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RNIA LIBRARY OF THE UNIVERSITY OF CALIFORNIA LIBRARY OF THE UNiV[

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LIBRITRY OF THE UNIVERSITY OF CALIFORNIA

LIBRA

THE CITIZEN'S LIBRARY

ESSAYS ON

The Monetary History of
the United States

CHARLES J. BULLOCK, Ph.D.

ASSISTANT PROFESSOR OF ECONOMICS IN WIUIAMS COLLEGE

"^ B P A ft y*My^

i ■UNIVERSITY

^-.££i.!f£^!'-'^

NciD ||0tfc

THE MACMILLAN COMPANY

LONDON: MACMILLAN AND CO.. Ltd.
1900

AU rights resirvid

ComoGHT, igooy
By the MACMILLAN COMPANY.

Kotivooti 9rfM

J. 8. OuiUng ft Go. - Berwick ft Smith

Norwood Man. U.S JL

3tt0U0tu0 % ISudt

PROFESSOR OF GREEK IN BOSTON UNIVERSITY

THIS BOOK IS DEDICATED

AS A MARK OF GRATITUDE AND AFFECTIONATE REMEMBRANCE

BY HIS FORMER PUPIL

THE AUTHOR

PREFACE

The three essays in this volume are based upon
a part of the materials that the author collected
some years ago, when lecturing upon the mone-
tary and financial history of the United States.
They are now published in the hope that they will
prove to be of some value to students and investi-
gators in this field. The author desires to make
grateful acknowledgment of the constant aid re-
ceived from his wife, who has devoted several
months to the work of gathering materials and
assisting in the preparation of the book.

CHARLES J. BULLOCK.

WiLLIAMSTOWN, MASS.,
August, 1900.

CONTENTS

PART I

THREE CENTURIES OF CHEAP MONEY IN THE
UNITED STATES

CHAPTBR PAGB

I. Introduction i

II. Wampum and Barter Currency

III. Silver and Gold Currencies

IV. Colonial Paper Money
i — V. Continental Paper Money .

VI. State Banks of Issue .

VII. A Return to Government Paper Money

VIII. Gold and Silver

7
13
29
60

PART II

THE PAPER CURRENCY OF NORTH CAROLINA

I. Early Issues (1712-1748) . . . .125

II. The Last Colonial Issues (i 749-1 774) . 156

III. The Last Issues (i 775-1 788) . . .184

X CONTENTS

PART III

THE PAPER CURRENCY OF NEW HAMPSHIRE

CHAFTBR PAGB

I. Colonial Issues (i 709-1 739) . . . 207

II. Colonial Issues (1740-1774) . . . 232

III. Revolutionary Issues (i 775-1788) . . 260

Bibliography 275

Index 289

Part I

THREE CENTURIES OF CHEAP MONEY
IN THE UNITED STATES

CHAPTER I

INTRODUCTION

At the present day, after all the discussion that
has occurred upon the subject, it is certainly diffi-
cult to present anything that is wholly new or origi-
nal concerning the monetary problems that have
vexed the United States. But it may prove worth
cm" while to undertake to review and interpret
familiar historical events in the light of certain
primary facts, the full significance of which has
seldom been appreciated in sufficient measure.
These facts are, first, that a strong movement in ^
favor of cheap money has existed continuously in
this country from the earliest period of coloniza-
tion ; and, second, that the persistence of such an /
agitation has been due, more than to any other
single cause, to the constant spread of settlements
westward over large areas that have long remained
thinly populated. With the growth of numbers,
the rise of manufacturing and commercial indus-
tries, and the increase of wealth, the desire for a
cheap currency has gradually diminished ; but this
has no sooner taken place in the more populous
states than the old phenomena have reappeared in
newly settled districts, while any localities that

MONETARY HISTORY

have remained sparsely peopled and devoted
chiefly to agricultural pursuits have always fur-
nished a favorable field for the old propagandaN

Back of all the strivings for an inexpensive
medium of exchange, each generation of our
people has always heard the complaint that our
supply of money has been insufficient ; ^ and this
cry has invariably furnished an unmistakable indi-
cation of the* underlying cause of the agitation.
"No complaint," wrote Adam Smith, in 1776, "is
more common than that of a scarcity of money.
Money, like wine, must always be scarce with
those who have neither wherewithal to buy it, nor
credit to borrow it. Those who have either, will
seldom be in want either of the money or of the
wine which they have occasion for."^ In the

1 One of the earliest of these complaints is found in a resolution
of the General Court of Massachusetts in the year 1641. It is so
typical of similar complaints of later times that a part of it may well
be quoted here : " Whereas many men in the plantation are in debt,
and heare is not money sufficient to discharge the same, though
their cattle and goods should bee sould for halfe their worth, as
e3cperience hath shewed upon some late executions, whereby a
great part of the people in the country may be undone, and yet
their debts not satisfied, . . ," The Court then proceeded to grant
relief to insolvent debtors. Mass. Recs., I. 307. John Winthrop
wrote that the merchants had brought over " great store of provi-
sions" in 1640, "so as now all our money was drained from us."
Winthrop, N. Eng., II. 7.

^ Smith, W. of N., II. 9. A year or two later John Witherspoon
wrote : " The cry with many is, we must have paper for a circulat-
ing medium, as there is such a scarcity of gold and silver. Is this
just? No. They mistake their own poverty, or the nation's pov-
erty, for a scarcity of gold and silver ; . . ." Works, IX. 45.

INTRODUCTION

United States an enterprising and resolute people
has been engaged, for nearly three centuries, in
occupying and developing a vast area of free
land. While natural resources have abounded,
each newly settled district has always experienced
a lack of the capital needed to bring the soil under
cultivation, to supply means of communication, and
to develop manufacturing enterprises.^ This want
might have been little felt by a le5s progressive
people ; but with us it has been a real and serious
obstacle, which has been removed only by the slow
gfrowth of wealth and numbers. In order to pos-
sess a sufficient supply of metallic money, a nation
must convert a portion of its capital into a stock
of gold or silver coins or bullion, a process that is
expensive, even under the most favorable circum-
stances. In the United States, prior to the dis-
covery of mines of the precious metals, gold and
silver could be obtained only through exchange
with foreign countries; and the acquirement and
maintenance of an abundant metallic currency was
made especially difficult by the poverty of our
people in all sorts of capital. The difficulty was
intensified still further by the sparseness of settle-
ment and the economic isolation of households
and communities, a circumstance which made the

1 This was well stated by Governor Ward of Rhode Island, in
1740: "And as the first settlers were not of the wealthiest sort, nor '
over-stocked with servants, the greatest part of their money was
nhavoidably swallowed up in procuring provisions, clothing, and
utensils for husbandry and labor, to subdue and cultivate the soil."
Rcc8.ofR.I.,V.8.

MONETARY HISTORY

monetary circulation sluggish and increased the
volume of currency required for the transaction of
a given number of exchanges. The accumulated
products of our industry were more often con-
verted into other things than money. Each person
usually desired to employ in production or ex-
change whatever gold or silver might come to
him; for he had many uses for other kinds of
capital, and could ill afford to keep on hand a
stock of money that appeared to be an idle invest-
ment. Therefore it happened that supplies of the
precious metals secured in trade tended to move
out of the colonies in exchange for other things
that were felt to be more necessary. This fact
explains the circumstance, so often bewailed by
writers of the seventeenth and eighteenth cen-
turies, that the balance of trade was commonly
against the colonies, so that gold and silver seemed
to take to themselves wings, and to fly out of the
country.

It may be said that it would have been better
for the people to have retained enough metallic
money to furnish an adequate medium of ex-
change, and this is undoubtedly true. But the
matter did not appear in this light to the individ-
ual colonist, who would usually expend his own
coins for things that were felt to be immediately
desirable, and would leave to some patriotic neigh-
bor the task of accumulating a stock of money
that appeared to be idle capital. In the colonial
period, the usual outcome was that the attempt to

INTRODUCTION

maintain a specie currency was abandoned, and some
less expensive medium was substituted. In later
times, the poorer 'and less populous regions of
the country have experienced a similar scarcity
of gold or silver, and have been equally desirous
of finding some form of currency that would be
easier to obtain. The continued growth of new
commonwealths in the West has served to perpet-
uate the conditions under which an agitation for
cheap money was sure to remain with us.

It is the purpose, then, of this first essay to
review the entire monetary history of the United
States in the light of the facts just stated, and to
show that all the varied currency experiments'
with which our people have been vexed for nearly
three centuries have been, first and fundamentally,
efforts to secure a cheap medium of exchange.
While it is not claimed that this thesis is entirely
novel,^ it is believed that the essay is the first
systematic effort to supply a unitary interpretation
of the leading facts in the history of American
currency. The second and third essays contained
in this volume are primarily investigations into sub-
jects about which little has been known hitherto.

1 Professor Sumner has appreciated this fact very clearly. See
Currency, 5-6 ; Banking, 1-3; also article in First Century, 238-
259. In the last-mentioned work he says that ** the monetary history
of the United States from the first colonization until now is a history
of experiments with cheap substitutes for money." Professor F. J.
Turner has well shown the similarity between the present silver
movement in the West and similar agitations of earlier days.
Atlantic Monthly, LXXIX. 441-442.

MONETARY HISTORY

But, since North Carolina and New Hampshire
remained, up to the very close of the colonial
period, sparsely settled farming communities in
which manufactures and commerce were of slight
importance, they offer a favorable field in which
to test the thesis which the first essay seeks to
establish. Thus a real unity of purpose may be
traced throughout this book, in which, as in most
collections of essays, no formal unity is to be
expected.

CHAPTER II

WAMPUM AND BARTER CURRENCY

The first immigrants brought into the colonies
little or no money, since they were poor men and
needed other forms of capital. Some years were
to elapse before the new plantations were to de-
velop any extensive foreign commerce, by means of
which specie was finally secured ; and a scarcity
of currency was experienced in the very first years
of settlement. Accordingly in Virginia, as early|f-
as 1619, tobacco was made receivable at threelj
shillings per pound ; while in New Netherland'
and Massachusetts the settlers utilized peltry
as a medium of exchange.^ In trading with the
Indians the colonists learned to use wampum, the
common Indian currency, and they soon began
to employ this in their dealings among themselves.
Thus commenced in this country the quest for a
cheaper substitutes for metallic money.

For the Indians, wampum had been a satisfac- ^
tory currency.^ It was manufactured largely at

1 Bruce, II. 498-499; Ripley, no; Fernow, 298; Felt, 11,
12, 14.

2 On wampum currency, see Weeden, I. 32-46 ; Bruce, II.
520-521 ; Amer, Nat., XVII. 468 ; Fernow, 297-299 ; Docs, of
N.Y.,1.269,365.

MONETARY HISTORY

the eastern end of Long Island, where were found
" the cockles whereof wampum is made." Much
labor and patience were required for its produc-
tion, and "an Indian's utmost manufacture
amounted only to a few pence a day." But the
English settlers, with their iron implements, were
able to incfease the output greatly, especially
after they settled upon Long Island near "the
mine of New Netherland." As a result, the wam-
pum depreciated, so that, in 1649, Massachusetts
had to prohibit its receipt in payment of taxes,
although it was allowed to remain a legal tender
for private debts until 1661. In counterfeiting
and otherwise deteriorating this rude medium, the
Indians seem to have learned a few lessons from
the white men, for we find that complaints came
to the commissioners of the New England Con-
federation that "the Indians abused the English
with false badd and unfinished Peage."^ Troubles
growing out of the depreciation and counterfeit-
ing of this currency became especially serious in
New Netherland, which seems to have received
much bad wampum from New England as well as
a bountiful supply directly from the cockle-shell
mints operated industriously by the English on
Long Island. In 1641, complaints were made
that " very bad wampum is at present circulating
here, and payment is made in nothing but rough
unpolished stuff which is brought hither from
other places," so that "the good, polished Wam-

1 Hazard, II. 124.
8

WAMPUM AND BARTER CURRENCY

pum, commonly called Manhattan Wampum, is
wholly put out of sight and exported." Then we
hear of a plague of bad wampum " of Stone, Bone,
Glass, Muscle-Shells, Horn, yea even of Wood and
Broken Beads." Washington Irving had an un-
doubted basis of fact for his humorous description
of the trials of the Dutch with the enterprising
Yankees, for we find wampum greatly depreciated
in 1659, "in consequence of the great importation
of Wampum from New England, which barters
therewith, and carries out of the country not only
the best cargoes sent hence, but also a large quan-
tity of Beaver and other Peltries," so that the peo-
ple of New Amsterdam " remain with a chestf ul
of Wampum, which is a currency utterly valueless,
except among New Netherland Indians only." ^
In spite of all such disturbances, however, this
rude money continued to be used more or less in
New York as late as 1701.

As time went on, other forms of barter currency
multiplied in the colonies. Yet Maryland and
Virginia clung to the use of tobacco, which long
remained the principal medium of exchange, even
after its value had fallen from three shillings to
twopence per pound.^ In nearly all the planta-
tions, beaver and other kinds of peltry were util-

^ For these references to New Netherland, see O'Callaghan, 26,

"5.434.

* Scharf, I. 273, 278, 280, 282 ; II. 35-36 ; McMahon, 224-225,
283 ; Ripley, no, in, 1 31-132 ; Hist Mag,, II. 42-43. In Vir-
ginia the burgesses frequently insisted upon having their own
wages paid in coin. Ripley, 132.

MONETARY HISTORY

ized extensively as currency, since furs, like
tobacco, " were in demand in Europe, and could
always, without much loss, be converted into coin
or its equivalent." In the Carolinas, rice and tar
were used for a similar purpose. Massachusetts,
in 1 63 1, made corn a lawful tender for all debts,
except in cases where beaver or money should be
specified.^ In addition to the commodities already
mentioned, we find that the various colonies, at
one time or another, authorized the payment of
public or private debts in wheat, oats, barley, peas,
I bacon, pork, beef, fish, flax, wool, sugar, brandy,
f whiskey, and even musket balls.^ West of the
Alleghanies, in Tennessee and Kentucky, Mr.
Roosevelt tells us that a similar barter currency
was in use during the last decade of the eigh-
teenth century; and, as late as 1885, the Bismarck
Tribune reports that gopher tails were at that
time employed as money in some sections of
Dakota.^

The use of these forms of " country pay," or
"specie," as, singularly enough, it was sometimes

1 For the O^olinas, see Hawks, II. 163 ; Douglass, Discourse,
317 ; Stat, of S. C, II. 37 ; Col. Recs. N. C, IV. 920. For Mas-
sachusetts, see Felt, 16. ''It is further ordered, that come shall
passe for payement of all debts at the usuall rate it is solde for,
except money or beaver be expressly named." Mass. Recs., I. 92.

*0n these barter currencies, see Bronson, 5-13 ; Weeden, loi,
119, 128, 142, 170, 178, 196 ; Femow, 298 ; Hist. Mag., XL 43-44 ;
Bruce, II. 521 ; Douglass, Discourse, 315-317.

•Roosevelt, III. 160-161 ; IV. 113-114, 232-233; Andrews,
119.

WAMPUM AND BARTER CURRENCY

called, occasioned great trouble for public officials.
Attempts were made to regulate prices in order
to keep the currency from fluctuating so much as
to be useless.^ In Massachusetts the collectors of
taxes were continually involved in the most ridicu-
lous difficulties.^ Payment of the public dues in
the lankest cattle available became so common
that the General Court had to enact, in 1658, that
no man should discharge the rates with "leane
cattle."^ Ten years later the mere* cost of
transporting the commodities received for taxes
amounted to ten per cent of the entire assessment,
and a further loss of five per cent was incurred
through shrinkage and deterioration. Accordingly,
in 1694, the government was obliged to discon-
tinue the payment of taxes in such a currency.*
The experience of other colonies did not differ
greatly from that of Massachusetts. Obviously
enough, the employment of such cheap substitutes
served to expedite the exportation of such gold
or silver coins as found their way into the country,
and to delay the accumulation of a sufficient stock
of metallic money. The precious metals could not

1 Wcedcn, 97, 99, 115, "8, 132.

'Thus a Springfield constable had to transport to Boston one
hundred and thirty busheb of peas received in payment of prov-
ince taxes. This required eight trips to Hartford, and two from
there to Boston. In passing the falls of the Connecticut a part
of the cargo was spoiled by the water, and the collector had to
petition the General Court for relief. Felt, 53.

•Mass. Recs., IV. 348.

* Felt, 38, 40, 45, 54 ; Douglas, Fin. Hist., 49-50«
II

MONETARY HISTORY

well compete with puny cattle and bad g^in as a
medium for the settlement of public or private
debts.i

^In 1749, the Governor of North Carolina complained of the
losses caused in that province by receiving commodities for taxes.
He said that it was " a stated rule that of so many commodities
the worst sort were only paid." Col. Recs. N. C, IV. 92a

CHAPTER III

SILVER AND GOLD CURRENQES

In spite of the initial poverty of the colonists
and the influence of the rude barter currencies,
the increase of industry and commerce gradually
brought into the more prosperous of the planta-
tions a considerable amount of specie, of which
a portion was retained in circulation. In the
seventeenth century this consisted chiefly of
Spanish silver money; but in the eighteenth,
gold coins, mainly from the Brazilian mines,
appeared in no small numbers.^ Nevertheless

^ The relative quantities of gold and silver that found their way
into the colonies have not been made the subject of special investi-
gation. But see Chalmers, 5, 8, 10, 15. In 1676 Edward Ran-
dolph wrote from Massachusetts : " There is a reasonable quantitie
of silver money in the colony, but no gold." See Hutchinson's
ColL Papers, 498. In the seventeenth century gold was much
scarcer than silver throughout the world. The world's annual gold
product, which was only ^3,885,000 at the time of the discovery
of America, averaged but ^5,662,000 between 1600 and 1620.
The silver mines of South America, however, had increased
the world's annual silver product from ^1,954,000 in 1500 to
an average of |i 7,579,000 between 1600 and 1620 ; and Spanish
silver money had become common in all parts of the globe. For
these statistics see Rep. Prec. Metals, 1896, 346-347. The gold
product increased but little during the seventeenth century. In
1677 the Brazilian mines began to be systematically operated, and

MONETARY HISTORY

complaints of the scarcity of coin and the alleged
impossibility of keeping it in circulation remained
so common, and have been accepted so compla-
cently by most historians, that it will be necessary
to present a little of the evidence that proves the
presence of a moderate amount of specie in the
colonies.

As early as 1639, Winthrop noted in his "Jour-
nal" the arrival of a bark which brought "much
wealth in money, plate, indico and sugar." ^ This
trade continued until, thirteen years later, Massa-

by 1700 were contributing largely to the world's stock of gold. As
a result, the annual production of gold increased greaUy between
1700 and 1760, as is shown in the following table : —

Years. Averagb Annual Product in

Thousands op Marks.
Brazil. All Other Countries.

1681-I700 4,185 25,849

1 701-1720 7,673 28,095

1 721-1740 24,692 28,535

1 741-1760 40,734 27,928

See Soetbeer, 109-110. For an account of the Portuguese gold
coinage, based on the product of the Brazilian mines, see Del Mar,
128-132. This enlarged output of the yellow metal furnished the
American colonies with gold coins in the eighteenth century. The
increase of the gold output relatively to that of silver is shown in
the following table : —

Ybars. Averagb Annual Product in

Thousands op Dollars.
Gold. Silver.

1581-1600 4,905 17413

1681-1700 7,154 14,210

1 721-1740 ...... 12,681 17)924

1 741-1760 16,356 22,162

1 Winthrop, N. Eng., I. 307. Cf. Bradford, 441.
14

SILVER AND GOLD CURRENCIES

chusetts established its celebrated mint in order to
recoin its circulating medium into a uniform silver
currency. In 1671, Ogilby wrote of Maryland,
"yet there wants not, besides English and other
foraign Co)ais, some of his Lordship's own
Coyn." ^ In Virginia, Mr. Bruce finds abundant
evidence of considerable accumulations of money
and plate toward the close of the seventeenth cen-
tury; and Dr. Ripley has reached the conclusion
that a good deal of metallic money was always in
circulation, especially in the tidewater districts.^
In the year 1698, Gabriel Thomas reported that
silver was plentiful in the vicinity of Philadelphia.^
Two years later, John Fysack wrote concerning
Carolina, Pennsylvania, New York, and New Eng-
land: "There is now in the Plantations a great
quantity of Spanish money Plate and Bullion and
would be more if returns were answerable."* In
1740, Dr. Douglass stated: "Before Paper-Money,
took Place in New England, Silver abounded in
Currency as much and perhaps more, than in
many of our Colonies."^ Ten years later, when
Massachusetts returned to a specie basis, its trade
prospered as never before; and Franklin, who
was an advocate of paper money, was obliged to
admit that the resumption of a silver currency had

1 Chalmers, 5.

« Bruce, II. 504, 506, 507 ; Rjplsyi n8,ii9> 131 •
* Gouge, 5. See also statement of William Fishboume, in 1739.
Watson, Annals, I. 75.
< Chalmers, 12.
^ Douglass, Discourse, 338.

MONETARY HISTORY

met with popular approval.^ This is only a tithe
of the evidence that might be presented upon this
point.

With the appearance of the Spanish and other .
coins, began the process of clipping the money.
This was practised extensively in the West Indies,
whence the colonies on the mainland secured the
larger part of their supply of specie; and it
continued until the Spanish piece of eight was
often reduced in weight by as much as one-third.* ,
The light weight coins naturally drove the " broad "
pieces of eight out of the country, but the colo-
nists may have condoned the practice, since the
cheaper money was more readily retained in circu-
lation. For it was difficult to keep even the
clipped money in the country so long as the barter
currencies were in vogue. A shilling in " coimtry
pay" was always at a discount when compared
with a shilling in silver, and this discount amounted
to thirty or forty per cent.* A full weight dollar.

^See his examination before Parliament in 1766. Works of
Franklin, III. 426-427. In 1767, while opposing Parliamentary
prohibition of paper money, Franklin had to admit the beneficial
effects of resumption in New England. Idem^ IV. 84-85.

* ** As the said Silver Coins went by Tale, and were not millM»
they were clipped to such a Degree, that the Exchange to England
varied in Proportion, . . ." Ashley, 51. See especially Douglass,
Discourse, 301 ; Docs, of N. Y., IV. ii 33-1 135 ; Yale Rev.^ VII.
263, 409 ; Felt, 35, 59, 60 ; Bronson, 20-22 ; Femow, 303-305.

'In 1704, a traveller reports that the price of a knife was \2d.
in '' country pay " and dd, in coin. Mr. Bronson finds that the
barter currency was always at fifty per cent discount in G>nnecticut.
Bronson, 22-23. Cf. Yale Rev.^ VII. 248, 259.

SILVER AND GOLD CURRENCIES

of 17I dwts. would not remain in circulation by
the side of a barter shilling; and it could be
clipped down to 12 dwts., or even less, before it
would cease to be dearer than "country pay."
Thus the practice of clipping coins became practi-
cally universal in spite of stringent laws that were
designed to prevent it.^

Since the colonies, until the Revolution, retained
the English denominations of pounds, shillings,
and pence for their money of account, it became
necessary to establish rates at which the Spanish
and other foreign coins should be received. In the
seventeenth and eighteenth centuries, the silver
pound sterling was the standard, or "rating,"
money of England. This equalled, from 1600 to
1 8 16, 1 718.7 grains of fine silver; so that the
shilling contained 85.93 grains of pure metal.* In
the seventeenth century, the Spanish dollar, or
piece of eight, has been variously estimated at 385
to 388.5 grains of fine silver, a weight which would
have made it equivalent to about 4s. 6d, in English
money .^ In 1704, Newton's assay at the English
mint gave the coin an official rating of 386.8 grains
of pure metal, and fixed its value at 4^. 6d,, a
valuation which it retained during the next eighty

^ Bronson, 21 ; Fernow, 303 ; YaU Rev., VII. 264. In South
Carolina the penalty for clipping was at one time death without
benefit of clergy. Stat, of S. C, II. 72-73.

^McCulloch, 318-319 ; Ruding, I. 12, 357.

• This subject has been treated exhaustively by Professor Sumner
in Amer. Hist. Rev.^ III. 607-619. Cf. Chalmers, 390-394, 402-403 ;
Del Mar, 105-111.

C 17

MONETARY HISTORY

years, although its fine contents gradually dimin-
ished.^ This customary rating of the dollar made
the pound sterling worth $4.444 ; and, so long as
the colonies valued the coin at 4s. 6d,^ the colonial
pound remained the same as the pound sterling.

But as early as 1642, Massachusetts raised the
rating of the dollar to 5^., and Connecticut took
similar action the following year.* In 1645, Vir-
ginia rated this coin at 6j., but this valuation waa
lowered to S^. a decade later.^ Thus began the
depreciation of the colonial metallic currencies.
In 1652, Massachusetts established a mint, and
began to coin shillings that were 22J per cent
lighter than the sterling standard.* Upon this
basis, the dollar would have been worth a little
less than 6s, Between 1671 and 1697, no fewer
than nine colonies began to advance the piece of
eight,^ and by 1700 great diversities existed in the
ratings given to this coin in different localities.

1 Chalmers, 414 ; Amer. Hist. Rev,, III. 613-615.

* Mass. Recs., II. 29; YaU Rev.^ VII. 247-248; Conn. Recs., 1. 86.

« Hening, Stat., I. 308, 397 ; Ripley, 112, 114.

*0n the New England mint, see Felt, 30-35 ; Hutchinson,
Hist, I. 164-165 ; Watson, 2-6; YaU Rev,, VTI. 249 et seq,;
Hickcox, Coinage, 1-13 ; Crosby. The New England shilling had
fine contents of 66.6 grains. YaU Rev,, VII. 252.

^In 1 67 1, Maryland rated the dollar at 6j. Arch, of Md., II.
286. In Mass. and N. Y., pieces of eight that were of full weight
were, in 1672, advanced to 6j. Mass. Recs., IV. Part II. 533 ;
Fernow, 300. For other instances referred to, see Papers of N. H.,
I. 448, 480 ; Belknap, I. 20i ; YaU Rev,, VII. 261, 263 ; Bronson,
20; Leam. and Spicer, 285, 295, 517; Min. of Penn., I. 558;
Scharf, II. 35; Bruce, II. 507-511 ; Ripley, 115-119; Stat of
S. C, II. 72, 94, 163, 165.

SILVER AND GOLD CURRENCIES

Virginia, after having advanced the dollar to 6s.
in 1683, allowed it to pass at 5^. a few years later.
South Carolina fixed a rate of S^. for a light coin
weighing 12 dwts., with an addition of s^d. in
value for every additional pennyweight. In New
York, a dollar weighing 15 dwts. passed at dr.,
while one weighing 17 dwts. was rated at 6s. gd.
Pennsylvania, and possibly West Jersey, gave the
piece of eight the highest rating, valuing it at ys.
6d. for a coin of 17 dwts. gross contents. In the
other colonies 6s. had become the prevailing valua-
tion of the dollar.^ By this time the evils of these
diverse and fluctuating currencies had become so
great as to call forth complaints to the English
authorities, who had already directed colonial gov-
ernors to refuse assent to laws that tampered with
the currency.* Accordingly a royal proclamation

1 For Virginia, see Ripley, Ii6~ii8; Bruce, II. 510-511. For
South Carolina, Stat, of S. C, II. 178; Carroll, II. 258. The
rating of 5^. for a dollar weighing 12 dwts. would give a rate of dr.
5^ for a dollar weighing 17 dwts., allowing 3|^. for each addi-
tional dwt Cf. Stat, of S. C, IX. 779. For New York, Femow,
301. For Pennsylvania, Shepherd, 402-404 ; Docs, of N. Y., IV.
1047, '059» I* 34* Fo'f West Jersey, a law of 1693 rated a 17 dwt.
coin at 7^. This was done in order that the coins might have the
same rating that prevailed in Pennsylvania. See Learn, and Spicer,
517. It seems possible that the actual usage in West Jersey may
have followed that of Pennsylvania in 1700. In Maryland there is
a contemporary statement that the dollar was rated at 41. (id, in
1697. ^c Ripley, 115; Bruce, II. 511. This seems to be an
error, since it conflicts with the acts passed by Maryland in 1686
and 1708, rating the dollar at 6j. See Scharf, II. 35.

'Chalmers, 10-15; Bruce, II. 509-510; Docs, of N. Y., IV,
1047, 1059 > Femow, 301 ; Ripley, 116 ; Smith, N. J., 240.

MONETARY HISTORY

was issued in 1704, and an express act of Par-
liament was passed in 1707, requiring that the
Spanish piece of eight should not be rated at more
than 6s,, and other coins at more than correspond-
ing values.^ But this law was almost universally
evaded. The West Indian colonies, noting that
the act specified only silver coins, proceeded "to
give independent ratings (by weight) to the gold
coins of Spain," and thus adopted a gold stand-
ard of value which could be depreciated at will
without any violation of law.^ Upon the mainland
the colonies before long began to rate silver by the
ounce, and thus the depreciation continued. In
accordance with the rating of 6s. fixed by Parlia-
ment for the dollar, an ounce of silver should have
been valued at 6s, 10.65^.* But the colonies usu-
ally * began to rate silver at 7^. or 8j. per ounce,
and soon placed it at even higher figures.^ Thus

1 Chalmers, 14-16, 414-415 ; YaU Rev,, VII. 406-410 ; Doug-
lass, Discourse, 301-302; Ashley, 50-63. * Chalmers, 15.

• See Sumner, in Yale Rev,, VII. 407. The sterling value of
silver was 55. zd, per ounce. The law of 1707 allowed a rating one
third higher than this. Cf. Chalmers, 14.

^ Maryland passed a law in 1708 in compliance with the act of
Parliament. Scharf, II. 35. Until 1733, when the colony issued
paper money, this valuation was retained. Douglass, Discourse, 315.
Virginia in 1710 rated the ounce of silver at 6f. yi,^ which was
even less than Parliament had allowed. Ripley, 127. But in 1727
silver was raised to 6x. %d. Idem, 130. See Douglass, Discourse, 316.
Here it continued, and was, therefore, always a little below the
rate fixed by Parliament.

« Belknap, III. 225; Yale Rev,, VII. 407-412; Felt, 60;
Weeden, 387 ; Conn. Recs., V. 157 ; Phillips, I. 19, 61, 106, ill ;
Fernow, 306 ; Douglass, Discourse, 311, 312.

SILVER AND GOLD CURRENCIES

it became necessary for all people that handled
any considerable quantity of money to have scales
for ascertaining the weight of the coins. Finally,
it is to be remembered that, during the first half of
the eighteenth century, most of the colonies issued
a paper currency whose depreciation soon brought
them down to a paper money basis; so that the
valuations which the English authorities gave to
specie were a matter of small moment.

In 1750, when Massachusetts retired her paper
currency and resumed a specie basis, Spanish
dollars weighing 17 dwts. were rated at 6^., and
silver was rated at 6s. 8d. per ounce.^ This was
a return to the rates fixed in the Parliamentary
enactment of 1707. A somewhat similar process
went on in other colonies that redeemed or re-
pudiated their redundant paper currencies, but the
rates finally given to the dollar were not uniform.
New Hampshire, Rhode Island, Connecticut, and
Virginia rated the dollar at 6s.^ South Carolina
and Georgia adopted valuations of 4s. Sd, and 5^.

1 YaU Rev,^ VII. 412-413 ; Felt, 1 21, 127 ; Weeden, 674-676 ;
Acts of Mass., III. 430, 480, 494. These rates for the dollar and
the ounce of silver are not equivalents, since, with the dollar at 6^.,
an ounce of silver would have been worth about 6;. 10.65^. But, as
a matter of fact, few, if any, dollars were of full weight, i,e* I7jdwts.
gross contents. With silver at 65. %d. per ounce, the dollar should
have had fine contents of about 377.4 grains, and this corresponds
well with what information we have concerning the contents of the
dollar. On this basis, the shilling would contain 62.9 grains of fine
silver.

* Papers of N. H., IX. 66 ; Potter and Rider, 99 ; Bronson, 74 ;
Ripley, 13^-133 ; Writings of Jefferson, VII. 409.

MONETARY HISTORY

respectively.^ In Pennsylvania, New Jersey, Del-
aware, and Maryland, the dollar passed for js,
6d? Finally New York and North Carolina
settled upon a rating of 8^.^ These valuations
were retained until the state currencies were super-
seded by a national system after 1789. Thd
resulting confusion that attended interstate deal-
ings can easily be imagined.

The result of this process was a gradual and
progressive depreciation of the colonial currencies^
as compared with the sterling standard.* When
the Spanish dollar, which was worth 4s, 6d.y was
rated at Si'., the colonial pound was reduced td
$4.00, or 1547 grains of fine silver, and ;£iii of
colonial money equalled ;£ioo sterling. With the
dollar advanced to 6s,, the colonial pound fell to
ii'iii or 1289 grains of pure metal, while £iZi\
of colonial currency equalled ;£ioo sterling. A
rating of 7s, 6d, for the piece of eight reduced the
colonial pound to $2.66, or 103 1 grains of silver;

J Stat, of S. C, IV. 543 ; Dip. Corr. of Rev., XII. 91. In South
Carolina until 1783 the dollar was rated at 32J. 6//., a valuation that
was fixed by the depreciation of the paper money. Ramsay, II. 164.

2 Phillips, I. 26-27; Acts of N. J., 7; Laws of Md., 1 781,
Chap. 16 ; Laws of Del., II. 731-732 ; Dip. Corr. of Rev., XII. 91 .

•In 1738, silver was current in New York at 91. ^(L per ounce.
Douglass, Discourse, 312. Two years later it fell to about 9^. Docs,
of N. Y., VI. 169. In 1756, Smith wrote that since the last war
silver had been valued at about 9;. 2d, Smith, N. Y., 333. This
last rating of silver would make the dollar worth 8j., and it remained
thenceforth at that figure. See Hickcox, Bills of Credit, 50. For
North Carolina see Williamson, II. 1 15 ; Dip. Corr. of Rev., XII. 91.

^ On this general subject, see Adler,
32

SILVER AND GOLD CURRENCIES

and made ;£i66f of colonial currency equal to
;£ioo sterling. Finally, when the dollar was
valued at 8j., the colonial pound amounted to
$2.50, or 967 grains of fine metal; while £177^
of colonial money was equivalent to ;£ic)0 ster-
ling.^

The chief reason for the progressive deprecia-
tion of the colonial coin currencies was the fact
that the colonists believed that specie could be |
more easily retained within their borders, or at-
tracted from neighboring plantations, by raising!
the rates at which it should be received. Before
1635 Rice Vaughn wrote: " If we do observe those
States which do soonest and most raise their Money,
we shall find that they do most abound with Money ;
and that Trades and Manufactures do most flour-
ish there." ^ This expedient of raising the value
of money, so often employed in Europe, was likely
to be favored in a new country, where the poverty
of the settlers made it difficult to accumulate a
large stock of specie. Moreover, since it lightened
the burden of debts whenever past obligations
were not specifically excepted from . its opera-
tion, it is easy to see why such a measure should
have found support from certain classes of people
in the colonies. Many of the acts for raising the
value of the coins state that the purpose is the

^See note by editor, in Douglass, Discourse, 300-301. All of
these comparisons may be found carefully tabulated in Wright. See
also Adler.

^Chalmers, 5, 7.

MONETARY HISTORY

" Encouragment of those that shall bring monys
into this Province," or some similar object.^ The
royal proclamation of 1704 alleges "the indirect
Practice of Drawing the Money from one Planta-
tion to another," as a cause for the imperial regu-
lation of the colonial currencies ; and Franklin, in
1767, assigns a similar motive for the policy of
overvaluing specie.* Of course, in the long run, an
increase of prices rendered nugatory all attempts
to increase the volume of money in this manner.*
Equally futile were the numerous prohibitions
placed upon the exportation of gold and silver,*
which, of course, had the same general purpose in
view.

If more materials were available, it would be
interesting to examine at length the attempts of
the several colonies to regulate the rates at which
gold and silver coins should circulate concurrently.

1 Arch, of Md., II. 286; Stat, of S. C, II. 163, 1 78; Hening, Stat.,
1.308; Papers of N.H., 1. 448; Mass. Recs.,V. 351 ; Felt, 36; Shep-
herd, 402. See also two interesting petitions asking that coins should
be raised, in Cal. Va. Papers, I. 53-54 ; Docs, of N. Y., IV. 1 134.

^Chahners, 414; Works of Franklin, IV. 81-82. In North
Carolina and New York, the increase in the rating of the dollar to
Ss, has been attributed to the influence of the paper currencies.
See Williamson, II. 115; Smith, N. Y., 332-333.

• Franklin, in the passage just referred to, well states the result
of this " weak practice," as he termed it : ** The balance of trade
carried out the gold and silver as fast as it was brought in, the mer-
chants raising the price of their goods in proportion to the increased
denomination of the money."

*See Felt, 16, 35, 36; Bronson, 17-18; Weeden, 382; Ya^
Rev,, VII. 257, 264; Femow, 305; McMahon, 226; Bruce, II.
506.

SILVER AND GOLD CURRENCIES

As it is, we may find it worth while to consider the
subject briefly. It has been shown that gold coins
came into the colonies in much larger numbers
after 1700 than had formerly been the case. In
Pennsylvania, between 1700 and 1739, there were
at least seven changes in the rates at which gold
and silver were receivable, and the ratio varied from
14.70: 1 up to 16 : i.^ In South Carolina a statute
enacted in 1695 practically established a ratio of
13:1; while six years later a ratio 15:1 prevailed.^
Virginia established a ratio of 16 : i in the year
1 714, but this was changed to 15:1 thirteen years
later. In 1782 a ratio of 16: i was reestablished.^
In 1736 Massachusetts issued bills of credit of a
"new tenor" which were declared to be " equal in
value " to certain weights of gold and silver, from
which a ratio of 14.84 : i may be computed.* Thir-

* Phillips, I. 19, 27. In 1709, the ratio adopted was so favorable
to gold that Philadelphia merchants stated that ''our pa3rments
were mostly made in gold, New York and Britain gradually exhaust-
ing our silver." Proud, II. 161. The ascertainment of the exact
ratios established by colonial statutes is commonly a work of some
difficulty, because the colonists, in some cases at least, *' disregarded
the difference in fineness of the metals, and derived the ratio from
the gross weights." See YaU Rev., VII. 413. In most cases the
computations here presented are necessarily based upon a compari-
son of the gross weights. In some cases, however, where Professor
Sumner's computations are used, the ratios are based upon a com-
parison of the fine contents of the coins.

« Stat, of S. C, II. 195, 178; Carroll, II. 258.

•Hening, Stat, IV. 51, 52, 218, 219, XL 117, 118; Ripley, 127,
130.

^ YaU Rev,, Vll. ^11.

MONETARY HISTORY

teen years later, the acts providing for resumption
of a specie basis rated gold and silver coins in such
a manner that it is difficult to compute the ratio.^
But in 1752 treasury bonds were made payable in
silver or gold at a ratio of 15.38 : i.^ Gold was not
legal tender at this time, although it was current
in the province at about the rates specified in a
statute of 1750.* In 1758 a large amount of gold
was received from England in payment of subsi-
dies voted by Parliament, so that the legislature
could declare four years later that "gold is now
become by far the greatest part of the medium of
trade in this province." Meanwhile the relative
value of silver in Europe had risen so that an ounce
of gold, which in 1756 was equivalent to 14.94
ounces of silver, would exchange for only 14.14
ounces of the white metal in 1760. Under such
conditions, foreign obligations naturally were met
by shipping silver out of the province.* In 1762 an
act was passed making gold legal tender at a rate
of about 4.22 grains for a shilling. Since the sil-
ver coins in actual circulation passed at 62.9 grains

1 YaU Rev,^ VII. 413-414. Taking the value of a shilling in
the gold coins that received the most favorable rating, and the
value of a shilling of the silver currency then in circulation, we
obtain a ratio of 14.94: i.

* YcUe Rev,^ VII. 414. Taking the fine contents of the silver
coins in actual circulation, Professor Sumner computes a ratio of
14.52: I.

"One writer claimed that the act of 1750 made gold a legal ten-
der. Yale-Rev,^ VII. 414. But Hutchinson entertained the oppo-
site opinion. Hutchinson, Hist., III. 98.

*Soetbeer, 129; Hutchinson, Hist., III. 99.
26

SILVER AND GOLD CURRENCIES

for a shilling, this law established a ratio of 14.905.^
This ratio would probably have overvalued gold
sufficiently to enable it to drive silver out of the
province if silver had remained at the value which
it held in 1760. But, as it proved, the white metal
fell in value so that in 1762 it required 15.27 ounces
to purchase one ounce of gold; while, for the
next few years, the ratio between gold and sil-
ver remained at about 14.8: i. As a result, the
act of 1762 did not drain the province of its
specie ; although its immediate effect was, as the
legislature probably intended, to depreciate the
standard of value about 4f per cent^ Finally
it may be noted that the ratings of gold and silver
adopted in Massachusetts in 1750 seem to have
been followed fairly closely in New Hampshire,
Rhode Island, and Connecticut ; so that a ratio of
slightly less than 15:1 may be said to have pre-
vailed in New England.* This undervalued silver,
which in every year from 1740 to 1790, with only
five exceptions, was worth more than one-fifteenth
as much as gold.^ Yet the divergence of the legal
from the market ratio was not great enough to
drain these colonies of their silver coins, although
silver was probably the metal more commonly

1 Acts of Mass., IV. 515, 516; Yale Rev., VII. 417.

« YaU Rev,, VII. 418.

•Acts of Mass., III. 495 ; Papers of N. H., VII. 77-78, 282,
296 ; G>nn. Recs., X. 339 ; Potter and Rider, 99. All of these
acts rate silver at 6j. &/. per ounce, and gold at about ;f 5 per
ounce.

*Soetbeer, 129.

MONETARY HISTORY

employed in the payment of foreign debts.^ Per-
haps the coins in actual circulation were clipped
to such an extent that the lighter silver pieces
would stay in circulation longer than the heavier
gold pieces, in spite of the overvaluation of the
yellow metal.

^ In Canada during the eighteenth century silver was overvalued,
and the problem of currency legislation was to keep gold in circu-
lation. In the West Indies, on the other hand, gold was over-
valued, and even the fractional silver coins tended to disappear
from circulation. See Chalmers, 20-21.

CHAPTER IV

COLONIAL PAPER MONEY

Soon after the colonies commenced to advance
the ratings of their current coins, there began a
series of attempts to establish private banks. It
must be remembered that, during the entire colo-
nial period, the word "bank" meant simply a
batch of- paper money, a conception that has dis-
appeared only gradually during the present cen-
tury as the functipns of deposit and discount have
assumed greater importance in modern banking.
During the seventeenth century, more especially
during its closing decades, public and private
credit had been developed in the countries of
northern Europe upon a scale that was previously
unknown. Naturally enough the real nature and
precise limitations of the great agency thus created
were not clearly understood. It was perceived that
credit increased enormously the control over capi-
tal enjoyed by a person or a company ; but it was
not realized so readily that credit is not the same
as capital, and that capital cannot be directly
created by credit, although its efficiency may be
greatly increased. John Law's projects, the Mis-
sissippi Scheme in France, the English Land
Bank Scheme, and the South Sea Bubble were

MONETARY HISTORY

no isolated phenomena: many other fallacious
enterprises grew out of the misunderstandings
'that prevailed concerning the nature and proper
uses of credit. Theories and plans of a paper cur-
rency began to appear in England as early as
1650, when William Potter published "The Key
of Wealth, or A new way for Improving of
Trade." Other schemes followed, all of which
proposed to find some other medium than metallic
money for a basis of paper credit For this pur-
pose deposits of merchandise or pledges of land
were commonly suggested.^ In England the exist-
ence of more settled industrial conditions and the
possession of a larger supply of capital facilitated
the growth of sounder views concerning the true
nature and proper basis of credit, but these lessons
were not learned until much sad experience had
been gained from unsafe banking ventures ; while,
as late as the period of restriction from 1797 to
1 8 19, all the forces of unreason had to be most
vigorously combated before it was generally
admitted that the premium on bullion was due
to the depreciation of the paper currency, and
not to an alleged scarcity of gold.^ In the Ameri-
can colonies, however, the economic conditions
were precisely the reverse of those which prevailed
in the mother country; and all circumstances
favored the persistence of erroneous ideas.

lOn these banking schemes in England, see Rogers, 1-88;
Dunbar, in Q.J, i?., II. 482-490 ; Trumbull, 6-7.
2 Macleod, II. 30-50. ,

COLONIAL PAPER MONEY

At some time previous to 1652, "paper bills" (
seem to have circulated in some parts of Massa-
chusetts, and there is a record of projects "for
raiseing a Banke/' ^ William Potters's " Key of
Wealth," or some similar publication, may have
come to the attention.of Governor John Winthrop,
of Connecticut; for, in 1661, he is found to be j
entertaining " some proposalls concerning a way of
trade and banke w%ut money." ^ A few years [
later, the Rev. John Woodbridge submitted a proj- 1
ect " for erecting a Fund of Land, T)y Authority, ■
or private Persons, in the Nature of a Money-Bank '^
or Merchandise-Lumber,'*^ In 1671, 1681, and
1686, private banks were actually established in
Massachusetts; and bills were issued, probably
upon the security of " such Real Estates of Lands,
as also personal Estates of goods and Merchan-
dizes not subject to perishing or decay." * These
projects, however, proved to be short lived. In
them can be distinctly traced the influence of
theories that were then prevalent in England. ^
In 1690, Massachusetts, followed shortly by other
colonies, emitted its first public bills of credit.

iFelt, 33 ; Proc. Ant. Soc., 1866, 35-36 ; Weeden, 318.

* Trumbull, 8-9 ; Weeden, 318-324.,

•Trumbull, 4-7, 9-1 1 ; Weeden, 328-329 j Douglas, Fin. Hist.

44-45-

*Proc. Ant Soc, 1866, 38-39; Felt, 46-47; Douglas, Fin.
Hist, 45-47 ; Trumbull, 11-14 ; Q,/, E,^ XI. 70-75.

•This is shown by Trumbull, 6-9. It is interesting to note that,
in the middle colonies, Thomas Budd in 1685 projected a bank of
commodities. Budd, Good Order, 40-41.

MONETARY HISTORY

Such issues soon became so common as to divert
attention, in a great measure, from private bank-
ing enterprises. Yet in 1700, 1714, 1733, 1739,
and 1740, private banks were projected in Massa-
chusetts, and were finally suppressed with great
difficulty.^ In some cases, however, these associa-
tions actually placed a considerable quantity of
their Bills in circulation. The great Land Bank
of 1740 issued about ;^35,cxx) of notes, and made
a most vigorous struggle to maintain its existence.*
In New Hampshire, Connecticut, and South Caro-
lina, associations were formed, between 1732 and
1738, for the purpose of engaging in similar ven-
tures; and at a later date we hear of other
attempts in Pennsylvania and Virginia.* But
Parliament interfered, in 1741,* by extending to
the colonies the provisions of the " Bubble Act,"
which had been passed twenty-one years earlier in
order to suppress such swindles as had occurred
during the time of the South Sea Company.

The paper money that so long cursed the Ameri-
can colonies was issued by acts of the several legis-

iFelt, 55, 65-67, 88-89, 97; Hutchinson, Hist., II. 188-189,
341 ; Sumner, Banking, 6-9 ; Q./. E., XI. 75-91, 136-143.

2 Hutchinson, Hist., II. 352-355 ; Felt, 97-109 ; Douglas,
Fin. Hist., 127-129 ; Sumner, Banking, 9-1 1 ; Weeden, 486-491 ;
Q,/, E,y XI. 148-157 ; Proc. Ant. Soc, April, 1896. .

« Papers of N. H., IV. 685 ; Felt, 91-92 ; Bronson, 42-43 ;
Q, /. E,^ XIII. 71-84 ; Douglass, Discourse, 310, 317 ; Shepherd,
433 ; Phillips, I. 27-28, 199 ; Sumner, Banking, 8, 9, 11.

^ Stat, at Large, 6 Geo. I. c. 18, 14 Geo. II. c. 37. Cf. Sumner,
Banking, 10.

COLONIAL PAPER MONEy

latiires. Massachusetts had led the way, in 1690,
with an issue of bills that were used to defray the
expenses of a disastrous military expedition.^ Her
example proved contagious; and, by 171 2, New
Hampshire, Rhode Island, Connecticut, New York,
New Jersey, North Carolina, and South Carolina
had issued quantities of bills of credit in order to
meet the outlays occasioned by Queen Anne's
War.^ In subsequent years bills were emitted as
a regular means of defraying the current expenses
of government; and, as the volume of paper ac-
cumulated, a great depreciation ensued. Sooner
or later all the plantations were deeply involved in
the mazes of a fluctuating currency, for the bur-
dens attending the various wars of the eighteenth
century were so great as to induce even the most
conservative colonies to resort to this easy method
of meeting public obligations.^ Virginia suc-

1 Hutchinson, I. 356-357 J Felt, 49-52 ; Weeden, 330, 379-381 ;
Proc. Ant. Soc, Oct., 1898.

2 South Carolina (1703); Stat, of S. C, II. 210, IX. Appendix.
New Jersey, New York, New Hampshire, and Connecticut (1709) ;
Phillips, I. 59 ; Hickcox, Bills of Credit, 13 ; Femow, 313 ;
Papers of N. H., III. 410-41 1 ; Bronson, 30-31. Rhode Island
first issued paper in 1710, and North Carolina in 1712 ; Potter and
Rider, 7-10; Arnold, II. 39-41 ; Col. Recs. of N. C, II. p. IV.,
IV. 576. On all these colonies, see Douglass, Discourse, 302-

318.

« Papers of N. H., V. 722, 740-742, 812-813; VI. 506-507;
Hutchinson, Hist, II. 390-391; Douglas, Fin. Hist, 118-119;
Potter and Rider, 100 ; Bronson, 63-64 ; Hickcox, Bills of Credit,
36, 39» 42 ; Fernow, 324-333 ; Phillips, I. 22-25, 73-76 ; Shep-
herd, 427-432 ; Scharf, II. 37 ; Iredell, Laws, 115, 157, 192, 198 ;

^ 33

MONETARY HISTORY

cumbed last, in i/SS, but made large issues in the
ensuing years.^

A second excuse for issuing bills of credit was
found at an early date. In 171 2, South Carolina
created a public loan bank, and issued bills that
were loaned to its citizens at interest, upon real or
personal security.^ This expedient was followed
sooner or later by nearly all of the other colonies.*
Rhode Island easily distanced all competitors in
the readiness and facility with which she created
loan banks ; while Pennsylvania, New Jersey, and

Col. Recs. of N. C, VI. 1308-1309 ; Stat, of S. C, IV. 114. Dr.
Douglass called paper money " a great promoter of expeditions.^
Douglass, Summary, I. 310.

1 Ripley, 154-157 ; Phillips, I. 194-196. Georgia issued her
first bills in the same year. Stevens, I. 399.

2 Stat, of S. C, II. 389, III. 232 ; Ramsay, II. 162-163. Massa-
chusetts issued money on loan in 1714, Rhode Island in 1715, and
New Hampshire in 171 7. Felt, 67, 77, S4 ; Hutchinson, II. 189 ;
Potter and Rider, 1 1 ; Arnold, Index, "Banks" ; Papers of N. H.,
V. 620, 684-688. Pennsylvania and New Jersey created loan banks
in 1723. Phillips, 1. 13, 63 ; Annals, VIII. 50-126 ; Mulford, 327.
Delaware issued bills upon loan at about the same time. Laws of
Del., I. 97. North Carolina adopted this expedient in 1729, Con-
necticut and Maryland in 1733, New York in 1737, and Georgia in
1755. Col. Recs. of N. C, IV. 419, 476 ; Bronson, 44 ; Scharf, I.
280; Hickcox, Bills of Credit, 25 ; Stevens, I. 399. Virginia was
the only colony that did not resort to this method of issuing bills.
Even there, only the governor's veto prevented such action in 1755.
See Phillips, I. 195. Pennsylvania, Maryland, and Georgia issued
their first paper money in this form. In 1739, Douglass wrote that
Delaware had issued paper "upon the same footing as Pennsyl-
vania." Douglass, Discourse, 315. Land and plate were the
favorite forms of security upon which these public loan banks were
issued. On the loan banks in general note Douglass, Sunmiary, 11,
99» 3651 Discourse, 302-317.

COLONIAL PAPER MONEY

Delaware followed a more conservative course than
most of the other plantations.

The abuses attending both forms of paper cur-
rency were usually of the most flagrant sort. Bills
were issued for the payment of current expenses
or extraordinary outlays, and taxes would be voted
for the purpose of redemption. Then subsequent
assemblies would extend the period during which
the paper money should be current, or would neg-
lect to levy sufficient taxes for its withdrawal.^
Thus the currency tended always to accumulate,
and its depreciation increased. Sometimes a legis-

1 Papers of N. H., III. 564-565, IV. 72 ; Potter and Rider, 19 ;
Femow, 317, 320, 327, 330 ; Shepherd, 423, 430 ; Phillips, I. 20,
61 ; Stat, of S. C, IX. 767, 769, 773. By the year 1731, South
Carolina had piled up a debt of ;f 106,000 that represented bills
issued many years previously. These were then exchanged for new
bills, and continued in circulation without any provision for their
redemption. Stat of S. C, IX. 778-779. Subsequent statutes,
of which the last was passed in 1769, provided for the continued
circulation of these bills. Douglass had good reason for remarking
that South Carolina had been "notoriously guilty of breach of
public faith." Discourse, 317. He could with propriety say: "By
this unnatural Contrivance they oblige Posterity to supply the
Extravagances of their Parents and Ancestors, instead of the
common and natural Instinct of Parents providing for their chil-
dren." He said that piling up a debt in this manner was " really
analogous to the Negroes in Guinea, who sell their Progeny into
Slavery, for the sake of raising some ready Pence." Discourse,
338, 343. Thomas Paine called attention to the manner in which
one assembly would incur debts that were bequeathed to subse-
quent assemblies, and said : "The amount, therefore, of paper
money is this, that it is the illegitimate offspring of assemblies, and
when their year expires, they leave a vagrant on the hands of the
public." Paine, II. i8i. "^ "

35 sy^ '^

MONETARY HISTORY

lature would resolve that the bills in circulation
should not exceed a certain sum, but such a decla-
ration would prove utterly worthless.^ In almost
every colony the first issues were to remain current
for a short time only, and were to be redeemed
speedily by taxes ; but the periods were gradually
lengthened to twelve, sixteen, or twenty-five years.^
Laws were often passed providing for the emission
of new bills to replace worn or mutilated issues.
Then the new money would frequently be placed
in circulation without withdrawing and cancelling
the old,^ while bills that had been withdrawn for
the original purpose of destroying them would
often be reissued for current expenses.* In some
colonies it happened that paper issued upon loan
would not be repaid at the stated periods, and
interest payments were commonly in arrears.
When this occurred, the legislature would fre-
quently extend the time of the loans, and some-
times a large part of both principal and interest

^Thus when Massachusetts issued her first bills, it was resolved
that the issues should not exceed ;f 40,000. Felt, 51. But when
the issues of legal tender notes ceased in 1748, the sum of
;^2,466,ooo was outstanding. Douglass, Summary, I. 528. In
1749, the amount was ;^2, 200,000. Hutchinson, II, 392.

*Felt, 63; Douglas, Fin. Hist., 117; Bronson, 37; Fernow,
315 ; Annals, VIII. 72 ; Ripley, 154, 156.

•Bronson, 35-37 ; Stat, of S. C, II. 256, IX. 767, 772, 773.

* Bronson, 51, 59, 71 ; Annals, VIII. 57, 58; Douglass, Dis-
course, 312. In New York it was found in 1748 that the treasurer,
instead of destroying bills that were supposed to be cancelled,
reissued them " for his own benefit or for the benefit of his friends."
Docs, of N. Y., VI. 534 ; Fernow, 326.

COLONIAL PAPER MONEY

would never be repaid.^ In this respect Rhode
Island was probably the worst offender. Her loan
banks were placed in the hands of a few favored
persons, called " sharers/' who happened to
possess the requisite "pull." The "sharers"
then proceeded to lend out the money at a rate
of interest that was, for the first ten years, five
per cent higher than that which they were obliged
to pay to the colony. In some cases the fortunate
" sharers " would sell their privileges for premiums
that sometimes amounted to as much as thirty-five
per cent. The results of such performances can
readily be imagined.

Although the colonial bills of credit were not
always made a legal tender, they were usually
given a forced circulation. Most of the advocates
of paper money would have agreed with the New
York legislature that bills not legal tender were
useless.^ The direst penalties — fines, imprison-

1 Many colonies experienced difficulty in collecting interest and
principal Felt, 70 ; Bronson, 59 ; Shepherd, 419 ; Iredell, Laws,
1 1 7-1 18 ; Docs, of N. Y., VII. 204. In Rhode Island interest was
often defaulted. Potter and Rider, 16, 34, 35. Once, when a loan
became due, it was extended for ten years without interest. Identf
19. In 1 741, in only six towns, 539 lawsuits were begun for the
collection of loans. Idem, 56. In 1759, when the affairs of the
loan office were settled up, ;f 50,269 was found to be unpaid and
uncollectable. Idem, 96. This was nearly eleven per cent of the
principal of the nine loan banks that had been issued. Ideniy 135-
138. For an account of the speculation in "sharers'" privileges
see Douglass, Discourse, 308-309.

* Femow, 329. When Connecticut bills were made legal tender
only at their current value in specie, the debtor party secured the
repeal of the law in three years. Bronson, 63.

MONETARY HISTORY

ment, and confiscation — were imposed upon those
evil-disposed persons who should dare to discrimi-
nate in favor of specie; but such forcing laws
were as ineffectual in supporting the credit of the
paper money as they have proved in all other
cases.^ When older issues had depreciated hope-
lessly, " bills of a new tenor ** were often emitted ;
and these were sometimes followed by others of a
newer tenor. Thus it happened that issues of the
"old tenor," "middle tenor," and "new tenor*'
circulated concurrently at different rates of depre-
ciation, the legislature usually undertaking to fix
the relative values of the three classes of cur-
rency.^ In order to prevent depreciation some
of the issues bore interest, but this was a pro-
vision that was readily repealed by subsequent
assemblies.*

As has always been the case, the appetite for
paper money increased with the issues of bills of
credit. Complaints of the scarcity of money almost
invariably followed each emission, and one pre-
text after another was found for issuing larger

^ The influence of the tender laws of Virginia is well described
by Bumaby, 31-32.

* Felt, 92, 107 ; Bronson, 56, 59, 63, 65 ; Papers of N. H., V.
143, 145, 621, 623 ; Potter and Rider, 53-56. In Massachusetts,
one shilling of the new tenor was declared equal to three of the
old tenor. In Rhode Island the proportion was one to four.
Douglass mentions " old tenor, middle tenor, new tenor first, new
tenor second." Douglass, Summary, I. 493.

•Felt, 57, 75; Hickcox, Bills of Credit, 14; Ripley, 156;
SUt of S. C, II. 712, 713, IX. 766 ; Douglass, Summary, II. 254.

COLONIAL PAPER MONEY

quantities of paper.^ Trade was said to be decay-
ing, public buildings had to be constructed, forti-
fications were needed, and dozens of other things
must be done by setting the printing presses at
work. The experience of the colonies demon- \
strates conclusively the impossibility of satisfying |
the desire for "more money " by issuing a paper '
currency. Depreciation commenced at an early
date, and tended to increase as time went on. In
New England sterling exchange was 133 in 1702,
a rate corresponding exactly to the rating of the
dollar at 6s, In 171 3, it rose to 150, and had
reached 550 by the year 1740. The climax was
reached in Massachusetts and Connecticut in 1749
and 1750, when exchange was quoted at 11 00,
indicating a depreciation of nearly 9:1, In
Rhode Island, the old tenor bills finally sank to
23 for I. In the middle colonies the depreciation

1 In Rhode Island, says Mr. Bates, one emission of bills " only
created the demand for the next." Bates, 33. When Connecticut
had issued enough paper to cause a depreciation of fifty per cent,
complaints of a scarcity of money became so numerous that the
legislature once more made taxes payable in produce. Bronson, 38,
56. The same thing occurred in Massachusetts. Felt, 76. Hutch-
inson describes these complaints of the scarcity of money in Mas-
sachusetts. Hutchinson, History, II. 211, 340, 341. In Virginia,
in 1776, when the state had issued ;f 350,000 and Congress had
emitted ]$io,ooo,ooo, ''freeholders" petitioned the legislature for
more currency. Phillips, I. 200. For such complaints of a lack
of money in the time of superabundant issues of paper, see Bates,
33-35; Potter and Rider, 33-34; Hutchinson, History, II. 197,
210,295; Bronson, 32; Shepherd, 414; Femow, 321; Phillips, I.
69, 70» 74. 76, 77-

MONETARY HISTORY

never reached such figures. In Pennsylvania
exchange once reached i8o, while the par of
exchange for specie was not higher than i66J.
In Maryland exchange rose from 133 to 250. In
North and South Carolina the paper currencies
finally sank to one-tenth the value of sterling.^

Such fluctuations in the standard of value
wrought intense hardships. In 1741, Governor
Shirley stated in his message to the Massachusetts
legislature : " A creditor who has the misfortune
of having an outstanding debt, of the value of 1000
pounds sterling, contracted anno 1730, can now
receive no more in our courts of judicature , . .
than the value of about 650 pounds sterling."
Between 1741 and 1749 exchange rose from 550
to 1 100, so that, as Douglass said, " Every honest
man not in debt lost about one-half of his personal
estate." 2 A widow who had had an income of £$
found by 1748 that this was reduced to about one-
eighth of its original value.^ Clergymen's salaries
suffered a corresponding reduction, so that Massa-
chusetts passed an act allowing them to receive
bills of credit *' only at their real value." * Harvard
College is said to have lost ;^ 10,000, and the Scotch
Charitable Society of Boston suffered sixty-six per

^For New England in general, see Douglass, Summary, I. 494;
Wright, LXI. For Rhode Island, Potter and Rider, 100. For the
middle colonies, Douglass, Summary, I. 494, II. 365. For the
Carolinas, Ramsay, II. 168; Douglass, Summary, II. 494.

* Douglass, Summary, I. 497, II. 14. , i
*Minot, I. S4.

* Felt, 79.

COLONIAL PAPER MONEY

cent loss upon the repayment of some of its invest-
ments.^ Under such conditions of demoralization,
it is not strange that the legislature of Massachu-
setts complained of "universal infectious corrup-.
tion " in the conduct of public affairs, and that
Hutchinson observed that " the morals of the peo-
ple depreciate with the currency." ^

In 1749, when the currency had depreciated to
nearly one-eleventh of its nominal value, Massa-
chusetts succeeded in redeeming it at a rate of 7^
shillings of paper for one shilling of specie.' This
was accomplished with the aid of a grant of
money which Parliament had voted in order to
recompense the colony for its expenditures during
King George's War.* Efforts were made to secure
the cooperation of the other provinces of New
England, but without immediate result. Connecti-
cut finally adopted a plan similar to that followed

1 Douglass, Discourse, 366; Q,J, £,, XI. 143,

'Douglass, Summary, I. 500; Hutchinson, History, H. 391.
Douglass has described very well ''The Mischiefs arising from a
large Paper Currency." He shows, for instance, that wages
changed less rapidly than prices, so that laborers suffered from the
disturbances caused by paper money. He states that in 171 2, when
silver was at Ss, per ounce, wages were 5^. a day; while in 1739,
when depreciation had driven silver up to 2gs, per ounce, wages
were only 12s, 9. day. See Discourse, 322-325.

•The act provided that 451. old tenor should be exchanged for
one dollar. With a dollar rated at 6^., this gives a ratio of 7} : i.

^Hutchinson, I. 392-395; Douglass, Summary, II. 15-16; Felt,
1 18-122, 131; Weeden, 674-677; Douglas, Fin. Hist., 131-133.
Shortly before this action was taken, the currency had fallen into
such a wretched condition of depreciation, that people were driven
to barter. Minot, I. S4.

MONETARY HISTORY

by Massachusetts, and decided to retire her cur-
rency at the rate of 8| for i. Some years later,
New Hampshire made a tardy provision for at
least a part of her paper issues ; and Rhode Island
exchanged her bills for treasury notes, or allowed
them to be paid for taxes at a high rate of depre-
ciation.^ The opponents of resumption in Massa-
chusetts predicted that such a policy would deprive
the people of a circulating medium, and ruin all
branches of trade. The result was that a specie
currency was restored and industry prospered.
Prior to this time, Newport had controlled the
importation of West India goods into some parts
of Massachusetts. This trade at once passed over
to Boston and adjoining ports, and Rhode Island
paid the penalty for her obstinate adherence to a
fluctuating paper currency.*

iFelt, ii8; Bronson, 67-73; Papers of N. H., V. 565-568, 574,
VI. 225, 226, VII. 58, 65, 145; Belknap, XL 425; Potter and
Rider, 67, 80, 97.

^ It seems probable that the resumption of a specie basis was
attended with some temporary inconvenience. A private letter
from Boston, of the date of June 17, 1750, says: "Trade is quite
dead, the Town is dull and still as on a Sunday; full of Goods, but
no Money to buy; . . ,** Mag, of Amer, Hist, \\,62*j. Douglass
refers to a similar situation in 1750. Summary, II. 88. A threat-
ened uprising of the paper money men resulted in a passage of a
stringent riot act. Felt, 1 29-1 31. But all such difficulties were
merely temporary, for the colony certainly enjoyed great subse-
quent prosperity, while the trade of Rhode Island languished.
Weeden, 676, 736; Potter and Rider, 24, 68. The French and
Indian War and the confusion attending the controversy with Great
Britain were injurious to trade, but yet the colony prospered until
the Revolution. Htltchinson could write in 1771: "Commerce

COLONIAL PAPER MONEY

During this carnival of fraud and corruption,
interference by an act of Parliament had often
been invoked. English merchants had sometimes
complained to the Board of Trade concerning the
losses to which the dishonest American currencies
had subjected them. The instructions of colonial
governors frequently directed that consent should
be refused to the passage of laws for the emission
of paper money.^ The governors often opposed
most vigorously all attempts to issue a depreciating
currency, and violent contests with the legislative
bodies not infrequently ensued. In Massachusetts,
the governor's salary was refused when he could
not be induced to consent to such measures ; and
in South Carolina, no acts passed the assembly for
four years on account of a deadlock over the sub-
ject of paper money.* Such occurrences were by
no means peculiar to these two colonies, and the

never was in a more flourishing state. The Massachusetts province
was, in this respect, the envy of all the other colonies; and while
the other colonies, by encouraging a delusive paper medium of
trade, had banished silver and gold, the Massachusetts had drawn
them, not only from several of the other colonies on the continent,
but from Jamaica, and more or less, every year, from Spain and
Portugal, and had obtained the name of the silver money colony.''
History, III. 350. See also II. 395-396,

^ In 1720, instructions to this effect were sent to all the govern-
ors, and such instructions were commonly repeated during the
next forty or fifty years. Docs, of N. Y., V. 539; Papers of N. H.,
III. 814 ; Col. Recs. of Penn., III. 261 ; Greene, 163 ; Hutchin-
son, II. 339 ; Felt, 76, 81, 84 ; PhUlips, I. 15, 51-55.

> Hutchinson, II. 298; Greene, 173; Whitney, 11 3-1 14;
Winsor, V. 328-329 ; Ramsay, II. 165.

MONETARY HISTORY

political party that stood for popular rights, as
against the prerogative of the royal or proprietary
governor, regularly included all the advocates of
paper currencies,^ When threats or open defiance
failed, the assemblies were accustomed to resort
to bribes in order to accomplish their purpose.^
Finally, in 175 1, Parliament passed an act pro-
hibiting any of the New England colonies from
emitting bills of credit and making them legal
tender ; but permission was given to issue treasury
notes that should be redeemed at the end of brief
periods from the proceeds of taxation, and should
not be given a forced circulation.^ Such a whole-
some restriction was immediately denounced as

^The New Jersey assembly refused supplies for two years on
account of the governor's rejection of various measures, among
which was a bill for issuing more paper. Mulford, 346 ; Pap. of
Morris, 213-226, 250, 270, 274, 310, 314-320. In New York, the
right to limit the time of revenue bills was used to extort consent
to issues of bills of credit Docs, of N. Y., V. 805. The Massa-
chusetts legislature refused to provide for the debts of the province
because Governor Belcher would not issue paper money. Felt,
86. See also Shepherd, 424-428 ; Fernow, 323 ; Williamson, II,
65 ; Felt, 69, 76-79, no.

2 Scharf, II. 35-36 ; Douglass, Summary, II. 14, 365 ; Phillips,
I. 72 ; Pap. of Morris, 2i6; Williamson, II. 8i. The Massachu-
setts legislature reduced the salary of Governor Shute, who was
unfriendly to the projects of the paper money men ; while Governor
Shirley, who proved more pliant, had his allowances and perquisites
increased. Douglass, Summary, I. 492, II. 17-18.

• A number of writers had invoked interference by Parliament.
See Douglass, Discourse, 311 ; Ashley, Memoirs, 61-63. The
House of Commons first considered the question in 1740, when it
directed the colonial governors to refuse assent to laws for the

COLONIAL PAPER MONEY

" destructive of the liberties and properties of his
Majesty's subjects" in the colonies; but, in 1764,
Parliament passed another act which imposed a
similar regulation upon all the other plantations,
and required that outstanding bills of credit should
be gradually retired.^

This legislation put an end to probably all
further issues of legal tender bills.^ But " treasury
notes" or "orders" or bills of still other names,
receivable at the provincial treasuries, were exten-
sively employed until the time of the Revolution.
The New England colonies made a regular prac-
tice of issuing treasury notes that were redeemed
by taxes within short periods, and usually bore
interest. Similar issues under various names can
be found elsewhere.^ In 1769, Maryland suc-
ceeded in emitting j)3i8,oco of bills upon loan.

emission of legal tender bills. Journ. of H. of C, XXIII. 527-528.
Four years later, a bill prohibiting further issues was introduced.
Idem^ XXIV. 658. For the act of 1751, see Stat, at Large, 24
George II. c. 53.

1 Stat, at Large, 4 George III. c. 34. For Franklin's efforts in
opposition to this measure see Works of Franklin, IV. 11, 79-94.
In 1773, an explanatory act specified that treasury notes could be
made receivable at the provincial treasuries. Stat, at Large, 13
George III. c. 57.

^The writer has been unable to find any legal tender issues after
1763 except one in South Carolina. Stat, of S. C, IV. 312, 313.
But this was merely a reSmission of old legal tender notes that had
been outstanding for many years.

•Papers of N. H., VI. 506-507 ; Felt, 31 ; Bronson, 81-84 ;
Potter and Rider, 94, 100, 209 ; Shepherd, 433 ; Ripley, 157, 161 ;
Stat of S. C, IV. 323.

MONETARY HISTORY

and a larger issue followed in 1773.^ In 1771,
New York created another bank of ;£ 120,000, but
the bills were made legal tender only at the treas-
ury; and finally, upon the eve of the Revolution,
Pennsylvania and New Jersey attempted to rees-
tablish their loan offices.^ In 1774, therefore,
there must have been a considerable amount of
paper in circulation in America. Pelatiah Webster
estimated the "circulating cash" of the thirteen
states at ;$ 12,000,000 at this time.® He thought
that one-half or three-fifths of the currency of
Pennsylvania was made up of paper, and believed
that this proportion was not exceeded in other
states.

Under the political conditions that prevailed in
the colonies, it was inevitable that the question of
paper money should get into politics. In Mas-
sachusetts, this occurred in 171 3, when banking
projects were being agitated,* and eight years later
Dr. Trumbull tells us that the paper money party
had become identified with the "popular" or
" liberal " party .^ This was natural, since the
governors and their councils often combated
vigorously all measures that tended to depreciate
the currency. Sometimes the governors undoubt-
edly opposed a paper medium because they had a

1 Laws of Md., 1769, c 14 ; 1773, c. 26.

* Hickcox, Bills of Credit, 45-46 ; Phillips, I, 29, 76 ; Feraow,

334-335-

« Webster, 142.

* Hutchinson, Hist., II. 188.

* Trumbull, 30. Cf. Hutchinson, Hist., II. 394,

COLONIAL PAPER MONEY

just appreciation of its evils ; at other times they
seem to have been concerned chiefly with the
prospect that their fixed salaries would inevitably
be paid in bad money; and, often enough, they
received from England explicit instructions that
were intended to leave them no opportunity to
exercise their own discretion.^ In colony after ^'^^
colony, party lines came to be drawn upon this sole
issue ; and when opposition was encountered from
the governors or councils, deadlocks frequently
ensued. Public disturbances were often aroused
by these controversies over paper money, and a
factional and disorderly spirit was engendered.^
There can be no doubt that the debtor class, as a
rule, accorded an active support to the inflationist
party ; and conducted a persistent agitation for a
cheap currency with which existing debts could
be more easily paid. Even Franklin was unable
to deny, in 1764, the truth of the allegation that in
some colonies, at least, paper money had been
issued " with fraudulent views " through the influ- j
ence of the debtor classes.^ Douglass wrote, in >l
1749: "The Parties in Massachusetts Bay at
present, are not the Loyal and Jacobite, the Gov-
ernor and Country, Whig and Tory, or any religious
sectary denominations, but the Debtors and the

^ Sometimes the council proved more strenuous than the governor
in opposition to issues of paper, and stood out against the inflation-
ists even when the governor had yielded. See Greene, 77-78, 163.

* This subject has been treated sufificiently in a previous note;
but see, in addition, Douglass, Discourse, 331-332.

« Works of Franklin, IV. 89.

MONETARY HISTORY

Creditors. The Debtor side has had the ascendant
ever since anno 1741, to the almost utter ruin of
the country/'^ He said: "Paper-money-making
assemblies have been legislatures of debtors, . . . ; " ^
and as much has been admitted by several of the
historians of colonial affairs.^ It is probable that
Thomas Paine did not overdraw the picture when
he wrote:* "There are a set of men who go
about making purchases upon credit, and buying
estates they have not wherewithal to pay for;
and having done this, their next step is to fill the
newspapers with paragraphs of the scarcity of
money and the necessity of a paper emission, then

1 Summary, I. 535.

^ Idem^ I. 310. Elsewhere he says: "Men are chosen into
the legislature and executive parts of their government, not for
their knowledge, honour, and honesty, but as sticklers for depreci-
ating . . . the currency, by multiplied emissions : this year, 1750, the
parties amongst the electors of assemblymen were distinguished by
the names of paper money makers, and the contrary." Idem^ II.
87; cf. I. 314. Referring to the journal of the house for August
17, 1747, he says that complaints sent to the legblature concern-
ing depreciation were " referred to committees consisting of the
most notorious depreciators.'' Idem, II. 14. Cf. Discourse, 330,

•See Hutchinson, Hist, II. 295, 353. In 1740, a majority of
the representatives elected in Massachusetts were subscribers to the
land bank scheme, and at another time several of the leading repre-
sentatives were notorious debtors. In Rhode Island, the evidence
is perfectly clear. In 1731, the paper-money party secured com-
plete control. Bates, 36-37; Potter and Rider, 26, 30, 82; Ar-
nold, II. 53; Recs. of R. I., V. 312. On other colonies see
"Weeden, 490; Bronson, 42, 77; Fernow, 321; Ripley, 160; Wil-
liamson, II. 81; Col. Recs. of N. C, IX. 76.

* Paine, II. 178.

COLONIAL PAPER MONEY

to have a legal tender under pretence of supporting
its credit, and when out, to depreciate it as fast as
they can, get a deal of it for a little price,
and cheat their creditors ; and this is the concise
history of paper money schemes."

There is evidence that, as time went on and the
lessons of sad experience were learned, the leading
merchants and propertied classes in the colonies
began to appreciate fully the evils of the fraudu-
lent paper currencies. As early as 1714, a town
meeting in Providence protested against further
issues of paper.^ At about the same time in the
assembly of New York, the members from New
York City opposed an increase of the bills of
credit.^ In 171 7, merchants of South Carolina
protested against the policy of the inflationists in
that colony.^ Three years later, Thomas Hutch-
inson and other leading citizens of Boston urged
the legislature to emit no more bills upon loan, and
to retire outstanding issues as soon as practicable ;
while, at the same time, Salem instructed her rep-
resentatives to oppose further measures of infla-
tion.* In 1723, "Gentlemen and Merchants of
Philadelphia" pointed out to the legislature the
danger attending the use of paper money ; ^ while

1 Arnold, II. 53. * Fernow, 318.

•Ramsey, 11. 164; Carroll, II. 147-148.

*Felt, 72, 73.

•Shepherd, 406-409; Annals, VIII. 52-53; Proud, II. 152-162.
The merchants seem to have drawn their arguments from Pollex-
fen's Discourse of Trade, Coin, and Paper Credit, a copy of which
was in the library of James Logan, one of the objectors.
K 49

MONETARY HISTORY

Franklin has written concerning the Pennsylvania
issues of 1729: "The wealthy inhabitants op-
posed any addition, being against all paper cur-
rency, from an apprehension that it would
depreciate, as it had done in New England, to
the prejudice of all creditors."^ In 1731, mer-
chants of Newport protested against renewed
emissions of bills of credit in Rhode Island.^ In
Massachusetts, Hutchinson tells us^ that, when
the land bank of 1740 was under consideration,
"men of estates and the principal merchants in
the province abhorred the project. ..." At
nearly the same date, Douglass said that "they
who call out loudest for this Paper Medium, are
not our large Traders."* In 1750, leading citizens
of Rhode Island sent to the King a remonstrance
against the conduct of the paper-money party,
stating that the landholders of the colony had
mortgaged their lands as security for the loans
extended by the province, and now found it to
their interest to increase the volume of paper in
order that they might pay their debts with
worthless currency.^ Two years later twenty-five
merchants and traders of Hartford presented to
the Connecticut legislature the following interest-
ing petition for relief : " As the medium of trade

1 Works of Franklin, I. 152.

« Records of Rhode Island, IV, 457-461.

8 Hatchinson. Hist, II. 354.

* Discourse, 330.

* Records of Rhode Island, 311, 330, 334; Potter and Rider,
82-84.

COLONIAL PAPER MONEY

is that whereby our dealings are valued and \J
weighed, we cannot but think it ought to be es-
teemed of as sacred a nature as any weights and
measures whatsoever, and in order to maintain
justice, must be kept as stable; for as a false
weight and a false balance is an abomination
to the Lord, we apprehend a false and unstable
medium is equally so, as it occasions as much
iniquity, and is at least as injurious."^ Finally,
Pownall has left us the following explicit state-
ment : " The majority of the men of business and
property in the Colonies have ever heretofore

{wished to have the assemblies restrained by act
of Parliament, from the power of giving the sanc-
tion of a legal tender to their paper money." ^

At this point it may prove interesting to review
briefly the arguments that were advanced in the
eighteenth century for and against government pa-
per money. The first issue of bills of credit in Mas-
sachusetts called forth a pamphlet, written probably
by Cotton Mather, in defence of paper money ; ^ and
the controversies that ensued during the next
eighty or ninety years resulted in a veritable del-
uge of writings dealing with the subject. Nearly
; thirty pamphlets appeared between 17 14 and 1721;
and, in 1728, government issues of paper were

1 Bronson, 71.

« Pownall, I. 198.

•Quotations from this pamphlet are given by Trumbull, 15-18.
Mather held that money '* is but a Counter or Measure of men's
Properties." He favored a paper currency, "an abiding Cash,"
iince " no man will carry it to another Country."

MONETARY HISTORY

defended in a master's thesis at Harvard College.^
The flood of publications continued until the close
of the century, when it was thought that the Fed-
eral Constitution had finally barred the door to fur-
ther issues of bills of credit.^

The advocates of paper currency always claimed
that it was the only means by which a sufficient
circulating medium could be secured, and many
historians have accepted this plea with discredit-
able complacency. The opponents argued, on the
other hand, that an adequate stock of specie always
existed until it was displaced by a cheaper form of
money ; and that complaints of a scarcity of silver
were never so common as they always became after
repeated emissions of bills of credit.* When, for
instance, the inflationists in Massachusetts were
endeavoring to secure larger issues of paper, in
1 71 2, Judge Sewall answered, in his speech in the
legislature: "I was at making the first bills of

1 Weeden, 485; Proc. Mass. Hist. Soc, XVIII. 124, 125.

* Trumbull gives copious extracts from many of these pamplilets.
Other extracts may be found in Q, J. E,, XI. 70-91, 136-160.
Lists of scores of such publications may be found in Thomas, II.
370 et seq. ; and Douglas, Fin. Hist., 138-146. Especially valuable
is Winsor, v. 170-176. See, finally, a reprint of a pamphlet by
Hutchinson, in Proc. Mass. Hist. Soc., Feb., 1899.

* Douglass, Discourse, 338; "A Countryman's Answer," quoted
by Felt, 74. In a protest of five members of the Rhode Island
legislature, in 1740, against the issue of more paper, are found
the following words : " In respe^ to trade, this bank will probably
so far depreciate the whole paper currency, that we shall have, in
reality, a less medium of exchange, and all complaints of scarcity
of money greatly increased." Recs. of R. I., IV. 580. Cf. Hutch-

COLONIAL PAPER MONEY

credit in the year 1690. They were not made for
want of money ; but for want of Money in the
Treasury."^ Dr. William Douglass argued in
1740: "The more a Country grows in good Trade,
the more true Medium of Trade it acquires/' ^
At a later date, John Witherspoon, Pelatiah Web-
ster, and Thomas Paine voiced similar opinions.^
These writers always insisted, as Douglass had
done in 1740, that "a trading Country must have
regard to the universal commercial Medium, which
is Silver; or cheat, and trade to a Disadvantage."*
Like Paine, they inquired: "But why, since the
universal custom of the world has established
money as the most convenient medium of traffic
and commerce, should paper be set up in prefer-
ence to gold and silver .^"^ Frequ.^xtly, the advo-
cates of bills of credit argued that a large paper
currency would stimulate trade, and thus lighten
the weight of the taxes that would ultimately be
levied for redeeming the bills issued.® Douglass

inson, Hist., II. 197, 210, 340-341. Douglass argued that the
emission of a depreciating paper currency " does not add to the
real Medium, but rather diminishes from it" Discourse, 329.
Forty years later, Pelatiah Webster made the same contention.
Webster, 6. Writing in 1739, Douglass says that, with ;f 630,000
of paper circulating in New England, " Money was never so scarce
and Debts worse paid." Discourse, 333. Cf. also Idem^ 341.
1 Coll. Mass. Hist. Soc, Fifth Series, VI. 366.

* Discourse, 342.

* Witherspoon, Works, IX. 45, 50 ; Webster, Essays ; Writings
of Thomas Paine, II. 132-187. See especially. Writings, II. 179.

* Discourse, 294. * Paine, II. 178.

* Hutchinson, Hist, II. 219, refers to these arguments,

MONETARY HISTORY

replied that inflation caused extravagance and spec-
ulation ; and Paine retorted : " Paper money is like
dram drinking ; it relieves for a moment by deceit-
ful sensation, but gradually diminishes the natural
heat, and leaves the body worse than it found it."^
When the inflationists urged that magnificent pub-
lic improvements could be undertaken by means
of government issues,^ Douglass reminded them
that some one must ultimately pay for all such
indulgences.^ Again, when depreciation set in,
and specie rose to a premium, the friends of paper
always claimed that the bills of credit had not
deteriorated, but that silver had risen in value on
account of the demands of persons who desired to
export bullion. To this effect Franklin wrote in
1729: "I need not say anything to convince the
judicious that our bills have not yet sunk, though
there is and has been some difference between
them and silver ; because it is evident that the dif-
ference is occasioned by the scarcity of the latter,
which is now become a merchandise, rising and
falling like other commodities as there is a greater
or less demand for it or as it is more or less

1 Discourse, 340-341, 365 ; Paine, II. 183-1S4.

* See quotations given by Felt, 65, 72. Governor Ward, defend-
ing Rhode Island's issues, argued that the money had been expended
for public buildings, fortifications, and the like. Records of Rhode
Island, v. 8-14. Cf. Hutchinson, Hist., II. 219, 295.

•"The unthinking Part of our People do not consider, that
every emission of Paper Credit called Money, is laying a heavy Tax
upon us, which in Time will contribute to our Misery." Discourse,

COLONIAL PAPER MONEY

plenty." ^ Douglass replied : " The repeated large
Emissions of Paper Money are the Cause of the
frequent rise of the Price of Silver and Exchange."
This, he argued, was equivalent to saying that the
bills had depreciated. Under such conditions, the
premium on silver must follow, " the same as the
Tides do the Phases or Course of the Moon."^
After the depreciation of the paper had gone to
such lengths that it could no longer be denied, its
advocates always advanced, with the greatest com-
placency, the suggestion that the fall in the value

1 Works of Franklin, I. 376. In 1764, Franklin repeated
this argument, and at greater length. Works, IV. 89--91. He
said that soon after the emission of the first paper in Pennsylvania,
** a difference soon arose " between silver and paper, due to the demand
for silver for export In 1721, when exchange had risen from 133
to nearly 270, the Massachusetts house of representatives thought
that a prohibition of selling bullion at more than Ss, per ounce
would remedy the difficulty, and that depreciation would not have
taken place at all if such a measure had been adopted at the very
start. Felt, 77. In 1740, Governor Ward of Rhode Island, and in
1750 the legislature, attributed the depreciation to the pernicious
practice of merchants in offering a premium for silver, **to the
injury and oppression of many poor widows, orphans, and others."
Potter and Rider, 74, 161, 188. This was in the face of a rise in
exchange from 133 to 550 in 1741, and iioo in 1749. The solici-
tude of a legislature of paper-money inflationists for widows and
orphans is most interesting.

^ Discourse, 325. Hutchinson said of a bill prohibiting silver to
be sold above proclamation rates : " Such an act can no more be
executed than an act to stop the ebbing and flowing of the sea."
Hist, II. 222. See Writings of Paine, II. 179. In 1723, a petition
of Philadelphia merchants argued as follows : " But, from hence a
sure rule may be taken, in relation to paper, that by so much as the
value of the public bills sink, by so much will gold and silver rise,
in proportion to their intrinsic worth." Proud, II. 162.

MONETARY HISTORY

of the bills of credit had operated as a gradual and
insensible tax upon the community; so that no
great harm had been done after all. To this opti-
mistic view it was readily replied that such a tax
was the most unjust and harmful method ever
devised for meeting public expenditures. It taxed
only those who were so situated that they could
not avoid it, and benefited sharpers, speculators,
and dishonest debtors. It devoured the estates of
widows and orphans, paralyzed legitimate business
undertakings, and wrought untold injury to public
and private morals.^ Yet the advocates of a de-
preciating currency still insisted that bills of credit
were a necessity, and that government should
assume its proper duty of supplying money directly
to the people. No better answer has ever been
given than is found in the following words of Wil-
liam Douglass : ^ "In all Countries excepting in
Paper Money Colonies, the People support the
Government : it is absurd to imagine that a Gov-
ernment finds Money for its People, it is the Peo-
ple who by their Trade and Industry, provide not
only for their own Subsistence, but also for the
Support of Government. . . ."

This chapter of our monetary history presents
a sufficiently dark and disgraceful picture. But
certain important facts still remain to be noted
before we pass from the subject of provincial
paper currencies. For eighty years the people of

1 Douglass, Discourse, 322-325 ; Webster, 30-32.
^Dbcourse, 342-343.

COLONIAL PAPER MONEY

the colonies were schooled in the belief that bills
of credit furnished a proper and convenient means
of defraying public expenditures, ordinary as well
as extraordinary. Such issues, of paper would
depreciate, and could ultimately be wholly repu-
diated, or could be redeemed at a fraction of their
face value. Under such circumstances, there inev-
itably developed a strong disinclination to permit
taxation to be practised on any scale commensu-
rate with the public needs.^ The habit of paying
taxes readily and regularly is not easily acquired,
while it is lost with the utmost facility. The colo*
nists, for three generations, were trained in a bad
school of public economy ; and had learned lessons

^ In Massachusetts, in the first half of the eighteenth century, the
policy of the legislature was " the abandonment of the constantly
increasing current expenses of the government, to be met by larger
and larger issues of bills of credit." Douglas, Fin. Hist, 121.
During a long term of years, only one budget provided for current
expenses. Cf. Hutchinson, II. 339. Pennsylvania, although more
moderate in her issues of paper prior to 1775, is found, on the very
eve of the Revolution, yielding to the ** temptation to overcome
instant wants by means of larger sums payable in the future."
Phillips, I. 28. Cf. Shepherd, 427. At the close of the colonial
period, Virginia, which had been far more conservative than most
of the colonies in her financial policy, was in a condition which Mr.
Bancroft describes as follows : "Virginia was, moreover, unpre-
pared for war. Its late expedition against the Shawnee Indians
had left a debt of a hundred and fifty thousand pounds ; its cur-
rency was of paper, and it had no efficient system of revenue."
Bancroft, Hist., IV. 144. With such conditions prevailing in the
larger and more populous colonies, it is easy to conceive of the
situation elsewhere. Professor Sumner has described admirably
the tardy and inadequate development' of colonial taxation. Sumner,
Financier, 1. 11-54.

MONETARY HISTORY

that were soon to bear bitter fruit. It is not at
all remarkable that, in the Continental Congress
of 1775, members are reported to have entertained
strong objections to burdening their constituents
with taxes, when it was possible to send to a printer
and obtain a wagon load of money, one quire of
which would pay for the entire sum needed to pros-
ecute the struggle for independence.^ In opposing
the attempts of Parliament to levy taxes upon them,
the colonies were contending not only against " tax-
ation without representation," but also against tax-
ation in any form. They were quite as certain
that it was impracticable to secure representation
in that body, as they were that Parliament ought
not to tax them without their consent.^ Finally,
as a matter of simple historical fact, there can be
little doubt that the acts of 1751 and 1764, which
suppressed further issues of bills of credit, contrib-
uted not a little to the final breach with the mother
country. In 1744, when Parliament was consider-
ing the advisability of prohibiting colonial issues
of paper money, the New York assembly resolved
that such a measure would be contrary to the con-
stitution of Great Britain, incompatible with the
rights and liberties of Englishmen, and likely to

1 Webster, 7-8.

2 The declaration of rights, adopted by the Stamp Act Congress
in 1765, maintained that taxes could not be imposed upon the
colonists without the consent of their representatives, and that the
colonies, ** from their local circumstances,'' could not be represented
in Parliament. Niles, 457. Professor Sumner has stated the
matter very clearly. Sumner, Financier, I. 25.

COLONIAL PAPER MONEY

subject America to the absolute will of the Crown.^
The action finally taken by Great Britain aroused
the most bitter feelings of resentment ; and the
law of 1764 was enacted at a time when the minds
of Americans were excited over the Stamp Act,
I and the wisdom of the restrictions imposed upon
the paper currencies was the less likely to be
admitted. In 1766, when he was examined before
the House of Commons, Franklin gave it as his
deliberate opinion ^ that one reason for the impa-
tience and disrespect which the colonies were
manifesting toward Parliamentary authority was
" the prohibition of making paper money." Too
little attention has been given to this fact by most
American historians.^

1 Hickcox, Bills of Credit, 32 ; Winsor, V. 203. Similar decla-
rations were made in other colonies. See Felt, 81, 115 ; Bronson,
68 ; Pap. of Morris, 221.

« Works of Franklin, III. 418. Cf. IV. 106.

•Mr. Felt seems to be the first writer to appreciate this fact.
Felt, 132.

CHAPTER V

CONTINENTAL PAPER MONEY

The story of our Revolutionary paper money
supplies the next chapter in the experience of the
United States with a cheap medium of exchange.^
With the inception of the struggle against Great
Britain, the colonies were confronted with the prob-
lem of raising the supplies necessary for the pros-
ecution of the war. In the spring and early
summer of 1775, revolutionary assemblies or con-
ventions were convoked in various provinces, and
preparations were made for the public defence.
With the restraining influence of the royal govern-
ors and the acts of Parliament removed, it was
practically certain that issues of paper would be
renewed. The disinclination to pay taxes, which
had been fostered by eighty years of false finan-
cial methods, inevitably asserted itself in a refusal
to meet by heavy taxation the burdens incurred in
a war that was caused in large measure by oppo-
sition to the taxing power of Parliament.

The Continental Congress has often been blamed
for resorting to the disastrous expedient of issuing
paper money, but the financial policy of the Revo-

1 On this subject much has been written. See bibliography in
Bullock, 122. Since this bibliography was written, two other
accounts of the continental currency have appeared. See White,
134-148 ; Holt, in Sound Currency, V.

CONTINENTAL PAPER MONEY

lution was practically settled by the provincial
assemblies. Congress did not convene in Phila-
delphia until May lo, and did not determine to
issue bills of credit until June 22.^ Meanwhile,
Connecticut had decided in April to emit paper
money ; and Massachusetts had* adopted a similar
measure seven days before Congress assembled.^
Before the month of May had expired, Rhode
Island pursued a similar course; and, in June,
New Hampshire, Pennsylvania, and South Caro-
lina followed suit* During the next few months
all the other colonies, without a single exception,
decided to provide the sinews of war by means of
bills of credit*

Although the Continental Congress was a revo-
lutionary assembly which might conceivably have
attempted to assume all the authority of a strong
national government, it is almost certain that such
a course would have resulted in the downfall of
that body. It was in reality a consultative assem-
blage, whose powers were limited by the wishes of
the several colonies. In order to exist and to
maintain any respect for its authority. Congress
had to be governed by the temper of its constitu-
ents ; and, in respect to the proper financial policy,

ijourn. of Cong., June 22, 1775.

«Conn. Recs., XIV. 432 ; Force, II. 782.

»Rec8. of R. I., VII. 321 ; Force, 11. 659, 1168 ; Ramsay, II.
171. For South Carolina, Force mentions no issue before Novem-
ber 15. See Force, IV. 55.

* Force, II. 1551, III. 113, 197, 575, 1240; Laws of Del., I.
571-586 ; Laws of Md., 1780, c. 22, note.

MONETARY HISTORY

the wishes of the people of America had already
been indicated with sufficient clearness by the
action of the various provincial assemblies.^ These
bodies had commonly pledged the half or the whole
of their estates for the preservation of their sacred
liberties, but they had shown a uniform determina-
tion to raise money by sacrificing only the estates
of those people who were helpless to avoid the
losses of a depreciating currency. It is perfectly
true that the expenses of any war must, apart from
help secured in foreign countries, be defrayed out
of the annual produce of the industry of a people ;
and that taxation is the safest, surest, and wisest
method of meeting such expenditures. But the
hands of Congress seem to have been bound by its
lack of authority and the manifest desires of the
people. The New York assembly, and probably
some others, had conveyed to the men gathered
in Philadelphia explicit statements of their sen-
timents;^ and the actions of various provincial

^ For a somewhat different view see Bronson, 146-156.

^The New York provincial congress, as early as May 26, sent to
the New York delegates at Philadelphia a letter stating that, since
it would be impossible to conduct the war without paper money,
the council was about to consider that subject, and would communi-
cate the results of its deliberations as soon as possible. Force, II.
1255. The New York council appointed a committee, of which
Gouverneur Morris was a member, to consider the subject of a
paper currency. Sparks, Morris, I. 38. This committee reported
in favor of a continental currency on May 30, and its report was
adopted and forwarded to the delegates in Philadelphia. Force,
II. 1 262-1 264, 1 281. New Hampshire also expressed its desire for
paper money. Papers of N. H., VII. 483.

CONTINENTAL PAPER MONEY

congresses in actually issuing paper were more
significant than any words.^

Thus the Continental Congress and the individual
colonies, or states, undertook to carry on the strug-
gle for independence by the aid of bills of credit.
The dangers of such a course were fully appreci-
ated by many men, but the temper of the great
body of the people could not be mistaken. Recent
historians have investigated with great care and
entire fairness the extent and character of the
opposition which the revolutionary movement en-
countered from many of the most intelligent and
respectable persons in America, and have assured
us that earlier writers have failed to do justice to
the strength and honesty of that party which con-
sidered separation from the mother country to be
unnecessary and undesirable.^ With the history
of colonial paper currencies before us, it is reason-
able to believe that the fe;ar of reckless issues of
bills of credit was certainly one cause for the hostile
attitude assumed by a large portion of the conser-
vative, propertied classes.^

^ How well Congress understood the disposition of the colonies,
and the limits of its own authority, is well shown in some " Obser-
vations on the Finances of America," which were sent to Franklin
in 1778. The " Observations" pointed out that, since America had
"never been much taxed" and the war was "upon the very
question of taxation," " the laying of imposts, unless from the last
necessity, would have been madness." Sec. Joum. of Cong., II.
118.

^ See Tyler, I. 293-315 ; Amer. HisU Rev,, I. 24-25 ; Sumner,
Hamilton, 48-51, 53-61.

*£ven John Adams was afraid of what the debtor class would

MONETARY HISTORY

Congress began by issuing $6,cx)0,cx)0 of paper
money before the close of 1775, and urged the
states to redeem their respective quotas of the
bills by imposing taxes.^ But the states refused
to resort to taxation, except for inconsiderable
sums, and continued to emit increasing amounts
of their own paper. After unsuccessful efforts to
raise revenue by such expedients as a lottery and
a domestic loan,^ larger continental issues had to
be emitted. In 1777, Congress began to make
requisitions upon the states for money that was to
be raised by taxes which only the states could
impose ; but these requests met with such a par-
tial compliance that further issues of paper were
placed in circulation. Several years elapsed before
the states instituted effective systems of taxation,
and little assistance was secured from this source,^
Loans and subsidies furnished by France brought
considerable sums into the federal treasury; but
more and more paper was emitted, the amounts of
the issues increasing as the depreciation of the
currency progressed. By the end of 1779, Con-
gress had issued $24i,Soo,ocx) of the continental
bills of credit ; while the states had gradually in-
creased their emissions to more than $200,cx)0,cxx).*

do if power should pass completely into its hands, '* for half the
nation are debtors." Works of Adams, II. 420.

1 Bullock, 125.

^Idem, 166-167, and references there given.

^ Idem, 151-164 ; Sunmer, Financier, I. 11-34, II. 64-80;
BoUes, I. 190-205.

^Bullock, 125-130. The estimate of the amount of paper

CONTINENTAL PAPER MONEY

At the opening of 1781, a dollar in paper was
worth less than two cents in specie, and the cur-
rency soon afterward sank in value to such an
extent that it became practically worthless.^

Congress knew, as is shown by its resolution
adopted Nov. 22, 1777, that "when a quantity
of money of any denomination exceeds what is
useful as a medium of commerce, its compara-
tive value must be proportionately reduced." ^ But
the unwillingness of the states either to levy taxes
themselves, or to allow Congress to do so, seemed
to leave no alternative but to continue the conti-

issued by the states is from Schuckers, 127. The figures have
been considered too large by some writers. See Knox, 10. But
the writer has collected sufEcient data to justify the statement
given by Schuckers.

1 Until 1779, the depreciation was fairly gradual. Late in 1775
and early in 1776 committees of safety and other similar bodies
took measures to force unwilling persons to accept the money.
Force, III. 1799, IV. 887, 888, 896, 941, 942, 1211, 1284. By
May, 1776, the depreciation of the paper has oeen clearly estab-
lished. Sumner, I. 49-50. The last half of 1776 saw a continuous
depreciation, until, by the opening of 1777* a depreciation of thirty-
three per cent was acknowledged by law in Pennsylvania. Phillips, I.
33. A year later four dollars in paper were equal to no more than
one dollar in specie ; and by January, 1779, the rate was eight for
one. During 1779, the currency rapidly declined to one-fortieth
of its nominal value. Bullock, 133. After 1780, it sometimes cir-
culated at rates of five hundred or one thousand for one. Webster,
502 ; Elliot, UI. 472. Finally barbers' shops were papered with
it, and suits of clothes were made out of it. Breck, 19.

2 Joum. of Cong., Nov. 27, 1777. Many of the leading Ameri-
cans understood this perfectly. John Witherspoon and Pelatiah
Webster are notable examples. See also the extracts given by
Simmer, Financier, I. 43-44, 95-97.

F 65

MONETARY HISTORY

nental issues. When the bills began to depreciate,
the states were requested to declare them a legal
tender for all debts; and this recommendation
was willingly accepted. Legal tender laws were
passed, and every possible effort was made to
force the circulation of the paper.^ Price con-
ventions were held, and these assemblages made
futile attempts to regulate prices.^ General Wash-
ington was authorized to seize whatever supplies
might be required for his army, and to compel the
owners to sell their goods at reasonable prices.'
All such methods were as idle as attempts to vio-
late the natural laws of money have always proved
to be. Persons who refused to sell their lands,
houses, or merchandise for nearly worthless paper
were stigmatized as misers, traitors, forestallers,
and enemies of liberty;* but prices continued to
rise, as the inflation of the currency proceeded
apace. Stores were closed or pillaged, and mer-
chants were mobbed, fined, or imprisoned;^ but
such action merely drove men out of business, and

^Felt, 169-170; Papers of N. H., VIII. 144; Bronson, 90, 95;
Hickcox, BUls of Credit, 50; Mulford, 439; Laws of Md., 1777^
c. 9; Laws of Del., II. 599; Col. Recs. of N. C, X. 194-196; Mc-
Call, II. 127, 134; Phillips, I. 31, 32, 78, 199.

'Sumner, Financier, I. 53-66, 72-78; BoUes, I. 158-167; Byon-
•on, 92 ; Potter and Rider, 168-171.

•Journ. of Cong., Dec. 27, 1776; Bullock, 128.

* Force, III. 1799; Felt, 168; Phillips, I. 78; CoL Recs. of
N. C, X. 194-196; Sumner, I. 61.

*Some of the penalties imposed upon " depredators" were fines,
forfeiture of debts or goods for which paper was tendered, confisca-
tion of property, imprisonment, and disqualification for holding

CONTINENTAL PAPER MONEY

tended to produce a real scarcity.^ Even Wash-
ington failed to appreciate the true cause of the
rise in prices, and bitterly condemned those who
were g^lty of what he called " forestalling *' and
"engrossing/* 2 Yet men like John Witherspoon
labored to show him that, "Fixing the prices of

public oflSces and prosecuting suits at law. Phillips, I. 32, 80, II.
129-132; Bronson, 90-92, 122; Hening, Stat., IX. 147; Laws of
Md., 1777, c. 9; Laws of Del., II. 599; Breck, 23-24.

^A letter from Boston, written in June, 1777, says: "We are all
starving here. Since this plaguey addition to the regulating bill,
people will not bring in provision, & we cannot procure the com-
mon necessaries of life." And, in 1779, the same person wrote:
"We are likely to be starved thro'out Boston. Never such a
scarcity of provisions." Coll. of Mass. Hist. Soc., Sixth Series, IV.
•124, 152. See also p. 139. For a similar complaint see Pickering,
I. 242.

^ Many laws were passed against these offences. Bronson, 91;
Mulford, 463; Sumner, Financier, I. 50, 53, 54, 57-59, 62-64, 77.
Washington denounced "the monopolizers, forestallers, and en-
grossers," wishing that they might be hunted down as " pests of
society " and " hanged upon a gallows five times higher than the
one prepared for Haman." Writings of Washington, VII. 282.
But Washington himself had been guilty of discriminating against
the paper money. In September, 1777, he advised John Parke
Custis to take care that the rent of a tract of land " shall have some
relative value, to secure an equivalent for the land and slaves."
He expressed a willingness to receive paper money, but at " equal
value to its intrinsic worth at the time of fixing the rent." Idem^
VL 90-91. The next year he advised Custis not to sell land
faster than he could reinvest the purchase money in other lands.
Exchanging lands for paper might be eventually " a means of giving
away the estate." Idem^ VII. 214-216. In August, 1779, Wash-
ington decided to "receive no more old debts" at "the present
nominal value of the money." The law, he thought, " never was
nor could have been intended to make a man take a shilling or six-
pence in the pound for an honest debt." Idem, VIII. 20.

MONETARY HISTORY

commodities has been attempted by law in several
states among us, and it has increased the evil it
was meant to remedy, as the same practice has
done since the beginning of the world." ^ And
Pelatiah Webster insisted that the " utmost efifect "
of forcing laws " was like that of water sprinkled on
a blacksmith's forge *';^ but the tender acts were
not repealed until after the paper had become
practically valueless.^

The misery and iniquity wrought by the depre-
ciating currency were beyond all description. The
rise of prices encouraged the most demoralizing
speculation, while the sudden acquisition of un-
earned and undeserved wealth by rascals and
sharpers stimulated the most wanton and shameful
'^travagance.* Washington has drawn a correct
picture of the conditions, the cause of which he did
not originally understand: "If I were to be called
upon to draw a picture of the times and of men,

^See letter to Washington, in Witherspoon, Works, IX. 150.
In his ** Essay on Money," Witherspoon held that the laws making
paper a legal tender " are directly contrary to the first principles of
commerce." Works, IX. 41.

2 Webster, 129.

*It was not until 1780, when the paper was worth only one or
two cents on the dollar, that Congress advised the states to amend
or repeal their tender laws. Journ. of Cong., March 20, 1780.

* General Greene wrote that luxury and dissipation were very
prevalent in Philadelphia, and called them ** the common offspring
of sudden riches." Mr. Stone has written, "Philadelphia soon
became the centre of speculation and of the pursuit of private gain."
Fenn, Mag., III. 362, 376. In general, sec Greene, Hist. View,
160; Belknap, 146-147 ; Breck, 28; Sumner, Financier, II. 136-137.

CONTINENTAL PAPER MONEY

from what I have seen, heard, and in part know,\
I should in one word say, that idleness, dissipation, |
and extravagance seem to have laid fast hold of 1
most of them ; that speculation, peculation, and an^
insatiable thirst for riches seem to have got the
better of every other consideration, and almost
every order of men ; . . . " ^ . The paper money
opened the door to the most shameful frauds
upon all who were so unfortunate as to be in the
position of creditors. Dishonest debtors were
enabled to pay their debts in worthless currency. /
Witherspoon wrote, "For two or three years we •
/constantly saw and were informed of creditors
running away from their debtors, and the debtors
pursuing them in triumph, and paying them with-
out mercy.'* ^ Many persons lost a large part or the /
whole of their fortunes.^ Guardians of trust funds
were enabled to acquit themselves of their obliga-

1 Sparks, Writings of Washington, VI. 151.

* Witherspoon, Works, IX. 36. In Rhode Island, in 1786,
stories were told of creditors " leaping from rear windows of their
houses or hiding themselves in their attics," in order to escape
debtors. Potter and Rider, 120.

• McKean lost ;f 6ocx> by depreciation. Atner, Hist, Rev,, II. 99.
William Livingston was worth ;^85f9 prior to the paper money era.
He lost a large part of this by having debts paid in worthless paper.
Sedgwick, 158. Richard Henry Lee found that, in 1779, he was
receiving as rent for four thousand acres of good land a sum of
money that would not purchase four barrels of corn. Lee, II. 45-
46. Jefferson offered to repay a personal loan with currency depre-
ciated to one-fourth of its nominal value. Some years later, how-
ever, he caused payment to be made in full. Ford, Writings of
Jefferson, IL 181-182. Jonathan Amory received for debts money
worth only one-sixth of its nominal value. Weeden, 799. Cf. also

MONETARY HISTORY

tions by paying widows and orphans in paper that
was worth only the smallest fraction of its nominal
value.^ Pelatiah Webster could well say of this
iniquitous currency that it had " polluted the equity
of our laws ; turned them into engines of oppres-
sion and wrong; corrupted the justice of our
public administration; destroyed the fortunes of
thousands who had most confidence in it;" and
had gone far "to destroy the morality of our
people." ^ Memories of those times were burned
into the minds of all honest men who witnessed

p. 803. The rich were often impoverished, while the poor acquired
sudden riches. Wells, III. 75. In 1786, the superior court of
Rhode Island heard twenty bills in equity brought by people who
sought to discharge mortgages with worthless paper. The legal
tender bills were brought into the court by the sackful. Bates, 144.
Mr. Breck, who took the most favorable view possible concerning
the currency, wrote; "Old debts were paid when the paper money
was more than seventy for one. Brothers defrauded brothers,
children parents, and parents children. Widows, orphans, and
others were paid for money lent in specie, with depreciated paper,
which they were compelled to receive." Breck, 28. See, finally,
BoUes, I. 179-180.

1 In Philadelphia, a guardian invested the fortune of his ward in
real estate at some time prior to the Revolution. In 1779, when
seventeen paper dollars were worth only one in specie, he proposed
to pay the principal of the estate in continental paper at its nominal
value. Phillips, II. 158. Benjamin Greenleaf, judge of probate in
Essex County, Mass., has left us a most interesting statement of the
injustice wrought by a depreciated currency, in the settlement of
estates. Q, /. E,, IX. 243-246.

2 Webster, 175, 176. Mr. Breck has written: "The morals of
the people were corrupted beyond anything that could have been
believed, prior to the event. All ties of honor, blood, gratitude,
humanity, and justice were dissolved." Breck, 28.

CONTINENTAL PAPER MONEY

them; and never during their lifetime did the
national government again resort to such a villa-
nous agency of fraud and corruption.^

For a long time Congress had refused to admit
that depreciation had taken place, and had re-
peatedly pledged the public honor, its sacred
honor, and several other kinds of honor, that the
currency would certainly be redeemed at its face
value.^ Insinuations that the paper would be
repudiated were indignantly rejected as " deroga-
tory " to the honor of that body ; while, as late as
September 13, 1779, Congress declared, in a public
address: "A bankrupt faithless republic would
be a novelty in the political world, and appear
among respectable nations like a common prosti-
tute among chaste and respectable matrons." We
are, therefore, at no loss for forcible language in
which to describe the action that was taken only
six months after this solemn declaration was sent
to the various states. On March 18, 1780, when
one dollar of the paper was worth only one or two
cents. Congress adopted a plan for redeeming it at
one-fortieth of its nominal value.^ It may be true

1 Of course the continental paper called forth many discussions
of the subjects of money and credit. We have often referred to
Witherspoon, Webster, and Paine. Various discussions may be
found in the Amer. Mus,, II. 23-73. See also the references in
Sumner, Financier, I. 79-80, 88-89.

^Journ. of Cong., Dec. 26, 1775 ; Dec. 28, 1776; Nov. 22,
1777; Dec. 29, 1778; Jan. 2, 1779; Jan. 13, 1779; Sept. 13,

1779.

•Bolles, I. 135, 207; Sumner, Financier, I. 85-87; Bullock,
136-138 J Journ. of Cong., March 18, 1780.

MONETARY HISTORY

that there was good reason for despau-ing of the
ability of the Confederation ever to redeem the
bills of credit at par ; and it is certain that such a
course would not have repaired the losses that had
been suffered by most of the original holders of
the bills. Nevertheless the resolution of 1780 was
just what Witherspoon called it, "The first and
great deliberate breach of public faith *' and " an
act of bankruptcy." ^ Congress probably justified
its action, as Jefiferson did in 1786, by claiming
that the " former ofifers to redeem this money at
, par " were " relinquished by the general refusal to
take but in progressive depreciation." ^ Yet this
does not alter the simple fact that thirty-nine for-
tieths of the paper was absolutely repudiated.
Franklin might say, as he did in 1779, that "there
is some advantage to the public in the depreciation,
as large nominal values are more easily paid in
taxes, and the debt by that means more easily
extinguished." ^ But such a complacent view was
merely indicative of a loose sense of moral obliga-
tions. As a matter of fact, the credit of the
United States received a shock from which it was
slow to recover.

Congress next proceeded to issue " bills of a new
tenor," to the amount of about $4,ooo,cxx); but
these quickly depreciated. They were exchanged,
in 1790, for the new public stocks created when

1 Witherspoon, Works, IX. 118,131.

2 Ford, Writings of Jefiferson, IV. 154.
• Works of Franklin, VI. 345.

V 72

CONTINENTAL PAPER MONEY

tjie national cf ^bt was at length funded.^ The old i/
bills gradualiyr disappeared from circulation, and
specie quickl* took their place.^ This was the end
of the continf ntal paper currency, of which only a
small part vfj^ funded, in 1790, at one cent on the
dollar.^ Dr W Ramsay was pleased to write that
the money ** gently fell asleep in the hands of its
last possessors." Mr. White has very properly
emended this by saying : " A truer figure of speech
would be that it passed out of the world like a vic-
tim of delirium tremens.*' * After the close of the
war, the paper-money mania broke out once more
in 1785 and 1786. This movement was most dis-
tinctly an agitation carried on by and for the debtor
classes of the country, and is thoroughly typical of
the struggles of the inflationists of the colonial
period.^ Seven of the states at this time emitted
bills of credit,^ and in all of the others there was

iBolles, I. 138-139, 141; Phillips, II. 170-172J Bullock, 137-

138. /

« Webster, 75; Writings of Jeflferson, IV. 154; Writings of ^
Madison, I. 48 ; Chastellux, II. 30.

•Elliot, Fund. System, 12. Of the bills circulating in 1780,
;|(i 19,400,000 were paid in by the states under the act of March 18,
1780. State Papers, Finance, I. 54, 58-59.

* Ramsay, II. 181 ; White, 146.

•This paper-money movement of 1785 has been carefully studied
by Libby, 50-69. Cf. Bancroft, VI. 167-176.

•Rhode Island, New York, New Jersey, Pennsylvania, North
Carolina, South Carolina, and Georgia. Bates, 1 18-148; Arnold,
11.520-537; Potter and Rider, 117-132 ; Fernow, 342; Phillips,
I. 34, 84, 85 ; Iredell, Laws, 551 ; Stat of S. C, IV. 712-713 ;
Ramsay, II. 184-185 ; Stevens, II. 374.

1
MONETARY HISTOK.Y

a strong party which favored such i policy.^ In
Massachusetts, the agitation started ty the debtor
classes resulted in Shays*s Rebellion, a nd order was
not restored without considerable difficulty. Per-
haps the baldest and most shamelejjs declaration
ever issued during an agitation for||)aper money
may be found in the following resolution, which
^as adopted in the Hampshire county convention
In 1 786: 2 "Voted, that this convention recom-
mend to the several towns in this county that
they instruct their representatives to use their
influence in the next general court to have emitted
a bank of paper money, subject to a depreciation^
making it a tender in all payments^ equal to silver
and gold, to be issued in order to call in the com-
monwealth's securities." The words that the
writer has italicized are so startlingly clear as to
render unnecessary all comment upon the villany
of these precious proposals.

But the experience of the country with a depre-
ciating paper currency finally taught a lesson
which proved effective, so far as the federal gov-

1 In New Hampshire there was a long and stormy agitation.
Belknap, III. 460-477 ; Coll. of N. H. Hist. Soc, III. 1 17-122.
For the uprising of the paper-money party in Massachusetts, see
Barry, III. 218-260; Weeden, 843-847. Even in conservative
Connecticut a paper-money party existed. Bronson, 168-169. In
Maryland there was a bitter struggle between the two branches of the
legislature. Scharf, II. 539 ; Pamph. on Const., 33. In Delaware
a similar contest occurred. Libby, 61-62. In Virginia, the oppo-
sition of the great federalist statesmen crushed a determined
movement in favor of paper money. Writings of Madison, I. 218,
332 ; Libby, 66-67. * Quoted by Libby, 56.

CONTINENTAL PAPER MONEY

emment was concerned. In 1787, Madison could
write ^ truthfully, "There has been no momentt
since the peace, at which the federal assent WDuldl
have been given to paper money," for the lead-|
ing statesmen of the United States had become,
almost without exception, stalwart opponents of a
government paper currency .^ In the constitutional |
convention there was an almost unanimous opposi- ^
tion to the proposal to allow either the states or /
the general government to issue bills of credit./
By an overwhelming vote the states were prohiW
ited from ever resorting to such an expedients
Then, by a vote of nine states to two, the conven-
tion decided to strike out of the Constitution the
clause that conferred such a power upon the
national legislature.* A majority of the delegates
that discussed the subject made it clear that they
intended to take away from Congress the power
to issue legal tender paper, and that they believed
that this purpose had been accomplished.^ The

iEUiot,V. 108.

* This is well shown by Bancroft, Plea for the Constitution. To
take a single example, Washington, by 1 785, had learned fully the
evils of paper money. Writings of Washington, XI, 51. Cf. Idem,
X. 489. See the denunciation of bills of credit in the Federalist,
295-296. * Elliot, I. 270-271. * Idem, I. 226, 245,

* See the debates in the convention. Elliot, V. 434-435. See
also the opinion of Mercer. Sparks, Morris, III. 321-322. This
much is fully established by Bancroft, in his Plea for the Constitu-
tion. Even Mr. Thayer, in defending the decision of the Supreme
Court, admits that " in the debates of the convention, so far as we
know anything about them, the majority of the speakers thought
that they were prohibiting bills of credit and paper money." Harv,

MONETARY HISTORY

Supreme Court, however, in our own time, has
managed to find a constitutional warrant for im-
pressing upon paper a legal tender character.^
But the purpose of the framers of the Constitution
was understood perfectly by the men who opposed
ratification in 1788. The new plan of govern-
ment was violently assailed on the ground that it
forbade either Congress or the states to issue bills
of credit.2 Recent investigations have shown that
this was one of the leading causes of the antago-
nism which the Constitution encountered. A de-
tailed study of the votes taken in each state where
it was proposed, in 1785 or 1786, to issue paper
money, has proved that the inflationists and repu-
diators of that period were the very men who op-
posed ratification two years later.^ Almost with-

Law Rev,, I. 79. This was evidently the opinion of George Tick-
nor Curtis. Curtis, I. 524-527. Criticisms on this part of Mr,
Bancroft's Plea are decidedly weak. E^, James, 64-68.

^In 1870, the Court held that the law of 1862, making green-
backs a legal tender, was unconstitutional. Shortly afterwards,
the personnel of the Court having changed, the law was upheld as
an exercise of the very indefinite " war powers" of the Constitution.
In 1884, a law of 1878, directing the reissue of greenbacks, was
declared constitutional even in times of peace. 8 Wallace, 603 ;
12 Wallace, 457; no U. S. Reports, 421. Perhaps the ablest
defence of the decisions is by Mr. Thayer, Harv, Law Rev., I.
Bancroft's Plea is the best-known attack upon the decisions. This
Plea called out a reply by McMurtrie. Mr. Justice Miller has
defended the decisions. Miller, 135-144. J. Randolph Tucker
has criticised the position of the Court. Tucker, I. 508-516.

2 See Luther Martin's " Letter." Elliot, I. 369-370, 376.

*This is shown conclusively by Libby. Cf. Hildreth, III. 466-
467, 535, IV. 25, v. 415-416; Bates, Chaps. IV. and V,

CONTINENTAL PAPER MONEY

out exception, the sparsely settled districts elected
representatives who voted to emit a depreciating
currency and then refused to adopt the new Con-
stitution. On the other hand, the richer and more
populous localities uniformly opposed the first pol-
icy and favored the second. The exceptions to this
rule are all explained by particular circumstances
of a local character; so that a map showing the
geographical distribution of the vote upon the Con-
stitution serves as a fair index of the population,
wealth, and industry of the various sections of the
thirteen original states. An examination of the
letters that passed between the great leaders of
the movement in favor of union shows that the
antagonism of the paper-money party was both
anticipated and actually encountered. Pickering
wrote that, in New England, opposition would
come " chiefly from the Shaysites and paper-money
men."^ Madison informed Washington that all
men who favored paper money and tender laws
contended against ratification.^ Many similar cita-
tions might be presented if space would permit.^
Among the leaders of the opposition, Symmes
wrote to Osgood concerning the constitutional pro-
hibition of bills of credit: "Here I suppose the
principal weight of opposition will hang." * Luther
Martin, in his letter to the Maryland legislature,

1 Pickering, II. 358. « Elliot, V. 572.

*Idem, v. 577; Hist. Mag,, XVI. 271 ; E^ys on Const., 176;
Pamph. on Const., 243.

* Hist ColL Essex Inst, IV. 214.

MONETARY HISTORY

made the most of arguments that were based upon
the same grounds. In the American Museum may
be found a set of satirical resolutions which pur-
ported to come from the enemies of the Constitu-
tion.^ One of these reads as follows : " Resolved,
that as this constitution most arbitrarily and inhu-
manly prohibits the emission of paper money, and
other resources, by which the unfortunate debtor
may throw off the discouraging burden of his obli-
gations, it ought to be considered, as in fact it is,
a system of tyranny and oppression, compelling
citizens in many instances to do things extremely
disagreeable, and contrary to their interest." The
facts warrant the positive assertion that the last
act of the inflationists of the eighteenth century
was to antagonize most bitterly the only feasible
plan for constructing a firm union of the thirteen
feeble, selfish, jealous, and quarrelsome states.

^ Amer, Mus,, III. S4-85. A somewhat similar piece of satire
may be found in McMaster and Stone, 83.

CHAPTER VI

-^ STATE BANKS OF ISSUE

In 1792,^ Congress established a national coin-
age system by providing for the concurrent circu-
lation of standard gold and silver coins. The silver
dollar was given pure contents of 371 J grains of
fine metal, and the gold eagle was to contain 247J
grains of pure gold.^ This established a coinage
ratio of 15 grains of silver for one grain of gold.
Such a rating was not far from the actual market
values of the two metals at the time when the law
was passed, but ^Iver soon cheapened and drove
gold out of circulation ; so that our first coinage
act resulted practically in silver monometallism.^

^Various plans and proposals for a coinage system bad been for-
mulated during tbe Confederation. Some of these have been
printed. See State Papers, Finance, I. 100-107; ^^P* Mon. Conf.,
417-453; Watson, 243-268. Cf. Sumner, Financier, II. 36-47.

* U. S. Stat, I. 248. For this and subsequent laws relating to
money, see Rep't Mon. Com., Appendix; Dunbar. The history of
the 371 J grain silver dollar, recommended by Hamilton and adopted
by Congress, has been correctly traced for the first time by Sumner,
in Amer, Hist Rev.^ III. 607-619. On our coinage laws, see
BoUes; Laughlin; Sumner, Currency; Upton; Watson; White;
and Linderman.

'Soetbeer, 130, gives 15.05 : i as the market ratio for 1791, and
15.68: 1 as the ratio for 1800. From 1800 to 1 810, the average
ratio was 15.61 : i. In 1819, the committee on coinage reported to
the house of representatives that gold, being underrated, "can
scarcely be considered as having formed a material part of our

MONETARY HISTORY

Concerning this earliest legislation, Daniel Web-
ster could declare, with entire accuracy, that " the
framers of the Constitution, and those who enacted
the early statutes on this subject, were hard-money
men ; they had felt, and therefore duly appreciated,
the evils of a paper medium ; they therefore sed-
ulously guarded the currency of the United States
from debasement. The legal currency of the
United States was gold and silver coin ; this was
a subject in regard to which Congress had run
into no folly." ^

But if the national government had, for the time,
turned away from the paper-money policy, the
) agitation for cheap currency did not die out in the
various states. An opportunity for such a move-
ment was found in the development of banks of
. \ issue.2 The Bank of North America, established

Y , money circulation for the last twenty-six years." State Papers,
^^> Finance, III. 399. Benton states that gold disappeared "com-

pletely and totally " about twenty years after the adoption of an
erroneous ratio by the law of 1792. Benton, I. 442. Even Ameri-
can silver coins were displaced by light-weight Spanish money, so
that Jefferson ordered the suspension of the coinage of silver dol-
lars after 1806. Watson, 73-74.

^Annals of Cong., 14th Cong., 1st Sess., 109 1. In 1834, Ben-
ton argued strenuously that " the government of the United States
was intended to be a hard-money government" Benton, I. 436.

*An extended bibliography on banking in the United States
may be found in Sen. Ex. Doc, 38. To the books there mentioned
may be added: Macleod, Diet, 169-195; T. P. Kettell, in Eighty
Years, I. 198-21 1; White; Bryan; and Sumner, Banking. The
book last mentioned is the leading work upon the subject, and is so
comprehensive that the reader may be referred to it for information
on all the subjects discussed in this chapter.

\^>

STATE BANKS OF ISSUE

in 1782, was the first institution in the United
States that undertook to maintain a bank currency
that should be at all times convertible into specie.^
In 1784, banks were founded in Boston and New
York ; and before long a banking mania spread in
all directions. In the Mississippi Valley, a bank
was established in Kentucky as early as 1802 ;
while, in 181 3, Missouri was provided with a simi-
lar institution. In 1791, the first Bank of the
United States was founded, and began to issue
circulating notes that formed a uniform and con-
venient paper currency throughout the country, a
function that was continued by its successor.^

But there were in the country only a few men
who had any adequate comprehension of the true
nature and the proper methods of banking. The
common view seemed to be that a bank was a mys-
terious and magical means of creating wealth out
of nothing; and it was supposed that, since a
banker secures interest on his notes, the banking
business offered a unique and beautiful opportu-
nity to secure interest on one's debts. Banks were
often formed for the sole purpose of issuing their
paper ; and the privilege of emitting such promis-
sory notes, which were intended to circulate as
currency, was claimed as a common law right.^ It

* Lewis; Sumner, Financier, II. 21-35.

^On the banks of the United States, see Clarke and Hall;
BoUes, II. 127-155, 317-358; Benton; Kinley; Sumner, Jackson;
articles by Root and White, in Sound Currency ^ IV.; /, P, E^

V. 421-457.

»aeaveland,XVII.

G 81

MONETARY HISTORY

was with reason that Hugh Williamson complained,
in i8 12, that the constitutional prohibition of the
issue of bills of credit by the states might be prac-
tically nullified " by a deluge of bank paper." ^ The
people of the United States had embarked once
more on the enterprise of substituting a cheaper

edium, paper, for gold and silver, which they
regarded as "dead stock," to use Hamilton's
phrase ; ^ and soon the issue of bank notes came
to be regarded as the only method of providing
the country with enough money to meet the needs
of industry.^

In all parts of the country many of the earliest
banks were conducted with extreme recklessness
or utter dishonesty. In New England, the first
crash came in 1809, and this was followed by the
enactment of more stringent laws regulating the
business. In 181 4, 1837, ^.nd 1857, there occurred
general suspensions of specie payments by most
of the banks in the United States ; while periods
of suspension in particular localities were even
more common. Only the New England banks
withstood the first of these crashes, and a still
smaller number maintained the convertibility of
their notes during the crises of 1837 ^^^ 1857.
During some parts of its existence, the second

1 Williamson, II. 40-41.

^ State Papers, Finance, I. 67. See Sumner's comments. Sum-
ner, Banking, 24-25.

• Note the manner in which Gouge combated this view. Gouge,
Part I. 45, 64-67, 1 1 7-1 23. See also quotations in Sumner, Bank-
ing, 25.

STATE BANKS OF ISSUE

Bank of the United States exercised a restraining
influence upon the issues of the state banks, since
it could refuse to receive in payment of public dues
the currency of any institution that did not main-
tain the convertibility of its notes.^ Indeed, it was
in part a demand for a national bank that should
regulate the disordered paper medium of the coun-
try that induced Congress to grant the charter in
1816. But this wholesome restraint was often
denounced as oppression and intimidation of the
state banks, and it helped to produce in some
localities a lasting hostility against the federal
Bank.

At the present day, the abuses perpetrated by
the state banks during the first half of the century
may appear almost incredible. The capital of
many institutions was only partially paid in, and
stockholders frequently proceeded to borrow all
that they had contributed.^ Loans were made
upon mortgage security, while it seemed impossi-
ble for the disastrous results that commonly fol-
lowed such a policy to teach the obvious lesson
that an institution that attempts to support a large
amount of demand liabilities must invest its funds
only in quick assets.^ Notes were issued in such

iQarke and Hall, 749-750; Gallatin, II. 461, III. 334, 336;
Sumner, Banking, 72, 79, 109, 113, 166, 208.

2 Gouge, 46-47 ; Raguet, 1 15-1 19, 145; Tucker, Money, 194,
365 ; Rep't Compt. Currency, 1876, XXXIII. ; Felch, 80.

'Hamilton, in 1790, had argued forcibly that land is "an unfit
fund for a bank circulation." State Papers, Finance, I. 73. But
in 1839, Condy Raguet expressed the belief that a bank should

MONETARY HISTORY

small denominations as one shilling, or even five
cents, in the expectation that it would never be
worth any one's while to collect such infinitesimal
currency and present it for redemption.^ One
notorious bank, which broke down in 1809, was
found to have ^[580,000 of notes in circulation, and
$86.46 in its specie reserve.* Banks were located
in inaccessible places, " on some bottomless prairie
road," or in the depths of forests, where it would
prove as difficult as possible to find the " offices "
at which the notes were payable.^ When a Boston
bank seijt a batch of currency to New York for
redemption, the collector of the port seized the
bills upon the pretext of preventing a run on the
New York banks.* A messenger sent to South

invest its capita/ in mortgages, since " the security of real estate **
is safer than that of promissory notes. Raguet, 90. Mr. McCulloch
telb us that the famous and conservative State Bank of Indiana, at
the outset of its career, loaned very largely to men who were buying
or improving lands. But the crisis of 1837 taught the managers
that these loans were ** sluggish and unreliable/' so that, after that
time, the loans were " mainly confined to bills of exchange " based
upon produce shipped to Eastern or Southern markets. McCulloch,
Men and Meas., 116.

1 See especially Raguet, 135-140, on the circulation of bank
notes of small denominations.

^ Gouge, 45-50. This was not much worse than many other
occurrences. In 1837, ^ Massachusetts bank failed, with ^111,000
of notes outstanding, and ^36.71 of cash on hand. Root, in Sound
Currency, II. 258.

8 G)oley, 268-269 ; Garnett, in Sound Currency, V. 142 ;
Hadden, 186-187 ; Rep't Compt Currency, 1876, XXXV.-XXXVI.;
BanJi Mag., XIII. 235.

* Felt, 218.

STATE BANKS OF ISSUE

Royalston to demand the payment of j^ 10,000 in
notes issued by the local bank, was arrested upon
a frivolous charge in order to avoid such a request.^
JNothing was more common than a state of public
* opinion which condemned every attempt to obtain
specie from the banks. To ask one of these
institutions to fulfil the promise printed on the
face of its bills was a disgraceful act, which
indicated a lack of public spirit, or was proof
positive of a desire to start a "run."^ In Ohio,
Indiana, and Missouri, between 1855 and 1859,
certain persons who presented notes for redemp-
tion were threatened with lynching or a coat of
tar and feathers.^ Some states established public
institutions that were no better than the loan banks
of colonial days. These were designed to do a
banking business "upon the faith and credit" of
the states^ and to supply the people with paper
money.* IfThus, in 1820, the Bank of the Common-
wealth of Kentucky was instituted. The legisla-

1 Whitney, Suffolk Bank, 60.

* In Richmond a man who took legal measures to compel the
payment of notes was subsequently sued for damages by the bank.
Gouge, 84. Persons seeking the redemption of bills issued by the
bank of Darien were obliged to swear, before a justice of the peace,
to the ownership of each and every bill. Idem, 141. Raguet
devotes a chapter to this subject. See also State Papers, Finance,
III. 394-395 ; White, 365.

•Bank Mag., X. 41, XII. 587, XIV. 323.

* Gouge, 131-133, 138; Conant, 330-337 J Root» i" Sound
Currency, II. 221-252 ; Sumner, Banking, Index, " Banks of the
States.'' In some cases state bonds were issued in order to raise
capital, and repudiation allowed. Scott, 33-48.

MONETARY HISTORY

ture appropriated JS7000 in order to purchase
books, paper, and the plates for printing bills ;
then i!2,cxx),ooo of paper was issued, and appor-
tioned among the counties to be loaned out on
mortgage security. This was practically an emis-
sion of state bills of credit, which was prohibited
by the Federal Constitution; but, in 1835, the Su-
preme Court, which had recently been " Jackson-
ized," found a way of arriving at the conclusion
that the act creating the bank was constitutional.^
Judge Story vigorously dissented from this opinion.
The consequence of the spread of this mania for
unsound banking was that from i8(X) to i860, an
inconvertible paper currency continued to vex the
United States. Bank notes were often at a dis-
count of fifty or sixty per cent,^ and the issues be-
came so large as repeatedly to cause inflation.
Then a period of liquidation would ensue, and
prices would fall to extremely low levels.^ In

18 Peters, 118; 11 Peters, 257. This case was first heard in
1834, and three judges out of five held that the notes were in
reality bUb of credit. But, as two judges were absent, the case
was heard again a year later. Meanwhile Chief Justice Marshall
had died, and two other vacancies had occurred ; so that now five
out of the seven judges were appointees of President Jackson.
Story stated in his dissenting opinion, at the final hearing, that
Marshall, at the first hearing, had decided that the notes of the
Bank of Kentucky were bills of credit. 1 1 Peters, 348. Cf. Sum-
ner, Banking, 142-143.

* Some statistics of depreciation may be found in Gouge, 132-
133, 135, 166-168; Gallatin, III. 363; Sumner, Banking, Index,
" Depreciation.**

* Gouge discusses intelligently these alternate periods of inflation

STATE BANKS OF ISSUE

these periods of depression the favorite remedies
suggested were more money or a higher protective
tariff.^ Men who had speculated on a , rising
market, and had been caught "long" when the
reaction commenced, would cry out loudly for
more currency in order that prices might be
sustained until it should be possible to unload
upon other people. Prodigality and dishonesty
always attended every era of inflation; and
when the false prosperity ^ thus created had
collapsed, debtors began to clamor for legislative
relief. In many states arbitrary stays of execu-
tion were granted, and unfair appraisement laws

and liquidation. Gouge, 1 10-126, 174-176. Raguet and Tucker
also describe the process. Raguet, 142-148 ; Tucker, Money,
18^-190. See also Gallatin, III. 365-488. Sumner makes his
chapters follow this sequence of events : inflation, crisis, liquidation.

^In the hard times just prior to 1830, there was laid before the
Senate a proposal for the issue of 1^50,000,000 of government paper.
Snch an addition to the currency, it was claimed, would make
property " rise two thousand millions of dollars " and would restore
prosperity. See Gallatin, III, 255. In the depression of 1840, the
Pennsylvania ** relief" system was authorized. This was intended
to relieve the situation through the issue, by the banks, of ^^3,000,000
of notes redeemable in state bonds. See Gallatin, III. 409-412.
The hard tunes succeeding the period of inflation that ended in
1 81 8 had much to do with the agitation for higher duties on
imports. See Clay's speech of 1824 and Webster's reply, in
Taussig, Papers, 254-256, 324-326. Gouge appreciated this fact
very well. Gouge, 125, 153. Cf. Taussig, Tariff Hist., 19-21,
68-69 ; Sumner, Protection, 39, 41.

3 See the picture of the inflation period of 1 81 6, in Gouge, 64-72.
Matthew Carey called this the " golden age " of Philadelphia, and
insisted that the prosperity was not artificial. Gouge, 71-72.

.87

MONETARY HISTORY

or replevin acts were passed.^ In the period from
1820 to 1825, Kentucky succeeded in making things
especially lively for the hated "money power."*
Says Professor Sumner : " Under the replevin law,
the judges instructed the jury to find * scaling
verdicts/ rating the judgment sum in specie
according to the depreciation at the time of the
contract. This sum could be collected after two
years, unless the creditor indorsed the execution.
If he did that, he obtained payment in three
months in paper worth about fifty cents on the
dollar, — that is, he obtained about one-fourth of
his original claim." This, according to the gov-
ernor of Kentucky, was "the paramount law
of necessity." Before long, the state had two
rival courts of appeals contending for " paramount"
jurisdiction, while the legislature was rent by the
efforts of the debtor party to secure the enact-
ment of still more "paramount" laws. In 1820,
a committee of the Pennsylvania legislature de-
picted the results of the issues of inconvertible
currency in the following words: "In conse-
quence of this most destructive measure the
inclination of a large part of the people, created
by past prosperity, to live by speculation and not
by labor, was greatly increased; a spirit in all
respects akin to gambling prevailed; a fictitious
value was given to all descriptions of property ;
specie was driven from circulation, as if by com-

1 Gouge, 131, 135 ; Sumner, Banking, Index, "Stay laws."
•Sumner, Bankii^, 1 21-137; Shaler, 173-185; Gouge, 131-132.
SS

STATE BANKS OF ISSUE

mon consent, and all efforts to restore society to
its natural condition were treated with undisguised
contempt."^ Six years later the governor of
Connecticut wrote: "It is amidst explosions of
credit, principally occasioned by the conduct
of Banks, that every class of industrious citizens,
and all our enterprising young men, are exposed
to repeated losses, against which no vigilance can
guard, and no prudence exempt them." ^

The growth of the banking mania was neces-
sarily attended with a renewal of the old com-
plaints and discussions concerning monetary
affairs. In the Mississippi Valley the cry was
heard that trade with the Eastern states drew off
all the specie,^ and this, too, in spite of the fact
that large amounts of silver came into this region
from New Orleans. The use of inconvertible bank
notes would merely accelerate the export of specie ;
but the cheaper medium was often welcomed as a
remedy for the alleged scarcity of hard money.
When, in 1814, the general suspension of specie
payments brought the country down to the basis
of a depreciated paper currency, it was vigorously
denied that the premium upon silver was proof of
the depreciation of the inconvertible bank notes.
In Philadelphia, Franklin had worthy successors
who began to publish pamphlets refuting the
" very fallacious and mischievous doctrines," that
" the ability of a Bank to redeem, i,e, to pay specie,
is the true criterion of excessive issues " ; that " a

1 Gouge, 1 20-1 21. ^Idtm, 161. 'BuUer, 295.

MONETARY HISTORY

paper currency is depreciated when it ceases to be
of equal value with gold and silver '* ; and that " the
rise of specie, and a general increase of prices,
are the certain indications of depreciation." ^ One
Philadelphia pamphleteer declared: "The paper
of the Bank of England preserves a value, as
steady perhaps as any attainable, whilst the pre-
cious metals, like other commodities, fluctuate
around this standard."^ This scientist proposed
the creation of a national bank which should issue
circulating, legal tender notes redeemable in United
States stocks. To perfect this scheme, he desired
that the notes of state banks should be payable in
those issued by the national bank. Matthew Carey
pronounced this a " magnificent *' idea, and " a sov-
ereign remedy for all the financial difficulties of the
country."^ In 1819, the president and directors
of the Bank of South Carolina submitted to the
state legislature a franker plea for inconvertible
paper money. The South Carolina address raises
the query whether a sufficient metallic medium is
not unobtainable, and whether it would not be bet-
ter to dispense entirely with the use of gold and
silver. Then it proceeds to recommend that the
government should issue all money to the people,
since government alone can adjust the amount of
currency to the needs of trade. Finally it abuses
the Bank of the United States for presenting for
redemption state bank notes received in payment
of the federal revenues.*

1 Gouge, 70. ^Bollman. 'Gouge, 76. */d5p»f, 143.
90

STATE BANKS OF ISSUE

The condition of the bank currency, however,
was not equally bad in all sections of the country.
As time wore on and the lessons of sad experience
were learned, better methods of banking were
developed in the older states. The New England
banks, led in this direction after the disaster of
1809. The city banks compelled those located in
the country districts to maintain the convertibility
of their notes, and wise legal restrictions gradually
were perfected.^ By i860, Massachusetts had
developed one of the best banking systems in the
world. In New York, the safety fund and the
bond security systems had been slowly perfected,
and honest management was the rule ; yet, in 1861,
the Bankers' Magazine described some of the coun-
try banks as mushroom concerns.^ Louisiana had
passed a model banking law in 1842, under which

1 Whitney, SufiFolk Bank ; Sound Currency, II. 276-284. The
most important restrictions were, briefly, as follows : (i) Banks
most have a certain amount of paid-up capital, and must not
impair this by loans on pledges of their own stock. (2) Small
notes were prohibited. (3) The note issues should not exceed a
certain amount, as twice the paid-up stock. (4) Noteholders
were given a prior lien on assets of the banks. (5) Banks were
forbidden to reissue the notes of other banks. (6) A certain
minimum reserve was required. (7) Directors were made specially
liable, and a double liability was imposed upon shareholders.
(8) Public statements of accounts were required, and examiners
were appointed to investigate the condition of the banks. (9) Deal-
ing in shares of other banks or in merchandise was forbidden,
and lending on mortgage security was sometimes prohibited. For
an early discussion of methods of legal regulation see Tucker,
Money, 191-232.

^BankMag,,y;N\.l.

MONETARY HISTORY

her banks were, in i860, the safest in the country
in many respects.^ In other states individual bank-
ing institutions had become justly celebrated for
the ability and honesty of their administration.
The reader will at once call to mind the State
Banks of Indiana and Ohio, the Bank of the
State of South Carolina, and the banking house
of George Smith and Alexander Mitchell in Wis-
consin.2 But such distinguished exceptions merely
serve to heighten the contrast presented by most
of the banking institutions in the South and West.
In the Upper Mississippi Valley the conditions
remained particularly bad in i860. Attempts had
been made to adopt the provisions of the banking
codes of other states, but the laws thus framed
had been badly administered. North of Louisiana
and Arkansas, there was practically no convertible
bank money in the Mississippi Valley; and the
notes of dead or doubtful banks were hawked
about at from ten to ninety per cent discount.'
In 1859, a bogus Ohio bank had started in busi-
ness by investing $165 in a plate, and paying one
quarter of a cent on a dollar for having its notes
printed. It had then established its credit firmly
by giving $1900 to the publisher of a bank note

1 Sumner, Banking, 387-391, 434-437. Note what McColloch
says of the honorable action of the New Orleans banks in 1 861.
McCulloch, Men and Meas., 138-139.

«See/. P, E,,\V, 1-36 ; McCulloch, Men and Meas., 1 13-138 ;
White, 374-394 ; Sound Currency, V. 1 14-120, 314-328 ; Sumner,
Banking, 439-442 ; Rep*t Compt. Currency, 1876, XXVI.-XXVIII.

^Bank Mag., XII. 166, XIV. 152, 811-814, XVII. 396, 1002.
92

STATE BANKS OF ISSUE

detector, who agreed to " quote the money right." ^
" Quis ctistodiet ipsos custodesf This incident
reminds us that note and counterfeit detectors
were in universal use by all who would avoid loss
from the receipt of bogus bank notes and the
notes of bogus banks.^ From the best data obtain-
able, it has been computed that, in i860, the specie
held by the banks of Illinois amounted to only
4.25 per cent of the circulation and deposits. In
New York and Massachusetts, the specie reseryee^
amounted, respectively, to 20.39 per cent and 21.63
per cent ; while, in Louisiana, the percentage rose
as high as 52.46.^

^BankMag.,XlV. 153.

' White, 397-404 ; Sumner, Banking, 455.

•Bank Mag,, XIV. 2P,

1-'

CHAPTER VII *^ x"^

A RETURN TO GOVERNMENT PAPER MONEY

In the last chapter it was shown that the
coinage legislation of 1792 resulted in an under-
valuation of gold, and the establishment of silver
monometallism. As early as 18 18, there began a
movement in favor of such a change in the ratio
of the two metals as would bring gold back into
circulation.^ In 1834 and 1837, the coinage laws
of the United States were finally amended so as to
accomplish this result At that time the market
ratio of silver to gold was about 15.8 : i ; but Con-
gress adopted a rating of 16 : i, with the evident
intention of establishing in practice the single gold
standard.* Unfortunately, the acts passed in 1834
and 1837 reduced the fine contents of the gold
eagle froYn 247.5 grains first to 232 grains and
then to 232.2 grains. Just before this change, the

^See documents reprinted in Rep't Mon. Conf., 502-697.
Gouge, Part I. 109, proposed to strike gold coins on whose face the
pure contents should be stamped. These would not need to be
made a legal tender, and could be used in all large payments.
Benton, chaps. 105 and 108, is an important reference on this sub-
ject. Gallatin advocated a change of the mint ratio to 15.6 : !•
Gallatin, III. 309. See also Raguet, 204-250.

au. S. Stat., IV. 696, v. 136. See Laughlin, 52-91; Soetbccr,
131. In 1840, the market ratio was 15.62 : 1.

GOVERNMENT PAPER MONEY

gold dollar had been worth a few cents more than
the silver dollar, which was the actual standard of
value. But this reduction in the weight of the
eagle produced a gold dollar that was about two
cents less valuable than the silver dollar.^ Thus
Congress robbed creditors of two per cent of the
value of existing debts, and established a prece-
dent that was fraught with danger for the future.
It was predicted that this action would enable
gold to replace silver as the actual medium of
exchange ; ^ and this result was gradually brought
about, especially after the great gold discoveries of
1849 caused a marked decline in the value of the
yellow metal. By 1853, the silver dollar was worth
J! 1. 04 in gold, and had become an obsolete coin ; ^

lAt the ratio of 15.73: i, which Soetbeer gives for the year
1834, the gold dollar of 23.2 grains established by the act of that
year would have been worth slightly more than ninety-eight per cent
of the 371 .25 grain silver dollar. In subsequent years the ratio some-
times rose to 15.8 or 15.9 to I, and this change in the value of the
gold dollar made it worth about ninety-nine per cent of the value of
the old silver dollar. Cf. the tables given by Linderman, 161-162.

^The committee that reported in 1834 made such a prophecy.
H. Rep., 278, p. 56. Raguet, 210-212, 247, predicted the same
ultimate result

* This displacement of silver was a very gradual process prior to
1850. In 1839, Raguet, 208-209, said that little progress had been
made in this direction. McCuUoch says that the specie currency
of the West was composed almost exclusively of silver until the dis-
covery of gold in California. McCulloch, Men and Meas., 119.
In 1850, the ratio of the two metals in Europe was 15.7: i>
about the same as it had been in 1834. But by 1853, it had
changed to 15.33:1. Soetbeer, 131. In this year even our
fractional silver disappeared from circulation, and Congress had

MONETARY HISTORY

while the product of the Califomian mines sup-
plied the country with an abundant gold circula-
tion. In 1 86 1, it was estimated that the currency of
the United States consisted of about $2So,cxx),ooo
of specie and $202,ooo,cxx) of bank notes.

Soon after the opening of the Civil War,^ the
government negotiated a loan of $iSo,cxx),cxx) from
the banks in the leading Eastern cities. Congress
wisely gave Secretary Chase permission to keep
this money in solvent banks, and to draw upon
these funds by check as fast as should be neces-
sary. But the Secretary foolishly refused to fol-
low such a course, and withdrew from the banks
a large portion of their reserves, — an action which
was soon followed by a general suspension of
specie payments by the banks throughout the
country.^ At the opening of 1862, the credit of
the United States was not sufficiently high to
enable the government to dispose of its six per
cent bonds at their par value; and the authori-
ties at Washington objected to selling the public
securities for what they would bring in the market.
Under these circumstances, Congress finally de-

to establish a debased subsidiary coinage. U. S. Stat., X. 160.
At this time it was explicitly recognized in the debates in Congress
that the United States had practically but a single standard of value,
and that gold. Cong. Globe, XXVI. 629, Appendix, 192.

^On this period of our finances, see Bolles, III.; von Hock;
Taussig, in Shaler's United States, II. 537-544.

a/. P. E,y VII. 289-326; Sumner, Banking, 45S-461; Rep't
Mon. Com., 402-404; White, 149-152. Even Spaulding, 1^4,
criticises this action of the Secretary.

GOVERNMENT PAPER MONEY

cided, against the emphatic protests of many of
its ablest members, to issue $i5o,ooo,(XX) of notes
that were declared to be legal tender in all pay-
ments, except for customs duties and interest on
the national debt.^ Other issues were subsequently
authorized, so that finally i!4So,ocx),cxx) of irredeem-
able paper was placed in circulation. In 1864,
the limit of the permanent issues was placed at
J!400,ooo,cxx) ; and the favorable turn of both mili-
tary and financial operations enabled the govern-
ment to adhere to its promise.*

As is well known, the greenbacks depreciated,
and the country was again involved in all the evils
of a fluctuating paper medium. The bills were
injected into a currency that already contained
more than $200,(XX),ooo of bank notes that had
ceased to be redeemable in specie,^ while the situa-
tion was made worse by the issue of interest-bear-
ing, legal tender paper.* Before the end of 1862,

^U. S. Stat., XII. 345. Mr. Spaulding, who claimed to be the
father of the greenbacks, discussed their history in his Legal Ten-
der Paper. He was well criticised by Walker and Adams, in
N, A, R.f April, 1870. On the greenbacks, see Newcomb; Bowen,
347-367; Sumner, Currency, 189-227; Walker, 369-375; Knox,
80-147; White, 148-165, 191-197; Noyes, 1-72; Rep*t Mon.
Com., 389-490.

«U. S. Stat, XII. 532, 710, 822, XIII. 219.

* Of the issues of the state banks in 1 86 1, probably 1 150,000,000
was in the North. After the suspension of specie payments these
issues increased to 1 183,000,000 in 1862, and ^238,000,000 the fol-
lowing year. After 1863, the notes of the national banks began to
replace these issues. Rep. Sec. Treas., 1897, CXXXI.-CXXXVIIL

^In 1861 and 1862, Congress authorized the issue of j((6o,ooo^ooo
H 97

MONETARY HISTORY

gold was selling for $1.34 in currency; and, during
the year 1864, the greenbacks showed an avetage
depreciation of more than fifty per cent.^ The
government did not avoid the necessity of selling
its bonds for what they would command in the
open market, and was obliged to create a nominal
debt of $2,565,000,000, for which it received not
more than $1,695,000,000 in gold. When all ele-
ments are taken into consideration, it seems certain
that, before the close of the war, the " paper-money
plan of finance '* had cost the United States an un-

of demand notes not bearing interest, but receivable for public
dues and finally made a legal tender. U. S. Stat, XII. 259, 313,
338. These were exchanged for greenbacks. For their history,
see Breckenridge, in Sound Currency, V.; Tenth Census, VII.
372. In 1863, interest-bearing notes, running for not more than
three years and a legal tender for debts, were issued to the amount
of 1211,000,000. U. S. Stat, XII. 710; Tenth Census, VII. 377-
378. In 1863 and 1864, "compound interest notes" were issued
to the amount of 1^266,594,000. These were a legal tender, and
^177,045,000 of the issue replaced the notes mentioned above.
U. S. Stat., XII. 710, XIII. 218; Tenth Census, VII. 378. These
notes entered into circulation to a greater or less extent, and
were periodically hoarded as the time for interest payments ap-
proached.

^ From the suspension of specie pa3rments by the banks to the
time of the issue of greenbacks, the premium on gold was only two
or three per cent. By July, the average value of |ioo of green-
backs had fallen to $&6,6o, and the following January it was only
^68.90. During the year 1863, the average gold value of the
greenbacks was 1^68.90, the value of the paper remaining nearly
stationary. Then in 1864, it sank to an average value of ^9.20.
The highest price ever paid in currency for one dollar in gold was
1(2.85. Tables of depreciation may be found in Knox, 97; Muhle-
man, 29 ; Rep. Mon. Com., 562.

GOVERNMENT PAPER MONEY

necessary expense of more than $500,000,000.^ In
other respects the experiment with the greenbacks
proved equally costly. Wages did not rise imme-
diately in proportion to the increase of prices,* so
that the laboring classes suffered a considerable
loss in their real incomes.^ Business was given
an unhealthy, speculative impulse, which necessi-
tated a severe period of liquidation in 1873. A
dishonest medium of exchange was productive of
the most notorious extravagance and corruption,
which gave to the decade following the close of
the war a character that was perhaps more un-
savory than that of any epoch since the adoption
of the Constitution. James Fisk and Jay Gould, the
CrMit Mobilier scandals and the Belmont impeach-
ment trial, were the natural products of this period
of reckless inflation.

In 1866, Secretary McCuUoch was authorized to
retire a certain amount of the greenbacks each
month ; but this necessary and wholesome policy
of contraction was opposed by all who had invested
while prices were still rising, and desired an oppor-
tunity to unload their investments upon other peo-
ple. Accordingly, when the greenbacks had been
reduced to $356,000,000, Congress prohibited the
further retirement of the notes.^ Meanwhile, the

1 Adams, 131 ; Rep. Mon. Com., 445-461 ; /. P, E.^ V. 1 17-156.

* Rep. Mon. Com., 470-479.

•U. S. Stat, XIV. 32, XV. 34. On contraction, see McCulloch,
Men and Meas., 210-213 ; Noyes, 7-16. According to the law of
1862, the greenbacks had been convertible into six per cent bonds,
but this provision was repealed in 1863. U. S. Stat., XII. 711,

MONETARY HISTORY

proposal was made to redeem with the paper
money a portion of the bonded debt of the United
States. When the 5-20 bonds were authorized in
1862, the pledge was made that interest should be
paid in coin, but nothing had been said concerning
the principal. This oversight was corrected in the
issues of bonds authorized in 1863 ;^ but the claim
was made that the obligations created under the
act of 1862 were lawfully redeemable in green-
backs, since the government had promised to pay
only the interest in specie. The Democratic plat-
form of 1868 advocated the payment of the princi-
pal of the 5-20 bonds in depreciated paper,^ but this
plank was practically repudiated by the candidate of
that party. The defeat of the Democrats was f ol-

^ U. S. Stat., XII. 345-346. The law of 1862 did not specify in
what money the bonds should be repaid, since no greenbacks had
been issued at the time when it was enacted, and there seemed to be
no occasion for a specific declaration. Another section of the law
provided for the issue of greenbacks and specified that they should
not be a legal tender for the interest on the debt. The bonds
issued in 1863 were specifically made payable in coin. U. S. Stat.,
XH. 710.

^Ann. Cyc, 1868, p. 747. President Johnson recommended
that the interest on the bonds should be applied to the payment of
the principal until that should be extinguished. Many Republicans
believed that the 5-20 bonds of 1862 should be paid in greenbacks ;
even John Sherman advocated such action in 1868. Cong. Globe,
40th Cong., 2d Sess., V., Appendix, 181. Cf. speech of Thaddeus
Stevens. IcUm^ 41 7^. In 1868, the Republican convention of
Indiana wanted to have these bonds " honestly " paid in greenbacks,
except where coin was specified ; and desired to have this done in
such a manner as to make the money in circulation equal to the
wants of the country, but without " too great an inflation of the
currtncy!^ Ann. Cyc, 1868, 378.
100

GOVERNMENT PAPER MONEY

lowed by a resolution of Congress pledging the
country to redeem all its bonded debt in coin, and
promising to adopt the same policy with respect
to the greenbacks.^ But many people still insisted
that " the bondholders should be paid in the same
currency that had been given to the soldiers/' as
if two wrongs could make a right ; while, in some
quarters, threats were heard that the debt would
be repudiated if Congress refused to redeem it with
depreciated paper.^

All the conditions that prevailed in 1868 contrib-
uted to the growth of a strong sentiment in favor
of the retention of the greenbacks as a permanent
feature of our monetary system. The creation of
the national banking system during the war had
resulted in a prohibitory tax of ten per cent upon
the notes of state banks.^ Since the continuation
of " wildcat ** bank issues was no longer possible,
it was evident that the withdrawal of the green-
backs, and the restoration of the gold standard,
would leave the country, for the first time in its
history, without any form of cheap currency. It
was not strange, therefore, that in many sections
there should be manifested a violent opposition to
parting with the only form of irredeemable paper
that remained available. Besides this, as has been
noted, many persons had made extensive invest-
ments during the period of inflated prices, and

lU.S. Stat, XVI. I.

^See Democratic platform in Ohio in 1869. Howard, 91.

•U.S. Stat., XIII. 484.

lOI

MONETARY HISTORY

would naturally oppose the restoration of the cur-
rency to a specie basis. These were the causes
that led to the passage of the act of 1868 prohibit-
ing the further retirement of the greenbacks.

As a matter of course, some people began to
deny that there had been any real inflation of the
currency on account of the issue of the greenbacks.
In December, 1862, when the premium on gold
ranged sometimes as high as thirty-four per cent,
Secretary Chase, in his Annual Report, expressed
a doubt whether this was due to an excessive issue
of paper. In the following January, it was often
contended in Congress, that the paper currency
had not depreciated; that King Gold had been
" degraded to a commodity of traffic, like com and
wine and pork,*' so that its value was subject to
** all the fluctuations of supply and demand " ; and
that the greenback commanded the same quantity
of commodities that it formerly did, so that the
premium on gold did not indicate a depreciation of
the paper.^ A year later, a writer in the NortA
American Review contended that it was " the duty
and the prerogative of a government to supply a
^ currency to the people," and that the greenbacks
were " the best currency that ever a nation had,"
" such a currency as was never dreamed of in the
philosophy of the framers of the Constitution."^

iCong. Globe, 37th Cong., 3d Sess., 383, 386, 391, 409.

^N, A, JP., XCIX. 210, 227. Hon. W. D. KeUey stated in
1876 that this article was by his ''late townsman and friend/'
Sydney George Fisher. Cong. Globe, 44th Cong., 1st Sess., 11 73.

102

GOVERNMENT PAPER MONEY

Then Henry C. Carey expressed the belief that it
was the wicked free-traders who attributed the
high price of gold to the greenbacks, which had
in reality " fallen on the country as the dew falls.**
He considered paper money "democratic in its
tendencies '* and wanted i!200,ocx),cxx) more of it,
for he denied that any " plethora of money *'
existed. The changes in prices that had occurred
since 1862 were such as must have taken place
" had the idea of a legal tender note had no exist-
ence.** He desired the retention of "a national
system of circulation based entirely on the credit
of the government with the people and not liable
to interference from abroad.** ^ Some years later,
the echoing voice of Henry Carey Baird was raised ^
in favor of a national paper currency interchange-
able with government bonds. Mr. Benjamin Butler
desired an " American system of finance,** based
upon a dollar, "of some convenient and cheap
material,*' which should have " a certain fixed and
stable value,** and should no more be redeemable
than a yardstick or a quart measure. This "Amer-
ican " currency, which should be the counter-
part of the " American System '* of protection, was
to be issued only by the government, and should
be convertible into interest-bearing bonds. Mr.
Butler despised gold and silver, which were " the
money alike of the barbarian and the despot.**'

1 Carey, Currency, 25, 29 ; Carey, McCulloch, i, 13, 19, 46.

* Baird, 1 1.

* Butler's Book, 953-954. This contains speeches in Congress.

103

MONETARY HIST6RY

In 187s, Congressman Kelley, of Pennsylvania,
declared the "Bullion Report" to be an anti-
quated production of David Rieardo, a "bond
and bullion monger." For his own part, Mr.
Kelley was ready to " go for what old Ben Frank-
lin says," and to follow the guidance of Horace
Greeley, who had demonstrated the beauty of the
"interconvertible bond system."^ Finally, Peter
Cooper persistently urged the necessity of adopt-
ing a " strictly national currency," " always inter-
convertible with Government bonds at a low rate
of interest," "which cannot be taken from the
hands of the people by the ever-shifting balances
of commodities between nations." ^ Such utterances
are fairly typical of the inflationist arguments
that were current in the years following the war ;
and it may be interesting to note that the quota-
tions from Mr. Cooper end with the argument,
advanced by Cotton Mather nearly two centuries
earlier, that paper money is " an abiding Cash."

In 1870, the Supreme Court finally succeeded
in reversing its earlier decision and declaring the
issue of legal tender notes to be constitutional. In
the opinion delivered by Justice Strong, the act
of 1834, which reduced the value of the dollar by
two per cent, served to give point to one of the
arguments advanced in behalf of the greenback,
which had given the country a paper currency of

^ Quoted by Leavitt, 193. Cf. Kelley's argument for an " inex-
portable currency." Kelley, 392-396.
2 Cooper, 10.

104

GOVERNMENT PAPER MONEY

fifty per cent less value than the medium used m
1861. The opinion was also expressed that it is
incorrect to speak of a " standard of value," since
" value is an ideal thing." ^ Then, in the panic of
1873, the Secretary of the Treasury, without express
authority of law, reissued a considerable quantity
of greenbacks that had been retired and were sup-
posed to be retained in the Treasury.^ This was
followed, in 1874, by the passage of the *' Inflation
Bill," which provided for the issue of $14,000,000
of the paper; but this measure was vetoed by
President Grant.* With all this encouragement,
the greenback rapidly became an important politi-
cal issue.

In 1872, the National Labor Reform Party de-
manded an irredeemable paper currency, issued by
the government " directly to the people." In the
following year, William Allen, a noted "Green-
backer," was elected governor of Ohio upon a
platform which apprehended danger to the debt-
or's interests from the resumption of specie pay-
ments, but did not demand a permanent paper
currency. In 1874, the Democracy in this state
called for a "sound currency," but wanted "an
increase of the circulating medium," which should
be secured by substituting government paper for
the notes issued by national banks. The next
year the platform denounced " the forced resump-

1 12 Wallace, 548, 553.

* Muhleman, 28 ; Rep. Mon. Com., 425.

• Rep. Mon. Com., 424-425 ; Noyet, i^ao.

105

MONETARY HISTORY

tion of specie payments," and demanded that the
" volume of currency be made and kept equal to
the wants of trade " ; and, after a close and excit-
ing contest, Rutherford B. Hayes, the Republican
candidate, was elected governor by a majority of
only 50(X) votes.^ This development of a move-
ment in Ohio for a permanent paper currency is
typical of what occurred jn several other states.
As a result, a National Greenback Party was organ-
ized for the presidential contest of 1876; and Peter
Cooper was nominated for the presidency upon a
platform that demanded national paper money, con-
vertible into interest-bearing bonds.^ In the fall
elections, 81,737 votes were cast for Cooper ; and it
is interesting to notice that 66,000 of these came
from the states of the upper Mississippi Valley,
and 7187 from Pennsylvania. This, however, was
but the beginning of the movement ; and the votes
cast in 1876 for the National Party by no means
represented tbe strength of the " greenback idea."
Two years/later, in the Congressional elections,
the agitation for an irredeemable paper currency
reached its climax.* In several states a fusion was
effected between the National and the Democratic
parties, while in a great many others the Demo-
cratic platforms contained a more or less qualified

1 For these various platforms, see Ann. Cyc, 1872, 773 ; 1873,
610-61 1 ; 1874, 667 ; 1875, 607.

* On the history of this party, see Andrews, Hist., I. 274-275,
286, 290-291 ; Leavitt ; Ann. Cyc, 1876-1884.

« See Atl. Month., XLII. 521-530 ; Nat, XXL 208-209, XXVIL
64, 221-222.

106

GOVERNMENT PAPER MONEY

indorsement of the proposals of the inflationists.^
It is impossible to determine with any accuracy
the real strength of the movement in this year, on
account of the complication of issues that arose
when the Democratic organizations in many states
became infected with Greenback principles.^ An-
drews has placed the aggregate Greenback vote of
1878 at i,0(X),365, while a Greenback writer states
it at i,4CX>,ooo.^ In 1880, however, the issues were
once more clearly drawn, and the National Green-
back party polled 307,740 votes.* Of these,
195,066 came from the upper Mississippi Valley;
60,019 came from the South; 35,778 came from
New York, Pennsylvania, New Jersey, and Dela-
ware ; 1 1,803 came from New England ; and about
5000 came from the Pacific coast. This is prob-
ably the fairest test obtainable of the geographical
distribution of the inflationist votes, although the
elections of 1878 furnish a better test of the aggre-
gate strength when the movement reached its
height The results of our computations are suffi-
cient to demonstrate that the real stronghold of
this Greenback movement was found in the newer
and more thinly populated regions of the West and

iAnn.Cyc, 1878.

*To assume that the total Democratic vote in those states where
the platform inclined in any degree toward a paper currency repre-
sents accurately the strength of the inflationists, would be wholly
unjustifiable. Thus, in Massachusetts, the large vote cast for
Butler was the result of his peculiar personal following.

•Andrews, Hist, I. 291 ; Leavitt, 224 ; Ann. Cyc, 1878, 808.

* Ann. Cyc, 1880, 702.

107

MONETARY HISTORY

South, which, prior to i860, had been supplied with
a bank currency that was often nothing more than
a form of irredeemable paper money. More will
be said in the following chapter of the causes that
produced this sectional distribution of the vote of
the National Greenback Party.

After suffering disaster in the elections of 1874,'
the Republican Party passed the " Specie-Resump-
tion Act " early in the following year before the
control of Congress passed out of its hands.^
Under this measure, skilful management of the
Treasury Department and a favorable revival in
trade enabled the government to resume specie
payments in 1879. .Congress seems to have
exhausted its powers of unwisdom in efforts to
obstruct the administration ; but it finally became
evident that the policy of resumption was certain
to prove successful. Then the inflationists became
alarmed at the prospect, and enacted the law of
May 31, 1878.2 This act prohibited the further
cancellation of the greenbacks, which had been
reduced to $346,68 i,ocx), and provided that, when
redemption in specie should begin, the notes
should not be withdrawn, but must be paid out
again and kept in circulation. Thus the paper
currency has remained with us, a permanent bur-
den upon the Treasury and a constant menace to
the business interests of the country.

lU. S. Stat., XVIII. 296 ; Tenth Census, VII. 389 ; Muhleman,
28-29 ; Noycs, 19-47 ; Rep. Mon. Com., 426-433.
2 U. S. Stat., XX. 87 ; Muhleman, 28.
108

GOVERNMENT PAPER MONEY

After 1880, interest in the agitation for a liar
tional paper currency died out for a time, only to
be revived by the People's Party a decade later, in
a movement that was most clearly conducted by
the agricultural classes of the South and West,
although a union was formed with the labor ele-
ment in the cities of the East.^ In 1892, Mr.
Weaver was nominated for the presidency upon a
platform that called for a national currency, " safe,
sound, and flexible," to be issued by the govern-
ment, and to have a volume of $50 per capita.
This money was to be issued in payment for
public improvements, and was also to be loaned
to citizens at two per cent interest.^ The exact
vote cast by the People's Party in 1892 and 1894
is not easily determined, but a careful estimate
places it at 879,469 votes in the former year and
1,434,253 in the latter.* Of these ballots, Mary-
land and the states north and east of her cast but
33,881 in 1892 and 53,717 in 1894.

iMcVey; g- /• ^.» X. 270-285.
« Ann. Cyc, 1892, 753-755-

• But see Ann. Cyc, 1892, 755, where Weaver's vote is placed
at 1,122,045.

109

CHAPTER VIII

GOLD AND SILVER

The agitation for the free coinage of the silver
dollar forms the last chapter of the history of
cheap money in the United States. In 1870, with
a view to the resumption of specie payments, Con-
gress began to consider the question of revising the
coinage laws of the country. The silver dollar was
then worth more than one dollar and two cents in
gold,^ and had been out of circulation for more
than a generation. After deliberating upon the
subject during five consecutive sessions, and secur-
ing expert advice, Congress passed the "Act of
1873.'' 2 This law, in accordance with a plan
formulated three years before, dropped the obso-
lete silver dollar from the list of authorized coins.^
Its deliberate intention, as stated repeatedly in
Congress,* was to establish legally the single gold
standard, upon which the currency of the country

iStat. Abst, 1898, 56.

2 U. S. Stat., XVII. 424 ; Laughlin, 98 ; Rep't Compt Cur-
rency, 1876, 170.

'See report on the act, in Sen. Misc. Docs., 132 ; statement in
Knox, 150 ; Rep't Dir. Mint, 1896, 461-573.

*Cong. Globe, 42d Cong., 2d Sess., 2305, 2306, 2308, 2310,
2316. Cf. speech by Senator Stewart, Cong. Globe, 43d Cong.,
1st Sess., 1392, 1678.

GOLD AND SILVER

had actually been based prior to the issue of the
greenbacks in 1862. The measure aroused no
opposition at the time because the inflationists felt
no interest in a silver dollar that was worth more
than gold, and were then concerned for the main-
tenance of a depreciated paper medium. But, in
187s, the "Resumption Act" was passed, while
the value of silver fell, so that the silver dollar
became cheaper than the gold. In 1876, when
the time for the resumption of specie payments
was approaching and the silver dollar was worth
only ninety cents, it was discovered that a crime
had been committed in 1873.^ From that time
to the present, the "remonetization*' of silver has
offered the best practicable method of securing a
cheap medium of exchange.

In 1876, "Pig-iron Kelley," "Silver Dick Bland,"
and a number of other statesmen introduced in
Congress bills that provided for the free coinage
of the old silver dollar, and gave that coin un-
limited legal tender power .^ The following year,
a free silver bill passed the House of Representa-
tives, with the support of such modern "sound
money men" as John G. Carlisle And William
McKinley.^ This measure was altered in the
Senate so that it required the government to pur-
chase a limited quantity of silver bullion each

1 See Cong. Rec, VII. 205, 584, 1263, 1265, 1271. For a plaus-
ible statement of this charge, see Coin, 15-20. For milder criticism
of the action of Congress, see Walker, Bimetallism, 184, 185.

« Cong. Rec, IV. 4704, 5186. « Ideniy VI. 241.

MONETARY HISTORY

month, and coin it into silver dollars ; and, in 1878,
the amended act was finally passed over the cour-
ageous veto of President Iftyes, who appreciated
the folly of temporizing with the policy of the
inflationists.^

The causes of the strong movement which
secured the enactment of the " Bland-Allison Act,"
have been carefully analyzed by Professor Laugh-
lin, in his " Bimetallism in the United States." ^
The inevitable reaction from the speculative activ-
ity and high prices of the era of paper-money
inflation had resulted in a process of liquidation
that involved the panic of 1873. The consequent
period of depression was attended by most un-
pleasant consequences for all persons who had
borrowed money on a rising market ; and distress
caused in this manner was especially prevalent in
the West, where land speculation had been most
active, and a large amount of mortgage indebted-
ness had been incurred. In the years following
1873, all the conditions were ripe for an inflationist
movement, since debtors were clamorous for relief
and there was an abundance of demagogues and
invertebrate statesmen ready to lead such an agi-
tation. This movement, moreover, was certain to
assume a sectional character, because much East-
ern capital had sought investment in the West,
and the debtor party was most numerous in the

1 U. S. Stat., XX. 25. On the history of this law, see Taussig,
Silv. Sit., 8-49; Laughlin, 179-214; Noyes, 73-126.
2 Laughlin, 186 et seq.

112

GOLD AND SILVER

newer and poorer states. For this reason, the
vote in the House of Representatives upon
the original free coinage bill "was non-partisan
and almost wholly sectional." "From districts
west or south of Pennsylvania, only six votes were
cast against the bill, two of these votes being cast
by Democrats; from Pennsylvania and the dis-
tricts east or north of it, the bill received only nine
supporting votes, and three of thg^nine votes were
Republican."^ ^ ' i\

An examination of the det)aTfes in Congress*
discloses the fact that the arguments of the free
silver men were generally pleas for currency ex-
pansion as a means of relief to oppressed debtors ;*
and threats were made that, if the measure failed
to pass, the " Resumption Act " would be repealed,
national banks would be destroyed, and the United
States would begin to " issue all the money tg be
in circulation in the country." Mr. Bland was
ready, in certain dire contingencies, to issue " paper
money enough to stuff down the bondholders until
they are sick," a sentiment that met with the
applause of the House of Representatives. The
"Crime of 1873" played its part in the discus-
sions; members declared that no discrimination
should be made against a great American product
such as silver; one speaker invoked "the roai^of
maddened labor " sounding " like a trumpet-blast of

1 Noycf, 40. Cf. Harper's Weekly^ Nov. 24, 1877.

* Blaine, II. 605-608, summarizes the debate in the Senate.

* Cong. Rec, VII. 601, 602, 957, 958, 1244, 1264, 1265, 1279.

I 113

MONETARY HISTORY

prophecy " ; and gold was denounced as "the money
of monarchs," the "idol of the miser and the
thief," the " most cowardly and treacherous of all
metals." ^

Under the operation of this law, 378,160,000
silver dollars were coined at our mints ; ^ but the
"friends of silver "were not satisfied. In 1890,
therefore, the " Sherman Act " was pushed through
Congress, as the price for which Western support
was secured for the tariff act of that year.^ This
was most distinctly an inflationist measure, de-
signed to increase the government's purchases of
silver to 4,500,000 ounces per month;* and the
arguments advanced in its favor were the same

1 For these references, in order, sec Cong. Rec, VII. 602, 1278;
1251; 584, 890, 1263, 1265, 1271; 926, 1251, 1271; 589; 1052.
^ Muhleman, 21.

• U. S. Stat., XXVI. 289. Senator Sherman's statement that
the bill was passed to prevent the adoption of a free coinage law is
clearly erroneous. Sherman, II. 1061 ^/ sg^, Cf. Amer, Hist, Rev.^
I. 556. , Mr. McKinley distinctly stated in the House of Represen-
tatives that the " Sherman Act '^ was the most favorable measure
for the silver cause that was obtainable, for, " we know we cannot
have free coinage now." Cong. Rec, XXI. 5812, 5813. There
seems to be evidence that President Harrison would have vetoed a
free coinage bill, and no such measure could have been passed over
his veto. Senator Teller gave what is probably the inside history
of the "Sherman Act," in his speech of April 29, 1896; and his
statement that Western members extorted silver legislation as the
price of their votes in favor of the tariff of 1890 passed unchallenged.
Cong. Rec, XXVIII. 4561, 4562.

* On the working of this act, see Taussig, Silv. Sit., 50-83; Noyes,
139-206; Muhleman, 31-33; White, 204-212; Rep. Mon. Com.,
138-145.

114

GOLD AND SILVER

that had done service in 1878. Thus Representa-
tive McKinley, in closing the debate upon the law
of 1890, argued,^ that it was necessary "that the
country should have an increase of its circulating
medium " ; that " the silver product of the United
States " should be used for this purpose ; that this
would be "just to the silver producers of this
country"; and that such action would create a
demand for silver that would "so increase the
value of that product" as to restore it to a parity
with gold at the ratio of 16 to i. The closing
words of his speech were as follows : " For one,
Mr. Speaker, I will not vote against this bill and
thus deprive my people, my country, and the
laborers, and the producers, and the industries of
my country, of thirty millions annually of addi-
tional circulating medium." But this concession
to the inflationist sentiment served merely to add
fuel to the fires of the silver agitation. After
three years of disastrous experience under its
operation, the "Sherman Act " had to be repealed ;
and this action brought the free silver sentiment
of the country to a climax, and precipitated the
campaign of 1896.

It is unnecessary to review the events that at-
tended the last presidential election, since they
must be familiar to all the readers of this essay ;
but it will be desirable to study the geographical
distribution of the silver and the gold parties. It
will be remembered that, in 1877, the free silver

1 Cong. Rcc, XXI. 5812, 5813.

MONETARY HISTORY

movement swept ever)rthing before it in all but six
of the Congressional districts west and south of
Pennsylvania ; while the " Bland Act " received
only nine votes in the Keystone State and in all
districts north and east of it By 1896, however,
the upper Mississippi Valley had undergone a
complete change in sentiment, and cast its votes
in favor of the maintenance of the existing gold
standard. The area controlled by the silver party
was pushed southward as far as Virginia, Tennes-
see, and Missouri ; and westward as far as Kansas,
Nebraska, and South Dakota. Even within these
boundary lines, the states of North Dakota, Cali-
fornia, and Oregon were lost to the cause of silver.
This survey of the recent inflationist movement
may be completed by a detailed examination of the
votes cast in 1896.^ In making the analysis of the
results of that election, the following method has
been employed. The strength of the National
Democratic Party has been added to the votes
cast for the Republican candidate, and these fig-
ures have been taken as the correct measure of the
sentiment in favor of maintaining the existing con-
ditions. Then the votes of the Democratic, the
National Prohibition, and the Socialist Labor par-
ties have been combined, in order to determine the
true strength of the forces that favored inflation ;
because the platforms of these parties advocated
either the free coinage of silver or a paper cur-

^The statistics of the vote cast in 1S96 may be found in the
World Almanac.

116

GOLD AND SILVER

rency issued directly by the government The
Prohibition Party has been omitted from the com-
putation, for the reason that its platform ignored
the question upon which the election turned. After
this, the writer determined the percentage which
the anti-inflation vote bears to the total vote of the
five parties selected for consideration. In present-
ing the results, it will be convenient to divide the
states into three groups according to their average
density of population in the last census year.^
The first group includes the eleven states of the
greatest average density of population, and it will
be seen that all of these were carried by the gold
party, usually by an emphatic majority : —

States

Average Density ^^^ ^^^^

OF GOLD VOTE

Rhode Island . . . . 318.44 .

. . . . 71.9

Massachusetts

. 278.48 .

. . . 72.9

New Jersey .

. 193.82 . ,

. . . 62.3

Connecticut

. 154.03 .

... 66.4

New York.

. 126.06 .

. . . 59.5

Pennsylvania

. 116.88 . ,

. . . 62.9

Maryland . .

. 105.72 .

. . . 56.9

Ohio . .

. 90.10 . .

• • • 52.3

Delaware .

. . 85.97 .

. . . 56.8

Illinois . .

. 68.33 . .

, . . 56.8

Indiana . .

. 61.05 . ,

• • • 513

The second group includes eighteen states of a
medium density of population, and these show a

1 These statistics may be found in Eleventh Census, Population,
I., p. XXXV. Another table containing the results of some slight
corrections may be found in Willcox, 395. In this computation
Willcox's 6gares have been used.

117

'Xy

MONETARY HISTORY

fairly even division of sentiment, eight casting
a majority vote in favor of the gold standard, and
ten showing a majority in favor of silver or paper :

States

Average Density

Per Cent

OF GOLD VOTE

Kentucky . . . .

. 46.47 50-5

Tennessee . . . ,

. 42.34 • •

. 47.5

New Hampshire .

. . 41.81 .

. 73-5

Virginia . . . .

. 41.27 . .

. 47.0

Missouri . . . ,

. 38.98 . .

. 45.7

South Carolina . .

. 38.16 ,

. 14.6

Michigan . . . .

. 36.46 . .

. 55.6

Vermont . . , .

, 36.39 .

. 83.1

Iowa

. 34.47 . .

. 56.6

North Carolina . .

. 33.30 .

. 47.1

Georgia ....

. 3I.IS . ,

. 39.9

Wisconsin . . .

. 31.10 .

. 61.9

West Virginia . .

. . 30.95 •

. 53.0

Alabama . . .

. . 29.36 .

• 31.9

Mississippi . .

. . 27.83 .

. . 8.8

Louisiana . . .

. . 24.63 .

. . 23.6

Maine ....

. . 22.11 .

. . 70.3

Arkansas . . .

. , 21.27 .

. . 25.2

The third group comprises sixteen states with
the least density of population, and it will be
noticed that only four of these cast a majority
vote in favor of the gold standard: —

States

Average Density

Per Cent
OF Gold Vote

Kansas . . .

. . . 17.48 . .

. . 48.2

Minnesota . ,

. . . 16.54 . .

. . 58.3

Nebraska , .

. . . 13.83 . ,

. . 47.3

Texas . .

. . . 8.52 . .

• . 31.7

California .

. . . . 7.78 . .
118

. . . 52.1

GOLD AND SILVER

States

Average Density

Per Cent

OF GOLD VOTE

Florida 7.22 26.7

Washington

• 5-34

. 44.0

South Dakota

. 4.54

49.8

Colorado .

3-99 «

13.9

Oregon . .

. 3.36

51.6

North Dakota

2.72

56.0

Utah. . .

. 2.56 ,

17.3

Idaho . .

1.05

21.4

Montana . .

.98 ,

19.7

Wyoming .

.64

48.5

Nevada . .

. .43

18.7

It is evident, therefore, that the inflationist move-
ment at the present day, as in all previous times,
finds its strength in the sparsely settled regions
where the scarcity of capital is most keenly
experienced.

Since this essay is dealing only with certain
underlying and fundamental facts in the monetary
history of the United States, it is unnecessary to
enter into a discussion of all the forces that have
contributed to produce the agitation for the free
coinage of silver.^ It suffices for the present pur-
pose to demonstrate that the silver movement is
primarily a continuation of the old struggle which
the debtor classes in the sparsely populated dis-
tricts have waged persistently in behalf of a cheap
form of currency. In this respect, the similarity
between the silver agitation and the greenback
movement is perfect, whether one considers many

^On this subject see Walker, Bimetallism, 217-219; /. P. E,, I.
163-178; e./.£.,X. 269-295.

119

MONETARY HISTORY

of the arguments advanced or the sections in
which popular support has been found. But it
should be added, in order to avoid misapprehen-
sion, that other causes contributed to produce the
persistent strength of the sentiment in favor of
the free coinage of silver. The continued fall
of prices for more than twenty years caused
undoubted injustice to many debtors, and fur-
nished telling facts in support of inflationist argu-
ments. Many fair-minded men found it hard to
choose between the evils of a single silver stand-
ard and the hardships of the existing situation. A
second cause may be found in the political influ-
ence of the owners of silver mines, who have taken
an active part in spreading the propaganda of the
silver party, and have furnished a large part of the
needful sinews of war. Then, since 1889, seven
sparsely settled states have been admitted to the
Union, and have added fourteen votes to the
strength of the free silver element in the Senate.
In 1896, these states cast twenty of their elec-
toral votes for Mr. Bryan, and only three for Mr.
McKinley.

If this essay has portrayed and interpreted cor-
rectly the monetary history of the United States,
one important conclusion may be drawn concern-
ing the probable future of the agitation for a cheap
form of currency. If the scarcity of capital in
sparsely settled areas has been hitherto the pri-
mary cause for the persistent demand for barter
currencies, paper money, and a depreciating metal-
120

GOLD AND SILVER

lie medium of exchange, such a movement must
gradually subside with the growth of numbers,
wealth, and diversified industries in the regions
that now form the seat of the silver party. Only
a few generations have passed since this agitation
was effectually quieted in the Northern Atlantic
states. Within the last twenty years, the valley
of the upper Mississippi has been won from its
adherence to the old propaganda. The area that
will henceforth feel the lack of ready capital, and
desire some cheap form of money, cannot be
greatly increased by the admission of new states.
Each passing decade will tend to remove the causes
that now contribute to the strength of the silver
movement in the extreme South and West. An
improvement of banking facilities in these regions
would contribute materially to the accomplishment
of this result. In periods of great industrial de-
pression, especially in times of distress and discon-
tent among the agricultural classes, the familiar
nostrums will still be proposed, and the demand
for "more money" may be renewed for a long
time to come. But, in the absence of some great
industrial cataclysm, there will be a continual nar-
rowing of the field within which the agitation for a
cheap currency can hope to secure any large meas-
ure of popular support.

121

Part II

THE PAPER CURRENCY OF NORTH
CAROLINA

CHAPTER I

EARLY ISSUES (1712-1748)

The early settlers in North Carolina, like those
in other colonies, were driven by their poverty to
resort to the use of a barter currency. In 1709,
Rev. William Gordon wrote: "In this as in all
other parts of the province, there is no money;
every one buys and pays with their commodities,
of which corn, pork, pitch, and tar are the chief."
The prices of these articles were fixed by law, but
at figures that a person could seldom secure for
them " after considerable expense and risk." The
result was that three shillings of this barter money
were reckoned as no better than one shilling ster-
ling.^ The lords proprietors naturally enough
objected to receiving such a medium in payment
of quit rents, and instructed the receiver general
to demand sterling money upon all occasions. In
1 71 3, the receiver represented to the council of
the province that he could not comply strictly with
this requirement, and was advised to accept " any
Good and Merchantable Commoditys of this country
at ye rated price." ^ The council further expressed
the opinion that rice well-dressed and cleaned, when

1 This letter is reprinted in Hawks, II, 309.
aCoL Recs. N. C, II. 34-35.

MONETARY HISTORY

accepted at the rate of i/j. 6d, per cwt. "is ye
true value of Sterl. money."

An enactment of 171 5 made seventeen leading
commodities a tender for debts. ^ These staple
articles were not receivable, however, unless in
good condition; and special contracts were ex-
cepted from the operation of the law.^ A few
years later three other commodities were added to
the list, and the ratings of wheat and corn were
raised ; while it was provided that five of the most
bulky articles must be delivered at some conven-
ient landing upon a navigable stream.^ Governor
Burrington claimed that when this last enactment
was made, rice was valued at a rate that led to a
depreciation of the commodity standard.* In 1731,
he said, concerning the practical working of the
act of 171 5, that, however accurate the original
rating of the goods may have been, it soon became
incorrect and unequal ; so that, for instance, while
deer skins had remained at about the value fixed
by the law, pitch and tar had fallen to one-quarter
of the legal valuation.^ The result was that " Peo-
ple generally take advantage to pay in the worst
Commodity which often occasions unfairness in
Trade and Dealings." Burrington expressed the
belief that the law was especially liable " to perplex

^Records, III. 185, IV. 292, 920-921; Basset, 60. On the in-
complete and fragmentary nature of the early records of the colony,
see Records, I., pp. III.-V.

« Idem^ IV, 292. Cf. Williamson, 1. 163; Hawks, II. 163-164.

» Records, IV. 293. * Idem, III. 615.

6/d5fw, III. 185. Cf.p. 615.

126

EARLY ISSUES (1712-1748)

strangers tradeing," and to encourage frauds in
such cases.

In 1750, Governor Johnston stated that payment
of the provincial taxes in produce had continued
" with very little Alteration " of these earlier laws,
and that this had resulted in " great Damage to the
Revenue," since it was " a stated rule, that of so
many Commodities the worst sort only were paid." ^
The people of the colony, however, clung persist-
ently to the practice, despite the governor's com-
plaints.^ Even the quit rents had to be collected
in this barter currency,^ since the only alternative
would probably have been a complete non-payment
of these unpopular dues, which were always in
arrears at the best.

North Carolina for various reasons long re-
mained an extremely poor colony, and was slower
in developing an extensive commerce than many
of her neighbors.* For this reason specie would

^ Records, IV. 920-921. Cf. the opinion of Governor Burring-
ton, III. 185.

^ Johnston called it " an odious sham method of supporting the
Charges of Government." Records, IV. 923.

'Johnston wrote in 1740 that the colonists insisted ''on pa3nng
their Rents in the worst and most bulky kind of their produce," and
they insisted on paying these " hopeful! Commodities " either at
their houses or at forty-two different landings. Yet he thought it
was impossible to abolish the practice entirely. Records, IV. 415.
In 1738, the Board of Trade inquired into the matter particularly,
and found that the practice had been forced upon the collectors.
Records, IV. 294.

* See Basset, 14, 15. Hawks, II. 252-289, gives an account of
the trade of the province.

127 .

MONETARY HISTORY

have been scarce even without the influence of the
barter and paper currencies that were introduced.
Yet coins and plate are sometimes mentioned in
the early laws. In 171 5, an act was passed " ascer-
taining the currency of Dollars," and Governor
Burrington states that this was intended " to bring
Dollars into the Country " ; ^ but, he adds, " it
never had the eflfect/' This enactment probably
rated " the Lion dollar " at three bushels of Indian
corn.^ Since a law of the same year rated corn
at IS. id. per bushel,^ this was equivalent to a rating
of 5^. for the lion dollar, which was worth but 3^.
7»7d. sterling.* This was a little more than the one-
third advance over sterling allowed by the royal
proclamation of 1704 and the act of 1707. Hawks
states that another provincial law of this period
provides for the distribution of silver plate forming
part of estates belonging to orphans.* In 1724,
Governor Burrington was instructed to enforce the
statute of 1707 relating to the valuation of foreign
coins;® but in 1729, after the paper currency had
fallen to one-fifth of the value of sterling, silver

1 Records, III. 18.

* I assume that this is the law mentioned by Hawks, II. 164.
Mr. Hawks evidently examined the manuscript copies of the laws
of 1715.

« Records, IV. 292.

* Sir Isaac Newton assayed the lion dollar of Holland at 14 dwts.
2.7 g. Bne contents, and valued it at 43.7^. sterling. See Postle-
thwayt, L 523; Chalmers, 67*

* Hawks, II. 174.

* This statement is made on the authority of Martin, I. 295.

128

EARLY ISSUES (1712-1748)

was rated at 25^. per ounce,^ which was nearly
five times the sterling rating of 5^. 2d, per ounce.
At the same time gold was rated at ;;^i per dwt.,
which would give a ratio of 16:1 between the
white and the yellow metals.

North Carolina resorted to paper money for the
first time in 171 2 in order to "defray the Charges
of an Indian War then kindled." ^ Taxes had
been levied for this purpose, but ;^4000 of bills
were issued in order to anticipate the work of col-
lection.^ The notes bore interest, and were to be
redeemed at stated times out of the receipts from
the taxes.* They seem also to have been made
a legal tender for all payments in which the rated
commodities were receivable.* But the Indians
remained troublesome, and the war continued ; so
that an issue of £^000 was made in 171 3,® prob-
ably upon the same terms as that of the previous
year.^ From a report made in 1740® we learn

1 Hawks, II. 286.

2 Records, I. 838, III. 145, IV. 576.

» Idem, III. 484. * Ideniy III. 145, 484.

* The Records state merely that this first issue was made <' Cur-
rent in all payments." III. 145. But the issue of 1713 was made
" passable for all debts for rated commodities of the country." II.
50. This was probably the case with the first issue.

* Records, II. 50, IV. 576. The historians have erroneously
stated that this was the first emission. Williamson, I. 205; Martin,

I. 264; Hawks, II. 280. On these early issues see also Records,

II. pp. IV.-V.

7 Records, II. 50; Martin, II. 264-265; Williamson, I. 205.

* Records, IV. 576. Williamson says that these bills depre-
ciated. History, I. 205.

K 129

MONETARY HISTORY

that this emission "depreciated the value of the
whole" about forty per cent, a fact that is not
surprising since the population of the colony at
this time was less than io,ocx)^ and the total
amount of paper in circulation was ;£ 12,000, equal
to $40,060.^

In 1715,^ a new issue of ;;^24,ooo was ordered.*
One-half of this sum was to be used for retiring
the ;£ 1 2,000 then in circulation, and the remain-
der was applied to the payment of public debts.
Holders of the old bills were required to bring
them in for exchange before March 25, 1716, after
which date the notes should "be of no value."
Two years' interest was to be paid on the old bills
thus exchanged. The new issue was made legal
tender " for any of the rated Commodities of the

* In 1 71 7, Colonel Pollock estimated the number of" tithables"
at 2000, which would give 9000 or 10,000 as the total population,
black and white. Records, II., p. V. All estimates of this charac-
ter are mere approximations to the truth, but are the best that are
possible.

2 I assume that the proclamation rates prevailed in North Caro-
lina at this time. This accords with the rating of the lion dollar at
5J. in 1 715. At proclamation rates the colonial pound was $3.33.

* There may be some uncertainty as to the date of this enact-
ment. The report of 1740 places it at 1714, and says the bills were
continued by an act of 1 71 5. Records, IV. 576. The editor of the
Records makes the date 1 7 14. See II., p. V. On the other hand.
Governor Burrington in 1733 gives 171 5 as the date. Records, III.
485. Hawks, who examined the manuscript records, gives the same
date. History, II. 280. The text of the act itself seems to point to
the year 1715. See Records, III. 178-179.

* This act is preserved. Records, III. 1 77-1 79. Extracts arc
given by Hawks. History, II. 280-281.

130

EARLY ISSUES (1712-1748)

Country or other Money allowing fifty per cent
between the same and sterling." Probably the
intention of the law was to make the paper equal to
the barter currency of the colony, which was below
sterling and was called "Proclamation money," ^
since ;;^I50 colonial was reckoned by the men who
framed this law as equal to ;^ 100 sterling.^ This
may be taken as the base from which to compute
the depreciation of the paper. To this tender law
was added a forcing clause which provided that
any one who refused the paper at fifty per cent
advance over sterling, should forfeit one-half the
value of the sum refused; while a later section
enacted that any member of the assembly who
should thereafter make any motion judged to be
"derogatory and prejudicial to the Publick Credit
of the said Bills," should be denounced as an
enemy to the country and fined twenty pounds.
Martin justly observes that a proposal to issue
more bills was not considered to be a remark of
this character.^ Finally, the law of 171 5 enacted
that any person convicted of counterfeiting the

1 See Records, III. 615, where Governor Burrington refers to
the rated commodities as '* Proclamation money.''

* The standard of value in North Carolina was the barter shilling
or pound, before paper was issued. We have seen that in New Eng-
land the barter money was worth only two-thirds as much as specie.
Bronson, 21. Then ;f 150 colonial would equal ;^ 100 sterling. This
may well have been the rate of exchange for the best commodities
in North Carolina. Commonly the barter currency was at a greater
discount. Hawks, II. 309.

• History, I. 293.

MONETARY HISTORY

bills should be punished "as guilty of Felony
without the benefit of Clergie." The new bills
bore no interest, and no time was set for their
redemption.^ The legislature, however, in the
same year levied a tax on polls and land, which
was intended to bring in ;£20CX) annually " till the
Publick Debts are answered and paid." At the
same time a pledge was made that the tax should
not be lowered or repealed, and that no more bills
should be emitted, until all of the outstanding
paper should be retired.^

These earliest acts for issuing paper money
illustrate perfectly the usual course of legislation
upon the subject. The first emission was small,
and it bore interest and was redeemable at stated
periods. It was justified, furthermore, as an emer-
gency measure. But the needs of the government
did not decrease, and the legislature made a new
emission twice as large as the first. This caused a
depreciation of forty per cent. The next steps were
to cure the inflation by issuing twice as much
money as was already in circulation, to make the
new bills redeemable at no definite time, and to
pay no interest upon the notes emitted. Then,
under the pretext of supporting the credit of the
bills, a forcing law was passed to fcompel creditors
to receive the paper, which was already depre-
ciated. Finally, a tax was levied which would,
if collected, make it possible to retire the notes in

1 Cf. Records, III. 485.

2 Idem, III. 189, 485. Cf. Martin, I. 275.

13a

EARLY ISSUES (1712-1748)

ten years ; and the legislature pledged the public
faith to issue no more paper, and to keep the tax
in operation as long as it might be needed. We
shall see how these promises were kept, and what
such a pledge of the public faith was worth.

But doubling the amount of the currency did
not improve its condition, for in 171 7 Colonel
Eden reported it to be "at a vast discount,"^
while four years later it was reported at 1 50 per
cent advance over sterling.^ Accordingly, as a
further support to the credit of the paper, the
assembly petitioned the proprietors of the province
to receive the bills in payment of the rent for
lands ; but this request was refused, although the
proprietors expressed a willingness to receive the
rated commodities of the country instead of specie,^
for these articles could be transported to England.
Colonel Pollock thought that the bills would be-
come " very current in a short time " if they could
be used in these payments.* For a time the tax
levied in 171 5 seems to have been collected, and
some of the paper seems to have been retired, in

* Records, II. 270. The report of 1740 says that the bills issued
in 1 715 depreciated eight per cent " from the value of their first
emission.** Idem^ IV. 576. This can hardly be correct in the face
of the other evidence.

^Idem, II. 417. This meant that £100 sterling was equal to
;^250 colonial.

•//«w, 11. 243-244, 250; Williamson, I. 205-206. It is possible
that some payments may have been made in paper after all.
See Remarks of Burrington, III. 145.

* Records, II. 296.

MONETARY HISTORY

accordance^ with the pledge made at that time.
But, as Governor Burrington wrote,^ " that Faith
was afterwards broke in upon." The tax had
called for 1 5^. per poll and zr. 6d, for every hun-
dred acres of land.^ In 1722, the legislature com-
mitted " the first public breach of the Funds laid
for sinking the bills," and reduced this tax to 5^.
per poll.*

By this time it was estimated that about ;^ 12,000
of the bills of 171 5 were yet outstanding;* while,
if the annual tax of ;;^2000 had been faithfully col-
lected and applied to the proper purpose, the notes
in circulation could not have exceeded ;£ 10,000.
A new emission of ;;^i 2,000 was now (1722) voted
in order to exchange the old bills, which were said
to be torn and defaced.® These new notes were to
be a legal tender at fifty per cent advance on sterling
in all contracts where payment in specie was not
expressly required, and holders of the old money
were given a few months in which to effect an ex-
change of old for new bills.^ Counterfeiting was

1 Records, III. 485, IV. 576. In 1717 Pollock said that the
bills then outstanding amounted to no more then ;f 16,000. Idem,
II. 296. But this seems to be too small a figure, because the tax
levied in 1 71 5 to sink the ;^24,ooo then issued amounted to only
£71000 annually, if collected.

^Jdem, III. 145.

^Jdem, III. 189.

^ Idenii III. 190, 485. Hawks describes this law. History, II.
282.

fi Records, II. 485, IV. 576; Hawks, II. 282.

•Records, III. 190, 485, IV. 576.

T These facts are taken from Hawks, II. 282. Cf. Martin, 1. 293.

EARLY ISSUES (1712-1748)

again made a capital offence. The consequence
of this legislation was that from 1722 to 1729 the
bills of credit circulated ** at the proportion of five
for one sterling," ^ a result which probably was not
regretted by the men who made the paper legal
tender at a rating of 1.5 to i. It appears, more-
over, that no more bills were cancelled after 1722 ; ^
but that the assembly, when bills were drawn in
through payments of the poll tax of five shillings,
"usually ordered them to be pay'd — out again,'*
for contingent expenses.^ Thus the public faith
was continually broken, in a manner not uncom-
mon in the colonies.

For the reasons just stated there were in circu-
lation, in the year 1729, fully* ;£ 12,000 of bills
issued prior to 1716 and reemitted in 1722. The
assembly had succeeded in preventing a contrac-
tion of the redundant currency, although Governor
Burrington is said to have received instructions in
1724 to have the paper redeemed and cancelled.*
Not content with this, the inflationists took advan-
tage of the prospective transfer of the province
from the proprietors to the Crown to secure a

1 Records, IV. 576.

^Identy III. 190.

»/flr^»i, III. 485-486.

*In 1729, the assembly estimated that ;£'2000 of the currency
had been lost, and that only £io,ocx) was in circulation. Iiftm,
III. 190, IV. 576. But the ;f2000 finally proved to be in the
hands of citizens. /</<fw, IV. 101-102. ^"^^^^

^This is Martin's statement. History, I. 295. I have been
unable to find Burrington's instructions of an earlier date than 1730.
See Records, III. 66.

MONETARY HISTORY

large addition to the bills of credit. The last pro-
prietary governor, foreseeing that he would soon
have to leave his position, is said^ to have been
induced, " by a shameful collusion " with the legis-
lature, to consent to an issue of £^0^000? Of
this sum, ;£io,cxx5 was to be exchanged for the
old bills emitted in 1722 and still in circulation, all
of which must be brought in within a certain time.
The remainder, amounting to £10^000^ was to be
loaned to the inhabitants upon the security of mort-
gages on unincumbered lands of double the value
of each loan. The bills were apportioned among
the precincts according to the number of tithables
in each, and placed in the hands of the precinct
treasurers. One-fifteenth of the principal of each
loan was to be repaid annually, with interest at a
little more than six per cent. Twenty shillings of
the new currency were to be rated at 15 dwts. of
silver. This was four times the rating of silver in
Virginia,® which the legislature took for a basis,
and is an admission of a depreciation of four to
one proclamation money, or more than five to one
sterling.* Existing obligations were to be settled

1 This is "Williamson's statement. History, II. 38.

2 Records, III. 145, 175, IV. 178, 419, 576. Cf. Martin, I. 301;
Williamson, II. 37-39. Hawks gives a long account of this law,
but gives 1727 as the date. History, II. 282-287.

•An act of 1727 in Virginia had rated silver at 4^. per dwt.
Hening, Stat., IV. 218.

* Since silver was worth 55. 2d. per oz. according to the sterling
standard, this would make exchange about £$^1 North Carolina
currency to £iQO sterling. Cf. Records, IV. 419.

136

EARLY ISSUES (17 12-1748)

according to the usage at the time when they were
incurred, but future contracts were to be in terms
of these bills. If the new currency should depre-
ciate, the legislature was annually to ascertain and
declare the value of twenty shillings of bills in
terms of silver. The notes were declared a legal
tender at the specified ratings, and fourteen of the
rated commodities were given new values in terms
of this new currency, while silver was rated at 2is.
per ounce.^

Thus was established a loan bank system such
as had been introduced in several other colonies,
and it was computed that the interest and princi-
pal would amount to ;£4S,ooo at the end of fifteen
years. This would redeem all the bills emitted in
1729, and leave a surplus of ;£socx) available for
the current expenses of the government, which
thus expected to derive direct pecuniary benefit
from the scheme.^ Since the population of North
Carolina must have been, in 1729, considerably
less than 36,000,^ and the trade of the province
was not large, a further depreciation of the paper
ensued. By 1 73 1, exchange was * at £700 or ;£8oo
provincial currency for ;£ioo sterling, and the gov-

1 These figures are given by Hawks, II. 286. The rating of
2$s, per ounce for silver is inconsistent with the rating of 20s. of
the bills at 15 dwts. of silver.

* See Records, IV. 178-179; Hawks, II. 285. For a copy of
one of these bills see Hawks, II. 280.

*In 1732, the population was estimated at 30,cxx> whites and
6000 blacks. Records, II., p. XVII.

^ Idem, 111. 146.

MONETARY HISTORY

ernor could call the paper ** worse than any of the
commoditys." ^ The royal officials in the colony
suffered from this advance in exchange on Lon-
don, since their salaries had been fixed before the
bills had been emitted.^ When the assembly voted
a salary of ;^ioo in paper for the chief justice of
the province, the governor asked for an increase,
stating that ;£8oo in currency would be worth but
;£ioo sterling. The assembly replied that ex-
change was, in their opinion, only ;£ 500 for ;£ioo,
and that the salary would suffice.® Williamson
has spoken very forcibly concerning this enact-
ment of 1729. He says:* "Although every man
in the colony saw that too much paper was in cir-
culation, for it passed below the nominal value,
excuses were formed, once and again, for making
more." " Of all the varieties of fraud that have
been practised by men, who call themselves hon-
est, and wish to preserve a decent appearance,
none has been more frequent, in legislative bodies,
than the attempt to pass money for more than its
proper value. There are men who conceive, that
^crimes lose their stain, when the offenders are
umerous ; that in the character of legislators,
hey cannot be rogues, ' defendit numerus,' There
J re men, who would be ashamed to acquire five

1 Records, III. 185.
^Idgm, III, 271, 309.

• Idem, III. 283. Burrington wrote the Lords of Trade that he
had offered to take silver at 8 for i, but only one man had been
willing to pay the governor's fees at that rate. Idem^ III. 208.

* History, II. 38, 39, 40.

138

EARLY ISSUES (17 12-1748)

shillings by stealing, picking a pocket, or robbing
on the highway ; but they would freely, and with-
out blushing, assist in poocinnr ^^Jf,'"^ to defraud
their creditor out of half Tiis just demand. There
are instances of men being banished from Carolina
for stealing a hog, not worth five dollars ; while 7^^
the men who banished them, would contend for / vt^^^V
paying a debt of seven pounds with the value of ^

twenty shillings."

Since the act of 1729 was passed just after the
surrender of the province to the Crown, and had
been approved by the proprietary governor, the
assembly managed to get the new bills into circu-
lation at once ; and thus secured the best of the
argument when the validity of the law was called
in question by the royal governor. ^ In 1730, Bur-
rington, who had come out as governor, received
instructions to approve no more bills for issuing
paper money unless they contained a clause sus-
pending their operation until the royal assent had
been secured ; and his successor was given similar
directions. ^ As happened elsewhere, frauds were
committed in the valuation of lands, and bills were
loaned upon inadequate security.® Then, too,
when the precinct treasurers in 1734 were ordered
to render accounts and produce the money paid in
for interest and annual instalments of the prin-
cipal, they turned in only one-tenth of the amount

1 Records, III. 146, 175, 486, IV. 179.

a/dfe»i,III.9S,498.

^Jdem, III. 145.

MONETARY HISTORY

actually due.^ Of the ;£i2,cxx) of old notes issued
prior to 1729, ;£9555 were exchanged for new
bills by 1 73 1, and were subsequently bumt.^ The
;£2CXX5 of old bills that were assumed to be lost in
1 729 turned up in the hands of the receiver of the
powder duties six years later, and were exchanged
for new currency.^

When the assembly of North Carolina met in
January, 1735, the governor called its attention to
the bad state of the currency, caused by the coun-
terfeiters who seemed to be industriously at work.*
The assembly readily agreed to remedy this evil at
once,^ and proceeded to prepare an act for ex-
changing the old bills for new. If the annual
instalments of one-fifteenth of the y^30,cxx5 loaned
in 1729 had been punctually paid with interest, at
least ;£ 1 6,000 of the ;£40,ooo emitted would have
been returned by the end of 1734. Such pay-
ments, however, had not been made in many cases;
and the receivers had turned in only one-tenth of
the money then due.^ But under the law as it
stood, the annual instalments of the principal
were due, and should be retired from circulation.
Accordingly the assembly seized upon the gov-

1 Records, IV. 179.

2/<i;f»j, III. 324, 546, 583.

^Ideniy IV. 101-102.

^Idem, IV. 78. The severe penalties of the early laws had
been continued by the act of 1729. Hawks, II. 286. In 1726, an
indictment was found against a counterfeiter. Records, II. 669.

*/^/w,IV. 82.

^ Idem, IV. 179.

140

EARLY ISSUES (1712-1748)

emor's proposal to remedy the evils of counter-
feiting, as an excuse for preventing the withdrawal
of any of the bills then in circulation. The pretext
for this action was that large arrears of quit rents
were due, and could not be paid without the cur-
rency.^ An act was passed,^ therefore, providing
that all the money due and to fall due on the prin-
cipal of the loan of 1729 should be let out again at
six per cent interest for the space of ten years, at
which time the original fifteen years would expire
and the entire sum loaned would become due.
This law provided, also, that, in order to remedy
counterfeiting, all the notes outstanding should
be brought in and exchanged for new bills. The
notes of this issue were not made a legal tender
at any fixed rate,® and it was probably intended
to have valuations of the currency fixed from time
to time. Governor Johnston wrote to the Board
of Trade* that this enactment "was intended purely
for the benefit of the Inhabitants of the Province
that they might be certain of at least a Currency
of ;;^40,ooo for Ten years to come." By means of
it the assembly made impossible the gradual retire-
ment of the paper, and so shaped matters that
at the end of ten years the whole sum of ;£40,ooo
would be legally subject to retirement. Since

1 Records, IV. 179, 576-577.

^ Idtm^ IV. 179-180, 419. In a report made in 1740 the date
18 erroneously given as 1734. Idem, IV. 576-577. Martin makes
the same error. History, II. 18.

» Records, IV. 419. Cf. p. XXII.

* Idem, IV. 179.

141

MONETARY HISTORY

there was absolutely no prospect that any subse-
quent legislature would consent to the immediate
retirement of the entire currency, it seems probable
that the law of 1735 was intended to make certain
the permanence of the paper money.

But while the assembly was at work on this sub-
ject, it did not stop with providing for the continued
circulation of the amount of currency already out-
standing. The commissioners appointed to stamp
the bills were authorized ^ to manufacture ;^25oo
more " to defray the Charges " of the operation.
Then ways and means had to be devised for pay-
ing various debts amounting to ;£i4,i50. Since
the governor considered it "absolutely necessary
these debts should be paid off as soon as possible,"
he consented to an emission of ;£io,ocx) in bills of
credit, which were to be sunk by a poll tax which
should continue in operation for five years.^ Thus
the currency of the province was increased to
;£S2,SCX); whereas, if the law of 1729 had been
enforced in good faith, the issues outstanding
would have been reduced to less than ;^24,ocx) by
1735- By this time the population of the province
was about 50,000, whites and blacks;^ and the

1 Records, IV. 179-180.

^Idem, IV. 108, 179-180, 419. The report of 1740 says that
jf 1250 were emitted. IV. 577. This is clearly a clerical error,
and ;f 12,500 is meant. This is the sum of the two emissions men-
tioned in this paragraph.

•In 1735, the whites alone were estimated at 40,000. Idem^
II., p. XVII. Mr. Saunders estimates the total population at 50,000
in 1734. Idem^ IV., p. XX.

142

EARLY ISSUES (i 712-1748)

circulating medium, therefore, amounted to about
j!3.SO per capita} This was a large sum for such
a poor colony, but not a larger relative amount
than was outstanding in 1729. Exchange on Lon-
don was at six hundred per cent advance over
sterling in 1736,2 which would make ;£700 colonial
equal \,o £,\QO sterling.

Meanwhile the governor and assembly had
become involved in a dispute concerning the pay-
ment of the quit rents.^ Governor Johnston in-
sisted that, if rated commodities were tendered in
these payments, they should be delivered at four
convenient places ; whereas the people insisted that
the articles could be tendered on the land where the
rents accrued, and thus endeavored to throw the
heavy costs of transportation on to the government.
But, more than this, Johnston announced* that
he would receive payment in sterling money or
in bills of credit at ratings fixed by his council.
The assembly protested vigorously, but without
effect; and then tried unsuccessfully to pass a
law providing that the value of the bills of credit
should be determined yearly by the governor and
delegates from each branch of the legislature.^
The governor then endeavored to secure the

^ This is computed upon the basis of proclamation rating, which
gives ^53.33 to the pound.

2 Records, IV. 225. This is the estimate of the provincial coun-
cil, and may be less than the actual rate of depreciation.

•This dispute was an old one. See Records, III. 541, 548-549.

*0n this subject see Records, IV., pp. XIV- XVIII.

»/flr^»f, IV. 175-185.

143

MONETARY HISTORY

passage of orders in council authorizing him to
settle the rates at which paper money or rated
commodities should be received.^ The dispute
continued until 1739, when an act was passed
providing that the governor, council, and delegates
from the assembly should "regulate the value'*
of the bills annually .^ In March, 1739, the de-
preciation was fixed, in accordance with this law,
at ;£iooo colonial currency for ;£ioo sterling.®
Since the delegates of the assembly participated
in this action, it is probable that a depreciation of
ten to one was too patent to be denied.*

There is a statement to the effect that in 1738 the
members of the legislature applied to the payment
of their own salaries interest money received from
the bills emitted in 173 5, although these funds had

1 Records, IV. 205. In 1 737, the assembly ordered that collectors
of the quit rents should be arrested for compelling people to pay in
the manner desired by the governor. Idem^ IV. 272. Cf. William-
son, II. 41-43. The governor dissolved the assembly.

* Records, IV. 416, 419.

^Idemy IV. 416, 419, 577. Governor Johnston said that the bills
had previously been accepted at seven for one, and that the valuation
of 1739 would increase the revenue. Idem, IV. 416. This law of
1739 was disallowed by the Crown, and the entire controversy
was reopened in 1741. This continued for eight years before
another quit rent act could be passed. Id^mt IV., pp. XVII-
XVIII.

* Williamson, II. 38-39, gives some statistics of depreciation.
He states the depreciation at 3 J for i in 1730 and 7i for i in
1739. The reader must notice, however, that this relates to the
exchange between paper and proclamation, or barter, currency.
This was only two-thirds the value of sterling; and with this allow-
ance, Williamson's figures are nearly like those given here.

144

EARLY ISSUES (1712-1748)

been pledged for sinking the bills.^ However this
may be, it is certain that a violation of all good
faith was committed in 1739. In February of that
year the commissioners appointed for exchanging
the bills of 1729 for those issued in 1735 reported
that, out of the ;£40,ooo of old notes, ;^3 7,849 had
'been replaced by bills of the last emission.^ This
left a balance of new bills which the legislature
ordered to be issued "in order to discharge the
Publick debts of this Province."® It turned out
that these " Publick debts '* were the wages of the
legislators themselves; and the lower house, in
asking the concurrence of the upper chamber in
this action, admitted * that the balance in question
"ought to be applyd (by Acts of Assembly) to
other purposes," so that the proposal might "be
deemed a violation of the Publick faith." The
council without delay passed this resolution, which
is actually termed in the minutes of the assembly
" a message " "in relation to the payment of the
wages of the Members of Assembly out of other
funds than are or ought to be appropriated for
said use." ^ Thus it appears that a legislature of
manufacturers of paper money could not only vio-
late the public faith for personal ends, but could
do this openly and deliberately with a brazen
effrontery that would make a highwayman blush.
In 1739, Dr. William Douglass wrote, concern-
ing the currency of the colony, the following

1 Records, III. 185. « Identy IV. 367, Vio-yji, 398-399*

^Idem, IV. 399. * Idem, IV. 409. 6 Idem, IV. 413.

L 145

MONETARY HISTORY

words : ^ " North Carolina, an inconsiderable
Colony scarce capable of any Fund for Paper
Emissions; have notwithstanding 40,000/. upon
Loan, and 12,500/. upon Funds of Taxes, At
present Exchange is settled by their legislature at
10 North Carolina for I Sterling^ It will be seen
that this statement is correct, except that the
amount " upon Loan " was £,10,qqo?

In 1740, Great Britain having become involved in
war with Spain,^ North Carolina was called upon
to take part in an expedition against Florida.*
The assembly promptly resolved "that a certain
Quantity of New Bills will be the most speedy
way to defray the Expenses of transporting the
Troops to be raised in this colony," but the gov-
ernor refused assent,*^ since his instructions forbade
him to approve of a law for issuing bills of credit
unless it contained " a suspending Clause " provid-
ing that it should not go into effect until "his
Majesty's pleasure should be known." Accord-
ingly a tax was levied^ and made payable in rated
commodities or in bills of credit at the ratio of
;£7.S in paper for ;£i in proclamation money.^

^Douglass, Discourse, 316-317.

^This error was natural since the entire amount emitted in 1729
and reemitted in 1735 was ;f 40,000, of which jf 30,000 was loaned.
Cf. Records, IV. 178-179.

» Winsor, V. 381-385; Hildreth, II. 376-377.

* Records, IV. 552, 553. « Idem^ IV. 557.

6 Idem, IV. 558, 574.

^ The Records contain only one allusion to this provision, and
that mentions a rate of 7 for I. But the bill was amended several

146

EARLY ISSUES (17 12-1748)

It was estimated that this levy would bring in a
sum equivalent to ;£i2CX) sterling.^ The colony
was now to receive a striking demonstration of the
disadvantages of its barter and paper currencies.
When an efifort was made to secure transportation
for the four hundred men raised in North Carolina,
" no owners of Vessels cared to take their Paper
Currency and Commodities in Payment.'*^ The
governor then found that bills of exchange on
London could not be negotiated in the province,
so that he was obliged to draw upon the commis-
sioners of the royal navy in order to raise passage
money for the troops.®

In 1740, Governor Johnston had written that the
;£52,5CX)* then outstanding was equivalent to no
more than ;£scxx) sterling, that it would be retired
in 1745 in accordance with the existing law, and
that he hoped " after that we shall never more be

times after that. Martin and Williamson state that the rate was 7.5
for I, and I have accepted this statement. Martin, H* 34; William-
son, II. 55-56. Proclamation money was, of course, the pound or
shilling of North Carolina's barter currency. Since this was worth
only two-thirds as much as sterling, a rating of £7*$ paper for £i
barter, or proclamation, currency was the same as ;f 11.25 paper for
£1 sterling.

1 Records, IV. 421.

^ This statement omits the balance of something more than
£2000 which the assembly had paid out for its own wages in 1739
instead of using for the redemption of old bills. The balance was
stated by the commissioners as ;f 3300 ; but this cannot be correct,
as they had redeemed £yji^19 o^t of jf 40,000 of the former issues.
Idem, IV. 398-399*

147

MONETARY HISTORY

plagued with any Paper money." ^ But the legis-
lature was of a different mind. In 1744, when
under the existing law the whole batch of paper
had but one more year to remain in circulation, the
governor called the matter to the attention of the
assembly .2 The lower house proposed to "sink
the Bills of Currency " by replacing them with a
new issue.^ The contemplated emission was to
be for ;£i6,ocx), "equal in value to Proclamation
money.'** Since the ;£52,500 of bills then in
circulation were worth no more than ;£5000 ster-
ling, or £7000 to £7500 proclamation money, it is
evident that the legislature hoped to inflate the
currency still more by the expedient of manufac-
turing bills of a new tenor. But the upper house
objected to one clause of the measure that provided
for the payment of the wages of the members of
the legislature out of the new bills.^ It was also
thought that the new emission was to be made
current for too long a period, and that the taxes
laid for redeeming it were not sufficient. The
council proposed to limit to five years the time that
the notes should run, and to make the tax two shil-
lings per poU.^ Thereupon the lower house sent
up to the council a message, probably of remon-
strance, with an alteration in the style of address

1 Records, IV. 416. • /dim, IV. 714, 717.

* Idgm, IV. 720. * Idem, IV. 717, 726.

* The bill provided " for the payment of the wages of the Coun-
cil and Assembly out of the funds on each Branch of the Bill.'*
fdemf IV. 717. « Idem, IV. 727.

148

EARLY ISSUES (1712-1748)

which the upper chamber deemed an ** affront and
indignity."^ The council accordingly refused to
"receive any Message from the House of Bur-
gesses" until proper satisfaction should be given
for this injury to its dignity, and the governor at
once dissolved the assembly. ^

Eight months later a new session was called, and
the governor again urged that the public debt
should be provided for.^ A land tax was pro-
posed by a committee of ways and means,* but the
lower house decided to prepare " a Bill for emit-
ting a new Currency." '^ This contained the objec-
tionable clause providing for the wages of the
legislature ; and the council rejected it,^ saying
this could not be done, "unless both Houses will
consent to joyn in proclaiming that they are still
resolved to persist in that little regard too often
shewn to public faith heretofore." A deadlock
then ensued over this measure, and the legislature
was again dissolved.^ Shortly after these perfor-
mances James Moir writes that the assembly is
" pretty well versed in the American Lotteries of
cancelling any kind of obligations by the easy
Method of over rating a Commodity or by caus-
ing Paper Bills of credit to be issued out where
there is no Fund to support them."^ He adds
that a majority of the members at the last session

1 Records, IV. 719. « Idem, IV. 739.

* /ifem, IV. 719, 732. « Id^m, IV. 746, 747.
» Id^m, IV. 734. ^ Idem, IV. 752.

* Mm, IV. 738. 8 Idem, IV. 755.

149

MONETARY HISTORY

were in favor of repudiating the paper altogether,
and that this fact was making the currency about
as valuable as " a little waste Paper." In April,
1745, the governor called another session of the
legislature. He told the members that they ought
to give their attention to public affairs instead of
confining all their " cares and endeavors " to get-
ting into their own pockets " the money which was
appropriated to sink the Public Bills and preserv-
ing the public faith." ^ In this affair, he said, they
had been so " Wretchedly anxious " that they had
inserted in the bill their own names " with the par-
ticular sums affixed to them " ; and he considered
this conduct so indecent that he was "not suffi-
cient master of words to bestow the proper epithets
upon it." After some altercation between the two
houses, the legislature at last passed a bill levying
a tax, with the proceeds of which the outstanding
bills should be redeemed.^ Williamson has very
justly remarked that the policy of the assembly at
this time " exhibits little more than repeated and
disgusting proofs of a desire to discharge debts by
fictitious payments." *

But the tax levied in 1745 did not accomplish
its purpose, and the condition of the currency was
not improved. In 1748, exchange on London was
^1000 colonial for ;£ioo sterling.* Governor

1 Records, IV. 772.

a Idem, IV. 773, 775, 779, 782, 788, 791.

•History, II. 66.

^ Douglass, Summary, I. 494.

150

EARLY ISSUES (1712-1748)

Johnston gives us to understand that one reason
for the failure of the law of 1745 was the breaking
down of the old system of paying taxes in com-
modities.^ In any event, the treasury of the col-
ony remained empty, and the most necessary
public services were neglected. Then began "a
loud and clamorous Demand for a large and
speedy Emission of a Publick Currency,** ^ which
was probably due to the fact that the old depreci-
ated bills had fallen into such bad repute as to be
almost useless " but to such as are in Debt." ^ It
was claimed that more money was necessary in
order to pay off arrears of quit rents, as well as to
provide for public expenses. In 1747, some small
expeditions sent out from St. Augustine by the
Spanish committed depredations along the coast,*
and this resulted in a demand for paper money
with which to erect forts.^ Finally the governor
yielded to the pressure that was brought to bear
upon him, and, in violation of his instructions,
consented to the emission of more bills of credit
without waiting for approval of the act from the
English authorities.^
The law of 1748^ was designed to make provi-

1 Records, IV. 921-923.

2 Id^m, IV. 922. » Idem, IV. 755.
* Idem, IV. 922. » Idem, IV. 866.

^ Idem, IV, 900, 915. On p. xxii of this volume the editor
places the date of this issue at 1747. This is clearly wrong, as the
Records show the date to be 1748.

T The entire text of this act may be found in Iredell's Laws of
North Carolina, 115-118.

MONETARY HISTORY

sion for the outstanding currency, to furnish means
for erecting forts, and to pay off certain debts of
the province. All bills of credit then current were
to be exchanged in one year for new bills, at a rate
of 7jj. old currency for is, proclamation, or new
money. Then ;£6cxx) was set aside for construct-
ing four forts, and the rest of the bills were appro-
priated for paying " the several Persons to whom
the Public is Debtor." We know that the gov-
ernor had become at this time " the most consider-
able " of the public creditors,^ and it is reasonable
to suppose that the other persons included in the list
were the members of the assembly, who could not
have failed to urge their claims for whatever wages
might have been due to them. If we assume that
all of the ;£52,500 of bills of credit emitted in 1735
were still outstanding,^ it would have required no
more than £7000 of new bills to exchange all of
the old at the rate of 7 J for i. Thus not more
than ;£ 1 3,000 could have been needed to provide
for the old currency and to construct the forts.
But the law of 1748 authorized the issue of
-5^21,350, so that the claims of the governor and
assembly must have been estimated at very liberal
figures. The new bills were made a legal tender
at proclamation rates, "that is to say, At four
shillings Proclamation Money for three Shillings

1 Records, IV. 922.

^We have no means of determining how many old bills were
outstanding in 1748, but it is certain that the number retired could
not have been large. Cf. Records, IV. 921.

EARLY ISSUES (17 12-1 748)

sterling," ^ and severe penalties were to be imposed
upon persons who should counterfeit them. The
tax law enacted in 1745 was repealed, and a new
tax was levied, payable in gold, silver, or paper.
This act seems to have discontinued the old prac-
tice of receiving barter currency for taxes,^ a fact
which was urged by the governor as one excuse
for his approval of it.

We have no means of knowing how completely
the money loaned by the colony to its citizens had
been repaid ; but the law of 1748 recites that " there
are divers considerable Sums of Loan Money due
and unpaid," and directs the county treasurers to
take measures for collecting such arrears. Since
it is doubtful if these arrears could have been col-
lected any better than the quit rents were, these
debts due to the colony by borrowers became a
charge against the public treasury when the bills
originally loaned were exchanged for those issued
in 1748. And this was the result of a scheme for
defraying the charges of government out of the
interest of bills issued in 1729 and 1735. The law
of 1748 brought to the English authorities loud
complaints from the attorney general of the colony
and others.* It was alleged, with how much truth
we cannot determine, that the construction of forts

^This was the correct ratio of the sterling and proclamation
rates, and exchange would be ;^I33 proclamation to ;^ioo sterling.
In the law of 1 7 15, exchange had been placed at fifty per cent
advance over sterling.

* Records, IV. 923.

*Idem, IV. 927-928, 932, 940.

153

MONETARY HISTORY

was a mere pretence for issuing bills,^ for " it was
made a job," and " two or three persons who were
in the Governors interest took the bills, and employ-
ing a few Negroes to throw up a little ground which
they called a Fort, charged the Province to the
amount thereof." The governor himself evidently
feared that he would lose his official head on
account of his violation of instructions, and accord-
ingly wrote the English authorities a long and
rather lame explanation of his action.*

Thus the old currency was replaced by an issue
of new bills, and debts contracted in the early
decades of the century were still unpaid. North
Carolina's issues had expanded from £,^000 in
1 71 2 to ;£24,ooo in 1 71 5. Then the currency
was contracted to about ;£ 12,000 in 1722, by the
redemption of bills out of the proceeds of taxes.
At that time the redemption of the bills ceased,
and the currency remained stationary until 1729,
when it was increased to ^^40,000. In 1735, the
paper money was increased to ^^52,500, and soon
after this it had depreciated to one-tenth of the
value of sterling, whereas it was issued at a nomi-
nal rating of two-thirds of sterling money. Finally,
contrary to the law of 1735, limiting the currency
of the money to a period of ten years, the bills of
credit remained outstanding until 1748, when they
were replaced by an emission of a new tenor.
Thus North Carolina had actually redeemed none

1 Records, IV. 932, 940.
^Idem, IV. 919-923.

IS4

EARLY ISSUES (1712-1748)

of the notes issued since 1712, with the exception
of ;£i2,ooo cancelled between 171 5 and 1722,
while about eighty-six per cent of the original
nominal value of the money had been repudiated
by the law of 1748.

ISS

CHAPTER II

THE LAST COLONIAL ISSUES (1749-1774)

The old currency of North Carolina, known as
" Old Proc," ^ was superseded by the issue of 1748,
which was thenceforth known as " Proc," ^ since it
was declared to be equal to three- fourths the value
of sterling. The ;£2i,350 of the bills of the new
emission had, therefore, a legal value of ^^16,012
sterling,^ or ;S>7i,093. Under the tax law of 1748,
only £703 of the bills had been drawn in and
destroyed* up to September, 1750. This left
;£20,646 of proclamation money, or ;S>68,7Si, in cir-
culation. Since the population of the colony had
increased to nearly 90,000 by this time,^ this amount
of money would not seem to be excessive. But it
is to be remembered that barter currency was still
in use in private payments ; while, as will be shown
presently, a new form of paper medium was soon
introduced. Moreover, the colony had in the past
shown such a shameful disregard of all good faith

1 Martin, II. 51.

2 Williamson, II. 114, 115 ; McRee, I. 114-116.

' This is £4 proclamation for £^ sterling, as declared in the
law of 1748.

* Records, IV. 1073.

6 In 1752, the population was 90,000. Idem, IV., p. XX.

156

LAST COLONIAL ISSUES (1749-17 74)

that its " promises to pay " must necessarily have
been regarded with suspicion. Therefore, the bills
of the new emission soon depreciated.^

The inconveniences of the old barter currency
had become so great that in 1748, as we have seen,
the tax levied for sinking the bills issued at that
time was made payable only in gold, silver, or
paper. In 1754 and 1764, the legislature adopted
more radical measures of reform, and, in doing
so, originated a new kind of paper currency.^
Laws passed in these years provided that the old
" rated commodities " should no longer be a legal
tender for debts. In the future the commodities
might be brought to the warehouses established in
accordance with the statutes, and should there be
inspected by public inspectors, branded, and de-
posited for further shipment or for safe keeping.
When this had been done, the person depositing the
goods might receive from the inspector an amount
of notes equal to the value of the commodities at
official ratings. These notes were made a legal
tender for public taxes and for private debts with
some restrictions as to time. Thus North Caro-
lina instituted a system of currency that resembled

iln November, 1748, James Moir wrote that he had offered the
new bills at ten per cent discount for cash, and could ** get nothing
for them." Records, IV. 878. Yet, in September, 1750, a report
of the legislature said that the bills had until then " supported the
value they were emitted at." Idem, IV. 1073. This statement of
the official report was intended for the English authorities, and is
probably incorrect. See, finally, Williamson, II. 1 14.

2Records,VII.,p.XVIII.

157

MONETARY HISTORY

very closely the "tobacco notes" which were so
extensively employed in Virginia ^ after 1730. But
there was one great drawback with this new sub-
stitute for money. The warehouses, where alone
the notes could be secured upon the deposit of
commodities, were necessarily situated in the vicin-
ity of navigable streams. The result was that the
frontier counties, where the complaint of scarcity
of money was greatest, could not share in what-
ever benefits may have arisen from the use of
inspectors* notes; and this finally became a sub-
ject for complaint.^ In the tidewater districts,
however, these notes formed a very important, if,
indeed, not the principal, part of the circulating
medium.

In 1754, the final struggle with the French for
the control of the Mississippi Valley began, and
North Carolina was called upon by Governor Din-
widdle, of Virginia, to aid in the expulsion of the
enemy from the Ohio region.^ In this manner
new debts were incurred, and pretexts were found
for emitting more bills of credit. The first of these
new issues was in 1754,* when ;£40,ooo was placed
in circulation. That this was really an act intended
to inflate the currency is quite certain. Governor
Rice had died shortly before Dinwiddle's call for
troops arrived, and Matthew Rowan was tempo-

^See Ripley, Financial History of Virginia, 145-153.
« Records, VIl., p. XIX. Cf. Basset, Regulators, 154.
« Records, V., pp. X-XI. See also Records, 178.
* Iredell, Laws, 157-163; Records, VI. 1308.

LAST COLONIAL ISSUES (1749-1774)

rarily the chief magistrate of the colony. William-
son says^ that Rowan "stooped to a bribe for
assisting dishonest men to defraud their creditors,"
and " assented to a bill for increasing a currency
that was already greatly depreciated." Martin
states 2 that the inflationists insisted that more
paper was needed, since the outstanding currency
would gradually be contracted by the operation of
the taxes levied for the purpose of sinking it. The
lower house, therefore, refused to provide for the
projected expedition unless Rowan would consent
to the issue of another batch of paper, and desired
to establish a loan office for the purpose of emitting
;£8o,ooo on loan. In any event, the law of 1754
shows, upon its very face, the intention of the men
who framed it. This act authorized the issue of
;£40,ooo, but of this sum only ;£i2,oco was applied
to the expedition in question. The sum of ;£4(X)0
was to be expended upon forts, and ;;^iooo was to
be applied to purchasing arms. The remaining
^^23,000 was expended for different purposes. The
law appropriated ;£4200 "towards paying the
public Debts of this Province," and we may hazard
a conjecture that these debts represented among
other things the salaries of the members of the
assembly, for we have encountered a similar item
in previous inflation bills. The rest of the money
was devoted to various " charitable and pious uses
of liberal education and public worship," such as
a school, parish church buildings, and the like;
1 History, II. 81. ^Idem, II. 66-67.

159

MONETARY HISTORY

all of which goes to show that almost anything
could serve as an excuse for inflation.^ Williamson
assures us that the " projected public school had
no patrons, whence it followed, that the money,
said to be given for the increase of learning, was
converted to other uses." ^ Finally the act levied
a poll tax and imposed duties on imported liquors,
for the purpose of sinking the bills.

The province learned once more that it is diffi-
cult to support expeditions in distant regions by
means of a paper currency. The troops sent to
Virginia had to be supplied by direct shipments
of pork from North Carolina, and at a greatly in-
creased expense. Sometimes produce was shipped
to the West Indies, and sold there for bills of
exchange on New York, which were used for the
support of troops sent to that province. Since
the commodities had to be disposed of at a forced
sale in ** a dull market," the cost of the war was
considerably increased.*

Governor Dobbs, who came out to the province
shortly after this law had been enacted, received
positive instructions to assent to no bills for emit-

1 Upon the act of 1754 Mr. Rivers solemnly remarks : ** Rowan's
short term of service was distinguished by liberal contributions for
building churches and purchasing glebe lands for the support of
ministers of the gospel." Winsor, IV. 303-304.

2 History, II. 83. Letters from Governor Dobbs show us that
first ;f 8000, then ;f 9000 more, and finally the whole of the money
appropriated for churches and schools, was expended by the assem-
bly for military purposes. Idem, V. 333, 439-440, 573.

«/dfe/w,V.,pp.XI-XII.

160

LAST COLONIAL ISSUES (1749-17 74)

ting paper unless these should contain the familiar
suspending clause.^ He proceeded to project
schemes for establishing a copper coinage, and
creating a loan office by means of which the
colony would be enabled to sink the outstanding
biUs.2 He seemed, moreover, to have the "bal-
ance of trade'* disease in a very violent form.^
But, as nothing came of his proposed measures,
we may conclude that the English authorities did
not approve of them, for they could not have failed
to secure support in North Carolina. The bills of
credit issued in 1754 were not at first accepted by
the people in the northern counties on account of
questions that had been raised respecting the regu-
larity of the proceedings of the legislature.* In
1755, we learn that the currency had depreciated
"ninety per cent below Proclamation money, at
which it was originally issued.'* ^ Yet money was
said to be very scarce in the southern part of the
province. The paper currency, we learn from the
same authority, would "neither purchase indigo,
cash, (if such can occasionally be had,) nor bills
of exchange." Indigo was said to be "the best
money to be had " in the province. In the same
year Governor Dobbs expressed ^ some apprehen-
sion about the currency, since the assembly was
not " inclinable " to maintain the credit of the bills
in circulation. But in 1756, he wrote that the bills

1 Records, V. I, 116. ^Idem, V. 573, 595.

2 Idem, v. 324-326, 333. » Idem, V. 45 1.
■ Idem, v. 392. • Idem, V. 440.

M 161

MONETARY HISTORY

were then circulating freely in the northern coun-
ties, so that the issue was not excessive.^

In 1756, military expenditures were again neces-
sitated, and a new form of obligations was issued.
The outlays occasioned by the war were met
by the emission of £3600 of treasury notes.*
These were not made a legal tender, but they bore
interest for one year and were to be redeemed out
of the proceeds of taxes levied for that purpose.
The use of such treasury notes had been intro-
duced into New England shortly after 1750, and
thereafter many colonies employed this method of
anticipating the collection of taxes. In 1757 and
1758, the province made further issues of £2S,8o6,
which raised the total amount emitted during the
three years to ;£29,4o6.^ Finally, in 1759, £sSoo
of these notes that had been drawn back into the
treasury by means of the taxes levied to redeem
them were reissued without interest, and were
secured by a new tax. A report made in 1764
states that, upon all the notes, interest was paid
to the amount of ;£i370. By the year just men-
tioned, bills had been redeemed and cancelled to
the amount of ;£23,8o7; so that, of the £30,776
representing the total principal and interest, only

1 Records, V. 573.

^Itient, VI. 1309. On the treasury notes, cf. Records, V., p.
XLV. Williamson says that this form of obligations was issued
because the governor refused to consent to further emissions of bills
of credit History, II. J 14.

* The details of all these issues may be found in a report made
in 1 764. Records, VI. 1 309- 1 3 1 1 .

162

LAST COLONIAL ISSUES (i 749-1 774)

^£6968 remained in circulation.^ This was in
itself a legitimate and unobjectionable method of
borrowing, and the notes were redeemed with fair
punctuality. But, as they were thrown into a cur-
rency that was already depreciated, they may have
tended to increase the confusion.^

Meanwhile the colony was blessed with still
another form of circulating medium. In 1757, it
appeared that James Murray, a member of the
council, had been issuing upon his own account a
decidedly novel kind of promissory paper. Mur-
ray was in collusion with Rutherford, the receiver
general of the quit rents, and he proceeded to
issue bills which bore on their face a promise that
the receiver general would accept them in pay-
ment of the rents. At first these notes were made
receivable in only four counties, then they were
declared a tender for quit rents in all parts of the
province. Whenever the bills were brought back
to Murray, he refused to accept them except for
debts due to him or in payment for commodities
rated at exorbitant prices. Governor Dobbs finally
interfered with this peculiar enterprise of Murray
and Rutherford.*

^ These are the figures of the report of 1 764. This states that
the ;^5SOO reissued in 1759 "neither adds or diminishes the Coun-
try Bills." Records, VI. 1 3 10.

* Williamson states that these notes depreciated despite the fact
that they bore interest. History, II. 114. I have been unable to find
other evidence upon this point, but with the bills of credit at forty
or fifty per cent discount, these treasury notes must have depreciated.

* An account of this transaction may be found in Records, V.
941-944, 951.

163

MONETARY HISTORY

The bills of credit of 1748 and 1754 failed to
rise to proclamation value, at which they were
emitted. In 1756, a Spanish dollar,^ worth 6s. at
proclamation rates, could not be had for less than
Ss. in paper, which showed that exchange was at
£177 colonial for ;£ioo sterling. Three years
later the governor stated that exchange had ad-
vanced to 190,2 and the same rates are reported
for 1760.^ In 1759, a number of London merchants
trading to North Carolina complained to the home
government that they had suffered losses from the
depreciation of the bills issued in 1748 and 1754,*
and Governor Dobbs received instructions ^ to have
the laws of those years amended in such a way as
to make the paper a legal tender only at its actual
value in specie. The legislature, however, asserted^
that it could find no merchants or English creditors
who had suffered such losses, and therefore believed
the complainants to be "Persons of no Weight."
Accordingly the desired amendment was not passed.
In this same year the legislature attempted to issue
some more bills, but was restrained by the veto of
the governor.^ At this time the outstanding issues
of bills of credit were estimated at ;£50,ooo,^ or
;S>i66,oco, while the population of the colony was
something more than icx),oc».® This would make
it appear that about j£i 1,000 of the ^^61,350 issued

1 Records, V. 558. « Idem, VI. 4, 17. » Idem, VI. 305.

* Id^m, VI. 17. 6 Idem, VI. 71. • Idem, VI. 218.

7 Idem, VI. 149-151. Cf. Martin, II. 103.

» Records, V. 951. • Idem, V., p. XXXIX.

164

LAST COLONIAL ISSUES (1749-1774)

by the laws of 1748 and 1754 had been redeemed.
But we find that bills drawn back into the treasury
were often paid out again for current expenses,^
so that the notes in circulation must have fluctu-
ated in amount from time to time.

In 1760, renewed military outlays seemed pecul-
iarly urgent, and Governor Dobbs ventured to
depart from his instructions and to advise the leg-
islature^ to issue more paper currency for the
purpose of feeding and clothing the troops of the
province. The lower house tried to issue the bills
without providing a tax to sink them,^ but failed
to carry its point. The measure finally adopted
provided for the emission of ;£i2,ocx) in bills of
credit* for paying military expenses, contingent
outlays, and bounties for killing Indians. The
bills were made legal tender at proclamation rates,
and a poll tax was laid for the purpose of provid-
ing for their redemption. In 1761,^ the governor
consented to another issue of bills of credit, this
time to the amount of ;£20,cxx), upon the same
conditions as in the previous year. As a result,
the outstanding legal tender bills were increased
to about ;£ 80,000,^ and exchange on London rose
tO;£200 colonial for ;£ 100 sterling.^

1 Records, v. 951. * Idem, VI, 2^4. ^ Idgm, Vi. 246,

* Iredell, Laws, 192; Records, VI. 1309. Cf. Martin, II. 130.

* Iredell, Laws, 198; Records, VI. 1309. Martin incorrectly
puts the amount of this issue at ;^i 2,000. II. 147.

« Records, VI. 615.

^ Idem, VI. 612, 6x5. A silver dollar came to be worth more
than gs. in paper.

16S

MONETARY HISTORY

It is necessary to refer briefly to an interesting
episode in colonial politics which was being enacted
at about this time. For its outlays in the war with
France, North Carolina received from Parliament ^
a grant of money that amounted to £77^9- Both
the governor and assembly desired to get exclusive
control of these funds. The latter proposed at
one time to use the Parliamentary grant in redeem-
ing a part of the outstanding paper, which certainly
seems a singular thing for a colonial assembly to
wish to do. The explanation of this action may
perhaps be found in a statement made by the gov-
ernor ^ to the effect that a junto of assemblymen
had united with the treasurer in a scheme to buy
up the paper at the current rate of exchange, £200
colonial for ;;^ioo sterling, and then redeem it in
specie at a rate of ;;^ 133 colonial for ;;^ 100 sterling.
The governor devised a plan of his own for redeem-
ing the paper, but this was rejected by the Board of
Trade on the ground that it was liable to the same
kind of objections as the plan advocated in the
assembly.^

The whole amount of bills of credit issued under
the laws of 1748, 1754, 1760, and 1761 was;;^93,3SO.
In 1764, a statement of the condition of the currency
was prepared for the legislature. This document*

1 See Records, VI., pp. XI, XII.

2 Idem, VI. 305.

• IdeMf VI., p. XII. I cannot find that any part of this sum was
used for redeeming the paper. It was probably applied to current
expenses.

^Idem, VI. 1308-1311. Cf. V^illiamson, II. 255-257,

166

LAST COLONIAL ISSUES (i 749-1 774)

informs us that, up to November, 1764, there had
been withdrawn and cancelled the sum of ;£25,286;
so that ;£68,o64 of the bills of credit remained
in circulation. Of the £30,776 representing the
principal and interest of the treasury notes emitted
between 1756 and 1759, the sum of £23,807 had
been retired ; so that £6g68 was still outstanding.
From these data it appears that the province had,
in 1 764, a paper circulation of ;£68,o64 bills of credit
and £6g6S in treasury notes, a total of £75,032.
For sinking these bills taxes had been levied, and
a simple enforcement of the law would retire all
the paper within a few years. Since the popula-
tion of the colony was now about 200,000,^ the
£75,032 of currency ($250,000) should not have
been a heavy burden. The fact that the appar-
ently moderate amount of paper in circulation
remained depreciated may seem somewhat singu-
lar. But it is to be remembered that the trade of
the province was not large,^ that in the frontier

^Estimates of population in 1765 vary. Mr. Saunders estimates
it at 125,000 in one place and 220,000 in another. Records, V.,
p. XXXIX ; Idem, VIII., p. XLV. Since the number of taxable
inhabitants was 45,912 in 1765, the entire population may have
been in the vicinity of 200,000. See Records, VII. 145, 289, 539.

^ It is difficult if not impossible to present any data concerning
the value of the imports and exports of the province. Statistics
for North and South Carolina in 1769 may be found in Macpherson,
III. 571-572. But it is impossible to determine accurately North
Carolina's share of the total exports and imports of the two prov-
inces. It may have been something less than ;^200,ooo sterling
in 1769. But the figures would not represent the trade of the
colony adequately even if they could be secured, because, on

167

MONETARY HISTORY

districts exchanges were effected chiefly by barter,
and that in the tidewater regions inspectors' notes
circulated to a very large extent. Consequently
the $250,000 of province paper, amounting per-
haps to $1.25 per capita, was a relatively large
sum. Moreover, the credit of the province had
been so greatly injured by the antics of the infla-
tionists in the past, that any kind of a public obli-
gation must inevitably have been held in suspicion.
No one could foresee what amount of paper might
be emitted in the future, and no one could feel
certain as to the fate of the currency then in
circulation.

In 1764, Parliament passed the act^ which pro-
hibited any colony from issuing bills of credit and
making them a legal tender for debts. This law
did not interfere with the issue of treasury notes,
such as had been emitted in 1756; and in 1773,
Parliament made an express declaration to that
effect.^ In 1764, Governor Dobbs advised the
assembly to call in the bills then circulating,
which were said to be much worn and counter-
feited, and to replace them with new ones.^ The
assembly, however, decided that such action would
involve needless expense, and that bills already
paid in, if in good condition, could be exchanged

account of the lack of good harbors, much of North Carolina's
foreign commerce was conducted through the ports of Virginia
and South Carolina. See Smyth, II. 98-99.

1 Stat, at Large, 4 George III. c. 34.

^Stat. at Large, 13 George III. c. 57.

• Records, VL 1090.

168

LAST COLONIAL ISSUES (1749-17 74)

for any torn or defaced money that might be in
circulation.^ Complaints of a scarcity of currency
still continued, and, in spite of the Parliamentary
prohibition, various petitions came to the legisla-
ture asking for more paper money .^ Governor
Tryon, who assumed the reins of government in
1765, seems to have sought to gain the favor of
the assembly by promising to use his influence
with the English authorities to obtain their
approval of the issue of more currency. By
means of these promises, he secured from the
assembly various enactments that he desired, but
his attempts to gain the assent of the home gov-
ernment to renewed issues of paper failed com-
pletely.^ In the " back counties " the scarcity of
even the paper money aggravated the causes of
discontent that led to the uprising of the Regula-
tors between 1765 and 1771.* These facts show
that a currency large enough to depreciate did not
still the complaints of a lack of money.

In 1767, exchange fluctuated from £i7S to ;;^i82
colonial for ;£ 100 sterling,^ and foreign bills were

1 Records, VI. 1 154 a.

^Idem, VII. 386, VIII. 77. In 1766, the assembly complained.
Tdem^ VII. 417. In 1768, the assembly drew up a petition upon
the subject Ideniy VII. 619.

' See accounts of these transactions in Records, VII., pp. XII-
XIII, VIII. pp. XI-XIV. See Tryon^s announcement of the
refusal of a petition for paper money in 1769. Records, VIII. 17,
87. Cf. Martin, II. 245.

* Basset, Regulators, 150-155.

*Wc have two statements for this year. Records, VII. 491,
493. Wright, LXI., edition of 1767, says that exchange in North

169

MONETARY HISTORY

not easy to obtain in the province.^ By 1768, the
gradual withdrawal of the old bills of credit and
treasury notes issued prior to 1761 had reduced
the outstanding paper to ;;^6o,i07, which was
about ;£iS,ooo less than had been in circulation
in 1764.^ This was not an inconsiderable contrac-
tion of the currency for a period of four years,
during which the number of taxables in the
province increased from 34,000^ to 5i,cxx),* which
indicates a large growth of population. This
contraction, however, did not bring the bills back
to their legal value of ;£i33 colonial for ;;^ioo
sterling, a fact which may have been due to an
increased issue of inspectors' notes, or to the dis-
turbances caused by the troubles with the Regu-
lators. In 1769, Governor Tryon placed the
amount of outstanding "proclamation bills" at
-^^58,535,^ a statement which corresponds nearly,
but not exactly, to the figures above presented.
Late in 1768, it became necessary to defray the

Carolina had been at 145 shortly before 1767. This must be an
error, since we have trustworthy evidence from North Carolina of a
higher rate.

1 See letters of McCulloh to Iredell, in McRee, I. 42-43.

*See a report made in January, 1768. Records, VII. 215.
Here the total amounts redeemed up to date are stated at ;f37,i62
of bills of credit and £26,SS7 of treasury notes. Subtracting these
sums from the total amounts issued (viz. ;f 93,350 of bills of credit
and ;f 30,776 of treasury notes), we have left in circulation
£s6,iSS of bills of credit and ;f39i9 of treasury notes.

^Idem, VI. 1040.

^ Idem, \ll, 539.

^Idem, VIII. 12, 212.

170

LAST COLONIAL ISSUES (i 749-1 774)

expenses of raising a body of troops which had
been called out by the governor in order to sup-
press an uprising of the Regulators, and the
assembly seized upon this as a good opportunity
to secure the issue of more currency.^ The cost
of raising the troops was only ;;^4844,^ but the
assembly straightway passed a bill for the emis-
sion of ;;^30,ooo in notes ^ which were to be used
for a variety of purposes, including of course the
payment of the wages of the members of the
legislature. But the governor and council refused
to consent to this measure. In the end a bill was
passed providing for the issue of ;£20,ooo of
debentures, which were to be redeemed out of the
proceeds of a poll tax of two shillings.* The notes
were not, however, to be a legal tender ; ^ and the
English authorities finally approved of the act as an
emergency measure.^ Although these debentures
found their way into circulation, the assembly
proceeded in 1770 to pass a valuation act,^ which
prohibited sheriffs from selling property taken
in executions unless it realized two-thirds of the
valuation set upon it by a board of appraisers.
This was defended, of course, upon the ground of
the scarcity of money.® In the spring of 1771,

^On this incident see Basset, Regulators, 185.
^Records, VII. 887-888.
• Idem^ VII. 9 1 5-9 1 6.

^^Idem, VII. 917, VIII. 5, 6, 9. Cf. Martin, II. 249.
» Records, VIII. 9. « Idem, VIII. 266-267.

' Acte of N. C, 485-486; Martin, II. 271.
•Sec Records, IX., p. XV.
171

MONETARY HISTORY

another body of troops had to be raised in order
to suppress the Regulators ; and, in order to
meet the expenses incurred in this manner, one
of the treasurers issued notes to the amount of
;£6ooo,^ which were a further addition to the
currency of the province. These treasurer's
notes proved to be especially objectionable, since
they bore but a single signature and were readily
counterfeited.^

In July, 1770, ;;^58,S3S of the old " proclamation
money *' was outstanding, besides the ;£20,ooo of
certificates, or debentures, issued in 1769; and all
this currency was said to be in brisk circulation.*
^ In August, 1 77 1, Josiah Martin, Governor Try on's
successor, reached the colony.* He found himself
confronted with a large amount of unpaid claims
caused by Tryon's expedition against the Regu-
lators, while the outstanding paper currency was
becoming discredited by the activity of the counter-
feiters,^ who had placed a large quantity of spuri-
ous bills in circulation. He urged the home
authorities to consent to an emission of new cur-
rency, which should be used for replacing the old
bills and for defraying the debts recently incurred
by his predecessor ; ^ and was told that this could
be permitted provided the notes were not made a
legal tender.^ The assembly complained of the

1 Records, VIII., p. XXIX. Cf. WiUiamson, II. 275.

2 Records, IX. 18. */dem, VIII. 212.
* Idgm, IX., p. III. » li^m, IX. 18.

« Idem, IX. 19. ' Idem, IX. 65.

172

LAST COLONIAL ISSUES (i 749-1 774)

difficulty of paying the debts of the province
without resorting to the issue of paper,^ and drew
up a petition to the Crown, praying that permis-
sion might be given to make the currency a tender
for debts.2 If this could be allowed, the assembly
pledged itself to " frame this Law, so as to prevent
British creditors from suffering, should such cur-
rency depreciate in value/' In this quotation the
italics are the author's, and the reader will hardly
fail to be struck by the implied willingness of the
legislature to rob domestic creditors. A bill was
then passed providing for the issue of ;;^ 120,000
in debenture notes,^ but this was vetoed by Gov-
ernor Martin.* The governor wrote to Earl
Hillsborough ^ that a majority of the delegates
'* from the Southern district in which the people
are almost universally necessitous and in debt,^ and
whose policy it has been to overflow the province
with paper money," advocated this large emis-
sion of new currency. He stated also that the
" minority from the Northern districts as warmly
opposed this system." In the end Martin con-
sented to the issue of ;£6o,ooo of " stamped de-
benture notes," equal to proclamation money.^

1 Records, IX. 142. « Idem, IX. 213. Cf. VII. 619.

^Idern, IX. 197. * Idem, IX. 222. » Idem, IX. 76.

'This southern district was thinly settled and in much less com-
fortable circumstances than the northern and eastern counties. In
1755, Abercrombie reported that money was especially scarce in
"the Southward parts of the Province." Idem, V. 451.

' The text of this act may be found in Acts of North Carolina,
496-497. See also Records, IX. 76.

173

MONETARY HISTORY

The notes were not made a legal tender, and an
annual tax of two shillings per poll for ten years
was levied upon the province ^ in order to provide
for their redemption. By means of these bills
Governor Martin planned to retire the notes issued
during Tryon's administration, and he hoped that
such action would prevent the new currency from
depreciating.^ His course in this matter was
approved by the English authorities.^ Martin
tells us* that the currency thus authorized was
placed in circulation much sooner than he had
expected, on account of " the alacrity with which
the base and false substitute of specie is manufac-
tured here." He adds that the new bills had
affected exchange far less than he had appre-
hended.^

At this point it is necessary to refer to the few
available facts concerning the coin cmrency of
North Carolina. The law that provided for the
issue of bills of credit in 1748^ declared the
paper to be a legal tender as proclamation money,

^Thus one-tenth of the bills was to be sunk each year. In
order for a poll tax of two shillings to supply the means for doing
this, the number of taxables must have been 60,000. This would
indicate a population of about 250,000. See Records, IX., p. XV.

^Idem, IX. 77. ^Idern, IX. 275, 278.

*/^^»f, IX. 260. ^Idem,

* Prior to 1748 the laws were not uniform. The bills issued in
1 71 5 were made a tender at ;f 150 colonial for ;^ioo sterling, the
same as the barter currency. Proclamation rates were £iZZ ^^
;f 100 sterling. Records, III. 178. Then the act of 1729 declared
20X. of the new paper equal to 15 dwts. of silver. Hawks, II. 284.
Thb made silver worth 26.6^. per ounce, while the proclamation

174

LAST COLONIAL ISSUES (i 749-1 774)

or as sterKng money at proclamation rates.^ But,
as we have seen, the currency did not retain its
nominal value, and depreciated as soon as issued.
At the rate fixed in 1748, ;£i33 of the paper
ought to have equalled ;£ioo sterling; but ex-
change rose in a few years to ;£i90 and even
;^200.2 By 1767 it seems to have fluctuated about
;£i8o colonial for ;£ 100 sterling.^ We know that,
as early as 1756, a Spanish dollar exchanged for
8s. of the paper,* whereas the proclamation value
of this coin was only 6^". When exchange finally
settled down to ;;^i8o, or perhaps less, a dollar
came to be rated, "by long usage," at 8s. ;^ for
with the paper currency worth £177^ colonial for
;^ioo sterling, this valuation of the dollar would
just keep it in circulation.^ This seems to furnish
an explanation of the fact that in North Carolina
the Spanish dollar came to be rated at 8s. In
1767, a bill giving a legal rating to gold and
silver coins was introduced in the legislature,®
but it does not seem to have become a law. The

rating was about 6s. io}</. The rate indicated the depreciation of
the paper.

1 Iredell, Laws, 117. Cf. Williamson, II. 39.

"Records, V. 451, VI. 4, 17, 305, 612, 615.

«/^iPW, VII. 491, 493.

*/^^w,V. 588.

•Note Williamson, II. 115.

• Thus in 1767 exchange is quoted at from ;f 175 to ;^i82. Rec-
ords, VII. 493.

^ Such an overvaluation of the dollar would make 20s. of silver
of the same nominal value as 20s. of paper. See tables in Wright, 4.

* Records, VII. 593.

17s

MONETARY HISTORY

next year a law was passed "to encourage the
Importation of British Copper Halfpence, and for
making them a Tender for the Payment of small
Debts," but this was disallowed by the Crown.^

Various acts passed by the assembly give the
reader the impression that gold and silver circu-
lated in the province to some extent at least. In
1729, gold and silver were included among the
rated commodities.^ Seven years later, a law pro-
viding for the collection of quit rents made gold
and silver payable at proclamation rates.^ The
same thing was done in tax laws enacted in 1745
and 1748.* After the bills of the new tenor came
to circulate at a relatively stable exchange of ;;^ 175
to ;£i82, the assembly, as we have seen, tried to
enact a law^ making gold and silver legal tender
at fixed ratings. Such measures would hardly
have been enacted if there had been no specie
in the province. In 1766, when Governor Tryon
mentions the subject of the scarcity of specie,® he
does not say that there is none in the colony. Gov-
ernor Glenn of South Carolina wrote to Governor
Dobbsin 1755^ that, since that province had retired
a considerable part of its paper, " gold and silver
begin to take up their abode with us, two-thirds of
all Payments being now made in those Metals."
Specie must have circulated to some extent in

1 Acts of N. C, 449. * Records, VII. 593.

2 Hawks, II. 286. « Idem, VI. 144, 201.
« Records, IV. 185. ' Idem, V. 378-379.
* Idem, IV. 781; Iredell, Laws, 117.

176

LAST COLONIAL ISSUES (1749-17 74)

North Carolina after the paper currency came to
have a relatively stable value. In 1770, Wynne
wrote concerning both Carolinas :^ " A very incon-
siderable quantity of English money circulates in
either province; the current cash consisting almost
wholly of Spanish dollars and pistoles."

It will be recalled that, in 1760 and 1761, the
province made two emissions of bills of credit,
amounting in the aggregate to ;;^32,ocx). For
sinking each issue a poll tax was levied,^ and it
was pledged that these taxes should continue in
operation until both of the emissions should be
redeemed. In 1768, after efforts to secure new
issues of paper had failed,^ the assembly voted to
repeal these taxes, alleging that enough money had
been collected to suffice for the purposes for which
the taxes were laid.* Governor Tryon, however,
vetoed this act,^ the real purpose of which was to
lighten taxation and prevent the reduction of the
number of bills then in circulation. The fact is that
the tax system of the colony was both wrong in

1 Wynne, II. 301.

* Iredell, Laws, 192, 198.

* Basset gives an account of this transaction. Regulators, 152,

"53.

* Records, VII. 922, 923. This was not correct. The total
amount of bills of credit of the emissions of 1748, 1754, 1760, and
1 761 that was cancelled between 1761 and 1768 was less than
£2^fiOO. Idem, VIII. 215. Many of these bills were, doubtless, of
the emissions of 1748 and 1754.

^ Idem, VII. 986. In 1771, Governor Martin stated that these
taxes were suspended by resolves of 1768. Idem, IX. 231. Com-
pare an act passed in 1770. Iredell, Laws, 254.
N 177

MONETARY HISTORY

principle and administered with a laxity that is
appalling. Nearly all the taxes levied in North
Carolina took the form of uniform assessments
upon polls, in the list of which adult white males and
adult colored males and females were included.^
At the time of which we are writing, the principal
auxiliary form of taxation was a light duty upon
imported spirits. Such a crude system of raising
revenue necessarily produced the grossest inequali-
ties, and these were made worse by bad adminis-
tration. The taxes legally in force in 1761, and
pledged to the redemption of the outstanding
paper, ought to have brought in about ;£8ooo
annually.2 But the sheriffs were exceedingly lax
in making collections, and were both negligent and
dishonest in turning money over to the treasurers
of the province; while the duty on liquors was
largely evaded by reason of the extensive scale
upon which smuggling was practised. In some
years the sheriffs turned in not more than one-
third of the amounts levied,^ and, in 1770, it was
found that in every county of the colony there was
at least one defaulting sheriff. In the year last
mentioned, the aggregate indebtedness of all the
sheriffs was ;£64,ooo.* Thus there was good rea-
son for the belief in 1768 that the burden of taxa-

1 On this subject see Basset, 72 ; Williamson, I. 122 ; Records,
VII., p. XI, X., p. XXV. In 1 713 and 1715 a tax had been laid
upon land, but this was not permanent. Records, III. 189, 485.

2 Records, V., pp. XLV, XLVI.
» Idem, VII., p. XVII.

* Idem, VII., p. XVII, IX. 68. See Wheeler, 311.

178

LAST COLONIAL ISSUES (1749-1774)

tion should be lightened, but the proper remedy
would have been to hold the sheriffs to a strict
accountability. This would have lightened taxa-
tion without a violation of the public faith.

In 1 77 1, the assembly turned its attention to the
taxes levied in 1748 and 1754 for the redemption
of the bills of credit emitted in those years. The
clerk of the committee of accounts submitted a
report which purported to show that, of ;£6i,3SO
of bills of these two emissions, ;£S3,I04 had been
burned ; while there was in the hands of the treas-
urers a sum of money amounting to ;£i 2,585, which
would more than suffice to redeem the rest of these
issues.^ Accordingly the assembly voted to repeal
the taxes levied in 1748 and 1754, on the ground
that they had accomplished the purpose for which
they had been imposed.^ Then Governor Martin
vetoed the bill, and denounced it as a fraudulent
measure. The assembly, however, anticipating
this action, prepared a resolution that would have
had the effect of discontinuing the collection of
the taxes ; but the governor, learning of this pro-
posed action, dissolved the legislature before the
obnoxious resolution could be entered upon the
records.^ After this, the speaker of the lower
house informed the provincial treasurers of the con-
tents of the resolution, and these officials omitted

1 Records, IX. 166.

* Idem^ IX. 167. See accounts of this afiair in Records, IX., pp.
XVI, XVII; Sikes, 11-14.
» Records, IX. 232, 233.

179

MONETARY HISTORY

these taxes from the lists ^ sent out to the sheriffs
for collection. Thereupon, the governor issued a
proclamation requiring* the sheriffs to make the
collections as usual, and threatening to have them
sued for any amounts that they should fail to col-
lect.

Although the assembly's statement of the case
seems to be fair and plausible, the governor was
probably right in his criticisms upon its action.
The ;£53,i04 of bills said to have been cancelled
were probably not exclusively bills of the two emis-
sions of 1748 and 1754. The governor said^ that,
in the accounts of the bills that had been cancelled,
no pains were taken to distinguish between bills of
the four emissions of 1748, 1754, 1760, and 1761.
This is certainly the case in the report submitted
in 1770,* and was probably true of the report of
1 77 1. The facts then would seem to be that bills
amounting to ;£93,35o had been emitted in 1748,
1754, 1760, and 1 761 ; and that ;£53,i04 had
been redeemed by 1771, while ;£i2,585 more
were said to be in the treasury but not yet de-
stroyed. This left a considerable quantity of the
old legal tender paper still in circulation,^ and bills
of the emissions of 1748 and 1754 were undoubt-

1 Records, IX. 233, 234. • Idetn^ IX. 231.

* Identy IX. 229, 234. * Idem, VIII. 215.

• The governor said that ;f 42,800 in legal tender paper was still
outstanding. Idem, IX. 231. This is about the difference be-
tween the ;£'93»350 representing the four emissions and the ;f53»i04
said to be burned.

180

LAST COLONIAL ISSUES (i 749-1 774)

edly outstanding when the legislature proposed to
repeal the taxes levied for redeeming the two issues
just mentioned. But there is still another point to
be considered. The governor stated that in 1768
the poll tax levied for sinking the bills issued in
1760 and 1 76 1 had been illegally suspended by a
resolution of the assembly.^ If it is true that the
assembly circumvented Tryon's veto of the bill
suspending the taxes of 1760 and 1761 and suc-
ceeded in abolishing those taxes, then its action in
1 77 1 was quite as "fraudulent" as Martin repre-
sented it to be ; for the repeal of the taxes levied
in 1748 and 1754 would have taken away the only
remaining funds available for redeeming the bills
of credit.

In 1 77 1, it appears that about ;£40,ooo of the old
legal tender notes were still in circulation,^ and
during that year the ;^6o,ooo of debenture notes
authorized by Governor Martin were added to the
currency of the province.^ This made a total of
about ;<C 100,000 of notes,* while the population

1 This incident is discussed by Martin, II. 291, 292 ; Williamson,
II. 164-166 ; Jones, 74-75, loi.

*This is the difference between the ;f 93,350 emitted in 1748,
1754, 1760, and 1761, and the ;f 5 3, 104 said to be burnt in 1771.

* These debenture notes replaced all the notes issued in Tryon's
administration.

*I assume that practically all the £3^*77^ o^ treasury notes
issued between 1756 and 1759 had been redeemed. Of this sum,
;f 26,857 was reported burnt in 1770. Records, VIII. 215. The
;f 100,000 in circulation in 1771 was equivalent to 1^333,000, at
its nominal value. With exchange at 177, it would be equivalent
actually to ;|S250,ooo.

181

MONETARY HISTORY

of North Carolina was about 250,cxx).^ No more
paper money was issued during the colonial period,
but in 1774 we find the assembly petitioning for
permission to emit bills of credit and make them a
legal tender .2 Inspectors* notes probably continued
to be extensively employed as currency, and a
law was passed in 1770 making special regulations
concerning the receipt of indigo notes for taxes.^
The ;£6o,cxx) of debenture notes issued in 1771
do not seem to have affected exchange materially,*
and the condition of the currency remained about
the same until the opening of the Revolution. In
July, 1772, Iredell stated that exchange was at
£160 colonial for ;£ 100 sterling,^ which indicates,
perhaps, some appreciation of the currency .• In

1 Records, IX., p. XV. « Acts of N. C, 461-462.

« Martin, II. 325. * Records, IX. 260.

*McRee, I. 115. Smyth states that in 1774 exchange was at
;f 133. Smyth, II. 99. But this was certainly a mistake, and was
probably due to an oversight of the fact that "proclamation
money" in North Carolina meant a rating of the dollar at eight
shillings instead of six.

* With the rating of a dollar at &., the nominal par would be
;^I77. But at this time the pound sterling was in reality a certain
quantity of gold, because that metal had been overvalued by Eng-
lish law, and silver was being displaced. Therefore Spanish silver
coins when shipped to England would have a value that changed
whenever the ratio of gold to silver varied. The legal rating of
silver was 5J. 2d. per ounce, which made the dollar worth 45. 6d.
But silver was sometimes more valuable than this, so that the
dollar became worth 45. &/. When this happened, the actual par
of exchange would fall from £iyy to £171$ with the dollar rated
at Ss, See Wright, 4. Besides this, it must be remembered that
the English gold coins were in very bad condition, having been

182

LAST COLONIAL ISSUES (i 749-1774)

^77Sf at least ;^40,ocx) of the debenture notes issued
in 1 77 1 must have remained outstanding;^ and, in
addition to this, a considerable quantity of the
bills of credit was still in circulation.^

subject to great loss from abrasion and clipping. The mint price
of gold was 77.87J. per ounce ; but gold bullion in the market
often sold for as much as Sos., because that sum of money was
paid in light-weight gold coins. See Smith, W. of N., I. 43-44 ;
McCulloch, 318. In 1773, it was decided that the gold coins
weighed on the average from 2.5 to 5 per cent less than they should
have done ; and ;^3^i 8,000 of selected coins showed a loss of nine
per cent. 34 Journals of House of Commons, 734-735. Such a
condition of England's gold coins might lower exchange in North
Carolina several per cent below 171. Finally, the cost of shipping
and insuring specie was much more than at the present day. In
1760, the cost of freight and insurance was over four per cent in
Massachusetts. Acts of Mass., IV. 541. If exchange happened
to be in favor of North Carolina in 1772, the rate would be
lowered by an additional amount. Perhaps, in this manner, we
can account for Iredell's statement.

^The tax levied to redeem them was supposed to bring in
;f 6000 annually for ten years. See Acts of N. C, 496-497. The
tax would have redeemed not more than ;f 24,000 by 1775, if
thoroughly and punctually collected. Probably it brought in con-
siderably less than that sum.

^ We know that some of these legal tender bills were in circula-
tion as late as 1778. McRee, I. 389, 406.

183

CHAPTER III

THE LAST ISSUES (1775-1788)

North Carolina was badly prepared to enter
the struggle for independence. Her credit had
been impaired by previous violations of the public
faith; and she had a considerable quantity of
paper in circulation, so that the margin of safety
for future issues was a narrow one. In April,
177s, the final message^ of the last royal governor
called the attention of the legislature to the fact
that the treasury was empty, while large demands
of various creditors were unsatisfied and the dues
of public officers were unpaid. The assembly con-
templated^ "with great concern" the "exhausted
state of the public funds," and said that this unfor-
tunate condition was not due to its own misconduct.
Owing to a dispute between the governor and the
legislature, no list of taxables had been drawn up
since 1772, and consequently no taxes had been
collected for more than two years.^ But more
than this, the province had no system of taxation,
except a primitive poll tax and a few imposts on
commerce. Even these were badly administered,

^Records, IX. 1 195; Jones, 166.
2 Records, IX. 1204; Jones, 169.
•Records, IX. 1204.

184

THE LAST ISSUES (1775-1788)

as is shown by the fact that the tax collectors in
1770 were indebted to the province for ;^64,ooo.^
The manner in which county officials sometimes
attended to their duties is shown in a letter written
about 1772, in which the writer states that, in his
county, " no County tax is laid, no list of taxables
is returned, no Sheriff qualified," so that "all is
confusion, anarchy, and uproar." ^ Under such
conditions, a debt of ;£6o,ooo was considered
almost beyond the resources of the province in
1771,^ when North Carolina had a population of
about 25o,(X)o; and an annual tax of ;£6ocx),
levied in order to sink this indebtedness,* was
probably regarded as a heavy burden. Under the
most favorable circumstances, the development of
an adequate system of taxation would have been
difficult in such a sparsely settled colony ; ^ but the
long-continued use of paper money, for the payment
of both ordinary and extraordinary outlays, greatly
impeded this process. Why should the people
submit to taxation, if the payment of one debt by
creating another is to be considered a proper
method of meeting public obligations ?

When a provincial congress met in August, 1775,
a committee of ways and means reported^ that the

1 Records, VII., p. XVII.
«McRee, I. 75.

»See Records, IX., pp. XII-XIV.
*ActsofN. C, 496.

* These facts are well stated by Williamson, in the American
Museum f II. 122, 123, 127.

•Records, X. 183-184; Jones, 222-223.

185

MONETARY HISTORY

colony was in debt to various creditors; that no
money "on the Contingent fund" was in the
hands of the southern treasurer; and that no
information could be secured concerning the con-
dition of the treasury of the northern district.
The committee recommended that measures should
be adopted to recover the ** diverse large sums of
money due from sundry sheriflfs,"^ and that the
money collected since 1771, under the tax laws of
1748 and 1754, should be returned to the taxpay-
ers. In order to provide the funds needed for the
defence of the province, the congress then voted *
to emit $125,000 in bills of credit. These were to
be a legal tender at the rate of eight shillings for
a dollar ; persons who should " speak disrespect-
fully" of the bills or offer a premium for specie
were to be treated as enemies of their country;
and finally a poll tax of two shillings, running for
a period of nine years, was levied for the purpose
of sinking the currency. This tax, however, was
not to be collected until 1777. Thus the war was
to be carried on for 1775 and 1776, if it should
last so long, without resorting to the unpleasant
expedient of paying taxes.

In April and May, 1776, more money had to be
raised, and the congress issued^ ;£soo,ooo more of

1 Acts were subsequently passed for this purpose. See Iredell,
Laws, 334, 386.

2 Records, X. 194-196; Jones, 223. Martin incorrectly places
the amount of bills at |(i50,ocx). History, II. 365.

B;^ 1 00,000 was authorized in April and ;^400,ooo in May. Rec-
ords, X. 532 573. See Martin, II. 3S6; Jones, 254, 257.

186

THE LAST ISSUES (1775-1788)

its paper, or ;J! 1,250,000. These bills were emitted
upon the same terms as the issue of 1775, and
were to be redeemed by a poll tax which should go
into operation in 1780. Jones states that these bills
were badly engraved on a poor quality of paper,
and that they were extensively counterfeited. In
1777, a tax of one shilling on every ;^ioo of
property was established for the purpose of meet-
ing county expenses,^ but no such provision was
made for the needs of the state. In 1778, more
funds were required, and the legislature authorized
the emission of ;£85o,ooo of paper, or ;J!2, 12 5,000.^
Some of these bills were to be used for replacing
former issues, which were much counterfeited;
and the rest were to be applied to defraying mili-
tary expenses. Mr. McRee says that no adequate
fund was provided for sinking this last emission,
and that the legislature was unwilling to hazard
its popularity by levying sufficient taxes to place
the credit of the state upon a proper basis.*

In 1779, however, the legislature applied to
other purposes that portion of the bills issued in
the previous year which was to have been ex-
changed for the emissions of 1775 and 1776.* By
this enactment the redemption of the two early
issues was postponed until 1780, and later laws

1 Iredell, Laws, 348-349. This tax was modified in 1779. Idem^
378. Iredell wrote that the action of the assembly in 1777 left " a
faint glimmering of hope." McRee, Life of Iredell, I. 359.

2 Iredell, Laws, 360-361.

• life of Iredell, I. 404. * Iredell, Laws, 369.

187

MONETARY HISTORY

provided for a further postponement for four
years.^ Meanwhile the depreciation of the paper
was increasing at an alarming rate. The official
tables established in 1783 recognized no deprecia-
tion before March, 1777, but these figures are
notoriously incorrect. The continental paper
began to decline in value as early as the middle of
1776, and this process could not have been much
longer delayed in North Carolina. By January,
1778, a depreciation of 3 J for i is recognized by
the official tables.^ In this year, Iredell urged the
grand jury at Edenton to proceed against all per-
sons guilty of offering a premium for specie.^ He
stated that it was a common practice to " make a
difference " between paper issued by the colonial
government and that issued by the state, or be-
tween continental paper and the bills emitted by
North Carolina. By January, 1779, six dollars in
paper were worth only one in specie ; and a year
later the rate of depreciation had increased to
32 for I.

Meanwhile the evils of counterfeiting had become
so great, in spite of the severe penalties prescribed
by the laws,* that the legislature appointed in each
county inspectors of the currency.^ Persons who
should be offered any of the bills were authorized
to bring them before these officers, who were to
stamp all counterfeits. When the assembly was
convened in April, 1780, the state currency had

1 Iredell, Laws, 401-414. ^Idem, 452. «McRee, I. 389,

* Iredell, Laws, 389-390. * Idftrtf 400.

188

THE LAST ISSUES (1775-1788)

depreciated ^ to one-fiftieth of its nominal value, if
not less; while the continental money had been
practically repudiated by the action of Congress
on the eighteenth of the preceding month. Up to
this time taxation had been practically suspended
in the state, except for the small sums that may
have been raised for county purposes. This
assembly levied a tax for the year 1780;^ but
it also emitted bills of credit to the amount of
;£i, 240,000, or $3,100,000, and made this money
a legal tender at its nominal value.^ This law
contained one section which authorized the gov-
ernor to emit "such further Sum or Sums" as
might be needed during the recess of the assem-
bly.* But the paper money had become so nearly
worthless that the war could no longer be carried
on through such an agency, and in September ^ it
was necessary to call for a specific tax payable in
provisions. This was afterwards described by
Governor Johnston as the "most oppressive and
least productive tax ever known in the State." ^
Yet, in 1781, "a money and specific Provision
Tax " was imposed.^

By the opening of 1781, one dollar of the paper
issued by North Carolina was worth less than one-

^ Iredell, Laws, 452.

«/^«, 397.

^Idem, 397-398.

* Of the laws passed at this session Iredell wrote, " They are
certainly the vilest collection of trash ever formed by a legislative
body." McRee, 1.446. • Elliot, IV. 79.

^Iredell, Laws, 405. ^ Iredell, Laws, 417.

189

MONETARY HISTORY

half of one per cent of its nominal value.^ Yet
the legislature proceeded to authorize the issue of
$26,25o,cxx) of notes in order to raise and equip
four battalions of continental troops.^ These notes,
or certificates, were payable in 1782, and bore
interest at six per cent It has been impossible
to determine whether they were made a legal
tender,^ but they must have found their way into
circulation, as such certificates usually did. In
February of this year, the salaries of judges were
fixed at ;£20,ooo annually;* and by December,
$725 in paper was worth but $1 in specie.** In
the early months of the year the currency was so
nearly worthless that the legislature provided that
all future purchases on the part of the state should
be made at specie rates,^ and paid for by issuing
certificates that should be redeemed in gold or
silver. But this was little better than a mere
impressment of supplies, and added to the paper
of the state a new form of indebtedness. At the
same time provision was made for adjusting tem-
porarily old claims against the state by appointing
district auditors to examine the demands of credit-
ors and to issue certificates for the amounts due.^

1 Iredell, Laws, 452. * Idem, 409-410.

* Iredell does not print all the sections of the law.

*McRee, I. 488. In 1780, Iredell paid ;^i6o per day for board
and lodgings. Idem, I. 472.

* Iredell, Laws, 452. • Idgm, 41 2.

'^ Idem, 410. The law fixed the prices that should be allowed
for each article furnished to the state. These prices were such as
prevailed in the period of inflation, as 32^. per pound for beef. The

190

THE LAST ISSUES (1775-1788)

As the paper currency approached a condition
of utter worthlessness, it circulated with increasing
difficulty, and finally collapsed. At the same time
specie began to return to circulation. This process,
of course, was attended with considerable incon-
venience ; and, for a time, it seems to have been
necessary to resort to barter.^ In May, 1780, Ire-
dell received $19 in silver.^ By 1781 and 1782
specie became plentiful, and remained so until it
was once more replaced by paper.^ In 1783, the
legislature repealed all acts making the old cur-
rency a legal tender, and established an official
scale of depreciation for use in the settlement of
debts contracted during the period of inflation.*
At the same time valuations were established for
foreign gold and silver coins, the dollar being rated
at eight shillings. This valuation of the dollar
was a mere confirmation of the rate at which it
had previously been received.**

certificates, therefore, were placed on the level of the depreciated cur-
rency; and, accordingly, they were made receivable for taxes at the
rate of 200 for I. Idemt 417.

^Thus in 1780 Iredell's sister is found trying to barter sugar for
chickens. McRee, I. 517.

2 Iredell, Laws, 451.

• In 1787, Willianison wrote that money had been " very plenty "
three years before. American Museum^ II. 107. In 1788, speakers
in the state convention commented on the abundance of specie
after the close of the paper-money period of the war, and said it
remained plentiful until paper was issued again. £lliot, IV. 90,
189. * Iredell, Laws, 452-453.

*Thus in 1779 an act relating to confiscated debts, which were
contracted in specie, placed exchange at 175, which shows the
191

MONETARY HISTORY

By 1780, North Carolina began to levy taxes for
state purposes,^ as we have seen. The exigencies
of the times had compelled the legislature to sup-
plement the assessment of polls by a tax on prop-
erty ;^ and, in 1782, a law was passed providing for
the assessment and collection of poll and property
taxes.^ Real estate was the principal item of prop-
erty taxed,* and the assessments were commonly
called land and poll taxes.** In 1785 and 1786,
other imposts were added to the revenue system
of the state.^ The taxes introduced in 1780 did
not prove effective at the start, and North Caro-
lina was able to give but little financial support to
the federal government. Prior to December, 1779,
the state seems to have paid nothing on her quotas
of the requisitions of Congress. Then, between
that month and June, 1780, North Carolina paid
$2,380,000 in depreciated paper, for which she
received a credit of $73,304 in specie,'' an amount
that was perhaps fifty per cent more than the bills
were actually worth.® In 1780, Congress asked the

dollar to be rated at Ss, In 1782, Morris reported a rating of Ss.
Sparks, Diplomatic Correspondence, XII. 91.

iSee Iredell, Laws, 397, 405, 417.

«See laws passed in 1777 and 1779. Idem, 348, 378.

«/(ir»f, 429-430.

* See State Papers, Finance, I. 435-436.

^See Letters to Washington, IV. 69; American Museum^ II.
122. ^ Iredell, Laws, 519, 586.

^ State Papers, Finance, I. 62.

^ This sum was rated according to the tables of depreciation es-
tablished by Congress, a scale which understated the extent of the
deterioration of the paper. Cf. Bullock, 132-133.

192

THE LAST ISSUES (1775-1788)

state to furnish $i,ocx),ocx) per month for twelve
months in order to sink its quota of the continental
bills. Upon this requisition ^ North Carolina paid
nothing until 1789, when she turned in $$,061,061
in paper, for which a credit of $126,671 ^ in specie
was allowed. From 1781 to 1788, Congress called
upon the state for $463,^06 in specie and ;J!674,739
in indents. Of these sums North Carolina paid
only $48,626 in specie.^ This is a poorer showing
than was made by any other state except Georgia.
The Revolution left North Carolina with a large
debt consisting of depreciated paper* and certifi-
cates of many kinds issued at various times to the
public creditors.^ By 1783, the paper currency had
disappeared from circulation, and the state was
upon a specie basis after seventy years' experi-
ence with a fluctuating medium of exchange.
Then began a renewed agitation for an issue of
bills of credit. In May, 1783, the legislature voted
to issue ;£icx),ooo, or i!2 50,000,^ ostensibly in order
to pay continental soldiers and officers of North
Carolina ; ^ but one clause of the act provided for

1 See Bullock, 158; Williamson, II. 281-282.

^ State Papers, Finance, I. 59. This paper was valued at 40 for
I, which was several times as much as it was worth. The continen-
tal paper was funded in 1790 at 100 for i, and had been as low as
500 or 1000 for I.

« Idem, I. 54-57.

* Writings of Madison, I. 513.

• Williamson has described this part of the debt. American
Museum, II. 126. • Iredell, Laws, 443.

' Note title of act, and compare McRee, II, 63.
O 193

MONETARY HISTORY

the payment of members of the assembly out of
the new bills. The paper was made a legal tender
in all payments, and 2^ tax was levied for its re-
demption. Moreover, the property recently con-
fiscated by the state was pledged as security for
this new emission. A contemporary writer charac-
terized the assembly that passed this act as a " set
of unprincipled men, who sacrifice everything to
their popularity and private views." ^ A few
months later the inhabitants of Edenton entreated
the legislature to make no further issues, and to
redeem the last emission as quickly as possible.^
Instead of doing this, the legislature soon broke
its solemn promises, and the money ^ derived from
the confiscated estates was " converted to another
use."

The bills emitted in 1783 soon depreciated, and
then arose a clamor for another issue of paper.*
Accordingly, in 1786, an emission of ;£ioo,ooo was
authorized.^ The new bills were declared a legal
tender in all payments, and a tax was levied for
their redemption. It was promised, furthermore,
that when the tax brought bills into the treasury,
the money should not be placed in circulation
again. Some of the new bills were used for state
expenses, and a debt was thus incurred for expendi-
tures on the " civil list," which should have been
defrayed out of the taxes of the year. Then a cer-

1 McRee, II. 46. * Idem.

« Idem, II. 63. * Iredell, Laws, 550-553.

' American Museum, II. i lo.

194

THE LAST ISSUES (1775-1788)

tain amount, not to exceed ^^36,000, was appro-
priated for the purchase of tobacco on the account
of the state.^ This was intended as a means of
providing for the state's quota of the interest due
for that year on the foreign debt of the United
States. The tobacco was to be sold for the high-
est price obtainable, and the proceeds were to be
placed at the disposal of the Board of Treasury
of the United States. The law provided at first
that the commissioners appointed to purchase the
tobacco should not pay more than 50$". per cwt.^
Madison writes that the agent " was authorized to
give nearly the double of the current price ; and
as the paper was a tender, debtors ran to him with
their Tobacco, and the creditors paid the expence
of the farce." ^ Maclaine states that, in March,
1786, no one was purchasing tobacco in Wilming-
ton except the commissioners, and that " the mer-
chants will not take it at the public price.*' * This
seems to confirm Madison's statement that the state
made the purchases at excessively high prices.
Probably on account of the disadvantageous rates
paid by the commissioners, a law was passed late
in 1786^ requiring that "the said Commissioners
shall not on any Pretence give more than the cur-
rent Cost Price of the Day." But this did not
save the state from a loss upon the transaction.

^ See also explanatory act passed in 1786. Iredell, Laws, 590-

591.

« Idem, 552. * McRee, II. 139.

• Writings of Madison, I. 244. * Iredell, Laws, 591.

MONETARY HISTORY

Williamson stated^ in 1787 that the tobacco had
been purchased "for two prices." In 1788, in the
North Carolina convention, Hill asserted ^ that the
state had "purchased tobacco at an extravagant
price, and sold it at a considerable loss,*' receiving
"about a dollar in the pound/* This would mean
a loss of sixty per cent. At the same time and
place Johnston said:^ "We are swindlers; we
gave three pounds per hundred weight for tobacco,
and sold it for three dollars per hundred weight,
after having paid very considerable expenses
for transporting and keeping it." He said that
a merchant who " purchases dear and sells cheap "
is certainly a swindler. Since these statements
passed uncontradicted, we niay safely conclude
that North Carolina lost more than fifty per
cent upon this speculation in tobacco. More than
this, the paper quickly depreciated. In August,
1786, Madison reported a depreciation of twenty-
five or thirty per cent.* The following year Will-
iamson wrote that twelve or thirteen shillings of
paper were worth only one dollar in specie,^ which
indicates a depreciation of more than fifty per
cent.^ In 1788, two dollars in paper were worth
only one dollar in specie.^ Williamson states ^ that

1 American Museum, II. no. ^ Elliot, IV. 84.

* Idemf IV. 89. * Writings of Madison, I. 244.

* American Museum ^ II. 113.

^ In this same year Hamilton reported a depreciation of 2 for I.
Hamilton, II. 37.

T Elliot, IV. 183. 8 American Museum, II. 113.

196

THE LAST ISSUES (1775-1788)

a guardian bought up paper " at twelve or thirteen
shillings for a dollar," and used it in paying to an
orphan the principal of an estate of i!2CXX).

While North Carolina had furnished the federal
government almost no financial support, the people
of the state generally exhibited considerable fear
and dislike of the idea of taxation by any federal
authority.^ It was not surprising, therefore, that
the Federal Constitution encountered bitter opposi-
tion in the state. Paper money was another issue
involved in the contest. North Carolina's dele-
gates in the federal convention had voted to
prohibit the states from emitting bills of credit,^
and had favored the proposition to take this
dangerous power away from Congress.^ The
leaders of the federalist party in the state had
wearied of the paper-money policy adopted after
the close of the Revolution,* while some of the
anti-federalists had favored the measures of infla-
tion.^ Outside of the state the delay of North
Carolina in ratifying the Constitution was at-
tributed to the desire "of preserving paper money
and tender laws.*' ® The fear was expressed "^ that
the provision of the Constitution prohibiting the

iMcRee, II. 178, 181, 217, 286, 329.

« Elliot, I. 271. « Idem, I. 245.

* See opinions of Iredell, Maclaine, Davie, and Johnston. Elliot,
IV. 89, 156, 157, 173, 183, 184 ; McRee, II. 60, 63, 246, 247, 267.

* See McRee, II. 246-247, 267. In the state convention one
speaker objected specifically to the prohibition of paper money.
EUiot, IV. 169.

* McRee, II. 241. "^ Elliot, IV. 182-185.

197

MONETARY HISTORY

issue of bills of credit by the states would interfere
with the paper currency already in circulation, and
it was proposed^ to amend the plan of govern-
ment in such a way as to make such interference
impossible. In the votes upon ratification it
appears that the counties adjoining Albemarle
and Pamlico sounds were the real support of the
federal cause; and it will be noticed that this
region was the oldest and most populous part of
the state, representing distinctly the commercial
interests of North Carolina.^ Five out of the six
towns represented in the convention of 1788
favored ratification,^ and it was from one of these
that a protest against paper money had come in
1783.* On the other hand, the opposition to the
Constitution centred in the thinly populated
districts of the interior and of the southern parts
of the state.^ We have already noticed that, in
1 77 1, the delegates from this southern district had
been most anxious to flood the province with
paper money; and it seems certain that, in 1788,
the desire for such a currency was greatest in the

J Elliot, IV. 247.

8Libby, 38.

^ Idem^ 41. Cf. American Museum^ III. 71-74.

*McRee, II. 63.

* See Libby's map of the distribution of North Carolina's vote.
With this compare the map of the Eleventh Census showing the
density of population in 1790. Eleventh Census, Report on Popu-
lation, I., p. XIX. This shows that the southern and western
counties had a population of from two to six persons per square
mile.

198

THE LAST ISSUES (17 75-1788)

sparsely settled regions of the south and west.
It is evident, therefore, that there was a close
connection between the inflationist movements in
1785 and the opposition to the Constitution in 1788.
Although so large a part of the debt contracted
during the Revolution had been wiped out by the
depreciation of the paper,^ to the great loss or
utter ruin of the holders of the bills, North Caro-
lina had a large debt in 1787. This consisted of
certificates issued to creditors, the almost worth-
less bills of credit emitted during the war, and the
currency created in 1783 and 1785. The conven-
tion called to consider the constitution in 1788
recommended 2 that the legislature should "take
efiFectual measures for the redemption of the
paper currency " ; and the town of Wilmington,
at least, instructed its representative to favor such
a policy.® A few months later it was proposed to
adopt a scale of depreciation for the paper emitted
in 1783 and 1785, and some members desired to
issue j^70,ooo more ; * but no such measures were
adopted. In 1789, the paper had begun to appre-
ciate, and complaints of a great scarcity of money
were renewed.^ During the following year the
assembly was "again running riot" over the
action of Congress in voting to assume the debts
of the states.* Taxes had been levied in 1788 and

1 See McRee, II. 63 ; Annals of Congress, 4th Cong., 2d Sess.,
1800. ^Idenit II. 246, 267.

« Elliot, rV. 252. ^Idem, II. 276.

» McRee, II. 243. • Idem^ IL 301.

199

MONETARY HISTORY

1789 for calling in the continental and state paper
and the certificates issued to public creditors,^ so
that a certain amount of these obligations had
been paid in at the treasury.^ Maclaine reports
that, in 1790, some persons proposed to subscribe
these funds in the hands of the comptroller and
treasurer as a part of the debt of the state.® The
assembly did actually draw upon these securities
in the treasury for j<C 12,000 to defray contingent
charges for the current year.* Under the funding
act of 1790, the United States authorized the
assumption of ^^2,400,000 of North Carolina's
indebtedness, and the national government actually
assumed 1^1,793,803 ^ of this amount

But a large part of the bills of credit issued in
1783 and 1785 remained in circulation. In 1796,
Walcott reported « that the "debt of the State
consists principally of paper bills of credit, of
which about one hundred and fifty thousand
pounds are estimated to be in the treasury and
in circulation." A year later the debt of North
Carolina was reported to be ^^430,000,^ which
represents probably the approximate amount of
currency then outstanding. In 1804, the state
chartered the Bank of Cape Fear and the New-
bem Bank, and required that the capital of each

1 Iredell, Laws, 630, 666. ^ Idem, II. 301.

8 McRee, II. 304. * Idem, II. 304.

» Tenth Census, VII. 327 ; U. S. Stat., I. 142.
• State Papers, Finance, I. 434.
7 Annals of Congress, 4th Cong., 2d Sess., 1802.
200

THE LAST ISSUES (i 7 75-1 788)

institution should be subscribed in specie. The
managers of these banks ^ "contrived to get
possession of nearly all the paper money which
had been issued on the faith of the State, which
being at the time a legal tender, enabled them to
evade demands for specie, which they did, by
thrusting this ragged paper at those who presented
their notes for specie/' This makes it seem
probable that in 1804 there was some difference
between the value of paper and that of gold or
silver. The bills of credit were still in circulation
in 1 810, when the State Bank of North Carolina
was chartered. The law establishing this institu-
tion provided 2 that the capital stock should be
i! 1,600,000, and that one-fourth of this amount
should be paid " in the paper currency emitted by
this State." After the bank should be ready to
commence business, the notes were to be no longer
a tender for debts due to or from the bank.
Finally, the dividends on the ]J!2 50,000 of stock
owned by the state were to be applied to the
redemption of the paper subscribed to the bank's
capital. But this law did not fully accomplish the
purpose of retiring the paper money ,^ for the sub-
scriptions to the stock of the bank proved smaller
than was desired, in spite of the fact that addi-

^ Gouge, 144.

'Laws of North Carolina, 1171-1180. This law was entitled
" An act to redeem the paper currency now in circulation, and to
establish a bank," etc. Cf. Gouge, 145.

* On this bank see Sumner, Banking, 46-47, 85, 176-177.
201

MONETARY HISTORY

tional inducements were ofiFered by a subsequent
act of the legislature.^ In 1814, the charters of the
Banks of Cape Fear and Newbem were extended
upon condition that, in case the State Bank should
be voluntarily dissolved before December 18, 18 16,
these institutions should redeem the bills of credit
with their own bank notes at the rate of one
dollar for ten shillings.^ This showed, of course, a
depreciation of twenty per cent in the value of the
old currency, which was issued at the rate of one
dollar for eight shillings. In 181 4, 181 6, and
1823, the state treasurer was authorized to issue
|i262,cxx) of treasury notes in order to pay for
subscriptions to bank stock.^ The dividends
received from these investments were used in
retiring the notes, but in 1836 it was stated* that
1^50,887 were still outstanding.

In 1837, John C. Calhoun made the following
statement^ concerning the history of the bills of
credit issued in 1783 and 1785: "North Carolina,
just after the Revolution, issued a large amount of
paper, which was made receivable in dues to her.
It was also made a legal tender, but which, of
course, was not obligatory after the adoption of
the Federal Constitution. A large amount, say
between four and five hundred thousand dollars,
remained in circulation softer that period, and con-
tinued to circulate for more than twenty years at

1 Laws of North Carolina, 1199. > Idem, 1301-1302.

» Idemy 1 301, 1346; Sumner, Banking, 177.
* Idem, 177. * Calhoun, III. 86.

202

THE LAST ISSUES (17 75-1 788)

par with gold and silver during the whole time,
with no other advantage than being received in
the revenue of the State, which was much less
than |i 100,000 per annum. I speak on the informa-
tion of citizens of that State, on whom I can rely."
If Calhoun had consulted the law passed by the
legislature of North Carolina in 18 14, he would
have learned that ten shilUngs of bills of credit
were worth at that time only eight shillings in
specie. In 1787, as we have seen, the deprecia-
tion was very much greater.

We have now followed the history of paper
money in North Carolina through three periods,
of which the first begins in 1712 and the last ends
about a century later. The first period ended with
an act of utter bankruptcy, the paper currency
having sunk from ;^i50 colonial in 171 5 to
;£iooo colonial in 1748 for every ;£ioo sterling.
The experience of the province during the second
period, which ended in 1774, was much less dis-
astrous. Yet the bills of credit issued in 1748 and
subsequent years depreciated from ;^I33 to ;^200
colonial for j^ioo sterling. That worse results
were not reaped during these years was due solely
to the restraining influence of the governors, who
were bound by explicit instructions and by the act
of 1764; for the assembly desired repeatedly to
emit large sums of new paper. In respect of the
repeated violations of public faith, the second
period was hardly better than the first. Moreover,
the province entered upon the contest for inde-
203

MONETARY HISTORY

pendence, burdened with a paper currency and
unprovided with an adequate system of taxation.
The third period saw the rise and fall of the
continental paper currency and the issue of
1^34,100,000 by the state; all of which became
practically worthless in 1781, entailing a second
bankruptcy. Then ;£200,ooo more paper was
issued in 1783 and 1785, only to depreciate to
one-half its nominal value and to involve the
state in a losing speculation in tobacco. What
the subsequent policy of North Carolina might
have been if the Federal Constitution had not pro-
hibited the issue of bills of credit by the states,
can be only a matter of conjecture. Perhaps the
War of 18 12 would have furnished a pretext for
another reckless inflation of the currency. In
any event, the state was unwilling to levy taxes
to redeem the paper that was outstanding in 1789.

204

Part III

THE PAPER CURRENCY OF NEW
HAMPSHIRE

CHAPTER I

COLONIAL ISSUES (170^1739)

During Queen Anne's War, New Hampshire
became involved in debt, and began to issue bills
of credit in order that " the government may stand
fair with her Majesty's good subjects, and the
soldjers may be encouraged in the defense of the
Province." ^ The first issue of ;^3000 was made
in 1709,^ and the bills then emitted were declared to
be receivable for taxes at five per cent advance;^
so that they practically bore interest. Taxes seem
to have been established to redeem the bills within a
period of five years.

During the following year, it became necessary
to raise additional funds,* and a second issue of
;^25oo was authorized.^ In 171 1, the legislature
voted* to reissue j^2000 of bills that had been
brought into the treasury in payment of taxes,
and emitted ;£2000 of new currency.^ At about

* Papers of New Hampshire, III. 420.

*/<^/w, III. 410-41 1. The house of representatives declared
that it would prefer to borrow from Massachusetts the money needed.

* Idem^ III. 430.

* See Letters of governor. Idem^ III. 440, 449.
»/i^»f, m. 460.

« Idem, III. 474, 475, 477, 503, 505.
» Idem^ III. 503, 505.

207

MONETARY HISTORY

the same time it was decided to discontinue the
five per cent advance allowed on money paid into
the treasury, since it was thought that the bills cir-
culated readily enough without such a concession.^
It now became necessary to pass an act for sup-
pressing counterfeiting.^ In 1 712, in order to pay
various claims against the province, it was decided
to reissue the ;£iooo that would be received from
the payment of taxes for that year, and to make a
new emission of £soo^ This brought the total
issues up to ;£8ooo (^^26,660);* and, since the
;^3CXX) of bills reissued must have represented
practically all of the money received from the
taxes levied to sink the currency, it is probable
that the whole amount of the original emissions
was in circulation. In May of this year the legis-
lature authorized the treasurer of the province to
receive torn or defaced bills in exchange for cur-
rency that was in good condition.^

In April, 171 3, the war was ended by the
Treaty of Utrecht, and no more paper money was
manufactured during that year. But, in 1714,
;£i200 was emitted "for the payment of the
province Debts." ^ In this year it was found ^

1 Papers, III. 473-474-

* Idem, III. 477. The text of this act may be found in Acts of
N. H., 34. It made the penalty for counterfeiting the same as for
forgery. « Papers, III. 533-534-

^ I assume that the dollar was rated at six shillings.

» Papers, III. 514.

« fdemf III. 565. These bills were to be redeemed in five years.

7 Idem, III. 563.

208

COLONIAL ISSUES (i 709-1 739)

that the taxes were being paid partly in bills
issued by Massachusetts, Rhode Island, and Con-
necticut ; and accordingly the legislature voted to
lend the entire j^iSCX) of taxes collected during the
past year to persons who would agree to repay
the loan in New Hampshire currency.^ Thus in
the second year of peace the province managed
to increase its issues by ;£i200, and to prevent
the retirement of ;^iSoo of bills that should have
been withdrawn from circulation.

The bills issued by each New England province
came to circulate freely in all of the others,^ so
that Douglass could speak of the "promiscuous
Currency in the four Governments.**® In 171 2,
we find that New Hampshire deposited a certain
quantity of her bills in Boston in order that they
might be exchanged for worn and defaced money.*
The result was that practically a single currency,
subject to a uniform rate of depreciation, circulated
in New England until 1 749.^ Thus, in 1 741, a writer

^ Papers. The money appears to have remained in the hands of
the borrowers for a long time. In 1 715, it was reported that the
loan had been made and good security taken. Idem^ III. 605. In
1 7 16, ^^230 more was loaned in the same manner. Idem^ III. 643.
In 1722, it was reported that the ;f 1500 loan and the ;^230 loan
were represented by bonds that were in safe keeping. Idem^ IV,
341. In 1732, the borrowers of this ^£^1730 loan were required to
pay arrears of interest and renew their bonds. Idem^ IV. 655.

* Bronson, 52-53; Douglass, Discourse, 309; Papers, V. 565.

* Douglass, Discourse, 311.

* Felt, 64.

* This is evident from a comparison of tables of depreciation in
the four colonies. See Felt, 83, 135; Diary of Hutchinson, I. 53;

P 209

MONETARY HISTORY

in Boston stated that " public bills of four Prov-
inces " were circulating in Massachusetts at 2gs.
for an ounce of silver.^ In 1739, the secretary of
the province of New Hampshire wrote to the
home authorities as follows:* "The rate of
Silver and Exchange between this Currency and
Sterling has always been the same as at Boston,
which is the Grand Mart of New England, and in
that respect governs the whole country." The
New England money began to depreciate in 171 3
or 1 714; and, by the latter year, 9^. in New
Hampshire paper was required to purchase one
ounce of silver, whereas Ss. would have sufficed
at the time the first bills were issued.* With a
view perhaps to preventing further depreciation,
the legislature now decided that the paper should
once more be received at the treasury at five per
cent advance.*

In 1715, it was found that ;^iSOO of province
bills had been drawn into the treasury; and the
legislature voted to reissue ;^SOo of this money,
while it was decided to have the remainder burnt.^
This was the first time that the law had been
obeyed by destro)ring the paper received from the
taxes levied to sink the bills. By this means the

Douglass, Summary, I. 494; Wright, LXV.; Belknap, III. 225;
Coll. N. H. Hist. Soc., V. 258; Bronson, 52; Potter and Rider, 55;
Wecdcn, 473-474. 484.

1 Felt, 107. « Papers, V. 46.

* Cf. Douglass, Discourse, 304; Belknap, III. 225.

* Papers, III. 564.

» Idem, III. 586, 589, 591, 592, 605.
210

COLONIAL ISSUES (i 709-1 739)

issues outstanding were reduced to about £8200,^
and the price of silver remained at gs. for the
year 1715. During 17 16, the legislature reissued
;^I500 of bills 2 instead of burning them, so that
the currency remained stationary. At the same
time, taxes to the amount of ;£iooo were sus-
pended.* The price of silver rose to los. per
ounce for 1716, the increased depreciation being
due perhaps to larger issues of paper by other
provinces. Although the colony now had a paper
circulation of about $27,000,* and a marked de-
preciation of twenty-five per cent had set in, the
legislature had complained of " a very great
scarcity of Money," and had resorted to a repeal
of part of the taxes levied to sink the bills of
credit. This action was prophetic of the events
of the ensuing year.

Early in 1717, it was proposed to make a new
and much larger emission,^ and by May it was
voted to issue ;^ 15,000 on loan for eleven years
at ten per cent interest.^ The money was to be

^ The total issues had been ;f9200 after the emission of 1714.

* Papers, III. 643, 644, 646, 647.

• Idem, III. 647.

^ The circulation most have remained at about ;f 8200, or 127,330.
The population of New Hampshire was estimated at only 10,000 in
1730. Coll. of N. H. Hist. Soc, I. 229. The money in circulation
in 1 7 16 must have amounted to about three dollars per capita, a
large sum for a province with so few industries and so little com-
merce as New Hampshire had. In 1 730, the imports into the prov-
ince were estimated at only ;f 5000 sterling, /dim, I. 228.

* Papers, III. 671, 675, 687.

• Idem, III. 688-689. Cf. Belknap, II. 20-21 ; Hildreth, II. 311.

211

MONETARY HISTORY

lent upon mortgages on land double the value of
each loan, and the various towns were to receive
shares proportioned to their quotas of the province
taxes. The annual payments of ten per cent of
the loan were to be burned in the presence of the
assembly each year, and bills issued by other
provinces were to be accepted in such payments
only at five per cent discount It is evident that
the New Hampshire inflationists were unwilling to
be outdone by their brethren in Massachusetts
and Rhode Island, where public loan banks had
been created in 1714 and 1715.^ None of the
bills of former emissions were burned this year,^
so that the currency of the province must have
been increased to about ;£2 3,000. As a result, the
price of an ounce of silver rose to 11 j. in 1 718, and
i2s. in the following year.*

For the next few years the inflationists seem to
have been content with what they had accom-
plished. In 1 71 8, the assembly voted to bum
;^900 of old bills,* but the records do not state
distinctly that this event took place. In 1720,
;^964 was actually bumt.^ Thus, at the most, the
currency was decreased by only £1^64 between
1 71 8 and the end of 1720. Meanwhile counter-

1 Felt, 67; Potter and Rider, 11.

*The records show no further burning of bills until 1718. In
January, the lower house of the legislature passed an act intended
to reissue all the bills of credit in the treasury. Papers, III. 667.

» Belknap, III. 225.

* Papers, III. 736,737.

^/dem, III. 786.

212

COLONIAL ISSUES (i 709-1 739)

feiters had been at work in the province,^ so that
the governor recommended that some of the bills
should be exchanged for new currency.^ In 1721,
the governor received instructions from England
to consent to no more laws for issuing bills of
credit unless they contained a clause providing
that they should not go into operation until ap-
proved by the home government.^ By this time
the depreciation had increased so greatly that an
ounce of silver was worth i^s, in paper;* yet it
appears that jQiSOO of money that had been
drawn into the treasury was " misapplied," so that
the governor had to urge the assembly to "con-
sider of ways and means to bring it into the treas-
ury again." ^

During 1721, bills to the amount of ;£ 11 88 were
burned .* but the currency did not improve. In
spite of this fact, the legislature attempted to emit
;^20,ooo and then ;£ 15,000 of new paper, and
desired to reissue money that had been paid into
the treasury.^ Thus the appetite for a cheap cur-
rency had not been satisfied, although $67,000 of
paper was in circulation.®

1 Papers, III. 797. ^Idtm, III. 830.

^ It/em, III. 813-814. Cf. Bancroft, II. 263 ; Green, 163.

* Belknap, III. 225. * Papers, III. 830.

«/</^w, III. 810, 819, 829.

Wiigm, III. 802, 807, 815, 835, 838.

^ Subtracting the sums already stated to have been burned from
the total emissions, it appears that ;f 20,148 was in circulation or in
the treasury. This would amount to more than six dollars per
capita.

213

MONETARY HISTORY

The colony now became involved in an Indian
war which lasted for three years.^ This furnished
a pretext for renewed issues of paper ; and another
was found in a proposition " for Striking bills of
Credit in this province for the encouragement of
raising naval Stores/' ^ for which the royal assent
was desired. The result was that in May, 1722,
the legislature voted to issue ;£28oo ; ^ and in the
following October decided to emit ;^2000 more.*
These were used for province expenses, and were
to be redeemed by taxes payable in bills of credit
or naval stores. No paper seems to have been
burned this year; and, by its close, silver was
selling for 14^. 6rf. per ounce. Besides making
these two new issues, the legislature voted ^ to
emit j£S3^4 of bills of credit to be exchanged for
the worn and defaced paper issued prior to 1716.*
These new bills were to be redeemed in five equal
instalments by taxes that should begin in 1724
and continue to 1728.^

1 See Belknap, II. 43-83 ; Papers, IV. 148.

2 Papers, IV. 40, 317. •Idtm, IV. 35, 36, 38, 39, 315.
*/fl5fw, IV. 74, 76. »/dV»i, IV. 35, 36, 315, 339, 340.
•The issues prior to 1716 amounted to ;£'9200. Of these I find

that no more than £2000 were burned prior to 1722. Idemy III.
592, 605, 737. The other bills that were burned were a part of the
£i$iO0O emitted on loan in 1715. This would make it seem that
;f 7200 of the early bills must be in circulation, whereas the law of
1722 proposed to exchange only £<fZ^' The legislature may
have assumed that all of the ;f4052 of bills burned prior to 1722
were of the emissions prior to 1 7 16. On this assumption it would
have been calculated that £$1^^ were in circulation.

'^ The old bills were replaced only gradually by the £sz'^A emis-
214

COLONIAL ISSUES (i 709-1 739)

The province had, at the beginning of 1723, a
currency amounting to about ;^25,ooo'^ This was
equivalent to at least eight dollars per capita,^
and the price of silver soon advanced to i6s, per
ounce. During 1723, the records show that ;£32i
of the bills were retired,* while no more issues were
made. But, in 1724, the governor had to ask for
additional funds for conducting the campaign
against the Indians,* and a new issue of ;£2C)00
was authorized.^ These bills were to remain in
circulation for a period of ten years, since the
taxes levied to redeem them were not to be col-
lected until 1733 and 1734. During 1724, £626
of the currency was burned,^ so that the net

sion. I find that ;f 2281 of old bUls were exchanged between 1723
and 1726. Papers, IV. 119, 122, 137, 162, 163, 181, 195, 196,
202, 211, 228. By 1737, the total number of bills exchanged was
;f4998. See Papers, IV. 246, 247, 299, 517, 598, 618, 633, 652,
690, 704, 710, 718, 732. In 1742, £S$ more was exchanged.
Papers, V. 182. This raised the amount exchanged to ;f 5084.

^This is the total of the ;£'20,i48 issued and in circulation prior
to 1722, and the ;f 4800 emitted in that year.

* The province could not have had a population much in excess
of 10,000 before 1730. See Coll. of N. H. Hist. Soc^ I. 229.

• Papers, IV. 348. Besides this, ;f 789 of the bills issued prior
to 1 71 6 were burned after being exchanged for bills of the £S3S4.
emission. Idem^lV, 119, 122. This, however, did not effect any
change in the amount of money in circulation. In subsequent
statements no account will be taken of the bills exchanged for
those of the ;f 5384 emission. ^Idem, IV. 156.

^Idemy IV. 157, 158, 167, 395, 398; V. 29. The house of'
representatives desired to emit ;f3000, but the council refused.
Idimy IV. 156, 157. This is perhaps an indication of a desire for
a conservative policy upon the part of the counciL

•/</if»»,IV. 381.

MONETARY HISTORY
increase of the paper money for the year was only

In May, 1725, Governor Wentworth informed
the assembly * that the clergy of the province had
been sorely distressed by the depreciation of the
paper currency, since salaries of ;£ioo established
a dozen years before had been reduced to about
one-half of their original worth.^ The assembly,
in the same month, abolished the five per cent
advance that had been allowed for province bills
received in payment of taxes.* Shortly after this,
bills issued by the other New England colonies
were made receivable for the taxes of the current
year.* This last action is explained probably by
the desire of the assembly to make the retirement
of the New Hampshire bills as difficult as possible,
for any bills of the other provinces that might
come into the treasury were sure to be reissued.
In December, an issue of £2000 of paper was
authorized ^ in order to defray the expenses of the
war. This emission, like the previous one, was to
be redeemed by taxes due only after ten years.
The paper burned during this year amounted to
£1377,^ so that the net increase of the currency
was £607.

1 Papers, IV. 169.

^Silver was at Zs, per ounce in 1 7 10, and at 151. or i6j. in 1725.
Selknap, III. 225.

•Papers, IV. 175, 178, 401.

^Idem, IV. 407. See also law of 1729. Idem^ 522, 529.

^Identy IV. 194, 205, 411, 417, V. 30.

^ Idem, IV, 181,405.

216

COLONIAL ISSUES (i 709-1 739)

At the opening of 1726, the province must have
had about £^26fi2\ of paper in circulation.^ In
January, £,^QO was issued in order to replace worn
or defaced bills of any issue since 1715.^ Then
in December two new emissions, aggregating
^2cxx), were authorized.* One-half of these was
to be redeemed by taxes in 1737, and the other
half in 1738. In this same month the legislature
had to appropriate ;£ 1 50 of currency in order to
purchase a bill of exchange for £,^0 sterling.*
During the course of the year bills amounting to
;^940 were burned,^ so that the legislation of 1726
resulted in a net addition of ;£io6o to the currency
of the province.*

In 1727, a further emission of £^2000 was author-
ized, and the bills were to be redeemed in 1739
and 1740.^ Thus the period of redemption, which
at first had been five years, had now been length-
ened to thirteen. During this year ;£i099 of the
former issues was retired,^ so that the real increase

^This equals the ;f 24,948 circulating at the end of 1722, plus
the ;f4000 emitted in 1724 and 1725, and minus the ;f2324 burned
in 1723, 1724, and 1725.

* Papers, IV. 201, 205, 416, 417.
^Jdem, IV. 232, 239, 438, 443, v. 30.

^ Idem^ IV. 233-234. This corresponds very closely to the
figures of Belknap. The latter gives i6j. as the price of silver in
1726. Belknap, III. 225. The sterling price of silver was 5^. zd,

* Papers, IV. 237, 422, 442.

• In May of this year the house desired to issue £2000 for pub-
lic buildings, but the council refused. Idemt IV. 430*

'^ Idem, IV. 250, 251, V. 30.

• Idem, IV. 246, 445.

217

MONETARY HISTORY

of the currency was j£goi. In the spring of 1728,
the lower house of the legislature proposed to issue
;£30,ooo upon the same terms as the loan of 171 7,
but the council objected on the ground that this
was too large a sum.^ A similar proposal was
made a month later, and met with the same fate.*
Upon the first of June, two projected issues were
under discussion, but neither one seems to have
been authorized.* During this entire session the
two houses of the legislature had been engaged
in a series of disputes over various matters,* and
it is not strange, therefore, that the council felt
inclined to object to a proposal to add £so,ocx)
to a currency that was already depreciated. The
legislature was dissolved in June, and did not meet
again until April 22, 1729.^ Diuing the entire
year no bills seem to have been destroyed, and the
price of silver had now advanced to 17^. per
ounce.®

When the legislature met in 1729, several at-
tempts were made to reissue bills that had been
drawn into the treasury in payment of taxes.' In
the end, £1776 of the currency was reemitted,®

1 Papers, IV. 289, 490.

* /iigm, IV. 298. Meanwhile, a proposition to issue ;^3000 had
failed to receive the approval of the council. Idem, IV. 491.

« Idem, IV. 502.

^ On this dispute see Belknap, II. 90-93.

6 Papers, IV. 308. • Belknap, III. 225.

'Papers, IV. 529, 553.

8 This was in two issues of ;^ 1076 and £7^^» Idem, IV. 516^
5i7»530»546, 550»557»V. 30.

218

COLONIAL ISSUES (i 709-1 739)

after a discussion in which the instructions of the
governor played a part.^ The salary of the chief
magistrate was now fixed at ;£6cxd in the paper
money of the province, a sum which was declared
to be worth ;£2CX) sterling.^ By this time the
;£i 5,000 issued on loan in 171 7 was due, but only
£^797 had been actually paid in and destroyed.*
The legislature was unwilling to retire this cur-
rency, but finally provided that it should be with-
drawn in three instalments in 1729, 1730, and
173 1.* During the entire year, ;£3io8 of old bills
were burned ; ^ but the outstanding currency still
amounted to about ;£2 5,477, while the price of
silver advanced to igs, 6d, per ounce.^

In 1730, Governor Belcher informed the assembly
that he had " a liberty to emit from time to time
what Bills of Credit may be necessary to defray
the expense'* of the province.^ Accordingly no
time was lost in preparing a bill for issuing ;£i300,®
which received Belcher's assent after the assembly
had made alterations desired by him in the bill
granting his salary.® Encouraged by its success
in this matter, the legislature, later in the year,
passed a bill for issuing £6000 for repairing forts

1 Papers, IV. 517.

^Idem^ IV. 513. For Belcher's salary in 1730 see Idem^ IV.
570, 760, 761.

•See Idem^ III. 786, 810, 819, 829, IV. 181, 237, 246, 349, 381,
526.

^Jdem, rV. 516, 537, 544, 624. 'Papers, IV. 566.

» Idem, IV. 497, 517, 526. ^Idem, IV. 571, 572, 761.

« Belknap, III. 225. ^ Idem, IV. 571-572.

219

MONETARY HISTORY

and building a state house.^ This time, however,
the governor objected,^ and " produced his Instruc-
tions prohibiting his assent to any bill for the
Emission of any more paper currency, except for
the support of the government." Besides this
measure, the assembly sought also to postpone to
a later period the redemption of the outstanding
bills; but here again Belcher's veto was encoun-
tered.* No paper money was burned during this
year, so that the currency of the province must
have increased to about £26^77.

In 1 73 1, the legislature brought forward repeated
projects for issuing more paper, one of these tak-
ing the form of a £40^000 loan,* but these efforts
proved fruitless. No bills were burned in this
year, however, so that the currency remained
unchanged. In 1732, Governor Belcher, whose
instructions required him to have the outstanding
currency retired punctually according to the law,*
called the attention of the legislature to the ;£i 5,000
loan emitted in 171 7.® He said that, although all
of the loans ought to have been paid by 1731,
not half of the issue had actually been collected.
When the legislature desired to emit £1000 of
bills to be redeemed by a tax in 1744, he informed
it that his instructions required him to have all the
money retired by 1742.^ During the year, the

1 Papers, IV. 583. » Idemy IV. 772.

^Idem, IV. 771-772. • Idem, IV. 624.

• Idem, IV. 771. ' Idem, IV. 621, 622, 786.

* Idem, IV. 593, 607, 608, 777.

220

COLONIAL ISSUES (1709-1739)

currency was diminished by burning ;£i3ii of old
bills,^ so that it stood at about £2^,466,

In 1733, the house of representatives twice
attempted to emit ;£20,ooo upon loan for a period
of sixteen years, but the council objected to the
project, stating finally that it would be "diamet-
rically opposite" to the governor's instructions.^
The representatives then desired to petition the
King for his assent to this project,^ and a deadlock
ensued which was ended by the governor, who dis-
solved the assembly.* In January, 1734, a new
legislature was convened, and Belcher urged it to
place the defences and public buildings of the
province in proper condition, and to provide for
the public debts.^ Within a few days the lower
house proposed to issue ^^3000 of paper that
should not be retired until after 1742, and the
council passed an act to emit ;£3000 which should
be cancelled in 1740, 1741, and 1742.* This ulti-
mately led to another deadlock,^ which called from
Governor Belcher a sharp message stating that he
would not under any conditions extend the time of
the currency beyond 1742.® The representatives
then declared their intention of appealing to the
Board of Trade, and defied the governor.® They

1 Papers, IV. 598, 622.
« /dVw, IV. 634, 635, 636, 637, 640, 791.
» Idem, IV. 641-642. * /demy IV. 644-645.

* /dfmf IV. 647-648. On this dispute see Belknap, II. 109-
no.

« Papers, IV. 655, 799. • /demy IV. 662.

f Idem, IV. 657-661. » /depi, IV. 663-664.

221

MONETARY HISTORY

next discussed plans for reissuing interest money
due on. the ;£ 15,000 loan, until Belcher finally dis-
solved the assembly a second time.^ Belcher then
issued a proclamation ordering the commissioners
in charge of the ;£ 15,000 loan to enforce strictly
the payment of the amounts still outstanding.^

In the fall of 1734, a new assembly was convened,
and urged by the governor to provide the funds
needed for meeting public debts and supporting
the government.* But the members showed no
disposition to comply with his request, and were
soon sent back to their homes. Between January i ,
1733, and December 31, 1734, the bills of credit
burned amounted to ;£2035,* so that the currency
of the province now stood at the sum of ;£23,43i.
Yet the large issues made by the other colonies in
New England and the unwillingness of the New
Hampshire legislature to fulfil its own promises
had discredited the paper, so that silver was now
selling ^ at 2js. per ounce. Under such conditions
the house of representatives had passed an act
making the paper issued by the province a tender
even in special contracts^ and had the assurance
to send over for the consideration of the English
authorities a scheme for emitting ;£6o,ooo of new
bills of credit.^

In April, 1735, Governor Belcher called the

1 Papers, IV. 666-667. * Belknap, lU. 225.

a Idem, IV. 668. « Papers, IV. 659.

» Idem, IV. 671-680. 7 Idem, IV. 834-835.

* Idem, IV. 633, 652.

222

COLONIAL ISSUES (1709-1739)

assembly together again. He informed them that
no taxes had been laid to supply the treasury for
four years, and that the needs of the province were
extremely urgent.^ The house of representatives
prepared a supply bill, which provided for the
emission of ;£4000 of bills of credit ^ that were to
be redeemed in 1742 by taxes payable in hemp,
flax, and bills of credit issued by the other New
England provinces as well as those emitted by
New Hampshire. The council objected to this
measure, pointing out, among other things, that a
tax payable in this manner would not call enough
province bills into the treasury to make it possible
to retire the paper by 1742.^ The representatives
insisted upon their original measure, and the gov-
ernor then dissolved* the assembly. During the
session Governor Belcher had called the attention
of the legislature to the fact that certain citizens
of New Hampshire had presumed " to strike and
Issue paper notes or Bills to pass in lieu of money."
He said that, since the province was restrained by
express instructions from doing such a thing, " pri-
vate persons ought not to presume upon it." ^ The
house of representatives replied ^ that it was " not
sensible wherein such an attempt is unwarrantable
unless some notorious Fraude or Cheat might be
designed and discovered therein," since the in-
structions from the English authorities did not

1 Papers, IV. 681, 685. * Idem, IV. 696-698.

« Idem, IV. 694. » Idem, IV. 685.

• Idem, IV. 695. « Idem, IV. 688.

223

MONETARY HISTORY

extend "to negotiable Notes amongst Merchants
and Traders." Belcher proceeded to issue a
proclamation warning people against receiving
the notes; and desired to have the legislature
pass an act outlawing these private issues/ as
Massachusetts had been induced to do.^ He as-
serted that complaints had been received^ that
"some of the Principle founders or undertakers
in the scheme have Refused to give credit to
those their own notes." This seemed to close the
incident* During 1735, bills were burned to the
amount of ;£i023,^ so that the currency amounted
to about ;£22,4o8.

In 1736, a new assembly was called together, and
the old quarrel was resumed ; but the grounds of
dispute were slightly changed. The house of rep-
resentatives finally drew up an address to the gov-
ernor, ^ which the council pronounced " so full of
first Principles of Nature and void of those of
Grace" as to justify a refusal to join with the
lower house in any further acts of legislation.^
Governor Belcher called the answer of the repre-
sentatives indecent, and once more dissolved the

1 Papers, IV. 688, 697.

^In 1735, Massachusetts passed an act forbidding any person
to receive the bills issued by these New Hampshire merchants.
Acts of Mass., II. 743-744.

« Papers, IV. 697.

*0n this private issue in New Hampshire see Belknap, II. no;
Felt, 91-92.

« Papers, IV. 690.

• Idem, IV. 707-708. ' Idem, IV. 71 1-712.

224

COLONIAL ISSUES (i 709-1 739)

assembly.^ During 1736, paper to the amount
of ;£iooo was retired,^ and the currency was
reduced to ;£2 1,408. Toward the close of the
year the price of silver fell from 27^. 6d, to 26s.
6d,,^ so that the resolute course of Governor
Belcher * was resulting in a slight decrease of the
depreciation.

Early in 1737, a new assembly convened, and
the governor stated that it was now six years since
"any supply of money to the Treasury" had been
provided.^ The representatives then proceeded
to discuss the advisability of issuing ;£3000 to
replace worn and defaced bills.® Finally the gov-
ernor consented to the issue of £6soo of new bills,
in order to defray the accumulated debts of the
last five or six years.^ These debts included £970
of arrears on the salary of the governor, six years
arrears of salary due to the treasurer, six and one-
half years salary due to the clerk, and arrears due
to other persons for periods of similar length.
These new bills ® were to be redeemed by taxes ^ of
which ;^4000 were payable in 1741, and ;£2500^^

1 Papers, IV. 712-713. « It/em, IV. 704.

• Belknap, III. 225.

*The council bore tbe brunt of tbe contest with the represen-
tatives, but it was probably reflecting the governor's wishes. This
often happened in colonial politics. See Greene, 87.

» Papers, IV. 716. ^ It/em, IV. 717, 822, 824,

f/dem, IV. 722-724, 732, 734.

• A copy of one of these bills may be found in Winsor, V. 174.

• Papers, IV. 724.

^In IdfM, V. 30, this issue appears as two issues, one of
£^poo and the other of ;f 2500. The date is erroneously stated 1 736.
Q 225

MONETARY HISTORY

in 1742. Thus Belcher nominally adhered to the
letter of his instructions ; but the taxes seem to
have been made payable in hemp, flax, and bar
iron, as well as in paper, so that they would not
suffice to call in all of the bills emitted.

The assembly now succeeded in securing the
passage of a bill for the issue of ;^3000 in order
to exchange old and worn bills.^ Not content
with this, efforts were made, upon various pretexts,
to issue ;£500, ;^iooo, and then £iSoo more
paper; but all of these seem to have failed.*
During 1737, bills to the amount of £g6s^ had
been burned ; so that the currency of the province
had received a net increase of £SSS7^ and now
equalled £26,g4S. In the following year, silver
rose to 28^. per ounce.^ In reviewmg this long
contest, Belknap justly concluded® that the real
reason why the representatives refused for so long
to supply the funds needed for the debts of the
province was "that they wanted emissions of paper
money, to be drawn in, at distant periods," which
was contrary to the instructions of the governor as
well as to his well-known principles.

In 1738, the legislature was not convened until
November. For once it seems that no propositions

1 Papers, IV. 732, 734. In 1738, it was reported that the £31000
had been exchanged and burned. Idemf V. 7.

a/fl5f/w. IV. 733, 734, 748, 750, 753, 829, 830, 831, 832.

«/fl5fw,IV. 718.

* This is ;f 6500 minus ;f 963. The ;f 3000 issued for exchanging
old bills would have made no addition to the currency.

« Belknap, III. 225. « Idem, II. 109.

226

COLONIAL ISSUES (i 709-1 739)

were made for the issue of more bills of credit. ^
The governor called the attention of the assembly
to the fact that the officials of Boston had arrested
counterfeiters who had a plate for manufacturing
bills like those emitted by New Hampshire in
1737.2 Other indications of the activity of coun-
terfeiters were not wanting,^ and a law was passed*
making the penalty for this offence "the pains
of death without benefit of clergy." The gov-
ernor and assembly received at this time a petition
from Rev. Hugh Adams, praying for relief. ^ He
stated that his nominal salary of ;^I04 was now
worth no more than £^6, on account of "the
altered prices of all necessaries for livelihood";
and asked that his stipend "be made good in full
value as really as in name," and that his parish be
required to make the payments punctually. Dur-
ing 1738, the records show that ;£4334 of cur-
rency was burned,^ so that the outstanding paper
now amounted to about ;^22,6ii.

During 1739, no additions were made to the
currency, and no bills were burned. In June of

1 See Papers, V. 1-9.

« Idem, V. 2. « Idem, V. 55-56.

^Identt 2, 4, 5, 8, 9. Cf. also Idem, V. 212. This law may be
found in Acts and Laws of New Hampshire, 1 71-172.

*This petition is a most curious one. See Belknap, III. 350-

358-

8 Papers, V. 7. At the same time ;f 3000 of old bills, exchanged
for the new issue authorized in 1737, were burned before the
assembly. This did not affect the amount of money in circulation,
and is neglected here. .

227

MONETARY HISTORY

this year, the House of Commons requested the
Privy Council to demand from each of the colonies
a statement of the amounts of bills of credit issued
and redeemed since 1700.^ In accordance with
this resolution, the secretary of New Hampshire
prepared a statement concerning the bills of credit
emitted by that province.* He said that some of
the records had been lost through the destruction
of his house by fire, and that the books of the
office in former times had not been kept " with a
due exactness." He stated that, as nearly as he
could ascertain, ;^56,384 of bills of credit had been
emitted by the province, of which ;^ 16,730^ were
issued upon loan. He estimated that all of these
bills had been retired except £io,S76 of the bills
issued for public expenses and "about" ;^2000
of those emitted upon loan; and stated that the
paper in circulation would all be retired by 1742.
This report will be found to differ very materi-
ally from the statements made in the preceding
pages, but the points of difference admit of a
partial explanation. According to the data given
by the writer, the emissions of new bills had
amounted to ;£44,8oo. The report of 1739 places
the total at ;£56,384; but this figure includes at
least some of the bills reissued,* which are excluded

^ 23 Journals of House of Commons, 379. * Papers, V. 45-46.

* In this sum he included the jf 15,000 issued in 17 17, and the
£1730 loaned out in 17 14 and 1 7 16.

*Thus the report of 1739 expressly includes the £173/0 loan,
which was made by reissuing bills paid into the treasury. We have
a statement of the province accounts for the years between 1722 and
228

COLONIAL ISSUES (i 709-1 739)

from the writer's statement.^ The total amount of
currency reissued from 1709 to 1739 was £17,390.'^
Some of these bills must have been included,
besides the ;£i730 expressly mentioned, in the
total of j£s^f3^4 stated by the secretary. In the
second place, it will be remembered that the writer
placed the currency in circulation in 1739 at
£22,600;^ while the report of 1739 states that
the outstanding bills amounted to about ;^ 12, 5 76.
It is impossible to account for this difference. The
writer feels certain that his account of the bills
emitted and bills cancelled * is complete, and that

1740, in wbich ;fio76 and ;f700 reissued in 1729 are included.
Papers, V. 30. The report of 1739 undoubtedly includes other
reissues besides the jf 1730 expressly mentioned.

^ This method of procedure is simplest and most satisfactory.
By subtracting the bills destroyed from the new issues, from which
reissues are rigidly excluded, one can readily ascertain the amount
of currency outstanding.

2 This includes ;f7276 issued in 1711, 1712, 1715, 1716, 1725,
and 1729 in order to pay province expenses, as explained in previ-
ous paragraphs. It includes ;£'i730 issued on loan in 1714 and
1716; jCSSH issued in 1722 to exchange old bills; and ;^3000
issued for the same purpose in 1737.

* This is the difference between the ;f 44,800 of new emissions
and the ;£'22,i89 of such bills burned. The records show that
£499S of old bills was burned before 1729 in exchange for the
jf 5384 issued in 1 722, and that ;£'3000 was burned in 1 738 in ex-
change for the ;f3000 issued in 1737. But these transactions did
not alter the amount of currency in circulation, and therefore the
;^7998 of paper thus burned is not included in the amount subtracted
from the ;^44,8oo of new bills issued.

* Thus the list of bills burned, which the writer secured from the
records, is more complete than one found in a report of the treas-
urer in 1740. See Papers, V. 23-33.

229

MONETARY HISTORY

the report of 1739 is based upon data that were
not wholly accurate, as the secretary of the prov-
ince admitted.^

In 1739, William Douglass wrote' that the
" Publick Bills " of New Hampshire " are so much
counterfeited they scarce obtain a Currency." For
this reason, and on account of the instructions of
the governor, he said that the " outstanding Bills
of publick Credit, some on Funds of Taxes, some
on Loan, do not exceed ;^ 12,000, gradually to be
cancelled by December 1742/' It is possible that
Douglass secured his information from the same
person who prepared the report of 1739 for the
English authorities. He tells us finally that the
ordinary expenses of government for the province
of New Hampshire were £iSoo New England
currency. This gives us the basis for an interest-
ing comparison. The £,22,600 of currency in cir-
culation amounted to fifteen times the annual
public expenditures, so that the practice of receiv-
ing the bills in payment of taxes could do but little
to maintain the credit of the paper money.

This closes what we may call the first chapter
of New Hampshire's experience with a paper cur-
rency. The bills of credit had depreciated so that
the price of silver had risen from Zs, to 29$". 6d, per
ounce ;^ but the amount in circulation had been

1 Moreover, since the interference of tbe English authorities was
feared, the author of the report of 1739 had every inducement to
place the outstanding bills at the smallest possible figure.

^ Douglass, Discourse, 302-303. * Belknap, III. 225.

230

COLONIAL ISSUES (i 709-1 739)

diminished from ;£26, 777 in 1730 to ;£22,6ii in
1739, and the situation would improve if Belcher's
firm policy should be continued. Yet it must be
remembered that the results would have been much
worse than they actually were in 1739, if the legis-
lature had been able to consult its own wishes in
issuing paper. The policy of the house of repre-
sentatives had been manifested with sufficient
clearness, and the evident desire of this branch
of the legislature was to provide for all province
expenses by the emission of bills of credit that
were supposed to be redeemed by taxes after long
periods of ten or twelve years. Such a policy
would surely lead to bankruptcy unless restrained
by the governor and council, especially since, after
the bills had once been emitted, the assembly was
extremely disinclined to enforce the withdrawal of
the paper at the end of the periods contemplated
by the law.

331

CHAPTER II

COLONIAL ISSUES (i 740-1 774)

In 1740, news reached the provuice that Eng-
land had declared war against Spain. Governor
Belcher called the assembly together, and urged
that Fort William and Mary should be strength-
ened.^ The house of representatives replied that
this could not be done ^ unless bills of credit could
be issued and made to run beyond the year
1742. In a few days the governor dissolved the
assembly, after it had become evident that he
could not secure the passage of such measures as
he desired.^ It was reported at this time that a
considerable part of the ;^ 15,000 loan of 171 7 was
still outstanding.* In August, another session was
called, in order to provide for the equipment of
soldiers to take part in an expedition against the
West Indies. After some recrimination it was
voted to issue ;£2000 for this purpose, and the
bills were to be redeemed at the end of 1 742 by
taxes payable in paper money, flax, hemp, and bar
iron.^ During 1740, bills of credit were burned to

1 Papers, V. 1 1. • Idem, V. 28, 67.

2 Idem, v. 18-19. * Idem, V. 28.

* Idem, V. 52, 70, 71. Winsor gives a copy of one of these bills.
Winsor, v. 175. In Papers, V. 30, the bills issued in 1740 are

232

COLONIAL ISSUES (i 740-1 774)

the amount of £1197^ so that the currency of
New Hampshire now stood at ;^23,4I4.2

The printed records for 1741 are exceedingly
meagre,^ but no mention is made of new emissions
of paper. Governor Belcher at this time sub-
mitted a message* complaining that he had lost
;^3240 since 1730 through depreciation of the
bills in which his salary was paid. The representa-
tives replied ^ that the law fixing the salary made
no provision for changes in the value of the bills,
and that the governor would have to be content
with what he was then receiving.

Late in 1741, Governor Belcher had been suc-
ceeded by Benning Wentworth, who convened the
legislature in January, 1742.^ The new governor
congratulated ^ the assembly because " the Publick
faith has been so Religiously kept in regard to
past Emissions of paper money," and because
" all former Emissions will be complyed with hi
the yeare 1742." He also asked to have his salary
fixed in such a manner that " it may not be liable

placed at £2*joo. This sum may include the £^QO mentioned in
Ideniy V. 72, 77. But, as the records do not show that this passed
the council, I shall omit it from the list of issues.
1 Papers, V. 17, 18, 23.

* This allows for the £2000 emitted and the ;£ii97 cancelled in
1740. If the additional jf 700, mentioned in a previous note, was
actually emitted, then the currency would amount to jf 24,1 14.

• See Papers, V. 73-86.

* Idem, V. 84-85. 6 Idem, V. 85.

• On Wentworth's relations with the legislature at this time, see
Belknap, II. 183-186. "^ Papers, V. 136.

233

MONETARY HISTORY

to vary or subject to depreciate by the uncertain
value of paper Currency/' which is an indication
that his faith in the good intentions of the assem-
bly was not over strong. The representatives pro-
ceeded to request that Wentworth should inform
them concerning the nature of his instructions on
the subject of issuing bills of credit,^ and soon had
under way a bill for emitting ;£6ooo.* The gov-
ernor insisted that he could not assent to any such
measure unless ample provision was made for his
support ; ^ and a bargain was finally arranged
upon this basis, Wentworth receiving a present of
;£i25, and an annual grant of £2SO out of the
interest of the money that was soon issued upon
loan.* As a result, we find him assuring the legis-
lature of his "hearty concurrence" in any meas-
ure that would "expedite" the emission of the loan
bank.*

The net result of the bargain concluded in 1742
was the issue of £4720 of paper money in order to
pay public expenses,® and the emission of ;£25,ooo
upon loan.^ Both of these issues were to be of a
new tenor, and were declared equal to proclama-
tion money, i.e. silver at a rating of 6^. 8d. per
ounce. The bills of former emissions, now to be
known as old tenor, were to pass in all payments

1 Papers, V. 139, 141, 146. ^/dem, V. 151, 152.

^/dem, v. 142, 143, 145, 150. */fl5f/w, V. 152, 153, 155.

^Idem, V. 159, 212, 284, 619, 654.

'^ Idem^ v. 160, 161, 164, 208-213, 620, 654.

234

COLONIAL ISSUES (1740-17 74)

at one-fourth of the value of the new money.^
Both of these acts received the approval of the
English authorities.* The assembly desired to
authorize another issue of ;£i28o, but to this the
governor objected.^ During this year the bills
that were cancelled amounted* to ;£i332 ; so that
;£2 2,082 of old tenor bills probably remained in
circulation. At the nominal rating of 4 for i,
these would be equivalent to £S5^o in bills of the
new tenor.

In 1743, the legislature of Massachusetts pro-
posed^ to the other New England colonies that
commissioners should be sent to Worcester to
devise a plan for common action in retiring the
outstanding bills of credit. We do not know,
however, whether such a conference ever occurred.
The ;£25,CKX) loan authorized in 1742 was not
placed in circulation until after the assent of the
home government was received in August of the
following year.* Silver soon rose^ from a price
of 28^. in the middle of the former year to 32^. per
ounce at the close of the latter. When the legis-
lature met in May, 1743, the governor, being under
the impression that the taxes of the previous year
would call in all of the old emissions, urged that
" a nice Enquiry '* be made as to the exact condi-

1 Papers, V. 143, 145, 157, 159, 615, 620.

*/dem, v. 654. A copy of one of these bflls is giyen by
Bryant and Gay, III. 133. *Felt, 115.

• Papers, V. 159, 616, 629. • Papers, V. 94, 654.

*/dem, V. 161, 165, 181, 182. "^ Belknap, III. 225.

MONETARY HISTORY

tion of the old currency.^ He also said that pro-
vision had been made for " exchanging all money
of the old Tenor," if the taxes levied for sinking the
old bills should prove insufficient* During 1743,
bills of credit were emitted to the amount of
;£i28o,^ and bills of old tenor amounting to £30S2
were burned;* so that the currency of the prov-
ince must have equalled ;£ 19,030 in old tenor
and ;£3 1,000 in new.^

In 1744, renewed military expenses were in-
curred, and the assembly clamored loudly for
further emissions of paper, demanding at one time
;£ 10,000 in a single issue.® In order to persuade
the governor to consent to further emissions, a
joint committee of the house and council was
appointed ^ to draw up resolutions showing the

1 Papers, V. 652.

'This contradicts his first statement that the taxes for 1742
would call in all of the bills. He evidently doubted whether they
would suffice for that purpose.

•These were in two issues of £y)0 and ;f930. Papers, V. 209,
212, 670, 672. They seem to have been the ;f 1280 of blank bills
which the legislature wished to emit in 1743. /</<?;», V. 159, 616,
629. This made ;^6ooo new tenor issued for province expenses.
See Idem, VI. 223. ^Idem, V. 204.

•The jf 19,030 old tenor was equal to £47 $7 ^" "®^* There-
fore the whole amount of currency was equivalent to ;f 35,75 7 in
new tenor bills, or 1119,190. The population of the province at
this time could not have been far from 20,000. In 1749 or 1750
Douglass estimated it at 24,000. Summary, II. 180.

» Papers, V. 239, 240, 248, 249, 720.

"^/dgm, v. 238-239. Wentworth seemed at one time to be
about to consent to the issue of bills in violation of his instructions.
Idem, v. 242-243.

236

COLONIAL ISSUES (1740-1774)

necessity for such action. In the end, Wentworth
consented to an act providing for the issue of
;^5500, on the condition that it should not go into
operation until the consent of the English author-
ities should be secured.^ The writer is unable to
find whether such consent was secured and the
bills actually emitted. Wentworth had positive
instructions not to consent to the emission of
more than ;^6oc>o of bills for the expenses of gov-
ernment,^ and brought these out in a controversy
in 1 745, during which there was no mention of a
violation of instructions in the previous year.
Moreover, no issue of ;^5500 is included in a state-
ment prepared by the assembly in 1753 concern-
ing the paper issued during the previous decade.^
For these reasons the proposed emission will not
be included in the writer's list of actual issues.

During 1744, bills of the new tenor to the
amount of ;£ii22 were burned by the assembly,*
so that the new tenor money was reduced to
;£29,878.^ Of the old tenor bills, £7J\ was can-
celled in this year.® It will be well at this point
to complete the story of the bills of credit of the
old emissions. The reader will remember that
the writer's figures showed that ;£22,6ii of old
tenor money was in circulation in 1739, and

1 Papers, V. 236, 251, 252, 551, 716, 722.

* Idem, v. 279.

«/</^^«, VI. 223-226. ^ Idem, V,2$o,

^This is on the assumption that no bills were issued in 1744.

•Papers, v. 250.

237

MONETARY HISTORY

;£i9,030 at the end of 1743; whereas the report
of 1739 placed the outstanding bills at only
;£i2,576, and Governor Wentworth thought that
all the bills would be brought in by the taxes of
the year 1742. The records show that, between
1744 and 1754, inclusive, bills of credit of the old
tenor were burned to the amount of ;£2i,30i.^
This is a complete demonstration that the writer
has not overstated the amount of old currency out-
standing in 1739 and 1743.

At the opening of 1745, the price of silver was
35^. per ounce, and it steadily increased as the
year progressed.^ Preparations for the expedition
against Louisbourg were now under way,^ and
New Hampshire was called upon to furnish her
quota of men. In order to raise funds, the repre-
sentatives proposed* to issue ;^ 10,000 of bills which
should be redeemed by taxes in ten annual instal-
ments beginning in 1755. The council objected
that the bill did not appropriate all of the money

iThe list is as foUows : 1744, £*ni ; 1746, £\z^*j ; 1747,
£MI\ 1748, ;f 342; I753,;f6733; 1754. jfu^S^S- See Papers,
v. 250, 416, 526, 919, VL 221, 222, 250, 251, 252, 256, 257, 258,
259, 261. The writer's figures showed that jf 19,030 was outstand-
ing at the end of 1743. The fact that a larger sum than this was
actually burned between 1744 and 1754 may have been due to the
presence of counferfeit bills. If it is true that the issues of 1740
amounted to jf 2700, as stated in Papers, V. 30, instead of ;f 2000,
as given in the writer's statement, then ;^700 of thb excess of bills
cancelled is accounted for.

3 Belknap, III. 225.

« See Winsor, V. 410 ; Belknap, II. 198-200.

* Papers, V. 276-277 ; Belknap, II. 201.
238

COLONIAL ISSUES (1740-1774)

issued to the purpose of defraying the charges of
the expedition, and that the taxes for redeeming
the bills ought not to be postponed longer than
1751.^ Then the governor sent the assembly the
text of one of his instructions,^ by which he was
ordered to consent to the emission of no more
than j£6ooo of bills of credit. Wentworth sought
counsel from Governor Shirley, of Massachusetts,
and was advised to consent to the issue of paper
without waiting for the royal approval, because
the great emergency would justify his conduct
in the eyes of the home government.^ After con-
siderable wrangling concerning the terms of the
bill,* an act was finally passed^ providing that
;^i3,ocx) should be emitted, and that these bills
should be redeemed by taxes between 1751 and
1760.^

The Louisbourg expedition proved more expen-
sive than was expected, and more money was soon
needed. In July of the same year, ;£6cxx) was
issued.^ Then, in September, the house of rep-
resentatives voted to emit ;^ 12,000 more, but this
time the council refused to assent to such a meas-
ure.® In October, however, the governor consented

1 Papers, V. 278. « Idgm, V. 279. • Idem, V. 933.

* Idem, V. 281, 282, 284-291.

* Idem, v. 290, 291, 296, 742 ; Belknap, II. 201-202 ; Barstow,

165.

•In the address of 1753, the date of this issue is given as Febru-
ary, 1744. The year of 1744-45 is undoubtedly meant.
7 Papers, V. 334, 33^, 338» 348, 756, 757, 763, 767.
•/^m, v. 377, 380, 773.

239

MONETARY HISTORY

to an issue of ;^8ooo that was to be redeemed by
taxes in the four years following 1762.^ This last
act contained a pledge that, if England should
reimburse the colony for the expenses incurred
in the last undertaking, the money thus granted
should "be put into ye Treasury as a fund for
the immediate calling in and sinking said Bills."
The three emissions of 1745 aggregated £,27,000?
and the new tenor money now in circulation
amounted to ;^56,878 ; ^ so that the price of silver
rose to 37J. per ounce.*

In 1746, new expeditions were projected.^ Early
in the spring it was proposed to issue ;£iSOO of
new bills which should be redeemed out of the
interest received on the ;£2 5,000 loan,^ but the
records do not show that such action was
authorized. In June it was decided to issue
;^6o,ooo for the purpose of defraying the ex-
penses of an expedition against Canada; and the
assembly pledged that at its next meeting provision
would be made for the redemption of these bills.^
This enormous emission more than doubled the

1 Papers, V. 383, 384, 387, 405, 776, 779.

* These are all mentioned in the report of 1753, in Idem, VI.
223-226.

*No bills of the new tenor were burned in this year. The
;£"56,878 now in circulation amounted to seven or eight dollars per
capita.

* Belknap, III. 225.
^ Idem, II. 226-228.

* Papers, V. 407, 412.

^ Idem, v. 432, 433, 813, 817, 821, VI. 224-225.
240

COLONIAL ISSUES (1740-1774)

quantity of new tenor money in circulation,^ and
the price of silver quickly jumped from 37^. to 5ar.
per ounce.* In December, Governor Wentworth
was constrained to request the legislature to " make
ample satisfaction for the Deficiency " in his " sal-
lary" caused by "the Depreciating of the Paper
currency."^ Without much delay an act was
passed* granting Wentworth ;^ 1000 for this pur-
pose, which shows that the governor's complacency
in allowing bills of credit to be issued secured for a
time the good will of the assembly.

The £60yOOO emitted in 1746 seems to have
been left without any provision for its redemption
except that the legislature promised ^ that, if Par-
liament should reimburse the province for its
expenses, the money thus granted should be
applied to sinking the bills. During 1747, the
currency continued to fall in value ; and the price
of silver rose from 53^. to 60$". per ounce,^ as the
full effects of the ;£6o,ooo emission began to be
felt. Thus silver had risen from 27^., at the be-
ginning of Wentworth*s administration in 1742, to
60$". in the year 1747. In the face of this decline
of the credit of the paper, the legislature proceeded
to devise schemes for emitting more currency,^ and

1 No bills of the new tenor were burned this year, and the cur-
rency must have increased to ;f 116,878, or ^^5389,000, — more than
|i6 per capita. * Ideniy V. 855.

» Belknap, III. 225. * Idem, V. 435.

• Papers, V. 846. • Belknap, III. 225.

' Two projects were for emissions that should be redeemed solely
R 241

MONETARY HISTORY

finally authorized the governor to issue enough bills
to pay oflf the troops of the province.^

In 1742, when the bills of the new tenor were
emitted, an act was passed which provided that
the new currency should be accepted in all pay-
ments at 6s. 8d, for an ounce of silver, and that in
future years the value of the money should be
regulated by the assembly in the fall of each year.^
It was also enacted that a severe penalty should
be imposed upon any one who should ofifer to
receive the bills at a lower rating, or to pay a
premium for silver. In 1746, the judges of the
superior court seem to have rated the bills at less
than their nominal value, and in the following year
the house of representatives ordered all the courts
to adhere strictly to the rating established in 1742.^
Soon after this, an act was passed by the lower
house reaffirming the valuation established in
1742 for the bills of credit, but to this the council
objected.* During 1747, only ;^2iio of new tenor

out of funds that might be granted by Parliament. A third con-
templated the issue of ;f 4000 redeemable by taxes to be levied in
1761 and 1762. Papers, V. 546, 551, 556, 560, 561, 901.

^Papers, V. 562, 563, 901. I am unable to determine whether
any such bills were issued. They are not mentioned in the
address of 1753. Idtm, VI. 223-226. Therefore I shall omit
them.

*Idemf v. 620. The provisions of this act may be inferred from
the references in V. 501, 531, 554.

^ IdeMy v. 501-502. This was probably not accepted by the
council, otherwise the subsequent measures introduced into the
house would have been needless.

^Jditn, v. 531-532, 553-554.

242

COLONIAL ISSUES (i 740-1 774)

bills was burned,^ so that £1 14,778 of paper money
was still in circulation.*

In 1 748, it appears that the affairs of the £1 5,000
loan authorized in 171 7 were not all settled, and
the committee in charge of this business was
ordered to hasten the adjustment of its accounts.^
Early in this year Governor Wentworth received
from Governor Shirley a communication* stating
that Massachusetts was considering a plan for
retiring its outstanding bills of credit by means of
the funds that Parliament intended to grant the
colony in return for its expenditures during the
late war. Shirley desired to have a conference
appointed, by which all the New England prov-
inces might devise "one general method or
scheme"; but New Hampshire was not willing
to consider the subject of redeeming its currency
at this time.^

Douglass estimated the amount of New Hamp-
shire currency outstanding in 1748 at ;£4SO,ooo
"of old tenor value." ^ Since the ratio of old
tenor to new was four to one, this sum would

^ Papers, V. 525.

^This makes no allowance for the possible issue in 1747, con-
cerning which the author was unable to reach a definite conclusion.

« Papers, v. 585.

*/.i5r»i, v. 565-569.

*See Felt, 1 19-120.

' Summary, II. 528. Douglass converted the new tenor bills of
New Hampshire into old tenor in order to have a common basis
for comparison of New Hampshire's issues with those of other
colonies.

243

MONETARY HISTORY

equal ;^i 12,500 in new tenor. The writer's
figures show that ;^922 of new tenor bills were
cancelled during 1748,^ so that the currency of the
province was reduced to ;£ 11 3,8 56, an amount
which agrees very closely with the estimate given
by Douglass. This was a large enough figure to
justify the remark of Douglass* that New Hamp-
shire was "always inclinable to a depreciating
fraudulent paper currency." In 1748, the price of
silver fluctuated from 54J. to 58^. per ounce.^

In 1749, the governor and assembly became
involved in a bitter dispute over the question of
the representation of certain towns and the elec-
tion of a speaker.* This lasted for several years
and prevented all legislation ; so th^t the represent-
atives were " incapable of augmenting their paper
currency," to use the words of Douglass.^ By this
time the London agent of New Hampshire had
received about ;£30,ooo of money granted by
Parliament to reimburse the province for its
expenses in the late war. This money could not
be invested because the agent had no authority to
do so, and the province lost about £^QO sterling
of interest money during each year that the
quarrel lasted.® Since the price of silver now

1 Papers, V. 586. ^ Summary, II. 193.

8 Belknap, III. 225.

*0n this quarrel see Papers, VI. 69-126; Belknap, II. 267-276;
Douglass, Summary, II. 35-38; Greene, 151.

^ Summary, II. 193.

•Belknap, II. 273. The governor, of course, attributed the
blame to the assembly. Papers, VI. 125.

244

COLONIAL ISSUES (i 740-1 774)

varied from 5df. to 60s, in old tenor money, the
bills of the new tenor must have exchanged for
silver at about iSs. in paper for one ounce of that
metal.^ At this rate of exchange, the money
granted by England would have been sufficient to
retire a little less than ;^90,ooo of the outstanding
new tenor bills,^ and the province could easily
have withdrawn the rest by its regular taxes.

In 1750, Massachusetts prohibited the further
circulation within her borders of any bills of credit
issued by New Hampshire, Connecticut, and
Rhode Island.^ In the following year Parliament
passed an act that forbade * any of the New Eng-
land colonies to emit bills of credit and make them
a legal tender. At length, in September, 1752,
the dispute between the governor and assembly was
terminated, and the business of law-making was
resumed.* It was decided ^ to have the reimburse-
ment money invested in public stocks, and to
apply the interest realized from this investment to
the redemption of the paper money.^ As no bills
had been retired since 1748, and the currency
amounted to ;^i 13,856, this could not be considered
a violent measure of contraction.

In 1753, the legislative mill was once more in

1 Old tenor was worth one-fourth of the new tenor.
*The sterling rating of silver was $s. 2d,

• Felt, Massachusetts Currency, 122.

* Stat, at Large, 24 George II. c. 53.

* See Belknap, II. 276-277; Papers, VI. 127 et seq.

• Papers, VI. 143, 147.
^ Idem, VI. 227, 273.

«4S

MONETARY HISTORY

working order and ready for further experiments
with the paper currency. The imperial statute of
1751 had required that all outstanding bills should
be punctually retired at the times appointed in the
existing laws, and that none of them should be
reissued. This called forth a protest from the
legislature of the province, and an address to the
King was adopted upon the subject.^ In this
the members protested that the province was
unable to redeem its paper as rapidly as required
by Parliament, and petitioned that the time for
retiring the ;^6o,ooo issued for the Canada expe-
dition should be extended to 1766. They stated
also that the taxes laid for redeeming bills of
former emissions amounted to ;^38oo annually.
The assembly voted ^ at this session to reissue^
;^ 1 2, 500 of bills that were then in the treasury.
This money was to be used for defraying debts that
had been accumulating during the late interregnum,
and taxes were levied to call in the bills in five
annual instalments, beginning in January, 1754.
The new tenor bills cancelled in this year amounted
to only ;^I93,* so that the currency stood at
;^i 13,663.

During 1754, the lower house of the legislature
seems to have desired to get £6000 of the bills

1 Papers, VI. 223-226.

2 Idenif VI. 210, 211, 212, 225.

* The discussions on p. 211 seem to make it clear that this was
a reissue, although on p. 225 it seems to be mentioned as a new
issue. * Idgm^ VI. 285.

246

COLONIAL ISSUES (i 740-1 774)

out of the treasury.^ The assembly proceeded to
draw upon the interest of the funds in London in
order to secure money to defray current expenses,^
but levied taxes that were intended to retire an
equivalent amount of currency. At this time the
bills of the ;£2 5,000 loan began to be cancelled,
and the whole amount of new tenor money burned
in the course of the year was ;£i4,i32.^ This left
;^99,53i of new tenor bills in circulation. The
province now reverted to the old practice of
receiving commodities in payment of taxes,*
although its paper currency was large enough to
depreciate to only one-third of its original value.
For the year 1754 twenty different commodities
were made receivable at fixed ratings, and the
practice was continued for a dozen years longer.^
The confusion in which the paper money had
involved the province was increased by the unusual
activity displayed at this time by those persons who
were engaged in manufacturing counterfeit bills.^
In 175 s, counterfeiters who were operating with
New Hampshire money were arrested in Rhode
Island.

In January, 175 5, preparations were commenced

^ I assume that this was the purpose of the act for granting
;^6ooo mentioned in Papers, VI. 285.
» Idem, VI. 285, 334.

• Idem, VI. 270, 271, 272, 273, 274.

• See Idem, V. 622, 684, VI. 151, 274.

« Idem, VI. 378, 516, 591, 669-670, 712, 751, 870, VII. 39, 80,
107.

• Idem, VI. 14, 20, 28, 338, 35«-353» 372, 417, 453, 457, 641,

247

MONETARY HISTORY

by Shirley for an attack upon Crown Point,^ and
New Hampshire was called upon for her quota of
men.* The imperial statute of 1751 had expressly
provided* that paper money might be issued
"upon sudden and extraordinary emergencies of
government," and Governor Wentworth finally
assented to the emission of ;^40,ooo of new cur-
rency in order to meet the expense of this expedi-
tion.* These Crown Point bills were issued at a
rating of fifteen shillings of paper ^ for one " Span-
ish miird Dollar," ® so that they were practically
a currency of a new tenor ; and they were to be
redeemed by taxes at the end of reasonably short
periods.^ Yet they depreciated so rapidly that
silver rose from 60s. to /or. per ounce in old tenor
currency during the course of the year,* and the

1 See Winsor, V. 502.

2 Papers, V. 355-357-

* Stat at Large, 24 George II. c. 54, sec. 4.

* This was in two issues of ;f 30,000 and ;f 10,000. Papers, VI.
368, 376, 425. On these emissions see Belknap, II. 307; Hildreth,
II. 450; Winsor, V. 590-591. A copy of one of these bills may be
found in the work last mentioned.

* This was 3J times the sterling value of the Spanish dollar,
which was worth but 4J. 6d. At this valuation an ounce of silver,
worth 5 J. 2d, sterling, would be rated at a little less than lys, ^d. in
new tenor.

® Thus the bill for five shillings, of which a copy is given by
Winsor, is declared equal to one-third of a dollar. Winsor, V. 590.
Cf. Belknap, II. 307.

7 Thus the ;f 10,000 issued in September was to be redeemed in
1760. Papers, VI. 425.

® Belknap, III. 225. When bills of exchange were drawn in this
year, the rate of exchange was at first ;f 3.25 Crown Point money
248

COLONIAL ISSUES (1740-1774)

pay of the soldiers had to be raised about eleven
per cent^ The law of 1751 had absolutely for-
bidden any province to make bills of credit a legal
tender ; ^ and, therefore, the Crown Point bills were
made receivable merely at the treasury of the
province.^

Naturally enough, no old currency was cancelled
during 1755; indeed, the records show that no
more bills were burned until 1758. Governor
Wentworth found that the paper money was use-
less for expenses incurred outside the province,*
and was hard pressed to secure sterling money for
such purposes. From time to time the assembly
found itself in need of an exportable currency, and
drew upon the funds invested in London. Thus
during 1755 and 1756, bills of exchange were drawn
for ;£295o sterling; but in each case provision
was made for retiring what was deemed an equiva-
lent amount of provincial currency.^ In 1756,
Wentworth arranged^ to borrow ;£3000 sterling
from Governor Shirley of Massachusetts. Late in
175 s, word was received from the governor of
Connecticut that that province had outlawed all

for £1 sterling; and later in the year it rose to £^.ys ^o' £^ step
ling. Papers, VI. 376, 428.

1 Belknap, II. 307. The pay was raised from ;f 13.10 to £i^.

* Stat, at Large, 24 George II. c. 54, sec. 7.

• See copy of bill given by Winsor.

^ See his message of 1756. Papers, VI. 487.
^/dem, VI. 376, 385, 410, 419, 428, 434, 435, 486. Besides
these sums, ;f 300 was loaned at interest Idem, VI. 339.
•/^/w, VI. 487.

249

MONETARY HISTORY

bills issued by New Hampshire, and had prohib^
ited them from being received in any payments
whatsoever.^

In 1756, renewed efforts to raise troops were
called for, and jC3S,7SO of new bills was printed
from the plates used in the previous year.^ These
were to be redeemed by taxes levied in 1759 and
1761 ; and it was pledged that any money that
should be granted by the King to reimburse the
province for its expenses should be an additional
fund for sinking the bills.* The new money was
to have the same nominal value as that issued the
previous year, but silver continued to rise in price
until it reached lOOi^. per ounce.* As a result,
the pay of the soldiers had to be raised from fifteen
to eighteen pounds,^ and the governor requested
the assembly to make good the depreciation of his
salary.^

In 1757, more men had to be raised; and the
governor, although fearing ^ " bad consequences,"

1 Papers, V. 446.

^Idgm, VI. 503, 516, 520. This was in two issues of £310,000
and ;£^5750. The latter was made from blank bills printed the
previous year. Idem, VI. 516, 531.

* The text of this act may be found in Papers, VI. 506-508.

^ Belknap, III. 225. Since the Crown Point money was given
a nominal rating of ^^ times the value of sterling, the nominal
value of silver in bills of the new tenor was nearly 17^. 3d, In
bills of old tenor the price of silver would be four times as much,
or 69J. per ounce. The difference between 69 and lOO shillings
represents the depreciation of the new money.

6 Belknap, II. 307. « Papers, VI. 543.

■^ See his message. Id^m, VI. 565.
250

COLONIAL ISSUES (1740-1774)

felt obliged to consent to an issue of ;^20,ooo of
additional currency.^ This was to be retired by
taxes payable in 1761 and 1762, and any reimburse-
ment money that might be received from the King
was pledged as a second fund for its redemption.
None of the ;^99,53i of new tenor bills outstanding
in 1754 had been retired, and £9S,7SO of new
currency had been issued in 1755, 1756, and 1757.
The province had, therefore, about ;^i95,28o of
currency in 1757, while its population probably
did not exceed 55,000.^ The price of silver, there-
fore, increased to nor., and this made it necessary
to raise the pay of the troops for a third time.*

In 1758, ;^20,5oo of additional paper was
emitted,* and bills to the amount of ;^3536 were
burned.^ The result was a net increase of ;^ 16,964
in the currency of the province, while silver rose
to 1205. per ounce.® In 1756, a second grant of
money, amounting to ;£8ooo sterling, had been
received from England and brought to this coun-
try ;^ while in 1758 it was decided to draw upon
the funds in London for ;^2000.* The sum thus
drawn was to be made good by a tax of ;^i2,5oo,
payable in the Canada bills issued in 1746, which is

1 Papers, VI. 569-571.

*For 1754, Mr. Bancroft estimated the population at 50,000
whites and a few blacks. Bancroft, II. 389-391.

• Belknap, II. 307, III. 225.

• Papers, VI. 663, 665. The printed records give no information
concerning the character of this issue.

« Idem, VI. 640, 652. "^ Papers, VI. 543-545» 57^-579-

• Belknap, III. 225. « Idem, VI. 643-645, 654.

«5I

MONETARY HKTORY

a recognition of a depreciation of more than six to
one for the Canada money.^ In one of the gov-
ernor's messages of this year, the attention of the
legislature is directed to the old ;^i5,cxx> loan of
1 71 7. Wentworth urged that an act should be
passed "to oblige delinquent borrowers of the
;^ 1 5,000 Loan to make speedy payment of the
sums from them respectively due,'* * which showed
that fifty years had not proved long enough to
settle the accounts of this enterprise undertaken
by the province.

In 1759, the province issued ;£i 3,000, which
was declared to be of sterling value, and was to
be redeemed partly by bills of exchange drawn
upon the funds in England and partly by taxes
levied in 1762 and 1763;* and it is possible that
further emissions were authorized during the course
of this year.* These new bills differed from pre-
vious issues in that they were emitted at sterling
rates and supported by sterling funds.^ The prov-
ince now had a rich variety of different kinds of
money. In 1760, the assembly made another issue

1 These bills were issued at proclamatioii rates.

•Papers, v. 691.

'The amount authorized was jfiy/xxx Idem^ VI. 712. But
only ;f 13,000 was issued. Idem, VI. 774.

^Idem, VI. 717, 726. The editor of the Provincial Papers
saw fit to omit large parts of the Journals, so that it is impossible to
determine whether these were new issues or reissues of old bills.
See editor's note in VI. 320.

^Note the plan outlined in resolutions of the assembly in 1758.
Idem, VI. 679.

252

COLONIAL ISSUES (1740-1774)

of £iifOOO of sterling bills, bearing five per cent
interest, and redeemable from the proceeds of
taxes levied in 1763, 1764, and 1765.^ In 1761,
the heavy military expenses of the colony came to
an end with the emission of ;^20,ooo, probably in
sterling bills such as had been issued in the two
preceding years.*

Thus New Hampshire, in a period of seven
years, had issued no less than ;^i 16,250 of new
tenor money,* and at least ;^48,ooo of sterling
bills.* We have little information concerning
these sterling issues. But they seem to have
been hoarded to such an extent that they entered
into circulation less than the other bills,^ and they
were retired within a few years.® This fact, and
the uncertainty whether the printed records con-
tain a full account of the amounts of paper burned
by the assembly, will make it impossible to form

1 Papers, VI. 735, 744, 745, 752, 756, VII. 38.

* Idem, VI. 779,786.

•;f40,ooo in 1755; ;f35»750 i^ 1756; ;f 20,000 in 1757; and
^20,500 in 1758.

*The writer's figures are ;f 13,000 issued in 1759, ;f 15,000 issued
in 1760, and ;f 20,000 issued in 1761. It is possible, as stated in a
previous note, that there were two other issues or reissues in 1759,
concerning which the records offer no certain information.

^ Idem, VII. 65. The issue of 1760 certainly bore interest.
Since all these issues were secured in whole or in part by sterling
funds, they would naturally be hoarded to a considerable extent.

®Thus in 1760 the sterling bills were made receivable for prov-
ince rates. Idem^Nl, 733. By 1764 they had become so scarce
that other bills were made receivable for taxes that had been pay-
able originally in sterling bills. Idem, VII. 38.

253

MONETARY HISTORY

any very definite conclusions concerning the num-
ber of bills circulating in this or in subsequent
years. Belknap's tables show that the price of
silver ranged from I2af. to I4cxr. per ounce in old
tenor money between 1761 and 1763.^ In 1760,
Governor Wentworth stated that a silver dollar
exchanged for six pounds of the old tenor money ,^
a figure which agrees exactly with Belknap's quo-
tations for the ounce of silver for that year. In
1763, the assembly granted the governor ;^ 12 50 of
new tenor money, which was declared to be equiva-
lent to £,2QO sterling.^ This is a rate of £,6\ new
tenor for £,1 sterling, and would indicate a rate of
£y2^ old tenor for £,\ sterling.*

But the bills were no longer a legal tender, and
their ability to do harm was infinitely diminished.
In 1762, the legislature authorized the issue of
;£20,ooo of sterling bills,** of which ;^ 10,000 was
to be used for sinking the Louisbourg and Canada
bills emitted in 1745 and 1746. These old issues
had aggregated ;£87,ooo, and had sunk to less
than one-sixth the value of sterling,^ so that the
;£i 0,000 of sterling money would probably suffice

1 History, III. 225. « Papers, VI. 744. • Idem, VI. 878.

.*This would give a price of about 129J. old tenor for an ounce
of silver.

^ Idem, VI. 844. Of this amount, ;f 20,000 was not issued until
1763. Idem, VI. 869. Of the entire issue, ;f 10,000 was said to be
outstanding in 1765, when bills of exchange were drawn in order to
redeem it. Idem, VII. 65.

^ Idem, VI. 655. They were made payable for a tax in 1758
at a rate of 6} for I.

COLONIAL ISSUES (1740-17 74)

for exchanging all that now remained outstanding.
In 1763, the records show that currency of various
issues to the amount of ^^63,5 18 was burned.^

By 1764, the assembly seems to have learned
something from the experience of the last few
years, for we find ^ it expressing the opinion that
" another Emission of a paper currency would . . .
be fruitless and attended with mischievous conse-
quences well known to every considering person
the least acquainted with the circumstances of the
Province." In a message written in 1 765, Governor
Wentworth informed the legislature^ that all the
paper money then outstanding must be retired
"after the close of the year 1767"; and said that
the province had incurred dishonor in the past by
unreasonable neglect of its obligations. The as-
sembly expressed the hope "soon to see an End
of our Paper Currency."* Another sum of money
recently received from England was devoted to the
redemption of bills of credit;^ and a balance of
;£i 2,000, remaining in London to the credit of the
province, was devoted to the same purpose.^ It
was enacted, furthermore, that in the future no
bills of credit should be reissued when once
received at the treasury.^ By the aid of the
funds in England and the province taxes,^ large

1 Papers, VI. 859, 860. Some of these amounts were sterling bills.
* Idem, VII. 30. » /dgm, VII. 85. * fi/em, VII. 94.

» Idem, VII. 53. • lifem, VII. 52, 65. ' /dgm, VII. 58.

"Statistics of taxes imposed between 1753 and 1766 may be
found in ColL of N. H. Hist. Soc, III. 152.

255

MONETARY HISTORY

sums of paper were retired in 1764, 1766, and
1768.1

Mr. Belknap tells us that, at length, "sterling
money became the standard of all contracts";
while the paper passed " as a currency," its value
being regulated "by the price of silver and the
course of exchange." * The records enable us to
describe some of the details of this process, which
gradually resulted from the action of Parliament
in preventing the issue of more legal tender paper.
In 1765, the legislature passed an act^ "for ascer-
taining the value of coined silver and Gold," by
which the dollar was rated at six and the guinea at
twenty-eight shillings. These were the same rates
that had been established in Massachusetts in 1750.
The law of 1765 seems to have been disallowed by
the home government,* but the rating of six shil-
lings for a Spanish dollar continued to prevail in
the province.^ After the passage of this act, the
outstanding paper was made payable for taxes at
its " present value." ®

1 Papers, VII. 32, 117, 150, 193. These sums amount to ;^4i,9o8
nominal value, but some of them are expressed in sterling and
others in new tenor di^ominations. Hence the total just stated
does not represent the true value.

« Belknap, II. 307-308.

» Papers, VII. 77-78.

^ Idem J VII. 281. The assembly proceeded, nevertheless, to
grant supplies and levy taxes "according to the present current
value of money Passing among us." Idem, VII. 282.

^ Belknap says that a dollar was rated at six shillings from 1765-
1776. History, III. 225. Note especially Papers, VII. 282-283.

•/^^/«,VIL 80, 108.

256

COLONIAL ISSUES (1740^1774)

But the provision made for redeeming the paper
in 1768 did not prove sufficient to retire all of the
currency. Accordingly the treasurer was author-
ized ^ to receive in public dues " any further Sum
of said Bills that shall be offered," and the gov-
ernor urged that another " Fund " should be estab-
lished to redeem " the paper Bills of Credit of this
Province that are yet passing as a currency solely
upon the Reliance placed on the good faith of the
Province, altho* they have some time since expired
by law." 2 Early in 1770, ;£2092 of currency re-
ceived at the treasury was burned in the presence
of the legislature.* In December of the same year,
the governor urged the assembly to consider ways
and means of retiring the notes still outstand-
ing ; * and finally the treasurer of the province was
authorized to borrow the funds needed to redeem
the paper that still remained in the hands of citi-
zens.^ In 1 791, Belknap wrote :® "The year 1771
was also distinguished by the abolition of paper
currency. Silver and gold had been gradually
introduced, and the paper had for several years
been called in for taxes. The time limited for its
existence being now come, it totally disappeared."
In subsequent years small amounts of old bills
were presented at the treasury.^

1 Papers, VII. 152. « Idem, VII. 187.

» Idem, VII. 235-241. In 1769, £()O0O of old tenor bills had
been presented at the treasury. Idintt VII. 215-216.

* Idem, VII. 260. « Idem, VII. 263, 265.

• History, II. 355. "^ Papers, VII. 302, 319, 351,

S 857

MONETARY HISTORY

After New Hampshire ceased to issue bills of
credit, the use of treasury notes was introduced, as
had been the case in Massachusetts some years
earlier.^ We have seen that the sterling bills
issued in 1760 were really treasury notes, bearing
interest at five per cent and redeemable out of the
proceeds of taxes levied within a period of three or
four years. Eight years later it was proposed ^ to
authorize the treasurer " to issue Notes upon Inter-
est to be Redeemed by the Province"; and this
was actually done in 1770,^ when such notes were
issued in order to sink the paper then outstanding.
In 1 77 1, the treasurer was instructed to borrow
£iSoo for the use of the province,* probably in a
similar manner. Later in the same year the gov-
ernor informed the assembly that a grant of
£6oog sterling had been received from Parlia-
ment in reimbursement of expenses incurred in
the late war, and urged that this money be used
for meeting the deficiencies of former years.^ This
advice seems to have been followed by the passage
of an act ® which provided for the redemption of
treasury notes out of the proceeds of bills of
exchange drawn upon the funds in London. In
1774, other notes then outstanding were redeemed
with money that was in the treasury.^

1 See Hutchinson's account of the introduction of treasury notes
into Massachusetts. History, III. 9-10.

3 Papers, VH. 156. » Id^, VII. 288.

» /tfem, VII. 263, 265. • Idem, VII. 296.

* Idgm, VII. 283. f Idem, VII. 363.

258

COLONIAL ISSUES (i 740-1 774)

The experience of New Hampshire with her
colonial bills of credit resembles so closely that of
the other colonies, that it is unnecessary to present
a summary of the results that flowed from these
experiments with paper money. One thing, how-
ever, must impress the reader; and that is that,
however disastrous the effects of New Hampshire's
paper currency, the outcome would have been
infinitely worse if the inflationists had not been
controlled to a considerable extent by the royal
governors and the statute of 175 1. If these influ-
ences had not been felt, the issues of paper would
have been swollen to a veritable deluge. Thanks
to external pressure, the colony was finally re-
stored to a specie basis, and the amount- of paper
circulating in 1774 had probably become small.
In 1775, therefore, the standard of value in New
Hampshire was the Spanish dollar, at a rating of
six shillings; and ^^133 of the currency of the
province was equivalent to ^^loo sterling.^

^ Thus, in 1772, the legislature rated ;£^I40 provincial currency
equal to 100 guineas. With the guinea rated at 21 shillings, as was
the case after I7i7» this gives an exchange of £133*33 for ;f 100
sterling.

«59

CHAPTER III

REVOLUTIONARY ISSUES

During the twelve years of peace and security
that followed the close of the French and Indian
War, New Hampshire enjoyed greater prosperity
than had ever before fallen to her lot; and the
population of the province increased until it
amounted to about 82,000 souls in the year 1775.^
The abolition of paper money had made it possible
to introduce some degree of order into the finances
of the colony, but it cannot be said that New Hamp-
shire was prepared for the struggle that was now
before her.

The annual expenses of the colony did not ex-
ceed ;£3500 sterling,^ and taxation was proportion-
ately light. The principal source of income was a
tax on polls and estates,* which had existed in the
province from the earliest times* and amounted in

1 Belknap, III. 234.

2 Adam Smith states it at this figure. Smith, W. of N., II. 154.
In 1796, the expenses of the state were only $28,600, or ;f 6440. In
1730, the ordinary expenses were stated at ;f 1500 for the regular
charges of government and ;f 500 for contingencies. Coll. of N. H.
Hist. Soc, I. 230.

• For the methods of assessment see Acts of New Hampshire,
29, 121, 172, 177, 178. The proportions of the various townships
in a province tax in 1773 may be found in Papers, VII. 326-329.

* Note Papers, I. 448.

260

REVOLUTIONARY ISSUES

practice to an assessment of polls, real estate, and
live stock.^ Duties on imports ^ had met with little
favor in the colonial period of New Hampshire's
history,^ and the only important branch of revenue
besides the property and poll taxes was an excise
on all liquors sold in the province.* In 1772, this
was farmed out for ;£934.^ It seems always to
have been subject to a great amount of evasion.^
Powder, or tonnage, duties were imposed upon
foreign ships that entered the ports of the prov-
ince,^ but the receipts from this source were in-
significant.^

Thus the burden of taxation in New Hampshire
was extremely light, and the province had no
revenue system^ adequate to the necessities of a

iThus, in 1796, polls were rated at ;f 11,525, real estate at
;f 15,531, live stock at ;f 12,882, and all other items at £S77* State
Papers, Finance, I. 442.

2 The excise on all liquors sold in the province included all
imported liquors, and may have been referred to sometimes as
an impost. See Papers, VII. 129.

• Thusj in 1 716, the governor had recommended an impost,
" which every Government in ye world doth but we." Papers, III.
649. But the assembly replied that public charges could be met
most conveniently by a tax on persons and estates. Idem, III. 651.

• For the laws imposing the excise see Acts of N. H., 168-170.
« Papers, VII. 236, 247, 261, 303.

^Idem, III. 449, 554 ; VII. 139.

7 Acts of N. H., 64. 8 Hill, 18-23.

• With some allowances, the following passage, written in 1 730,
gives a correct picture of the provincial finances at the outbreak
of the Revolution: **The revenue arising within this province is
three hundred ninety and six pounds, by excise, which is appro-
priated towards the Governor's salary, and about three or four

261

MONETARY HISTORY

protracted war. Such an emergency was certain
to be made the occasion for renewed issues of
paper money, especially since the restraining in-
fluence of the royal governor was now removed.
Belknap states correctly the cause of the difficulties
experienced by the state in the struggle for inde-
pendence when he says : ^ " The war in which we
became involved with Britain, found us not des-
titute of resources, but unskilled in the art of
finance."

When the question of financial methods was
raised in 1775, the Provincial Congress resolved
that the war could not be carried on without paper
money; and wrote to the Continental Congress
urging that " some general plan for bills of credit "
should be adopted, or that the separate colonies
should adopt some common scheme for regulating
their own issues.^ Upon June 9,^ before any con-
tinental bills had been emitted. New Hampshire
decided to issue ;£ 10,050 of treasury notes. These
were not made a legal tender, but were receivable
at the provincial treasury. They were to be re-
deemed by taxes in 1776, 1777, and 1778. Before
the year closed, ;£30,ooo of additional notes was
emitted upon a similar plan.* Some of the bills

barrels of gun-powder, from the shipping, which is spent at the
fort. There is no other revenue but by tax on polls and estates."
Coll. of N. H. Hist. Soc., I. 230.

1 Belknap, II. 425. Cf. also pp. 425-434.

3 Papers, VII. 481, 483.

^Idern, VII. 5 10 ; Belknap, II. 396.

* Papers, VII. 549, 638 ; Belknap, II. 396.
262

REVOLUTIONARY ISSUES

thus issued bore interest,^ but this provision was
soon repealed.^ Persons who should counterfeit
the paper were to be punished as "Enemies to
their Country." »

Upon the whole, during this year, the province
seemed to desire to pursue a fairly conservative
course respecting its paper issues. These treasury
notes might not have depreciated if the war had
proved to be of short duration, and the legislature
did not at this time perpetrate wholesale robbery
under the guise of a tender law. The regular
province tax of ;£4000 was levied as usual,* and
it was undoubtedly intended to collect punctually
the taxes levied in order to redeem the paper. New
Hampshire, unlike some of the other colonies, did
not expect that the war could be carried on by the
issue of paper money unsupported by taxation.
Bartlett and Langdon, the delegates of the prov-
ince to the Continental Congress, warned their
constituents that ruin would result from " emitting
paper on every occasion " ; and regretted the course
of the legislature in making the third emission of
treasury notes.^ In December, New Hampshire
received from Congress a grant of $40,000 of con-
tinental money.®

In the opening days of 1776, a committee was
appointed to devise " a Plan for sinking the Colony
Debt," ^ but before the end of January it was de-

1 Papers, VII. 510, 550. * Idem^ VII. 551.

2 Idem, VII. 575. * Idem, VII. 609.
^Idem, VII. 615, 631. • Idem, VII. 681. ^ jr^em, VII. 706.

263

MONETARY HISTORY

cided to make a new issue of ;£20,(X)8.^ These
bills were declared a lawful tender " at the Treas-
ury and all other payments," and the taxes levied
for their redemption were not to be collected until
1783 and the three subsequent years. It is worth
while to call attention to the fact that the long
postponement of the time of redemption and the
first tender act came at the same time, and that
this was just the period when the first difficulties
were being encountered in maintaining the credit
of the paper currency in most of the states.^
Later in the year, the legislature made an attempt®
to secure gold and silver in exchange for its notes.
By June, it became necessary to pass more strin-
gent laws against counterfeiting.*

During the month last mentioned, $io,(XX) was
received from the federal treasury ; ^ but the prov-
ince voted to issue ;£3400 of fractional currency,^
which was made a tender in all payments. At
about the same time, the continental bills of credit
and those issued by other colonies were made a
legal tender,^ and a refusal of the paper currency
was made punishable by the forfeiture of the entire
debt.^ Thus, as Belknap says,® the "fraudulent

1 Papers, VIII. 51, 60, 61.

2 See Sumner, Financier, I. 48 et seq, 'Papers, VIII. 135, 176.
^Idem, VIII. 144, 184. For other references on counterfeiting

see VII. 551; VIII. 404»494» S^S* 5^6, 532, 54i» 54^, 554, 55^, S^a*
5^, 599f 600, 603, 694, 724. » Idem, VIII. 168.

• Idem, VIII. 169. ' Idem, VIII. 144.
B This is Belknap's statement. History, II. 426.

• Idem, II. 427,

264

REVOLUTIONARY ISSUES

debtor took advantage of the law to cheat his
creditor, under colour of justice " ; while hawkers
" who crept from obscurity and assumed the name
of merchants, could even increase their substance."

In July, the legislature of the newly formed
state of New Hampshire issued £20,160 of new
bills of credit ; ^ and two months later a state tax
of ;£25oo was levied upon polls and estates.*
Thus, at the end of 1776, the state had emitted
;^83,6i8 of paper currency,^ practically all of
which was in circulation;* while the volume of
continental money had swollen to $25,000,000.^
When the next year opened, this mass of paper
had depreciated to about two-thirds of its nominal
value.®

Price conventions and price regulations were
now in order, and New Hampshire was repre-
sented at a conference of the New England states,
which was held at Providence from December 25,
1776, to January 2, 1777.^ By this convention,
the rising prices of labor and commodities were
attributed to avarice, and a price tariff for all New

1 Papers, VIII. 190; Belknap, II. 467.
« Papers, VIII. 331. Cf. pp. I43-I44-

• These figures of the writer agree exactly with a statement that
may be found in Idem, VIII. 588.

* In January, 1776, the legislature voted to bum £1 128 of interest-
bearing treasury notes, but the records do not enable us to deter-
mine whether this was actually done. Idem, VIII. 56.

» Cf. Bullock, 130. « Idem, 133.

' Papers, VIII. 406-407; Sumner, Financier, I. 55; Bullock,
127; Hildreth, III. 181.

265

MONETARY HISTORY

England was prepared. Soon after this, New
Hampshire established a legal scale of prices;^
and, later on, laws were enacted against " monopoly
and extortion."* Congress now asked the states
to issue no more paper, and to withdraw the bills
already issued.^ New Hampshire voted to call
in "all the Bills of Credit issued in 1775 " ;* and,
in September, reorganized her system of taxation.^
It was decided also to ask from Congress a loan
sufficient to enable the state to withdraw all the
bills issued in 1775 and 1776.®

But in January, 1777, it was considered neces-
sary to authorize the treasurer to issue interest-
bearing notes to the amount of ;£30,ooo,^ so that
the currency was increased to about ;£iii,8cx).®
The depreciation of the paper continued until, by
the close of the year, the currency was worth but
one-third of its nominal value,^ and this, too, despite
the fact that other price conventions were con-
vened to remedy the evil.^^ In November, a tax

1 Papers, VIII. 455-456, 471. ^ Belknap, II. 427-428.

• Journals of Congress, Feb. 15, Nov. 22, 1777.

• Papers, VIII. 587. » Idem, VIII. 685.

• Idem, VIII. 588, 589. 7 Idem, VIII. 454, 465, 588.

' The total issues now amounted to ;f 113,568. But £l^AA of
the bills had been burned in April, 1777, so that no more than
;^i 1 1, 824 could have been in circulation. Idem, Will, 537. If
the £ii2S, mentioned in a previous note, was actually burned in
1776, the amount of outstanding bills would be slightly less than
;fiii,8oo.

» See official rates adopted in 1780. Idem, VIII. 858. Cf.
Bullock, 133.

10 Sumner, Financier, I. 60, 65; Hildrcth, III. 227, 232.
266

REVOLUTIONARY ISSUES

of £^o,ooo, payable " in all bills of this State/*
was levied ; and it was resolved that the ** paper
bills shall not be legal tender for debts after the
first day of March next ensuing."^ Finally, on
November 22, Congress made its first requisition
upon the states, and called upon New Hampshire
for $200,cxx>.2

At the opening of 1778, the paper money had
sunk to rather less than one-third of its nominal
value ;^ but, in March, the legislature voted to
issue ;£40,ooo of the treasurer's notes, payable in
four years with interest at six per cent.* At the
same time a tax of jQSo^ooo was levied,^ and
;£6o,0O0 of this amount was appropriated to the
payment of the requisition made by Congress in
the previous year. But the sum thus set aside for
federal purposes could not have been collected
at the appointed time, for New Hampshire made
its first payment into the federal treasiu'y at the
very end of 1779.^ At the close of 1778, the state
must have had about ;£ 15 1,000 of its paper out-
standing ; ^ and the depreciation of the paper cur-
rency had reduced its value to eleven or twelve
cents on the dollar.^

1 Papers, VIII. 722, 723, 724.

* Idem, VIII. 728-729; Journals of Congress, Nov. 22, 1777.
» Papers, VIII. 858; BuUock, 133. * Papers, VIII. 779.

* Identt VIII. 778-779. • State Papers, Finance, I. 59.
^ This includes the ;f 40,000 of treasurer's notes authorized in

March. During 1778, some bills were burned, but the printed rec-
ords do not enable us to determine the amount. Papers, VIII. 762.
8 Idem, VIIL 858; Bullock, 133.
267

MONETARY HISTORY

During 1779, the treasurer was authorized to
borrow ;£70,ooo for the use of the state.^ The
writer has been unable to ascertain the character
of the obligations issued at this time,^ but it seems
probable that the legislature was attempting to
find some financial device * that would prove less
dangerous than the emission of more bills of credit.
In 1780, a loan of ;£300,ooo, at interest, was au-
thorized.* From what we know of the manner in
which the interest-bearing certificates of the fed-
eral government found their way into circulation,*
it seems certain that New Hampshire's currency
must have been increased by the obligations issued
in 1779 ^^d ^780.

Congress made three requisitions for money
during 1779.* In March, New Hampshire levied
a tax for ;£250,cx)0 ; ^ and, in the following Decem-
ber and January, the state paid into the federal
treasury $600,000 of continental currency, for
which a credit of ^^54,5 12 in specie was received.®

1 Papers, VIII. 823, 842.

'The writer has had access only to the Provincial and State
Papers.

» The first of these two loans was to be contracted for one year,
and was to bear interest

* Papers, VIII. 868. Since the currency was then worth about
one cent on the dollar, this sum amounted to no more than ;f 30cx>
in specie.

^ E^.t note the manner in which the loan office certificates found
their way into circulation. Bolles, I. 260-261.

•Journals of Congress, Jan. 2, May 21, Oct. 6, 1779; Bullock,
158. "^ Papers, VUI. 823,

• State Papers, Finance, I. 59.

268

REVOLUTIONARY ISSUES

In March, 1780, $scx),cxx) more of the paper was
paid in by New Hampshire, and an additional
credit of jii2,5(X) was obtained.^ Thus, on these
early requisitions, the state furnished the federal
government with $i,300,cxx) of depreciated paper,
which was rated at $123,948 in specie.^

In 1780, when Congress passed the 40 for i
act,^ New Hampshire voted to redeem its quota
of the continental bills and to repeal its tender
acts.* Within eighteen months the state paid into
the federal treasury $5,2CX),ooo of continental
paper, the whole amount of its quota, for which a
credit of jii30,(XX) in specie was received.^ Ham-
ilton's report of 1790 leads us to infer that the
state issued $145,000 of bills of the new tenor, in
place of the old money turned over to the federal
authorities.® In April, 1780, a table of deprecia-

^ State Papers, Finance, I. 59.

* This was more than its real value, since the tables of deprecia-
tion established by Congress did not tell the whole truth. Bullock,
132.

* Journals of Congress, March 18, 1780; Finances of the United
States, 136-138. This act called upon the states for taxes to re-
deem the continental money, which was declared to be worth only
one-fortieth of its face value. When the old money was paid in,
bills of a new tenor were to be issued to an amount not exceeding
one-twentieth of the face value of the old emissions, ** on the funds
of individual states." Six-tenths of the new bills were to be at the
disposal of the states, and the rest were to be *< subject to the orders
ofthe United States."

* Papers, VIII. 856.

•State Papers, Finance, I. 58.

* This states that the bills of the new tenor issued on the funds
of New Hampshire, and appropriated to the use of the United

269

MONETARY HISTORY

tion was adopted for use in the settlement of army
accounts.^

The old currency now disappeared from circula-
tion. In August, 1 78 1, the state imposed a tax
of |! 1 00,000, payable in "bills of the new emis-
sion."* A month later an act was passed^ "for
making Gold and Silver a Tender for all Debts "
and for settling the depreciation of the paper cur-
rency. This rated the dollar at six shillings.*
Early in 1782, the treasurer was authorized "to
hire ;f 20,000 in specie, and to give Notes on
Interest for any sums demanded of him by virtue
of an order from the President." * This was prob-
ably the same plan that was followed in the loans
of 1779 and 1780. In June, Robert Morris's notes
and the bills issued by the Bank of the United
States were made receivable for all taxes as the
equivalent of specie.*

New Hampshire had become dissatisfied with
the apportionment of her quota of the requisitions,
and claimed that she was made to bear more than
her just share of the public burdens.^ For this
cause, or for some other, her compliance with the
financial demands of Congress now became partial
and reluctant. From 1781 to 1788, the state paid

States, amounted to |(58/xx). This was four-tenths of the total.
State Papers, Finance, I. 58. See resolutions adopted in 1780.
Papers, VIII. 876-877.

1 Papers, VIII. 858. ^Idem, VIII. 913.

« Idem. , * Dip. Corr. of Rev., XII. 91.

» Papers, VIII. 931. • Idem, VIII. 945.

''Journals of Congress, April i, 1782.
270

REVOLUTIONARY ISSUES

into the federal treasury $35,630 in specie, and
$86,474 in indents, leaving unpaid balances of
$216,625 in specie and $253,146 in indents.^

The Revolution had left New Hampshire with
a debt that was considered a heavy burden. One
estimate, probably unreliable, places it at $500,000
in 1784.^ In 1782, it was decided to allow holders
of the obligations of the state to bring them to the
treasury and have them liquidated according to the
legal scale of depreciation.^ When this should be
done, the treasurer was instructed to issue specie
certificates for the principal of the debts and for
accrued interest. In the course of six or eight
years a considerable part of the indebtedness was
paid off,* so that in 1790 the remaining debt
was estimated at $300,000.^ Of this, $282,595
was finally assumed by the United States.^

New Hampshire did not escape the paper-money
mania that raged in so many of the states in 1785
and 1786.^ In the former year various conferences
that were held to consider the subject demanded
"a new emission of paper bills, funded on real
estate, and loaned on interest." And this hap-
pened, be it noted, when so much of the paper

1 State Papers, I. 56-57.
*Ford, Writings of Jefferson, IV. 139.
•Papers, VIII. 926.
^ Barstow, 269, 293; Belknap, II. 461.
* State Papers, Finance, I. 29.
•Tenth Census, VII. 327.

^On this subject see Belknap, II. 461-477; Barstow, 269-272;
Hildreth, III. 473; libby, 7-1 1, 52-54.
271

MONETARY HISTORY

formerly issued was in circulation that the depre-
ciation was sixty per cent on the notes and twenty
per cent on certificates of indebtedness.^ As a
remedy for the discontent, the legislature of the
state passed a law that enabled debtors to offer
real or personal property " at a fair valuation " in
satisfaction of their engagements. But this act,
which remained in operation for five years, did not
quiet the agitation for more paper money. On
the contrary, it simply made specie more scarce
than before.

A paper-money party was formed in 1786, and
the newspapers teemed with discussions of the
necessity of issuing more currency in order to
stimulate industry and relieve the poor. Concern-
ing these fulminations, the New Hampshire Mer-
cury observed* that "there is no single trace of
any idea of redemption, or any one attempt to give
the currency a foundation; but the whole seems
predicated on a supposition that the general court
by a mere act of legislation . . . could impress
an intrinsic value upon paper." The inflationists
claimed that " Paper money, or even leather but-
tons, when stamped by authority and funded with
realities, will answer for internal commerce as well
as silver and gold.*'^ Finally, Belknap wrote:*
" The same party who were so zealous in favor of
paper currency, and against laws which obliged

1 Belknap, II. 462.

«Coll. of N. H. Hist. Soc., III. 117-118.
• libby, 53. * Belknap, II. 467.

272

REVOLUTIONARY ISSUES

them to pay their debts, proceeded to inveigh
against Courts and lawyers."

When the legislature met in 1786, paper money
straightway became the principal subject of con-
sideration ; and finally a plan was formed for the
issue of ;£50,ooo of paper, which was to be loaned
upon mortgage security at four per cent interest,
and should be a legal tender in all payments.
This scheme was submitted to the various towns
for consideration, but the inflationists were not
satisfied with this concession. Accordingly, they
proceeded to gather in Rockingham County, and to
march to Exeter, where they tried to intimidate
the legislature. This movement proved a ridicu-
lous fiasco ; and, in January, 1787, the towns voted
against the projected issue of paper money. Recent
investigations have shown ^ that in New Hamp-
shire, as elsewhere, the men who conducted the
agitation for paper money in 1786 were the oppo-
nents of the Federal Constitution, when the ques-
tion of its ratification was under discussion in 1788.

iSeelibby, 54.

273

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. Money.)
Tucker, J. R. Constitution of the United States. Chicago,

1899. (Tucker.)
Tyler, M. C. Literary History of the American Revolution.

New York, 1897. (Tyler.)

Upton, J. K. Money in Politics. Boston, 1884. (Upton.)

Von Hock, C. H. Die Finanzen der Vereinigten Staaten
von Amerika. Stuttgart, 1867. (von Hock.)

Walker, F. A. Money. New York, 1878. (Walker.)

Bimetallism. New York, 1896. (Walker, Bimetallism.)

Washington, G. Writings of Washington. Edited by Jared

Sparks. Boston, 1855. (Sparks, Writ, of Washington.)

Writings of Washington. Edited by W. C. Ford. New

York, 1 889-1 893. (Writings of Washington.)

Watson, D. K. History of American Coinage. New York,

1899. (Watson.)
Watson, J. T. Annals of Philadelphia. Revised edition.

Philadelphia, 1897. (Watson, Annals.)
Webster, P. Political Essays. Philadelphia, 1791. (Webster.)
287

MONETARY HISTORY

Weeden, W. B. Economic and Social History of New Eng-
land. Boston, 1 89 1. (Weeden.)

Wells, W.V. Life of Samuel Adams. Boston, 1865. (Wells.)

Wheeler, J. H. Historical Sketches of North Carolina.
Philadelphia, 185 1. (Wheeler.)

White, H. Money and Banking. New York, 1895. (White.)

Whitney, D. R. The Suffolk Bank. Cambridge, 1878.
(Whitney, Suffolk Bank.)

Whitney, E. L. The Government of South Carolina. Balti-
more, 1895. (Whitney.)

Willcox, W. F. Density and Distribution of Population in
the United States. In Economic Studies, H. New
York, 1897. (WiUcox.)

WiUiamson, H. Hbtory of North Carolina. Philadelphia,
1 81 2. (Williamson.)

Winsor, J. Editor. Narrative and Critical History of
America. Boston, 1887. (Winsor.)

Winthrop, J. Hbtory of New England. Boston, 1825.
(Winthrop, N. Eng.)

Witherspoon, J. Works. Edinburgh, 1805. (Witherspoon,
Works.)

Wright, J. The American Negotiator. Third edition. Lon-
don, 1767. (Wright.)

Wynne, M. History of the British Empire in America. Lon-
don, 1770. (Wynne.)

Yale Review. (Yale Rev.)

288

INDEX

•• Act of 1873," 111-112.

Adams, H., petitions for relief, 227.

Adams, J., quoted, 63-64.

Agitation for retention of the green-
backs, 101-102.

Allen, W., a noted Greenbacker,
105.

Auditors, to examine accounts
against North Carolina, 19a

Baird, H. C, quoted, 103.

Bancroft, G., quoted, 57 ; on paper
money and the Constitution, 75.

Banks, colonial, 29-33; banks of
the United States, 81, 83, 90;
state banks of issue, 80-92;
abuses perpetrated by state
banks, 82-92; introduction of
sounder methods, 91-92 ; condi-
tion of state banks in i860, 92-
93 ; issues of state banks taxed
out of existence, loi; national
banking system created, loi;
banks in North Carolina, 200-
202; banking scheme in New
Hampshire, 223-224.

Barter currency, 7, 9-11, 125-127.

Belcher, governor of New Hamp-
shire, 219 et passim,

Belknap, J., quoted, 226, 256, 257,
262, 264, 272.

Benton, T. H., quoted, 8a

Bills of credit, see " Paper money,"

Bimetallism, in colonial times, 24-
28; imder the Constitution, 79-
80, 94-96, iio-in.

" Bland-Allison Act," 112.

Bland, R., quoted, 113.

BoUman, E., quoted, 90.
Bonds, proposal to redeem United
States bonds in greenbacks, 100-

lOI.

Breck, S., quoted, 70.
Burrington, governor of North

Carolina, 126, 127, 134, 139.
Butler, B., quoted, 103.

Calhoun, J. C, on paper money of
North Carolina, 202.

Carey, H. C, quoted, 103.

Chase, S. P., action of, in 1861, 96 ;
doubts existence of depreciation,
102.

Cheap money, reasons for agitation
in the United States, 1-5; desire
for, must decline, 120-121.

Coins, clipping of, 16-17; over-
valuation of, 18-23.

Congress, Continental, its policy
determined by the several colo-
nies , 60-63 ; unable to levy taxes,
64; repudiates paper money,
71-72.

Contraction, policy of, in 1866, 99.

Cooper, P., quoted, 104; nomi-
nated for the presidency, 106.

Counterfeiting, 132, 134, 140, 153,
168, 172, 187, 188, 208, 212, 227,
247, 263, 264.

Debenture notes in North Caro-
lina, 171, 173, 181.

Debt, of North Carolina, 193, 199;
of New Hampshire, 271.

Defaulting sheriffs, in North Caro-
lina, 178.

289

INDEX

Depreciation, of colonial coin cur-
rency, 33-33 ; of colonial paper
money, 39-40; of continental
paper, 64-65 ; of bank notes, 86,
93; of the greenbacks, 97-98;
of North Carolina's currency,

130. 133. 13s. 136, 137. i43» 154,
157, 161, 164. 188, 189, 190, 194,
196, 303; of New Hampshire's
currency, sio, 311, 313, S15, 318,
333, 3s6, 335, 340, 341, 344, 348,
350, 351, 354, 365, 366, 367, 370.

Discussions of monetary questions,
31, 51-56, 67-68, 89-90, 103-104.

Dobbs, governor of North Caro-
lina, 160, 163, 164, 165.

Dollar, the Spanish, 17-18 ; ratings
of, by colonies, 18-33 1 ^® pres-
ent dollar, 79; in North Caro-
lina, 174-176, 191.

Douglass, W., quoted, 15, 34, 35,

47. 48. 50. 53. 55. 36. 145. ao9.
330, 343, 344.

Edenton, protests against paper

money, 194.
English creditors, lose by colonial

paper money, 164, 173.
Engrossing, 67.
Exchange, quotations of, 39-40,

131, 137, 143, 150, 164, 165, 169,
175, 183, 183, 359.

Exportation of money prohibited,

34.
Exports and imports of North

Carolina, 167-168.

Federal Constitution, opposed by
advocates of paper money, 76-
78. 197-198, 273.

Franklin, B., quoted, 50, 54, 55, 59,
73.

Free coinage of silver, advocated
in 1876, in; reasons for move-
ment, 113; culmination of move-
ment in 1896, 115; nature and
probable future of movement,
Z19-131.

Fysack, quoted, 15.

Gallatin, A., on Pennsylvania " re-
lief," 87.

Glenn, governor of South Carolina,
176.

Gold, as currency in colonial times,
13-38; production of, 13; and
our national coinage system, 79-
80, 94-96, iio-iii; in North
Carolina, 138-139, 174-176, 191 ;
in New Hampshire, 356, 359.

Greenbacks, see " Paper money."

Hamilton, A., quoted, 83, 83.
Hayes, R. B., elected governor of

Ohio, io6 ; vetoes " Bland-Allison

Act," I IX
Hostility to Great Britain, caused

by prohibition of paper money,

44-45, 58-59.
Hutchinson, T., quoted, 41, 43.

Indigo notes, 183.

" Inflation Bill," vetoed by Presi-
dent Grant, 105.

Inflation, caused by paper money,
38-39, 64-65, 68, 86-89.

Inspectors' notes, 157-158, 183.

Iredell, J., quoted, 183, 188.

Issues of bills of credit by New
Hampshire incorrectly stated,
338-330, 338.

JeflFerson, T., quoted, 73.

Job, political, involved in paper
issues, 154.

Johnston, governor of North Caro-
lina, 137, 141, 143, 147, 151.

Kelley, D. D., quoted, 104.
Kentucky " relief," 88.
Knox, J. J., statement concerning
•• Act of 1873," iia

Laughlin, J. L., on causes of the
free silver movement, 113.

Legal tender laws, in colonial
times, 37-38 ; of the revolution-

290

INDEX

aiy period, 66-68; in North
Carolina, 129, 131, 186; in New
Hampshire, 222, 234, 242, 264.

Loan banks, 34-35. 36, 37, 45, 46,
86, 136, 153, 211, 234.

London merchants, complain of
paper currency, 164.

Lottery, continental, 64.

Madison, J., quoted, 74, jj^ 195.

Martin, governor of North Caro-
lina, 172.

Mather, Cotton, quoted, 51.

McCulloch, H., quoted, 84.

McKinley, W., advocates free coin-
age of silver, iii ; on " Sherman
Act," 115.

Mint, New England, 18.

Moir, J., quoted, 149.

Murray, J., issues circulating notes,
163.

National Greenback Party, its his-
tory, 106-108.

New England colonies, bills of four
colonies circulated promiscu-
ously, 209, 216; plans for re-
deeming paper by common
action, 235, 243.

New Hampshire, issues paper in
1709, 207 ; and continues to make
such issues, 207, 211, 214, 215,
216, 217, 219, 225, 232, 234, 239,
240, 246, 248, 250, 251, 252, 253,
254; issues paper during the
Revolution, 262-269.

New Hampshire Mercury ^ quoted,
272.

New tenor issues, 38, 72-73, 152,
234, 269.

North Carolina, a poor colony,
127-128; passes acts regulating
coin currency, 128-129; issues
paper money, 129 et seq.; con-
tinued issues, 130, 134, 136, 140,
142, 152, 158, 165, 171, 173; is-
sues paper during the Revo-
lution, 186-190; payments on

requisitions of Congress, 192-
193; issues paper in 1783 and
1786, 193-197 ; engages in losing
speculation in tobacco, 195-196;
attitude of the state toward the
Federal Constitution, 197-198 ;
charters banks to redeem its
paper, 200-202; results of its
paper-money policy, 203-204.

Ogilby, T., quoted, 15.

Paine, T., quotejl, 35, 48, 53, 54^
Paper money, fsjuud bjf lliB'^colo-
nies for public expenses, 32-34 ;
issued upon loan, 34-35 ; abuses
attending colonial issues, 35-41 ;
depreciation of colonial paper,
38-41; end of colonial issues,
44-45; a political issue, 46-49;
opposed by merchants and prop-
ertied classes, 49-51; arguments
concerning, 52-56; Revolution-
ary issues, the continental bills
of credit, 61-73; opposed by
the propertied classes, 63 ; issues
steadily increased, 64; attempts
to force its circulation, 66;
evils that it produced, 68-71;
bills " of a new tenor," 72-73 ;
paper issued in 1785 and 1786,
73; opposition to paper money
in constitutional convention, 75 ;
and the adoption of the Consti-
tution, 76-78; issued by United
States in 1862, 96-97; cost of
Civil War increased by the
greenbacks, 98-99; evils pro-
duced by greenbacks, 99; agi-
tation for permanent paper
currency, 99, loi; discussions
concerning, 102-104; leads to
formation of the Greenback
Party, 105-108; retirement of
greenbacks prohibited, 108; is-
sued by North Carolina, 129 ei
seq.; issued by New Hampshire,
207 et seq.

291

INDEX

Parliament, opposes inflation of
colonial currencies, 19-21, 44,
58-59, i68, 245.

People's Party, 109.

Pickering, T., quoted, 77.

Pownall, T., quoted, 51.

Price conventions, 66, 965.

Quarrels between governors and
colonial assemblies, caused by
paper money, 43-44, 4^7. '43.
149, 166, Z79-180, 318, 321, 224-

225.
Quit rents, 125, 127, 133, 143, 151.

Ramsay, D., quoted, 73.

Rated commodities of North Caro-
lina, 126, 130, 131, 133.

Regulators of North Carolina, 169,
170, 171, 172.

Repudiation, 41-42, 71-72, 155;
threatened, zoi, 15a

Reserves, of state banks, 93.

Resumption, in colonies, 41-42;
" Resumption Act " of 1875, io8,
III.

Rowan, M., governor of North
Carolina, 158-159.

Scarcity of money, complaints of,
2. 14, 38, 52, 82, 89, 169, 211, 271-
272.

Sectional distribution of votes on
monetary questions, 106, 107, 109,
113, 116-119.

" Sherman Act," 114.

Silver, as currency in colonial times,
13-28; production of, 13; and
our national coinage system, 79-
80, 94-96, iio-iii; in North
Carolina, 128-129, 174-176, 191;
in New Hampshire, 256, 259.

Smith, A., quoted, 2.

Stay laws, 87-88.

Sumner, W. G., quoted, 5, 88.
Supreme Court, on paper money
and legal tender, 75, 86, 104-105.

Taxation, opposition to, fostered
by colonial paper money, 56-58 ;
states refuse to levy taxes for sup-
port of war of independence, 64 ;
bad SjTStem of taxation in North
Carolina, 177-178, 184; North
Carolina reluctant to levy taxes,
185, 186, 187; property taxes in
North Carolina, 192; in New
Hampshire, 961, 267.

Tobacco notes, 158.

Treasury notes, 45, 162-163, 258.

Trumbull, J., quoted, 46.

Tryon, governor of North Caro-
lina, 169.

United States, assumes debts of die
states, 9oa

Valuation acts, in North Carolma,
171 ; in New Hampshire, 272.

Violation of public faith, 36, 71, 72,
134. 13s. 14s. ^TJ^ i8o, 213. 255.

Wampum, as currency, 7-9.
Washington, G., on paper money,

67, 68-69. 75.
Webster, D., quoted, 8a
Webster, P., quoted, 68, 7a
Wentworth, B., governor of New

Hampshire, 233 et passim.
White, H., quoted, 73.
Williamson, H., quoted, 82, 138-

139. 150. 160, 197.
Winthrop, J., quoted, 14.
Witherspoon, J., quoted, 2, 67-68,

69,72.
Wynne, M., on currency of the
Carolinas, 177.

299

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