OF THE PAPER MONEY OF THE UNITED STATES OF

AMERICA.

Much conversation having arisen lately on the subject of this money, and few persons being well acquainted with the nature of it, you may possibly oblige many of your readers, by the following account of it.

When Great Britain commenced the present war upon the colonies, they had neither arms nor ammunition, nor money to purchase them or to pay soldiers. The new government had not immediately the consistence necessary for collecting heavy taxes; nor would taxes that could be raised within the year during peace, have been sufficient for a year's expense in time of war: they therefore printed a quantity of paper bills, each expressing to be of the value of a certain number of Spanish dollars, from one to thirty: with these they paid, clothed, and fed their troops, fitted out ships, and supported the war during five years against one of the most powerful nations of Europe.

The paper thus issued, passed current in all the internal commerce of the United States at par with silver during the first year; supplying the place of the gold and silver formerly current, but which was sent out of the country to purchase arms, &c. or to defray expenses of the army in Canada: but the great number of troops necessary to be kept on foot to defend a coast of near 500 leagues in length, from an enemy who being masters at sea could land troops where they pleased, occasioned such a demand for money, and such frequent additional emissions of new bills, that the quantity became much greater than was wanted for the purposes of commerce; and the commerce being diminished by the war, the surplus quantity of cash was by that means also proportionally augmented.

It has been long and often observed, that when the current money of a country is augmented beyond the occasions for money, as a medium of commerce, its value as money diminishes. Its interest is reduced, and the principal sinks, if some means are not found to take off the surplus quantity. Silver may be carried out of the country that produces it, into other countries, and thereby prevent too great a fall of its value in that country. But when by this means it grows more plentiful in all other countries, nothing prevents its sinking in value. Thus within 300 years, since the discovery of America, and the vast quantities of gold and silver imported from thence, and spread over Europe

and the rest of the world, those metals have sunk in value four-fifths, that is, five ounces of silver will not purchase more labor now than an ounce would have done before that discovery.

Had Spain been able to confine all that treasure within its own territories, silver would probably have been there of no more value by this time than iron, or lead. The exportation has kept its value on a level with its value in other parts of the world. Paper money not being easily received out of the country that makes it, if the quantity becomes excessive, the depreciation is quicker and greater.

Thus the excessive quantities which necessity obliged the Americans to issue for continuing the war, occasioned a depreciation of value, which commencing towards the end of 1776, has gone on augmenting till at the beginning of the present year, 50, 60, and as far as 70 dollars in paper were reckoned not more than equal to one dollar in silver, and the prices of all things rose in proportion.

Before the depreciation commenced, the congress fearing it, stopt for a time the emission of new bills, and resolved to supply their occasions by borrowing. Those who lent them the paper money at that time and until March 1778, fixed their property and prevented its depreciation; the interest being regularly paid by bills of exchange on France, which supports the value of the principal sums lent.

These loans not being sufficient, the congress were forced to print more bills, and depreciation proceeded. The congress would borrow no more on the former conditions of paying the interest in French money at Paris; but great sums were offered and lent them on the terms of being paid the interest, and repaid the principal in the same bills in America.

These loans in some degree lessened, but did not quite take away the necessity of new emissions, so that it at length arrived at the excessive difference between the value of paper and silver, that is above-mentioned.

To put an end to this evil, which destroyed all certainty in commerce, the congress first resolved to diminish the quantity gradually by taxes, which, though nominally vastly great, were really less heavy than they appeared to be, and were readily paid. By these taxes 15 millions of S. dollars, of the 200 millions extant, are to be brought in monthly and burnt. This operation will destroy the whole quantity, to wit, 200,000,000, in about 14 months. Thirty millions have already been so destroyed.

To prevent in the meantime the farther progress of the depreciation and give some kind of determinate value to the paper, it was ordained that for every sum of forty dollars payable by any person as tax, he might discharge himself by paying one dollar in silver. Whether this expedient will produce the effect intended or not, experience and time must discover.

The general effect of the depreciation among the inhabitants of the states has been this, that it has operated as a gradual tax upon them, their business has been done and paid for by the paper money, and every man has paid his share of the tax according to the time he retained any of the money in his hands, and to the depreciation within that time. Thus it has proved a tax on money, a kind of property very difficult to be taxed in any other mode; and it has fallen more equally than many other taxes, as those people paid most who being richest had most money passing through their hands.

With regard to the paper money or bills borrowed by the congress, it appears by the above account to be under two different descriptions.

First, the quantity of bills borrowed before the depreciation, the interest of which in silver was to be and is paid. The principal of this sum is considered as equal in value to so many dollars of silver as were borrowed in paper, and will be paid in silver accordingly.

Secondly, the quantities of bills borrowed in different stages of the depreciation down to the present time; these sums are, by a resolution of congress, to be repaid in silver according to the value they were of in silver at the time they were lent; and the interest is to be paid at the same rate. Thus those lenders have their property secured from the loss by depreciation subsequent to the time of their loan.

All the inhabitants are satisfied and pleased with this arrangement, their public debt being by this means reduced to a small sum. And the new paper money which bears interest, and for the payment of which solid funds are provided, is actually in credit equal to real silver.

If any persons living in distant countries have, through their absence from their property in America, suffered loss by not having it timely fixed in the several loans above-mentioned, it is not doubted but that upon an application to congress stating the case, they will meet with redress.

The real money used in the United States, is French, Spanish, Portuguese, and English coins, gold and silver. The most common is Spanish milled dollars, worth five livres five sols tournois.

The nominal money is generally paper, reckoned in pounds, shillings, and pence, of different value in the different states when compared with real money, and that value often changing, so that nothing certain can be said of it. Everywhere the accounts are kept in the nominal pounds, shillings, and pence, the pound containing twenty shillings, and the shilling twelve pence, whatever may

be the real value.

Bills of exchange are frequently drawn on Europe, the rate of exchange differing in different states and fluctuating in the same state, occasioned by the greater or less plenty of bills or of demand for others; they are commonly drawn at 30 days' sight.

The usages in buying and selling merchandises, are much the same as in Europe, except that in Virginia the planter carries his tobacco to magazines, where it is inspected by officers, who ascertain its quality and give receipts expressing the quantity. The merchants receive these receipts in payment for goods, and afterwards draw the tobacco out of the magazines for exportation. Weights and measures are uniform in all the states, following the standard of Great Britain.

Money is lent either upon bond, or on mortgage, payable in a year with interest. The interest differs in the different states from five to seven per cent.

Goods are generally imported on 18 months' credit from Europe, sold in the country at 12 months' credit.

Billets or promissory notes payable to the creditor or order, are in use, and demandable when due, as well as accepted bills of exchange: without any days of grace, but by particular favor.

THE RETORT COURTEOUS.

"John Oxly, pawnbroker of Bethnal Green, was indicted for assaulting Jonathan Boldsworth on the highway, putting him in fear, and taking from him one silver watch, value 5l. 5s. The prisoner pleaded, that having sold the watch to the prosecutor, and being immediately after informed by a person who knew him, that he was not likely to pay for the same, he had only followed him and taken the watch back again. But it appearing on the trial, that, presuming he had not been known when he committed the robbery, he had afterwards sued the prosecutor for the debt, on his note of hand; he was found guilty, death.” Old Bailey Sessions' Paper, 1747.

I chose the above extract from the proceedings of the Old Bailey in the trial of criminals, as a motto or text, on which to amplify in my ensuing discourse. But on second thoughts, having given it forth, I shall, after the example of some other preachers, quit it for the present, and leave to my readers, if I should happen to have any, the task of discovering what relation there may possibly be between my text and my sermon.

During some years past, the British newspapers have been filled with reflections on the inhabitants of America, for not paying their old debts to English merchants. And from these papers the same reflections have been translated into foreign prints, and circulated throughout Europe; whereby the American character, respecting honor, probity, and justice in commercial transactions, is made to suffer in the opinion of strangers, which may be attended with pernicious consequences.

At length we are told that the British court has taken up the complaint, and seriously offered it as a reason for refusing to evacuate the frontier posts according to treaty. This gives a kind of authority to the charge, and makes it now more necessary to examine the matter thoroughly; to inquire impartially into the conduct of both nations; take blame to ourselves where we have merited it; and, where it may be fairly done, mitigate the severity of the censures that are so liberally bestowed upon us.

We may begin by observing, that before the war our mercantile character was good. In proof of this (and a stronger proof can hardly be desired) the votes of the House of Commons in 1774-5, have recorded a petition signed by the body of the merchants of London trading to North America, in which they expressly set forth, not only that the trade was profitable to the kingdom, but that the remittances and payments were as punctually and faithfully made, as in any other branch of commerce whatever. These gentlemen were certainly competent judges, and as to that point could have no interest in deceiving the government.

The making of these punctual remittances was however a difficulty. Britain, acting on the selfish and perhaps mistaken principle of receiving nothing from abroad that could be produced at home, would take no articles of our produce that interfered with any of her own; and what did not interfere she loaded with heavy duties. We had no mines of gold or silver. We were therefore obliged to run the world over, in search of something that would be received in England: We sent our provisions and lumber to the West Indies, where ex