The Currency Act was an attempt by Parliament to assume control of the colonial currency system. It added to the growing list of grievances in the colonies, which eventually led to the Revolutionary War.
Colonial America suffered from a lack of hard money due to the mercantile system. Under that economic, system colonies exported relatively cheap raw materials and imported relatively expensive manufactured goods. The system was good for merchants in the mother country, but bad for the colonies because it resulted in more money leaving the colonies than coming in.
Some colonies relieved their currency problems by issuing paper money backed by anticipated tax collections or land mortgages. Paper money was popular among the working class and farmers because it put more money into circulation and stimulated the economy. Paper money was unpopular with British merchants because its value fluctuated – often downward. At the urging of those merchants, on April 19, 1764, the British Parliament passed the Currency Act. That act prohibited the colonies from printing any new paper money and stated that the paper money already in circulation was to be retired according to a prescribed timetable.
The Currency Act greatly burdened the colonial economy, which already suffered from a shortage of hard money. It proved to be one of a continually growing list of grievances in the colonies, which eventually led to the Revolutionary War.