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NATURE AND NECESSITY
FIRST PRINTED AT PHILADELPHIA IN THE YEAR 1729.
This is one of the author's earliest compositions, it having been written at the beginning of his twenty-third year. It is indeed the first tract of a political nature, which is known to have come from his pen, and although it was published anonymously, yet he afterwards avowed the authorship in his autobiography, where he thus speaks.
“ There was a cry among the people for more paper money ; only fifteen thousand pounds being extant in the province, and that soon to be sunk. The wealthy inhabitants opposed any addition ; being against all paper currency, from the apprehension that it would depreciate as it had done in New England, to the injury of all creditors. We had discussed this point in our junto, where I was on the side of an addition; being persuaded that the first small sum struck in 1723 had done much good by increasing the trade, employment, and number of inhabitants in the province; since I now saw all the old houses inhabited, and many new ones building; whereas I remembered well when I first walked about the streets of Philadelphia, (eating my roll,) I saw many of the houses in Walnut Street, between Second and Front Streets, with bills on their doors • To be let'; and many likewise in Chestnut Street and other streets; which made me think the inhabitants of the city were one after another deserting it. Our debates possessed me so fully on the subject,
that I wrote and printed an anonymous pamphlet on it, entitled, The Nature and Necessity of a Paper Currency. It was well received by the common people in general; but the rich men disliked it, for it increased and strengthened the clamor for more money; and, they happening to have no writers among them that were able to answer it, their opposition slackened, and the point was carried by a majority in the House. My friends there, who considered I had been of some service, thought fit to reward me, by employing me in printing the money ; a very profitable job, and a great help to me. This was another advantage gained by my being able to write.
“ The utility of this currency became, by time and experience, so evident, that the principles upon which it was founded were never afterwards much disputed; so that it grew soon to fifty-five thousand pounds; and in 1739 to eighty thousand pounds, trade, building, and inhabitants all the while increasing. Though I now think there are limits beyond which the quantity may be hurtful."
This Inquiry bears the marks of the author's characteristic acuteness and sagacity, but contains some of the fallacies, which were then common in the colonies on the subject of paper money. Occasionally the arguments are addressed more to the popular prejudices, than to the good sense and intelligence of readers, though there is no doubt that Franklin was sincere in supporting the doctrines of the advocates of the papermoney system. He subsequently expressed the same opinions in his examination before the committee of the House of Commons in 1766. This essay is curious, as showing his early impressions, and the rudiments of his thinking upon subjects, which occupied his mind and employed his pen, to a very considerable extent, in the mature period of his life. EDITOR.
THERE is no science, the study of which is more useful and commendable than the knowledge of the true interest of one's country; and perhaps there is no kind of learning more abstruse and intricate, more difficult to acquire in any degree of perfection than this, and therefore none more generally neglected. Hence it is, that we every day find men in conversation contending warmly on some point in politics, which, although it may nearly concern them both, neither of them understands any more than they do each other.
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,