A Brief Account of the Rise, Progress, and Present State of the Paper Currency of New-England
In January, 1749 Massachusetts passed a controversial currency reform act, designed to call in all their paper money and redeem it with silver, at the rate of one dollar for every 45 shillings in paper money. The British government had reimbursed Massachusetts for expenses incurred in the Cape Breton expedition, and Massachusetts used the reimbursement to finance the currency reform. The law, although passed in 1749, was not to take effect until April 1, 1750. Many in the colony opposed the act, and hoped to reverse the policy before it was carried out. This pamphlet was written in response. It defends the wisdom of the currency reform, and in the process presents a valuable account of New England's monetary history. Originally published in Boston in 1749, this anonymous pamphlet has since been reprinted in Andrew MacFarland Davis's Colonial Currency Reprints, Volume IV, pp. 377-98.
Rise, Progress, and Present State
And of the Measures taken by the Massachusetts
Province, for establishing a Silver Currency
for the Future.
Together with some
PROPOSALS for rendering those Measures more effectual.
THE whole Mystery of Money, Trade, Exchange, &c. has been discover'd and set in a very clear Light by Mr. LOCKE, who as one of his Correspondents observes to him, open'd the Eyes of the World, which, until he had wrote, had us'd Money as Indians do Wampum, it serv'd them for buying and selling, and they consider'd it no farther. Among other Things, he remarks, That, "Supposing any Island, separate from the rest of Mankind, whatever is their Money, if they have but a certain Quantity, and can get no more, it will be a steady standing Measure of the Value of all other things; but this, he says, is a Supposition that is not like to be found in the Practice of Mankind, since Navigation and Commerce have brought all countries acquainted with one another, and introduced the Use of Gold and Silver Money into all trading Parts of the World; and it serves rather to give Light into the Nature of Money, than to teach a new Measure of Traffick."
But notwithstanding the great Truth of this Observation, the People of New-England, about forty Years ago, projected a Sort of Money, consisting of Publick Bills of Credit, and differing from the Money of all the rest of the World. They argued justly enough, that these Bills have several of the most essential Properties of Money. They are durable; or, in Case of Decay, others may easily be provided to supply their Place. They are of light and easy Carriage. They are as unlikely to be counterfeited as Silver or Gold: And they may be proportioned in Quantity to the Trade and Circumstances of the People. But then their Value is confin'd to the Governments of New-England, which Experience has shewn them, cannot be preserved, whilst they have Commerce with the rest of the World.
It was in the Year 1690, that the Government of the Massachusetts-Bay issued the first Publick Bills of Credit that were known in New-England: For upon the Return of the Forces from an unfortunate Expedition against Canada, there was a Demand for a larger Sum of Money than it was possible for the Government immediately to raise. The Court laid a Tax equal to the Demand, and issued Bills of Credit, with which they paid the Publick Debt, and promis'd to receive those Bills; and by a subsequent Vote or Resolve, allow'd 5 per Cent. on them in discharge of the Tax.
The Thing was new, and many of the Soldiers who received the Bills were forc'd to part with them at a Discount of 30 or 40 per Cent. to supply their immediate Necessities; but before the Tax was paid, the Bills were valued equal to Money, or rather above it. This Emission was drawn in and finish'd without any bad Influence upon the whole Currency.
In Queen Anne's War, the Government again issued a Sum in Bills annually, which not being very considerable, and the Bills having a Preference in the Treasury to Silver, kept up their Credit until about the Year 1711, when such large Sums were issued, that Silver began to be hoarded by some, and exported by others, in large Quantities, and the Bills became the only Measure and Instrument by which all private Trade and Dealing were regulated and managed. And to confirm the Currency of the Bills, and effectually to banish Silver and Gold, the Massachusetts Province, in the Year 1712, made their Bills a Tender in Discharge of all Debts, unless there appeared a special Agreement or Contract otherwise.(1)
In the Year 1714, the Silver being gone, and the whole Sum in Bills then extant being less than was necessary to carry on the Trade, the People were drove to great Straits, and a Project was set on Foot for a Private Bank of Bills of Credit: To divert which, and satisfy the Inhabitants, the Government issued £50,000, being then equal to Silver at about 10 s. per Ounce, and lent to such Persons as should give Security to repay 1 5th part of the Principal annually, and an Interest of 5 per Cent: and as Bills of the same Form were issued every Year by the Government, for their ordinary Charge, this Interest was apply'd as Part of the Fund for drawing in such Bills. The whole Scheme of this Loan seems to have been taken from a chimerical Projection for a Land-Bank, printed in London in the Year 1684, and re-printed at Boston about this Time. In 1716, a Loan of £100,000 was issued: a few Years after, another of £50,000; and then one of £60,000; the Bills of each being of the same Tenor. None of the Loans were paid at the Periods promis'd, and the Borrowers were indulg'd one Year after another, and several of them are not yet closed, though the Sum outstanding is now inconsiderable. When a Tax has been engag'd as a Security to the Bills, by the Government, it never, but in one Instance, has been postpon'd; but still this Fund, as it is call'd, is very fallacious, and has no Tendency to keep the Bills at any certain Rate or Value. For Instance, In 1702 the Government issued £10,000, which they promised to draw in by the End of 1703; but in the Beginning of 1703, they issued £10,000 more, exactly of the same form, and which at all times were received in the Treasury indifferently with the first, and engaged to bring in this Sum in 1705, which in Effect is putting off the first Sum 'till then, and they continued this Practice from Year to Year.(2) In the Year 1736, the Bills were so depreciated, that 26 or 27 s. was equal to no more than one Ounce of Silver. All the Bills that were then extant were to be drawn in by the Year 1741. A new Sort of Bills were then issued for the Government Charges, one of which was to be equal to three of the Old, in publick and private Payments, and the Possessor was promis'd an Ounce of Silver for every 6 s 8 of the New; and the same Promise seems imply'd for every 20 s of the Old, to be paid in the Year 1742. And it was propos'd the Silver should be rais'd in this Manner: Whenever Bills of the new Form were issued, a Tax was actually laid equal to the Sum issued, on some Year before 1742, and without any further Act of the Court, must have been levy'd in such Year. This Tax was payable in Bills, or in Silver at 6 s 8 the Ounce: If it was all paid in Bills, there could be no Demand on the Treasury: If any were left out, somebody must have paid in Silver sufficient to exchange them. Thus there seem'd to be full Provision for enabling the Government to keep their Promise. But here was the Leak. By the Acts of Government issuing the Bills of the old Form, it was engaged, that the whole of them should be drawn in before the Year 1742, a certain Sum each Year; but it was left to the Assemblies of each Year to apportion this Tax upon the Towns. So that a further Act of the whole Legislature was found necessary. When the Year 1741 came, the House of Representatives were sensible that an extreme difficulty would be brought upon the People, by finishing the whole Bills in this Manner, when there was no Silver and Gold in the Country, to serve as a Currency, in the room of them; and when the late Governour, Mr. Belcher, insisted upon their apportioning the Tax of that Year, they refus'd to do it, on failure of which, the whole Scheme for paying off the new Bills must be defeated. And indeed there was so little Expectation of the Bills being paid off in 1742, at 6 s 8, that in 1741, 9 s of them would not purchase an Ounce of Silver. In the same year the present Governour came to the Chair, and found the Currency of the Country thus perplexed; and the first Assembly he met, refus'd to apportion the Tax, after he had recommended it to them. This Refusal as effectually destroy'd the Security of the Bills, as any Act of Government could have done, and the best Terms the House of Representatives could be brought to were, to carry the Tax of 1741, part of it to the Year 1742, and the remainder to 1743; and they provided by a Clause in the Act, that if the Assemblies of those Years should not agree upon apportioning the Tax, the Treasurer should issue his Warrants agreable to the Apportionment in the last Tax Act. At the same Time Bills for the future Charges of Government were issued, of a new Form, payable in Silver at 6 s 8 the Ounce in 1746; one of these Bills to be equal to sour (sic.) of the first Form (Silver being now about 28 s per Ounce in the old Bills,) and full Provision was also made for bringing in these new Bills in one or other of the Years before 1746, or Silver in lieu of them: So that now it was not in the Power of any Thing short of the three Branches of the Legislature, to prevent all the Paper Currency extant being bro't in by the Year 1746. And to satisfy the Possessors of the Bills engag'd to be redeem'd in 1742, they were made equal to the new Bills in publick and private Payments, and a Tax was granted for such Sum as the former Taxes were rendred deficient by Means of raising the Value of these Bills. This gave every Possessor of those Bills, which were commonly called the Middle Tenor Bills, a great deal more than the Bill cost him, tho' the Government neither did nor could comply with their Promise in Form. Before the Governour consented to the afore-mentioned Act, he insisted, in a Speech made to the Court, upon their coming into some Measures for securing the Value of private Debts, in Case the Bills should depreciate; upon which another Act was agreed on and pass'd, the Design of which was, That although Bills were the only Instrument in all Trade and Dealing, yet that Silver at 6 s 8 the Ounce should be the Measure. And the Bills then and after to be emitted for five years, were declared equal to Silver at that Rate: And in Case the Bills should depreciate, compared with Silver and Exchange to London, an Addition should be made on all Debts and Contracts equal to the Depreciation; and the current Rate of Silver and Exchange, was to be determined every six Months, either by the General Court, or by seven Councellors, or by a Committee appointed by the Judges of the Superior Court. This has been commonly called, the Equity Act; and it was generally thought, would prevent the great Mischiefs of a Paper Currency, but yet it has prov'd of little or no Service. For
As to the first Part of the Act, People were soon convinced that to make one Thing the sole Measure, and another the sole Instrument of Trade, was impossible. And all Persons continued to keep their Books, and make their Agreements for Bills, as much as if the Act had never pass'd. And the Allowance for Depreciation run us into great Confusion: The Merchant seldom or ever demanded it, for it would have been almost impossible in a running Account to have settled it; and besides, he would have miss'd the Sale of his Goods by insisting on it, and the Practice of it in any one Case, and not generally, prov'd very unequal. Indeed it soon appear'd, that the strict Observance of the Rule would produce great Injustice. Silver and Exchange might rise 10 or 20 per Cent. but it was several Months before this had a general Influence on Trade even in the Town of Boston, and longer in other Parts of the Province, and some Years before it had it's Effect on the Landed Estate of the Province. It was then thought, if Provisions were taken in with Silver as the Standard, it might be a good Addition to the former Law, and an Act pass'd accordingly, but the Price of Provisions being govern'd by the Plenty or Scarcity of them, and a scarce Year following immediately upon this Alteration of the Rule, made the Observance of it more difficult than before.
Upon the breaking out of the French and Indian War, all Hopes of putting a Period to the Paper Currency vanish'd; for the Defence of the four Governments of New-England, lays in a manner, tho' very unreasonably, upon the Massachusetts Province, and such large Sums were necessary for carrying on the War, especially for the Charge of the successful Expedition against Cap Breton, that the Taxes for drawing in the Bills issued for those Charges were greater than it was possible for the People to pay before 1746; and so the Funds for the future Emissions were necessarily laid upon more distant Years. The Bills being thus multiply'd sunk in their Value faster than usual; so that 56 or 58 s now will purchase no more Silver than 30 s would do five or six Years ago.
I have omitted a great many Circumstances relating to these Bills, designing only to give a general Idea of the Nature and Operation of them.
The other Governments of New-England soon went into the same Practice of issuing Bills, after the Massachusetts had shewn them the Way; and the Bills of each Government, by common Consent, obtain'd a Currency through the Whole.
The great Mischiefs and infinite Injustice arising from a depreciating Currency, which it is impossible to prevent or redress, are so glaring, and our Ears have been so fill'd with the Complaints and Cries of those who have been most sensibly affected, that there is no need of spending any Time in describing or enumerating them.
During the Currency of these Bills, a Variety of Proposals have been published for retrieving their Credit, and for furnishing a stable Paper Currency, but all to no Purpose.
No Sort of Bills but such as are payable on Demand, can have an invariable Value; and in this Case there must be a Deposit, and it is as easy to provide Silver to serve for a Medium, as for a Deposit, and it is as likely to stay in the Country in one Case as in the other.
Bills that are payable at a distant Day, will be esteem'd according to the Time of Payment, and from their being issued, will gradually rise in their Value, which will produce the same Injustice as a gradual Depreciation; for whether the Creditor receives less or the Debtor pays more than the Contract, the Injury is the same; somebody is defrauded: But then, the Rise would be more intolerable than the Fall. The Creditors are few in Number compar'd with the Debtors, the one generally envy'd, the other pity'd. The Injury and Complaint of the Creditors have been too much disregarded; but turn the Tables, and oppress the numerous Debtors, and they will not long remain quiet.
I think therefore we may rest satisfy'd, no stable Currency can be projected, other than that of Silver and Gold.
And here I expect to be ask'd: Why may not New-England have a Currency of Bills of Credit, as well as New-York and Pennsilvania? I answer. At New-York, and Philadelphia Silver is their Medium, and mill'd Dollars pass current at a known determinate Rate, and other foreign Coins in proportion: Paper Bills are sometimes the Instrument in Payments, but the Proportion is small compar'd with the Silver; and I have no Doubt that if either of those Governments should ever issue a sufficient Sum in Bills to serve for a Currency, their Silver and Gold would leave them, and their Bills depreciate as those of New-England have done; which, as has been observed, kept their Value while Silver continued current with them.
The General Court of the Massachusetts seem at length fully convinc'd of the Necessity of destroying the Paper Currency; and having a Sum granted by Parliament to reimburse the Expence of the Cap-Breton Expedition, they have pass'd an Act of Assembly for transporting the same in foreign Coin, and exchanging it for their Bills by the last of March 1750, at the Rate of a mill'd Dollar for 45 s Currency; and have determin'd, that after that Time, all Contracts shall be in Silver at the Rate of 6 s a Dollar, which is agreable to the Rate establish'd by Act of Parliament, and that all past Contracts shall be discharg'd by a Dollar for 45 s, and they have prohibited the Currency of the Bills of the other Governments after the Redemption of their own Bills.
But this Act, notwithstanding all the Calamities brought upon the Province by Paper Money, is not universally approv'd of.
One would think, that with a People making a high Profession of Religion, there should need no other Argument to reconcile them to the Act than this, viz. That Truth and Justice, after having been banish'd near forty years, are in a fair Way to return again. Remove the Cause and the Effect will cease. In this Case no imaginary or expected Difficulties that may attend Trade of the Province, ought to have any Weight.
However, we will consider the several Exceptions that are made to the Act, and see what Force they have.
The principal Objection with a greater Number than publickly care to own it, is this; That whenever the Bills are redeemed, the Possessor ought to be paid as much as they would purchase in Silver at the Time they were issued, which might be a Recompence for what he has suffered by the Depreciation. Here seems to be an unwarrantable Desire of personal Advantage at the Expence of the Publick. There has been such a Confounding of Property that it is absolutely impossible to remedy what is past. All Attempts have rather increas'd the Evil. Besides, how unreasonable would it be, when the Course of Exchange for a Year or two past has been at 900 per Cent. advance from Sterling, and almost Nineteen in Twenty of the present Possessors, have receiv'd the Bills at that depreciated Rate, they should now be paid double, or more, what they gave for them. But we are told, the Bills promise a certain Sum, and it behoves the Government to pay off their Bills according to their Promise, as much as it does a private Person.
Promises made by private Persons, the Performance whereof will produce great and extensive Injustice, may and ought to be dispensed with. I acknowledge it behoved the Government, by all Ways and Means possible, after they had issued their Bills, to support the Credit of them, and great Injustice arises by their Failure; but now it is produc'd, as the Case with these Bills is circumstanced, there is no Remedy. The Bills have been sinking in the Possessors Hands ever since they were issued, and every one who has been a Possessor ought to have his Part of the Loss made up to him, and not the Possessor of the present Day run away with the Whole. But at first Glance it appears impossible to settle what every Man's Proportion shall be. Besides, it may be considered in this Light. Whatever Sum is outstanding in Bills, just so much is due from the Inhabitants to the Government; and whatever the Bills sink in their Value, just so much less, really, the Inhabitants have to pay, than they would have, if the Bills kept their Value; and if they sunk in every Man's Hands in Proportion to his Part of the Tax, he could complain of no Injustice, which all arises from Persons being unequally possess'd, tho' in what Proportion can never be ascertain'd. Let us suppose then the Value of the Bills could be rais'd again, this would advance the Value of the Debt to the Government, and as great Inequality and Injustice will be occasioned by their rising as was by their falling; for as they are continually passing from one to another, the same Persons will not be possess'd of them, in the same Proportion, when they rise, as when they fell. ---- It is said, the Parliament, in King WILLIAM'S Reign, when the clipp'd Money was call'd in, receiv'd it as if it had been of full Weight, and voted a large Sum for the Deficiency occasioned thereby. It is very true: But it was owing to the Necessity of the Times, which requir'd an immediate Stop to be put to the Currency of the clipp'd Money, which could be effected in no other Way: And it has always been allow'd, that Two Millions was given to the Possessors of that sort of Money, more than in Equity they could claim.
Another Exception to the Act is, That it is in vain to think of a Silver Currency, while the Balance of Trade is against us; for the Silver will be immediately ship'd off, and the Bills being destroy'd, we shall be without a Medium. By the Balance being against us, is, no Doubt, intended, that we import more then we are able, by our Exports of every Kind, to pay for. Indeed there is no making so certain a Judgment of the Truth of this from Time to Time, with a Paper Currency, as with a Silver; which ordinarily would be more plenty or scarce, according as the Balance was for or against us. But I think it plainly appears, there is this bad Influence of the Paper Currency upon our Trade, viz. That now the Profit arising to the Merchant, upon most Branches of our Trade, is from the Goods imported; whereas, when Silver was current, all Commodities for Exportation to the West-Indies, the Southern Colonies on the Continent, and the foreign Ports in Europe, were purchas'd at such Rates here, that they would bear an Advance when they came to Market; and the Profit of the Adventure lay in that Advance, more than in the Goods imported in Return, and West-India Goods were frequently so low here, that they made an advantageous Return to England. Nay, even in our Trade to Great-Britain, although the Profit of that consisted principally in the Advance on the Goods imported hither, yet a Man of a middling Judgment in Trade, could ordinarily find a better Way of making Returns than shipping Silver from hence: Now it is most natural to suppose, that when we change our Currency, altho' a great Proportion of the Silver may at first be exported, to satisfy the Debts due to Great-Britain, and perhaps to import more English Goods; and we may be greatly straitned from the Scantiness of the Currency, yet in a short time it will restore the Trade to the State it was in before the Paper Currency commenc'd; for a Man of but small Acquaintance with [T]rade, before he parts with his Silver will consider, whether the Price demanded for any Commodity for Exportation, is so reasonable as that he has as good a Chance of Advantage by shipping the Commodity as the Silver, the Consequence of which will be, not that he must ship his Silver because he can't have the commodity at a reasonable Price, but it will come down to such a Rate as that he can better afford to ship it than the Silver; and there is no room to suppose the contrary, unless we could imagine that all the Produce of the Country, of every kind, is not sufficient to pay what is absolutely necessary for our Consumption; which Supposition is without the least Foundation. If we have spent more than we have earnt while our Paper Currency lasted (for there is no Country under Heaven where People who have no Estates live so luxuriously as they do here) it will be one good Effect of the new Currency, that it will make us better Husbands. But then I may perhaps be told, if the Consequence of this new Currency will be the Lowering the Commodities of the Country, so far it will be a Damage. Nor at all: For those Things imported, and which are necessary in the Business and Expences of the Inhabitants, will be cheap in Proportion. If a Trader has a reasonable Profit or Advance on the Thing exported, he will have none on what he returns in lieu of it. No Doubt, in the general Scramble that we have had for Twenty years past, when the Contest has been, who should raise the Price of their Business and Wares fastest, some have done it in greater Proportion than others, and it may be expected they will fall accordingly; and after a little while all Things will return to the Standard, and bear a just Proportion one to another.
Those Persons, I acknowledge, who have made a dishonest Gain by a depreciating Currency, must be content, if they can rest so, with what is past, and live honestly for the future. Of this Sort, in the Country, have been those who have made a Trade of buying Lands at long Credit, and then paying for them in Bills when they have depreciated so much that perhaps the Value of their Lands has doubled. And, in the Town, may be reckon'd, such Traders and Shopkeepers as have bought large Quantities of Goods on long Credit, and after that greatly exceeded the Credit given, and before Payment has been made the Value of the Bills have sunk one Half, and their Goods advanc'd in their Shops in Proportion. Now the Discouragement of this Trade, instead of being any Disadvantage to us, will be extremely for our Benefit; for this unjust Gain had encouraged great Numbers, with little or no Trading Stock, to leave the Business they were bred to, and turn Shopkeepers; which has proved of pernicious Consequence, by lessening the Number of Artificers and labouring People, and by infecting those that remain with an Itch after living by their Heads rather than their Hands. I would not be understood, that all Shopkeepers, especially such as have been bred to the Business, or have a Stock to begin with, should be discountenanced. A Number will always be necessary for the convenient Supply of Goods to the Inhabitants in small Parcels; but they have of late increas'd to a surprizing Degree, and it looks as if almost all liv'd one upon another, and that but a small Proportion was employ'd in producing any Thing from the Earth or Sea.
There has been a further Exception made, which is not against the Design of the Act, but the Sufficiency of it to answer the Purposes propos'd. It is said, That notwithstanding all the Provision that is made to the contrary, the Bills of the other Governments will remain current in this Province, and if so, the Act can have no good Effect, as to any future Regulation of the Currency.
It is, I confess, a great Unhappiness, that we are possess'd of so large a Sum in the other Governments Bills, and there is a great Danger, That, unless the Parliament interpose, the Bills, will either die in our Hands, or the Continuance of their Currency will prevent the Design of the Act. Of the two Evils the first is the least; for though it will be a heavy Loss, we feel it at once, and it's over; the other would be a continued Loss, and work our Ruin. But there is all imaginable Reason to expect the Interposition of the Parliament. The Affair of the New-EnglandCurrencies has formerly been under the Consideration of the House of Commons. The Massachusetts Province have now voluntarily gone into the same Measures, or perhaps more effectual than any formerly propos'd in Parliament, that they should be compell'd to. They have twice invited the other Governments to join Commissioners in concerting Measures that might suit the Whole, before they settled any for themselves, but they all neglected or refused; though it's now generally suppos'd that Connecticutt will regulate their Currency in much the same Manner the Massachusetts have done. - - - - Can it then be imagin'd that the other Governments will be suffer'd, either greatly to injure the People of the Massachusetts, by the Loss of the Bills they are possess'd of, or else by the Currency of them, defeat the Regulation of the Whole? And it will be much easier now to project a Method for sinking these Bills without Loss, than it would have been if the Massachusetts Act had never pass'd. In order to shew how it may be effected, we will first consider the State of the Bills of each Government, and then offer some Proposals for putting an End to their Currency, in a Manner the least burthensome that may be.
Connecticutt are a wise People, and have conducted their publick Affairs with great Prudence, more especially with Respect to their Bills of Credit. They have never run into any extravagant Emissions; they have shewn a Desire to preserve the Credit of those Bills they have issued, though without Success; and, if I am not misinformed, they have very little more outstanding than their Grant from the Parliament, at the Rate set by the Massachusetts, will redeem: If, therefore, they should refuse to apply the Grant to this Purpose themselves (which there is no great Danger of) the Way is very plain for the Parliament to do it for them.
New Hampshire have about Four Hundred and Fifty Thousand Pounds of the present Currency, or, as it is commonly called, old Tenor. Their Grant will not sink above One Hundred and Fifty Thousand Pounds, which will leave Three Hundred Thousand. About One Third was lent to the Inhabitants, in like Manner as the Massachusetts Loans, only for a longer Term, and the Estates of the Borrowers are mortgaged to the Government for Security. The Remainder, except a small Proportion for the Charge of their Government, was issued for the CanadaExpedition, and has no other Fund for drawing it in again, besides an Expectation of being repaid the Charge of that Expedition by his Majesty. But after they shall have receiv'd what may be allow'd for those Charges, it's probable they may have about One Hundred and Eighty Thousand Pounds remaining outstanding.
Rhode-Island, about three Months ago, had between Five and Six Hundred Thousand Pounds, the like Currency. They have lately sunk Seventy Five Thousand Pounds by Bills of Exchange drawn on their Agent on Account of the Canada Expedition. They expect by the Grant from the Parliament, to be able to sink so much more as to leave about Four Hundred and Twenty Thousand Pounds outstanding, the Whole of which has been lent to their Inhabitants, and their Estates mortgag'd for Security; but it is not to be all sunk until the Year 1763.
It is a Question whether New-Hampshire have one eighth Part of their Bills current within that Government. Rhode-Island has more of theirs, perhaps one third or one half. The rest of the Bills of both Governments are current in the Massachusetts and Connecticutt. There is therefore no Reason to expect that New Hampshire or Rhode Island will be anxious about redeeming their Bills. It is their Interest to have them depreciate until they become of no Value: The Borrowers will so much the easier discharge their Debts to the Government, and the Inhabitants pay what is due by Taxes. Nay there is great Reason to fear that Rhode Island may speedily issue more Bills. The Governor and all the Members of the Legislature are elected by the People, and it is sometimes made a Test to the Candidates before their Election, that they shall declare in Favour of more Paper Money, and this is as likely to be the Case at their Election in May next, as it has been in Times past.
Massachusetts and Connecticutt are able to sink all their Bills above the Grant, by a Tax, in one Year. New-Hampshire and Rhode-Island have a Sum so much greater in Proportion, that it will be extremely difficult, and perhaps impossible, for them to do it.
Suppose then that by an Act of Parliament, all of the Estates mortgag'd, or other Securities given to the Governments of New-Hampshire and Rhode-Island, for paying in the Bills according to the nominal value, should be made liable for the Payment of a Spanish Dollar, or other Silver Coin in Proportion, for every Forty-five Shillings in Bills of the old Tenor, or every Eleven Shillings & Three Pence in Bills of the new Tenor. That those Borrowers who have engag'd to pay the Whole in less than Ten Years, should be left to comply with their respective Agreements as to the Time of Payment; but where any exceeded Ten Years, they should be held to pay one Tenth annually, their former Agreements notwithstanding; and that Interest of 6 per Cent should be paid from Time to Time, for all that remain'd unpaid. If any Borrower fail'd of making Payment three Months after it became due, so much of the mortgag'd Estate, as would make up the Deficiency, to be forthwith sold, without a Process at Law. And for the Bills that have been issued for the Charges of Government, the Assembly of each Government to make a Tax for one Tenth part annually, with the Addition of 6 per Cent. Interest on the whole Sum that in each Year remains outstanding; such Tax to be paid likewise in Silver at the Rates aforesaid.
When this is done, each Government should be oblig'd to call in their present Currency, and give the Possessors new Bills (none to be less than Five Pounds Proclamation Money) payable in Silver with Interest of 6 per Cent. the whole in Ten Years, and one Tenth to be discharg'd annually. Every 45 s of the old Bills to be received for 6 s of the new, and so in Proportion. And the future Currency of those Governments to be regulated and establish'd at the same Rates with the Massachusetts.
The Members of the Legislatures might be compell'd to do their Parts, either by being made liable to the Possessors of the Bills, in Case of Neglect; or by such other Penalties or Disqualifications as the Wisdom of Parliament should direct.
In this Way Nobody could complain of Injustice or Oppression. For
The Governments would have but a very small Burthen. One Thousand Pounds Sterling a Year, or thereabouts, would be sufficient for New-Hampshire's Tax, and Rhode-Island would not raise so much. And
The Borrowers will not pay so much as they received; many in Rhode-Island not half so much; and the Whole of New-Hampshire Loan was issued when Silver was about 30 s per Ounce, and they will pay it at above 50 s. --- If it be urg'd, That when they made their Contract, they expected to discharge it by Bills of a depreciated Value, and not by Silver. This was an unjust Contract, and therefore ought to be void, or in Force so far only as it is equitable. And
The Possessors of the Bills will have the present Value of them; for the Interest they will carry will make them as good as if they were payable on Demand.
Thus, as briefly as I could, I have given an Account of the Nature, Rise, and Progress of the Paper Currency of New-England, and of the Measures taken by the Massachusetts to sink the Bills of that Province; and have propos'd a Method, in which the other Governments may easily sink theirs: And I heartily wish they may be compell'd to it, that so Fraud, Injustice, and Oppression, which for thirty Years past have reign'd triumphant among us, may be banish'd for ever.
1.Thus there being a somewhat greater Scarcity of Silver than common, a general Opinion prevail'd, that the Currency of the Country might be enlarg'd by issuing Paper; but like the Dog in the Fable, while they catch'd at the Shadow, they let go the Substance.
2.Here was a fatal Error. Had the Government made a Tax every Year for such Sum as they issued, given the Premium of 5 per Cent. to such as paid Bills, distinguish'd the Bills of each Year, and allow'd those Inhabitants that did not pay Bills to pay Silver, (of which there was then sufficient) and so finish'd one Sett of Bills every Year, most of the Mischiefs that attend a Paper Currency would have been prevented. Indeed it's probable, such Bills would have been hoarded, and never serv'd as a Medium, but the Government would have obtain'd a Year's Credit, which was the Thing first aim'd at.
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