WI: America Adopts Full-Reserve Banking and Paper Currency

Okay so WI the US Constitution is ratified with a section mandating the adoption of Full-Reserve banking practices and allowing the government to issue paper currency not backed by specie.
 
ASB no way in hell, America didn't move to full paper money till the 1970s, try in the 1780s? America crashes, a major civil war/revolution, things get very ugly, Maybe Jefferson goes to town and pulls a Robespierre.
 
We actually had a paper currency during the civil war known as the greenback.

http://en.wikipedia.org/wiki/United_States_Note
True, but the paper was nominally based on gold, even if you couldn't convert it during war-time.

The Continental Congress basically destroyed the concept of paper money for some time 'not worth a Continental' was a synonym for worthlessness for a LONG time.

If the individual states had actually given Congress taxing powers (in the AoC) or if they had assumed the national debt themselves, or something, then maybe, MAYBE a paper currency would be possible earlier. But that is verging close to ASB. Getting it into the Constitution WOULD be ASB, IMO
 
Given the history of paper currency in the pre-Constitution era, extremely unlikely. As already noted, "not worth a Continental" (paper dollar) was a synonym for worthless. Right up until the Silver Certificate notes were withdrawn from circulation in the 1970s anyone could exchange their bills for silver. Not sure when gold coins stopped circulating at face value -- perhaps when FDR seized gold in the 1930s?
 
There is one opportunity for this, before the 1970s. A Hamilton presidency, he would have the intelligence to pull it off (let alone conceptualize it). As has been previously stated, this would result in a civil war. I agree the south would go crazy, they barely understood compound interest let alone a full reserve system.
 
Okay so WI the country didn't have such a bad experience with paper money? That is Congress doesn't just order the printing of more currency without the ability to tax? Basically I'm looking for the economic effects of the adoption rather than why the were adopted. A full reserve banking system would negate the need for a central bank and also eliminate the threat of banking collapses. A paper currency's value would largely be set by the government instead of by banks and corporations hoarding(or dumping)gold and silver. Of course getting money for loans would be more difficult(but not impossible).
 
Personally I think the south would love this more than the north. After all it would be southern slave owners that probably would emerge as the main lenders in this scenario. It was southern states that opposed the establishment of a central bank rather than the northern states.
 
You have to explain to them how it works and that is problem. The main reason they were against Hamilton's plan (besides the man proposing it) was that they just didn't get. Using Debt to guarantee the currency of the state was novel to them and smelled of England. The south did not have the financial structure to support this, most of the economy was barter very little specie existed and the Continental completely killed any interest they would have in adopting it.

As an example of the lack of insight in the South His Excellency by Joseph Ellis tells a story that I paraphrase: George Washington used to buy suits from an English Tailor he had never met and would refuse to pay for them because they didn't fit. The problem was he described himself as being slender when in fact he was a large well built man. My point is that the South at this time is not governed by logic but by passion (same could be said for the north).

Jefferson used to order French furniture when he was in debt in France and then had a French chef teach a slave how to cook like him.

The South in this period just did not have the know how to understand how a system like this would work and so they would probably view at as an "evil monarchist conspiracy"

What you are asking is to get rid of the problems that the Continental had during the ARW this is impossible because the money problems of the AoC were acute. The govt. subsisted completely on foreign loans. Because these loans were repaided spotty at best, there is no Credit in the "Full Faith and Credit" to back up the currency.
 
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