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CHAPTER XX.

THE LESSON IN ECONOMICS.¹

It is plain that a study of the statistics connected with the emissions ought to reveal much that is of interest provided the data upon which they are founded are sufficient in quantity, and are accompanied with contemporaneous information which will enable us to develop the effect of the amount of paper money in circulation upon the price of exchange, upon wages, and upon the cost of living. When the subject of the Massachusetts coinage, and proclamation and lawful money was discussed, the attention of the reader was called to the fact that the pounds, shillings and pence in use were not sterling, but New England money, the conversion of which into sterling could be effected by applying a discount of twenty-five per cent. In a similar way it is necessary before entering upon any examination of the statistics connected with the currency to call attention to the fact that during the latter part of the lime when these emissions were being made, the presence of bills of the same denomination which were phrased in different forms, and circulated side by side at different values, compelled the selection of the bills of one of these forms as the ordinary measure of value. The choice for this purpose naturally fell upon the old tenor bill. Up to the time of the issue of the new form, current values were stated in old tenor. This would probably have controlled in any event, so long as the old tenor remained in circulation, but the fact that for a

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short time the bills of the first new tenor and second new tenor were received by the government at different values, added to the perplexity of the situation, and made it almost imperative for writers to convert the bills of the new tenor into old tenor in making statements of the amount in circulation. When, therefore, it is stated that there was in circulation in 1749, about £1,900,000 of public bills of the province of the Massachusetts Bay, it must be remembered that if the taxes which were laid for the purpose of withdrawing from circulation the old tenor bills, had been paid exclusively in those bills, and the province had accepted the new bills as the measure of values, there would have been a great reduction in the nominal amount of the bills in circulation, and in the stated rate of exchange. Of the bills of the new tenor of all sorts there were in circulation at that time only about £475,000. Exchange measured in these bills instead of being 1100 or thereabouts, would have been only 275. Such facts as these add greatly to the confusion of the situation, but no just appreciation

can be acquired of the statements showing the movements of exchange, etc., which I am about to submit, unless the disturbing elements introduced by the emission in 1737 of the new tenor bills are fully considered. The above table, showing the rate of exchange and the

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price of silver at different dates, 1702 to 1749, was made up by Dr. Douglass:¹

Years.	Rate of silver per ounce.			Years.	Rate of silver per ounce.			Years.	Rate of silver per ounce
1700 to 1704	7s.			1721	{	12s. 6d., 13s. 13s. 6d.		1731	{	18s. 6d. 19s.
1705 to 1710	8s.			1722		14s., 14s. 6d.		1732	{	19s. 6d. 20s. 20s.6d.
1711	8s.	4d.		1723	{	14s. 6d., 15s. 15s. 6d.		1733	{	21s. 21s., 6d. 22s., 22s. 6d. 23s.
1712, 1713	8s.	6d.		1724		16s., 16s., 6d.
1714, 1715	9s.			1725		16s., 15s.		1734	{	24s., 25s., 26s. 26s. 6d.
1716, 1717	10s.			1726, 1727		16s.		1735		27s. 6d.
1718	11s.			1728	{	16s. 6d., 17s. 18s.		1736		27s., 26s. 6d.
1719	12s.			1729	{	19s., 19s. 6d. 20s. 21s. 22s.		1737		26s. 6d., 27s.
1720	12s.	4d.		1730		21s. 20s. 19s.		1738		20s.

The Suffolk files furnish us with two papers which give the fluctuations in silver somewhat more in detail between 1700 and 1738, inclusive, than can be found in the foregoing table.² This record, which follows, is copied from a book kept by Edward Winslow, who was sheriff of Suffolk county, and it has, therefore, a certain official character.

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A table which was incorporated in the draught of an act which failed of passage and which included the rates from 1710 to 1727, has already been given.¹ The following table which includes not only the price of silver but also the premium on exchange from 1713 to 1730, will be found useful for purposes of comparison. It is taken from a pamphlet entitled, “An Enquiry into the state of the bills of credit of the province of the Massachusetts Bay in New England in a letter from a gentleman in Boston to a merchant in London,” 1743

Yrs.	Price of silver.	Exchange.			Yrs.	Price of silver.	Exchange.
1713	8s. 4d. p. oz.	50	pct. advance		1722	14s. p. oz.	160 pct. advance
1714	9s.	60			1723	15s.	160
1715	9s.	60			1724	16s.	200
1716	9s. 2d.	60			1725	16s.	200
1717	10s.	60			1726	16s.	200
1718	11s.	100			1727	16s.	200
1719	12s.	110			1728	16s. 6d.	200
1720	12s. 4d.	110			1729	19s.	200
1721	12s. 6d.	130			1730	18s. 6d.	240

The following is taken from Wright’s “American Negotiator”, which says that “A state of all the degrees of depreciations in the respective years the variations or changes happened, from the year 1702 to the year 1749,

Years	Exchange.	Oz. of silver cur.		Dollar ster.
1702	133	6s.	10½ d.	4s.	6d.
1705	135	7s.	0d.	4s.	6¼ d.
1713	150	8s.	0d.	4s.	7½ d.
1716	175	9s.	3d.	4s.	7d.
1717	225	12s.	0d.	4s.	7½ d.
1722	270	14s.	0d.	4s.	6½ d.
1728	340	18s.	0d.	4s.	7d.
1730	380	20s.	0d.	4s.	7½ d.
1737	500	26s.	0d.	4s.	6½ d.
1741	550	28s.	0d.	4s.	5d.
1749	1,100	60s.	0d.	4s.	8½ d.

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both by the ounce and dollar, that correspond with tilt said depreciation, are set down in the following [foregoing] table.”

In the “Diary and Letters of His Excellency Thomas Hutchinson, Esq., by Peter Orlando Hutchinson, Boston, 1884,” on page 53, the following is to be found: “So early in his life as the year 1736 he published a small pamphlet on the subject [currency].” Note. On the fly leaf at the beginning of his Almanac for 1770, he has jotted down the rates of silver for a long series of years. The memorandum stands thus:¹

RATES OF SILVER IN

1714	8/	6		1725, 6	15/	6		1738	27/
15	9/	2		30	18/			39	28/6
16, 17	12/			31	19/			44	30/
21	13/			33	21/			45	36/
22	14/	6		34	25/			46	36/38/ 40/ and 41/
24, 5	16/			37	26/	6		47	50/ 55/ and 60/

In 1700 the province was practically on a specie basis and exchange was quoted at its normal rate, 133⅓. Silver was, however, rated in some of the tables at 6s. 10½ d., and in others at 7s. The former rate is given in Douglass’s table, and is practically approved by Hutchinson.² If the piece of eight of 17 dwt. was permitted to circulate for six shillings, the rate of silver to be derived therefrom was as we have heretofore seen, 7s. 3f. an ounce, while on the other hand the rate to be

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derived from the weight required in the proclamation for the piece of eight, which should circulate at six shillings, was 6s. 10²/₇ d. per ounce. The general rating of the period appears, however, to have been that given by Winslow, 7s. per ounce. A committee of the general court recommended that pieces of eight should pass at 7s. per ounce in 1701.¹ Another committee in 1703, proposed that plate, bullion and silver of sterling alloy should pass at 7s. per ounce.² Seven shillings may, therefore, be adopted as the generally accepted value at that time.³ December 27, 1704, Dudley announced that he had received the proclamation.⁴ On the 3d of March, 1704-5, the council passed an order that no money should pass by tale, but what was of due weight, according to her Majesty’s proclamation. Light money and plate of sterling alloy were to pass until further provision should be made at the next session of the assembly at seven shillings per ounce. The house non-concurred and the governor summoned them to a conference. After the conference, the order was amended by striking out the seven shilling and making it read that light weight coins, etc., should pass and be good in payments by the ounce Troy, pro rata, until the end of the session of the court in May.⁵ On the same day Dudley issued a proclamation to that effect.

All through the provincial legislation 6s. 8d. is treated as the normal value of the ounce of silver in terms of

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lawful money. The London price at the same time was 5s. 2d. sterling. This sterling rate was occasionally recognized in some of the enactments. For instance, in January, 1741-42, it was enacted “that five shilling and two pence of all grants and establishments which have been made in sterling money as aforesaid, shall be paid by six shillings and eight pence of the bills hereby emitted.” With exchange at 133⅓ and silver at 5s. 2d. sterling an ounce the value in lawful money would have been 6s. 10⅔d. per ounce. The effect of this act was therefore that 6s. 8d. should perform the duty of 6s. 10⅔d. The question naturally arises whence came this rate of 6s. 8d.? It is probable that it dates back to the days of the colony when silver plate was rated at 5s. per ounce.¹ This was before the days of the mint and was nominally a sterling rating. 5s. sterling would be the equivalent of 6s. 8d. lawful money. Its use would in that event have been merely traditional, but a traditional rate might have fixed itself upon a purely representative money.

According to Hutchinson an entirely new weight was assigned to the piece of eight which should pass for six shillings, at the time of the resumption of specie payments which carried with it a new standard for the value of the ounce of silver. He says, “It was thought best to conform to Queen Ann’s proclamation and to establish a currency at the rate of six shillings a milled dollar,

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for, although silver by the act of the province is made the standard at 6s. 8d. the ounce, yet at the same time a milled dollar was allowed to pass at 6s. and everybody expected by this means to exclude hammered pieces of eight from our currency, and this has been the effect, and in fact silver is our standard by law at 6s. 10d. the ounce, supposing a dollar to weigh 17 dwt. 9 grains.”

Douglass saw that through the changes made in the allowances to the governors and in the per diem pay which the members of the General Assembly voted to themselves, a sort of scale could be constructed with which to measure the diminution of the purchasing power of the bills, and he therefore put together the following table.²

A.D.	1702.	1720.	1730.	1740.	1743.	1745.	1747.	1748.
Gov’rs.	Dudley	Shute	Belcher	Belcher	Shirley	Shirley	Shirley	Shirley
Per an.	£600	£1,000	£2,400	£3,600	£5,400	£6,000	£7,600	£9,600
Counc’.   Per day	5s.	6s.	10s.	15s.	18s.	18s.	30s.	40s.
Rep’tves.   Per day	3s.	4s.	6s.	10s.	12s.	12s.	20s.	30s.

The growth of the rates or annual charges of the government is almost as instructive as the advance of the pay of the legislators, but is of course complicated by causes outside the currency. The changes in the pay of

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the councillors and representatives, as laid down in the province laws, are as follows:

A.D.	1692.	1714.	1728, 1737.	1738, 1740.	1741.	1742, 1746	1747.
Councillors:   Per day	5s.	-------	10s.	15s.	12s.	18s.	30s.
Representatives:   Per day	3s.	4s.	6s.	10s.	8s.	12s.	20s.

It will be seen that the records practically confirm Douglass’s table, so far as the per diem pay of the legislators is concerned, the brief variation in 1741 not being of sufficient importance for consideration. The increase in the governor’s pay in 1748, would indicate a probable increase at the same time in the pay of the councillors and representatives; but there is no record preserved of any action on this point. The annual tax acts all contain statements of the amounts respectively levied for the province tax and for representatives’ pay and fines. If the service of the representatives had been uniform each year, we could test the table by a comparison of the appropriations for representatives’ pay for different years; but an examination of these amounts from year to year shows that the growth to be found there does not exactly follow the law which would be deduced from the amounts of the per diem pay. It is a fact, however, that while the amount assessed in June, 1747, for representatives’ pay and fines, was £2,878 11s. 6d., the corresponding amount in the levy next year was £4508 5s. The presumption is that Douglass was correct in the figures which he gave for the pay of the councillors and representatives in 1748.

It is difficult to trace in the records the allowances made to the governors and lieutenant governors during

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the early days of the province, but in 1729, the house of representatives published an account of the proceedings of the assembly in connection with the appropriations made for these purposes.¹ From this it appears that Phips was allowed £500 in March 1692-93 and 500 in October, 1694.² Stoughton, who as lieutenant governor succeeded to the performance of his duties, was allowed £200 in 1695, £300 in 1696, £250 in 1697, and £300 in 1698. Bellomont had £1,000 in 1699 and £ 1,000 in 1700. In 1701, Stoughton was allowed £200. Dudley received practically £500 per annum during his term of office, and Tailer who as lieutenant governor performed the duties of the office until Shute arrived was allowed £500. Shute was at first allowed £1,200, but this was afterwards cut down to £1,000. The allowances to Dummer after Shute’s departure were irregular, but practically amounted to a salary of £800. Burnet would not take the allowance in the form in which it was granted. Belcher’s first allowance was £2,400; from 1731 to 1737 inclusive, he was allowed £3,000 per annum; then for three years the sum was fixed at £3,600. From this point Shirley’s allowance was advanced by stages to £5,400, £5,760, £6,000, £7,600, and finally it was in 1748 £9,600.

It was stated by a contemporary writer 3 that there was

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in circulation in the four New England colonies, when the first issues of province bills were made, about £200,000 in silver. Douglass¹ says that in 1713 one third in value of the circulating medium of the New England governments was silver, and the other two thirds paper. The bills he estimated at £175,000. Silver was then rated at 8s. per’ ounce. They were therefore equivalent to 437,500 ounces of silver. He called them 438,000 ounces, and thus got a total of 657,000 ounces. A comparison of some of these estimates may be useful.

Year.	Silver in circulation.	Bills in circulation in all New England	Rate of silver per ounce.	Corresponding ounces of silver in circulation.	Value of circulation at 6s. 8d. per ounce.
1700	£200,000	-----------	7s.	571,428	£190,476
1713	219,000 oz.	-----------	8s.	657,000	219,000
1718	-----------	300,000	12s.	500,000	166,666
1731	-----------	470,000	20s.	470,000	156,666
1739	-----------	630,000	29s.	434,482	144,827

If there is any rule to be deduced from the foregoing table it would seem to be substantially the same as that laid down by Douglass:² “The more paper money we emit, our real value of currency or medium becomes less, and what we emit beyond the trading credit of the country does not add to the real medium, but rather diminishes from it by creating an opinion against us, of bad economy and sinking credit.”³

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The apparent exception to the rule, in the excess in the purchasing capacity of the circulation shown in 1713, may be capable of explanation. When the colony began the emission of public bills of credit there was in circulation an amount of silver practically adequate for the transaction of local business affairs. Until it had been totally displaced and superseded by paper money, any estimate of the amount remaining in circulation at any given time must have been conjectural. Douglass’s estimate of one-third in circulation in 1713 may have been too high, and was indeed disputed by one of his contemporary controversalists. Whether this be so or not, time was required for the emissions to produce their effects upon the discount of the bills and the displacement of silver, and it is quite probable that the £50,000 emitted for the Hill and Walker expedition against Quebec in 1711 had not then fully done its work. Still another exception to the rule is to be found in 1749. There were outstanding that year in the month of May, about £2,120,000 old tenor. A tax of £75,000 new tenor was laid that summer. This was equal to £300,000 old tenor, and reduced the amount outstanding to £1,820,000, or, as it was then generally stated, £1,900,000. Silver was then quoted at 60s. an ounce, and the outstanding circulation, thus reduced, taking the contemporary estimates as our basis, was equivalent to 633,333 ounces, which at 6s. 8d an ounce was equal to £211,111. It must not be forgotten, however, that when that tax was laid it was known that the government of Great Britain had completed its preparations for reimbursing the province for its expenditures in behalf of the Cape Breton expedition, and a law had been passed in the province fixing the terms of the redemption of the bills. These exceptions, therefore, do

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not furnish adequate reasons for doubting the correct-of the rule deduced by Douglass.

The influence of large emissions on the part of the province of the Massachusetts Bay upon the silver quotations can be easily distinguished, and in some instances, where the rise of silver was stimulated by causes not connected with the issues of this province, the coincidence with large emissions in Rhode Island furnishes an adequate explanation of this change in rate. Douglass was of opinion that two thirds of the bills emitted by Rhode Island were absorbed in the circulation of Massachusetts.¹ The following table mainly made up from facts brought together by Douglass in his pamphlets, will illustrate these points.

Year.	Rate of silver per ounce.		Loans and extraordinary emissions.
1700	7s.
1706	8s.
1712	8s.	6d.	£50,000 advanced account Quebec expedition.
1715	9s.	2d.	£50,000 loan, 1714; £40,000, R.I., 1715.
1717	12s.		£100,000 loan
1722	14s.		£50,000 loan, 1721; £40,000, R.I.
1728	18s.		£60,000 loan, 1727; £40,000, R.I., 1728.
1732	21s.		£60,000 R.I. loan, 1731.s
1733	27s.		£76,000, 1733; £104,000, R.I.; £50,000, Conn.
1738	29s.		£100,000 R.I. loan

Wages did not rise proportionately with silver. In a pamphlet published in 1721, when silver was between 12s. and 13s. an ounce, the writer says,² “I will next ask the poor laborer that works for five shillings per day, half money, half goods, whether he lives better now than

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when he received four shillings per day in good silver money at the rate of seventeen penny-weights for six shillings.” Another pamphleteer writing at this time, sets forth the effect upon the agriculturist as follows: “We formerly sold butter sixpence a pound, that sixpence would buy two pounds of sugar, and if we now have ninepence a pound for butter, that ninepence will buy but one pound of sugar or thereabouts.”¹ Douglass, writing in 1739 concerning the effect of the depreciation on wages, says:² “How much they have suffered and continue to suffer is obvious. For instance, a carpenter, when silver was at 8s. per oz., his wages were 5s. a day all cash. The Town House, A. 1712, was built at this rate; whereas at present, A. 1739, from the bad influence of paper money, silver being 29s. per oz., he has only 12s. a day, equal only to 3s. 4d. of former times; and even this is farther reduced, by obliging him to take one half in shop goods at 25 per cent. or more advance above the money price.” He then proceeds to show how the purchasing power of the day’s wages has diminished, selecting butter for his illustration on the ground that it rose the most uniformly of all provisions. When wages were 5s. per day, butter was 4d. per pound, and the laborer could buy 15 pounds with one day’s wages. His 12s. would only purchase 7 pounds, butter being then 20d. a pound. The salaries of clergymen had more than doubled, but the original purchasing power of the salaries had been diminished by thirty-three per cent.

The form of the public bill has already been indicated. It was in effect a certificate of indebtedness, and

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on that theory, when it found its way back to the treasury the debt was extinguished, and the temporary function of the bill was performed. Under this theory the amounts originally issued each year were simply intended to meet the immediate needs of the government, and provision was made for their retirement in the next tax bill. The withdrawal from circulation, and the locking up in the hands of a treasurer, of large sums collected by taxation, is recognized as a serious disturbance to the circulating medium of a government, and various devices are to-day resorted to in order to prevent as far as possible the consequent reduction of the circulation. In a similar way, after the country became dependent for a circulating medium upon the amounts thus annually emitted, the sudden emission and the withdrawal each year of so large a proportion of the medium of trade must have created a serious disturbance in commercial affairs, and the cry of a scarcity of bills during the period of the year when the taxes were being collected was based upon a genuine want, even when the bills were most abundant. The increase in the amounts issued, the postponement of the periods for retirement, and the distribution of the withdrawals over several years, were only partial remedies for this evil. Confidence in the bills was based upon their ultimate withdrawal, and the greater the emissions the greater the taxes that must be levied to provide for their retirement. While this was evidently true, and while there were indications that pointed to a loss of confidence in the bills when the assembly failed to provide the promised fund for the withdrawal of an emission, yet it cannot be doubted, however paradoxical it may seem, that whenever a fund was called in for the purpose of redeeming the government promises and maintaining confidence in

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the bills, it was expected that there would be an emission to fill the gap thus occasioned in the circulating medium.

The emissions in Massachusetts from 1702 to 1749 reached the sum of £4,634,700, while the withdrawals during the same period, including the £300,000 in 1749, were £2,814,900. It was doubtless to overcome the disturbance occasioned by this annual process of absorption and emission, that the system of distributing bills of public credit among the inhabitants, on loans secured by real estate, was resorted to. £310,000 was thus put out at different times. The first loan was to the Boston merchants who furnished supplies for the Quebec expedition in 1711. This was only a temporary loan, to enable them to carry the sterling exchange paid to them by the paymasters of the expedition, until it should be met in London. In 1714, when it was about to be paid, it was replaced by a loan of £50,000 to the inhabitants of the province. The first loan being for a specific purpose, and temporary in its nature, did not affect the price of silver, but the second seemed to mark a policy on the part of the government, and its emission is selected by Douglass as the point where silver began its flight. When the first instalment of this second loan fell due, in 1716, £100,000 were put out in a similar way, and this was followed by £50,000 more immediately after the last instalment on the first popular loan was payable, in 1721. When by the terms of these loans they should have been retired, a new loan of £60,000 was made, and doubtless this process would have been continued but for the interference of the Board of Trade. The meaning of the attempt is obvious. The assembly were seeking to furnish a medium for trade, which should

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not be subject to the annual calls for retirement under which bills for government expenditures were issued.

Among the various experiments then made there were but two attempts to give these bills a credit based upon a promise that they should be paid in coin, the first being of little consequence, as it applied to only £1500 emitted in 1693.¹ The promise in this, as well as in the later and more important instance, was not on the face of the bill, but was in the act of emission, and in the second case was so worded that in practical operation it did not prove beneficial for the bills in question. The act under which the £9,000 in bills of the first new tenor were emitted in February, 1736-37, contained a provision for levying a tax in 1741, adequate for their retirement, payable not only in the bills themselves, but in old tenor bills or in certain produce. If by chance it should happen that any of these new tenor bills should be outstanding at any time after December 31, 1742, the possessor was to be entitled to receive from the treasurer for every six shillings and eightpence in these bills, an ounce of silver or the like value in gold. All of the first new tenor bills were issued with this promise of redemption in December, 1742, attached, and all of them were declared to be in value equal to silver at six shillings and eightpence an ounce, an estimate which was above the true rating of silver based upon sterling exchange, as has already been pointed out, and also above the rate at which the bills circulated, as appears from the discussions which subsequently took place in connection with the adjustment of debts. It may be necessary to recall to the mind of the reader, the following

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facts, which have already been fully set forth in chronological sequence in the narrative of events heretofore related. Their repetition here is necessary if we would group together facts of interest in economic study. The first of the new tenor bills were declared to be worth three times as much as bills of the corresponding denominations of the old tenor form, and were to be received by the treasurer on the basis of one of the new tenor for three of old tenor. In January, 1741-42, when the second new tenor form was first issued, the bills were rated in the act on the basis of one of the form mentioned in the act for four of old tenor, no provision being made in the act for their redemption in coin. From that time until December, 1742, the province saw circulating side by side two forms of bills, each declared to be equal to silver at six shillings and eightpence an ounce, one of these forms being rated in the statutes in old tenor, at a premium of 33⅓ per cent. above the other, and the bill that was at a discount having behind it a specific pledge for its redemption in coin within less than twelve months. It was also true that at the same time Rhode Island bills issued on twenty-year loans, to an amount vastly disproportioned to the resources of the colony, when compared with the relation of the Massachusetts bills to the resources of that province, were freely received at a premium above these first new tenor bills. It is possible that the discredit in which these hills were held during the spring and summer of 1742 was intentional, for the assembly, just in time to save the credit of the province, made provision for the exchange of such as were outstanding December 31, 1742, on terms nearly equivalent to their redemption in coin. Thus ended this absurd attempt to give credit to the public bills by promising to redeem

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in silver and gold such as were outstanding after the fund provided for their withdrawal from circulation should be closed. How far it may have affected public opinion at the time, and prevented a more liberal and reasonable attempt at the establishment of a currency redeemable in coin on demand, must be a matter of personal judgment, but it will be admitted that this experience was capable of an interpretation in the hands of those hostile to such a movement which would have militated against any such experiment.

I have prepared and submit herewith a table¹ showing the various amounts annually emitted, inclusive of loans from 1702 to 1750. In parallel columns with these, the amounts retired each year and the amounts left outstanding are given, the withdrawals being made up on the assumption that the loans were called in when due. It is known that this was not the case, but it would be impracticable to attempt to follow these payments in detail. It is also known that the tax collectors were at times delinquent in their returns, so that the funds provided for the withdrawal of the bills were not collected according to the terms of the legislation, but in the long run these things took care of themselves.

During the entire period of the emissions, the impost and excise were regularly pledged for the protection of the bills of public credit, and during the latter part of the time, not only these, but all public dues were thus pledged. No recognition is had in the tax levies of the effect of the impost and excise upon the retirements, until 1714, and it might seem that this fact would be fatal to the value of the table. As a matter of fact, when the table was originally constructed, it was not expected that it would yield results of value concerning

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the circulation, the sole object of its preparation being at that time to ascertain when and to what extent the assembly were delinquent in the redemption of their pledges for the retirement of the bills. An examination of the subject, however, revealed the fact that from time to time there were apparent adjustments of these matters, including therein a part at least of the interest money derived from the loans. Inasmuch as the province did not derive direct benefit from some of these loans, their influence upon the revenue is proportionately reduced. After 1714, questions concerning the effect of public dues upon the circulation can no longer be raised, since in the tax levy, allowance is made each year for the amount expected to be received from these sources. In 1706, the tax levy fell short of the funds pledged by £3,500 and it was stated that the impost and excise were relied upon to make this amount good. In 1710, it was stated that the treasurer’s accounts showed that the pledged impost and excise funds exceeded the bills then outstanding by £11,000.¹ Of the funds then pledged there were £11,000, due in 1709, £11,000 due in 1710, £11,000 due in 1711, and £ 11,000 due in 1712, for which no taxes were levied. Beginning with 1714, a certain amount was estimated each year as the probable contribution of these special taxes towards the revenue of the province, and this was deducted from the sum of the funds pledged for that year. The remainder was the sum to be laid as a province tax. To meet deficiencies £3,572 3s. 1d. interest money was appropriated in 1716,² and again, in 1718, £13,250 was levied for the same purpose. In 1739, and again in 1741, no tax was levied. Funds were pledged for these years, £37,500 in 1739,

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and £27,000 in 1741, and if no special apportionment should be made by the assembly when the funds became due, the treasurer was authorized to levy the taxes, making use for that purpose of the last previous apportionments. There can be but little doubt that the treasurer acted under this authority, for in January, 1742, the assembly laid new funds for the bills outstanding, alleging in the preamble of the act through which this was accomplished that there were then outstanding £100,125. The several funds representing this amount can be easily identified. They do not include the funds of 1739 and 1741, and they agree perfectly with the running account kept by the assembly in their tax levies, if it be assumed that the impost and excise took care of the balance not provided for by taxation before 1714. There is still one other complication which is yet to be considered, that which arose from delinquencies. It is known that at times the collectors were greatly in arrears in their returns, but it may be inferred that Shirley, when he set himself to work to cure this evil, was able practically to do so. In 1746, £32,000 were appropriated to cover deficiencies and from these various deficiencies, appropriations, and separate adjustments, it may be concluded that a table of this sort will furnish an approximate view of the course of the currency inflation. The destruction of the account books of the treasurer in the fire of 1747, will probably prevent any more satisfactory method of obtaining information on this point from being adopted.

The emissions in the table are procured from the acts and resolves of the General Court. The tax acts furnish the withdrawals or retirements. The figures to be obtained from this table correspond approximately in their final result with those given by contemporary writers

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as to the amount outstanding in 1749. There are some fragments of treasurer’s statements and some committee reports showing the amounts outstanding at different dates. These reports require examination before they can be applied to test the accuracy of this table. The treasurer was apparently accustomed to charge himself with all bills which were emitted against future funds, but the bills intended for loans he charged to the commissioners of the loans, and they made their reports direct to the assembly. The treasurer’s reports, therefore, as to the amount of bills outstanding at any given date require correction by the addition of the loans then outstanding to the net amount with which he stands charged after having deducted from the emissions the credits to which he was entitled.

The diagram setting forth the disappearance of the silver circulation of the province and the line of growth of the currency shows also the corresponding movement which took place in the price of silver, all values being stated in the old tenor currency of the province.¹ If, when these bills were first emitted, the claim was well founded that there was need for an addition to the circulating medium, it might have been possible to maintain the bills at par until the bills and the silver then in use were in excess of the trading wants of the province. The circumstances of the province necessarily controlled and limited its trading capacity. A greater amount than was needed could not have been kept in circulation. Hence the maintenance at par of an adequate substitute for the silver could only have been attained by the displacement of that metal. If the currency had remained at par up to the point suggested, there would have been no necessity for considering the relations of the increase

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of the currency to the decrease of the silver. Each emission of bills would have required the displacement of a corresponding amount of coin in order that it should circulate. As a matter of fact, however, the rise of silver began almost as soon as the province adopted a form of bills of its own. Up to 1702, use was made of the colony bills, to meet by emissions the extraordinary wants of the province. The adoption at that date of a form of bill specially adapted to the use of the government was a practical announcement that the policy of emitting public bills was to be continued, and was followed so promptly by a rise in silver that the quotation in 1704 shows an advance of a shilling. The displacement of silver was apparently slower in taking effect, so that it would appear that the bills increased slightly the purchasing capacity of the circulation for a few years.

The rise in silver in 1705, which is recognized by Winslow in his table, occurred at a time when quotations are difficult to obtain, and are not harmonious in character. It was in the spring of that year that the council endeavored to secure the passage of an order that no money should pass by tale but what was of due weight according to her Majesty’s proclamation, while light weight coins and plate of sterling alloy were to pass at seven shillings per ounce. In this the council failed and they secured from the representatives, as a recognition of the proclamation, only the concession that light weight coins, etc., should pass and be good in payments by the ounce Troy pro rata until the end of the session.¹

In 1706, however, according to Douglass, “the courts of judicature, chancered silver to 8s. per oz. in satisfying of debts, being nearly after the rate of 6s. a light piece

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of eight then current.” This was a recognition of the well established fact that there were no full weight coins then in circulation,¹ and since the depreciation had been imposed upon the silver in circulation, through the permissory currency of light weight coins, it enabled the paper money of the province to remain for a time nominally at par. Douglass says, in continuation of what has just been quoted, “At this rate Silver and Province Bills continued at Par until A. 1714.” This par was, of course, delusory, since it was not measured in full weight coin. Professor Sumner says, “In 1700-12 in New England, silver was at 8 shillings per ounce, which meant that the current piece of eight, assumed sterling, weighed 360 grains. Par of exchange was about 155.”² At a later date even the light weight money fled, and then came the resort practically to the rate fixed by the statute of 1697, for the piece of eight, for a standard by which to measure the discount of the paper money in circulation.

The graphic delineation of the disappearance of the silver³ is based upon the statement of one of the pamphleteers of the day as to the amount of silver required for the trade of New England,⁴ and the assertions of Dr. Douglass that there were 219,000 oz. still remaining in circulation in 1713, which had entirely disappeared in

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1718.¹ Since the disappearance of silver was practically simultaneous throughout New England, the only effect of adjusting this representation to the proportion in use in Massachusetts alone, would be to reduce slightly the area included between the two curves. The main features would be the same.

With regard to the time of the disappearance of silver, it is not improbable that the £100,000 loan at the end of 1716, following so closely the £50,000 loan of 1714, caused the coin to be hoarded in 1717. Then came the process of adjustment, through which the silver rate reduced to its just proportion a paper medium having a nominal valuation in excess of the trading needs of the province. When distrust and lack of confidence added the force of their weight, this reduction actually brought the purchasing capacity of the bills in circulation, notwithstanding the great excess of their denominational value, below the amount formerly deemed essential for the use of the province.

By reference to the table showing the coincidences between certain movements in the price of silver and emissions of large amount by this province and the colony of Rhode Island, the dates of some of the Rhode Island loans can be obtained. A glance at the diagram will disclose the effect of these emissions, but it is desirable for the full appreciation of this effect, to take note of certain facts in connection with affairs in Massachusetts at the same time. A contemporary writer² says, in 1740, that the highest point which the Massachusetts currency had then reached was in 1721. This statement would be true, if no consideration were had of the loans made about that period, but when these are

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borne in mind, the culminating point prior to 1741 would seem to have been in 1726. The necessity of including the emissions of the other governments, if we would deduce any law from the subject under consideration, is forcibly illustrated by the divergence, between 1727 and 1741, of the lines which mark the currency volume on the one hand, and the silver rate on the other. Under pressure from the Board of Trade, the provinces of the Massachusetts Bay and New Hampshire were not only prevented from further increasing their bills of public credit during this period, but were actually compelled to reduce the amounts in circulation. Meantime Rhode Island had flooded the province with emission after emission of public bills, some issued upon funds, but nearly all loaned out at interest for terms varying from ten to thirteen years, and then to be liquidated in annual instalments covering ten years more. Of these bills there were £340,000 outstanding in 1741, the greater part of which were in circulation in Massachusetts. Owing to their presence, the assembly of this province had witnessed the silver rate advance from 16s. in 1727, to about 29s. in 1741, in the face of the fact that the circulation of their own public bills had been reduced from £396,000 in 1726, to £229,000 in 1741. The purchasing capacity of the bills of the province in circulation, rated in silver at 6s. 8d. per ounce, had through these causes been reduced from £165,000 to less than £53,000. Attempts had been made, without success, to prevent the circulation of the bills of the neighboring governments. The colony of Rhode Island was drawing a revenue from the interest of the loans. The borrowers were able, in turn, to lend in Massachusetts the public bills which they thus secured, at a higher rate of interest than that charged by the lender, so that

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they also made a profit. The privilege of obtaining shares in these loans commanded a ready sale at a premium. To all of this the people of the province of the Massachusetts Bay had to submit, through the obstinacy and stupidity of the traders, who insisted upon giving currency to the Rhode Island bills.

The rate of silver should naturally have gone in 1748 above seventy shillings, but the belief that the expenses of the Cape Breton expedition would be reimbursed must have held it in check. Certainly this must have been the case after the passage of the act in January, 1748-49, providing for the future redemption of the bills, if the coin should be received by the province, in settlement of the claim for reimbursement. Furthermore, this act contained arbitrary measures for the prohibition of the circulation of the bills of the other governments, and this again had a tendency to reduce the silver rate.

The addition of another line to the diagram, showing the volume of the entire currency in circulation, including the contributions of the other governments, might perhaps have added to its interest. It will not be difficult, however, to make use of the figures heretofore given to obtain an approximate result of this sort. In its present shape, the diagram brings forth vividly the peculiar condition of this province, just prior to the inflation under Shirley, when suffering vicariously for the sins of Rhode Island. The province had responsibilities enough of its own to bear in this connection, and it is well that so much of the burden as can be lifted shall be deposited where it belongs.

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