558 | To the Earl of Shelburne

    No 20

    Boston Aug 25. 1767

    My Lord

    I beg leave to lay before your Lordship a Representation of the State of the Currency of this Province tending to show the ill effects which the incouragement of paper money in the Neighbouring Colonies will bring upon it. The Occasion of drawing up this representation was this: It appeared in the London News papers that Dennis De Berdt Esqr Agent for Massachusets Bay joined other Agents of the Colonies in their sollicitation for a permission to create paper Money.1 If Mr De Berdt had really been Agent for Massachusets Bay, as he really never was more than a Charge d’affaire of the House of Representatives, He could not have done any thing more contrary to the Sense of this province than appearing as an Advocate for paper Money. As this People have had full Experience of the Mischeifs of that Currency, there is Nothing they more dread than the Return of it among them.

    In the last Session the Council taking into Consideration the forementioned News paper Article, thought it proper that a Representation should be made to prevent this province being so far misunderstood as to be ranged Among the sollicitors for paper money, a species of riches which they never desire again to acquire. For this purpose the Council endeavoured to engage the House to join with them: but the House chusing to act separately, the Council proceeded to appoint a Committee to draw up a Representation to be transmitted by the Governor to his Majesty’s Ministers.2 The inclosed is the produce of this resolution, which I beg leave to Submit to your Lordship to be laid before his Majesty, if it shall be thought proper. This Remonstrance is founded only upon an Apprehension of the Mischeifs which will arise to this province by removing the present restraints upon making paper Money within [the]3 adjoining Colonies; altho’ the Arguments used in it conclude against the use of paper money in general. The few Observations I have to make upon this Subject I shall apply to the general Question.

    When I first came to America as Governor of New Jersey, I was placed amongst paper money the most creditable of any upon the continent, never depreciated, & accompanied with a sufficient quantity of silver specie for external trade.4 And yet thro’ all this fair face the Ill Consequences of these emissions were very apparent at no great distance. In the first place there was no obligation for redemption at a certain time, notwithstanding instructions to Governors & clauses of bills in pursuance thereof. For before any set of bills were redeemable another Set of bills were emitted with the usual clause of their being a general tender. They therefore were a tender at the treasury for the redemption of expired bills. In vain therefore did the possessor of bills read upon the face of them that he was entitled to a certain quantity of silver; When he applied for it, he might be told that by subsequent laws the silver was turned into paper; and that he would have no right to insist upon being paid in silver, whilst Any Emission of Bills remained unexpired. This was generally understood to be Law: but it certainly was not so in regard to the possessors of bills who were not subjects of the province & therefore were not bound by the subsequent Laws substituting new bills in lieu of the silver promised by the Old ones.5

    We read in the Newspapers that the Merchants of London who Sollicit for leave to emit paper money propose that this paper Money shall not be a tender for Debts due to British Creditors. They are in the right to take care of themselves; but they should also have considered the propriety of their endeavouring to put others under dangers & difficulties which they protest against for themselves. If there is no Danger of the paper money, for which they sollicit, depreciating, why wont they run the risk of it themselves? If there is a Danger, why will they sollicit it? If they would persuade the Parliament to have confidence in American paper Money, they should show it in themselves. But I beleive Evry one will be for guarding against it as well as they can. If the British Creditors are to be exempted from the Clause of tender, They of the province of Massts Bay, which deals only in Specie, have a right to expect the same exemption. The Colonies whose paper has not depreciated will expect to be exempted from that which is now in actual depreciation; & in the next step, Each Colony will require to be exempted from the paper of all others. And at length as the Circulation is contracted & the credit impaired, the people will want to be exempted from their own paper.

    I remember upon a time, when I had the honour to converse with the late Earl Granville, then Lord President of the Council, upon the Subject of paper Money,6 His Lordship observed that Enforcing its Currency destroyed its credit; and added that if bank bills, which were now current allmost preferably to Cash, were to be made by Act of parliament a legal tender, they would immediately depreciate. This Observation is at first very striking & when applied to the American paper money forms an Argument that is unanswerable. Evry State or Corporation, as well as private person, has a certain quantity of credit, within which they can borrow any money they please. Ev’ry Colony, I suppose, is at liberty to borrow money in this Way; and so long as their credit keeps up, their Securities will circulate. But when they come to ask leave to enforce the Circulation of such Securities beyond their natural credit, what is this but to oblige people to lend them Money whether they will or not; or in other words to take from the people their Money against their Will? I have allways thought that to oblige people to take paper instead of money, except under the exigencies of real Necessity, is a very despotic Act. And yet in America, because it has happen’d to coincide with the Schemes & intrests of the popular leaders, It seems to have changed its Nature. What would be said if the parliament of Great Britain should raise money by issuing Notes enacted to be legal tenders?

    A Principal Objection against paper money seems to me not to be taken notice of so much as it deserves. It is this: When the Currency is only Specie, It forms a kind of Barometer whose rising & falling shows the people the increase & decrease of the general stock. If they ^are^ carrying on a losing trade or import more than their exports will pay for or live at a greater expence than their Income will bear, the Want of Cash gives them warning & obliges them to attend to it. But where the Currency is paper and that in plenty, a People may go on by the Various means of a losing trade, unnecessary imports and extravagant living to the utmost extremity of Bankruptcy, without having any Warning, except perhaps the depreciating of their paper. And this last is generally made use of to encrease the Calamity by the introduction of numberless frauds for which it is peculiarly calculated. So that when the people are obliged to strike a ballance, they find themselves deep in debt without a shilling to pay, without money & without credit, calling in Vain as privates for what they owe to themselves as a public. I have in a former letter to your Lordships Office called paper Money the Negative Power of Riches.7 It is doubly so: It at first occasions all the Specie in the Country to be carried out of it: & afterward it creates the Want of an extraordinary quantity of Specie to pay the debts of which it bears the testimony.

    But after all that has been said against paper Money, I am sensible that it is not so easy to tell how to get rid of it as it is to show its Mischeivousness. A Colony who sets about changing their paper into a Specie Currency, without a lucky Opportunity, such as the Massachusets laid hold of, will have many difficulties to struggle with before they attain their End. But they must succeed, if they persevere: For a Ballance of Trade in their favour & a proper OEconomy in their domestic expences must produce an encrease of Specie untill there is enough for the ordinary Currency. But the Misfortune is that the Advantages proposed from such an Effort ^are distant,^ & the Inconveniences attending it are immediate. People are too intent upon the present; they would have posterity do something for them; and by the means of paper Money they really effect it. Hence arise sollicitations for paper Money, first founded in self intrests & afterwards enlarged by Connections. But surely if people would look forward for a few years to come, they would chearfully submit to some temporary inconvenience, in order to remove the accursed thing from them & substitute in its stead real riches & true Credit for all future time.

    I have according to the desire & expectation of the Council, communicated to your Lordship my Sentiments upon the Subject of the papers enclosed, at the same time I submit them. I have run into greater length than I intended; but I hope that the Importance of the Subject and the Earnestness of this Government to bear testimony against paper Money will excuse it.

    I am, with great respect, My Lord, Your Lordships most obedient & most humble Servant.

    Fra Bernard.

    The right honble The Earl of Shelburne

    ALS, RC      CO 5/756, ff 101-103.