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Thus much by way of apology for this present Inquiry into the Nature and Necessity of a Paper Currency. And if any thing I shall say may be a means of fixing a subject, that is now the chief concern of my countrymen, in a clearer light, I shall have the satisfaction of thinking my time and pains well employed.

To proceed, then,

There is a certain proportionate quantity of money requisite to carry on the trade of a country freely and currently; more than which would be of no advantage in trade, and less, if much less, exceedingly detrimental to it.

This leads us to the following general considerations. First. A great want of money, in any trading country, occasions interest to be at a very high rate. And here it may be observed, that it is impossible by any laws to restrain men from giving and receiving exorbitant interest, where money is suitably scarce. For he that wants money will find out ways to give ten per cent, when he cannot have it for less, although the law forbids to take more than six per cent. Now the interest of money being high is prejudicial to a country several ways. It makes land bear a low price, because few men will lay out their money in land, when they can make a much greater profit by lending it out upon interest. And much less will men be inclined to venture their money at sea, when they can, without risk or hazard, have a great and certain profit by keeping it at home; thus trade is discouraged. And if in two neighbouring countries the traders of one, by reason of a greater plenty of money, can borrow it to trade with at a lower rate than the traders of the other, they will infallibly have the advantage, and get the greatest part of that trade into their own hands; for he that trades with money he hath borrowed at eight or ten per cent,

cannot hold market with him that borrows his money at six or four. On the contrary, a plentiful currency will occasion interest to be low; and this will be an inducement to many to lay out their money in lands, rather than put it out to use, by which means land will begin to rise in value and bear a better price. And at the same time it will tend to enliven trade exceedingly, because people will find more profit in employing their money that way than in usury; and many that understand business very well, but have not a stock sufficient of their own, will be encouraged to borrow money to trade with, when they can have it at a moderate in


Secondly. Want of money in a country reduces the price of that part of its produce which is used in trade; because, trade being discouraged by it as above, there is a much less demand for that produce. And this is another reason why land in such a case will be low, especially where the staple commodity of the country is the immediate produce of the land; because, that produce being low, fewer people find an advantage in husbandry, or the improvement of land. On the contrary, a plentiful currency will occasion the trading produce to bear a good price; because, trade being encouraged and advanced by it, there will be a much greater demand for that produce;* which will be a great encouragement

Some obscurity is thrown over this paragraph by confounding low price with want of demand, and high price with briskness of demand, things which often go together, and which are now, as formerly, often confounded with each other, though they are by no means identical, one being the cause, the other the effect, respectively; for the increase of demand, out of proportion to that of the supply, increases price, and the reduction of demand, out of proportion to that of supply, reduces price. This inaccuracy, combined with another, which we shall soon meet with in this essay, namely, the confounding of circulating medium, or money, with capital generally; and also another nearly allied to it, namely, the confounding of the amount of capital ready to be loaned,

of husbandry and tillage, and consequently make land more valuable, for that many people would apply themselves to husbandry, who probably might otherwise have sought some more profitable employment.

As we have already experienced how much the increase of our currency, by what paper money has been made, has encouraged our trade, particularly to instance only in one article, ship-building, it may not be amiss to observe under this head, what a great advantage it must be to us as a trading country, that has workmen and all the materials proper for that business within itself, to have ship-building as much as possible advanced; for every ship, that is built here for the English merchants, gains the province her clear value in gold and silver, which must otherwise have been sent home for returns in her stead; and likewise every ship, built in and belonging to the province, not only saves the province her first cost, but all the freight, wages, and provisions she ever makes or requires as long as she lasts; provided care is taken to make this her pay-port, and that she always takes provisions with her for the whole voyage, which may easily be done. And how considerable an article this is yearly in our favor, every one, the least acquainted with mercantile affairs, must needs be sensible; for, if we could not build ourselves, we must either purchase so many vessels as we want from other countries, or else hire them to carry our

with that of the circulating medium, led to many of the fallacies, which were prevalent in Franklin's time in subjects of political economy, and which have, to this day, not wholly disappeared from similar speculations. The propositions really in question in this part of the essay are, that briskness of trade promotes production and consequently wealth, and that plenty, or rather a sufficiency, of circulating medium promotes trade, and a want of it, on the other hand, obstructs trade. These propositions are sufficiently plain, and are indisputable, and they constitute the author's premises or postulates, but they will not be found to lead to all bis conclusions.-W. PHILLIPS.


produce to market, which would be more expensive than purchasing, and on many other accounts exceedingly to our loss. Now as trade in general will decline where there is not a plentiful currency, so ship-building must certainly of consequence decline where trade is declining.

Thirdly. Want of money in a country discourages laboring and handicraftsmen (who are the chief strength and support of a people) from coming to settle in it, and induces many that were settled to leave the country, and seek entertainment and employment in other places, where they can be better paid. For what can be more disheartening to an industrious laboring man than this, that, after he hath earned his bread with the sweat of his brows, he must spend as much time, and have near as much fatigue in getting it, as he had to earn it? And nothing makes more bad paymasters than a general scarcity of money. And here again is a third reason for land's bearing a low price in such a country, because land always increases in value in proportion with the increase of the people settling on it, there being so many more buyers; and its value will infallibly be diminished, if the number of its inhabitants diminish. On the contrary, a plentiful currency will encourage great numbers of laboring and handicraftsmen to come and settle in the country, by the same reason that a want of it will discourage and drive them out.* Now the more in

* This proposition is true, and yet it tends to leave a wrong impression on the mind; for money, like ships, is an instrument of trade, and like ploughs, is an instrument of production, and the more facilities for trade and production, and consequently for obtaining wealth, the country afforded, the greater were the inducements to emigrate to it. The quality of the ships, and ploughs, &c., is as important as the number. Just so of the circulating medium; the soundness of the currency is quite as important as its abundance. The error left upon the mind by the above language, and it is a very common one, is, that there is some predominant and

habitants, the greater demand for land (as is said above), upon which it must necessarily rise in value, and bear a better price. The same may be said of the value of house-rent, which will be advanced for the same reasons; and, by the increase of trade and riches, people will be enabled to pay greater rents. Now, the value of house-rent rising, and interest becoming low, many, that in a scarcity of money practised usury, will probably be more inclined to building; which will likewise sensibly enliven business in any place; it being an advantage not only to brickmakers, bricklayers, masons, carpenters, joiners, glaziers, and several other trades immediately employed by building, but likewise to farmers, brewers, bakers, tailors, shoemakers, shopkeepers, and, in short, to every one that they lay their money out with.

Fourthly. Want of money in such a country as ours, occasions a greater consumption of English and European goods, in proportion to the number of the people, than there would otherwise be. Because merchants and traders, by whom abundance of artificers and laboring men are employed, finding their other affairs require what money they can get into their hands, oblige those who work for them to take one half or perhaps two-thirds goods in pay. By this means a greater quantity of goods are disposed of, and to a greater value; because working-men and their families are thereby induced to be more profuse and extravagant in fine apparel and the like, than they would be if they were obliged to pay ready money for such things after they had earned and received it, or if such goods

almost magical effect belonging to a circulating medium, as distinguished from other instruments and facilities of production and trade, and their result, wealth; whereas the quantity of even a sound currency is not decisive of the prosperity of a country, as might be seen in Franklin's time in some of the South American provinces. W. PHILLIPS.

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