But the loss of public credit, popular disturbances, and insurrections, were not the only evils which were generated by the peculiar circumstances of the times. The emissions of bills of credit and tender laws, were added to the black catalogue of political disorders.

The expedient of supplying the deficiencies of specie, by emissions of paper bills, was adopted very early in the colonies. The expedient was obvious, and produced good effects. In a new country, where population is rapid, and the value of lands increasing, the farmer finds an advantage in paying legal interest for money; for, if he can pay the interest by his profits, the increasing value of his lands will, in a few years, discharge the principal.

These bills of credit emitted by the state, and loaned to the industrious inhabitants, supplied the want of specie, and enabled the farmer to purchase stock. They were ge nerally a legal tender in all colonial or private contracts, and the sums issued, did not generally exceed the quantity requisite for a medium of trade, they retained their full nominal value in the purchase of commodities. But as they were not received by the British merchants in pay. ment for their goods, there was a great demand for specię and bills, which occasioned the latter, at various times, to depreciate. Thus was introduced a difference between the English sterling money, and the currencies of the colonies, which remains to this day.

The advantages the colonies had derived from bills of credit, under the British government, suggested to con gress, in 1775, the idea of issuing bills for the purpose of carrying on the war. And this was perhaps their only expedient. Money could not be raised by taxation; it could not be borrowed. The first emissions had no other effect upon the medium of commerce, than to drive the specie from circulation. But when the paper substituted for specie had, by repeated emissions, augmented the sum in circulation, much beyond the usual sum of specie, the bills began to lose their value. The depreciation con tinued in proportion to the sums emitted, until seventy, and even one hundred and fifty nominal paper dollars, were hardly an equivalent for one Spanish milled dollar, Still, from the year 1775 to 1781, this depreciating paper currency was almost the only medium of trade. It supplied the place of specie, and enabled congress to support a numerous army; until the sum in eirculation amounted to 200,000,000 of dollars. But about the year 1780, specie began to be plentiful, being introduced by the French army, a private trade with the Spanisü islands,

and an illicit intercourse with the British garrison at New York. This circumstance accelerated the depreciation of the paper bills, until their value had sunk almost to nothing, (see page 119). In 1781, the merchants and brokers in the southern states, apprehensive of the approaching fate of the currency, pushed immense quantities of it suddenly into New England; made vast purchases of goods in Boston; and instantly the bills vanished from circulation.

The whole history of this continental paper, is a history of public and private frauds. Old specie debts were often paid in a depreciated currency, and even new contracts, for a few weeks or days, were often discharged with a small part of the value received. From this plenty and fluctuating state of the medium, sprung hosts of speculators and itinerant traders, who left their honest occapations for the prospect of immense gains, in a fraudulent business, that depended on no fixed principles, and the profits of which could be reduced to no certain calculations.

To increase these evils, a project was formed to fix the prices of articles, and restrain persons from giving or receiving more for any commodity than the price stated by authority. To attempt to fix the value of money, while streams of bills were incessantly flowing from the treasury of the United States, was as ridiculous as an attempt to restrain the rising of water in rivers amidst showers of rain.

Notwithstanding all opposition, some states framed, and attempted to enforce, these regulating acts. The effect was, a momentary apparent stand in the price of articles; innumerable acts of collusion and evasion among the dishonest; numberless injuries done to the honest; and finally, a total disregard of all such regulations, and the consequential contempt of laws, and the authority of the magistrate.

During these fluctuations of business, occasioned by the variable value of money, people lost sight, in some measure, of the steady principles which had before governed their intercourse with each other. Speculations followed and relaxed the rigour of commercial obligations. Industry likewise had suffered by the flood of money which had deluged the states. The prices of produce had arisen in proportion to the quantity of money. in circulation, and the demand for the commodities of the country. This made the acquisition of money easy, and indolence and luxury, with their train of desolating

consequences, spread themselves among all descriptions of people.

But as soon as hostilities between Great Britain and America were suspended, the scene was changed. The bills emitted by congress had long before ceased to circulate; and the specie of the country was soon drained off to pay for foreign goods, the importations of which 'exceeded all calculation. Within two years from the close of the war, a scarcity of money was the general cry. The merchants found it impossible to collect their debts, and make punctual remittances to their creditors in Great Britain; and the consumers were driven to the necessity of retrenching their superfluities in living, and of returning to their ancient habits of industry and economy.

The change was, however, progressive and slow. In many of the states which suffered by the numerous debts they had contracted, and by the distresses of war, the people called aloud for emissions of paper bills to supply the deficiency of a medium. But the advantages of specie as a medium of commerce, especially as an article of remittance to London, soon made a difference of ten per cent. between the bills of credit, and specie. This difference may be considered rather as an appreciation of gold and silver, than a depreciation of paper; but its effects, in a commercial state, must be highly prejudicial. It opens the door to frauds of all kinds; and frauds are usually practised on the honest and unsuspecting, especially upon all classes of labourers.

North Carolina, South Carolina, and Georgia, had recourse to the same wretched expedient to supply themselves with money; not reflecting that industry, frigality, and good commercial laws are the only means of turning the balance of trade in favour of a country, and that this balance is the only permanent source of solid wealth and ready money. But the bills they emitted shared a worse fate than those of Pennsylvania; they expelled almost all the circulating cash from the states; they lost a great part of their nominal value, they impoverished the merchants, and embarrassed the planters.

The state of Virginia, with more prudence, never sanctioned the practice of issuing bills; but allowed the inhabitants to cut dollars, and smaller pieces of silver, in order to prevent it from leaving the state. This pernicious practice prevailed also in Georgia.*

• A dollar was usually cut in five pieces, and each passed for a quarter; so that the person who cut it gained a quarter, or rather a fifth. Therefore, should that silver be re-coined, the state must lose a fifth.

Maryland escaped the calamity of a paper currency. A bill for the emission of bills of credit was brought forward by the house of representatives; but it was rejected by the good sense of the senate. The opposition of the other house was not only violent, but threatened the most serious consequences to the state; the question was at length submitted to the people, who decided in favour of the senate.

New Jersey, from its situation between the two great commercial cities of Philadelphia and New York, has a continual drain upon its specie. This state also issued a large sum in bills of credit, which served, indeed, to pay the interest of the public debt; but the currency suffered a vast depreciation as in other states.

Rhode island exhibited a sad example of that total want of principle which always succeeds to a neglect of moral duties. Anxious that the state should abound with money, the legislature passed an act for issuing bills to the amount of £100,000 sterling. This iniquitous law was firmly opposed by many of the most virtuous and respectable characters in the state; but their opposition only produced more violent measures on the part of the assembly, who, to the amazement of all honest men, passed another act, enforcing the circulation of these bills, by making them a legal tender in all debts, and obliging every creditor to accept them in payment, or forfeit his demand. But the state was at that time governed by a' faction. During the rage among the people for paper money, a number of noisy ignorant men were elected into the legislature from the smaller towns; and they not only made bad laws to suit their own base purposes, but appointed equally corrupt men to fill the judicial and executive departments. The result of all this was, the total loss of confidence, the state thrown into confusion at home, and held in detestation abroad.

Massachusetts had the good fortune, amidst her political calamities, to prevent an emission of bills of credit. New Hampshire made no paper; but in the distresses which followed her loss of business after the war, the legislature made horses, lumber, and most articles of pro-" duce, a legal tender in the fulfilment of contracts. It is doubtless unjust to oblige a creditor to receive any thing for his debt, which he had not in contemplation at the time of the contract. But, as the commodities which were to be a tender by the law of New Hampshire, were of an intrinsic value, bearing some proportion to the amount of the debt, the injustice of the law was less

flagrant, than that which enforced the tender of paper in Rhode island. Indeed, a similar law prevailed for some time in Massachusetts; and in Connecticut it is a standing law, that a creditor shall take land on an execution, at a price to be fixed by three indifferent freeholders, provided no other means of payment shall appear to satisfy the demand. In a state that has but little foreign commerce, and little money in circulation, such a law may not only be tolerable, but, if people are satisfied with it, may produce good effects. It must not, however, be omitted, that while the most flourishing commercial states introduced a paper medium, to the great injury of honest men, a bill for an emission of paper in Connecticut, where there is very little specie, could never command more than one-eighth of the votes of the legislature. The movers of the bill have hardly escaped ridicule; so generally is the measure reprobated as a source of frauds and public

mischief.

The legislature of New York, a state that had the least necessity and apology for making paper money, as her commercial advantages always furnish her with specie sufficient for a medium, issued a large sum in bills of credit, which support their value better than the currency of any other state. Still the paper has raised the value of specie, which is always in demand for exportation; and this difference of exchange, between paper and specie, exposes commerce to most of the inconveniences resulting from a depreciated medium.

Such is the history of paper money, thus far a miserable substitute for real coin, in a country where the reins of government are too weak to compel the fulfilment of public engagements, and where all confidence in public faith is totally destroyed.

While the states were thus endeavouring to repair the loss of specie by empty promises, and to support their business by shadows, rather than by reality, the British ministry formed some commercial regulations that deprived them of the profits of their trade to the West Indies and to Great Britain. Heavy duties were laid upon such articles as were remitted to the London merchants for their goods; and such were the duties upon American bottoms, that the states were almost wholly deprived of the carrying trade. A prohibition, as has been mentioned, was laid upon the produce of the United States, shipped to the English West India Islands in American built vessels, and in those manned by American seamen. These restrictions fell heavy upon the eastern states, which depended much