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Powdered Wigs, Palfrey, and Pierce: Payroll in the 1700s

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A pope opposed slavery. A kite, a key, and a forefather proved lightning is electricity. A revolution in France sparked the best of times and the worst of times. A new nation was born in Independence Hall and forged in a battle that pitted democracy against monarchy.

The 1700s were a century of change across the world, and America was no exception. What kept America running during its founding? A big part was men in powdered wigs running payroll.

Actually, payroll was far from formal, and few powdered wigs were involved in the process until the onset of the Revolutionary War. Because Colonial America mainly comprised agrarian and artisan laborers, most early settlers were self-employed or only hired laborers on a temporary basis. According to Leonard A. Haug, full-time employees were rare as industry was underdeveloped, even as America's vast natural resources became apparent.

But as the Revolution brewed, the need for military pay masters (a payroll precedent established in ancient Rome) arose. And the Paymaster General of the Army (PGA) raked in the big bucks, pulling in $100 a month — likely under $14,500 annually in 2010 dollars.

James Warren holds the title as the first PGA, but he was soon replaced by William Palfrey, who once served as John Hancock's business advisor. Palfrey established special auditors for more accountability of personnel entrusted with military funds. Unfortunately, "Palfrey" might as well have been "paltry" for many soldiers. Continental currency had little real value, and during 1780-81, American forces waited up to five months without their checks.

Yet despite its miniscule buying power, money was money, and thieves wanted their unfair share. Luckily for us, innovation is a hallmark of America, even during the Revolutionary period. As a paymaster was delivering funds to George Washington, he received a tip that he may run into some desperadoes. So he pulled the old switcheroo, buying poor clothes and an old horse, passing by the villains with little trouble, and delivering the full funds to Washington.

Though Washington's troops were undoubtedly grateful for their pay, PGA John Pierce became the true soldiers' hero. Pierce's Register listed all back-owed pay due to soldiers and others who performed war-related services. Better than just creating the list, he issued 93,000 certificates worth more than $10 million in just over two years. Not bad for a new nation.

And not bad for providing a solid payroll foundation for America as our nation evolved into an industrial powerhouse in the 1800s — a topic for another blog post.