USA > Pennsylvania > The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. III > Part 3
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Sixthly, I must also take leave to differ in opinion with those, who, without enquiry, and by wholesale, are pleased to condemn all schemes of lending money to be discharged by annual payments; for I truly think that method will not only suit the different circumstan- ces and conveniency of the people best, but in all re- spects will prove the safest and most profitable, as well as equal; and my reasons for it are these.
1st. Whatever quantity be issued, if one fifth, sixth, or tenth part of the sum, according to the time for which it is to last, must necessarily come into the office every year, it may be lent out again at five per cent. for any time within the term, to such persons as had no place or opportunity to come into the first loan: By which means all the frightful odd things, mentioned in the Gentlemens sixth observation, will presently vanish; for every man, in this case, according to his ability, may, if he thinks fit, share in that advantage, which the pub- lick most generously and prudently offers to the necessi- ties of the people.
2dly. If so great a share of the whole comes in yearly to the office, in order to be let out again, it will, in a great measure prevent engrossing, and help the circu- lation considerably: It will also give more frequent op- portunity of discovering frauds, and gradually increase the public stock and revenue of the bank; and by that means it will demonstrably sink the original sum within the time prefixed; that is to say, the paper at the end of that term, will either be found in the office, or its value in cash, ready to pay what shall then happen by acci- dent to be yet abroad.
Seventhly, If too great a security is demanded for the loan of publick money, I think it will in a great measure frustrate the design of relieving many of the middling and most industrious sort of the people, whereof, it is my opinion, that one half of the value of lands, one third of houses, and personal estates, and near the whole value of ground rents, may very safely be lent to those who are willing and able to give such security.
Eighthly, If upon further consideration, you find that the sum intended may he issued to better advantage for a longer time, I think the objection that our acts can only subsist five years without being approved, is of no
weight; for, besides that it would not be very civil to suppose, that the legislative power here would deliber- ately go upon any act of that importance, or indeed of any kind, which we had the least cause to suspect would be disagreeable to his Majesty, or the sentiments of his ministry, we know very well, it is in his Majesty's royal power and prerogative to repeal and make void, at any time, all acts of Assembly to be made or passed in America. And for my part, if I did not in my con- science believe that the act now proposed, could be made on such a rational, just and equal foot, as would rather claim his Majesty's gracious favour in assenting to it, than render it obnoxious to his imperial justice, I should neither have given myself nor you this trouble.
Gentlemen, these are most frankly and sincerely my present sentiments of the matter before you, and as I do not find myself inclined to dispute, and much less to shew any stiffness or obstinacy, in an affair of such a general concern, I shall very much rely on your diligent circumspection and care for the good of your country, being still ready and willing to give you all the assist- ance in my power. WILLIAM KEITH.
January 22, 1722-23."
The proceedings of the Assembly do not appear to have given satisfaction, for petitions were on the 22d November presented, praying that the paper currency "may be made to answer former contracts, and be con- tinued, longer than ten years;" "that the sum be in- creased;" and "that the, manner of its sinking be formed on a scheme of sinking principal and interest together," "and the security to be given be lessened." It was then determined, after a long debate to increase the amount to £15,000; to extend the time to 8 years; to be paid in annual payments, the security to be double the value in lands, lots, ground rents, and free hold estates, in fee simple; and in houses freehold in fee simple, three times the value of the sum borrowed. "It was agreed to ap- point 4 commissioners and trustees to execute the office of managing and disposing of the paper currency, and that the office to be erected for the issuing of it be set- tled in Philadelphia; but on occasion, to be also held in Bucks and Chester county." It was ordered also, that a committee "consult the Attorney General, and other persons skilled in the law, as they think fit, in relation to drawing the bill for a paper.currency." Good plate was agreed to be received as security for paper at five shillings per ounce. On the 26th of January, two of the petitioners of the 22nd, presented the following an- swer to the sentiments of Logan and Norris.
"To the Honourable House of Representatives of the Province of Pennsylvania, in Assembly met, the twenty-fourth day of January, 1722-23.
May it please this Honourable House,
· We beg leave to lay before you some considerations, in answer to the sentiments of several gentlemen and merchants, in relation to a paper credit, which they were admitted to present the tenth instant.
First, It is but just to concede to their notion, ' That this Province is dependent on, and derives all its powers from, Great Britain, and that it is the highest wisdom in our legislature, to direct themselves by the same pru- dent measures, as far as our circumstances with theirs / may agree.
Secondly, It is by them alleged, That when the nation was distressed by war, and their coin generally debased, yet the parliament would not advance their currency on any account; and that they renewed it at the same fine- ness, to pass at the former rates, and they have unaltera- bly kept to the same. And further, that twelve hundred
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thousand pounds made good to private persons all their loss received from exchanging their clipped and debased coin for the new mnilled -money delivered at a par. To which we say, that we know (by what authority soever it was or is done) that since, if not then, the coin hath been (particularly the gold) often raised and lowered; and that the twelve hundred thousand pounds did make good all the loss in the kingdom for the debased coin, is an assertion we doubt not but there are many in Great Britain, (and some here) can inform those gentle- men otherwise.
Thirdly, In concurrence with the sentiments of these gentlemen, in their third paragraph, we humbly recom- inend it to our legislators, that our bills be established on so just a foundation, that while in being, they may still continue of the same value with real money, according to the rates at which they are first issued.
Fourthly, If those bills cannut be procured, where they are to be issued, for a less pledge or security than gold or silver would be, the easy terms of refunding them will not lessen their value; for the stamp of au- thority has its own laws, as unalterable in themselves as those of interest or increase are in usury, and which, .such as are versed in those affairs, as carefully consider.
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Fifthly, The schemes most commonly talked of for lending out sums, to be discharged by annual payments equal to, or not much exceeding the interest, for a cer- tain number of years, without paying any principal, are not partial and unjust, nor destructive to publick credit; for the pledge secured is more than an equivalent to the sum received, and the interest given is not inconsiderable even of the lowest rated schemes. To whom are they partial and unjust, since no method is proposed or con- trived for any particular man or men, excluding others? The benefit is to be general, and though the necessities of the poor chiefly call for the succour, yet it is more within the compass of the rich to be thereby favoured, because they have plenty of pledges: Let them not then complain of partiality and injustice through their own negligence. How are such schemes destructive to pub- lick credit, since the publick is capable of yielding so much relief to a necessitous people, without hurting it- self? No, the design is laudable, and greatly becomes our generous patriots. But perhaps there are some that are partial to themselves, although they seem to speak in defence of the publick, affording us room to guess, they would have no money borrowed, but of private persons, and begrudge the borrowers of the publick the gain (of near thirty pounds, according to the exquisite calculation of those gentlemen) because they know, that such an advantage is not equal to the sweet incomes of usury.
Sixthly, All such projects are not exceedingly weak and unjust; for what man, had he money by him to lend, would refuse it on sufficient security?", And if he does lend it on such a security, where can we suppose the lender's loss to be? Or wherein is the paper credit les- sened, when there is more than its value to support it? Their supposing it to be lent to all is an amusement; and the tribunal is easily to be erected, to find out persons of worth from those that are worth nothing; and the poor (who, they say, have as little merit as any) may have a chance to get it by labour, by the employers having something to pay, both to their and the poor man's advantage: And thus a way may easily be found for dispensing publick favours. We presume to add to those great and rich men, (and therefore, according to their account, sober and industrious men) that we humbly hope a medium in business will run us from the loose way ofluxury, idleness and folly, which often hap- pens from being nonplused in a regular dispatch of af- fairs for want of pay when due.
Seventhly, This currency, or paper money, will not fall in value, if raised on a good foundation, as recom- mended in the third article. The rising of silver is alone owing to the avarice of the possessor, who knowing there is no other currency, (and that too at this time ex
tremely scarce) they have imposed on the necessities of people, by advancing it near two shillings per pound; but it is not improbable, that our bills being always ca- pable of purchasing our country produce, their value being equal to silver, will again reduce it to its stated worth, and be as satisfactory to the kind lender, who (according to them) relieved the borrower in distress, or sold him land or goods at their real value at the time of lending or sale.
Eighthly, Those do not deceive themselves, who, because gold and silver may be had at New York, or other places, in exchange for their paper money, suppose that the one is as good as the other. It is a re- ceived maxim, that the value of any thing is in propor- tion to what it will purchase. Now paper bills will, at this time; and would formerly, purchase goods in New York cheaper than Cash will at Philadelphia; and it is obvious that some other reasons may have occasioned the rise of silver and gold there, since we have here advanced at least six pence per ounce on silver, beyond the rate ascer- tained by act of parliament, without any such measure as paper money.
These being premised on the general heads, what next follows is an answer to their three conclusive points:
1st, If the whole sum struck be so small, that it will not answer the absolute and immediate necessities of those who have real securities to give, it will not (we humbly conceive) be sufficient to pass from hand to hand for a currency.
2d. That which is a benefit to any person for five years, will be a further benefit for a longer term; and, perhaps, the fixing it to a short date may abridge some persons from effecting what they might accomplish for their own good and the country's advantage, in more time. The difficulty of exchanging worn out bills for new, in an office to be erected for that purpose, we doubt not the care and ability of this assembly to surmount, and render practicable. And, if our laws can continue in force no longer than five years without the royal ap- probation, yet we presume a law so beneficial to the subject here, so concurrent to the practice of neighbor- ing colonies, and no ways repugnant to the laws of Eng- land, will, when duly represented at home, not want that approbation.
3d. We confide in this, that the wisdom of this ho- nourable House needs no direction, in the care to be taken, of sinking the paper currency in course, and in a just manner; for we esteem you (and not these gen- tlemen petitioners) to be proper judges of the methods hitherto discoursed of.
These observations, may it please this honourable House, on the sentiments of those gentlemen, we hum- ly offer to your consideration, and pray your favourable construction."
On the 29th, the bill for making £15,000 in bills of credit was reported, and read a second time on the 30th, and further to be considered in the afternoon. In the meantime, the following "Further sentiments of the gentlemen and merchants," were read.
To the Honourable House of Representatives of the Pro- vince of Pennsylvania.
"In the important affair of a paper credit, now under the consideration of your House, it is to be hoped that all honest men, amongst us, think of it from the same principles, and with the same inclinations, viz: to pro- mote the true interest and reputation of this colony.
Upon these views alone we lately took the liberty to petition your honourable House, to be heard upon the subject, and the next day exhibited our sentiments, in writing, drawn into several heads, and built on such so- lid foundations of truth, that we are well assured they cannot be shaken.
Yet, as the opinions of men are extremely various, and great pains have, of late, been taken here, to instil and strengthen popular errors on that subject; we find
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divers of these drawn up, in a paper, lately presented to, and received by, the House; containing, as it says, some considerations, in answer to our said sentiments, but truly consisting, in a great measure, of those com- mon mistakes, which have unhappily occasioned such differences in opinion, even among the well meaning, who, we presume, all aim at the public good.
The more clearly, therefore, to manifest these popu- lar deceptions, to prevent the unhappy consequence, that may attend their obtaining further place, and more effectually to establish the truth and certainty of those heads, we before presented, we humbly beg leave to offer the following observations, on the several parts of that paper, with some further sentiments on the whole matter; which, we hope, will be interpreted according to their true intention, that is, to serve the public, in which we are all jointly embarked.
The design of what we then exhibited to the House (as is evident from all the parts of it) was not to oppose a paper credit, but to show the danger of ill concerted schemes, and to point out, as far as was then proper, what we conceived to be the most effectual measures, for answering all the just ends, proposed by such a cre- dit.
In the three first articles was represented how much it became us, as a government depending on Britain, to copy after the great examples their parliaments have set before us: particularly these two cases of keeping our bills, when issued, equivalent to such money.
To the first of these, those concerned in that paper are obliged to concede.
To the second they answer with a gross mistake, and an unbecoming trifling: for, it is positively true, that since the great reformation of the English coin, in 1696, there has not been the least alteration in it; guineas, which till lately, never were a legal tender, were limited that year, that they should not, under a penalty, be re- ceived at more than twenty-two shillings each. But no sooner did silver, the true lawful money of the kingdom, circulate freely again, which, by the great diligence of the several mints, they did, within six months after; but the people refused to take them at more than twenty- one shillings and six pence, as formerly; at which rate they have constantly continued, till the mines of Ameri- ca, especially of Brazil, producing much more gold than silver, in value, the first has fallen in Europe; on which, to prevent the exportation of silver, they are, by a late act of parliament, reduced to twenty-one shillings; and at that rate, at length made a legal tender, that is, lawful money of the nation. If foreign gold or silver be meant, which are only merchandize, and rise, as the demand is for exportation, these are entirely out of the question. To the other part, where they alledge, that the twelve hundred thousand pounds did not make good all the loss in the kingdom; we say, that our informa- tions are as good as any can pretend to, in this province.
That sum on large trials made in the exchequer, of the monies received the year before, was judged suffi- cient to make good the whole loss; and all, who brought in their money, within the time limited, had it made good to them. It is true, some persons disaffected to the government, and others fond of their hoards, for- bore, and suffered accordingly: but the great care of the parliament, and therefore the truth of our assertion, are from lience equally clear.
The third head, which is the greatest point, of keep- ing up our bills to the same value with real money, ac- cording to the rates at which they are at first issued, is also conceded in general terms; and the just foundation mentioned, is all that is contended for.
But what is advanced in the fourth and fifth articles, is the grand popular error, that endangers a disappoint- ment, in that great end proposed. For no stamp of au- thority can give an intrinsic worth, where it really is not. Experience, whose instructions even the weakest may reach, will show us, that bills ef credit have been issued in no place on this continent, where they have not, soon-
er or later, sunk below the value, at which they were at first made; and yet they all had as powerful a stamp of authority as any we can give. We are now upon put- ting in practice a project of the same kind; it is there- fore the more highly incumbent on us, prudently and advisedly to consider in time, by what means the incon- veniences that have attended others, in theirs, may be prevented in our undertaking.
The first remark we offered on this head was from this foundation, that if the public by their terms of issu- ing their bills, show they estimate them at less than they would real money; all mankind, but especially the tra- der, whose business it is to exchange his commodity for its real value, will naturally be taught to do the same. The greatness of the security makes no manner of elif- ference, unless the borrower of the hills should be ob- liged, for one hundred pounds lent in them to repay; upon that security, the like sum of gold or silver, and not in the same specie; for should one, upon lending any rari- ty, of no great intrinsic value, take a security of one hun- dred pounds, to have it returned, this would not add to the real worth of the thing lent, though it showed, the lender resolved to have it restored to him; or, if a man should assign the bond of another person of dubious credit, for one hundred pounds due, for the consideration of fifty pounds only, to be paid by the assignee, in twelve months to the assignor; and for the payment of the fifty pounds, should take a mortgage or security worth five hundred pounds, this indeed will make the debt of fiffy more certainly good, but will not add one farthing to the value of the bond assigned in the same manner, if a person be possessed of fifty pounds in bills of credit, though there be a security of one or two hundred pounds given for them in the office by the borrower at the first taking of them out, should these bills, for the same reasons that have prevailed in Boston and other places, in the like case, sink in their value, and become worth less than forty pounds, while in that person's hands, the security given will in no manner, compensate that loss to the possessor; for neither he, nor even the public, can have any satisfaction from the se- curity; because, if the borrower returns the bills again, when due from him, though they should not then be worth twenty pounds of that coin, by which they were first rated, his security will be entirely discharged by the payment. This is most evident and plain to any man of reason, who will make use of it: but persons over-run with the common notions, depending on the applause of such as are ready prepared to give it to every thing favouring their own opinions, may think it sufficient for answering the most certain truth, barely to deny it, and confide in the numbers, that are to support their assertions; which we conceive has been the only motive to those persons who drew up or presented the paper now under consideration; but the unhandsome reflections that are cast in that part of it, shall for the present be waved, and referred to the close of this, as a more proper place.
In our fifth and sixth heads we asserted, that such schemes as were then commonly talked of, were partial, weak and unjust; as they were intended to make grants very beneficial to the first borrower, but injurious to the others: that all would equally covet the same advan- tage; but that from the nature of the thing, all could not possibly partake of it; unless the quantity of the bills were so vast as to render them of little or no value. The truth of all which is so clear and plain, that it would be little less than a mockery to human reason, to offer arguments for supporting what, if understood, is self- evident. But this is now entirely out of time, the wis- dom of the Assembly having admitted none of those schemes there guarded against, and it will be difficult to find a reason for offering that part of the paper to the House, after all the votes that have been passed on this affair, unless it be to prepare with an extreme modesty, for another push to overset all that has hitherto been vo- ted.
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Their whole answer to the seventh head is grounded | silver; which the boldest assertor will scarce venture to on another great mistake in the cause of the rise of sil- affirm. ver amongst us; which is truly thus: In the year 1709, We further beg leave to observe, on their answer to the three last articles: when the act of parliament for reducing our coin, took place, silver was our common currency ; gold being First, That to supply the want of a medium for com- merce is the honest intention of the proposal for bills of credit, and not to discharge the debts of those who want means from the public, to get clear of them. then but rarely seen; but it was judged necessary (see- ing the act was silent in it) to make that also, as well as silver, pass current by weight at some determinate rate; and being at that time, worth four pounds an ounce, or Secondly, All bills, bonds, &c. on an equal security, are the more valned the sooner they become dne; and the sooner public bills are to sink, the greater will be their credit. It is true, that the longer the time is, the more easy it may seem to the first borrower; but, in the whole course of the bills, after their second payment, this will but diminish their credit. If eight years be preferable to five, because of the length of the time, the same argument may be urged for sixteen or twenty. four shillings per penny weight in Britain, it was advan- ced in the same proportion with silver, (viz. one third, ) to five shillings and four pence per penny weight; but because,this sum could not be so divided by twenty-four as to render it practicable to reckon single grains by far- things, without a fraction, it was, by common consent, raised to five shillings and six pence, that a grain might be accounted at two pence three. farthings. This seem- ing small difference, with the advance given in England Thirdly, It is extremely mannerly (we grant) to leave it entirely to the Assembly, to consider the man- ner of sinking the bills ; but this complaisance, it is doubted, is more owing to an unconcernedness in that point, when, or whether ever they sink, provided they are once obtained, than, to any real modesty; otherwise, it was certainly a breach of that, after the House had voted both the sum and the time, not to acquiesce in their wisdom, but to solicit an enlargement, by the East India company for Spanish silver, wrought so great a change in our currency, that our payments were mostly made in gold, New York and Britain gra- dually exhausting our silver; insomuch, that even nine or ten years ago, five per cent. advance was given, in gold, in exchange for Spanish silver; though afterwards, upon a greater importation of the latter, this difference, for some time, abated; but gold having still further fallen in value in Britain, the disparity has again further in- We pay as great a deference, may it please the house, to the legislative authority, as any others; yet we well know their wisdom will influence them to lend constant- ly an open ear to all necessary hints from without doors, that may contribute any advantage to the important af- fairs, brought from time to time under their considera- tion. creased; for accounting pieces of eight, only at five shillings and four pence per ounce, which is under a me- dium for their common price; and gold at three pounds, eightech shillings, which is near its present or late value, in England; an ounce of Spanish silver is truly equiva- lent to seven shillings and six pence in gold, at five pounds ten shillings per ounce as we rate it. It is therefore, From hence it is, that we shall yet crave liberty to of- fer our further sentiments, not only in relation to a paper credit, but upon some other points, that nearly concern the prosperity of this colony. neither avarice nor sharping that has occasioned this ad- vance in the exchange of these two metals, but the es- sential difference in their intrinsic value at the market to which they are carried; which is estimated by rules, that ever will prevail among competent reasoners on the basis of trade, though such as go beyond their last, will meddle with matters out of their sphere, are unca- pable of comprehending them.
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