357

CHAPTER XIX.

THE EMISSIONS OF THE NEIGHBORING GOVERNMENTS. CONNECTICUT.

Connecticut cannot be held to any great degree of responsibility for the paper money inflation in New England which we are now considering. If we quote from Douglass, we shall obtain an estimate of the feeling which prevailed in Massachusetts in 1739, with regard to the course taken by that colony.¹

“Connecticut,” he says, “a charter colony of industrious husbandmen, having with much prudence emitted only small quantities of bills, silver would have continued with them at 8s. per oz., as it did in New York, their neighboring government westward, if their people had not given a currency to the public bills of their brethren, in the neighboring colonies of New England. Connecticut emitted bills only for the present necessary charges of government upon funds of taxes, until A., 1733, having granted a charter for trade and commerce to a society in New London, this society manufactured some bills of their own, but their currency being soon at a stand, the government were obliged in justice to the possessors to emit £50,000 upon loans, to enable those concerned in the society to pay off their society bills in colony bills; their charter was vacated and a wholesome law enacted, that for any single person or society of persons to emit and pass bills for commerce, or in imitation of colony bills, penalty should be as in case of forgery or counterfeiting colony

358

bills.”¹ We have already seen that this feeling with regard to the responsibility of Connecticut was shared. by the authorities of the province of the Massachusetts Bay, as was shown in January, 1748-49, in the letter to the neighboring governments, in which especial mention was made of the regret felt that the bills of Connecticut must be included in the general prohibition of the circulation of bills of the neighboring governments.

The several features which have been noted as marking the progress of the emissions and the consequent depreciation of the currency of the Massachusetts Bay and New Hampshire, can also be traced in the records of Connecticut. The first emission was in 1709 and the bill as described in the act was an exact copy of the Massachusetts bill. By carelessness on the part of the engraver the words “in all public payments” were omitted on the plate. This omission was cured by legislation in May, 1710.² The policy of allowing five per cent in payments to the treasury, was adopted from the outset, and this five per cent. was added to the taxes proposed as a fund for calling in the bills. The first fund that was laid, could, according to the terms of the act of emission, be paid in certain produce of the colony,

359

as well as in the bills of credit.¹ The next spring it was enacted that in order to give currency to the bills of credit, the fund could only be met in bullion at 8s. an ounce or in bills of credit and in no other way,² and the following fall this rule was changed so that the taxes could be paid either in money as it generally passed in New England at the time of payment, or in bills of credit and in no other way.³ In 1713, the bills of low denomination of the first issue having been altered and the colony flooded with raised bills, a new bill was issued. In this form the words “in all public payments” were deliberately omitted. It was estimated that there were then £20,000 in circulation and an attempt was made to draw in the outstanding bills and compel their exchange within one year for bills of the new issue.⁴ In 1726, it was enacted that inasmuch as the dividing the bills of credit into quarters was detrimental, bills thus treated ought not to be accepted by the treasurer in part payments.⁵ It is obvious, however, that the practice continued and that the treasurer of the colony not only received bills thus mutilated, but paid them out in this condition, for in May, 1736, the halving and quartering of bills of the denominations of £5, 40s., 20s., 10s. and 5s. was prohibited and the treasurer was forbidden after May 20, 1737, to receive bills of these denominations thus mutilated and was ordered not to pay them out.⁶ An effort was then made to force these fragments out of circulation by offering to exchange them at the treasury for whole bills up to a certain date.

360

This evidently did not accomplish its purpose, as the proposition was from time to time renewed, each time a new limit being set for the period within which the exchange could be made.¹

In February, 1732-33, an act was passed making it illegal for private persons or societies to emit bills of credit intended for a general currency.² This act was occasioned by the circulation of the notes of the New London Society United for Trade and Commerce, an organization to which a charter had been granted by the assembly a few months before.³ When it was discovered that under guise of commercial dealings the company was attempting to supply its notes as a medium for trade, its career was promptly closed by the governor and its charter was annulled by the assembly. The colony having thus suppressed an attempt on the part of a company of its own creation to furnish a medium of trade to the people, was of course not prepared to submit to the circulation within its borders of the bills of the Massachusetts land bank. In order effectually to prevent this however, more legislation was necessary and in October, 1740, an act was passed imposing a penalty for uttering, rendering or passing any bills or notes whatsoever, which either had been or should be made for a general currency or medium of trade and emitted on the fund or credit of any private person or persons, society or company, whatsoever, either of Connecticut or of the neighboring goverments.⁴ This act was temporary

361

in character but was made permanent in May 1741.¹

The currency within the colony of the bills of credit of other governments was not only recognized in the acts against counterfeiting, but provision was made in some of the tax acts for receiving certain of these bills in payment of taxes.²

In emitting a new tenor bill in May, 1740, the colony no longer followed in the footsteps of Massachusetts in the form of the bill. Not only was the phraseology changed but the nominal rate of silver was different. The following is the form of the bill as given in the act.³

No. (      ) This bill by a law of the Colony of Connecticut shall pass current within the same for Twenty Shillings in value, equal to silver at eight shillings per ounce, Troy weight, Sterling Alloy, in all payments and in the Treasury.

Hartford, May 8th, 1740.

A B C

{

Committee.

The trouble about the adjustment of debts began in 1718. It was stated that at that time the bills of credit had an universal currency throughout the government and that the whole course of trade since 1709, had been gradually managed and regulated thereby. Debts were generally understood to have been contracted in bills. To prevent oppression by the vigorous exaction of money (which could not be procured but with great difficulty) it was provided that from July 12, 1709, to July 12, 1727, in all cases where the debt was contracted with the real intent on the part of

362

both creditor and debtor, that it should be paid in bills even though not expressly so stated, a tender of bills would stay execution.¹ This provision was, in October, 1728, extended until 1735.²

In 1740, the new tenor bill was, as we have seen, made by its terms a legal tender. This was not only provided for in the form of the bill, but also in the last paragraph of the act.³ In November, 1740, instructions were received from the Lords Justices of the Regency to enforce the act of parliament relative to the rates at which foreign coins should pass in the plantations, and at the same time the Lords Commissioners for Trade and Plantations wrote, calling attention to the fact that the legal tender function of the new tenor bills frustrated the act of parliament. In consequence, an act was passed repealing the clause of the act which conferred this quality upon the bills and amending the form of the bill so as to overcome the objection of the Board of Trade.⁴ This was accomplished so far as the form was concerned by striking out the word “and”. The bill then became current only in all payments in the treasury. It was thought that this might have a tendency to depreciate the bills. To overcome this, the exchange of the new tenor bills was authorized at the treasury, for bills of the old tenor of Connecticut or of the neighboring governments at the rate of £250 per cent. more of the said bills of the old tenor for those of the new tenor that might be brought to the treasurer, or so much per cent. as the old tenor bills aforesaid should bear to the new tenor as therein expressed. Such exchanges

363

were only to be made during sessions of the assembly.¹

In May, 1742, an act for regulating coins and currencies was passed. It was based upon royal instructions and an act of parliament. Coined silver of sterling alloy was to pass at 6s. 8d. an ounce, and the same was to be accepted, received and taken to be lawful money of and in the colony. The bills of credit were to be regulated in their currency by the said standard according to their current value, which was to be determined from time to time by the assembly. Contracts were to be settled in money or in bills of credit, regulated as aforesaid, and suits at law were to be brought for lawful money.² This act was repealed in May, 1744, and it was then enacted that all processes and suits should be brought for the recovery of the coin or currency expressed or plainly understood in the contract.³

A spasmodic attempt was made in May, 1747, to cut off the circulation of bills of other governments within the limits of the colony. It was then enacted that for the future the bills of public credit of Connecticut only, or the silver or gold equivalent thereto, should be accepted, taken, or received in that colony.⁴ Contracts in these outside bills were declared to be void. This clause was however repealed in the succeeding October.⁵

Preparations for the use of the money to be received from Great Britain in reimbursement for the expenses of the Cape Breton expedition, began in October, 1748, by the passage of a resolution by the assembly, instructing the London agent of the colony to deposit the money

364

which he should receive in the Bank of England.¹ This was followed by a vote in May, 1749, that all such allowances of sterling money as should be made by the parliament of Great Britain towards reimbursing the colony in the late expedition to Cape Breton, and such as might be intended for the expenses of the colony in the late intended expedition against Canada should be improved for the calling in and exchanging, sinking and discharging the then outstanding bills of credit made and issued by the colony.² When the money was received it was enacted that no part of the exchange should be sold outside the colony.³ Although the disposition to apply the same heroic method of treatment to the currency question, as that which was successfully carried through the assembly in the province of the Massachusetts Bay, evidently existed in Connecticut at the outset, the courage of the assembly disappeared when brought to the test and the voluntary resumption of of specie payments did not take place.

We can obtain official accounts of the circulation of the public bills of the colony in 1740 and in 1751. In January, 1739-40, Governor Talcott reported to the Board of Trade that there were outstanding of the bills of credit issued against funds £5,738, 16s. 9d. Of those which had been lent there were outstanding £33,594, 9s. 3d, making a total amount then in circulation of £39,333, 6s.⁴ The heavy emissions caused by the war

365

expeditions began in 1744. £19,000 were issued that year, followed by £40,000 in 1745, and £55,000 in 1746. These emissions were all in new tenor which was rated in the tax acts at the rate of three and one half of old tenor for one of the new. The report in 1751, which has been referred to stated that there was then outstanding £340,218 18s. 7d. old tenor.¹ This amount is less than would be obtained by tabulating the emissions and deducting the taxes laid as funds for calling in the bills. It is, however, an official statement of the circulation at that time. £4,000 new tenor the equivalent of £14,000 old tenor, issued in 1744, were to be called in in 1750. To obtain the amount outstanding in 1749, it is probable that we ought to add £14,000 to the amount stated in the report as outstanding in 1751. If we do this we shall have in round numbers the circulation in 1749, as £354,000 old tenor.

◄Volume I, Chapter XVIII   Directory of Files   Volume I, Chapter XX►