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CHAPTER VII.

THE LAND BANK OF 1740 AND THE SILVER BANK.

During the last year of the administration of Governor Belcher in Massachusetts Bay a number of inhabitants of the province organized what was termed “The Land Bank,” and made an experiment in the way of furnishing a currency secured by real estate, redeemable in the future in commodities. This action on their part aroused a number of Boston merchants, who as a means of opposition to this scheme concluded to issue their own notes redeemable at future periods in silver, with a sliding scale of rates from the then current rate to twenty shillings, proportioned to the distance of the times of redemption, the last of which was in 1755. This latter project was termed “The Silver Bank.”¹ The organization of the Land Bank at this time must be imputed to a resolution passed by the house of representatives, June 28, 1739, the preamble of which was in the following words:—

“Whereas there is a great scarcity of bills of credit, which are the only medium of commerce among us, and inasmuch as those bills only which may be issued for the necessary support of his Majesty’s government here can by no means be a sufficient supply for carrying on the trade and business of this province which must therefore be brought under a great declension unless some further expedient can be found out,” . . . This led up to a vote “that a committee be appointed to

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receive in the recess of the court any scheme or proposals from any persons whomsoever for the furnishing a further medium of trade, in such way and manner, as that the value thereof may be maintained,” and the whole wound up with an order of publication in the Boston newspapers.

There can be but little doubt that the passage of this vote stimulated John Colman to renewed efforts towards the establishment of a bank of issue, a subject in which as we have already seen he had been interested now for twenty-five years. The result of his work was made evident, when, at the session of the General Court begun on the 5th of December, 1739,¹ and continued in the month of January, 1739-40, a scheme was presented by Colman and three hundred and ninety-five others for emitting bills secured by real estate, which were to serve as a medium for trade. In submitting the list of subscribers to this project, the promoters called attention to the small size of the individual subscriptions, and stated that they had acted in the matter by advice and persuasion, being desirous to interest many in the scheme. Hutchinson, treating of the same point, says that the greater part of those who were interested in this affair, as well as of those who were concerned in the proposed bank in 1714, were men of small means. He adds that a majority of the representatives for 1740 were subscribers to or favorers of the scheme.²

John Colman, whose name headed the list of subscribers,

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was one of those who had been interested in the similar project in 1714, which was then called the private bank. He had in 1720 published a pamphlet in which he stated that it would be many years before a return to a specie basis could be expected; and as a temporary remedy he suggested a bank which should emit bills on real security, the loans to bear six per cent. interest, and the surplus revenue above expenses to be invested in silver and held until the profits should amount to the original sum emitted.¹ He claimed to have had some correspondence with Governor Belcher on the subject of the scheme which he now proposed, and had for some time been at work endeavoring to interest people in its favor. On the 10th of March, 1739-40, a broadside was issued, in which it was stated that in order to redress the distressing circumstances under which the province labored for want of a circulating medium, it was proposed to set up a bank on land security, no person to be admitted but such as dwelt in the province and had real estate therein. It was announced that on certain days a committee would be in session at the Exchange Tavern in King Street, to receive subscriptions. The scheme when analyzed may be briefly stated as follows: Subscribers to a so-called stock of £150,000 simply agreed to borrow a certain amount in bills of the company. Their voice in the affairs of the company was determined by the size of the subscription. The only payment which was required to be made was forty shillings on each thousand pounds,

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two-tenths of one per cent. of the loan, for organization expenses. Each subscriber was to furnish satisfactory mortgage security for his loan, on which he was to pay interest at the rate of three per cent. per annum, and the principal was to be paid in twenty annual instalments of five per cent. each. These payments were to be made in Manufactory Notes, as the notes of the company were called, or in hemp, flax, cordage, bar-iron, cast-iron, and certain other enumerated commodities. There were provisions as to the organization, and the annual meeting; and a clause which provided that loans not exceeding one hundred pounds might be made on personal security.

The bill which it was proposed to emit was originally printed in the broadside as follows:—¹

Twenty Shillings

We promise for ourselves and Partners to receive this Twenty Shilling Bill of Credit as so much Lawful Money in all payments, Trade and Business.

Boston, etc.

The words “Boston, etc.” were then marked out, and the following words written in:—

and after ye expiration of twenty years to pay ye possessor ye value thereof in manufactures of this Province.

Boston, etc.

The thirteenth article in the prospectus required each subscriber to sign an instrument in which he agreed to indemnify the signers of the bills.

The crudeness of this whole proceeding finds no better illustration than in the proposition to emit a bill which contains no agreement to redeem; nor was the document much improved by the words which were added in writing. As a matter of fact the bill which was actually issued was signed by the directors, and read as follows:—

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“We jointly and severally promise for ourselves and partners to take this bill as lawful money at six shillings eight pence per ounce in all payments, trade, and business, and for stock in our treasury at any time; and after twenty years to pay the same at that estimate on demand to Mr. Joseph Marion or order in the produce or manufactures enumerated in our scheme, for value received.”

No provision was made in the prospectus for the use by the company of any of its bills in trade. It is stated, however, that in the articles as finally settled £10,000 were allowed as a sum to be thus employed, and the accounts of the company show that their agent entered upon numerous mercantile ventures.¹

The company was properly designated by the governor “a scheme for emitting bills or notes,” and by the committee of the General Court a projection “for making and emitting notes of hand as a medium of trade.” It had no capital stock, and the only provision for any possible fund to be held as a security for the bills is to be found in the section which provides for the distribution of profits.

Attention has been called to the fact that in 1720, Colman had published a scheme for a bank, in which he proposed to create his capital out of the reserved profits arising from the business. A similar proposition is to be found in the tenth article of this prospectus, which declares that there shall be an annual dividend, “provided always that in all such dividends care shall be taken that there still remain in the stock double the principal paid in from time to time as aforesaid.”

The subscribers who were attracted by the original broadside met on the 30th of July and chose directors for the scheme. The names of these directors were

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Robert Auchmuty, William Stoddard, Samuel Adams, Peter Chardon, Samuel Watts, John Choate, Thomas Cheever, George Leonard and Robert Hale.¹ On the eighth of September they unanimously agreed upon certain articles, expressing the meaning and intention of the scheme and for the prosecution of it, which articles they said were to be esteemed fundamental. The plan presented in these articles was said to contain the substance and essential part of the scheme first proposed, which had been digested amended and altered after frequent and long deliberations, so far only as was necessary to attain the ends proposed and to prevent doubts as to the true and honest meaning of the same. The amended articles were signed by the directors and acknowledged December 4, 1740, before a justice of the peace. They were then published as a prospectus.² An extract from the Book of Records of the Manufactory Company, Monday, November 24, was appended to the publication. This extract contained the vote which identified the articles as those mentioned in the bills, and also certain provisions with regard to the exchange of defaced bills and the renewal of those destroyed.

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It is obvious that it was possible for the mortgage loans of the Land Bank to be paid off entirely in commodities, thus leaving the bills afloat without other security than was afforded by the partnership. It may therefore seem strange that the opinion should have been held by any number of men that the bills under such circumstances could have obtained circulation, but it must not be overlooked that at that very time the Merchants’ Notes were held at a premium of thirty three per cent. over province bills. The cause for this lay in the fact that the former were redeemable at an expressed rate in silver, and that perfect confidence was felt in the solvency of those who issued them. The conditions of the two experiments were not parallel; but evidently the experience with the Merchants’ Notes furnished an argument in favor of the acceptance by the community of a bill issued by a company without capital, not redeemable until twenty years after date and then payable in commodities. When to this argument derived from the career of the Merchants’ Notes is added the fact that great numbers were interested in the scheme who by their example and enthusiasm brought in new converts daily, it can be understood that the financial weakness of the subscribers as a class might be under-estimated. Further the fact must not be forgotten that people were accustomed to pay their taxes in commodities, and that the rate at which these commodities were convertible promised to be a favorable one.

As early as 1720 a pamphleteer had suggested that the province should organize a bank of this sort, and should loan province bills for terms of twenty-one years on security of lands, or merchandise.¹ Twenty annual

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payments, beginning the second year, at the rate of six per cent. per annum, were to wipe out all claims for principal and interest. Such payments were to be made in hemp, flax, turpentine, pitch, tar, rosin, fish-oil, whalebone, or any other commodity that would prevent importation, or that was good for exportation, especially what the crown and nation of Great Britain encouraged. It was quite likely that Colman obtained from this pamphlet the idea which converted his Land Bank of 1714 into the Land Bank and Manufactory Scheme of 1740,—the encouragement of local industries, and the prevention of imports being elements in the scheme which appealed to the populace.

The activity which Colman displayed, the number of persons whom he had interested in his scheme, and the certainty that he would attempt to put his bills on the market aroused a powerful opposition. A number of Boston merchants formed an association, afterwards known as the Silver Scheme, the purpose of which was first, to issue bills, which, like the Merchants’ Notes of 1733 should be on a silver basis; second, to secure the mutual agreement of the subscribers to refuse to receive the bills of other governments not redeemable in gold or silver except at a discount to be fixed by the Company; and third, not to receive the Land Bank bills on any terms.¹ It is not clear when the change which has been pointed out in the bills of the Land Bank, placing them on the basis of the then par value of silver, was adopted. It is quite likely to have been a counter thrust, induced by the superior attractiveness of the

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currency offered by the silver men, and adopted after the promulgation of that scheme. The bills of the Silver Scheme were drawn payable to Isaac Winslow, and each was signed by some of the directors. They ran for fifteen years, and were then redeemable at the rate of twenty shillings per ounce for silver. Meantime the directors promised to receive them in all trade and business as follows:—

In	1741,	an ounce of silver at the rate of				28s. 4d.
“	1742,	“	“	“	“	27s. 9d.
“	1743,	“	“	“	“	27s. 2d.

and so on, with an annual reduction of seven pence in the rate of silver till it reached twenty shillings in 1755, the date at which the bills were redeemable. Issued at the current rate of silver, the sliding scale of appreciation which they contained was the equivalent of a low rate of interest. There was one feature connected with them which does not appear on the face of the bills. The directors agreed among themselves to exchange the silver bills at any time for common current notes, on the basis of the scale of appreciation given in the bills, and at a later date so amended the article of their scheme containing this agreement that any possessor of silver bills could enforce it by legal process.

It will be observed that the proposed limit to the loans of the Land Bank was £150,000 in lawful money. Each twenty-shilling Land Bank bill, if, according to its terms, it found a circulation on the basis of 6s. 8d. per ounce for silver, was worth more than four times as much as the twenty shilling bill of the Silver Bank, which must, according to the scale of rates on which these bills were redeemable have been issued in 1740 on the basis of silver at 28s. 11d. per ounce. The £120,000 of silver bills to be emitted would therefore

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represent in lawful money on the day of their issue less than one-fifth of the proposed issue of the Land Bank. One hundred and six Boston merchants, headed by Edward Hutchinson, subscribed the articles of the Silver Scheme. Their combined subscriptions exceeded the amount proposed to be issued, and were cut down to keep within the limits of the proposed plan. When the scheme was matured they also applied to the General Court for its approval and sanction.

In the second article of their scheme, Edward Hutchinson, Samuel Welles, James Bowdoin, Samuel Sewall, Hugh Hall, Joshua Winslow, Andrew Oliver, Esqrs., Edmund Quincy, Thomas Oxnard and James Boutineau, Merchants, were declared to be the directors or committee to manage the affairs of the subscribers to the scheme.¹

By the tenth article the subscribers entered into the following agreement:

“We the subscribers therefore agree and promise, that we will neither directly nor indirectly, by ourselves, nor any of us, receive any bills that shall be emitted hereafter by the neighboring governments unless redeemable by Silver and Gold as aforesaid, or that have some solid and equivalent fund. And as to Bills heretofore emitted, we agree and promise that we will receive and pass them, with such Allowance or discount, as this Company shall agree upon, by major vote from time to time, at two meetings yearly, the one in the month of January, and the other in the month of July, and that we will wholly refuse in all Trade and Business, and for all debts due, the notes that may be emitted by the subscribers to the bank commonly called the Land Bank,

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or any other Scheme of the like Nature; And that we will do everything, as much as in us lies, to make this emission a common currency, and prevent these bills being hoarded up, or depreciated.”¹

The lines of the fight were now squarely drawn, and a committee of the General Court was appointed March 18, 1739-40, to “investigate the several projections for emitting notes.” This committee reported adversely to the Land Bank, but recommended that the Silver Scheme be referred to the next session. The council favored the recommendation of the committee, the house voted to refer both schemes to the May session, both companies meantime to be prohibited from issuing notes. The council concurred in this, and on the fourth of April the governor issued his proclamation forbidding the projectors of both schemes to issue notes or to proceed further until the May session of the General Assembly. This session opened May 28, at which date the restrictions imposed by the order of the General Court expired by limitation, and no obstacle stood in the way of the consummation of either project, provided the promoters chose to proceed without the sanction of the government.

The situation of affairs at this time was the same as at the last session. The governor and council opposed the Land Bank, and favored the Silver Scheme. The house favored the Land Bank, but could not consistently oppose the Silver Scheme. Both propositions were laid before the house, June 4, and both were laid upon the table. On the sixth, the house took the Land Bank scheme from the table and heard arguments in its favor.

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On the same day a petition to the governor and council and house of representatives, headed by Benjamin Gerrish, and signed by a number of influential Boston merchants, setting forth the pernicious tendency of the Land Bank, the bills of which from their nature were of no determinate value, and praying the assembly in its great wisdom, justice, and goodness to discountenance and suppress so great a mischief, was presented and read in the house. Further consideration of the Land Bank was then postponed to June 18.

The council, realizing that the house of representatives was proceeding in an independent manner in the consideration of the question at issue, and that its action would be friendly to the Land Bank, voted, June 12, to appoint a joint committee to which both schemes should be referred. The house concurred, and the members of the joint committee were named. Notwithstanding this action on the part of the house, no progress was possible in this committee, as the members of the committee appointed by the house refused to meet with those appointed by the council.

On the fifteenth, several citizens of Ipswich presented a petition to the General Court headed by the name of John Choate, in which they argued in favor of the Land Bank, and prayed that it might be patronized, encouraged, and assisted. This petition was read to the house of representatives on the 18th of June, and at the same time a memorial of several inhabitants of Boston relating to the Land Scheme; a memorial of sundry inhabitants of Middlesex County; a petition of sundry inhabitants of the province praying for the consideration of the Land Scheme, and a petition of sundry merchants, factors of Great Britain, and others, praying

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that the scheme might be discountenanced were read, and arguments for and against the scheme were heard.

The inaction of the joint committee to which the two schemes had been referred, through its incapacity to hold meetings, deprived each side of the fruits of a complete victory. No concerted action could be secured by the council, but independent action by the house was prevented so long as it should continue to recognize the reference to the joint committee. On the whole, the gain was on the side of the council, as inaction on the part of the house was one of the things that the board was after. The house on the 18th, therefore, resolved to cut the gordian knot, and regardless of parliamentary rules, assumed consideration of the petitions above mentioned, while both propositions were still nominally before the joint committee. On the nineteenth, by a vote of fifty-nine against thirty-seven, the house resolved that the persons concerned in the said scheme should not be forbidden to issue bills or notes of hand in pursuance of the same. This independent consideration of the matter by the house was opposed by the council on the ground that the whole matter was still in the hands of a committee, but they were of course helpless under the circumstances.

The merchants of Boston, alarmed at this action of the house, procured signatures to a new petition against the Land Bank, which they presented at the council chamber, great numbers of them being present on that occasion.

On the 12th of July this session ended, and on the seventeenth Governor Belcher issued a proclamation in which he recited the various petitions which had been presented to the council against the Land Bank, and cautioned his Majesty’s good subjects against receiving

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or passing the bills, saying that they tended to defraud men of their substance, and to disturb the peace and good order of the people. Notwithstanding this, the promoters of both schemes proceeded to organize, and by August 1 the directors of the Silver Scheme began to issue their bills.¹

The next session of the Assembly began on the 20th of August, and ended September 12. On the last day of the session the governor recommended that an inquiry into the character of the two schemes be prosecuted by a committee of the General Court during recess, and that in the meantime the projectors be prohibited from proceeding further without leave from the General Court. The house refused to appoint such a committee either with or without the prohibition from further proceedings.

On the 22d of November, Belcher, in his speech to the General Court, took a strong position in favor of the Silver Bank, while he denounced the Land Bank in unmeasured terms. The council had taken the matter it hand during recess, he said, and had secured an amendment

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to the Silver Scheme, whereby possessors of bills might receive the value of the bills in silver or gold on demand. This amendment was lodged with the secretary.

The contest between the council and the house of representatives had attracted public attention, and the effect upon the Land Bank had evidently not been to its disadvantage. On the 30th of July, when the partners met at the house of James Jarvis in Roxbury and chose their officers, the names of upwards of eight hundred subscribers could be counted on their list.¹ The pronounced sympathy of the house, if it had not secured favorable action in their behalf, had at any rate left matters in such shape that they could proceed with the development of their scheme without fear of interference. The fact that six of the leading members of the house were directors in the Land Bank, and that many of the members were subscribers, was a guarantee for the future.

In 1720, Colman had stated in his pamphlet that it would be hopeless to undertake such a project without the sanction and support of the government; yet on the 19th of September, 1740, the mutual agreements and covenants between the Land Bank subscribers, by means of which the circulation of the bills among themselves was to be secured, were duly executed, and the issue of the bills was commenced in the face of the certain opposition of a portion of the government.

It was obvious that the governor and council were powerless to check the forward movement of the Land

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Bank by legislation.¹ The number of subscribers when the partners first appealed to the assembly had been less than four hundred. When they organized they numbered over eight hundred, and indeed they continued to increase until there were ultimately about a thousand names upon the list. Their influence secured the house, and for the present at least would continue to do so.

The conflict between the friends and foes of the Land Bank took possession of the columns of the press. As early as July, an agreement was published in which the subscribers pledged each other they would neither directly nor indirectly receive or take any bills emitted in the scheme commonly called the Land Bank, and

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cautioned all those who dealt with them that such was their purpose. This document was signed by Peter Faneuil, Charles Apthorp, Hugh Hall, and one hundred and forty-five others. At a later date a similar agreement was published which had been circulated in Newport, and which had received seventy-four signatures. These movements were to some extent offset by the publication of similar agreements of an opposite nature and the publicity given these proceedings led to advertisements by dealers to the effect that Land Bank notes would or would not be received in trade.¹ Individuals whose names had been brought into notice in connection with the contest inserted notices in correction of rumors as to their opinions or purposes. The wits of the day invoked the aid of ridicule in fictitious notices, the humor of which was doubtless effective at that time.²

The thoughts of the opponents of the scheme began in the fall of 1740 to turn towards parliament for relief, and steps were taken to secure action in that behalf in England. The New England merchants and traders

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in London presented a petition to his Majesty in Council for redress. This petition was, on the twenty-seventh of October, referred to the Lords Commissioners for Trade and Plantations.¹ There still remained, however, as a resource in this country, the potent influence which the governor exercised over office-holders, and on the fifth of November there was issued the first of a series of proclamations to different classes of officeholders throughout the province. In this instance it was addressed “to all such persons as hold any commission under me,” and all such were warned against signing or giving any countenance or encouragement to the passing of Land Bank notes on pain of being removed from office. The next day a similar proclamation was specially addressed to the military officers of the province.

If Belcher thought that his threat of removal from office would dissuade those who held commissions under him from continuing their support of the Land Bank, he was mistaken. On the tenth of November, William Stoddard, a justice of the peace, transmitted his resignation of his trust on account of the proclamation of

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November 5. Robert Hale, a justice of the peace, resigned the same day. Samuel Adams and John Choate, justices of the peace; also sent in their resignations, in a joint letter, on the same day. The influence of these resignations may perhaps be traced in Belcher’s letters. November 13th he writes to Partridge, the province agent: “Never was so vile a scheme set on foot. Yet what is done about it will not be sufficient without an Act of Parliament.” Again, on the nineteenth, writing to the same correspondent, he says: “I believe nothing less than an Act of Parliament will put an end to it, the undertakers are so needy and violent in the pursuit of it.”

On the 5th of December, an instrument entitled the Manufactory Scheme was laid before the council. It had been offered by Robert Hale, one of the directors, for record in the office of the secretary. The board refused to permit this, alleging that the proposition to record it after they had publicly expressed their opinion of the pernicious tendency of the said scheme was a great indignity offered to the board. The same day, Samuel Adams, William Stoddard, Samuel Watts, Robert Hale, and John Choate—all of whom, except Watts, had presented their resignations as justices of the peace—were removed and dismissed from their said offices. On the ninth, George Leonard, a justice of the peace, and one of the justices of the Inferior Court of Common Pleas in the County of Bristol, was dismissed from office. On the nineteenth, Joseph Blanchard, a justice of the peace, was also dismissed from office; January 1, 1741, John Burleigh, a justice of the peace, and January 3, John Fisher, Elkanah Leonard,¹ and

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Ammi Ruhamah Wise, justices of the peace, were removed from office for receiving and passing the notes commonly called Land Bank and Manufactory Bills, and persisting therein.¹

Many of the military officers were also recalcitrant. Among other instances of this sort we find in a letter addressed to Colonel John Chandler, that nine officers who had taken and passed, and who continued to take and pass Land Bank bills, tendered their resignations on the twenty-ninth of December. The columns of the press contain abundant evidence of the discontent occasioned by the proclamation.²

Open letters were sent to the several registers of deeds,

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in December, calling upon them to make a return of the Land Bank mortgages. As a further means of influencing military officers, the colonels of regiments were instructed to inquire into the conduct of the officers subordinate to them. The justices of the general sessions of the peace were instructed to use their power both in court and as individuals, to prevent the circulation of the Land Bank bills. In granting licenses to retailers or common victuallers, they were to take this into consideration, and were to caution licensees against passing or receiving the aforesaid bills. A blank form of summons was prepared for use by the council in cases where they wished to bring before them persons accused of passing Land Bank bills.

The registers of deeds responded to the call of the council, and a complete list of all the subscribers to the Land Bank whose loans were secured by real estate was thus brought under their scrutiny. Information was also freely offered as to delinquencies on the part of individual officers, who were thereupon instructed by special letters to explain and desist.

The inquisitorial nature of these proceedings called forth from individuals against whom they were directed responses which differed in tone according to the character of the writers and their sympathy with the Land Bank, and which were perhaps in some instances governed by the importance of the offices held by them. Many were cringing and obsequious; a few were manly and independent; and there can be detected in some the contempt of the writers for the despotic and tyrannical methods of the council. Andrew Burley wrote:

As to the complaint exhibited against me for receiving and passing Manufactory Bills since his Excellency’s proclamation, I freely acknowledge I have done and am determined so to do at present.

Henry Lee, of Worcester, said:

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I am determined to do what I can to encourage it, and think that the privilege of an Englishman is my sufficient warrant therefor. . . . As I act to my conscience, I regard being punished any way for differing in my opinion from the Council, to be civil persecution, and to be deprived of my office until I be proved unfaithful in it, or have violated the laws of the land, I look on as an invasion of my native rights.

Lee, who was a justice of the Peace, was of course removed from office. Whatever our views as to the economic character of the Land Bank and Manufactory Scheme, we can but agree with him that, so long as there was no law against the experiment, it was his privilege as an Englishman to encourage it; nor was it anything short of civil persecution to punish him for holding a different opinion from the council. The power of the council under the charter to remove from office was disputed by contemporaneous writers; and Lee was not alone in his opinion that it was an invasion of his natural rights. Yet the steps of this kind taken by the council in the cases of individual office-holders were insignificant in their consequences when compared with an order issued on the 27th of January, 1740-41, in the following words:

Voted, That no person shall be admitted to appear and plead before this Board as an attorney and counsellor at law, on any pretence whatever, who shall pass, receive, or give encouragement to the bills called Land Bank or Manufactory Bills, but that notice he given hereof in the public prints.

To appreciate to-day the full force of this order, we must recur to the charter of William and Mary, where we find it established and ordained,—

That the Governor of our said Province or Territory for the time being with the Council of Assistants may do, execute, or perform all that is necessary for Probate of Wills and granting of administration for, touching, or concerning any interest or estate which any person or persons shall have within our said Province or Territory.

Attorneys who differed from the council on this point

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were therefore cut off by this order from all probate practice before the board.

Meanwhile the governor, at the close of the January session of the assembly, had in his address to the court acknowledged the zeal and steadiness of the council in their efforts to suppress the Land Bank, and had reproached the house for the countenance which it had given to this iniquitous contrivance, a considerable number of the members themselves being, as he was told, greatly interested in it. He alluded to measures taken here and at home for the suppression of the scheme, measures which he did not doubt would soon have the desired effect. In aid of these efforts, the council caused a letter to be prepared to the Lords Commissioners of Trade and Plantations, which on submission to the board was duly approved.

The combined efforts of the governor and council, the Boston merchants, and the individuals interested in securing legislation in England adverse to the Land Bank were so far fruitful that on the 27th of March, 1741, Francis Wilks, Agent, wrote:

A bill is just passed the House of Commons to extend the Act commonly called the Bubble Act, passed in 1720, to the plantations in America, after it had sundry alterations from what was first printed which I could not have a copy of, and time to consider it before it was sent to the Lords. I am satisfied it is the determined resolution of the Parliament to dissolve all companies in America who have put forth any notes or bills to pass in public, and to prevent any other from doing it hereafter.

On the 9th of April the bill referred to by Wilks had its third reading in the House of Lords. It still had certain formalities to go through before it would become a law, and some weeks would necessarily elapse before knowledge of its passage could reach America.¹ Pending

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its arrival, the province was destined to witness scenes which testified to the earnestness with which the inhabitants of some of the poorer towns were prepared to carry on the battle in behalf of the Land Bank bills. It must be remembered that in some of these towns it had been voted to receive these bills in payment of the town rates. The selection of town officers and the choice of representatives had been controlled in many instances by the opinions of the candidates upon the Land Bank scheme, and the character of the new house was to show that the land bankers were still in the ascendant.¹

At such a time as this, when the popular voice had distinctly expressed itself in favor of the Land Bank, the attempts of the governor and council to suppress the company led a few lawless spirits to counsel resistance. Of this the governor received warning through an affidavit, made May 2, by Samuel Bates of Weymouth, before Edward Hutchinson, to the effect that there was a report in that town of a confederacy in the country of about five thousand men, whose design it was to come to Boston to know the reason why there was not a currency for the Land Bank money. Bates further said

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that a paper had been passed about in Abington for that purpose, and that there were rumors of the storage of corn in Boston, for shipment for a market. The Governor, on the fourth of May, appointed John Quincy to make inquiry into the matter with privacy and caution, and if he should find that there was need of action to call upon Mr. Justice Lincoln for aid in suppressing this riotous and disorderly proceeding.

Apparently the investigation revealed the fact that there was some foundation for the information lodged by Bates. Affidavits were procured showing that there had been some attempts made to obtain the written engagement of a large number of persons in the towns of Hingham, Weymouth, Stoughton, Abington, Plymouth, and Bridgewater, for a simultaneous rising on the 19th of May. Notices had been posted at meeting-houses, vague in import, and indicating some secret understanding. Precisely what was intended is not clear, but from certain veiled threats it may be concluded that the conspirators wished to compel persons having corn, and especially the proprietors of a large amount supposed to be stored in Boston, to sell their corn for Land Bank bills. The evidence appears to have been sufficient to justify the council in voting that they had information of a combination to force the currency of the Land Bank bills, and to order, on the 14th of May, the issue of a warrant for the arrest of a number of persons who were alleged to

have been concerned in a design and combination with a number of evil-minded persons to come into the town of Boston in a tumultuous manner tending to the disturbance and disquiet of the government and affright and terror of his Majesty’s good subjects.

On the 11th of May, 1741, the governor wrote to Thomas Hutchinson, concerning these events, saying: “I assure you the concerned openly declare they defye

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any Act of Parliament to be able to do it. They are grown so brassy and hardy as to be now coming in a body to raise a rebellion, and the day set for this coming to this town is at the election (27th instant), and the treasurer, I am told is in the bottom of the design, and I doubt it not. I have this day sent the Sheriffe and his Officers to apprehend some of the heads of the conspirators.”¹

The premature disclosure of the attempt and the prompt measures for its suppression prevented any outbreak. The only significance of the conspiracy lies in its testimony to the widespread influence of the Land Bank.

One explanation that might be given for the uprising of these people would be the waning popularity of the bills. They had been distributed in the outlying towns, where they found a ready local circulation, but with time there must have come a realizing sense that the circulation was after all limited, and that the combination of the Boston capitalists who were opposed to the bills was powerful. At any rate we have evidence that about this time the managers of the Land Bank put forth new efforts to secure the co-operation of the subscribers.

The date of the first lot of mortgages taken by the Land Bank was September 9, 1740. Within six months of that time there is evidence that the bills did not remain in the hands of the public to their satisfaction. This is to be found in the printed form of a supplemental agreement which was prepared for execution on the part of subscribers who had mortgaged lands to the company. This instrument after reciting the leading features of the mortgage goes on to say that the mortgagor covenants that he “will annually pay one half

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at least of each of the annual payments in those indentures mentioned, of five in the hundred of the principal sum by him received, with three per cent. interest for the principal enjoyed, in the manufactures in the said indenture mentioned.

“Also that it shall be lawful for the Directors of the said Company at their discretion from time to time to let out such bills as shall be in their Treasury, on good security, to be repaid both principal and interest in the aforesaid manufactures only.

“And lastly, that it shall be lawful for the Directors of said Company, at their discretion, to continue in the Treasury and not let out any of the bills that shall happen to be in the Treasury, at any time in the two last of those twenty years mentioned in said Indentures, but to keep them there till the expiration of said last two years.”¹

The only copy of this interesting document which has yet been disclosed was in the possession of the late William G. Weld who communicated it to the Colonial Society of Massachusetts, at their February meeting in 1895. This agreement was executed by Joseph Weld, a subscriber to the Land Bank, on the 19th of March, 1740-41, as a supplement to the mortgage which he had executed September 9, 1740. The inference is inevitable that the Company was then realizing some difficulty in keeping its bills afloat, and if that be accepted it can hardly be doubted that the Land Bank could not long have been maintained even if the government had not undertaken to suppress it.

It is a curious fact that simultaneously with this attempt on the part of the Land Bank to keep its bills

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afloat, and the riotous effort which has been described to enforce by violence their circulation, several schemes were under consideration in different parts of the province for the organization of local banks of a similar character. From Scituate a gentleman wrote in April:

“A number of us in this and the neighboring towns are designing the same thing and propose the same sum, [£50,000], and as some wealthy men encourage our proceeding, by promising to be concerned, I doubt not it will be completed in a month’s time.”

About the same time it was rumored that a bank was to be formed in Middlesex County, which was expected to profit by the mistakes of the Land Bank. In Essex County, a bank was organized and a petition in its behalf was presented to the General Court by Edward Eveleth, Ebenezer Stevens and John Brown, in behalf of themselves and partners. April 2, 1741, the Council voted to refer the petition to a joint committee, but the house refused to concur in the reference. This Essex County bank actually prepared and put in circulation notes of small denominations.¹ They were dated at

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Ipswich, May 1, 1741, and were payable to the order of James Eveleth, one third at the end of every fifth year, in produce or manufactures. “Will it not be for the interest of all the Counties to follow this laudable example?” said a querist; “and if all these notes obtain circulation who can complain for want of paper money?”¹

On the 27th of May, immediately following the issue of the warrant for the arrest of the conspirators, a new assembly met, and Samuel Watts, a director of the land bank and one of the justices of the peace whom the council had dismissed from office, was elected speaker of the house. The governor disapproved this choice, whereupon the house proceeded to elect William Fairfield, an abettor of the scheme, and this election met with approval.

The council and the house then proceeded to the choice of councillors. The names of thirteen of the newly elected councillors were rejected by the governor on the ground that they were directly interested in or were abettors of the Land Bank. The evidence which these elections furnished the governor, being conclusive as to the temper of the house upon the important question in which he took so much interest, he dissolved the house the next day for that reason, and writs for a new election were issued, returnable July 8.

On that day the new house met, and proceeded to organize by the election of John Choate as speaker. Choate, it will be remembered, headed the Ipswich petition in favor of the Land Bank which was presented in 1740, and had been dismissed by the council from his office of justice of the peace after he had tendered his resignation. It is not probable that there could have

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been any expectation on the part of the representatives that this choice would meet with Belcher’s approval. It is almost certain that the bit of bravado in which they indulged by electing Choate met with the fate which was anticipated when the governor promptly refused his approval, and that the act was taken merely to show him that there had been no change in popular opinion. Choate having been rejected, the house then chose John Hobson, Esq., speaker, a friend of the Land Bank, but not a subscriber. On the thirty-first of July, the General Court proceeded under the general powers in the charter to the election of civil officers, and amongst others, chose Samuel Watts and Robert Hale to be two of the collectors of excise. Both were directors in the Land Bank. The governor had two months before refused his approval of the choice by the house of Watts as speaker. Hale was the man who had offered to file the articles of association of the Land Bank in the office of the secretary of the province, which offer the council had denominated a great indignity to the Board. The records do not disclose when the act passed by parliament for the purpose of suppressing the Land Bank reached this province; but it is quite certain that this took place before the events which we are now considering.¹ Up to this time no steps had been taken by the directors of the Land Bank which indicated a purpose

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on their part to recognize the act of parliament.¹ Nevertheless the governor submitted to the house, and distasteful as the step must have been, approved the choice of these two men as collectors of excise.

It is essential that we should pause at this stage of the narrative to consider the nature of the act which had been passed by parliament, and the condition in which the projectors of the Land Bank and the Silver Scheme found themselves under the operation of that act.

The act of the 6th of George I., chapter 18, spoken of by Wilks, the province agent, as the “Bubble Act,” was introduced in parliament during the excitement connected with the celebrated South Sea Company. It had according to its terms a twofold purpose: first, the creation of two corporations for the transaction of certain classes of insurance; and second, the creation of a monopoly of this business for these companies and (simultaneously, it would seem) a monopoly of the stock market for existing corporations. The first purpose was accomplished in the ordinary way; the second, by enacting that the transacting of business by any joint-stock company having transferable shares, or the raising of any such stock, or the taking of subscriptions therefor, or transferring shares therein, or doing anything in furtherance of any such undertaking without special authority by statute, would be unlawful after June 24, 1720. All transactions by any such company were declared to be void, and any business done by it would be

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a public nuisance, for which the offenders were to be punished according to the nuisance act. Such offenders would further incur the penalties of premunire, and were liable for treble damages to any merchant suffering harm in his trade through them.

The statute, the passage of which in the House of Commons was reported by Wilks, was the 14th George II., chapter 37, and was entitled “An act for restraining and preventing several unwarrantable schemes and undertakings in his Majesty’s Colonies and Plantations in America.” It began by reciting in the preamble the passage of the 6th George I., chapter 18, and then proceeded to describe the Land Bank at length, with a brief allusion to other schemes.

The assertions embodied in this preamble are to the effect that,—

. . . persons have presumed to publish in America a scheme for supplying a pretended want of a medium in trade by setting up a bank on land security, the stock of such bank to be raised by public subscriptions for large ‘sums of money, whereof small sums were from time to time to be paid in by the particular subscribers, and to be managed by Directors, Treasurer, and other officers, and dividends to be made as therein mentioned; and the said company of subscribers were to promise to receive the bills which they should issue, for and as so much lawful money as should be therein respectively mentioned in all payments, trade and business; and after the expiration of twenty years to pay the possessor the value thereof in manufactures.

It then goes on to say that sundry other schemes, societies, partnerships, or companies have been set on foot in America for the raising of public stocks or banks, and unlawfully issuing large quantities of notes or bills, contrary to the true intent and meaning of the said act. Following this description of the Land Bank and reference to the Silver Scheme comes a statement to the effect that doubts had arisen whether the Act of 6th George I., chapter 18, could be executed in America,

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since all proceedings under it were appointed to be heard and determined either at Westminster, Edinburgh, or Dublin; so that the said act in its original shape was powerless to suppress violations of its terms which might occur in America. For the purpose of removing these doubts it was enacted that the said act did, does, and shall extend to the colonies in America. All things prohibited in the 6th George I., chapter 18, and all the undertakings, attempts, etc., before mentioned were declared to be illegal and void. All offenders against either of the two acts were declared to be liable to the penalties of the Public Nuisance Act, and they further incurred the pains and penalties of the Statute of Provision and Premunire. Any person who might suffer injury through any of the proceedings declared to be illegal in the act was empowered to bring suit against the company causing the injury, or against any subscriber to the same, in any court in any of his Majesty’s dominions, colonies or plantations in America, and judgment, if recovered, should be given for treble damages. Any possessor of the notes issued by these companies was authorized to bring action against the company, or against any person who within six years had been or who might thereafter be connected with the undertaking. Every such person was declared to be personally liable for the face of the notes and interest from date of issue, and the possessor was entitled to immediate judgment, even if the note by its terms was not yet due. The penalty of treble damages could be avoided by those interested in these schemes if they should pay all demands made upon them under this act, and should abandon the schemes entirely on or before September 29, 1741.

The passage of this act sounded the knell of the Land

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Bank. It is true that the company was not a joint stock company, nor did it have transferable interests therefore it would be difficult to say how it came within the scope of the Bubble Act. The assertion made in the preamble of the act of 1741 to the effect that the stock of the bank had been raised “by public subscriptions for large sums of money, whereof small sums were from time to time to be paid in” was absolutely false. The annual instalments which the subscribers agreed to pay were to be applied in liquidation of loans which they were to have from the company, and were not payments on account of stock subscriptions. The pretence that the Bubble Act originally applied to the colonies was more than absurd, it was wicked; and the language of the preamble of the act of 1741 practically recognizes that fact. It was perfidious on the part of those who drafted that preamble to so describe the Land Bank as to cause members of parliament to believe that it came within the terms of the Bubble Act. Not only was there no reason why the projectors of the Land Bank should, at the time when they organized, have suspected that they were violating any of the statutes of the realm, but there was then on record a report of the Board of Trade made to a committee of the Privy Council in which the opinion of the Board was given that schemes of this sort were permissible in the colonies. More than that, the attorney-general himself had filed an opinion which might have been quoted to show that what was then being done had been pronounced to be legal by the highest counsel in the realm. These two documents are of enough importance in this connection to call for a statement concerning their origin and contents, of sufficient detail to show their application.

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In April, 1735, the assembly of the province of Massachusetts Bay passed an act restraining the circulation of the New Hampshire Merchants’ Notes emitted the preceding year. An attempt was made to secure the disallowance, by the Privy Council, of this act, and the matter was referred to a committee of the Privy Council which called upon the Board of Trade for information; whereupon the Board of Trade, on March 17, 1736, reported to the committee that the New Hampshire bills in question were issued to supply a want of money, by private men of good estate who had entered into an association for that purpose, and that the bills had no compulsory circulation, being left to stand or fall according to the credit of the signers.¹ Under these circumstances the conclusion of the Board of Trade was, “It would therefore in our opinion be a great hardship to set a public mark of discredit upon the persons engaged in this undertaking.”

On the tenth of November, 1735, Willes, the attorney-general in a communication to the Right Honorable the Lords Commissioners for Trade and Plantations, used the following language:²

“In obedience to your Lordships’ commands signified by Mr. Popple, I have considered the scheme which you was pleased to send me for erecting a sort of Bank at Boston in the Massachusetts Bay, and can see no objection thereto in point of law.”³

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The decision of the Board of Trade that the action of the New Hampshire merchants was permissible, and the opinion of the attorney-general that there was no legal objection to the scheme for a bank in Boston, justify the statement that the contracts and undertakings of the Land Bank company were at the time of their execution legal. If it be urged that there might have been some point connected with the organization of the Land Bank itself which might prevent it from accepting the benefit of these precedents, the answer must be that not even that defence from the charge of harshness and injustice in this legislation can be allowed to prevail. The “Act for restraining and preventing several unwarrantable schemes and undertakings in his Majesty’s colonies and plantations in America,” was passed because the statement was made in a petition to the House of Commons, that the attorney-general and solicitor-general had delivered an opinion that the act of 6th of George I, chapter 18, did not extend to the colonies and that Colman and his associates could not be reached except through legislation. February 11, 1740-41, the petition of several merchants and others, interested in the affairs of the province was read in the House of Commons. The petitioners set forth the efforts which had been made by his Majesty and the House of Commons to check the emission of bills of public credit

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in the colonies. They asserted that John Colman and a very great number of private persons had without authority assumed a power to erect themselves into a company or society under the name of the Land Bank, and had chosen officers to carry on the same under large yearly salaries, avowedly for the purpose of issuing paper bills or notes to a very large amount, to be redeemable twenty years hence, or at some other remote distance of time. These notes had actually been issued in spite of the opposition of the most considerable inhabitants and in disregard of the governor’s proclamation and the paper money of the province had been thereby greatly increased. Petitions had been presented to his Majesty in council, for relief from Colman’s scheme and the Lords of the Committee of his Majesty’s most honorable Privy Council had referred them to the Lord’s Commissioners for Trade and Plantations, who had concurred that the scheme was of a dangerous tendency and fit to be suppressed as speedily and effectually as possible. Every order possible for them to give had been given, but although the said Colman’s scheme would here in Great Britain have been an high offence and attended with heavy punishments, as being within the act of the sixth year of his late Majesty King George the First, chapter the 18th, sections 18, 19, 20, yet his Majesty’s attorney- and solicitor-general, to whom the method for prosecuting the persons concerned in the said scheme was in the course of said petition referred, had reported their opinion that that act did not extend to America, and that nothing could effectually be done to put a stop thereto, but by the interposition of a positive law. The petitioners, therefore, prayed that the said act of parliament of the sixth year of his late Majesty George the First, might be extended to the British

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Plantations in America, by express words, and with such penalties, forfeitures and disabilities, on all persons offending against the same, or with such other relief in the premises as to the House should seem proper.¹

Thus through the extension to the colonies of an act which by its original terms could not have been there enforced, and which it was admitted did not apply to the Land Bank, a body of law-abiding citizens, who had engaged in a scheme which they believed would alleviate a great public need, were by legislation made subject to the statute of Provision and Premunire, the penalties of which were forfeiture of estate and imprisonment. The act under which this was accomplished not only impaired the obligation of existing contracts; it was not only retroactive, it was ex post facto. The affairs of the company were by its passage thrown into chaotic confusion. Its securities were annihilated, and the persons who had participated in it were individually at the mercy of evil disposed persons who might punish their enemies by collecting quantities of Land Bank bills making demand for payment and then insisting upon the application of the penalties of the statute.

The attitude of the house of representatives at the opening of the July session indicates very clearly that the Land Bank party had not at that time made up their minds to submit. Indeed it may be doubted if they would quietly have done so if Belcher had remained at the head of the government.

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