It has been already stated that the extraordinary increase in the circulating medium in the summer of 1733, caused by the simultaneous emission of the merchants' notes and the large amounts of public bills put forth by Rhode Island and this province, produced an immediate effect upon the rate of silver, which was so noticeable as to attract general attention. "Silver rose," says Hutchinson, "from 19s. to 27s. the oz., and exchange with all other countries rose also, and every creditor was defrauded of about one-third of his just dues. As soon as silver rose to 27s., the notes issued by the mer chants, payable at 19s., were hoarded up and no longer answered the purposes of money. Although the currency was lessened by taking away the notes, yet what remained never increased in value, silver continuing several years about the same rate, until it took another jump."(1)

The decline in the bills naturally compelled consideration. In May, 1734, the governor called attention to the low ebb to which the bills had fallen. They carry on their face these words, he said, "in value equal to money, and yet sixteen shillings in these bills will not at this day purchase four shillings lawful money." He exhorted the members of the assembly to adhere to the obligations which had been imposed upon them, and told them that "a sacred observance of the terms of the several acts by which the bills have been issued must have a natural tendency to support their credit."

The house apparently attributed the decline to the merchants' notes, and on the 4th of July, 1734, the representatives asserted that these notes had greatly affected the bills of public credit. They wished the assembly to take the matter under consideration, but the council prevented this by declining to co-operate with them.

This experience of the sudden decline of public bills taught the sufferers a lesson in economics, which was announced by the governor in his speech on the 22nd of November, 1734. He said it was apparent to a mere observer, that every emission of bills had the effect of depreciating those in circulation in proportion to the amount emitted, and he called attention to the fact that the combined issues the previous year, of the government bills, private bills and bills of the neighboring colonies, had diminished the value of the bills of public credit at least twenty per cent. The effect of this, he said, reached the most careful and industrious, and widows, orphans, ministers of religion and public servants were affected by it. He referred to the merchants' notes as contributory to this result.

There are certain circumstances connected with the sudden rise of silver, coincident with the large emissions of bills of various sorts heretofore alluded to, which are peculiar and require some consideration. The issues of the province from the summer of 1730 to 1733, including the large issue of 76,500 then made, amounted to 113,200, but the retirements during the same period had reached the sum of 90,500, so that the circulating medium had only been increased by 22,700 in the bills of public credit of this province.(2)

There can be no doubt that the merchants' notes were hoarded the instant that silver began to rise above the price at which they were rated. A very slight rise in the price of the metal, measured in public bills, would necessarily have operated to send them out of the market. When this rise had actually taken place and the bills had disappeared from circulation, the circulating medium had only been increased since 1730 by the 22,700 which had been added to the amount of the bills of this province during that period and whatever contributions to the currency had been made during the same time by the neighboring governments. Among these latter, however, was an emission of 60,000 for loans by Rhode Island, in 1731. The silent hoarding of the merchants' notes was not appreciated, and even after their withdrawal from circulation the discount of the public bills continued, and the notes were made the scape-goats of the situation.

At the May session in 1735, the governor said that he hoped the assembly would not rise till they had passed a law, in the most effectual manner to save this people from the oppression daily springing from "what are called merchants' notes." June third the representatives voted to insist upon a clause in a bill then pending, that in contracts where payment was provided for in merchants' notes, a tender of province bills, bills of the neighboring governments, or gold or silver, at the rates therein mentioned, should discharge the debt. On the fifth, they said that the emission of the merchants' notes was not justifiable and had been the means of raising the price of silver, and their further circulation would be oppressive to the inhabitants of the province. If bills of credit of this or of the neighboring governments were tendered in suits where payment was claimed in merchants' notes, they were of the opinion that such tender ought to stay execution. The society, they said, alluding by this term to the organization which had issued the notes, ought to be compelled to exchange note for note, beginning the first of November next, and until December first, after which the notes ought not to pass. The society would probably have been glad to retire its notes by December first on the terms suggested, as they were then at a premium of about thirty-three per cent. As special legislation was the order of the day, at that time, for the cure of every evil, no matter how temporary its nature might be, the assembly continued for a time to wrestle with this subject, but found that there were difficulties in the way of their accomplishing anything in that line. A bill was brought in, but after several amendments, failed of passage. The subject was under debate again in December, and again in January, 1735-36, and was finally shelved March 24, 1735-36. By this time it had probably become apparent that the notes were no longer in circulation.

The report of the committee, June, 1731,(3) recommending the emission of bills which should be redeemable in five years in silver at 16s. an ounce, was followed, in 1732, by a movement which, if the people had been ready to apply heroic methods, might have resulted in placing the province on a specie basis with much less trouble than was actually experienced when this was finally accomplished. A proposition was submitted to the house in January of that year for a loan of 300,000 in bills of credit, borrowers to pay the same in twenty annual payments in silver at 8s. an ounce, so that the treasurer might, at the end of twenty years, be prepared to redeem outstanding bills in coin. The proposition was crude, the amount of bills being disproportionately large if the redemption was not to take place till the end of the twenty years, and the locking up of so great an amount of silver for so long a period would have been absolutely impracticable. It may be doubted, however, if these were the reasons which led the house abruptly to decline all consideration of the project.

In November, 1734, an act for retrieving and ascertaining the value of the currency was introduced, which provided for the emission of 60,000 in bills of a new form and tenor, payable in silver at the rate of 6s. 8d. per ounce. They were to be let out for ten years, and 110 was to be paid annually during this period by the borrower for each 1,000 borrowed. Twenty shillings of the present tenor were to be worth 6s. 8d. of the new, and the new bills were to be redeemable at the end of five years, one-half in coin, one-half in notes.(4) This act was defeated by the house.(5) It is of interest, not only because it contains the evidence of an effort in the direction of specie resumption, but also because of the name associated with its introduction.

We find in the records that in November, 1734, Thomas Hutchinson of the council, the father of Governor Hutchinson, as chairman of a committee of both houses, reported a bill for the emission of 60,000, which was defeated on the 26th of that month in the house. The details of the bill are not given in connection with Hutchinson's name, but it was doubtless the one which has just been described. In 1737, the same Thomas Hutchinson reported the act which contained the form of the bills of new tenor, which act was then promptly passed. Silver was then quoted at 27s. an ounce. The new bills were said to he equal to silver at 6s. 8d. per ounce, but were measured in old tenor at the rate of one to three. It is evident that one to four would have been a more just proportion, if it had been intended by the nominal rating of silver in the act to furnish an exact measure for the value at which the new bills should pass. Nevertheless the new form had a certain sort of success, which evidently stimulated the belief that through some such means as those suggested in 1734, a specie basis might be reached.

In pursuance of this idea, another scheme was submitted in January, 1737-38, for the emission of 60,000. This was a decided improvement upon the proposed act which was rejected by the house in 1734, but the similarity of the two acts will he apparent upon comparison of their general construction. The bills of the proposed emission were to he let out for ten years to such subscribers as would agree to pay to the treasury annually during that period, for each 1,000 furnished them in bills, 105 in silver or gold coin, silver being rated at 6s. 8d. per ounce. No bills were to be emitted unless 30,000 were subscribed.(6)

The proposed act was printed and distributed and subscriptions were solicited. At first glance this scheme seems preposterous. Silver was then rated at 27s., and it would not appear, when we consider this rate, to have been possible to float the new bills at par in silver. On this, of course, depended the success of the experiment. We must bear in mind, however, that the rating of silver was in old tenor, and that alongside these bills another form of bill circulated which was receivable in payment of government dues, one for three. If we convert the silver rate into new tenor, the undertaking has less of a herculean aspect. At all events, it is evident that there were hopes that the scheme might be put through. By June 6, 1738, 19,000 had been subscribed by merchants of good standing in Boston,(7) but that seemed to be the limit which could then be reached, and the subscription fell through. In January, 1738-39, the attempt was renewed, but on the 24th of April only 13,000 had been secured in subscriptions.(8) It is quite probable that the distrust occasioned by the further decline of the currency, was the cause of the falling off in the subscriptions when the attempt was renewed. This decline is to be traced to an emission by Rhode Island of 100,000 in 1738.

If we needed any evidence to connect the senior Thomas Hutchinson with these attempts to return to a specie basis, it is to be found in the fact that both his own and his son's names are among those of the subscribers on the above lists.(9) It was he who submitted the report of time committee appointed to secure subscriptions. Again, December 28, 1738, in behalf of a committee to whom the consideration of the difficulties attending the public credit in the province had been referred, he submitted another report, from which his opinions may be deduced. In addition to passing the bill then under consideration, which was practically the same as that which had failed in the spring, he thought that provision should be made at the same time for calling in all bills of credit, for which no tax had already been laid, according to the terms agreed upon in the respective acts under which they were issued. The circulation of any bills issued by the neighboring colonies since the first day of May, 1738, should be absolutely prohibited, unless such bills were redeemable in silver or gold, and founded upon adequate security.

This last suggestion made by Hutchinson was at once incorporated in a law in a modified form. The currency of any bills of neighboring governments already emitted after May 1st, 1738, or thereafter to be emitted, was prohibited unless it appeared upon the face of such bills that they "were made redeemable in lawful money upon good security," "within ten years after their first emission." The great quantity of bills issued without certain provision for their redemption, had, the assembly said in the preamble to this act, stripped them of all their money and brought the government into contempt. This province had fixed their value, but this the neighboring governments had failed to do, therefore they prohibited the circulation of their bills, except as before stated.(10)

An attempt was then made to pass a bill providing that in the hands of inhabitants of Massachusetts, bills of the neighboring colonies should be a legal tender to residents of the respective colonies, for all debts or special contracts payable in Massachusetts bills. In January, 1738-39, this idea was formulated in the shape of an act which was duly passed, but it was shorn of some of its enormities before it got through.(11) The non-resident creditor was permitted to make affidavit if the consideration of the debt was either wholly or in part in Massachusetts bills and to the extent that he was able to prove that the debtor had received the bills of this province he was entitled to have his debt satisfied in them.

Notwithstanding the failure of the attempt to bring the currency to a specie basis through the proposed subscription loans heretofore described, the incident is full of interest and we may well believe that, had it not been for the Rhode Island issues, the patriotic spirit which led to such large subscriptions to the loans might have been stimulated to the point of success. The government had been both a borrower and a lender, and as far back as 1728 a subscription loan had been proposed. A brief review of these transactions will reveal the fact that while some of the loans were mere attempts to furnish a more permanent circulating medium than could be derived from public bills which were constantly drawn in by taxation, others of them, and especially the proposed subscription loans, rested their appeals for support upon the benefit that the province would derive from the action of the subscribers.

The first instance that we find in this review is the action of the Boston capitalists in 1692, in advancing bills of public credit for the use of the government. In 1703, the province was a borrower, and again it borrowed its own notes from the people. In 1711, the province loaned its bills to the Boston merchants who agreed to stand in the gap and furnish supplies to the Hill and Walker expedition, taking pay for the same in sterling exchange drawn on the home government. This could only have been accomplished through an appeal to the patriotism of those who rallied to the support of the government. The loans of 1714, 1716, 1721 and 1728 were all of them evidently made for the purpose of avoiding what was deemed to be an impending stringency of the circulating medium, and of furnishing a currency which should not be subject to the annual withdrawals required for the funds. Concerning the proposed subscription loans of 1728 and 1729, we have no such knowledge as will enable us to speak positively as to their import, but we can add to the suggestions previously made an analysis of certain events selected from the records which will, perhaps, aid us in solving their general character.

October 13, 1727, a petition of certain Boston merchants was presented to the General Court in which they complained that trade was languishing; that trading by truck or barter was attended with great and insuperable difficulties and that the people called for a supply of money in order to purchase their daily bread. A committee was appointed to consider the matter and report at the next session. In February, 172728, a committee was appointed to receive and consider in the recess of the Court, any scheme or projection for retrieving the value of the bills of credit or for making suitable provision for a medium of trade and this committee was authorized to take subscriptions of any persons for the fulfilment of such scheme or schemes and make report thereon.(12) A bill was reported December 20, 1729, for the retrieving and ascertaining the value of the bills of credit of the province and a committee was appointed to take subscriptions from such gentlemen as were willing to subscribe as undertakers in the affair. It is probable that this was the progenitor of the plan already described in 1734, and which was attempted in 1738 and again in 1739.

In December, 1739, John Read of Boston submitted a plan for the gradual recovery of silver in trade. He proposed that a number of merchants and gentlemen should deposit in bank a fund of silver and should emit their bills for four times the amount of the silver deposit. The silver and the bills were then to be loaned at five per cent. per annum to borrowers who would agree to pay their interest in silver. The silver was to be valued at the then current rate and the bills were to be emitted on that basis. A portion of the bills were to be sunk each year, to cover the gradual conversion into silver. To provide for this, the bills furnished by the undertakers were to run for one, two, three and four years. Then so much of the fund as still remained in bills was to be renewed in a similar way for three years, then for two years, then for one year. Meantime the entire expenses of the affair were to be borne by the undertakers. The original fund of silver was twenty per cent, of the total amount of the silver and bills of the bank. If loans to the same amount at five per cent, were kept alive during ten years, and no charges of any sort against the bank, this twenty per cent. of silver would at the end of ten years have become seventy per cent. "At time end of ten years," says Read, "7/10ths. of this bank will be turned into money, and so money may be certainly and very gradually recovered and brought back into all our trade again," but the assembly did not see fit to bestow much thought on his plan.(13)

In March, 1739, Thomas Hutchinson, who afterwards became governor, submitted a plan for importing silver from England. He represented that bills for about 210,000 were then outstanding, 40,000 of which were on loan and 170,000 to be called in by 1742. If these bills were called in there would be nothing left for circulation. He, therefore, proposed that the government should borrow of some company or from private merchants in England 220,000 ounces of silver or the equivalent in gold, for the term of ten years, at the rate of 4 per cent. per annum for interest.(14) A fund should be established for the payment of this loan by a duty or excise on such commodities as was thought best. He submitted a calculation showing the charge to which the province would be put by such a scheme, and further proposed that a bill should be brought in to fix the rates at which silver and gold should be received in payment of past debts. He thought that the whole thing could be adjusted in ten years without disturbance to trade and that then justice which had been banished would be restored. "But this proposal," says Hutchinson, in his History,(15) "was rejected."

We have seen elsewhere that in January 1738-39, the governor signified his willingness to secure if possible the approval of the Lords of Trade to an emission of 60,000. The proposed bill was submitted to certain London merchants for their criticisms, after which a report was made, a copy of which was forwarded to the province by Wilks, the agent, and was submitted to the assembly by Belcher, in October, 1739.

The bill which was described in the report as a proposed emission of 60,000 at the rate of 6s. 8d. in silver, redeemable one-half in five years, the remainder in ten years, will be recognized as the subscription loan, which was then attempted. The Lords of Trade reviewed the objections which had been made against it, included among which was one that the coin for the redemptions would be locked up for too long a time. They found the act unacceptable in the form in which it was submitted, still they would assent to a similar bill, provided none of the new bills of credit should be current until all those emitted prior to 1727, thus including the several loans, should be sunk. They further required that no more should be issued each year than in proportion to what should be paid off and sunk, of the old bills. They also said that all the redemptions provided for up to 1741 must be strictly complied with. The new bills could neither be paid nor received at a higher rate than 6s. 8d. per ounce of silver. They were to be redeemed at three periods, three, six and ten years, instead of five and ten years, and special contracts were not to be affected by them. By the time that the conclusions of the Board of Trade reached the house, this bill had been forgotten and the whole matter was ancient history. The house curtly disposed of the affair by saying that they could do nothing concerning the bill.

We get an official quotation of exchange in connection with the events of Belcher's administration. The rate on the bills drawn for the payment of the troops which accompanied the expedition against the King of Spain's dominion in the West Indies was fixed at 400 per cent.

It was in 1722 that the first issue of fractional currency was made.(16) Copper had followed the silver and gold and great inconveniences and difficulties had arisen through the want of small money for change. To remedy this five hundred pounds in pennies, two pences and three pences were issued. As it was expected that they would remain in circulation indefinitely, parchment was selected as the material upon which they should be printed. The pennies were round, the two-pence pieces square and the three-pences "sexaugular" They simply bore the distinguishing denomination, the title of the province and the date, no promise of redemption being printed upon the face of the token.

In the course of time these must have disappeared and we find it alleged in the preamble of an act in 1737 that people were in the habit of tearing the bills of public credit into halves and quarters and passing them thus torn and defaced.(17) Of course, this was done in order to make change, but apparently advantage was taken by counterfeiters of this rough treatment of the currency and the act in question was passed to prevent such practices. A better remedy for the grievance than penal legislation was found in July of the same year, in the issue of fractional currency, in bills ranging from one penny to sixpence.(18)

This period continued to be characterized by an unusual amount of extravagance in the habits of the people, and this was commented upon by some of the writers of the day. While this phase of life may be accepted as a natural concomitant of an inflated currency, some contemporary writers thought that it was traceable to the use of shop notes.

The activity of the pamphleteers was coincident with their opportunities. The situation in 1733 revived the hopes of those who wished to organize banks and a pamphlet was published that year in which the Rhode Island emissions were attacked and a project for a bank of issue was submitted.(19) Two pamphlets were published in 1736, one in which the merchants' notes were attacked(20) and one in which a proposition was advocated, somewhat similar to that suggested by the author of "A project for the emission of one hundred thousand pounds of province bills, etc.," in 1720, for a resumption of specie payments.(21) These were followed by a proposal for a land bank in 1737.(22) The scheme for emitting 60,000 to be loaned to subscribers, payments for the loans to be made in coin, which was under consideration in 1738, was attacked in a pamphlet published that year.(23) This publication induced Dr. Douglas to take a hand in the controversy and he published in reply to this attack, his "Essay concerning silver and paper currencies,"(24) etc., etc. The year 1740 was characterized by great activity on the part of the controversialists, and was made conspicuous by the publication, in Boston, under that date, of Douglass's "Discourse concerning the currencies," the most valuable of the many publications in connection with the currency discussion.(25) We have under this date also the first of the many pamphlets devoted to sounding the praises of the land bank of 1740.(26) During the year 1741, the discussion was mainly confined to the land bank and incidentally its opponent the silver bank.(27) The closure of the land bank removed it from consideration by the controversialists, but one more pamphlet, this time political in its nature, was devoted to a narrative history of its rise, progress and consequences. This was published in 1744.(28)

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1. History of Massachusetts, (ed. 1795) vol. 2, p. 341.

2. In the additional instructions sent to Belcher in April, 1737, he is charged with having issued 106,571, 13s. 4d. in the space of seven months, as follows 76,500 in November, 1733; 2,700 in January, 1733-34; and 27,371, 13s. 4d. in May, 1734. The acts under which these issues were made are given in Acts and Res. Prov. Mass. Bay, Chs. 7 and 11, Laws 1733-34, and Ch. 1, Laws 1734-35. The period included is not the same as that given above.

3. See ante, p. 118.

4. The form of the proposed bill was as follows:

This Indented Bill of due from the Province of the Massachusetts Bay in New England to the Possessor thereof shall be in value equal to silver coin after the rate of six shillings and eight pence the Ounce, or gold coin after the rate of four pounds sixteen shillings the ounce, and shall be accordingly accepted in all payments: And the Trustees shall be obliged at any time after the day of to deliver to the possessor hereof one-half of the sum herein expressed in silver or gold coin at the rates before mentioned and the other half in new bills of the same form and tenor with this bill and in like manner to be exchang'd at the end of five years more.

By order of the Great and General Court or Assembly.

Boston, the day of A, B, C} Committee.

Mass. Arch., vol. 101, no. 522.

5. Mass. Arch., vol. l01, no. 524.

6. The form of the proposed bill was given as follows:

One Shilling. No. 1000.

This Bill of One Shilling due from the Province of the Massachusetts Bay in New England, to the Possessor thereof shall be in Value equal to SILVER COIN at the Rate of Six Shillings & eight Pence the Ounce, and GOLD COIN at Four Pounds eighteen shillings the Ounce Troy Weight, and accordingly shall be redeemed by Silver and Gold at the Rates aforesaid, and shall be accepted in all publick and private Payments in such Time and in such Manner as is provided by an Act of the General Assembly.

Dated at Boston the day 1738.

A, B, C }Committee.

Mass. Arch., vol. 101, no. 566.

7. Thomas Hutchinson, senior, subscribed two thousand five hundred pounds, Thomas Hutchinson, junior, fifteen hundred pounds. Mass. Arch., vol. 101, no. 562.

8. Mass. Arch., vol. 101, no. 562; no. 564; nos. 607615.

9. The amounts of their subscriptions to the first of the proposed loans have been given. To the second, Thomas Hutchinson subscribed three thousand pounds, Thomas Hutchinson, junior, one thousand. Mass. Arch., vol. 101. no. 615.

10. Acts and Res. Prov. Mass. Bay, vol. 2, p. 965; Ch. 14, Laws 1738-39.

11. Acts and Res. Prov. Mass. Bay, vol. 2, p. 972; Ch. 19, Laws 1738-39.

12. Mass. Court Rec., vol. 14, p. 48.

13. Mass. Arch., vol. 102, no. 113.

14. At 6s. 8d. per ounce this was a little over 70,000 New England money and was equal to 52,000 sterling.

15. History of Massachusetts (ed. 1795), vol. 2, p. 352.

16. Acts and Res. Prov. Mass. Bay, vol. 2, p. 242.

17. Acts and Res. Prov. Mass. Bay, vol. 2, p. 827.

18. Acts and Res. Prov. Mass. Bay, vol. 2, p. 883.

19. Money, the sinews of trade. The state of the province of the Massachusetts Bay considered with respect to its trade for want of a medium of exchange wherewith to manage, etc., etc. By a lover of his country. Boston, N. E. [1733]. A pamphlet entitled Trade and commerce inculcated with proposals for the bringing gold and silver into the country, Boston, 1731, was purchased at the Brinley sale by the Library of Congress. It cannot be found at present.

20. The melancholy state of the province considered in a letter from a gentleman in Boston to his friend in the country. Printed in the year 1736.

21. A letter to a member of the honorable house of representatives on the present state of the bills of credit. Boston. Printed in the year 1736. This pamphlet, I attribute to Governor Hutchinson. It was published in connection with the struggles for the resumption of specie payments, 1728-1738.

22. A proposal to supply the trade with a medium of exchange and to sink the bills of other governments. Boston. Printed in the year 1737.

23. Some observations on the scheme projected for emitting 60,000 in bills of a new tenor, to be redeemed with silver and gold, showing the various operations of these bills, and their tendency to hurt the publick interest. In a letter from a merchant in Boston to his friend in the country. Boston, 1738.

24. An essay concerning silver and paper currencies, more especially with regard to the British colonies in New England. Boston, [1738].

25. The publications that year were: A proposition for a bank, under title of A letter relating to a medium of trade in the province of Massachusetts Bay, Boston, 1740; A discourse concerning the currencies of the British plantations in America, especially with regard to their paper money. More particularly in relation to the province of the Massachusetts Bay in New England. Boston, 1740; An inquiry into the nature and uses of money; more especially of the bills of publick credit: old tenor. Together with a proposal of some proper relief in the present exigence. To which is added a reply to the essay concerning silver and paper currences (sic). Boston, 1740. This pamphlet was by the author of "Some observations" the pamphlet which had called forth "The essay concerning silver and paper currencies," etc., and Douglass appended to the Discourse a postscript devoted to answering the Inquiry.

26. A letter from a country gentleman at Boston to his friend in the country. Boston, 1740.

27. Dr. Douglass attacked the bank in a pamphlet bearing the following title: A letter to - merchant in London, concerning the late combination in the province of the Massachusetts Bay in New England to impose or force a private currency called land-bank money. Published for the public good, 1741. To this there was a reply: A letter to the merchant in London to whom is directed a printed letter relating to the manufactory-undertaking, dated Boston, February 21st, 17401. Printed for the public good, 1741. This brought forth A second letter to , merchant in London, concerning a late combination in the province of the Massachusetts Bay in New England to impose or force a private currency called land-bank money. This pamphlet bears date Boston, March 31, 1741. A writer in London was impelled by reading Douglass's Discourse to express his approval of the same through a pamphlet which, he entitled "Observations occasioned by reading a pamphlet, entitled, A discourse concerning the currencies of the British Plantations in America, in a letter to, etc., etc." London, 1741.

28. An account of the rise, progress, and consequences of the two late schemes commonly called the land bank or manufactory scheme and the silver scheme, in the Province of the Massachusetts Bay, wherein the conduct of the late and present G during their ad-ns is occasionally consider'd and compar'd. In a letter from a gentleman in Boston, to his friend in London. Printed in the year 1744.

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