on the ground of its absolute necessity, as the means of a supply of a circulating medium. The existence of such necessity is then the main question. The suppression of the paper currency in Massachusetts, in 1747, in pursuance of Hutchinson's proposal, and its suppression in the other New England provinces, afford very strong grounds of argument against the existence of any such necessity, notwithstanding the difference in the circumstances of the middle provinces, from those of the New England provinces, pointed out by Franklin in this paper; since, after all, the cause imagined for this necessity, namely, the excessive importations, the constantly outstanding balance due to the British merchants, and the consequent remittances of specie, existed no less in New England than in the middle provinces. It may be gravely doubted whether the operation of these causes was so different in the different provinces as Franklin supposes.

The paper-money system was vindicated upon two distinct grounds; the one, the necessity of a currency, and the impossibility of keeping a sufficient supply of gold and silver in the country, and so, as Dr. Franklin said before the committee of the House of Commons, if you cannot have what you would prefer, the expediency of taking the next best thing; the other, the absolute advantages of this currency, even over the precious metals. One of these advantages was the revenue derived to the government from it. Thus Pownall, after describing the situation of the colonies, says, "In a country, under such circumstances, money lent to settlers upon interest creates money. Paper money thus lent upon interest will create gold and silver in principal, while the interest becomes a reserve that pays the charges of government. This currency is the true Pactolian stream, which converts all into gold that is washed by it. It is upon this principle, that the wisdom and virtue of the Assembly of Pennsylvania established, under the sanction of government, an office for the emission of paper money by loan."-POWNALL's Administration of the Colonies, 4th ed. p. 186.-W. PHILLIPS.

In the Report of the Board of Trade, dated February 9th, 1764, the following reasons are given for restraining the emission of paper bills of credit in America, as a legal tender.

1. "That it carries the gold and silver out of the CC*

province, and so ruins the country; as experience has shown, in every colony where it has been practised in any great degree.

2. "That the merchants trading to America have suffered and lost by it.

3. "That the restriction has had a beneficial effect in New England.

4. "That every medium of trade should have an intrinsic value, which paper money has not. Gold and silver are therefore the fittest for this medium, as they are an equivalent, which paper never can be.

5. "That debtors, in the Assemblies, make paper money with fraudulent views.

6. "That in the middle colonies, where the credit of the paper money has been best supported, the bills have never kept to their nominal value in circulation, but have constantly depreciated to a certain degree, whenever the quantity has been increased."

To consider these reasons in their order; the first is, First. "That paper money carries the gold and silver out of the province, and so ruins the country; as experience has shown, in every colony where it has been practised in any great degree." This opinion of its ruining the country seems to be merely speculative, or not otherwise founded than upon misinformation in the matter of fact. The truth is, that, the balance of their trade with Britain being greatly against them, the gold and silver is drawn out to pay that balance; and then the necessity of some medium of trade has induced the making of paper money, which could not be carried away. Thus, if carrying out all the gold and silver ruins a country, every colony was ruined before it made paper money. But, far from being ruined by it, the colonies that have made use of paper money have been, and are, all in a thriving condition. The debt

indeed to Britain has increased, because their numbers, and of course their trade, have increased; for, all trade having always a proportion of debt outstanding, which is paid in its turn, while fresh debt is contracted, the proportion of debt naturally increases as the trade increases; but the improvement and increase of estates in the colonies has been in a greater proportion than their debt.

New England, particularly, in 1696 (about the time they began the use of paper money), had, in all its four provinces, but one hundred and thirty churches or congregations; in 1760 they were five hundred and thirty. The number of farms and buildings there is increased in proportion to the numbers of people; and the goods exported to them from England in 1750, before the restraint took place, were near five times as much as before they had paper money. Pennsylvania, before it made any paper money, was totally stript of its gold and silver; though they had, from time to time, like the neighbouring colonies, agreed to take gold and silver coins at higher and higher nominal values, in hopes of drawing money into, and retaining it for the internal uses of, the province. During that weak practice, silver got up by degrees to 8s. 9d. per ounce, and English crowns were called six, seven, and eight shilling pieces, long before paper money was made. But this practice of increasing the denomination was found not to answer the end. The balance of trade carried out the gold and silver as fast as it was brought in, the merchants raising the price of their goods in proportion to the increased denomination of the money. The difficulties for want of cash were accordingly very great, the chief part of the trade being carried on by the extremely inconvenient method of barter; when, in 1723, paper money was first made there, which gave new life to

business, promoted greatly the settlement of new lands, (by lending small sums to beginners on easy interest, to be repaid by instalments,) whereby the province has so greatly increased in inhabitants, that the export from hence thither is now more than tenfold what it then was; and, by their trade with foreign colonies, they have been able to obtain great quantities of gold and silver, to remit hither in return for the manufactures of this country. New York and New Jersey have also increased greatly during the same period, with the use of paper money; so that it does not appear to be of the ruinous nature ascribed to it. And, if the inhabitants of those countries are glad to have the use of paper among themselves, that they may thereby be enabled to spare, for remittances hither, the gold and silver they obtain by their commerce with foreigners, one would expect that no objection against their parting with it could arise here, in the country that receives it.

The second reason is, "That the merchants trading to America have suffered and lost by the paper money." This may have been the case in particular instances, at particular times and places; as in South Carolina about fifty-eight years since, when the colony was thought in danger of being destroyed by the Indians and Spaniards; and the British merchants, in fear of losing their whole effects there, called precipitately for remittances; and the inhabitants, to get something lodged in safe countries, gave any price in paper money for bills of exchange; whereby the paper, as compared with bills, or with produce, or other effects fit for exportation, was suddenly and greatly depreciated.

The unsettled state of government for a long time in that province had also its share in depreciating its bills. But since that danger blew over, and the colony has been in the hands of the crown, their currency became

fixed, and has so remained to this day. Also in New England, when much greater quantities were issued than were necessary for a medium of trade, to defray the expedition against Louisburg; and during the last war in Virginia and North Carolina, when great sums were issued to pay the colony troops, and the war made tobacco a poorer remittance, from the higher price of freight and insurance; in these cases, the merchants trading to those colonies may sometimes have suffered by the sudden and unforeseen rise of exchange. By slow and gradual rises they seldom suffer; the goods. being sold at proportionable prices. But war is a common calamity in all countries, and the merchants that deal with them cannot expect to avoid a share of the losses it sometimes occasions, by affecting public credit. It is hoped, however, that the profits of their subsequent commerce with those colonies may have made them some reparation. And the merchants trading to the middle colonies (New York, New Jersey, and Pennsylvania) have never suffered by any rise of exchange; it having ever been a constant rule there to consider British debts as payable in Britain, and not to be discharged but by as much paper (whatever might be the rate of exchange) as would purchase a bill for the full sterling sum. On the contrary, the merchants have been great gainers by the use of paper money in those colonies; as it enabled them to send much greater quantities of goods, and the purchasers to pay more punctually for them. And the people there make no complaint of any injury done them by paper money, with a legal tender; they are sensible of its benefits; and petition to have it so allowed.

The third reason is, "That the restriction has had a beneficial effect in New England." Particular circumstances in the New England colonies made paper