Appendix 4


    [c.12-25 Aug. 1767]

    A Representation of the State of the currency of this Province, and of the manner in which any alteration in that matter might affect the Trade and business of the Province and the property of the Inhabitants, and of other persons who may have debts and effects therein.

    Money being the instrument of commerce and the measure of the value of everything that has relation to it,1 it is necessary it should be of a known fixt standard, or as nearly so as the nature of it will permit.

    As Silver and Gold from the nature of them and other circumstances, are most fit to answer the purposes of money, mankind by general consent have adopted them as such: and accordingly the coin of one Kingdom, after the proportion of pure metal has been ascertained, finds a ready currency in another, at a fixt value compared with its own; and thus they become in the commerce of the world the common measure of the value of other things. If in a commercial State anything else be substituted as money, the value of it will be estimated by the quantity of Silver or Gold it will purchase; or, which amounts to the same, by the quantity which the produce of such State, when carried to market, will purchase: allowance being made for the charges attending transportation.

    In this Province a Paper medium issued on the credit of the Government, has been substituted as money, and the value of it has always been estimated by the specie it would purchase. From the first issuing it in 1690 to its being redeemed in 1750, except for the time the Government in all payments made into the Province Treasury allowed on it a premium of five per Cent, it had been in a depreciating state; and depreciated from 6s. 8d. to above 50s. the oz. of Silver:2 at which last mentioned rate it was redeemed by the Government in 1750,3 and in lieu of it was substituted the Silver money remitted from England to reimburse to us4 the expense of taking Cape Breton: which money with other Silver & Gold has ever since been the stable currency of the Province:5 while the currency of some of the neighbouring Governments, particularly Rhode Island and New Hampshire, whose bills of credit were on par with ours, sunk so low as that eight pounds of it would not purchase one ounce of Silver: and it is probable our own Bills if they had not been redeemed by the reimbursment aforesaid would have sunk in the same proportion.6

    As this Province has remarkably experienced the bad effects of a depreciating paper currency, the mention of some of them may serve to shew what is to be expected in case a similar currency should ever obtain here again.

    One effect was, that Silver & Gold ceased to be the currency of the Province. The reason of this is manifest: where two things are substituted as money, he that is possessed of both, will part with that first, which from the nature of it, and the general estimation of mankind, not to mention other circumstances, is of the least value. The other he will not part with for any purposes, the less valuable thing will answer for. Of course this latter, which in our case was the paper Bills, became the only currency; and the other vizt. the Silver and Gold were hoarded till the possessor could make a profit by exporting them.

    Another effect was, that Trade was discouraged; and the British Merchant in particular defrauded. __ When the Merchant here sold his Goods, he expected to make at the time of payment a certain profit. But when pay day came, if his customer was punctual he found the paper Bills had depreciated so as to sink a part of the whole of his profits, and very commonly much more. If this customer postponed payment which was no uncommon thing, his loss was proportionably greater. There have been frequent instances during the period of greatest depreciation, of persons purchasing on credit large quantities of Goods, and paying for them (and punctually too) with one half or less part of the Goods purchased. They have purposely kept the Goods by them till the day of payment or near it: and have then sold so much of them for bills in hand (which was no difficult thing) as would enable them to pay for the whole. Or if the purchaser without such views had Sold the Goods as opportunity offered, it made no difference in the loss of the Merchant, who with the Bills he received could not replace one half of the quantity of the Goods he sold; or pay the British Merchant who credited him, one half of the cost of them. __ Hence Bankruptcies and the attendant evils: hence great loss & fraud to the Merchants in Great Britain in particular, whose distance put it out of their power to secure any part of the Bankrupts effects: and hence, in all its branches discouragement to Trade.

    Another effect was great confusion and a kind of civil dissension in the Province.7 As soon as the depreciation was perceived, which was perceived by the enhanced price of everything, disputes arose about the payment of debts, Salaries &c; and besides the immediate ill consequences arising from thence at length divided the Province into two great parties: the espousers & opposers of a depreciating currency. The former being by much the most numerous could easily and in fact did, introduce into the General Assembly a majority of their own party, which improved every opportunity to increase the quantity of paper Bills: the emissions of which, tho’ it added to the nominal, did not add to the real value of the currency: for the whole taken together after such emissions, would not purchase of anything more than the Bills would, that were extent before; and in some instances perhaps not so much. It is easy to conceive that in such a state of currency great confusion in dealings must ensue. But that was not the worst effect: The minds of people were soured by it, and a set one part of them in a state of enmity with the other. The Creditor was injured, and if he demanded an equivalent, or any consideration for the depreciation the Debtor thought himself oppressed: and this was the cause of perpetual animosities & discord which prevailed in almost all transactions & business, both of a public and private nature, wherein it was possible for the spirit of party to operate.

    Another effect was, a most unjust transfer of property; whereby private persons and bodies corporate, not in debt and possessed of personal Estate, were greatly injured. — All persons within this description were sufferers by the depreciation but it fell heaviest on Widows and Orphans and the helpless part of the community, that depended on the income of their money for their support. Their income greatly failing by means of the depreciation, they were all great sufferers; and many of them either became miserable, or were supported by charity. __ Corporate bodies also have greatly suffered: The Stock of Harvard College in particular, was diminished one half by the depreciation.

    To mention all the bad effects that arose from our late paper currency, and to trace them minutely through their several Branches would be tedious. In general it was destructive of the morals8 of the people: many of whom in matters of property seem to lose all idea of right and wrong; and instead of applying themselves, as they had been accustomed to do, to honest occupations for a livelihood, made it their study to circumvent each other and everyone else that fell in their way: to which practice they were originally led by the fraudulent nature of the currency which enabled them, without the hazard of punishment, to practice the greatest frauds. __ It was destructive also to industry, without which, numbers instead of being the riches, do but increase the poverty of a Country; and in consequence of this, it was unfriendly to population, if it be true that people increase but in proportion to the means of subsistence; which a want of industry necessarily must lessen.

    These were effects of our late depreciating paper currency: and some of them would have taken place, if it had not depreciated: particularly the exportation of Gold & Silver, which to a commercial Country must necessarily be detrimental, so long as those species continue the money of the world, or of those nations, with which such Country carries on its commerce.

    It’s depreciation is a natural effect & almost a necessary effect, of a paper currency. A Bill of it, like the Bill or Note of a private person, is a security or obligation for the payment of money. The private Bill, if payable on demand; and the possessor can depend on it, is worth the Sum it promises: if payable at a distant time (Interest being out of the question) it is not worth that some: and the possessor to have the present benefit of the Bill must part with it at a discount. The public bill differs from the private in this respect, that the community, if they have faith in the Government, will by general consent dispose of their commodities for the public bill as for money: it therefore for the most part answers the purpose of the possessor, as well, or nearly as well, as money: and so there is no discount on it as on the private bill. But if he has remittances to make to another Country where that Bill is not deemd money, and he cannot purchase with it commodities that will answer as well as money he will then apply it to the purchase of money, that is, Gold or Silver coin, on the best terms he can: and in the purchase he will take care to give no more than will make them turn at least to as good account as anything else.

    Here commences a depreciation:9 which cannot be avoided in the best paper currency whatever, unless there be a fund to which the possessor at any time may apply to exchange his Bill for Gold or Silver: or unless by general industry and frugality, the balance of Trade be in favour of the Country where such currency is: in which case the possessor can easily procure bills of Exchange to answer his purposes. While the balance of Trade is in favor of a Country it can always command the sufficiency of Gold & Silver for a currency; and in fact will be possessed of it, unless by the fault of its legislature, it be cursed with a paper currency.

    In a Country of Trade and Commerce that makes any pretensions to civility (except such as procures its Gold & Silver from its own mines) the money of it is characteristic of it’s Inhabitants, or of its Soil. If its money be Gold & Silver, its Inhabitants are generally industrious; or it’s Soil is fruitful, or both. If it’s money be paper either its Soil is not worth cultivating, and the industry of it’s Inhabitants is in a great measure lost upon it; or its Inhabitants taken collectively are idle and extravagant. Ingenious industry & frugality, even where there is no Soil, have the balance of Trade in their favor; and are therefore possessed of the precious metals: witness the Dutch Provinces. And if it be true that like causes produce like effects, it must be true, that where the same qualities are predominant, the same effect must follow from them. It would be invidious to give examples of the contrary characters: but in general it may be said, that, whatever may be the Soil, industry & frugality are not the characteristics of some paper money Provinces in America.

    From some of these observations, if just, it seems for the most part the fault of any commercial people, if their medium be not Gold & Silver. There appears no necessity then of a paper medium; and no propriety or policy in the Colonies endeavouring to free themselves from the restraint of making it: as it will probably operate to their own disadvantage, as well as to that of the Mother Country. The Merchants of Great Britain in times past have severely felt the effects of a paper currency in some of the Colonies, and possibly may again, if they become abettors of it: especially if the Bills be made illegal tender, in which case their factors could obtain no allowance for any depreciation that might happen. Or supposing they should apprehend (as it seems some of the Merchants of London do) that they could secure themselves from the ill effects of such depreciation by procuring an act of Parliament “declaring paper bills shall not be a legal tender in payment of any Sterling debts or contracts whatsoever, already made, or to be made, by or with, or in the name and behalf of any person residing in the Kingdom of Great Britain”:10 and supposing further (what they will never assert) that they have a right to justice in preference to, & exclusive of, all other his Majesty’s Subjects, Such an Act would not answer the purposes intended by it. For as the payment of the debts due to said Merchants or their Factors must depend on the ability of their debtors, whatever loss might happen to these latter would eventually fall on the former. If the debts due to the latter are not paid equal to the value of the Bills when the debts were contracted, they will not be able to pay the Sterling debts due from them according to such value: or though they might do it for some time, they would finally become Bankrupt, and of course the British Merchants would be hurt. The provision in the act then must extend to all such as deal with the Merchants of Great Britain, not only directly, but remotely through others in a long gradation: that is, the extension must be general: or in other words, the paper Bills must not be a legal tender, if the British merchants with effectually secure themselves from all loss by them.

    The merchants of Great Britain can reap no advantage from a paper currency in the Colonies, even though they would in that case draw away the Specie that ought to serve for our medium. It would be good policy in them to be satisfied with the overflowings, rather than by draining the Reservoir, hazard or impair the fountain.

    Experience is the best teacher. The Massachusetts have experienced the bad effects of a paper medium, and the good effects of the Gold and Silver one; which is their present medium: to secure which they banished from them the Bills of the neighbouring Colonies by a Law of the Government11 which they have found very salutary in its operation. And having now for seventeen years experienced that they can do without paper Bills (as they apprehend the other Colonies also can) they are utterly averse to their being introduced into the Province again: and therefore humbly hope that the present restraint on the Colonies with respect to the issuing of paper Bills will not be removed: and in particular that the act of Parliament made on the 24th year of his late Majesty for restraining such Bills in the Governments of New England will not be repealed.12

    The Committee abovementiond pursuant to their appointment aforesaid, beg leave to Report the forewritten Representation, which is submitted to the honorable Board, in the name of the Committee

    John Erving

    In the Law here to be annexed, which was first made in 1750, has been successively renewed.

    Ms, Copy      CO 5/756, ff 106-111.