USA > Massachusetts > Suffolk County > Professional and industrial history of Suffolk County, Massachusetts, Volume II > Part 18
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The bill to be as follows, viz. : Twenty Shillings.
We promise for ourselves and partners to receive this Twenty Shilling Bill of Credit as so much lawful money, in all payments, trade and business, and after the expiration of twenty years to pay the possessor the value thereof in manufactures of this Province. Boston, etc.
It is worthy of remark that the anticipations of Governor Belcher were signally verified as time went on. The bank, no doubt, labored under the disadvantage of having opposed to it the highest colonial authorities; but it is easy to see that the basis upon which it was formed was not one which could be fairly sustained under varying conditions, and with the tendeney of human nature to throw disagreeable burdens upon others rather than to assume an equitable share of the load. The bank issued notes to a large amount, but when it became necessary to recall and redeem them it was found that quite a number of the asso- ciates were not in a condition to make good their pledges, and the more responsible of their number had to bear a disproportionate share in the work. Thus as late as 1460 the stockholders of the Land Bank peti- tioned the Legislature for authority to start a lottery for the purpose of raising money to meet their indebtedness, and as late as 1:68 there were petitioners to the General Court asking that they might be relieved from obligations that had been assumed twenty-eight years before. The set- tlement led to a vast amount of litigation, the holders of the notes hav- ing to content themselves, after expenses had been paid, with a rela- tively small return upon the face value of the bills, while, as we have just said, the burden of redemption fell upon a relatively small number of the original incorporators.
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And yet, this bank, so erndely organized, and bearing upon its face the marks of speedy dissolution, was for a time so popular as to almost occasion a local revolution. In May of 1141 the governor had assur- ance that a thousand men were to rise in Boston and to be joined by a number of thousands from the country, for the purpose of demanding his reasons for opposing the Land Bank, ard to mob the traders who re- fused to sell coin for its bills. The insurrection did not materialize. partly for the reason that Governor Belcher took the initiative and ar- rested a number of those who were thought to be the leaders in the con- templated disturbance.
To show the mixed state of the currency of Boston at that period, it is well to quote from a letter written by a resident of Boston to a mer- chant in London. "We have in Massachusetts," he says, "public bills of four provinces at 29s for an ounce of silver. New tenor of Massa- chusetts at Gs &d of silver. Connecticut new tenor at &s, and Rhode Island new tenor at 6s 9d. Of Private Bank bills there are £110,000, issued in 1433, to prevent an enormous Rhode Island emission from de- preciating our currency. They are punctually paid in gold and silver, and are 33 per eent. better than Province bills. There is another sum of £120,000 in merchants' notes emitted in 1440, on a silver bottom to stifle the Land Bank, which are equivalent to cash. They who are re- sponsible for them are eminent and wealthy merchants. The bills of the Land Bank are payable in 20 years, and then only in goods at an arbitrary price."
It will thus be seen that the little town of Boston at that time was not only overloaded with depreciated curreney, but had a vast and curious assortment of different kinds of notes in circulation, so that the ordinary tradesman, as well as the ordinary citizen, needed to possess an intimate knowledge of the varieties of paper bills and their respective values, which would now be found only among those trained in the office of an exchange broker.
Matters seem to have gone for the next few years from bad to worse, for while the paper issues of the Province of Massachusetts were not materially extended, the emissions of bills of credit by the adjoining colonies were extremely frequent. In 1444 the governor in a message to the Legislature stated that there were at that time 6440,000 of Rhode Island bills in circulation, of which £350,000 were passing in Massachusetts, and that other adjoining colonies seemed to consider that Boston was the best place in which they could dispose of their paper money.
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On May 31, 144, in the annual election sermon, Rev. James Allen said, referring to these troubles: "And you (the governor) will be the means of delivering us from the perplexing difficulties we are involved in, particularly by an unhappy medium, uncertain as the wind, and fluctuating like the waves of the sea, which lies at the merey of every one to rise or sink at his pleasure. Through the unrighteousness whereof the land mourneth, and the eries of many are going up into the ears of the Lord of Sabbaoth."
A changed condition, when it came, was brought about by circum- stances that could not have been foreseen, and yet through a line of action suggested several years before by Mr. Thomas Hutchinson. In 1444 a report was made by the English Lords of the Treasury on the expense of the North American colonies in the expedition against Cape Breton. They stated the proportion of Massachusetts to be £261,200 in the new tenor bills. This computed at 142 per cent. for exchange made about £183,000, which was said to be the credit of this colony. On the receipt of this estimate, Mr. Hutchinson moved in the Legis- lature that the public notes be redeemed by specie to be received from the Royal Exchequer for charges in the capture of Louisburg.
In the meanwhile the merchants of London who traded in Boston petitioned the Parliament to the same effect. The project of Mr. Inteh- inson did not at first receive much encouragement, at least from the House of Representatives, and it seems to have required all of his per- suasion, eloquence and influence to secure its adoption. But in time he succeeded, and a committee was designated to meet similar bodies from other New England governments on the same subject. These other colonies did not, however, seem to be favorably impressed with the plan, hence it was necessary for the Province of Massachusetts to 11n- clertake the work of redemption on its own account.
The redemption law passed the Legislature on the 26th of January, 1:48. It required all of its bills of credit to be exchanged at the treas- ury by March 31, 1450, at the following rates: For 45s in bills of the old tenor, one piece of eight or a dollar; for 11s and 3d of the middle and new tenor, the same coin; and so in proportion for greater or less sums. If any of such bills were kept back for a year after the time designated, they were to be irredeemable. The enactment further pro- vided that as the paper system was to be dispensed with, all public and private demands contracted after the date fixed for recalling the treasury notes should be accounted as payable in silver coin estimated at 6s sd
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for an ounce. It was further provided that what the specie, to be re- ceived from England, should lack of paying these notes, should be can- celled by a tax.
In addition the following penalty was enacted for taking or passing any of the New Hampshire, Connecticut and Rhode Island notes, the oath in question to be taken at the renewal of licenses of all innholders and all officers of towns and states: "You, A. B., do in the presence of God solemnly declare that you have not, since the last day of March, 1750, wittingly and willingly, directly or indirectly, either for yourself or any for or under you, been concerned in receiving or paying within this government any bill or bills of credit of either of the gov- ernments of Connecticut, New Hampshire or Rhode Island. So help you God."
It is probable that this oath was more formidable in its reading than in its execution, for it is a matter of record that bills of these ad- joining colonies circulated to some extent in Boston after the period designated.
On September 18, 1449, the public were informed that the specie paid by the crown had arrived in Boston under the charge of Mr. William Bollan, then the provincial agent of Massachusetts in London. This money consisted of 653, 000 ounces of silver and ten tons of copper. There is reason to believe that this was more coin than there had ever before been in Massachusetts at the same time. The remittance and other subsequent ones, in connection with the prohibition of bills of credit here, gave to Massachusetts the name of the "hard money colony."
In the following winter, in order to prevent the farthings and coined silver and gold from passing at a proportionately higher rate than a milled dollar at 6s., it was thought desirable by the Legislature to issue a paper bill of small denominations, and for this reason it was voted that $3,000 of bills be struck off, to be denominated 1d., 2d., 3d., +1/2d., 6d. and 18d.
While it is probable that among the business men the change in the system of currency was received with unqualified satisfaction, there appears to have been serious doubts in the minds of the agricultural classes who traded in Boston. This is brought out in the following poetical dialogue, printed in the Boston Weekly News Letter of 1150, Honestus representing a country trader and Politicus a merchant :
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HONESTUS.
Why, Sir, to tell the truth, I'm come To bring some paper trash to Town
To pay my debts; for 1 do fear
I shan't be able 'nother year.
POLITICI S.
When once the dollars shall come out,
Ther 'l be no want of money then ;
Eager you '1 catch the glittering Coin,
And bless the golden era when
This paper trash is no more seen.
HONESTUS.
Ah, Sir, we hear the Province bills
Do lie recluse within the tills
Of some great men, to wait the time The dollars shall the same redeem. And what is worse than all, 'tis said
To foreign lands they '1 be conveyed.
Then what's our fate-the silver gone- The paper burnt-and we undone.
This feeling of distrust was further increased by artful agitation on the part of those who had previously benefited through the paper issues of neighboring colonies, and the House of Representatives took into consideration the case of two individuals who were suspected of pub- fishing and dispensing a printed paper containing sundry expressions tending to bring into contempt and subvert the constitution of this government. These persons appear to have been concerned in having verses printed in Rhode Island containing a lamentation for the death of old tenor currency and having very hard reflections on the General Court. In April of 1751 a large number of people from Abington and other towns came to Boston with riotous intentions to force the Legis- lature to condemn a system which was threatening to eut down the wages of those dependent on labor for their support, while granting to the wealthy an opportunity to hoard up silver and gold. The rioters, however, when they arrived in Boston were not met by the large party of co-operators that they had expected, and their courage consequently evaporated.
The commissioners appointed to exchange the public notes for specie closed their labors June 3, 1451, and reported at the time that they had redeemed 51, 192, 236 5s. Id. of the different eredit bills of the colony,
24
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at the rate in the total of about one in specie for ten in paper. This was nearly all of the paper eurreney that was ont. For years following petitions came in from time to time to the Legislature asking that the paper money found might be redeemed, some having been discovered in old desks, bottoms of leather chairs, and other private places of de- posit. The government of the time seems to have been exceedingly lenient and to have allowed the claims of these subsequent petitioners for losses sustained in bringing about this wholesome and healthy change.
It is only fair to point out that the one chiefly responsible for the reform was Mr. Thomas Ilutchinson. As he remarked afterward to a correspondent in England: " I think that I may be allowed to call my- self the father of the present fixed medium, and perhaps have a natural bias in favor of it." It is well to have this fact kept clearly in view, for Governor Hutchinson, as he afterwards became, was later one of the most unpopular men in Boston, and the historical accounts that have come down to us concerning him have referred almost entirely to his opposition to the patriotie wishes of the colonists, and have made little reference to the very able part he took in reseuing the colony from this quagmire of depreciated currency.
On June 25, 1:51, a law was enacted by Parliament that the Massa- chusetts Bay colony should not thereafter issue bills of credit, and should emit only such paper money as was needed for the expenses of the government each year, or in case of invasion by an enemy, but never as a legal tender for debt. That this requisition might be com- plied with, any governor who should consent to a rule of different signification on this subject was to be dismissed from office and ever after be ineligible to public employment.
In spite of the large volume of specie that had been received in 1:49, in 1:55 the contraction of the currency, due to the necessity of paying bills abroad, was so great that the General Court voted to negotiate a loan of £23,000 in London for six years at lawful interest. This course was adopted several times as a means of obtaining the silver needed for the conduct of business.
In 1460 the Lords of the Treasury in London, in settling the account of expenses due to carrying on the war with Canada, allowed to Massa- chusetts the sum of £200,000 as its proportion. It was thought desir- able by some that this should be remitted to the colony in silver, in the same manner that the former remittances had been made; but the chief
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magistrate for the time being, Governor Bernard, considered it desir- able to give to the General Court a simple lesson in finance, as had some of his predecessors. He said: "If we look for the advantages which are to balance the great cost of importing the reimbursement in hard money, we shall find them all imaginary. They are not of the real value of one shilling. If there is any want of specie for circulation, it would be but a temporary convenience, and not a lasting gain to introduce specie, and the want must be great to justify so large a premium as ten per cent. It is the nature of trade, like water, to bring itself to a level. It is just the same thing, whether you bring a certain quantity of specie into the province, or prevent the like quantity from going out of it. As, therefore, the advantages of negotiating your money by bills are very plain and certain, the only question will be whether it is practicable."
In accordance with the advice of the governor it was ordered by the Legislature that the treasurer draw bills of exchange on London for the proportion of money granted by Parliament to Massachusetts for military charges.
At this time a new question arose in the colony in relation to our local currency, which is curiously the antithesis of the controversies that have been going on for some time past in relation to the currency system of the United States. Silver was found to be most profitable by the merchants for the payment of debts due in England, and for this reason silver was the metal oftenest exported. At the same time gold not being of so ready an exchange there for mercantile obligations, and not being a legal tender for debt here, although it was current as in- dividuals might agree, was exceptionally plentiful. To prevent the inconvenience arising from this unsettled relationship between the two metals, a majority of the House of Representatives, as well as the business community, were desirous of having gold made a legal tender.
This led to the introduction of a bill into the General Court in No- vember, 1761. This said: "Whereas, divers species of foreign gold coin are current in this province, and are received into and paid out of the public treasury, but are not lawful money in publie or private pay- ments, by which it is apparent many inconveniences have arisen to the prejudice of trade and commerce, and consequently very detrimental to the public, therefore such money is to be placed on the same footing of legality as silver." Curiously enough, in this effort to give a legal
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tender value to gold Mr. Thomas Hutchinson was found in the opposi- tion. So far as one can judge, he was profoundly convinced of the desirability of having a single standard of value, and was of the opin- ion that silver best performed that function. He said, writing to a correspondent in December, 1461: " The last session of the Court was spent in a controversy about our money. The House passed a vote for making gold a lawful tender at the rate it passes. This would have driven away our silver and eventually depreciated the currency. 1 stood in front of the opposition, and it was with difficulty the Council was kept from concurring. I am afraid the next session, as the gov- ernor at present is not sensible of the ill consequences of the proposal, it will pass. If it succeed 1 look upon it to be the first step of our return to Egypt."
A part of his premonitions were correct. In January, 1462, in again writing to his correspondent he says: "The House has passed a bill for issuing notes payable in dollars at 6s, or in gold at the rate now set, which sinks our currency four or five per cent. It will pass the Board with little opposition. The secretary, Irving, Bowdoin, and two or three more are with me, and a great clamor is raised against my papers. Pray tell me if I am wrong and let me know what people say on your side of the water. If the party see them condemned I shall have no chance. Our debts will be paid in a twelvemonth."
Apparently the evils that Mr. Hutchinson anticipated did not come to pass. The people of Boston were severely straitened in their re- sources by depreciations in trade, and by their inability to export in commodities values to the amount that they imported. But the driv- ing out of silver by gold, and the necessary adoption of a single standard of gold, did not seem to follow.
The financial affliction which was next felt, and which aroused the quickest opposition, was the imposition of taxes by the English Parlia- ment, which necessitated the payment of coin into the British treasury. It may be well to point out at this time that the indignation that was aroused in Boston and its vicinity by the Stamp Aet and other similar imperial enactments, was due quite as much and perhaps more to the belief that they would deplete the colony of its currency than to any theoretical feeling concerning the injustice of imposing a tax without according representation. We are disposed to believe that this basis for resistance was an afterthought. Thus in 1268 a majority of the Massachusetts Couneil petitioned the House of Commons to aid in the
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removal of grievances it endured. The petition says: "This province is still in debt on account of the charge incurred by the late war. The yearly taxes upon the people for lessening the debt, though not so great as during the war, are nevertheless with more difficulty paid by reason of the great scarcity of money. The scarcity of money in the colonies is owing to the balance of their trade with Great Britain being against them, which balance drains them of their money to the great embarrassment of their trade, and the only source of it. This em- barrassment is much increased by the regulations of trade and by the tax acts, which draw immediately from trade the money necessary to support it, on the support whereof the payment of the balance afore- said depends. The exports of the colonies, all their gold and silver, and their whole power of remittance falls short of the charged value of what they import from Great Britain."
In other words, the imposition of taxes which drew the money directly from the colony without hope of its return, tended, in the opinion of the Boston merchants, to bring their currency system again into the demoralized condition in which it had been prior to its estab- lishment upon a specie basis. In spite of these protests the tax still continued, and, curiously enough, the industrial and financial condition of the province seemed to improve.
Thus in January of 1044 Governor Hutchinson said: "There never has been a time since the first settlement of the country when the treasury has been in so good a state as it is now. I may congratulate the province upon its being entirely free from debt, the tax of last year with a stock in the treasury being equal to all the securities due from the government and to the charges of the current year." The people of Boston were not in the least disposed to receive these flattering statements in good part, and maintained that the governor's deserip- tion was due to his desire to pacify the political animosities of the people, and that they were not justified by facts, though so far as evi- dence shows they were incorrect in this supposition, for the statements of Governor Hutchinson appear to have been strictly true.
In May of 175 the Committee of Safety appointed by the Provincial Council, passed the resolve that, "Whereas, many of our brethren of the colonies of Connecticut and Rhode Island are now with us to assist us in this day of public and general distress, in which we are deeply concerned, and whereas our brethren of said colonies have brought with them some of the paper currencies of their respective colonies,
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which have not of late had a currency with us, and for want of which our common interests may greatly suffer, Resolved, that said paper currencies shall, and after the date hereof, be paid and received within this colony in all payments to all intents and purposes in the same pro- portion to silver as the same are paid and received within the respective colonies by which the same have been issued."
This was the first act of financial independence, setting, as it did, at defiance the severe restrictions and penalties that the English Parlia- ment had imposed. To sustain the defences of the colony money was needed, and the Provincial Congress empowered the treasury to borrow £100,000 lawful money seeured by notes of the province at six per cent., and the General Congress was asked to promote the circulation of this currency throughout the Union. The form of note was substan- tially the same as had been previously issued, bearing the heading of the colony of Massachusetts Bay, and stating that the notes "will be received in all payments in the colony, and no discount or abatement shall be made thereon in any payment, trade or exchange whatsoever."
This was a revival of paper money as a legal tender, after a lapse of more than a quarter of a century, during which time the people had become aceustomed to and had realized the advantages of a specic eur- rency or of a curreney founded distinctly upon specie. These provin- eial bills of credit with the notes to the amount of $2, 000, 000 issued by the Continental Congress, soon had their effeet in bringing about their own depreciation, although the congressional bills were issued under the order that " whoso refuses to take these notes without some dis- count shall be deemed an enemy to his country;" while the Com- mittee of Public Safety of Massachusetts voted on their second issue of paper money in July of 1175 that they were a legal tender in all pecin- iary transactions as equivalent to specie at the usual rates, under penalty of treble damages to both the payer and receiver.
The General Court of the colony under the new order of things, which assembled in August, 1275, authorized a fresh emission of £100, - 000 in paper, and at this time deereed that on the back of it should be stamped the figure of an American citizen, with a sword in his right hand, and with an inscription which is still our State motto. This money received the appellation of "sword in hand money " because of the armed image on its back.
While the discounts at which the colonial and continental paper money eireulated were at first comparatively slight, during the year 1:15 loss
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of credit became apparent. In the early part of 1666, as a sign of the scarcity of specie, as well as of a distrust in the security of paper money, strenuous efforts were made to raise 630,000 of hard money in Massa- chusetts on exchange for bills, this to promote the expedition of our forces to Canada; but the effort met with a disheartening degree of success.
In order to meet this growing trouble the New England colonies sent delegates to a convention which was held in Providence, R. I., to see if something could not be done by general action to strengthen their credit. The result was a passage of resolves that "whoever pays, or receives the colonial or continental currency at a less rate than origi- nally preseribed, besides being accounted a foe to the liberties of his country, shall forfeit the sum so exchanged." They also advise several States to make this paper a legal tender for debts as previously re- quired, and to provide that a refusal of it in such a mode should be the extinguishment of all claims.
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