USA > Rhode Island > Providence County > Providence > State of Rhode Island and Providence Plantations at the end of the century : a history, Volume 3 > Part 23
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Under the bounty act of 1733, which was repealed in 1745, the colony paid out about £1,300 annually. The bounty system was a failure, as was subsequently acknowledged by its advocates, but whether because of the depreciating value of the specific rates payable under it or be- cause of the greater profitableness of other forms of industry or both is not quite clear. The amount paid increased from £431 in 1733 to £1,781 in 1738, but did not again reach the latter figure.
In a typical year of this period, 1735, the total expenditures were a little less than £5,800 paper money, or about £1,300 sterling. The items were as follows: Refunded interest to the towns, £956; repair- ing the jail at Providence, £289; Block Island pier, £1,100; bridges in Newport, £50; chairs for colony house, £27; cannon for the fort, £300; paper money burned, £1,015; bounty on hemp, flax, whale oil, bones and codfish, £910; miscellaneous expenses, including salaries of all officers, £1,152.
The judicial system, though extended and rearranged in 1729, con- tinued to be supported by a system of court fees. The fee system prevailed in almost every department of public service; a fee of £4 was imposed on every petition presented to the general assembly, and the proceeds of this tax on the right to address the legislature was distributed among the members of the upper and lower houses. In 1721 the salary of the assistants was increased to £10 per annum, and the wages of the deputies were raised to 6s. per day. The cost of maintaining the agent in England was at times a heavy charge. His
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS.
salary remained at £40, but the incidental expenses of feeing, tipping and treating the crown officials and their lackeys in order to get a hearing, averaged more than the salary.
The evil effects of the paper money system showed in local expendi- tures as well as in colonial. In 1719 the appointment of vendue masters or auctioneers became an annual duty of the freemen. A tax of two and one-half per cent. on the price of the goods sold was paid to the local treasury. In 1723 the town of Newport first voted to erect an almshouse, and in 1725 the mainland towns were authorized to build houses of correction for vagrants. The care of the poor constituted the heaviest local burden. Education in Portsmouth was provided for in 1716, and in a few years two additional school houses were built by the town. In 1735 thrifty Providence, with the permission of the general assembly, granted to George Taylor the right to keep school in the county house.
The receipts from imports were appropriated to the lighthouse or to the fort, usually the latter, but no statistical account of them is pos- sible. The colonial government was continually endeavoring to oblige the collector of customs, who was appointed by English authority, to charge only the fees set by its own laws and in most cases seems to have succeeded. The naval officer appointed by the governor had charge of the entrance and clearance of vessels and collected tonnage duties. The duties already noticed during the earlier period seem to have been abolished. In 1731 a duty was laid on sugar manufactured in the neighboring colonies, and in 1732 a tonnage duty of six pence per ton was levied on all foreign vessels on each entry into the harbor, and on all coasters an equal sum once each year to be used for the fort.
We shall turn now to the new tenor period lasting from 1740 to 1756.
The new tenor period was brief but was marked by events of prime fiscal importance. In 1744 direct taxation of property was again resorted to, and in the same year the lottery was introduced to provide for internal improvements. In 1751 restrictions were placed upon note issues by Parliament, and in 1752 the colony for the first time began to accumulate a permanent debt.
The war between England and Spain in 1739 marked the close of the peace period of Walpole, and just as the advocates of hard money were beginning to gain a foothold in Massachusetts the preparations for an expedition against the Spanish West Indies furnished a new excuse for further paper money issues. The opportunities for the circulation of the issues of Rhode Island in Massachusetts seem to have been but slightly changed by various laws enacted by that colony and by Parliament. Those of the former which were restrictive seein to have been entirely disregarded.1
1The Mass. law of 1739 prohibiting the circulation of bills not redeemable in lawful money, was followed by a Parliamentary enactment of 1740 extend-
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The emissions of 1740 were of two kinds: £10,000 old tenor bills of credit for the supply of the treasury to meet war expenses, and £20,000 new tenor bank notes. The old tenor differed in form from the new tenor in that in the former the colony of Rhode Island prom- ised to pay the number of pounds, shillings or pence expressed in the face of the bill in money ; in the latter it promised the payment of the face of the bill in silver at a rate of six shillings nine pence per ounce, or gold at the rate of £5 per ounce, or "in any medium of exchange" "as will be equal to so much gold or silver". The bank notes were to be loaned for ten years at four per cent. interest, and the loans were to be payable in the bills themselves or in their legislative equivalent in coin.
The standard adopted at the recommendation of Parliament con- formed quite closely to the New England standard, which was six shillings, eight and two-thirds pence per ounce, and it had the addi- tional merit of being a little cheaper money than the Massachusetts bills at a standard of six shillings eight pence per ounce of silver and therefore would circulate in Massachusetts. The new tenor bills had scarcely been sent on their way when increasing expenditures and a decreasing income made other financial expedients necessary.
The expenditures of the colony for the year ending in August, 1740, had been about £9,100 in addition to £4,921 for the colony house at Newport. In 1741 they were £29,650 and an additional £3,300 for the colony house. They decreased to about £11,000 in 1743 but rose again to £16,500 in 1744, and for the four years 1741-44 averaged over £22,000 annually. Meanwhile the income of the colony decreased. In 1740 the interest payable on the outstanding banks annually amounted to £8,000. In 1741, by the expiration of the banks of 1731 issued for bounty purposes, £3,000 of interest ceased. In 1743, £2,500 more ceased, and in 1744 the total receipts from interest, had the whole been punctually collected, would have been only £2,500. The bounties alone due that year amounted to over £1,766. As the effects of the depreciating currency increased the payment of mortgages became more difficult. Tenth bonds also were constantly defaulted. A plan of electing a colonial attorney for each county had been adopted in 1740 in order to facilitate legal redress by the colony against its debtors, but it was abandoned in 1742, and the prosecution of such cases was left to the attorney-general. In 1741 there were 539 suits on
ing the provisions of the Bubble act of 1720 to the colony. The issue of circu- lating notes based on land or specie by private parties was thus forbidden and such issues already made were ordered to be redeemed. This curtailment of paper money was met by a further law of Parliament, repealing the law of 1728, under which governors had been instructed not to allow the circulation of more than £30,000 paper money at any one time. In 1743 Massachusetts prohibited the circulation of bills which had been issued by neighboring colonies after 1742.
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bonds pending in Providence county alone. In 1742 1,040 more were instituted. According to the reports of the treasurer, who was respon- sible for their prosecution, there were overdue bonds of towns in his hands amounting to £10,234; there were bonds in suit amounting to £5,000 and in the attorney's hands amounting to £4,902. The indus- trial resources of the colony were drying up with the fever begotten of its financial excesscs. Four thousand pounds new tenor bills had been emitted in 1741 to meet the cost of the reinforcements sent to Santiago, but Parliament, spurred on by the protests of the Massachusetts and Rhode Island hard money parties, was closely watching the issucs of the colonies. Agent Partridge used his best efforts to allay the sus- picions of the home government at a cost of £900 for his services. In the absence of active warfare in the colonies Rhode Island kept the sloop Tartar on the Spanish main at a cost of nearly £15,000 in four years. In the four years, 1741-44, the total expenses were £88,500. The income, had it been collected, would have amounted to £75,700, of which £52,000 were tenth bonds, which should have redeemed a corre- sponding number of, outstanding notes.
In February, 1744, a bank of £40,000 new tenor was issued in spite of a most earnest protest by a not insignificant minority of the legis- lature. This bank was loaned at four per cent., although the real rate of interest was much higher, and one-fourth of the interest money was refunded to the towns annually. To the protests the legislature replied in May by the issue of £2,500 bills of credit, and levied a tax of £10,000 old tenor payable in nine months to redeem them with. It had been just thirty years since any tax had been assessed, and al- though this tax was used for other purposes and the redemption of the bills deferred to 1748 and 1749, the taxing power which had so long lain dormant was again exercised and a noteworthy step in ad- vance was made in fiscal methods. In October the first lottery was authorized to furnish funds for building a bridge at Weybosset (now Market Square) in Providence. It was for £15,000. One thousand prizes valued at £12,000 were offercd, thus leaving £3,000 for the bridge. The venture was a success. The bridge was built for £1,610 7s. 4d., and a balance of £1,389 12s. 8d. was invested in 1750, the inter- est to be used to keep it in repair. The property tax, which had been again resorted to as a war expedient, was thus supplemented by the lottery to provide for internal improvements.
The beginning of the war with France in 1744 dulled the hopes of the hard money men, and from that date until the declaration of peace in 1748 bills of credit were issued every year. From 1740 to 1748 new tenor bills amounting to £58,650 were issued (equivalent to £234,600 old tenor). £96,000 old tenor had been issued to redeem the bank of 1740, but not a shilling of all these issues was redcemed. Two banks of new tenor notes, equivalent to £240,000 old tenor, had also been
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emitted. The total calculated in old tenor was £570,600. There was outstanding in 1740 of previous emissions of bills of credit the sum of £117,001 and of bank notes £380,000. At the beginning of 1749, therefore, Rhode Island had issued and seemingly not redeemed £1,067,601. A few thousand pounds of a recalled issue of 1740 were redeemed by a special committee, but there is now no evidence that any considerable portion of the total issue was exchanged.
When, in response to a representation in 1746 from Rhode Island and other colonies, Parliament in 1747 decided to reimburse the colo- nies for the expenses in the Cape Breton and Canada expedition, £800,000 sterling was appropriated for the purpose. The Massachu- setts share was £183,649 2s. 7 1-2d., and with this and a tax of £712,000 old tenor, all of its old paper was redeemed. Had Rhode Island maintained during the previous ten years an attitude of honorable dealing with the holders of its bills of credit, the same course would have been quite possible though not quite as easy. Of the sum out- standing in bills of credit the colony had already pledged to redeem those issued previous to 1746 by taxation. This sum was £24,900 new tenor or £99,600 old tenor. Of the sum emitted for the expedition to Louisburg and Canada, amounting to £33,750 new tenor or £135,000 old tenor, the allowance from England of £12,338 sterling would have redeemed (at a rate of 10 1-2 to 1) £129,550, leaving only £5,450 old tenor to be redeemed by a special tax. If to this sum is added the £117,001 outstanding in 1740, there would have been but £122,451 old tenor to redeem and a per capita tax of £3 14s. would have sufficed. The per capita tax necessary to redeem all Massachusetts bills was about £3 5s. Even had all the taxes pledged to redeem the bills issued between 1740 and 1745 been levied at one time in Rhode Island, the total would have required a tax of about £6 14s. per capita, and the sacrifice would have been slight in comparison with the losses subse- quently sustained by a continuance of paper issues.1
The feeble effort to redeem its bills then made by the general assem- bly seems to have been scarcely more than an attempt, of which that body had been so often guilty, to persuade the public that it was try- ing to be honest, although its whole course then and for some years after proved the opposite. Governor Wanton in 1748 drew on the lords of the treasury for £10,144 9s. 6d. and the amount was allowed to Agent Partridge. Deducting £507 4s. 6d. for commissions and charges
. 1The outstanding bank notes amounting to £640,000 and the £96,000 emitted to exchange the bank of 1740 are not included in the above calculations of the cost of redeeming the colony's paper issues, as they either had been redeemed or the colony held mortgages of nominally double their value against them and the notes should have been redeemed when the mortgages were cancelled. Massachusetts had issued no bank notes since 1728. Much of the disposition to excuse the colony for its thoroughly dishonest procedure at this time has arisen from failure to distinguish between the amounts of bills of credit out- standing and the notes of the various banks.
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there was a net of £9,637 5s. sterling applicable to the redemption of bills. Of this, however, only £7,800 was used for that purpose and £88,725 of the bills redeemed. The remaining sum was devoted to paying other debts of the colony. There was in the treasury £24,000 bills of old tenor. These were used for general purposes. Of taxes of £17,500 new tenor which had been pledged in 1740-45 to redeem the bills of credit then issued and were to be levied between 1748 and 1752 only £5,000 were assessed and they were diverted to other uses. At this time as at earlier dates there was no earnest effort to redeem the outstanding bills.
Instead, and in violation of the express wishes of the home govern- ment the servile house of deputies, in response to a large number of petitions, passed another bill in August, 1750, for emitting £50,000. The bill did not pass the upper house owing to final adjournment without a quorum. Another bank of £25,000, however, was emitted in March, 1751, the interest to be devoted to paying bounties on hemp, flax, woolen manufactures, whale oil and codfish. The bounties prom- ised by this issue were repealed in the same year, but no attempt was made to recall the issue. It was the last bank emitted for thirty-five years.
The first emissions of bank notes had been subseribed for by some of the better classes of people. The maximum and minimum limits to the amounts subseribed for by a single individual were £300 and £50. In the issue of 1744 the limits had been reduced to £100 and £6. In the issue of 1750 the limits were £37 10s. and £3. Only the poorest and lowest classes were now borrowers. The rights to subseribe had in each sueeessive bank been confined, for a period of two or three months, to those who had not before subscribed. The multitude of debtors far exceeded the opportunities to borrow and the fortunate ones found themselves able to sell their rights at a premium, which was probably determined by the anticipated depreciation of the bills. The eom- mitteemen of the various towns who allotted the loans began to charge for transfers of rights and doubtless fattened on the needs of their neighbors until their extortion was checked by the legislature. They were forbidden taking more than 1s. 3d. for each transfer.
With an assurance worthy of a better eause the assembly calmly asserted that "the one great and principal eause of the depreciation of bills of public eredit" was "the illegal praetiee of some persons giving and offering more of them for gold and silver than the face value". A foree bill was therefore enaeted to aid the value of these bills. Any persons "who either by themselves, or by the proeurement of others, wittingly or willingly, directly or indirectly, shall after the 10th day of May, 1751, contraet for, settle, aeeount, allow, receive, take or pay at any greater or higher rate for any silver, gold or bills of exchange, than at which the same is hereby regulated, settled and
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allowed" were to be fined £50. Executions were to be granted by the court only upon oath of the plaintiff that he had conformed to the law. All public officers were required to take similar oath before they were qualified to act. All traders from outside the state were subjected to a like pledge. A law fixed the equivalent values of this and other issues at one ounce of silver-6s. 9d. of the bills of 1750-16s. new tenor --- 64s. old tenor. All of these values were expressed in the note, the weight of silver being expressed in the body, the value in new tenor in the upper margin and the value in old tenor on the back. Death was the penalty to counterfeiters.
The passage by the house of deputies of the bill to emit £50,000 of bank notes brought forth a final and effective protest from seventy- two of the leading merchants of the colony to the king to prohibit further issues of paper money. The assembly wrote to Partridge to oppose any and all such legislation and repeated all the usual jargon about its anxiety to preserve the "valuable liberties and privileges" of the charter. Partridge wrote that through his efforts "the sting" was taken out of the bill, but Parliament passed the act on March 12, 1751, prohibiting any issues of paper money subsequent to September 29, 1751, with some exceptions ; it prohibited the postponement of the time of payment of bills and notes already issued ; it allowed the issue of bills of credit for not over two years, for current expenses, on the approval of His Majesty; it provided for the issue of such sums as were needful on the occasion of sudden emergency such as war or invasion, for five years, with the approval of the home government; it declared that no bills of credit or notes should be legal tender for debts.
The applicability of a Parliamentary law which required an act of Rhode Island to be submitted to the king or his government, which was a violation of the charter right, had been questioned, as has been noted, as early as 1724. Such reference of Rhode Island laws was in 1731 decided to be beyond the scope of royal power, and now although the spirit of the law was observed, the clauses relating to the approval of the king were entirely ignored ; the colony emitted bills as it judged needful, but did not submit such measures to the home government. In June, 1751, a scale of equivalents was adopted for debts. Six shillings nine pence of the notes of 1751 or 16s. new tenor or 64s. old tenor were declared equal to one ounce of silver, and debts expressed in terms of the various issues were to be paid in as many bills as at the time of payment were equal to an ounce of silver. Thus silver bullion or its equivalent was made the only legal tender for debts.
During these years depreciation went on with increasing but irregu- lar pace. In 1747 when the colony declared the legal rate of exchange to be 5.5 for 1, it paid the wages of the officers serving in the Canada
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expedition at a rate of 7.5 for 1. In the same year the treasurer bought £500 sterling for £4,550 old tenor bills, a rate of a little over 9 for 1. In the latter months of 1748 the assumed legal rate of ex- eliange was declared to be 5.7 for 1; it probably was about 9 for 1. In January, 1749, Massachusetts adopted the eoin standard and prohibited the eireulation of all paper money. Rhode Island bills in February dropped to a rate of 10.5 for 1. Paper money was like a seat in a stage eoaeh ; its possessor paid for its use by the hour.
The trade of Massachusetts in West Indian produets, which before 1749 was almost wholly through Newport, was driven at onee to Salem and Boston. It was a eommereial disaster from which the eolony never recovered. Heavy failures oeeurred in 1752. Providenee was authorized to build an almshouse in 1753. A general aet of insolveney was passed in 1756. Driven thus by foree of eireumstanees the colony began to provide for the redemption of its paper money, but the first tax of £25,000 was seareely ordered in 1754 when war began again. The colony tried to supply its war needs by loans, and it borrowed £4,000 old tenor, but so great was the industrial depression that 10 per eent. interest was paid and the old expedient of bills of eredit was again resorted to. Within the year 1755, £240,000 old tenor bills were emitted for the Crown Point expedition. Aeeording to the order of Parliament they were nearly all redeemed within two years, partly by taxes and partly by the issue of interest bearing treasury notes. In the following year £14,000 bills were emitted for a second similar expedition. These were the first so-called lawful money bills, but exeept the law of 1751, already noted, there was no eolony aet defining lawful money. Such aets had, however, been passed by the two neigh- boring eolonies and the bills of 1756 were therefore made payable to bearer in lawful money of Massachusetts or Conneetieut. Massaehu- setts's lawful money being 6s. 8d. per ounee of silver, these bills prom- ised payment at the same rate, instead of 6s. 9d., as all previous issues of new tenor bills had specified. They were redeemed within two years. As war expenses rapidly inereased the legislature, now become solieitous for the eredit of the colony, direeted the treasurer to borrow gold, silver, bills of 1756 or old tenor bills at 6 per eent. interest in sufficient sums to meet the needs of the treasury, payment to be made Deeember, 1759. Although gold and silver were promised in payment of all but the old tenor bills, and the right was reserved to pay them at the rate of $1 in silver for every £5 10s. paper, which was a very high premium, paper being then eurrent at more than £6 for a Spanish dollar, the loan could not be negotiated. The assembly had granted to the treasurer the alternative of issuing lawful money bills payable in two years. The bills, however, were emitted for five years, earried five per eent. interest, and promised payment at the rate of 6s. 9d. for one ounee of silver. The law provided that a milled dollar
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should at all times be taken in lieu of 6s. of them. In view of the inability of the colony to borrow money in any other way these interest bearing bills were a forced loan. Protests were made against the rate of interest by some members of the country towns, who were always jealous of the moneyed classes. They claimed that three per cent. was high enough and that the bills would be hoarded, and indeed their prediction proved true to some extent. Meanwhile old tenor bills still circulating continued to depreciate-a condition which could not fail to follow the vagaries indulged in by the assembly on the slightest provocation. In 1756, of a tax of £70,000 levied to redeem the Crown Point bills, only £52,271 seems to have been collected, and instead of burning the bills £33,841 were placed in the general treasury and only £18,430 destroyed. In 1756 the Spanish silver dollar was declared equal to £4 old tenor of the Crown Point bills. For purposes of re- demption this rate placed a high premium on the bills, as the current rates were about £5 5s. for $1, or nearly 18 for 1; sterling exchange being therefore above 23 1-2 for 1. In June, 1763, the assembly de- clared gold the only legal tender in contracts unless otherwise specified. In the following year the last notes of the ninth or last bank were called in and the name "old tenor" was abolished. The notes and bills were to be redeemed by the colony at a rate of £7 for 1 silver dollar. In 1770 a law was passed by which the circulation of old tenor bills was prohibited after January 1, 1771, and they were to be re- deemed by treasury notes having one year to run, payable in lawful money at the rate of 6s. lawful money for £8 old tenor. As lawful money was at that time at par with English coin, old tenor had fallen to 26 2-3 for 1 lawful money or about 35 for 1 sterling.
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