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Now it is certainly the advantage of a country to make interest as low as possible, as I have already shown; and this can be done no other way than by making money plentiful. And since, in emitting paper money among us, the office has the best of security, the titles to the land being all skilfully and strictly examined and ascertained ; and as it is only permitting the people by law to coin their own land, which costs the government nothing, the interest being more than enough to pay the charges of printing, officers' fees, &c., I cannot see any good reason why four per cent to the loan-office should not be thought fully sufficient. As a low interest may incline more to take money out, it will become more plentiful in trade; and this may bring down the common usury, in which security is more dubious, to the pitch it is determined at by law.
If it should be objected, that emitting it at so low an interest, and on such easy terms, will occasion more to be taken out than the trade of the country really requires ; it may be answered, that, as has already been shown, there can never be so much of it emitted as to make it fall below the land it is founded on; because no man in his senses will mortgage his estate for what is of no more value to him than that he has mortgaged, especially if the possession of what he receives is more pr carious than of what he mortgages, as that of paper money is when compared to land.* And if it should
* This passage is obscure, a fault with which Franklin's writings are rarely chargeable. It is so far from being true that no man in his senses will mortgage his land for what is of no more value to him than that which he mortgages, that it is the most common practice to mortgage lands and personal property for what is not of half the value of either. The lender often demands security exceeding the value loaned. Perhaps the meaning is, that the money must be of more convenience or use to the borrower than the land mortgaged for it, or he would not borrow; and that it could not be of such convenience and use to him if an excess VOL. II.
ever become so plenty by indiscreet persons continuing to take out a large overplus, above what is necessary in trade, so as to make people imagine it would become by that means of less value than their mortgaged lands, they would immediately of course begin to pay it in again to the office to redeem their land, and continue to do so till there was no more left in trade than was absolutely necessary.* And thus the proportion would find itself (though there were a million too much in the office to be let out), without giving any one the trouble of calculation.
It may, perhaps, be objected to what I have written concerning the advantages of a large addition to our currency, that, if the people of this province increase, and husbandry is more followed, we shall overstock the markets with our produce of flour, &c.f To this it may be answered, that we can never have too many people (nor too much money.) For, when one branch of trade or business is overstocked with hands, there are the more to spare to be employed in another. So, if raising wheat proves dull, more may (if there is money to support and carry on new manufactures) proceed to the raising and manufacturing of hemp, silk, iron, and many other things the country is very capable of, for which we only want people to work, and money to pay them with.
had been issued, whereby its value and utility would be diminished. W. PHILLIPS.
* But there was another view of the case presented by the opposers of paper currency, which Franklin omits. If a man has mortgaged his land for a hundred pounds, and invested the money in the purchase of other land, and two years afterwards, when the money has depreciated in value fifty per cent, sells half of the land he purchased for a hundred pounds and pays off his debt, though the land may not have risen at all in the mean time, he makes a very good operation, at the expense of those through whose hands the money has been passing in the mean time. This was the operation of the paper-money system, to which the opposers of that system objected. — W. Phillips.
† The author passes this objection with a very slight consideration, and on the whole rather disingenuously and like a partisan, as he and every other man in the province were, at the time, on one side or the other of the question. He had immediately before said, that, in case of excess, the surplus would be returned, and of course there could not be a lasting excess if this was the case. But here he supposes there may be a surplus until the increase of business shall absorb it, and that such increase will be sufficient for the purpose. Now the first supposition is palpably not well founded, in regard to a money redeemable at some future day, as was the provincial paper money generally. As to the second supposition, that any quantity of such paper that can be issued, will be used and eventually needed, there are abundant examples to the contrary. — W. Phillips.
Upon the whole it may be observed, that it is the highest interest of a trading country in general to make money plentiful; and that it can be a disadvantage to none that have honest designs. It cannot hurt even the usurers, though it should sink what they receive as interest ; because they will be proportionably more secure in what they lend; or they will have an opportunity of employing their money to greater advantage, to themselves as well as to the country. Neither can it hurt those merchants, who have great sums outstanding in debts in the country, and seem on that account to have the most plausible reason to fear it; to wit, because a large addition being made to our currency will increase the demand of our exporting produce, and by that means raise the price of it, so that they will not be able to purchase so much bread or flour with one hundred pounds when they shall receive it after such an addition, as they now can, and may if there is no addition. I say it cannot hurt even such, because they will get in their debts just in exact proportion so much the easier and sooner as the money becomes plentier; and therefore, considering the interest and trouble saved, they will not be losers; because it only sinks in value as a currency, proportionally as it becomes more plenty. It cannot hurt the interest of Great Britain, as has been shown; and it will greatly advance the interest of the proprietor. It will be an advantage to every industrious tradesman, &c., because his business will be carried on more freely, and trade be universally enlivened by it. And as more business in all manufactures will be done, by so much as the labor and time spent in exchange is saved, the country in general will grow so much the richer.
It is nothing to the purpose to object the 'wretched fall of the bills in New England and South Carolina, unless it might be made evident that their currency was emitted with the same prudence, and on such good security, as ours is; and it certainly was not.
As this essay is wrote and published in haste, and the subject in itself intricate, I hope I shall be censured with candor, if, for want of time carefully to revise what I have written, in some places I should appear to have expressed myself too obscurely, and in others am liable to objections I did not foresee. I sincerely desire to be acquainted with the truth, and on that account shall think myself obliged to any one, who will take the pains to show me, or the public, where I am mistaken in my conclusions.
And as we all know there are among us several gentlemen of acute parts and profound learning, who are very much against any addition to our money, it were to be wished that they would favor the country with their sentiments on this head in print; which, supported with truth and good reasoning, may probably be very convincing. And this is to be desired the rather because many people, knowing the abilities of those gentlemen to manage a good cause, are apt to construe their silence in this, as an argument of a bad one. Had any thing of that kind ever yet appeared, perhaps I should not have given the public this trouble. But, as those ingenious gentlemen have not yet (and I doubt never will think it worth their concern to enlighten the minds of their erring countrymen in this particular, I think it would be highly commendable in every one of us, more fully to bend our minds to the study of what is the true interest of Pennsylvania ; whereby we may be enabled, not only to reason pertinently with one another ; but, if occasion requires, to transmit home such clear representations, as must inevitably convince our superiors of the reasonableness and integrity of our designs.* Philadelphia, April 3, 1729.
Soon after this pamphlet was written, the measure proposed in it was adopted by the Assembly of Pennsylvania; and subsequently another bill for a similar object was passed, the principal features of which were published by Governor Pownall. They were understood to have been communicated to him by Franklin, with other remarks on paper money. The proceedings of the Assembly on the subject are described in the extract below.
“ As the paper-money act made and passed in Pennsylvania, in 1739, was the completest of the kind, containing all the improvements which experience had from time to time suggested, in the execution of preceding acts; an account of that act will best explain and recommend the measure contained in the following proposal.
“ The sum of the notes, by that act directed to be printed, was eighty thousand pounds proclamation money. This money was to be emitted to the several borrowers, from a loan-office established for that purpose.
“ Five persons were nominated trustees of the loan-office, under whose care and direction, the bills or notes were to be printed and emitted.
“ To suit the bills for a common currency, they were of small and various denominations, from twenty shillings downwards to one shilling.
“ Various precautions were taken, to prevent counterfeits, by peculiarities in the paper, character, manner of printing, signing, numbering, &c.
“ The trustees took an oath, and gave security for the due and faithful execution of their office.
“ They were to lend out the bills on real security of at least double the value, for a term of sixteen years, to be repaid in yearly quotas or instalments, with interest. Thus one sixteenth part of the principal was yearly paid back into the office, which made the payment easy to the borrower. The interest was applied to public services, the principal, during the first ten years, let out again to fresh borrowers.
The new borrowers, from year to year, were to have the money only