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try has occasionto carry its money abroad,’ either as a stock to trade with, or to purchase allies and foreign succours. Qtherwise, that very universal estimation is an (inconvenience, which paper-money is free from ‘; since it tends to deprive a ‘country of even the quantity of currency that should be retained as a necessary instrument of its internal commerce, and obliges it to be continually on its guard in making and executing, ‘at a great expence, the laws that are to prevent the trade which exports it. Paper-money well funded' has another great advantage over gold and silver; its lightness of carriage, and the little room that is occupied by a great sum; whereby it is capable of being more easily, and more safely, because more privately, conveyed from place to place. Gold and silver are not intrinsically of equal value with iron, 2. metal in itself capable .of‘many more beneficial uses to mankind. Their value rests chiefly in the estimation they happen to be in among the generality of nations, and the credit given to the. opinion, that that estimation will continue. Otherwise a pound of gold would not be a real equivalent for even a bushel of wheat. Any other well-founded credit, is as much an equivalent as‘ gold and silver; and in some cases more so, or it would not be preferred by commercial people in different countries. a Not to mention again our own bank bills; Holland, which understands the value of cash as well as any people in the world, would never part with gold and silver for/ credit (as they do when they put it into their bank, from whence little of it is ever afterwards drawn out) if they did not think and find the credit a full equivalent.
The 5th reason'is, “ That debtors in the assemblies make paper-money with fraudulent views.” This is often said by the adversaries of paper-money, and if it has been the case in any particular colony, that colony should, on proof of the fact, be duly‘ punished.l This, however, would be no reason for punishing other colonies, who have'nat so abused their legislative powers. To deprive all the colonies of the convenience of paper-moneyrbecause it has been charged on ‘some of them, thatthey have made it an instrument of
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fraud, as if all the India, Bank, and other stocks and trad— ingcompanies were to be abolished, because there have been, once in an age, Mississippi ‘and South-Sea schemes and bubbles.
.The 6th and last reason is‘, “ That in the middle colonies, where 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.” If the rising of the value of any ‘particular commodity wanted for exportation, is to be considered as a depreciation of the values of whatever remains in the country; then the rising of silver above paper to that
~ height of additional value, which its capability of exporta
‘ tion only gave it, may be called a depreciationof the paper-7
Even here, as bullion has been wanted or not wanted for exportation, its price has varied from 5s. 2a’. to 5s. 8d. per ounce. This is near 10 per cent. But was it ever said or thought on such an occasion, that all the bank bills, and all the coined silver, and all the gold in the kingdom, were depreciated 10 per cent? Coined silver is now wanted here for change, and 1 per cent. is given for it by some bankers: are gold and bank notes therefore depreciated 1 per cent.? The fact in the middle colonies is really this; on the emission of the first paper money, a difference soon arose between that and silver ; the latter having a property the former had not, a property always in demand in the colonies; to wit, its being fit for a remittance. This property having soon found its value, by the merchants bidding on one another for it, and a dollar thereby coming to be rated at SS. in paper money of New York, and 7s. 6a’. in paper of Pennsylvania, it has continued uniflormly at those rates in both provinces
now near forty years, without any variation upon new emis- '
sions; though, in Pennsylvania, the paper-currency'has at times increased from 15,0001. the first sum, to 600,000l. or near it. Nor has any alteration been occasioned by the paper money, in the price of the necessaries of life, when compared with silver: they have been for the greatest part of the time no higher than before it was emitted; varying only
by plenty and scarcity, or by a less or greater foreign demand. It has indeed been usual with the adversaries of a paper-currency, to call every rise of exchange with London, a depreciation of the pziper: but this notion appears to be by no means just: for if the paper purchases every thing but bills of exchange, at theformer rate, and these bills are not above one-tenth of what is employed in purchases; then it may be more properly and truly said, that the exchange has risen, than that the paper has depreciated. And as a proof of this, it is a certain fact, that whenever in those colonies bills of exchange have been dearer, the purchaser has been constantly obliged to give more in silver, as well as in paper, for them ; the silver having gone hand in hand with the paper at the rate above-mentioned ; and therefore it might as well have been said, that the silver was depreciated.
There have been several different schemes for furnishing the colonies with paper money, that should nat be alegal tender, viz. .
1. T a farm a ban/l, in imitatian 0f the bank of England, with a suficient stack af cash to pay the bills on sight.
This has been often proposed, but appears impracticable,
‘under the present circumstances of the colony-trade; which, ' as is said above, draws all the cash to Britain, and would
soon strip the bank. I
2. T0 raise a fund by some yearly tax, securely ladged in the bank of England as it arises, which should (during the term of years for which the paper-hills are to be current)
accumulate to a sum. suficient to discharge them all at their ‘g
This has been tried in Maryland: and the bills so funded were issued without being made a general legal tender. The event was, that as notes payable in time are naturally sub,ject to a discount proportioned to the time: so these bills fell at the beginning of the term so low, as that twenty pounds of them became‘worth no more than twelve pounds in Pennsylvania, the next neighboring province; though both had been struck near the same time at the same_nomi
nal value, but the latter was supported'by the general legal tender.’ Thehiaryland bills however began to rise as the term shortened, and towards the End ‘recovered their full value. But, as a depreciating currency injures creditors, this injured debtors ; and by its continually changing value, appears unfit for the purpose of money, which should be as fixed as possible in its own value; because it is to be the
measure of the value of other things.
8. To mahe‘the hills carry an interest suficz'ent to support their value.
This too has been tried in some of the New England co- “
lonies; but great inconveniencies were found to attend it. The bills, to fit them for a‘currency, are made of various denominations, and-some very low, for the sake of change; there are of them from 10!. down to 31!. When they first come abroad, they pass easily, and answer the purpose well enough for a few months ; but as soon as the interest becomes worth computing, the calculation of it on every little bill in a sum between the dealer and his customers, in shops, Warehouses, and markets, takes up much time, to the great hindrance of business. This evil, however, soon gave place to a worse ; for the bills were in a short time gathered up and boarded; it being a very tempting advantage to have
money bearing interest, and the principal all the while in a '
man’s power, ready for bargains that may offer ; which m0ney out on mortgage is not. By this means numbers of people became usurers with small sums, who could not have found persons to take ‘such sums of them upon interest, giv
ing goodsecurity; and would therefore not have thought ’
of it; but would rather have employed the money in some business, if it had been money of the common kind. Thus trade, instead of being increased by such bills, is diminished‘; and by their being shut up in chests, the very end of making them (viz. to furnish a medium of commerce) is in a great measure, ifnot totally defeated..
On the whole, no method has hitherto been formed to establish a medium of trade, in lieu of money, equal in all advantages, ,to bills of credit—funded on sufiicient taxes
for discharging it, or on land-security of double the value, for repaying it at the end of the term; and inthe mean time, made aGENERAL LEGAL TENDER.
The waves never rise but when the winds blow.
AS the cause of the present ill humor in America, arid of the resolutions taken there topurchase less of our manufactures, does not seem to be generally understood, it may afi‘ord some satisfaction to your readers, if you give them the following short historical state of facts.
From the time that the colonies were first considered as
capable ofgranting aids to the crown, down to the end of the
last war, it is said, that the constant mode of obtaining those aids was, by requisition made from the crown, through its governors, to the several assemblies, in circular letters from the secretary of state, in his majesty’s name, setting forth the occasion, requiring them to take the matter into consideration, and expressing a reliance on their prudence, duty, and affection to his majesty’s government, that they would grant such sums, ' or raise such numbers of men, as were suitable to their respective circumstances.
I The colonies, being accustomed to this method, have from ' time to time granted money to the crown, or raised troops for its service, in proportion to their abilities, and, during all the last war, beyond their abilities ; so that considerable sums were returned them yearly by parliament, as they had exceeded their proportion. '
Had this happy method of requisition been continued (a 1
method that left the king’s subjects in those remote countries the pleasure of showing their zeal and loyalty, and of imagining that they recommended themselves to their sovereign by the liberality of their‘ voluntary grants) there is no
6 This letter first appeared in a London paper, January 7, 1768,,and was afterwards reprinted as a postscript to “ The true Sentiments of America,” printed for Almon, 1768.