Excerpt of Hutchinson's History of Massachusetts-Bay
Thomas Hutchinson authored The History of the Colony and Province of Massachusetts-Bay, the most important contemporary history of the colony. His discussion of the Land and Silver Bank controversy, and the role that controversy played in Belcher being dismissed as the governor of Massachusetts, is a good overview of the episode. Hutchinson himself supported neither the land nor silver banks. In late 1740, Hutchinson traveled to London on a diplomatic mission, and was therefore an eyewitness to the skullduggery used by Belcher's opponents to obtain Belcher's downfall.
Also available is a lengthy contemporary account of the Land and Silver banks. The most extensive modern works dealing with these banks are Andrew McFarland Davis, Currency and Banking in the Province of the Massachusetts-Bay, vol. 2; George Billias, The Massachusetts Land Bankers. The University of Maine Bulletin, 61, no. 17 (April 1959); and Cathy Mitten, The New England Paper Money Tradition and the Massachusetts Land Bank of 1740, Columbia University Master's Thesis, 1979.
This excerpt is from vol. II, pp. 298-304.
A general dread of drawing in all the paper money without a substitution of any other instrument of trade in the place of it, disposed a great part of the province to favor what was called the land bank or manufactory scheme, which was began or rather revived in this year 1739, and produced such great and lasting mischiefs [p. 299] that a particular relation of the rise, progress, and overthrow of it may be of use to prevent any attempts of the like nature in future ages. By a strange conduct in the general court they had been issuing bills of credit for 8 or 10 years annually for charges of government, and being willing to ease each present year they had put off the redemption of the bills as far as they could, but the governor being restrained by his instruction from going beyond the year 1741, that year was unreasonably loaded with 30 or 40 thousand pounds sterling taxes, which according to the general opinion of the people it was impossible to levy, not only on account of the large sum, but because all the bills in the province were but just sufficient to pay it, and there was very little silver or gold, which by an act of government was allowed to be paid for taxes as equivalent to the bills. A scheme was laid before the general court by the author of this history, then one of the representatives of Boston, in which it was proposed to borrow in England upon interest and to import into the province a sum in silver equal to all the bills then extant, and therewith to redeem them from possessors and furnish a currency for the inhabitants, and to repay the silver at distant periods which would render the burden of taxes tolerable by an equal division on a number of future years, and would prevent the distress of trade by the loss of the only instrument, the bills of credit, without another provided in its place. But this proposal was rejected. One great frailty of human nature, an inability or indisposition to compare a distant, though certain inconvenience or distress with a present convenience or delight is said by some strangers, who come among us from Europe, to be prevalent in Americans so as to make it one of their distinguishing characteristics. Be that as it may, it is certain that at this time a great number of private persons alledging that the preceding general court having suffered the province to be brought into distress from which it was not in the power of their successors to afford relief, the royal instruction being a bar to any further emissions of bills until all that were then extant should be redeemed, resolved to interpose. Royal instructions were no bar to the proceedings of private persons. The project of a bank in the year 1714 was revived. The projector of that bank now put himself at the head of 7 or 800 persons, some few of rank and good estate, but generally of low condition among the plebeians and of small estate, and many of them perhaps insolvent. This notable company were to give credit to £.150,000 lawful money, to be issued in bills, each person being to mortgage a real estate in proportion to the sums he subscribed and took out, or to give bond with two sureties, but [p. 300] personal security was not to be taken for more than 100£. from any one person. Ten directors and a treasurer were to be chosen by the company. Each subscriber or partner was to pay 3 per cent. interest for the sum taken out, and 5 per cent. of the principal, and he that did not pay bills might pay the produce and manufacture of the province at such rates as the directors from time to time should set, and they should commonly pass in lawful money. The pretence was that, by thus furnishing a medium and instrument of trade, not only the inhabitants in general would be better able to procure the province bills of credit for their taxes, but trade, foreign and inland, would revive and flourish. The fate of the project was thought to depend upon the opinion which the general court should form of it. It was necessary therefore to have a house of representatives well disposed. Besides the 800 persons subscribers, the needy part of the province in general favored the scheme. One of their votes will go as far in popular elections as one of the most opulent. The former are most numerous and it appeared that by far the majority of the representatives for 1740 were subscribers to or favorers of the scheme, and they have ever since been distinguished by the name of the land bank house.
Men of estates and the principal merchants in the province abhorred the project and refused to receive the bills, but great numbers of shopkeepers who had lived for a long time before upon the fraud of a depreciating currency, and many small traders gave credit to the bills. The directors, it was said, by a vote of the company, became traders and issued just what bills they thought proper without any fund or security for their ever being redeemed. They purchased every sort of commodity, ever so much a drug, for the sake of pushing off their bills and by one means or other a large sum, perhaps fifty or sixty thousand pound, was abroad. To lessen the temptation to receive the bills, a company of merchants agreed to issue their notes or bills redeemable by silver and gold at distant periods, much like the scheme in 1733, and attended with no better effect. The governor exerted himself to blast this fraudulent undertaking, the land bank. Not only such civil and military officers as were directors or partners, but all who received or paid any of the bills were displaced. The governor negatived the person chosen speaker of the house, being a director of the bank, and afterwards negatived 13 of the new elected councellors who were directors or partners in or reputed favorers of the scheme. But all was insufficient to suppress it. [p. 301] Perhaps the major part, in number, of the inhabitants of the province openly or secretly were well wishers to it. One of the directors afterwards acknowledged to me that altho' he entered in the company with a view to the publick interest yet when he found what power and influence they had in all publick concerns, he was convinced it was more than belonged to them, more than they could make a good use of and therefore unwarrantable. Many of the most sensible discrete persons in the province saw a general confusion at hand. The authority of parliament to controul all public and private persons and proceedings in the colonies was, in that day, questioned by no body. Application was therefore made to parliament for an act to suppress the company, which notwithstanding the opposition made by their agent was very easily obtained, and therein it declared that the act of 6th of king George the first, chapter the eighteenth, did, does and shall extend to the colonies and plantations in America. It was said the act of George the first, when it passed, had no relation to America, but another act 20 years after gave it a force even from the passing it which it never could have had without. This was said to be an instance of the transcendent power of parliament. Although the company was dissolved, yet the act of parliament gave the possessors of the bills a right of action against every partner or director for the sums expressed with interest. The company were in amaze. At a general meeting some, it was said, were for running all hazards although the act subjected them to a praemunire, but the directors had more prudence and advised them to declare that they considered themselves dissolved and met only to consult upon some method of redeeming their bills for the possessors, which every man engaged to endeavor in proportion to his interest, and to pay in to the directors or some of them to burn or destroy. Had the company issued their bills at the value expressed in the face of them; they would have had no reason to complain of being obliged to redeem them at the same rate, but as this was not the case in general, and many of the possessors of the bills had acquired them for half their value, as expressed, equity could not be done, and so are as respected the company perhaps the parliament was not very anxious, the loss they sustained being but a just penalty for their unwarrantable undertaking if it had been properly applied. had not the parliament interposed, the province would have been in the utmost confusion and the authority of government intirely in the land bank company.
Whilst Mr. Belcher, by his vigorous opposition to the land bank, was rendering himself obnoxious to one half the people of the [p. 302] province, measures were pursuing in England for his removal from the government. Besides the attempts which we have mentioned from New Hampshire which had never been laid aside, there had always been a disaffected party in Massachusetts who had been using what interest they had in England against him. Lord Wilmington, president of the council, the speaker of the house of commons and Sir Charles Wager, first Lord of the admiralty, all had a favorable opinion of Mr. Belcher, so had Mr. Holden who was at the head of the dissenters in England, and all upon one occasion or another had appeared for him.
The most unfair and indirect measures were used with each of these persons to render Mr. Belcher obnoxious and odious to them. The first instance was several years before this time. A letter was sent to Sir Charles Wager in the name of five persons whose hands were counterfeited, with an insinuation that Mr. Belcher encouraged the destruction of the pine trees reserved for masts for the navy and suffered them to be cut into logs for boards. Forgeries of this sort strike us with more horror than false insinuations in conversation, and perhaps are equally mischievous in their effects. The latter may appear the less criminal because abundantly more common.
An anonymous letter was sent to Mr. Holden, but the contents of it declared that it was the letter of many of the principal ministers of New-England who were afraid to publish their names lest Mr. Belcher should ruin them. The charge against him was a secret undermining the congregational interest in concert with Commissary Price and Doctor Cutler, whilst at the same time he pretended to Mr. Holden and the other dissenters in England to have it much at heart. To remove suspicion of fraud the letter was superscribed in writing either in imitation of Doctor Colman's hand, a correspondent of Mr. Holden, or which is more probable a cover of one of his genuine letters had been taken off by a person of not an unblemished character, to whose care it was committed, and made use of to inclose the spurious one. Truth and right are more frequently, in a high degree, violated in political contests and animosities than upon [p. 303] any other occasion. It was well known that nothing would more readily induce a person of so great virtue as the speaker to give up Mr. Belcher than an instance of corruption and bribery. The New-Hampshire agents therefore furnished him with the votes of the Massachusetts assembly containing the grant of £.800 and evidence of the adjournment of New-Hampshire assembly, alledged to be done in consequence, nor was he undeceived until it was too late.
Mr. Wilks, the Massachusets agent, who was in great esteem with Lord Wilmington, and was really a person of a fair upright mind, had prevented any impressions to Mr. Belcher's prejudice, but it unluckily happened that the land bank company employed Richard Partridge, brother by marriage to Mr. Belcher, as their agent. He had been many years agent for his brother, which fact was well know to his lordship, but, from an expectation of obtaining the sole agency of the province by the interest of the prevailing party there, engaged zealously in opposing the petitions to the house of commons, and gave out bills at the door of the house. It was said that Mr. Belcher's opposition to the scheme, in the province, was meer pretence; had he been in earnest, his agent in England would never venture to appear in support of it, and this was improved with Lord Wilmington to induce him to give up Mr. Belcher, and it succeeded. Still the removal was delayed one week after another, two gentlemen from the Massachusets continually solliciting. At length, it being know that Lord Euston's election for Coventry was dubious, one of these gentlemen undertook to the Duke of Grafton to secure the election, provided Mr. Belcher might immediately be removed, and, to accomplish his design, he represented to Mr. Maltby, a large dealer in Coventry stuffs and a zealous dissenter, that Mr. Belcher was, with the episcopal clergy, conspiring the ruin of the congregational interest in New-England, and unless he was immediately removed it would be irrecoverably lost, that the Duke of Grafton had promised, if Lord Euston's election could be secured, it should be done, that letters to his friends in Coventry would infallibly secure it, that he could not better employ his interest than in the cause of God and of religion. Maltby swallowed the bait, used all his interest for lord Euston, the two gentlemen spent three weeks at Coventry, and having succeeded agreeable to the Duke's promise Mr. Belcher was removed a day or two after their return.1 This account I received from Mr. Maltby himself, who lamented that he had suffered himself to be so easily imposed on. [p. 304]
A few weeks longer delay would have baffled all the schemes. The news arrived of his negativing 13 counsellors and displacing a great number of officers concerned in the land bank, and his zeal and fortitude were highly applauded when it was too late. Being in London at this time, I had opportunity of fully informing myself of these facts.
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