Though the ministerial elite tolerated no dissent in its religious mission, on practical matters, such as raising revenue and spending it, the colonial government was the most democratically accountable in the world at the time. For good reason, Alexis de Tocqueville identified the colonial New England township as the seedbed of American democracy.