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1714, with a bank of fifty thousand pounds; New York, Rhode Island, South Carolina, quickly followed, and before seven years were gone the loan office was established in Pennsylvania and New Jersey.

The trade of New Jer-
The people of New

This was inevitable. sey was with New York. York had a paper currency, and paid in paper for every cord of wood and for every boat-load of potatoes that came over the bay. These paper bills of New York, passing current with the farmers of New Jersey, drove out of circulation every pistole, every carolin, every chequin, every piece-of-eight, the bounds of the colony contained; for the ingenuity of man never has and never can devise a plan for the common circulation of specie and debased paper bills.

Thus, when 1723 came, the people of the Jerseys were paying their debts with the money of New York, and their taxes with bits of plate, ear-rings and finger-rings, watches, and jewelry of every sort. Nor were coins much more plentiful in Pennsylvania. A few light pistoles, a few pieces-of-eight, a few English shillings, passed from hand to hand. But so far were they from supplying the needs of trade that the men of Chester besought the Assembly to make produce a legal tender, to prohibit the exportation of coin, and to add one more shilling to the

Spanish dollar. The merchants of Philadelphia and the traders of Bucks sent up petitions for a paper currency. Most of these prayers were heard. Another shilling was added to the dollar; produce was made a legal tender, and the best of all forms of colonial paper money was emitted. The bank was limited to fifteen thousand pounds; four thousand to pay the debts of the province, and eleven thousand to be loaned to the people. As the law distinctly stated that the new money was to relieve the distress of the poor, no man was suffered to borrow more than one hundred pounds. Nor could he have even that unless he came to the loan office and deposited plate of three times the value, or mortgaged lands, houses, or ground-rents of twice the value of the sum he received, and agreed to pay into the treasury each year five per centum interest and one eighth the principal. So quickly were the bills taken up, and so much were they liked, that another bank of thirty thousand pounds was issued before the year went out.

When the Lords of Trade heard of these proceedings, they hastened to send back a disapproval and a warning. The governor was bidden to recall the evils that had come upon other colonies from making bills of credit. The people were assured that nothing but tenderness

for the men in whose hands the new money was prevented the acts being laid before the king for repeal. A warning was given that, should any more acts emitting paper money be passed, they would surely be disallowed. On the first of March, 1731, the bills were to become irredeemable, and as that day came nearer and nearer the merchants and traders grew more and more uneasy, and more and more doubtful what to do. The opponents of paper money dwelt much on the danger of such a currency and the threat of the Lords of Trade. The friends of paper money had much to say of the brisk times that followed the issues of 1723.

But the arguments that prevailed most, the arguments that brought over the doubting, that persuaded the governor and the assembly, in open defiance of the orders from England, not only to reissue the old money, but to put out thirty thousand pounds of new, were contained in a little pamphlet from the pen of Franklin, entitled "A Modest Inquiry into the Nature and Necessity of a Paper Currency."

"There is," he begins by saying, "a certain quantity of money needed to carry on trade. More than this sum can be productive of no real use. Less than this quantity is always productive of serious evils. Lack of money in

a country puts up the rate of interest, and puts down the price of that part of produce used in trade. It keeps skilled workmen from coming in; it induces many already in to go out; it causes, in a country like America, a far greater use of English goods than there otherwise would be. These facts being understood, it is easy [he asserts] to see what kind of men will, in the face of these facts, be for, and what kind of men will be against, a further issue of paper bills. On the side of the enemies to the bills will be the lawyers, the money-lenders, the speculators in land, and the men who, in any way, are dependent upon them. On the side of the friends to the issue of bills will be the lovers of trade, the supporters of manufactures, and the men who have the interest of the proprietors of the province truly at heart.

"The enemies to paper money cry out, that, if any more be issued, the value of the whole of it will sink." This suggests an inquiry into the nature of money in general, and bills of credit in particular. Money, he declares, “is a medium of exchange; and whatever men agree to make the medium is, to those who have it, the very things they want, because it will buy for them the very things they want. It is cloth to him who wants cloth. It is corn to him who wants

corn. Custom has made gold and silver the materials for this medium of exchange. But the measure of value for this medium is not gold and silver, but labor. Labor is as much a measure of the value of silver as of anything else. Suppose one man employed to raise corn, while another man is busy refining gold. At the end of a year the complete produce of corn and the complete produce of silver are the natural price of each other. If the one be twenty bushels and the other twenty ounces, then one ounce of silver is worth the labor of raising one bushel of corn. Money therefore, as bullion, is valuable by so much labor as it costs to produce that bullion.

"But this bullion, when coined into money, is heavy, consumes time in the counting, cannot be easily hidden. Hence it is that at Hamburgh, at Amsterdam, at London, at Venice, the centers of vast trade, men have resorted, for sake of convenience, to banks of deposit and bills of credit. Into the banks they put their gold and silver, and take out bills to the value of what they put in. Thus the money of the country is doubled, the banks loaning out the gold at interest, the people making their great payments in bills.

"As the men of Europe put in money for the security of the bills, so [says he] men in

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