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ISSUES OF PAPER-MONEY.

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sufficiency of capital to meet their growing wants which has ever attended new settlements; and in nothing was this want of capital more manifested than in the scarcity of currency, which was the greater because money admits of the substitutes of barter and credit. Hence it was, that the first settlers in New England used the Indian wampum and beaver-skins as currency; that fish was used in Newfoundland, and tobacco in Virginia, for the same purpose. The scarcity of gold and silver in the colony might have been increased by the restraints on their commerce and industry, but it would have existed under any circumstances, as we always see in our rising towns in the West.

With this deficiency of money in the colonies, when they were involved in the expense of raising and paying troops, they were induced to issue bills of credit, or promissory notes, which being payable to bearer, and divided into sums of small amount, answered the purposes of currency; and they were subsequently led to further issues, as a cheap and ready way of remedying the general scarcity of money.'

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Massachusetts thus issued such bills in 1690 to pay army on its return from an unsuccessful invasion of Canada. She made another issue, on a like occasion, in 1707. South Carolina issued similar bills in 1702 to

1 Adam Smith thus explains and justifies the use of paper-money: "It is convenient for the Americans, who could always employ with profit in the improvement of their lands a greater stock than they can easily get, to save as much as possible the expense of so costly an instrument of commerce as gold and silver, and rather to employ that part of their surplus produce which would be necessary for the purchase of those metals, in purchasing the instruments of trade, the materials of clothing, several parts of household furniture, &c.-not dead stock, but active and productive stock."-III. Wealth of Nations, 453.

VOL. I. — 5

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DEPRECIATION OF PAPER CURRENCY.

pay the debt contracted by her invasion of St. Augustine; and she made a further emission in 1713 to meet the expense of repelling the Spanish invasion.

In the same year, to defray the cost of an expedition against Canada, New York issued bills to the amount of twenty thousand pounds, Connecticut of eighty thousand, and New Jersey of three thousand.

These bills of credit being redeemable at a distant day, and being commonly issued in excess, gradually depreciated, although, to sustain their credit, the colonial Legislatures had made them a legal tender.

As this provision proved injurious to the British merchants, to whom the colonists were generally indebted, the governors of the colonies were at length instructed to prevent the passage of any law authorising further issues of paper.

This restriction created great alarm in Massachusetts, where the paper currency being redeemed in annual quotas, must be continually diminishing, unless they could make new issues. They therefore devised the expedient of a currency to be issued by a land bank, for which a company was promptly formed; but, before it obtained a charter from the colonial Legislature, the company was dissolved by an Act of Parliament.

The inconvenience of this restriction of paper-money was augmented in Massachusetts, by the exemption of Rhode Island from its operation, since, by her charter, the Governor was not appointed by the Crown, and he either received no instructions from England, or disregarded them. Thus unrestricted, she exercised her power very liberally, and her issues contributed still further to the depreciation of paper-money, so that an ounce of silver which was worth but five shillings and two pence sterling, came to be worth in New England

PREDICTIONS CONCERNING THE COLONIES.

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twenty-seven shillings currency.' An act of Parliament was finally passed that no paper-money should be a legal tender in the colonies.

With the disposition thus plainly and frequently manifested on the part of the mother country to draw the cords of colonial dependence tighter, and from their efforts equally constant to resist or evade the trammels imposed on their commerce and manufactures, even then men discussed the problem whether this conflict of feelings and interests would not lead to a separation as soon as the colonies had sufficient strength to effect it; and it is interesting, at the present day, to notice the various speculations which then prevailed on this great question.

In 1755, John Adams, at that time the teacher of a village school, made the following memorable reflections in his diary:

"Soon after the Reformation, a few people came over into this new world for conscience' sake. This apparently trivial incident may transfer the great seat of empire into America. If we can remove the turbulent Gallics, our people, according to the exactest calculations, will, in another century, become more numerous than England itself. All Europe will not be able to

'The depreciation of the paper-money of the colonies is thus stated by Anderson in 1739, Vol. III. p. 498:

In New England, for £100 sterling...... £525 currency.

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Virginia is not included in this list, because she then had no papermoney; but she was induced, a few years later, to follow the example of her sister colonies; and at the breaking out of the Revolution, she had a large public debt, of which this paper currency was the evidence.

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PREDICTIONS CONCERNING THE COLONIES.

subdue us. The only way to keep us from setting up for ourselves is to disunite us."1

About the same time Hume, in his history of the House of Stuart, thus wrote:

"Speculative reasoners, during that age, raised many objections to the planting of those remote colonies, and foretold that, after draining their mother country of inhabitants, they would soon shake off her yoke, and erect an independent government: but time has shown, that the views entertained by those who encouraged such generous undertakings were more just and solid. A mild government and great naval force have preserved, and may still preserve, during some time, the dominion of England over her colonies. And such advantages have commerce and navigation reaped from those establishments, that more than a fourth of the English shipping is at present computed to be employed in carrying on the traffic with the American settlements." 2

Another writer, at that period, cited by Anderson, in speaking of these colonies, says:

"That their growth may render them dangerous I have not the least conception. We have already fourteen several governments on the maritime coast of the continent; and shall probably have as many more behind them on the inland side. Their jealousy of each other is so great, that they have never been able to effect such a union among themselves, nor even to agree in requesting the mother country to establish it for them. If they could not agree to unite for their defence against the French and Indians, who were perpetually harassing their settlements, burning their villages, and murdering their people, is there any danger of their

1 Adams's Diary, 264, cited in IV. Bancroft, 215.
2 Hume's History - Appendix to James the First.

EXPEDITION AGAINST LOUISBURG.

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uniting against their own nation, which they all love much more than they love one another?"

In 1755 Governor Shirley thus wrote to Sir Thomas Robinson :

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'Apprehensions have been entertained that they will in time unite to throw off their dependency upon their mother country, and set up one general government among themselves. But if it is considered how different the present constitutions of their respective governments are from each other, how much the interests of some of them clash, and how opposed their tempers are, such a condition among them will seem highly improbable. At all events, they could not maintain such an independency without a strong naval force, which it must for ever be in the power of Great Britain to hinder them from having; and whilst His Majesty hath seven thousand troops kept up within them, with the Indians at command, it seems easy, provided his governors and principal officers are independent of the Assemblies for their subsistence, and commonly vigilant, to prevent any step of that kind from being taken."1

Such seem to have been the sentiments of the British ministry a few years later, when, acting in accordance with these views, they brought about that separation, which, under more prudent and temperate counsels, might have been postponed one or two generations longer.

Let us now trace the course of events by which this result was hastened.

In the war which France declared against England in 1744, an expedition against Louisburg, in the Island of Cape Breton, was set on foot by Massachusetts, under

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