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CHAPTER XVIII.

THE EMISSIONS OF THE NEIGHBORING GOVERNMENTS. RHODE ISLAND.

Before attempting to analyze events connected with the paper money craze which at this time swept over Rhode Island, let us take a glance at the contemporary estimate of these occurrences. Dr. Douglass, after stating that in 1739, there was about £330,000 in the public bills of this colony then in circulation, all emitted upon loans, proceeded as follows: “The interest of these public loans defrays the charges of the government, and of their towns.” In this lay the peril of the situation. No theorizing of the financiers could convince the assembly that it was unwise to maintain the government without taxation. No exercise of the power of disapproval on the part of the governor could, under the charter of this colony, check, and no appeal to the privy council could prevent, the passage of these loan acts. Owing to the supposed scarcity of currency created in Massachusetts and New Hampshire, by the disabilities as to the emission of paper money imposed by the privy council, the emissions of Rhode Island were welcomed there. The restraints upon emissions in Connecticut were voluntary and were based upon the reluctance of the government to participate indiscriminately in the general inflation. The supply of colony bills was supposed by many to be inadequate and there also the Rhode Island bills were welcomed. In thus contributing to the supposed needs of her neighbors, and at the same time deriving benefit from the loans through which this was effected, Rhode Island was unconscious of the harm that she was doing.

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On the other hand, the other governments did not realize that through their weakness in thus permitting the wants of the inflationists to be supplied from outside sources, they were contributing to their own injury.

Douglass, however, saw this, and declaimed against it with his accustomed vigor: “I shall embrace this opportunity,” he said, “of exemplifying the iniquity of the colony public bills of credit, by the instance of Rhode Island, a small colony containing about 18,000 souls, under an old charter, very lax and general; they admit no instructions from the King, Council, or Board of Trade and Plantations, the King having no representative or commissioned governor in this legislature. This handful of people have lately made a very profitable branch of trade and commerce by negotiating their own paper money in various shapes, their money being loans of paper credit called bills, from their government to private persons upon land security, to be repaid, not in the same real value, but in the same depreciating, fallacious denominations.” The author then points out that a person who had managed to keep alive his debt to the colony through participation in the successive loans, had been placed, through the steady increase in the price of silver, in the position of being able each year to pay off his loan in paper having the same denominational value as that which he borrowed, but whose purchasing power had steadily declined. He sarcastically adds that if this could be supposed to continue the debt could be paid with nothing.

The successive loans of the colony, or banks as they were termed, were evidently sources of attraction to borrowers. Most of the later acts establishing them contain provisions requiring the commissioners who had charge of lending the money to give preference in the

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distribution of the loans, to persons who had not participated in the previous banks. Douglass asserts that the borrowers were able to lend the bills at a rate of interest considerably in advance of that which they paid to the colony. “They who take up this loan money,” he says, “are called sharers, and for the first ten years pay into the treasury, 5 per cent. per annum interest; and for the other ten years pay 10 per cent. per annum of the principal, without interest. The sharers let out this money, in their own and neighboring colonies at 10 per cent. for the said twenty years (some let it at a higher interest.) * * .”¹ Such being the case, it is easy to conceive that the rights to subscribe for these loans might have been very valuable to capitalists who knew how to improve their opportunities, and, on the other hand, the farmers and country people generally, not having immediate use for the bills, would have been ready to part with these rights for a compensation.

This state of affairs, according to Douglass, actually existed. “In another shape,” he says, “upon a new emission, interest is made with the managers to obtain shares in the loan; the sharers immediately sell (or may sell) their privilege, as it is called, for ready money premium; at the emission A, 1738, the premium was £35 per cent, that is, the emission of £100,000 does immediately produce after the rate of £35,000 ready money profit.”²

With this preliminary survey of the field of action in Rhode Island, which contains in outline all the material facts which we shall find, we are prepared to examine

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somewhat more in detail the characteristic features of these peculiar proceedings.

The first emission was for £5000, which was to be called in through taxation, in five annual collections of one thousand pounds each. It was alleged that the issue was made in consequence of an order having been received from her sacred majesty, Queen Anne, for an expedition to be prosecuted with speed against the French and Indian enemies, which by reason of the great scarcity and want of silver money, this colony, without some extraordinary means should be used for effecting the same, would be unable to perform. The form of note corresponded with the Massachusetts old tenor note and bore date August 16th, 1710. The hands of the believers in sound money are to be seen in the attempt to limit the time that the bills should be out, and in the clauses of the act which provide for calling them in. They were to be received and paid, for the same value and equal to current coin passed in the colony, for and during the space of five years ensuing the date of the act, and when called in, the possessor of such bills was to be reimbursed the sum mentioned in such bill or bills, in current money of said colony by the general treasurer thereof.¹ This probably means that if the taxes through which they were to be retired should be paid in coin, leaving the bills outstanding, then the colony would redeem the bills on the above terms.

In 1715, the first of the large loans was made. There were, during the course of the inflation, a few instances of special legislation providing for the lending of bills to individuals, one of which was prior to this date. These individual loans were, however, too insignificant

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in amount to compel consideration. Up to 1715, there had been several emissions for the current expenses of the colony, and the policy had been inaugurated of allowing five per cent. advance when payments were made in the public treasury. As it was found that the bills could be easily floated on loans, and the interest money received by the colony was adequate to meet current expenses, there was no longer any need for making this allowance. The total amount lent to the inhabitants of the colony in 1715, was £40,000. It was put out in two instalments, one of £30,000 July 5th, and one of £10,000 October 26th. The alleged causes for the loans were the extraordinary additional charges to the colony created by sundry expeditions for the reducing of Port Royal and Canada, which had brought the money and other mediums of exchange of the colony to a low ebb, and had caused trade to decay and business to languish. Fort Anne had gone to decay, and ammunition and stores were wanted. The gaol needed repairs and enlargement, and there were many other public emergencies. It was not stated how the lending of the public bills to borrowers would meet these exigencies, but as interest was to be received by the colony during the continuance of the loans, it is evident that this was what was relied on. The bills furnished by this emission ranged in denomination from £5 to 1s. and were to be lent for ten years at five per cent. interest. It was apparently the intention that five year mortgages should be given subject to a renewal for five years longer. Separate bonds were to be given for the interest money, one for the amount that would be due each year, five only being required when the loan was made.¹

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At the May session 1721, £40,000 were emitted by way of loan to supply the deficiency in the medium of exchange, and also on account of the speedy and very great repairs needed at Fort Anne. These bills were loaned for five years at five per cent, and for three months after they were offered, “no person that hired any of the former bills of credit” was eligible as a borrower. It was provided that the interest could be paid in hemp or flax at prices to be set, and one-half the interest money was to go for the support of the towns in the colony.¹

Under the terms of the loans made in 1715 and 1721, the entire £80,000 should have been paid during the years 1725 and 1726. It is generally stated by writers on the subject of the currency that by an act passed in 1728 these loans were continued in force, and provision made for their payment in instalments, the last of which would become due in 1738.² It is true that an act of this general character was then passed, but the legislation which then took effect did not entirely cover the necessities of the case. Both loans were then past due, and if the terms of the original act had not been amended by intermediate legislation, the loans should before that date all have been paid. Reference is made in the preamble of the act of 1728 to an act in addition

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to the two acts of 1715, which is there said to have been passed on the 29th of December, 1724. The edition of the laws of Rhode Island published in 1730 gives the title of this act.¹ The colonial records also give this title, but the act itself is not given in either of these publications.²

Through the kindness of Mr. George Parker Winship, of Providence,, I am able to supply the essential portions of the missing act. The amendments were effected by two acts, passed at the session of December 29, 1724, the first of which stated that the £40,000 emitted in 1715, were to be paid in 1725. If the said bills were paid then, there would be an absolute necessity of raising and emitting more bills, which would be a great charge to the colony. For this reason, it was enacted that those persons who had taken out the aforesaid bills should pay the same within ten years from and after the time of the aforesaid year, 1725, that is to say, one-fifth part in the year 1727, and one other fifth part in the year 1729, and to pay one-fifth part at every two years’ end, until the same be wholly paid unto the colony’s trustees. The money when repaid was to be apportioned to the several towns, and by them to be let out upon good land security for the term of five years to any of the inhabitants of the respective towns who had not had an opportunity to participate as borrowers in either of the two banks which had already been established. Bonds were to be given for the payment of the interest. As the principal would be subject to changes through the payment of instalments, provision was made in the act for the issue of these interest bonds upon a graduated scale, as follows: “Those persons

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that have taken out these bills to give bonds for the payment of the whole interest of the bills they have hired for two years, and two bonds for the four-fifths remaining for the next two years, and so bonds for the annual payment of the interest for such part as is in their hands till the whole be paid, said bonds to be taken by the committees of each respective town to which they belong.”

The second loan of £40,000 was treated at the same session in a somewhat similar way. It was alleged that it had been found by experience that the loan could not be called in at the prescribed time without unspeakable damage to the country. To avoid this it was enacted that borrowers might be permitted to have the use of the bills on interest for five years longer. Payments were to be made once in two years, if so desired by the borrowers, and the money when paid in was to be let out by the towns in the same manner as prescribed in the case of the other loan. The interest money to be derived from the extended term was to be applied in the same way as was directed in the original act.¹

If this legislation had been permitted to stand its effect would have been to give the borrowers under the first bank the use of their money for just twice the length of time allotted to those who participated in the second bank; the loans under the first being for ten years and the payments by instalments covering ten years longer, while those under the second were for five and five.

The act of 1728, which has been referred to as the only one generally recognized as authority for the extension of these loans, contained in its preamble the assertion

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that the amendatory act of 1724 ordered and directed the £40,000, being the first bank emitted in Rhode Island,¹ to be called in out of the hands of the persons entrusted therewith and let out to others. The assembly had, however, concluded that it was better for the honor and integrity of the government not to keep out the bank longer than necessity required. It would also be of less prejudice to the currency. The payment of interest had exhausted the stock of the borrowers, and to demand the payment of the whole sum of the loan at one time would lead to the ruin and destruction of many families. It was, therefore, enacted that the act of December 29, 1724, should be repealed, that the loan should be continued three years,² under the same terms as those of the act by which it was created, after which it was not to be regarded as a loan, but was to be paid off in ten equal annual instalments, without interest; and for this purpose ten bonds were required. Provision was also made with reference to the interest bonds, the purpose of which was to see that interest was paid during the three years’ extension. Taken by itself, the language of this provision is not intelligible, but when read in connection with previous legislation, its meaning is clear.³

The absurdity of the claim set forth in the preamble of this act of 1728, that the legislation in 1724 had been in the nature of calling in the loans and furnishing an opportunity to let the same bills out to others who had not participated in the first of the so-called banks, indicates some hidden motive. A person desirous of borrowing under the terms of that act, if the opportunity had not been offered him till the last payment under

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the terms of the act should have been made, might have been kept out of his five year loan until his predecessor had enjoyed the use of some of the bills that he had borrowed for twenty years. This is the extreme case in one direction, but if, on the other hand, he came in as a participator in 1727, on the first payment made under the act, then he had but a five year loan, as against the twelve year loan of the same money by his predecessor, who still had before him eight years in which to pay off the balance of the loan. Those who had participated in the second bank had enjoyed the benefits of the loans for only one half the time allowed their more fortunate neighbors, who borrowed bills under the first bank, while those who had not succeeded in obtaining loans under either of the earlier “banks” were evidently at a still greater disadvantage if this legislation was to stand, and as the market value of the privileges to which Douglass refers must have been measured by the length of the loans, it is plain that the wording of the act of 1724 was unfair, and that it required revision if there was to be any pretence of offering equal opportunities to the would be borrowers. One step towards accomplishing this was taken by offering a new loan upon equal terms with the old. By the repeal of the act of 1724, and the extension of the loan at interest for three years, the life of the first loan was extended to thirteen years, and the time in which the payments by instalments could be made ten years longer. The new loan of £40,000 offered under this act was to be let out primarily to those who had not enjoyed the benefits of the former loans, and the loans were to be made for thirteen years. For three months no person who had participated in either of the previous loans was eligible as a subscriber to this. The provisions for interest during the life of the

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loan, and for payment by ten equal annual instalments after the expiration of the thirteen years were similar to those made with regard to the loan in the former act.¹ It will, perhaps, be suspected that this result must have been brought about by pressure upon the assembly on the part of those who were dissatisfied with the act of 1724, and that the gentle gloss put upon the facts of the case as stated in the preamble was not expected to deceive those who secured the repeal of the former act and the new emission for loans, on an equality with the first of that character.

As a result of this legislation the participators in the second £40,000 bank were still at a disadvantage, but in June of the same year the final step towards equalizing the opportunities of the borrowers was taken by putting this bank upon precisely the same plane with the others, that is to say, it was to remain out for thirteen years and then to be sunk in the same manner as the others. It was through this intricate process that the borrowers in the three “banks” then in existence were put upon an equality as to the length of time afforded for the advantageous use of these credits.² In June, 1731, special provision was made for the new interest bonds required by this extension and for the execution of the bonds needed to carry out the payment by instalments.³

A new loan of £60,000 was made in June, 1731. It was conceived that a bounty for the encouragement of the hempen manufactory and of the whale and cod fishery would be of great advantage and benefit to Great

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Britain. Persons who had not already borrowed from any of the “banks” were first to be served. The loan was to be for ten years and the interest was to be for the use of the colony. Payment was to be made after the ten years, in ten equal annual instalments.¹

The governor attempted to restrain this emission by withholding his consent from the act; but the assembly treated his dissent with disdain and August 3rd, 1731, set forth their reasons for considering it of no effect.² The governor appealed to the King, but the opinion which was afterwards transmitted by the attorney general and solicitor general could have given him little comfort[.]

In July, 1733, £104,000 were emitted, of which £100,000 were loaned. Fort George was weak and lacked arms and ammunition. £4000 of this emission were to be used to procure these, and the bills were to be withdrawn through the interest payments of the second and third years, on the loan simultaneously emitted. The whale and cod fishery needed promoting and a pier at Block Island would be very convenient. The loan was for ten years at five per cent., and was then payable in ten instalments.⁴ In August, 1738, a new loan of £100,000 was made, the essential features of which were in all respects like those of 1733. The alleged causes for the emission were that the “first bank” had almost expired, and nearly one-half of the second. There was an absolute necessity of increasing the medium of exchange. The Colony House at Newport was

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out of repair. A light-house was needed at Beaver Tail. Bounties ought to be offered for the fishery and for hemp.¹

Meantime, the colony had gone through the same experiences in the division of the bills for making change, as had obtained in the other governments, and had also in a similar way sought to prevent the evil by penal legislation.² In 1737 and 1738 the torn bills were called in.³ Penalties were provided for counterfeiting the bills of any of the New England governments;⁴ but even after this, wicked persons engraved plates and uttered forged bills.⁵ The trouble connected with the adjustment of debts had been partially provided for by giving the judges of the superior and inferior courts power, in entering up judgment upon any bond or other specialty, conditioned for the payment of money, to chancer down such instrument to the just damages.⁶ When the loans of the first bank were extended, many mortgagors neglected to execute the new bonds required by the act, and an attempt was made to cure this evil by passing an act requiring the grand committee to sue the mortgages of such as failed in this regard.⁷ Difficulty was experienced in collecting interest upon the mortgages. No other security was taken for the interest money than the personal bonds of the mortgagors. If, after a sale of mortgaged property was made, the vendor moved out of the colony there was no way in which this interest could be collected.⁸ To protect the

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colony against losses arising from this cause, it was enacted, in 1738, that the mortgages should be good and valid to secure the interest as well as the principal.¹

There can be no doubt that during all these proceedings there was a strong minority in Rhode Island which was in thorough opposition to them. The opponents of the paper currency were, however, so utterly incapable of coping with the situation that, from the days of the first emission, when a feeble attempt was made to provide for a possible redemption in coin of such of the bills as might be outstanding after the taxes for calling them in had been collected, they put forth no efforts of consequence until 1731, when the governor came to their assistance. The various petitions and addresses then sent to England are given in the colonial records.²

Members of the assembly, however, notwithstanding the inefficacy of the proceeding, filed written protests against the emissions in February, 1743-44.³

It was evidently hoped, in 1731, that if the governor’s power to disapprove such bills were sustained, the colony might be brought into line with Massachusetts, under instructions similar to those issued to Belcher. The opinion of the attorney general shattered this hope, and from that time forward the opponents of the banks were compelled to let matters drift until parliament should intervene.

Meantime, silver had, before 1740, reached 27s. in old tenor, and the new and old tenor bills of the province of the Massachusetts Bay, even though of the same denomination, were circulating at different values. Rhode Island followed the example of Massachusetts and issued a new tenor bill. The act under which this was accomplished

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provided for the emission of £20,000 on loans in the new form, and £10,000 for present emergencies of the old tenor. The alleged causes for the issue were that the colony was obliged to send two companies of soldiers against the Spaniards, and was compelled to maintain a private vessel of war to cruise off the coast of New England. The new notes were to be equivalent to silver rated at nine shillings an ounce. The loans were to be for ten years, to be paid in ten equal annual payments and the interest was to be at the rate of four per cent. The bonds for interest were merely issued as collateral. The form of the bill to be emitted was as follows:

This bill of            due from the Colony of Rhode Island, etc., to the possessor thereof, shall be in value equal to oz. dwt. gr. in silver, Troy weight of Sterling Alloy or gold coin at the rate of £6 13s. 4d. per ounce, or to such a sum, in any medium of exchange as shall be passing in the Government, as will be equal to so much silver or gold; and shall be accordingly accepted by the Treasurer of said Colony, and the Receiver thereof, in all payments, by order of the General Assembly.

Newport, September 16, 1740.¹

On the second of December, 1740, the assembly announced that after the passage of the above act, instructions were received from the Lords Justices of Great Britain, to which the act did not seem to be in some parts exactly agreeable. It was, therefore, enacted, in compliance with the aforesaid instructions, that in lieu of the aforesaid £20,000 there should be emitted £20,000 equivalent to silver at 6s. 9d. per ounce or to gold of proportionate value. The loans were to be for ten years. The interest was to be at the rate of four per cent. and the mortgages were to be security for both principal and interest. The form of the new bill was as follows:

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This bill of            due from the Colony of Rhode Island, etc., to the possessor thereof, shall be in value equal to     oz. dwt.     gr. in silver, Troy weight, of sterling alloy, or gold coin at the rate of five pounds per ounce; and shall be accordingly accepted by the Treasurer and the Receiver thereof, in all payments, by order of the General Assembly.

Warwick, December 2, 1740.¹

A provision in the first of these two acts that fees should be one-third as much in the new bills as they formerly were in bills of the old tenor, would indicate that it was the intention to rate their value as one of the new tenor for three of the old. In the second of these acts the same fees were made one quarter as much in the bills then emitted as in bills of old tenor,² and later it was enacted that 6s. 9d. in the new bills were equivalent to 27s. in old tenor, thus definitely placing them on the basis of one to four.³

At this stage of the emission, January 9, 1740-41, a report was made by Governor Ward to the Board of Trade showing the amounts of the several issues, the price of silver at the date of each issue and the value of each emission in sterling. According to this report there were then outstanding public bills of the denominational value of £340,000 equal in value to £88,074 , 16s. 10¾d. sterling. If the last emission had been stated in terms of old tenor in the report the amount outstanding would have been £400,000, once and three quarters the amount then outstanding of the bills of the province of the Massachusetts Bay. One reason assigned by the governor for these large emissions was that “the province of Massachusetts Bay, having their hands so tied up that notwithstanding a great number of bills in

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circulation among them, the merchants of Boston have been forced to emit a round sum of negotiable notes of hand to supply the want of money and prevent business from stagnation.”¹

In this report Governor Ward called attention to the fact that moderation on the part of Connecticut and restraints imposed upon Massachusetts and New Hampshire had not operated to preserve the bills of those governments from participating in the depreciation suffered by the bills of Rhode Island. Failing to recognize the true responsibility of his own government, whose bills, through the weakness of the neighboring governments, were permitted to work their full effects upon the situation, he sought for an explanation for the depreciation in the fact that the Boston merchants were obliged to purchase gold and silver. This, he added, “is the only true way of accounting for that misfortune; and what confirms it is that the colony of Connecticut have not, at this time, above £13,000 or £14,000 extant, in bills of credit, and yet it takes as much of their money to purchase an ounce of silver as it does of the Massachusetts, New Hampshire, or ours.”²

The bills, which were to be equivalent to silver rated at 6s. 9d. an ounce, were known as the new tenor bills, and following the provisions of the act containing the rejected form for which they were substituted, were to be receivable “in all payments.” Two thousand pounds were emitted in May, 1741,³ and two thousand pounds in October of the same year.⁴

In consequence of the great expense of the war with

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Spain, the fear that there would be a war with France, and the fact that the four “banks” emitted in 1715, 1721, 1728, and 1731, were being annually sunk, thereby lessening the medium of exchange, £40,000 more in new tenor bills were, in February, 1743-44, loaned for ten years at 4 per cent. interest, one quarter of which was to go to the towns. The mortgages, which secured interest as well as principal (the bonds for the interest being merely collateral security), were then to be satisfied by ten equal annual payments.¹ These payments were to be made in the same bills, or in such other medium of exchange as should be passing in the colony at the time of payment, according to the value of said bills when emitted.

In February, 1744-45, £2,500 in new tenor bills were emitted on account of the Cape Breton expedition, and in September, 1745, £5,000 more of the same form.²

In June, 1746, £11,250 new tenor were emitted on account of the Canada expedition. These were to be called in by a fund covering the years 1750 to 1754, inclusive.³ In February, 1746-47, £15,000 new tenor were emitted, and an equivalent fund for the retirement of these bills was provided by annual taxes of £10,000 old tenor each year, 1747 to 1752 inclusive.⁴

With this last emission our interest in the Rhode Island bills of public credit, so far as they affected the price of silver in the province of the Massachusetts Bay, necessarily ceases. It may, indeed, be thought

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that the contributory effect of the Rhode Island bills was not of much consequence after power was given to Shirley to emit bills to meet the expenses of his warlike expeditions. There are, however, some points connected with some of the later emissions which are worthy of being noted. March 18th, 1750-51 there was an emission authorized of £25,000 of a new form and tenor, to be used for “promoting the raising flax and wool and manufacturing the same into cloth, and also for giving a proper and suitable encouragement for the carrying on the whale and cod fishery.” This act also included provisions “for settling and ascertaining the value” of the bills authorized to be emitted. It was alleged in the preamble of the act that the cause of the depreciation of the bills was owing to the indiscreet and illegal practice of giving for gold and silver and bills of exchange for sterling money, larger sums in bills of credit than the values stated for gold and silver in the respective acts of emission. This had worked injury and oppression and the gold and silver had thereby been drawn out of the colony. It was conceived to be of the highest importance that such evil practices should for the future be restrained.

The new bills were to be equal to silver at 6s. 9d. and gold at £5, 1s. 6d. an ounce, and every six shillings and nine pence of the new bills was to be equal to fifty-four shillings old tenor. They were to be lent on mortgage for five years at six per cent. and the loans were then to be paid in five equal annual instalments. The form was to be as follows:

By a law of the Colony of Rhode Island, etc., made and pass’d the third Monday of March, A. D., 1750. This bill of            due to the possessor thereof from the Colony, shall pass current and be equivalent to the respective proportions of silver and gold, as are regulated and stated

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in said Act, and shall be accordingly accepted by the Treasurer of said Colony and the Receiver thereof, in all payments.

Providence, March the 18th, 1750.

Death to counterfeit this bill.

Any person who should pass one of these bills at a higher rate than was specified in the act could be tried and excluded from the freemen of the colony. £100 sterling was said to be worth £137, 10s. in the bills of the new form, or £275 in the bills known as new tenor, or £1,100 in old tenor. An ounce of silver was said to be worth 54s. old tenor, or 13s. 6d. new tenor.

Courts were to make up judgments, according to the contract, either in sterling money, silver or gold, or in bills of public credit according to the values above given.

Every plaintiff, before he could have an execution issued, was required to take oath that he had not violated this act, and no person could assume public office until he had taken the same oath. Every person coming into the colony, intending to carry on trade or commerce, was required within ten days to take the following oath:

“That you have not wittingly or willingly directly or indirectly by yourself or others, contracted for, given, taken, paid, accounted or settled for Gold, Silver, or Bills of Exchange, in any other manner and form than what is regulated and directed by this Act, and that you will for the future punctually and bona fide, observe and comply with the directions hereby stated, so long as the same shall be and continue in force.”¹

When we reflect upon the opportunities afforded the average citizen in those days to acquaint himself with the laws in force in the colony, the question naturally suggests itself how many of them could possibly have known

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in any other way than by hearsay the contents of the manuscript laws which circulated about the colony in which were defined and through which only could be ascertained the values at which the bills of this form were to be received and passed under the penalties imposed by the act. Had it been possible by any sort of legislation to compel the circulation of these bills at any fixed rate in silver, it would at least have been essential that the bill itself should bear upon its face some evidence of the rate at which the assembly proposed by penal legislation to enforce its circulation.

It is not a matter of surprise to find that this extraordinary act was the subject of amendment in the following June, when a new form of bill was adopted in which the value was expressed in ounces of silver. The valuation in the former act was repealed and the ounce of silver was said to be equivalent to 64 shillings old tenor, or 16 shillings new tenor. The form was as follows:

This bill due from the Colony of Rhode Island, shall be equal to         of coined silver of sterling alloy, to the possessor thereof, and shall be accordingly received in the Treasury. By order of the Assembly.

Providence, March 18, 1750.¹

On the back were the inscriptions varying according to the denomination of the bill as follows:

5 oz. bill. This bill is equal to sixteen pounds old tenor.

2 oz. 10 dwt. bill. This bill is equal to eight pounds old tenor, and so on down to the 15 gr. bill which was said to be equal to two shillings.²

The modification of this act of emission called for a

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change in the form of oath required from plaintiffs and others. This was provided for in the following August.¹

The circulation of bills of public credit of the colony of three different styles, bearing stated values in coin fixed by legislation, but differing from each other, seemed to require new instructions for the courts as to the method of entering judgments. In August, 1751, in consequence of the depreciation of the bills which had caused many people to complain and that, too, as it was stated with just cause, that they had suffered through the alteration of the medium of exchange established by the colony, it was enacted, that in all debts now or hereafter to become due, for every debt of 64 shillings, old tenor, or 16 shillings new tenor, or 6s. 9d. in bills of March, 1750, the debtor should pay as much in any of the aforementioned bills, as at the time of payment should be really worth one ounce of silver of sterling alloy, and all judgments were to be made up accordingly.²

The success of the counterfeiters of bills of public credit caused the passage of a savage act in 1743. Any person convicted of the offence of counterfeiting the bills of any of the New England governments was to have his ears cropped; to be branded with an R on each cheek; to be imprisoned at discretion; to pay double damages and double interest on the amount of the bills while in the possessor’s hands and his real and personal estate was to be forfeited to the colony. If without estate he was to be set at work or sold for a term of years.³

It can readily be understood that the various transactions called for by the legislation extending the “banks,”

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changing as they did the character of the obligations which the mortgages secured and altering the method’s of their payment, were likely to cause litigation. So far as legislation could remedy these evils the assembly stood ready to furnish it. In February, 1729, in consequence of the neglect of the borrowers to comply with the terms of the act in relation to new bonds, the grand committee was authorized to put the mortgages of delinquents after a certain date in suit.¹ We have already seen that in 1738 they attempted to meet the case of unpaid interest on estates where the mortgagor had left the colony.² As the loans fell due there was more legislation.³

The obligations for the loans being independent from those for the interest, new laws were needed as to the method of carrying on litigation in cases of delinquency, and in 1745, the grand committee was authorized to put the bonds and mortgages of such delinquents in suit, and the general treasurer was to sue on the interest bonds.⁴

In August, 1747, an act was passed for appointing committees in each town for the management of the colony’s money, let or to be let, on loan, in the several towns. If it be borne in mind that silver that year reached 60s., and that Massachusetts had absorbed the greater part of the early emissions of Rhode Island currency, this announcement of an adherence to the policy of loaning the colony bills in the face of the deluge of paper money in Massachusetts seems inexplicable.⁵

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In February, 1748-49, an act was passed to relieve the grand committee from the disadvantage under which they were placed in being unable to put mortgages in suit until the tenths became due, in cases where the mortgagors had died or left the colony leaving no estate behind them with which to satisfy either interest or principal of the mortgage.

From these attempts to remedy the evils under which the colony labored, and to cure the difficulties in the way of securing the collection of the interest, and a return of the loans of the public bills, it may be conjectured that towards the end of the period of inflation the benefits of the “banks” were not so conspicuous as at first. The temporary abandonment of the loan system in 1745 and the emission of bills, the retirement of which was provided for in future funds, would indicate an awakening sense of the evils of the situation were it not for the immediate recurrence to former methods. The maintenance of the difference in values at which the old and new tenor bills of Massachusetts circulated in that province can be easily comprehended. There was a constant use for them, with the discriminations as to value which were made in the acts of emission, furnished by payments in the public treasury on account of the several funds provided for their retirement. Payments of this sort formed so small a part of the function of the Rhode Island bills, that it is quite possible that it was found necessary to institute these funds in 1745, in order to maintain the differences in value at which the different bills were to circulate in accordance with the terms of the acts of emission.

During the period of the early emissions, it is evident that reliance was placed upon the small silver and the copper coins which still remained in circulation, for

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change. The bills issued in 1710, ranged from , £5 to 2s, in 1715 from £5 to 1s. In the course of time, even this remnant of the hard money disappeared, and de pendence must then have been placed upon the fractional currency furnished by Massachusetts and the convenient method of tearing off a proportionate part of one of the larger bills. In 1744, a provision was made for small change by making the bills range from £2 to 4d, and in 1751, in the proposed issue, the bills were to be from 25s. to 3d. In the bills in ounces which were substituted the denominational values ranged from £16 to 2s.

The ratio of silver to gold furnished by the Massachusetts acts of 1737 and 1744 was 14.7 to 1. The ratio to be derived from the Rhode Island acts was not uniform. In 1740 it was 14.8 + to 1 and 1751, 15 to 1.

In 1751, Barlow Trecothick testified in the House of Commons that sterling exchange was in 1742, from 500 to 550 in Rhode Island bills of public credit.¹ The rate of exchange given by Governor Wanton in 1747 was 750.² The bills on the agent of the colony were sold in 1749 at the rate of 1050.³ Alexander Grant, Esq., testified in the hearing before the House of Commons in February, 1750-51, that exchange was then 1050 to 1100.⁴ The committee of the House of Commons having in charge the preparation of an act of parliament for regulating and restraining paper bills of credit in the colonies accepted the statements of Barlow Trecothick and Mr. Alexander Grant and in the preamble to the resolution offered by them March 12, 1750-51, recited

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the fact that exchange was at the figures given by them on the dates mentioned in their testimony. They also stated “that the value of silver in the colony of Rhode Island hath between the years 1742 and 1749 raised from 28s. or thereabouts (the value in 1742) to 60s. per ounce, or thereabouts (the value, in 1749).”¹

The amount of the currency outstanding in February, 1750, was valued by a committee of the assembly in sterling at £45,485, 17s. This amount can be obtained by adding the sterling value of the outstanding bills issued to supply the treasury, to the sterling value of the outstanding loans. It is obvious that the committee regarded the rate of exchange at that time as 1100 currency for 100 sterling. On that basis the circulation was £500,335. There was at that time in the hands of the treasurer an amount of these bills nearly equal to £25,000 and this amount was, perhaps properly, not returned as in actual circulation.²

On the 4th of September a number of loyal citizens of Newport, in a petition to the king, alleged that the bills of credit outstanding on loans amounted to £390000, and those outstanding which were issued to supply

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the treasury amounted to £135,335, making in all £525,335. These figures are evidently taken from the report to the assembly, and differ from the result obtained there only in the failure to deduct the bills then in the treasury.¹

The assembly were evidently annoyed at this petition, and in June, 1751, a committee reported that the assertion that the outstanding circulation was £525,335 was not at that time true. They did not, however, state what the circulation at that date, in their opinion, really was. Nor did they state what it was in June, 1751. The petition of the Newport citizens had been forwarded for the purpose of preventing, if possible, a threatened emission. In the interval this emission had been made and the currency had been swelled by its amount. It would hardly have strengthened the position of the committee after this attack upon the truthfulness of the petitioners to have shown a circulation largely in excess of the assertions which were impugned.

The Spanish milled dollar was declared, in 1752, to be equal to 56s. old tenor. At 6s., the rate of proclamation money, this was on the basis of 9⅓ old tenor for one of lawful money, or taking the sterling value of the dollar at 4s. 6d., exchange was 1244.² Thus we see that Rhode Island was still pressing forward in her wild career of inflation when the limitation of our investigation compels us to drop the subject.

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