A Stated Meeting of the Society was held in the Hall of the American Academy of Arts and Sciences on Wednesday, 16 January, 1895, at three o’clock in the afternoon, the President, Benjamin Apthorp Gould, LL.D., in the chair.
After the Records of the December Meeting had been read and approved, the Honorable Joseph Hodges Choate was elected an Honorary Member.
Mr. Francis H. Lincoln communicated the following additions to the list of Historical Societies in Massachusetts:1 —
This society was organized 10 September, 1894. The objects are defined in the Constitution as follows: “The object of this society shall be the awakening of an interest in local history; also the collection of papers, documents, and other articles relating thereto, and of specimens of natural history connected therewith, the preserving of records of passing events that may become of value in the future, and the securing of a safe repository for the same.”
THE NANTUCKET HISTORICAL ASSOCIATION.
This association was incorporated 9 July, 1894. Its purposes are defined to be “to collect and preserve historical relics, documents, pictures, hooks, etc.”
THE GROTON HISTORICAL SOCIETY.
This society was incorporated 11 May, 1894.
Mr. Andrew McFarland Davis read the following paper: —
For a proper appreciation of the state of public opinion which made possible the extraordinary experiment in economics called the Land Bank or Manufactory Scheme, some knowledge is requisite of the struggles for a circulating medium through which the Colonists had passed during their century and a little over of occupation of the Massachusetts Bay. Since opinions upon topics of this sort were largely dependent in New England upon the condition of knowledge in the mother country, it would he interesting to study the cause of the sluggish growth there of knowledge of banking, to seek for the reason why an intelligent people were so slow in realizing the potency of the great banks on the Continent in stimulating the commercial prosperity of the cities in which they were located, and to point out certain coincidences and connections in the propositions submitted here and in England by men of speculative temperament to relieve the supposed need of a circulating medium through the establishment of banks of issue. However interesting such an examination might prove, it would be entirely impossible to compress it within the limits of a paper which should attempt to give even an outline sketch of the history of the Land Bank of 1740.
If the subject be examined from the standpoint alone of the economist, the material at command, especially if we should include a review of contemporaneous opinions, is adequate to fill the time at our disposal. If treated in relation to the bearing of its history upon political opinions, its enormous importance would compel the amplification of details to an extent that would in itself furnish abundant occupation for the time ordinarily assigned to a paper at our meetings. If we should leave to the student of economics the study of his specialty, and to the historian the task of measuring the influence of the events connected with the closing of this affair upon the minds of the people of Massachusetts Bay, we should still find that any attempt to give in one afternoon a detailed analysis either of the legislation connected with the closing of the Land Bank or of the litigation in consequence thereof would fail for lack of time.
Under these circumstances I am compelled to make a selection from this superabundance of material; and, taking into consideration that very little has been published in available form from which can be obtained a coherent narrative of the events connected with the formation and the arbitrary closing of this so-called bank, I have thought it would be wise for me to confine myself to a simple chronological statement of these events, preceded by a brief introduction which will tend to show the circumstances under which the people of this Province thought there was need for relief of this general character, and which will set forth the possible influence which previous experience may have had in leading men of fair intelligence to the conclusion that such an ill-founded scheme might succeed.
The first settlers of Massachusetts brought with them but little coin, and for a long time all transactions were by barter. The accounts of Harvard College show that for many years term-bills were paid in produce, live-stock, meat, and occasionally with curious articles raked up from the family chests of student debtors. The experiments with bullets and wampum as a legal currency in a limited way are known, and it is also familiar to all that corn was receivable in payment of country rates,3 and that notes were frequently made payable in commodities.
The fact that the thoughts of our people were from time to time during the seventeenth century directed toward the establishment of some sort of bank has been fully demonstrated, and the drift of public opinion which led up to the attempted organization of a bank of issue in 1686, under the approval and with the sanction of the Council, for the ostensible purpose of loaning its bills upon real and personal security and imperishable merchandise, has also been shown by the careful collation of facts, with minute observation and patient industry, from numerous recondite sources of authority.4 It is not known why this scheme, thus started under government patronage, was abandoned before it had accomplished any of its contemplated objects; but in 1688, when it was laid upon the shelf, the promoters still had in possession the printing press with which they had purposed to manufacture their paper currency.5 It is possible that the question of a government issue of notes may by that time have been under consideration. It was only two years after the final abandonment of the proposed bank that the emergency arose which brought about the first emission of these notes. They were familiarly known as Colony or Old Charter Bills, and were put forth to pay the expenses of Phips’s unfortunate expedition against Canada. Their amount was limited in 1691, and they were retired in 1692; but some of them were from year to year reissued, even under the Province Charter, until 1702, when the first emission of Province Bills was made. Their appearance seems to have suggested to tradesmen that in a similar way they too might meet their obligations, and perhaps contribute to the circulating medium; for about this time we begin to hear of Shop Notes, which apparently were promises to pay in goods, issued by tradesmen. For a time these Shop Notes worked great hardship to laborers and others who were by their circumstances forced to receive them,6 but their limited circulation prevented them from being a serious element of disturbance to the currency.
The scarcity of money, which had led the Council, in 1686, to favor a bank of issue which should effect loans, again attracted the attention of legislators in 1701, and the matter being brought before the General Court, a committee was appointed to find out some suitable means to remedy the evil. This committee recommended, among other things, the establishment of a bank of credit; but the section of their report in which this recommendation was incorporated was rejected.
Meantime the emission of government bills, which originally contemplated only the furnishing of a temporary expedient, had gone on increasing in amount from year to year. It was the custom to pledge as security for the redemption of the bills certain specific taxes of specially designated years. By 1714 the income of the Province from taxation was pledged, either wholly or in part, each year for six years to come. It is needless to say that as time went on the issues increased, and the time for which the revenue of the Province was thus anticipated became longer. Each bill was in form a certificate by a committee of the General Court to the effect that it would be received as so much money in public payments. Inasmuch as some of the bills in circulation could not be received by the Province for several years to come, it was natural that all should feel the effects of this discredit. This fact alone would have caused them to depreciate, even if the amount then in circulation had been properly proportioned to the needs of the community. The Province Bills and the Bills of the neighboring government in circulation in the Province had by that time driven all the gold and silver out of circulation, and much of it out of the country. The depreciation and distrust of the bills was sufficient to impair their efficacy, and to cause a clamor for more circulating medium. The remedy was supposed to be more paper money, and this time the proposition came from outside the legislature.
In 1714 an attempt was made to secure from the General Court authority to organize a private bank of issue. A pamphlet which had been published in London in 1688 setting forth a scheme for a bank, and rehearsing a number of arguments in its favor, was reprinted in Boston.7 It was in substance a proposition for a partnership to emit bills on security, to be supplemented by obtaining the signatures of citizens to an agreement to receive such bills in trade. It was stated that the proposed Boston scheme differed in some of its details from the plan set forth in the pamphlet, but that in the main the two projects were identical.
The application of the promoters of this scheme for the support and approval of the Government aroused a spirit of bitter opposition, which manifested itself not only within the limits of the General Court, but found expression elsewhere. To forestall the argument that the bills thus proposed to be issued were needed as a circulating medium, the enemies of the scheme introduced an Act authorizing the Province to furnish Province Bills to citizens, on security of real estate. The two plans came to be designated the Private Bank and the Public Bank; and the General Court was so completely converted to the Public Bank that it not only authorized the issue of £50,000 in Province bills to be loaned for five years on real security, but it also passed an order forbidding any company or partnership from emitting bills of credit as a medium of exchange or trade without its consent and approbation. The positive stand thus taken by the Government in 1714 did not, however, put an entire stop to the discussion; for we have evidence that the matter was still being agitated in December, 1715, through a town meeting then held in Boston, at which the question was submitted whether the influence of the town should be given in favor of a public or a private bank. The agitation could only have been prolonged at this period by those who favored the private bank, and it is clear that they were signally defeated, since Boston not only voted to favor a public, but even went to the extent of placing on record the town’s disapproval of a private bank.8 Hutchinson says: “The controversy had an universal spread, and divided towns, parishes, and particular families.”
The £50,000 in Province Bills for loans in 1714 were followed by a similar issue of £100,000 in 1716, to be loaned for ten years. In 1721 £50,000, and in 1728 £60,000 were distributed among the towns for use in the same way, provision being made for their being called in by subsequent tax levies. All of these bills were receivable with a five per cent premium in favor of taxes; yet, by 1720, notwithstanding the large number of bills which still remained in circulation, it was found necessary to make provision for the receipt of commodities in the adjustment of taxes.
In 1733 there was much discontent at the situation. Massachusetts and New Hampshire were restrained by royal instructions in their capacity to emit bills, but Rhode Island had full power to float them at will. The bills of the latter Colony flowed into Massachusetts; and when in July of that year an issue of £100,000 of them was made, for loans at five per cent, a number of Boston merchants entered into an agreement with each other not to receive these bills in trade. As an offset to this emission, and for the purpose of driving the Rhode Island bills out of the market by filling the gap which they were expected to occupy, these merchants organized a company, and issued £110,000 of their own notes, redeemable in ten years in silver at 19s. per oz.,9 the bills resting for their security solely upon the solvency of the individuals composing the company. These bills were known as Merchants’ Notes; and, as silver rose rapidly shortly after their issue, in consequence of large emissions of paper money by the Province of the Massachusetts Bay, the Merchants’ Notes, being payable at a specific rate, were hoarded, and disappeared from circulation. The confidence which the public thus showed in these notes induced some New Hampshire merchants to make a similar attempt in 1734. Their notes bore interest at one per cent, and were payable in bills of the several Colonies, in silver, in gold, or in hemp at Portsmouth prices, in 1747.10
In 1737 there was a simultaneous issue in Massachusetts of two classes of Province Bills, one being identical in form with those which were already in circulation, while those of the other class stated that they were to be received on the basis of twenty shillings for three ounces of silver, troy weight. Bills of these forms were for a time thereafter distinguished under the titles of “old tenor” and “new tenor.” The latter are, however, after 1741, sometimes designated “middle tenor bills.” The old bills were received for all public dues. In the middle tenor bills import or tunnage dues were excepted;11 while the last tenor bills, which were issued at one valuation in 1741 and at another in 1744, were to be accepted in all payments in the treasury. The old tenor bills were issued in 1736 on the basis of three to one of the new tenor. Old tenor bills were therefore receivable for public dues at the rate of twenty shillings for the ounce of coined silver. Their discredit in the market was even greater than the amount recognized by the Government. Hutchinson quotes silver at twenty-seven shillings just after the issue of the Merchants’ Notes in 1733, and says it remained about the same rate for several years, when it took another jump. We can perhaps trace the movement if we look forward to an order passed by the General Court in 1742 to the effect that one pound of the then newly emitted bills should be received as the equivalent of four pounds old tenor, or one pound six shillings and eight pence new tenor. It is obvious from this order that the new tenor form had not fulfilled its purpose, but that Government paper had reached such a discredit that in one and the same document three rates were prescribed at which different issues should be received. In the final redemption of the bills they were grouped in two classes, all after the first form being placed upon the same level.
A part of the discredit of the Government bills was due to the redundancy of paper money occasioned by the circulation of notes of neighboring colonies. The first step towards the correction of this evil was taken in 1738, by the passage of an Act restraining the circulation of certain bills of the neighboring colonies. Other Acts of this sort, more sweeping in their character, were afterwards passed.
In 1739 John Read of Boston submitted a proposition to the General Court for a bank of issue based upon a twenty per cent fund of silver.12 No action was taken upon this proposition.
Such was the state of the currency at the end of the year 1739, and such had been the experience of the Province in reaching this distracted condition of affairs. There was in circulation an amount of Province Bills and hills of the adjoining governments, more than adequate, if current at par, to furnish a medium for trade. Yet so great was the depreciation that provision had to be made in each Tax Act for the reception of commodities in the adjustment of taxes. The only bills which had apparently held their own were the unsecured Merchants’ Notes which have already been described.
At the session of the General Court begun on the fifth of December, 1739, and continued in the month of January, 1740, a scheme was presented by John Colman and three hundred and ninety-five others for emitting bills secured by real estate, which were to serve as a medium for trade. In submitting the list of subscribers to this project, the promoters called attention to the small size of the individual subscriptions, and stated that they had acted in the matter by advice and persuasion, being desirous to interest many in the scheme. Hutchinson, treating of the same point, says that the greater part of those who were interested in this scheme, as well as of those who were concerned in the proposed bank in 1714, were men of small means.
John Colman, whose name headed the list of subscribers, was one of those who had been interested in the similar project in 1714, which was then called the Private Bank. He had in 1720 published a pamphlet in which he stated that it would be many years before a return to a specie basis could be expected; and as a temporary remedy he suggested a bank which should emit bills on real security, the loans to bear six per cent interest, and the surplus revenue above expenses to be invested in silver and held until the profits should amount to the original sum emitted.13 He claimed to have had some correspondence with Governor Belcher on the subject of the scheme which he now proposed, and had for some time been at work endeavoring to interest people in its favor. On the tenth of March, 1740, a broadside was issued, in which it was stated that in order to redress the distressing circumstances under which the Province labored for want of a circulating medium, it was proposed to set up a bank on land security, no person to be admitted but such as dwelt in the Province and had real estate therein. It was announced that on certain days a committee would be in session at the Exchange Tavern in King Street, to receive subscriptions. The scheme when analyzed may be briefly stated as follows: Subscribers to a so-called stock of £150,000 simply agreed to borrow a certain amount in bills of the company. Their voice in the affaire of the company was determined by the size of the subscription. The only payment which was required to be made was forty shillings on each thousand pounds, two-tenths of one per cent of the loan, for organization expenses. Each subscriber was to furnish satisfactory mortgage security for his loan, on which he was to pay interest at the rate of three per cent per annum, and the principal was to be paid in twenty annual instalments of five per cent each. These payments were to be made in Manufactory Notes, or in hemp, flax, cordage, bar-iron, cast-iron, and certain other enumerated commodities. There were provisions as to the organization, and the annual meeting; and a clause which provided that loans not exceeding one hundred pounds might be made on personal security.
The bill which it was proposed to emit was originally printed in the broadside as follows: —
“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.
The words “Boston, etc.” were then marked out, and the following words written in: —
“and after ye expiration of twenty years to pay ye possessor ye value thereof in manufactures of this Province.
The thirteenth article in the prospectus required each subscriber to sign an instrument in which he agreed to indemnify the signers of the notes.
The crudeness of this whole proceeding finds no better illustration than in the proposition to emit a note which contains no agreement to redeem; nor was the document much improved by the words which were added in writing. As a matter of fact the note which was actually issued was signed by the Directors, and read as follows: —
“We jointly and severally promise for ourselves and partners to take this bill as lawful money at six shillings eight pence per ounce in all payments, trade, and business, and for stock in our treasury at any time; and after twenty years to pay the same at that estimate on demand to Mr. Joseph Marion or order in the produce or manufactures enumerated in our scheme, for value received.”
No provision was made in the prospectus for the use by the company of any of its bills in trade. It is stated, however, that in the articles as finally settled £10,000 were allowed as a sum to be thus employed, and the accounts of the company show that their agent entered upon numerous mercantile ventures.
The Company was properly designated by the Governor “a scheme for emitting bills or notes,” and by the Committee of the General Court a projection “for making and emitting notes of hand as a medium of trade.” It had no capital stock, and the only provision for any possible fund to be held as a security for the bills is to be found in the section which provides for the distribution of profits.
I have called attention to the fact that in 1720, Colman had published a scheme for a bank, in which he proposed to create his capital out of the reserved profits arising from the business. A similar proposition is to be found in the tenth article of this prospectus, which declares that there shall be an annual dividend, “provided always that in all such dividends care shall be taken that there still remain in the stock double the principal paid in from time to time as aforesaid.”
It is obvious that it was possible for the mortgage loans of the Land Bank to be paid off entirely in commodities, thus leaving the notes afloat without other security than was afforded by the partnership. It may therefore seem strange that the opinion should have been held by any number of men that the notes under such circumstances could have obtained circulation, but it must not be overlooked that at that very time the Merchants’ Notes were held at a premium of thirty-three per cent over Province Bills. The cause for this lay in the fact that they were redeemable at an expressed rate in silver, and that perfect confidence was felt in the solvency of those who issued them. The conditions of the two experiments were not parallel; nevertheless, this premium evidently inspired the belief that a note issued by a company without capital, which was by its terms not redeemable until twenty years after date, and was then payable in commodities, would find circulation in the community. A part of this confidence is unquestionably to be found in the numbers already interested in the scheme, whose example and enthusiasm brought in new converts daily, and a part is perhaps due to the fact that people were accustomed to pay their taxes in commodities. The rate also at which the commodities were convertible, according to the terms of the amended note, was a favorable one.
As early as 1720 a pamphleteer had suggested that the Province should organize a bank of this sort, and should loan Province Bills for terms of twenty-one years on security of lands, or merchandise.14 Twenty annual payments, beginning the second year, at the rate of six per cent per annum, were to wipe out all claims for principal and interest. Such payments were to be made in hemp, flax, turpentine, pitch, tar, rosin, fish-oil, whalebone, or any other commodity that would prevent importation, or that was good for exportation, especially what the Crown and Nation of Great Britain encouraged. It was quite likely that Colman obtained from this pamphlet the idea which converted his Land Bank of 1714 into the Land Bank and Manufactory Scheme of 1740, — the encouragement of local industries, and the prevention of imports being elements in the scheme which appealed to the populace. Apart from the experience that the community already had in the use of commodities in the adjustment of taxes, they had seen the New Hampshire Merchants’ Notes of 1734, which were not payable till 1747, and which might then be paid in hemp at Portsmouth prices, circulate so readily that legislation was necessary to drive them out.
The peculiar form of the note as originally printed in the prospectus may have been the outcome of the use of Province Bills, which were not in the form of promises to pay.
The activity which Colman displayed, the number of persons whom he had interested in his scheme, and the certainty that he would attempt to put his notes on the market aroused a powerful opposition. A number of Boston merchants formed an association, afterwards known as the Silver Scheme, the purpose of which was to issue bills, which, like the Merchants’ Notes of 1733, should be on a silver basis.15 It is not clear when the change which I have pointed out in the notes of the Land Bank, placing them on the basis of the then par value of silver, was adopted. It is quite likely to have been a counter thrust, induced by the superior attractiveness of the currency offered by the silver men, and adopted after the promulgation of that scheme. The notes of the Silver Scheme were drawn payable to Isaac Winslow, and were signed by the Directors. They ran for fifteen years, and were then redeemable at the rate of twenty shillings per ounce for silver. Meantime the Directors promised to receive them in all trade and business as follows: —
- In 1741, an ounce of silver at the rate of 28s. 4d.
- “1742, “ “ “ “ 27s. 9d.
- “1743, “ “ “ “ 27s. 2d.,
and so on, with an annual reduction of seven pence in the rate of silver till it reached twenty shillings in 1755, the date at which the notes were redeemable. Issued at the current rate of silver, the sliding scale of appreciation which they contained was the equivalent of a low rate of interest. There was one feature connected with them which does not appear on the face of the notes. The Directors agreed among themselves to exchange the silver bills at any time for common current notes, on the basis of the scale of appreciation given in the notes, and at a later date so amended the article of their Scheme containing this agreement that any possessor of silver bills could enforce it by legal process.
It will be observed that the proposed limit to the loans of the Land Bank was £150,000 in lawful money. Each twenty-shilling Land Bank note, if rated according to its own terms, in silver at 6s. 8d. per ounce, was worth more than four times as much as the twenty-shilling note of the Silver Scheme, redeemable in silver at the rate of 28s. 4d. per ounce. The £120,000 of silver notes to be emitted would therefore represent in lawful money on the day of their issue less than one fifth of the proposed issue of the Land Bank.
One hundred and six Boston merchants, headed by Edward Hutchinson, subscribed the articles of the Silver Scheme. Their combined subscriptions exceeded the amount proposed to be issued, and were cut down to keep within the limits of the proposed plan. When the Scheme was matured, they also applied to the General Court for its approval and sanction.
The lines of the fight were now squarely drawn, and a committee of the General Court was appointed 18 March, 1740, to “investigate the several projections for emitting notes.” This committee reported adversely to the Land Bank, but recommended that the Silver Scheme be referred to the next session. The Council favored the recommendation of the committee, and it would have been adopted but for the action in the House, where it was voted to refer both schemes to the May session, both companies meantime to be prohibited from issuing notes. The Council concurred in this, and on the fourth of April the Governor issued his proclamation forbidding the projectors of both schemes to issue notes or to proceed further until the May session of the General Assembly. This session opened 28 May, at which date the restrictions imposed by the order of the General Court expired by limitation, and no obstacle stood in the way of the consummation of either project, provided the promoters chose to proceed without the sanction of the General Court.
The situation of affairs at this time was the same as at the last session. The Governor and Council opposed the Land Bank, and favored the Silver Scheme. The House favored the Land Bank, but could not consistently oppose the Silver Scheme. Both propositions were laid before the House 4 June, and both were laid upon the table. On the sixth the House took the Land Bank scheme from the table and heard arguments in its favor. On the same day a petition to the Governor and Council and House of Representatives, headed by Benjamin Gerrish, and signed by a number of influential Boston merchants, setting forth the pernicious tendency of the Land Bank, the bills of which from their nature were of no determinate value, and praying the assembly in its great wisdom, justice, and goodness to discountenance and suppress so great a mischief, was presented and read in the House. Further consideration of the Land Bank was then postponed to 18 June.
The Council, realizing that the House of Representatives was proceeding in an independent manner in the consideration of the question at issue, and that its action would be friendly to the Land Bank, voted, 12 June, to appoint a joint committee to which both schemes should be referred. The House concurred, and the members of the joint committee were named. Notwithstanding this action on the part of the House, no progress was possible in this committee, as the members of the committee appointed by the House refused to meet with those appointed by the Council.
On the fifteenth, several citizens of Ipswich presented a petition to the General Court headed by the name of John Choate, in which they argued in favor of the Land Bank, and prayed that it might be patronized, encouraged, and assisted.
The inaction of the joint committee to which the two schemes had been referred, through its incapacity to hold meetings, deprived each side of the fruits of a complete victory. No concerted action could be secured by the Council, but independent action by the House was prevented so long as it should continue to recognize the reference to the joint committee. On the whole, the gain was on the side of the Council, as inaction on the part of the House was one of the things that the Board was after. The House, therefore, resolved to cut the Gordian knot, and regardless of parliamentary rules, to resume consideration of the Land Bank scheme, while both propositions were still nominally before the joint committee. On the eighteenth of June this action was taken, and on the nineteenth, by a vote of fifty-nine against thirty-seven, the House resolved that the persons concerned in the said scheme should not be forbidden to issue bills or notes of hand in pursuance of the same.
The merchants of Boston, alarmed at this action of the House, procured signatures to a new petition against the Land Bank, which they presented at the Council chamber, great numbers of them being present on that occasion.
On the twelfth of July this session ended, and on the seventeenth, Governor Belcher issued a proclamation in which he recited the various petitions which had been presented to the Council against the Land Bank, and cautioned his Majesty’s good subjects against receiving or passing the notes, saying that they tended to defraud men of their substance, and to disturb the peace and good order of the people. Notwithstanding this, the promoters of both schemes proceeded to organize, and by 1 August the Directors of the Silver Scheme began to issue their notes.
The next session of the Assembly began on the twentieth of August, and ended 12 September. On the last day of the session the Governor recommended that an inquiry into the character of the two schemes be prosecuted by a committee of the General Court, during recess, and that in the mean time the projectors be prohibited from proceeding further without leave from the General Court. The House refused to appoint such a committee, either with or without the prohibition from further proceedings.
The contest between the Council and the House of Representatives had attracted public attention, and the effect upon the Land Bank had evidently not been to its disadvantage. On the thirtieth of July, when the partners met at the house of James Jarvis in Roxbury and chose their officers, the names of upwards of eight hundred subscribers could be counted on their list. The pronounced sympathy of the House, if it had not secured favorable action in their behalf, had at any rate left matters in such shape that they could proceed with the development of their scheme without fear of interference. The fact that six of the leading members of the House were Directors in the Land Bank, and that many of the members were subscribers, was a guarantee for the future.
In 1720 Colman had stated in his pamphlet that it would be hopeless to undertake such a project without the sanction and support of the Government; yet on the nineteenth of September, 1740, the mutual agreements and covenants between the Land Bank subscribers, by means of which the circulation of the notes among themselves was to be secured, were duly executed, and the issue of the notes was commenced in the face of the certain opposition of a portion of the Government.
It was obvious that the Governor and Council were powerless to check the forward movement of the Land Bank by legislation. The number of subscribers when the partners first appealed to the Assembly had been less than four hundred. When they organized they numbered over eight hundred, and indeed they continued to increase until there were ultimately about a thousand names upon the list. Their influence secured the House, and for the present at least would continue to do so.
The conflict between the friends and foes of the Land Bank took possession of the columns of the press. As early as July, an Agreement was published in which the subscribers pledged each other they would neither directly nor indirectly receive or take any bills emitted in the scheme commonly called the Land Bank, and cautioned all those who dealt with them that such was their purpose. This document was signed by Peter Faneuil, Charles Apthorp, Hugh Hall, and one hundred and forty-five others. At a later date a similar agreement was published which had been circulated in Newport, and which had received seventy-four signatures. These movements were to some extent offset by the publication of similar agreements of an opposite nature; and the publicity given these proceedings led to advertisements by dealers to the effect that Land Bank notes would or would not be received in trade.16 Individuals whose names had been brought into notice in connection with the contest inserted notices in correction of rumors as to their opinions or purposes. The wits of the day invoked the aid of ridicule in fictitious notices, the humor of which was doubtless effective at that time.17
The thoughts of the opponents of the scheme began in the fall of 1710 to turn towards Parliament for relief, and steps were taken to secure action in that behalf in England. The New England merchants and traders in London presented a petition to his Majesty in Council for redress. This petition was, on the twenty-seventh of October, referred to the Lords Commissioners for Trade and Plantations.18 There still remained, however, as a resource in this country, the potent influence which the Governor exercised over office-holders, and on the fifth of November there was issued the first of a series of proclamations to different classes of office-holders throughout the Province. In this instance it was addressed “to all such persons as hold any Commission under me,” and all such were warned against signing or giving any countenance or encouragement to the passing of Land Bank notes on pain of being removed from office. The next day a similar proclamation was specially addressed to the military officers of the Province.
If Belcher thought that his threat of removal from office would dissuade those who held commissions under him from continuing their support of the Land Bank, he was mistaken. On the tenth of November, William Stoddard, a Justice of the Peace, transmitted his resignation of his trust on account of the proclamation of 5 November. Robert Hale, a Justice of the Peace, resigned the same day. Samuel Adams and John Choate, Justices of the Peace, also sent in their resignations, in a joint letter, on the same day. The influence of these resignations may perhaps be traced in Belcher’s letters. November thirteenth he writes to Partridge, the Province Agent: “Never was so vile a scheme set on foot. Yet what is done about it will not be sufficient without an Act of Parliament.” Again, on the nineteenth, writing to the same correspondent, he says: “I believe nothing less than an Act of Parliament will put an end to it, the undertakers are so needy and violent in the pursuit of it.”
On the fifth of December, an instrument entitled the Manufactory Scheme was laid before the Council. It had been offered by Robert Hale, one of the Directors, for record in the office of the Secretary. The Board refused to permit this, alleging that the proposition to record it after the Board had publicly expressed their opinion of the pernicious tendency of the said Scheme was a great indignity offered to the Board. The same day, Samuel Adams, William Stoddard, Samuel Watts, Robert Hale, and John Choate — all of whom, except Watts, had presented their resignations as Justices of the Peace — were removed and dismissed from their said offices. On the ninth, George Leonard, a Justice of the Peace, and one of the Justices of the Inferior Court of Common Pleas in the County of Bristol, was dismissed from office. On the nineteenth, Joseph Blanchard, a Justice of the Peace, was also dismissed from office; 1 January, 1741, John Burleigh, a Justice of the Peace, and 3 January, John Fisher, Elkanah Leonard,19 and Ammi Ruhamah Wise, Justices of the Peace, were removed from office for receiving and passing the notes commonly called Land Bank and Manufactory Bills, and persisting therein.
Many of the military officers were also recalcitrant. In a letter addressed to Colonel John Chandler, nine officers who had taken and passed, and who continued to take and pass Land Bank Bills, tendered their resignations, on the twenty-ninth of December. The columns of the press contain abundant evidence of the discontent occasioned by the Proclamation.
Open letters were sent to the several Registers of Deeds, in December, calling upon them to make a return of the Land Bank mortgages. As a further means of influencing military officers, the colonels of regiments were instructed to inquire into the conduct of the officers subordinate to them. The Justices of the General Sessions of the Peace were instructed to use their power, both in Court and as individuals, to prevent the circulation of the Land Bank Bills. In granting licenses to retailers or common victuallers, they were to take this into consideration, and were to caution licensees against passing or receiving the aforesaid bills. A blank form of summons was prepared for use by the Council in cases where they wished to bring before them persons accused of passing Land Bank Notes.
The Registers of Deeds responded to the call of the Council, and a complete list of all the subscribers to the Land Bank whose loans were secured by real estate was thus brought under their scrutiny. Information was also freely offered as to delinquencies on the part of individual officers, who were thereupon instructed by special letters to explain and desist.
The inquisitorial nature of these proceedings called forth from individuals against whom they were directed responses which differed in tone according to the character of the writers and their sympathy with the Land Bank, and which were perhaps in some instances governed by the importance of the offices held by them. Many were cringing and obsequious; a few were manly and independent; and there can be detected in some the contempt of the writers for the despotic and tyrannical methods of the Council. Andrew Burley wrote: —
“As to the complaint exhibited against me for receiving and passing Manufactory Bills since his Excellency’s proclamation, I freely acknowledge I have done and am determined so to do at present.”
Henry Lee of Worcester said: —
“I am determined to do what I can to encourage it, and think that the privilege of an Englishman is my sufficient warrant therefor. . . . As I act to my conscience, I regard being punished any way for differing in my opinion from the Council to be a civil persecution, and to be deprived of my office until I be proved unfaithful in it, or have violated the laws of the land, I look on as an invasion of my native rights.”
Lee, who was a Justice of the Peace, was of course removed from office. Whatever our views as to the economic character of the Land Bank and Manufactory Scheme, we can but agree with him that, so long as there was no law against the experiment, it was his privilege as an Englishman to encourage it; nor was it anything short of civil persecution to punish him for holding a different opinion from the Council. The power of the Council under the Charter to remove from office was disputed by contemporaneous writers; and Lee was not alone in his opinion that it was an invasion of his natural rights. Yet the steps of this kind taken by the Council in the cases of individual office-holders were insignificant in their consequences when compared with an order issued on the twenty-seventh of January, 1741, in the following words: —
Voted, That no person shall be admitted to appear and plead before this Board as an attorney and counsellor at law, on any pretence whatever, who shall pass, receive, or give encouragement to the bills called Land Bank or Manufactory Bills, but that notice be given hereof in the public prints.
To appreciate to-day the full force of this order, we must recur to the Charter of William and Mary, where we find it established and ordained, —
“that the Governor of our said Province or Territory for the time being with the Council of Assistants may do, execute, or perform all that is necessary for Probate of Wills and granting of administration for, touching, or concerning any interest or estate which any person or persons shall have within our said Province or Territory.”
Attorneys who differed from the Council on this point were therefore cut off by this order from all probate practice before the Board.
Meanwhile the Governor, at the close of the January session of the Assembly, had in his address to the Court acknowledged the zeal and steadiness of the Council in their efforts to suppress the Land Bank, and had reproached the House for the countenance which it had given to this iniquitous contrivance, a considerable number of the members themselves being, as he was told, greatly interested in it. He alluded to measures taken here and at home for the suppression of the Scheme, measures which he did not doubt would soon have the desired effect. In aid of these efforts, the Council caused a letter to be prepared to the Lords Commissioners of Trade Plantations, which on submission to the Board was duly approved.
The combined efforts of the Governor and Council, the Boston merchants, and the individuals interested in securing legislation in England adverse to the Land Bank were so far fruitful that on the twenty-seventh of March, 1741, Francis Wilks, Agent, wrote: —
“A bill is just passed the House of Commons to extend the Act commonly called the Bubble Act, passed in 1720, to the plantations in America, after it had sundry alterations from what was first printed which I could not have a copy of, and time to consider it before it was sent to the Lords. I am satisfied it is the determined resolution of the Parliament to dissolve all companies in America who have put forth any notes or bills to pass in public, and to prevent any other from doing it hereafter.”
On the ninth of April the bill referred to by Wilks had its third reading in the House of Lords. It still had certain formalities to go through before it would become a law, and some weeks would necessarily elapse before knowledge of its passage could reach America. Pending its arrival, the Province was destined to witness scenes which testified to the earnestness with which the inhabitants of some of the poorer towns were prepared to carry on the battle in behalf of the Land Bank Bills. It must be remembered that in some of these towns it had been voted to receive these bills in payment of the town rates. The selection of town officers and the choice of Representatives had been controlled in many instances by the opinions of the candidates upon the Land Bank Scheme, and the character of the new House was to show that the Land Bankers were still in the ascendant.20
At such a time as this, when the popular voice had distinctly expressed itself in favor of the Land Bank, the attempts of the Governor and Council to suppress the Company led a few lawless spirits to counsel resistance. Of this the Governor received warning through an affidavit, made 2 May, by Samuel Bates of Weymouth, before Edward Hutchinson, to the effect that there was a report in that town of a confederacy in the country of about five thousand men, whose design it was to come to Boston to know the reason why there was not a currency for the Land Bank money. Bates further said that a paper had been passed about in Abington for that purpose, and that there were rumors of the storage of corn in Boston, for shipment for a market. The Governor, on the fourth of May, appointed John Quincy to make inquiry into the matter with privacy and caution, and if he should find that there was need of action to call upon Mr. Justice Lincoln for aid in suppressing this riotous and disorderly proceeding.
Apparently the investigation revealed the fact that there was some foundation for the information lodged by Bates. Affidavits were procured showing that there had been some attempts made to obtain the written engagement of a large number of persons in the towns of Hingham, Weymouth, Stoughton, Abington, Plymouth, and Bridgewater, for a simultaneous rising on the nineteenth of May. Notices had been posted at meeting-houses, vague in import, and indicating some secret understanding. Precisely what was intended is not clear, but from certain veiled threats it may be concluded that the conspirators wished to compel persons having corn, and especially the proprietors of a large amount supposed to be stored in Boston, to sell their corn for Land Bank Bills. The evidence appears to have been sufficient to justify the Council in voting that they had information of a combination to force the currency of Land Bank Bills, and to order, on the fourteenth of May, the issue of a warrant for the arrest of a number of persons who were alleged to
“have been concerned in a design and combination with a number of evil-minded persons to come into the town of Boston in a tumultuous manner tending to the disturbance and disquiet of the government and affright and terror of his Majesty’s good subjects.”
The premature disclosure of the attempt and the prompt measures for its suppression prevented any outbreak. The only significance of the conspiracy lies in its testimony to the widespread influence of the Land Bank.
It is a curious fact that simultaneously with this attempt to enforce by violence the circulation of the Land Bank Bills, several schemes were under consideration in different parts of the Province for the organization of local banks of similar character. From Scituate a gentleman wrote, in April, —
“a number of us in this and the neighboring towns are designing the same thing and propose the same sum [£50,000], and as some wealthy men encourage our proceeding, by promising to be concerned, I doubt not it will be completed in a months time.”
About the same time it was rumored that a bank was to be formed in Middlesex County, which was expected to profit by the mistakes of the Land Bank. In Essex County, a bank was organized and a petition in its behalf was presented to the General Court. This bank actually prepared for circulation notes of small denominations. They were dated at Ipswich, 1 May, 1741, and were payable to the order of James Eveleth, one third at the end of every fifth year, in produce or manufactures. “Will it not be for the interest of all the Counties to follow this laudable example?” said a querist; “and if all these notes obtain circulation who can complain for want of paper money?”21
On the twenty-seventh of May, immediately following the issue of the warrant for the arrest of the conspirators, a new Assembly met, and Samuel Watts, a Director of the Land Bank and one of the Justices of the Peace whom the Council had dismissed from office, was elected Speaker of the House. The Governor disapproved this choice, whereupon the House proceeded to elect William Fairfield, an abettor of the Scheme, and this election met with approval.
The Council and the House then proceeded to the choice of Councillors. The names of thirteen of the newly elected Councillors were rejected by the Governor on the ground that they were directly interested in or were abettors of the Land Bank. The evidence which these elections furnished the Governor, being conclusive as to the temper of the House upon the important question in which he took so much interest, he dissolved the House the next day for that reason, and writs for a new election were issued, returnable 8 July.
On that day the new House met, and proceeded to organize by the election of John Choate as Speaker. Choate, it will be remembered, headed the Ipswich petition in favor of the Land Bank which was presented in 1740, and had been dismissed by the Council from his office of Justice of the Peace after he had tendered his resignation. It is not probable that there could have been any expectation on the part of the Representatives that this choice would meet with Belcher’s approval. It is almost certain that the bit of bravado in which they indulged by electing Choate met with the fate which was anticipated when the Governor promptly refused his approval, and that the act was taken merely to show him that there had been no change in popular opinion. Choate having been rejected, the House then chose John Hobson, Esq., Speaker, a friend of the Land Bank, but not a subscriber. On the thirty-first of July, the General Court proceeded under the general powers in the Charter to the election of civil officers and amongst others chose Samuel Watts and Robert Hale to be two of the Collectors of Excise. Both were Directors in the Land Bank. The Governor had two months before refused his approval of the choice by the House of Watts as Speaker. Hale was the man who had offered to file the Articles of Association of the Land Bank in the office of the Secretary of the Province, which offer the Council had denominated a great indignity to the Board. The records do not disclose when the Act passed by Parliament for the purpose of suppressing the Land Bank reached tins Province; but it is quite certain that this took place before the events which we are now considering.22 Up to this time no steps had been taken by the Directors of the Land Bank which indicated a purpose on their part to recognize the Act of Parliament. Nevertheless the Governor submitted to the House, and distasteful as the step must have been, approved the choice of these two men as Collectors of Excise.
It is essential that we should pause at this stage of the narrative to consider the nature of the Act which had been passed by Parliament, and the condition in which the projectors of the Land Bank and Silver Scheme found themselves under the operation of that Act.
The Act of the 6th of George I., chapter 18, spoken of by Wilks, the Province Agent, as the “Bubble Act,” was introduced in Parliament during the excitement connected with the celebrated South Sea Company. It had according to its terms a twofold purpose: first, the creation of two corporations for the transaction of certain classes of insurance; and second, the creation of a monopoly of this business for these companies and (simultaneously, it would seem) a monopoly of the stock market for existing corporations. The first purpose was accomplished in the ordinary way; the second, by enacting that the transacting of business by any joint-stock company having transferable shares, or the raising of any such stock, or the taking of subscriptions therefor, or transferring shares therein, or doing anything in furtherance of any such undertaking without special authority by statute, would be unlawful after 24 June, 1720. All transactions by any such company were declared to be void, and any business done by it would be a public nuisance, for which the offenders were to be punished according to the Nuisance Act. Such offenders would further incur the penalalties of premunire, and were liable for treble damages to any merchant suffering harm in his trade through them.
The statute, the passage of which in the House of Commons was reported by Wilks, was the 14th George II., chapter 37, and was entitled “An Act for restraining and preventing several unwarrantable schemes and undertakings in his Majesty’s Colonies and Plantations in America.” It began by reciting in the preamble the passage of the 6th George I., chapter 18, and then proceeded to describe the Land Bank at length, with a brief allusion to other schemes.
The assertions embodied in this preamble are to the effect that, —
. . . “persons have presumed to publish in America a scheme for supplying a pretended want of a medium in trade by setting up a bank on land security, the stock of such bank to be raised by public subscriptions for large sums of money, whereof small sums were from time to time to be paid in by the particular subscribers, and to be managed by Directors, Treasurer, and other Officers, and dividends to be made as therein mentioned; and the said company of subscribers were to promise to receive the bills which they should issue, for and as so much lawful money as should be therein respectively mentioned in all payments, trade and business; and after the expiration of twenty years to pay the possessor the value thereof in manufactures.”
It then goes on to say that sundry other schemes, societies, partnerships, or companies have been set on foot in America for the raising of public stocks or banks, and unlawfully issuing large quantities of notes or bills, contrary to the true intent and meaning of the said Act. Following this description of the Land Bank and reference to the Silver Scheme comes a statement to the effect that doubts had arisen whether the Act of 6th George I., chapter 18, could be executed in America, since all proceedings under it were appointed to be heard and determined either at Westminster, Edinburgh, or Dublin; so that the said Act in its original shape was powerless to suppress violations of its terms which might occur in America. For the purpose of removing these doubts it was enacted that the said Act did, does, and shall extend to the Colonies in America. All things prohibited in the 6th George I., chapter 18, and all the undertakings, attempts, &c, before mentioned were declared to be illegal and void. All offenders against either of the two Acts were declared to be liable to the penalties of the Public Nuisance Act, and they further incurred the pains and penalties of the Statute of Provision and Premunire. Any person who might suffer injury through any of the proceedings declared to be illegal in the Act was empowered to bring suit against the company causing the injury or against any subscriber to the same, in any court in any of his Majesty’s Dominions, Colonies, or Plantations in America, and judgment, if recovered, should be given for treble damages. Any possessor of the notes issued by these companies was authorized to bring action against the company, or against any person who within six years had been or who might thereafter be connected with the undertaking. Every such person was declared to be personally liable for the face of the notes and interest from date of issue, and the possessor was entitled to immediate judgment, even if the note by its terms was not yet due. The penalty of treble damages could be avoided by those interested in these schemes if they should pay all demands made upon them under this Act, and should abandon the schemes entirely on or before 29 September, 1741.
The passage of this Act sounded the knell of the Land Bank. It is true that the Company was not a joint stock company, nor did it have transferable interests; therefore it would be difficult to say how it came within the scope of the Bubble Act. The assertion made in the preamble of the Act of 1741 to the effect that the stock of the Bank had been raised “by public subscriptions for large sums of money, whereof small sums were from time to time to be paid in” was absolutely false. The annual instalments which the subscribers agreed to pay were to be applied in liquidation of loans which they were to have from the Company, and were not payments on account of stock subscriptions. The pretence that the Bubble Act originally applied to the Colonies was more than absurd, it was wicked; and the language of the preamble of the Act of 1741 practically recognizes that fact. It was perfidious on the part of those who drafted that preamble to so describe the Land Bank as to cause members of Parliament to believe that it came within the terms of the Bubble Act. Not only was there no reason why the projectors of the Land Bank should, at the time when they organized, have suspected that they were violating any of the statutes of the realm, but there was then on record a Report of the Board of Trade made to a committee of the Privy Council in which the opinion of the Board was given that schemes of this sort were permissible in the Colonies. More than that, the Attorney-General himself had filed an opinion which might have been quoted to show that what was then being done had been pronounced to be legal by the highest counsel in the realm. The importance of these two documents in this connection is obvious. I therefore submit a statement concerning their origin and contents, of sufficient detail to show their application.
In April, 1735, the Assembly of the Province of Massachusetts Bay passed an Act restraining the circulation of the New Hampshire Merchants’ Notes emitted the preceding year. An attempt was made to secure the disallowance, by the Privy Council, of this Act, and the matter was referred to a committee of the Privy Council which called upon the Board of Trade for information; whereupon the Board of Trade, on 17 March, 1736, reported to the committee that the New Hampshire bills in question were issued to supply a want of money, by private men of good estate who had entered into an association for that purpose, and that the bills had no compulsory circulation, being left to stand or fall according to the credit of the signers.23 Under these circumstances the opinion of the Board of Trade was, “It would therefore in our opinion be a great hardship to set a public mark of discredit upon the persons engaged in this undertaking.”
On the tenth of November, 1735, Willes, the Attorney-General, in a communication to the Right Honorable the Lords Commissioners for Trade and Plantations, used the following language:24 —
“In obedience to your Lordships’ commands signified by Mr. Popple, I have considered the scheme which you was pleased to send me for erecting a sort of a Bank at Boston, in the Massachusetts Bay and can see no objection thereto in point of law.”
The contracts and undertakings of the Land Bank Company were therefore at the time of their execution legal and proper, so far as the subscribers themselves, the Attorney-General of his Majesty, or the Board of Trade knew. They were, however, by this Act rendered void ab initio.
Thus through the extension to the Colonies of an Act which by its original terms could not have been there enforced, and which by any strict interpretation of language would not have applied to the Land Bank, a body of law-abiding citizens, who had engaged in a scheme which they believed would alleviate a great public need, were by legislation made subject to the statute of Provision and Premunire, the penalties of which were forfeiture of estate and imprisonment. The Act under which this was accomplished not only impaired the obligation of existing contracts; it was not only retroactive, it was ex post facto. The affairs of the Company were by its passage thrown into chaotic confusion. Its securities were annihilated, and the persons who had participated in it were individually at the mercy of evil-disposed persons who might punish their enemies by collecting quantities of Land Bank Bills making demand for payment and then insisting upon the application of the penalties of the statute.
The attitude of the House of Representatives at the opening of the July session indicates very clearly that the Land Bank party had not at that time made up their minds to submit. Indeed it may be doubted if they would quietly have done so if Belcher had remained at the head of the Government.
A contemporary writer describes the situation when Shirley took charge of affairs as follows: —
“As to the temper of the people at that time the Land Bank Party, which was very numerous throughout the Province, was irritated and inflamed to such a degree that they seemed ripe for tumult and disorder; they had persuaded themselves that the Act of Parliament could not be carried into execution, and they had even bid defiance to the Government by their threats.” “Nor was the temper of the House of Representatives in a much better frame than that of the populace, two thirds of the members at least being either partners or abettors of the Land Bank Scheme, from whom a general opposition to all the measures of Government necessary at that time for his Majesty’s service and the public welfare of the Province seemed in their present disposition to be much feared.”25
It will depend somewhat on the judgment of the individual whether Shirley’s advent to power will be considered to have been for the advantage of the Province or not. He found a people ripe for rebellion. Parliament had placed in the hands of his predecessor an instrument of oppression which could have been so applied that resistance would have been inevitable. The situation demanded conciliation and wise administrative ability. Belcher was incapable of dealing with the question in the proper spirit, and was totally inadequate for the emergency. Had he remained in power the first collision with Great Britain would probably have occurred in 1741. Shirley was, however, a widely different man. He was intelligent, cultivated, and thoroughly understood the people with whom he was brought in contact, and the difficulties against which they were struggling. The methods adopted by Belcher served, according to Shirley “only to exasperate the people and beget a malignant spirit.” His evident sympathy with the unfortunate situation of the individual subscribers to the Land Bank could not prevent him from insisting that the legislative steps which were thereafter taken towards winding up that scheme should be in accordance with the general terms of the Act which compelled this step, but it led him to urge the Board of Trade to let such legislation stand where it was quite evident that it was evasive of the strict application of that Act. His commission was published 14 August. It was important that some steps should be taken towards the abandonment of the scheme and the redemption of outstanding bills prior to 29 September, if the right to a judgment for treble damages was not to be a permanent enjoyment of the possessors of the bills. It can not well be doubted that it was largely due to the change in Governors that the convocation of the Company at Concord on the first of September became possible, at which meeting a committee was appointed “to examine the Directors’ and Treasurer’s accounts and the Company’s trading stock.” At an adjourned meeting held at Milton, 22 September, tins committee reported, and the next day, —
“a Committee was chosen who were impowered to attend and assist the Directors in consuming the bills as paid in by the partners or otherwise drawn into the treasury, and that they, in behalf of the partners, should audit and settle the Accounts of Trade with the Directors or Factors of the partners, in order to their receiving or paying what might be gained or lost in the trade, to be concluded and shut up as soon as possible, and that they should see the plates on which the Bills were struck be forthwith destroyed.”
This vote is said to have been obtained with difficulty, and to have been carried by a bare majority, many being desirous to stand out and bid defiance to Parliament.
On 28 September, in order that the record might be complete as to their voluntary withdrawal from the further prosecution of the scheme before the limit of time set by the Act of 1741, the Directors entered the following declaration, couched in the language of the statute, on the Company’s books: —
We, the subscribers, having been concerned in the Manufactory Scheme lately erected in Boston on Land Security, which by the partners is voted to be dissolved, do hereby publicly declare that from this time forward we do desist from and give up and relinquish, and wholly forbear to act further therein, or directly or indirectly to carry on the same.
Operations in connection with the Silver Scheme had already been suspended. Although the Act under which the two organizations were thus abruptly brought to an end made void and illegal all the contracts and agreements into which both Companies had entered, still the situation of those who had issued the silver notes was far less perilous than was that of the promulgators of the Land Bank Scheme. These notes had been divided among the Directors, all men of good standing in the community, and by them distributed among friends who were united by a common purpose, and were actuated by the belief that the steps they were taking were in the nature of self-defence. The consideration of their mortgages was expressed in ounces of coined silver, sterling alloy. Payments were to be made in the same or in standard gold. The obligations ran in favor of nine Boston merchants,26 whose names were duly recited as payees in the instruments, but who were not described as Directors of any organization. There was, in other words, nothing on the face of these papers which would of itself compel a court to recognize them as connected with an illegal company. Traces are to be found of litigation arising from the facilities furnished possessors of the notes, under the Act of Parliament, to annoy individual partners; but these are insignificant compared with the record of the other Company.
On the other hand, the Land Bank mortgages were issued in consideration of so many pounds in bills of credit called “Manufactory Bills.” The receipt of them was acknowledged to be from nine gentlemen, who were described as “Directors of the Manufactory Company (so-called).”27 Their payment was provided for “in Manufactory Bills as aforesaid, or in Merchantable Hemp, Flax, etc.,” at such prices as the Directors should judge they would pass for in lawful money. These instruments were, therefore, unmistakably connected with the Land Bank Company. The patrons of the Land Bank were scattered through the Province. The majority of them were able to meet the obligations which they had assumed, but the margin of their capacity to respond beyond this was narrow. Knowledge of the character of the Act for closing the Companies led some to transfer their property. The straightening of the lines between the Province and adjacent Colonics threw the residences of a number of the promoters outside the Province. Against subscribers thus situated, proceedings under subsequent Provincial legislation became ineffective. It was necessary to provide for the redemption of outstanding bills; for the expenses incurred by the Company, and for certain losses which had been incurred in trade. Each solvent subscriber was primarily responsible for his loan, and in addition for his proportion of losses incurred in the prosecution of the scheme in accordance with the Articles of Agreement. The question of the proper distribution of the losses in trade was a source of perplexity, and caused much discussion. After the adjustment of such questions as these, there still remained the delinquencies arising from the insolvents, the fugitives, and the dishonest.
It is not my purpose to attempt to follow in detail the subsequent legislation upon this complicated subject. We have traced the fortunes of the Land Bank from its origin to its compulsory closure. The legislation which then took place was with a view to protect the public in the first instance, and to prevent as far as was possible the honest partners from being imposed upon by the delinquents. For two years no legislative steps were taken to alleviate the situation. During this period the Attorney-General, under instructions from the Council, prosecuted a few of the delinquents. The situation of the unfortunate subscribers who had complied with the law was harassing in the extreme. Forty-seven thousand two hundred and eighty-two pounds two shillings and ten pence in notes had been issued. About thirty-two thousand five hundred pounds of them were brought in with reasonable promptness after the vote of dissolution, and voluntary provision was made by about six hundred of the subscribers for their proportion of the redemption.
Some of those who were still delinquent were stimulated by a proclamation of the Governor in 1742 to contribute their proportion toward adjusting their several loans, and others were intimidated by the subsequent appointment of a committee by the General Court for the purpose of seeing what could be done to the delinquent partners.
The fact that a subscriber had paid in his proportionate share merely relieved him from the penalty of treble damages. He might still be the victim of any possessor of the bills who chose to sue him. Nor could the Directors enforce the collection of dues to the Company since all contracts were rendered void by the Act of Parliament. Under these circumstances the subscribers, who had complied as far as was possible with the Act of Parliament, petitioned for relief, and in 1743 an Act was passed by the General Court appointing a Commission, into whose hands the affairs of the Company were placed. The Commissioners could collect debts and levy assessments; and the estates of subscribers were held for such assessments as if they had been attached. The Commissioners were also empowered to execute mortgages on the property of subscribers in place of those originally given the Company. Thus through the aid of a commission all the void obligations of the Company were practically revived, and power was given to renew the securities. The Act of Parliament was to that extent rendered of no effect.
So far as the subscribers themselves were concerned there remained unpaid of their obligations to the Company only £2318 8s. 3d. when the affairs of the Company were turned over to the Commission. This amount was due from eighty-three delinquents, of whom forty-six had paid a part of their dues, and thirty-seven were totally delinquent.
The Commission levied three assessments, — one against the total delinquents, one against the partial delinquents, and subsequently a third against all subscribers. As regards the results accomplished by these assessments one of the Commissioners afterward reported that proceedings under this Act “tended rather to increase than diminish the debt of the Company of Partners.” In this connection it will be remembered that the outstanding bills all drew interest from September 1740, under the provisions of the Act of Parliament, — an important feature in these protracted proceedings.
In 1747 matters were still further complicated by the destruction by fire of the papers of the Commission, including all evidence of payment of assessments.
In order to expedite the closing of this tedious affair, — a process which up to this time had apparently operated in inverse order, — new powers were given the Commission in January, 1749, and a new assessment was ordered. The published lists of the former assessments were declared to be evidence of the amounts due the Land Bank, and the subscribers were put to the proof of payments which they might have made. Collections could be made by warrants of distress, without suit.
An assessment made in pursuance of this order failed to receive the approval of the General Court. If it had been permitted to stand, the whole matter would have been speedly disposed of, but misfortune followed the unlucky participants in the affair, and the recalcitrants were powerful enough to block the wheels of the Commissioners. Thus they practically remained for ten years thereafter, notwithstanding occasional legislation for the purpose of bringing matters to a close. Curiously enough, in one of these Acts it is provided that attested copies of the record of the original mortgages in the registries of deeds may be used in suits against Partners, thus entirely ignoring the effects upon these contracts of the Act of Parliament.28 During this period much trouble was experienced in securing service of the warrants of distress. In some parts of the Province the officers retained them for years in their hands and then returned them not served.
In the spring of 1759, the Commission was reorganized. The new Commission levied two assessments, the first being upon those partners whom the Commissioners judged of ability to pay. The greater part of this first assessment was collected, and the money was applied, so far as was necessary, for the redemption of the bills then outstanding. In order to refund Partners who had paid more than their just proportion, the second assessment was levied upon the subscribers whose names were omitted in the previous list. The enforcement of this last assessment was met with successful resistance.
In 1760 a lottery was authorized in aid of the unfortunate subscribers to the Land Bank. It hung fire for some time and required more legislation and the passage of more resolutions to enable the Commissioners to secure any benefit from it, but eventually the net sum of £556 15s. 6d. was realized.
The accounts of the two Commissions were called in and audited, and a third Commission was appointed 20 March, 1767. With the passage of this Act, the familiar title “Land Bank” disappears from the Index of the Province Laws, so far as the registry of Acts is therein preserved. Nor is there any record in the Archives after this date of any conclusion reached upon the subject.
There were reports of committees both on the accounts of the Commissioners and on the relations of the Directors to the Partners. Action was contemplated to enforce an assessment upon the surviving Directors, and the estates of those who were deceased, of £1740 7s. 3d., said to be due the Partners from the Directors. Objection was made to the jurisdiction of the Court, but an order was passed to bring in a Bill assessing the Directors the above sum. Objection was then raised that a final settlement had been made with a committee of the General Court in 1751. This question was discussed, and on 3 March, 1768, the hearing was adjourned to the first Tuesday of the next May session, and there, so far as the record shows, the matter dropped.
I have said nothing in detail of the litigation consequent upon the Parliamentary and Provincial legislation, nor have I space to do so now. The Court files are full of special blanks printed to meet the exigencies of the occasion. There are special forms of writs for possessors of notes, others for the Commissioners as plaintiffs, and there are special blanks for Warrants of Distress to be issued by the first and second Commissions. Hundreds of these were used in the various proceedings, the numbers being greatly increased in consequence of the fire in 1747.
Two things may tend to cloud our judgments in determining the influence of these proceedings upon subsequent political events. First, we can have no sympathy with the Scheme. It could have had no other effect than to add to the embarrassments under which the Province was then laboring. It was so inherently weak that before the first payment of interest became due on the mortgages, the managers procured the execution of an additional agreement that not over one half in amount of the payments to be made should be in Manufactory Bills.29 It was so vicious in principle that it is difficult not to accept its suppression as a thing which ought to have been accomplished on any terms. In the second place, the powers delegated by the General Court to the Commissioners, after it was found that the first Act for the suppression of the Land Bank was only effective so far as honest men were concerned and could be easily evaded by others, were arbitrary in the extreme, and a review of the history of the affair is apt to leave this the leading impression in the mind, thereby tending to throw into the background the iniquitous character of the Parliamentary legislation on the subject.
The fact that there was strong hostility to the Scheme on the part of capitalists and intelligent business men undoubtedly had its effect in preventing any proper unanimity of feeling upon the methods of parliamentary suppression, yet the following of the Land Bank was so great that these methods had a far reaching influence in preparing the people of Massachusetts for subsequent resistance to parliamentary interference in their affairs. Hutchinson assumed that these proceedings famished evidence of Parliamentary supremacy, but Samuel Adams, in 1773, called attention to the fact that the Act passed by the legislature of the Province militated against the Act of Parliament, and claimed that the acquiescence of the people was simply to what they conceived might operate for public good, while they did not consider themselves bound by such portions of the Act of Parliament as would work harm even to individuals.30
I think that the recital of what has gone before must have prepared us to admit that John Adams was correct when he said, “The Act to destroy the Land Bank Scheme raised a greater ferment in this Province than the Stamp Act did.” His statement that this ferment “was appeased only by passing Province laws directly in opposition to” the Act of Parliament,31 brings before us anew the fact that the General Court shielded the honest subscribers, as far as possible, at the expense of the Act of Parliament. Thus we see that the preposterous legislation of Parliament for the purpose of suppressing the Land Bank, led to its direct evasion by the legislature of the Province and brought the question of Parliamentary supremacy under discussion.
As we look over the list of Directors we see the name of Samuel Adams, and in the later reports of committees the estate of Samuel Adams figures as a delinquent. It is known that the harassing proceedings taken against the estate of the father were a source of annoyance and trouble to the son. Who shall measure their effect upon the mind of the future inspirer of the Committees of Correspondence, the indefatigable and persistent leader in the revolutionary movement?
“It is supposed,” wrote one of the pamphleteers of the day, “that there will be about one thousand subscribers, who in their station of life must have an intercourse of business or dealing interwoven with ten thousand more.” “Many towns,” wrote another, “take the notes in trade, besides paying their Town and Ministerial rates with it, at least in part.” Yet Parliament was too impatient to wait a few months for this popular experiment to collapse through its own weakness, too anxious for hostile legislation to care for its reputation for consistency and justice, and in its haste and impatience sought to crush the Land Bank out of existence by means which then aroused the indignation of this multitude of interested persons, and which cannot fail to create the same feelings in the mind of the disinterested reader to-day.
A discussion, in which several of the members participated, followed the reading of Mr. Davis’s paper.