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During the war, vast sums of paper currency had been emitted by Congress, and large quantities of specie had been introduced, towards the close of the war, by the French army, and the Spanish trade. This plenty of money enabled the states to comply with the first requisitions of Congress ; so that during two or three years, the federal treasury was, in some measure, supplied. But when the danger of war had ceased, and the vast importations of foreign goods had leffened the quantity of circulating specie, the states began to be very remiss in furnishing their proportion of monies. The annihilation of the credit of the paper bills had totally stopped their circulation, and the specie was leaving the country in cargoes, for remittances to Great Britain ; still the luxurious habits of the people, contracted during the war, called for new supplies of goods, and private gratification seconded the narrow policy of state-interest in defeating the operations of the general government.
Thus the revenues of Congress were annually diminishing; some of the ftates wholly neglecting to make provision for paying the interest of the national debt; others making but a partial provision, until the scanty supplies received from a few of the rich states, would hardly satisfy the demands of the civil lift.
This weakness of the federal government, in conjunction with the food of certificates or public securities, which Congress could neither fund nor pay, occasioned them to depreciate to a very inconsiderable value. The officers and soldiers of the late army were obliged to receive for wages these certificates, or promissary notes, which passed at a fifth, or eighth, or a tenth of their nominal value ; being thus deprived at once of the greatest part of the reward due for their services. Some indeed profited by speculations in these evidences of the public debt; but such as were under a necessity of parting with them, were robbed of that support which they had a right to expect and demand from their country
Pennsylvania indeed made provifion for paying the interest of her debts, both state and federal ; assuming her supposed proportion of the continental debt, and giving the creditors her own state notes in exchange for those of the United States. The resources of that state are immense, but she has not been able to make punctual payments, even in a depreciated paper currency.
Massachusetts, in her zeal to comply fully with the requisitions of Congress, and satisfy the demands of her own creditors, laid a heavy tax upon the people. This was the immediate cause of the rebellion in that ftate, in 1786. But a heavy debt lying on the state, added to burdens of the same nature, upon almost every corporation within it; a decline, or rather an extin&ion of public credit ; a relaxation of corruption of manners, and a free use of foreign luxuries ; a decay of trade and manufactures, with a prevailing scarcity of money ; and, above all, individuals involved in debt to each other—these were the real, though more remote causes of the insurrection. It was the tax which the people were required to pay, that caused them to feel the evils which we have enumerated this called forth all their other grievances ; and the first act of violence committed, was the burning or destroying of a tax-bill. This fedition threw the ftate into a convullion which lasted about a year ; courts of justice
were violently obstructed; the collection of debts was fupended; and a body of armed troops, under the command of General Lincoln, was employed, during the winter 1786, to disperse the insurgents. Yet so numerous were the latter in the counties of Worcester, Hampshire, and Berkshire, and so obftinately combined to oppose the execution of law by force, that the governor and council of the state thought proper not to intrust General Lincoln with military powers, except to act on the defensive, and to repel force with force, in case the insurgents should attack him. The leaders of the rebels, however, were not men of talents ; they were desperate, but without fortitude ; and while they were supported with a superior force, they appeared to be impressed with that consciousness of guilt, which awes the most daring wretch, and makes him shrink from his purpose. This appears by the conduct of a large party of the rebels before the magazine at Springfield; where General Shepard, with a small guard, was stationed to protect the continental stores. The insurgents appeared upon the plain, with a vast superiority of numbers, but a few shot from the artillery made the multitude retreat in disorder with the loss of four men. This spirited conduct of General Shepard, with the industry, perseverance, and prudent firmness of General Lincoln, dispersed the rebels, drove the leaders from the state, and restored tranquillity. An act of indemnity was passed in the legislature for all the insurgents, except a few leaders, on condition they should become peaceable subjects and take the oath of allegiance. The leaders afterwards petitioned for pardon, which, from motives of policy, was granted by the legislature.
But the loss of public credit, popular disturbances, and insurrections, were not the only evils which were generated by the peculiar circumstances of the times. The emissions of bills of credit and tender laws, were added to the black catalogue of political disorders.
The expedient of supplying the deficiencies of specie, by emiffions of paper bills, was apopted very early in the colonies. The expedient was obvious, and produced good effects. In a new country, where population is rapid, and the value of lands increasing, the farmer finds an advantage in paying legal interest for money ; for if he can pay the interest by his profits, the increasing value of his lands will, in a few years, discharge the principal.
In no colony was this advantage more sensibly experienced than in Pennsylvania. The emigrations to that province were numerous the natural population rapid and these circumstances combined, advanced the value of real property to an astonishing degree. As the firft settlers there, as well as in other provinces, were poor, the purchase of a few foreign articles drained them of specie. Indeed, for many years, the balance of trade must have necessarily been greatly against the colonies.
But bills of credit, emitted by the state, and loaned to the industrious inhabitants, supplied the want of specie, and enabled the farmer to purchase ftock. These bills were generally a legal tender in all colonial or private contracts, and the fums issued did not generally exceed the quantity requisite for a medium of trade, they retained their full nominal value in the purchase of commodities. But as they weie not received by the British merchants, in payment for their goods, there was a great demand
for specie and bills, which occasioned the latter at various times to appre. ciate. Thus was introduced a difference between the English sterling money and the currencies of the colonies which remains to this day *.
The advantages the colonies had derived from bills of credit, under the British government, suggested to Congress, in 1775, the idea of issuing bills for the purpose of carrying on the war. And this was perhaps their only expedient. Money could not be raised by taxation--it could not be borrowed. The first emissions had no other effect upon the medium of commerce, than to drive the specie from circulation. But when the paper substituted for specie had, by repeated emiffions, augmented the sum in circulation, much beyond the usual sum of specie, the bills began to lose their value. The depreciation continued in proportion to the sums emitted, until feventy, and even one hundred and fifty nominal paper dollars, were hardly an equivalent for one Spanish milled dollar. Still from the year 1775 to 1781, this depreciating paper currency was almost the only medium of trade. It supplied the place of specie, and enabled Congress to support a numerous army; until the sum in circulation amounted to two hundred millions of dollars. But about the year 1780, fpecie began to be plentisul, being introduced by the French army, a private trade with the Spanish islands, and an illicit intercourfe with the British garrison at New York. This circumstance accelerated the depreciation of the paper bills, until their full value had sunk almost to nothing. In 1981, the merchants and brokers in the southern states, apprehensive of the approaching fate of the currency, pushed immense quantities of it suddenly into New-Lingland-made vast purchases of goods in Boston-and inftal, the hills vanished from circulation.
The whole history of this continental paper is a history of public and private frauds. Old specie debts were often paid in a depreciated currency-and even new contracts, for a few weeks or days, were often disa charged with a small part of the value received. From this plenty and fiuctuating itate of the medium, sprung hotts of speculators and itinerant traders, who left their honeft occupations for the profpect of immense gains, in a fraudu ent businets, that depended on no fixed principles, and the profits of which could be reduced to no certain calculations,
To increafe theft evils, a project was formed to fix the prices of articles, and restrain pertuns from giving or receiving more for any commodity than the price ftated by authority. These regulating acts were reprobated by every man acquainted with commerce and finance ; as they were in. tended to prevent an effect without removing the cause. To attempt to fix the value of money, while streams of bills were incessantly flowing from the treasury of the United States, was as ridiculous as an attempt to restrain the riling of water in rivers amidst showers of rain.
* A Dollar, in Sterling money, is 45. 6d. But the price of a Dollar rose in New-England currency to 6s. in New York, to 85. in New Jersey, PennSivania, and Maryland, to 75. 6d.; in Virginia, to 6s. in North Carolina, to 8s. in South Carolina and Georgia, to 45. 8d. This difference, originating between paper and specie, or bills, continued afterwa ds to exist in the nominal estimation of gold and silver, Franklin's Miscel. Works, p. 217.
Notwithstanding all opposition, fome states framed and attempted to enforce these regulating acts. The effect was, a momentary apparent stand in the price of articles ; innumerable acts of collusion and evasion among the dishoneft; numberless injuries done to the honeft ; and finally a total disregard of all such regulations, and the consequential contempt of laws, and the authority of the magistrate.
During these fuctuations of business, occafioned by the variable value of money, people loft fight, in some measure, of the steady principles which had before governed their intercourse with each other. Speculations followed and relaxed the rigour of commercial obligations.
Industry likewise had suffered by the flood of money which had deluged the states. The prices of produce had risen in proportion to the quantity of money in circulation, and the demand for the commodities of the country. This made the acquisition of money easy, and indolence and luxury, with their train of defolating confequences, spread themselves among all descriptions of people. But as soon as hoftilities between Great Britain and America
fufpended, the scene was changed. The bills emitted by Congress had long before ceased to circulate ; and the specie of the country was soon drained off to pay for foreign goods, the importations of which exceeded all calculation. Within two years from the close of the war, a scarcity of money was the general cry. The merchants found it impossible to collect their debts, and make punctual remittances to their creditors in Great Britain ; and the consumers were driven to the necessity of retrenching their superfuities in living, and of returning to their ancient habits of industry and economy.
The change was however progressive and flow. In many of the states which suffered by the numerous debts they had contracted, and by the distressés of war, the people called aloud for emissions of paper bills to supply the deficiency of a medium. The depreciation of the continental bills, was a recent example of the ill effects of such an expedient, and the impoffibility of supporting the credit of paper, was urged by the opposers of the measure as a subitantial argument against adopting it. But nothing would silence the popular clamor; and many men of the first talents and eminence, united their voices with that of the populace. Paper money had formerly maintained its credit, and been of fingular utility ; and pait experience, notwithstanding a change of circumstances, was an argument in its favor that bore down all opposition.
Pennsylvania, although one of the richest states in the union, was the first to emit bills of credit, as a substituse for specie. But the revolution had removed the necessity of it, at the same time that it had destroyed the means by which its former credit had been supported. Lands, at the close of the war, were not rising in value-bills on London could not so readily be purchased, as while the province was dependent on Great-Britain the state was split into parties, one of which attempted to defeat the measures most popular with the other--and the depreciation of continental bills, with the injuries which it had done to individuals, inspired a gene-, ral diftrust of all public promises.
Notwithstanding a part of the money was loaned on good landed security, and the faith of that wealthy ftate pledged for the redemption of
the whole at its nominal value, yet the advantages of specie as a medium of commerce, especially as an article of remittance to London, soon made a difference of ten per cent. between the bills of credit and specie. This difference may be considered rather as an apppreciation of gold and silver, than a depreciation of paper ; but its effects, in a commercial state, must be highly prejudicial It opens the door to frauds of all kinds, and frauds are usually practised on the honest and unsuspecting, especially upon all classes of labourers
This currency of Pennsylvania is receivable in all payments at the custom-house, and for certain taxes, at its nominal value ; yet it has sunk to two-thirds of this value, in the few commercial transactions where it is received.
North Carolina, South Carolina, and Georgia had recourse to the same wretched expedient to supply themselves with money; not reflecting that industry, frugality, and good commercial laws are the only means of turning the balance of trade in favour of a country, and that this balance is the only permament source of solid wealth and ready money. But the bills they emitted shared a worse fate than those of Pennsylvania ; they expelled almost all the circulating cash from the states; they lost a great part of their nominal value, they impoverished the merchants, and embarrassed the planters,
The state of Virginia had too much wisdom to emit bills ; but tolerated a practice among the inhabitants of cutting dollars and smaller pieces of silver, in order to prevent it from leaving the state. This pernicious praetice prevailed also in Georgia*.
Maryland escaped the calamity of a paper currency. The houfe of delegates brought forward a bill for the emission of bills of credit to a large amount; but the senate firmly and successfully refifted the pernicious scheme. The opposition between the two houses was violent and tumultuous ; it threatened the state with anarchy; but the question was carried to the people, and the good sense of the senate finally prevailed.
New-Jersey is fituated between two of the largest commercial towns in America, and consequently drained of fpecie. This state also emitted a large fum in bills of credit, which served to pay the interest of the public debt ; but the currency depreciated, as in other states.
Rhode Island exhibits a melancholy proof of that licentiousness and anarchy which always follows a relaxation of the moral principles. In a rage for upplying the state with money, and filling every man's pocket without obliging him to earn it by his diligence, the legislature passed an act for making one hundred thousand pounds in bills; a sum much more than fufficient for a medium of trade in that state even without any specie. The merchants in Newport and Providence opposed the act with firmness; their opposition added fresh vigor to the resolution of the assembly, and induced them to enforce the scheme by a legal tender of a moft extraordinary nature. They passed an act, ordaining that if any creditor should refuse to take their bills, for any debt whatever, the debtor might lodge
* A dollar was usually cụt in five pieces, and each passed by toll for a quar. ter; fo that a man who cut it gained a quarter, or rather a fifth. If the Rate jaould re-coin this filver, it must lose a fifth.