Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects, published during the American War, and continued up to the.
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- PREFACE Of the Author.
- Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects
The Continental debt is already a heavy one, and there is no way of sinking it but by paying it while we can; it is still increasing fast; and without a speedy tax, and a very sufficient one, it will grow upon us beyond any possibility of payment. An expense account ought always to be paid up as soon as it becomes due; these are accumulating sums, and it is dangerous to neglect them.
I have heard some people say, it is no matter for the present payment of the Continental debt, we are a country of rapid increase, and what is contracted by three millions of people, will soon be paid by six. But how unfatherly and ungenerous is it to load posterity with an immense debt, which we have an advantage in sinking a good part of ourselves; besides, it will be a great discouragement to foreign emigrants to settle in this country, to be told that the country is loaded with an immense debt, and their first title to an enfranchisement will be by beginning to pay it.
We are engaged in a cause which, in all annals of time, has ever been deemed most honorable and glorious, and most characteristic of noble and generous minds, viz. As things now stand, the most hardened, impudent Tory does not pretend that if we fail of supporting our cause, we have any other chance but that of absolute submission and pardon, and even hat pardon, doubtless, with numerous exceptions.
Who can bear the thought of absolute submission and pardon? Who can think, without distraction, of coming under the domination of tories, and suing to them for favors and intercessions? This dreadful apprehension introduces, with great force on my mind, another reason why we ought to sink, by a sufficient tax, as much as we can of the continental debt, viz.
That without this it is not possible to continue the war, and avoid absolute submission. I conceive the value of the currency of any state has a limit, a ne plus ultra, beyond which it cannot go, and if the nominal sum is extended beyond that limit, the value will not follow. No human wisdom, or authority, can be able to stretch the nominal currency beyond such real value. The consequence of any attempt to extend such nominal addition, must depreciate the value of the whole, till it is reduced within said limit.
I will explain my meaning thus: It follows from this, that any attempt to continue the war, by increasing the currency beyond the abovesaid limit, is vain, and must fail of the effect intended, and ruin all those who possess the currency already emitted. Whether the currency already emitted rises to the said limit, is a question of fact that may admit some doubt, but that it is not greatly within it, I think can be no doubt with people well acquainted with the nature and circumstances of this great subject; and be that as it may, I think every inconvenience arising from it is easily remedied by a sufficient tax.
I do not apprehend we have yet suffered by a depreciation Edition: But should we admit that we are on the verge of a depreciation, or that our currency hath suffered some little already in its value, two consequences will follow, which deserve great and immediate consideration. What contributes not a little to this facility is, that it may be done by general consent, without public uneasiness and disturbance, for a depreciation of currency can be wished for by nobody, but those who are deeply in debt, the weight or numbers of whom I have reason to believe is not great at present in these States; it is the mighty interest of all the rest of the inhabitants to prevent a depreciation, and I conceive every man of estate who has cash in hand, or due to him, would be willing to contribute his share to the lessening our currency, and so preserving its credit.
Yea, would eagerly choose this, rather than risk his own loss by a depreciation of the cash he has in hand, and in debts due. I have not the vanity to think I can exhaust the subject, but I have said so much on it, as I hope will set abler heads and pens on a thorough disquisition of it, for I think all will agree, that the subject is a very important one, and deserves most immediate and most serious attention. FREEDOM of trade, or unrestrained liberty of the subject to hold or dispose of his property as he pleases, is absolutely necessary to the prosperity of every community, and to the happiness of all individuals who compose it: Every industrious man will procure all the goods he can for sale; this is the way to get most money; and gain is the soul of industry, the hope of reward sweetens labor, and the most righteous have respect to the recompence of reward.
Every man will make his goods for market of the best quality he can, because they will bring more money and quicker sale than goods of mean quality. Every man will endeavour to carry to market the most scarce goods because there is the greatest demand and best price for them. All experience shews, that the most effectual way to turn a scarcity into a plenty, is to raise the price of the articles wanted: Every man will go to market and return in good humor and full satisfaction, even though he may be disappointed of the high price he expected, because he has had the full chance of the market, and can blame nobody; and should he indulge fretting on the occasion, he would be the more ridiculed, and less pitied by his neighbours: In times of danger, distress, and difficulty, every man will use strong endeavours to get his goods to market, in proportion to the necessity and great demand for them; because they will then bring the best price, and every man is fond of embracing golden opportunities and favorable chances.
This naturally preserves the stock on hand from needless profusion and waste, and converts it to the best and most prudent use for the benefit of the community, and naturally tends to ward off high distress or total want, till the high price and great demand, by their natural operation, will bring further supplies to market. In times of scarcity, every man will have strong inducements to bring all he can spare to market, because it will then bring the highest price he can ever expect, and consequently the community will have the benefit of all that exists among them, in a much surer manner than any degree of force could extort it, and all to the entire satisfaction of buyer and seller; by which the numberless feuds, riots, resentments, and mischiefs which usually attend forced markets, would be entirely avoided; and the market be supplied with all there is to be had.
For no principle can draw into market, all the supplies which are attainable, Edition: In times of scarcity, when all the goods that are to be had, are exposed to sale, it is not possible the prices should exceed the degree of scarcity, for when the prices rise very high, they will soon determine whether the scarcity is real or not; for if not real the high price will bring such quantity to market as will soon lower the price; but if real, it is necessary for the above reasons, that the prices should continue high till supplies are produced.
Every man will have as little to do with the market, and bring as few goods there as he can; for the less goods he has for sale, the less mortification and loss he sustains. Every man will make his goods for market of a bad quality, or at least not the best; for they must all go at the limited price, and he therefore gets nothing for any special care or skill he may bestow on his goods to meliorate or perfect their quality: Every man is induced to keep such goods as are most scarce from market; for if he carries them there, he can get no more than the limited price, and stands a chance of a bad hustling in the crowd into the bargain.
Whereas, if he can keep his goods from market, the scarcity will soon force a great price, and he has a chance of great profits. If prices are limited, and the owner is compelled to sell at the prices limited, he considers himself injured by every sale he makes for less than he supposes he could have obtained in a free market; that his liberty is taken from him, and he can no longer call his property his own.
These are hard feelings to one born to freedom almost perfect, and raised to the expectations of enjoying it in future time, in its highest perfection. These feelings fill the mind with anxiety and resentment, and when instances of this become numerous among the merchants, tradesmen, and farmers, small accidents may blow up the concealed coal, and most fatal effects may easily be supposed to ensue.
This is a danger of no small magnitude, for the real strength and establishment of every government consists in the hearty union and satisfaction of the individuals that compose it. In times of danger, distress, and difficulty, no man will be induced to any great efforts to supply the market; for an additional danger makes an additional expense upon the goods; but he must take the limited price and no more; he will not consequently combat or risk an increase of danger and expense without any chance of compensation. When things grow scarce, every man will endeavour to lay in great stores if he can do it without an increase of price, and will not think it necessary to retrench his expenses, whilst he thinks his stock will last through the scarcity; the consequence of which is, that all the scarce articles at market will be scrambled up by a few hands, who will have no inducement to parsimony in the expenditure of them, by which the scarcity and distress are increased, and many must be wholly destitute; and as far as this respects the necessaries of life, the consequences must be dreadful.
Add to the above, that in times of scarcity and great demand, every man who can possibly conceal his goods will be tempted to do it, in expectation that the great demand will soon break through the unnatural restraint of the limitation, and he shall be able to obtain a great profit in the future sale; and in spite of all the vigilance and force that can be used, many will be able to do this; which I Edition: In addition to all these, the difficulties which must attend the execution of such an act of limitation, may perhaps furnish not the least objection to it.
Must the owner be obliged to sell to every person who applies to purchase, without knowing whether he wants for use or sale? Must he forego previous engagements of his goods in favor of the present demandant? Must he be obliged to sell to every knave and litigious fellow, with whom he would not chuse to be at all concerned in any dealing?
Must he have his house searched from top to bottom for concealments? Even the lodging-rooms of his wife and daughters!
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I must beg to be excused from any further description of these horrors, which too many know are not mere creatures of the imagination. It is not possible to form a limitation of prices which shall be just, and therefore the whole scheme necessarily implies injustice. The principles on which the just prices of goods are fixed, are in a constant state of fluctuation, and therefore the prices must rise and fall with their causes: And as it is much safer to bind a man in health than a man in convulsions, so it will be safer to limit trade in peaceable than convulsed times.
It is not more absurd to limit the precise height to which a ship shall be fixed at a wharf, where the tide is constantly ebbing and flowing. A great force will be requisite to keep the ship from rising or falling with the tide, and a mighty little use to pay for the trouble; besides the probability of very essential damage which the ship must incur by the application of the necessary force: Another mischievous consequence of this fatal measure, and not the least, I conceive to be its unhappy tendency to corrupt the morals and integrity of the people.
To escape the ruinous consequences of loosing in their sales, they are in a manner compelled, but to say the least, they have very strong temptation, either by downright lying, or using little arts, shifts, and cheats, to avoid the sale of their goods to disadvantage. This naturally brings them into the habit, and gives them a facility of inventing and practising low methods of shamming Abraham, which they never would otherwise have thought of, and which it is infinitely detrimental to the public, they ever should learn; instances of this sort might be enumerated without end.
But it is needless to give examples, it were better they and their causes should be removed, than that they should be repeated. But after all, it is said that a limitation of prices is necessary to appreciate the currency, and supply the army. Two very great objects indeed: I will attend to both. I do not conceive that a limitation of prices can possibly appreciate the currency or prevent a further depreciation.
The value of money is nothing in itself, it is a mere relation, it is the proportion between the medium of trade and the objects of trade; these two will always be in balance: Therefore, if the medium of trade be increased, whilst the objects of trade continue the same, the money must depreciate; if the medium of trade increases, and the objects of trade decrease, the proportion will alter fast, and the depreciation will increase in a double proportion, which I take to be the case at present. Money will therefore increase or decrease its value according to the increase or decrease of its quantity, and the increase or decrease of the quantity of goods, or the objects of trade.
This principle is grounded on the nature of the thing, and can never be altered, and consequently any attempt to oppose it must be equally vain, as opposing any other law of nature whatever. It follows from this, that nothing can ever appreciate the money, but lessening its quantity, or increasing the quantity of goods or objects of trade, and all attempts to Edition: It follows, that the price that any article of trade will bring in a free, open market, is the only measure of the value of that article at that time, and if this is warped from the truth, by any artifices of the merchant, or force of power, it cannot hold; but the error will soon discover itself, and the correction of it will be compelled by the irresistible force of natural principles, i.
Both these may be done for a short time, but neither can last long. It follows that any limitation of prices, however strongly enforced, if below the rates required by this great natural proportion, is but temporary injustice, cannot be of long continuance, will tend daily to lessen the quantity of goods in market, and so will increase the mischief it was designed to prevent, and bring with it a large train of evils besides, which will require much time and wisdom to remedy, and many that will be utterly remediless, examples of which are obvious.
Money is made only for a medium of trade, and must be kept in circulation and use, or it perishes; for to stop the circulation of money and to kill it is the same thing, stop its course and it dies, give it circulation again and it revives, or comes to life again; therefore, the price of goods for sale, or objects of trade i. Every limitation of prices below their due proportion, cheeks the circulation of money, than which nothing can be more dangerous, when money is over plenty; this has been the constant effect of every limitation of prices which has been tried in America.
Business immediately stagnates, goods cannot be had, people cannot purchase with their money the necessaries they want, they begin of course to think that their money is good for nothing, and refuse to take any more of it, and grow willing to part with what they have on hand at a depreciated value; so that the certain operation of a limitation of prices is a further depreciation of the money instead of the contrary.
Instead of this, it is of the last necessity in a plenty of money, that a free circulation be kept up, people will readily and even greedily take any money which they can readily pass again. Much in this case depends on opinion, which is soon formed by people in general, when they find they cannot buy necessaries with their money.
Specious reasonings, warm harrangues, declarations of Congress, or even the force of power operate little against this; it is a glaring intuitive proof of the badness of money, when it will not purchase necessaries, and as glaring and strong a proof that it is good, when it will buy any thing in market.
Hence appears the necessity of keeping up a high and brisk circulation of money, and the folly and danger of limitations, or any other measures which prevent a circulation and obstruct trade. These are arguments grounded on plain fact, they have their foundation in the laws of nature, and no artifice or force of man can prevent, elude, or avoid their effects; their operation is uncontrolable, and therefore I conceive all opposition to them is the height of Edition: That any goods at market might be bought for continental money, the Speculators especially as they are called were fond of receiving it, and no person could be at any loss for any thing at market, if he had that money to purchase the goods he needed.
That imported goods on an average which were the only articles Speculators dealt in were 50 per cent. In July 25, , price current of imported goods, at Philadelphia, was as follows, West-India rum 3l. Price current 25th May last was, rum 7l. These computations are made in the face of the world, and grounded on facts which any body may disprove if they are not true, or correct the reasoning if it is not just.
Now I have only to add; let any body who is disposed to see, open their eyes, and see who it is that has raised our prices, or which is the same thing, depreciated our money. Is it the Speculators who deal only in imported articles? Or the farmers, among whom no kind of dangerous speculation does or can exist? Perhaps it may be replied here, that the articles of country produce are extremely scarce, which raises their price beyond the due proportion of other things: You must admit too, that the plenty and scarcity of money will determine the value of that also.
Why then will any one pretend to limit either, against the operation of this great principle? It is easy, in addition to all this, to prove that the price of imported articles in general does not exceed the value of them, if computed on the expense of acquirement: Nor do I think that the scheme of loans can give establishment to the currency, or prevent its depreciation. All loans increase the public debt, and the immensity of the sum is one cause of the depreciation, as it induces people to think it never will be paid, or the payment will necessarily be delayed to such a distant period, as in point of use to the present possessor is nearly equal to total failure.
If the credit of the Loan-Office is well supported as it must be to give it any good effect the Loan-Office certificates themselves will pass in payment, and so become an addition to the currency which they are designed to lessen. If foreign loans are negotiated, and bills sold here, drawn on the loaned bank in Europe, those very bills will become a currency here, and so add to the mischief. The discount on all European bills, is not less than 50 per cent.
If hard money, borrowed in Europe, should be imported and sold here, the insurance, which is more than 50 per cent. After all these objections to the various methods that have been proposed, it may be expected that I should propose some method that will be practicable and effectual to fix the value of our currency; and this I cannot think very difficult, either in theory or practice, though I have not one new thought to offer the public on the subject.
We are now on the brink of ruin, and the worst disgrace, in danger of loss of liberty hitherto nobly asserted, and subjection to shameful slavery to enemies most cruel and insulting in themselves, and all that heightened in them to madness by the determined opposition we have given to their scheme of tyranny over us. All this danger arises not from our poverty or want, for we have officers and soldiers enough, stores Edition: In matters of difficulty and importance, all wise counsellors compare well the end and the means, on which two very weighty matters always present themselves.
Whether the means are sufficient to secure and effect the end proposed. Whether the end is worth the means necessary to effect it. When these two points are settled, there remains no more room for consultation or debate, the rest is all vigorous action, strenuous exertion to put the means into such effectual execution as to obtain the end. This is a wise method of planning, which no man will have any objection to. We will then adopt it in the consideration of the weighty subject now in view.
The end is fixing our currency and preventing any future depreciation, and so putting an effectual end to all the cheats, delusions, disappointments, and ruinous losses, which every one who has been concerned in it hath hitherto felt, and giving every one a sure and well grounded confidence in it in future.
This is an end, an object of such vast, such weighty consequence, and so confessed and acknowledged by all, that no arguments or illustrations are necessary to be added here. The only means I conceive possible to obtain this end, are to call in such sums annually by taxes, as shall be equal to the annual expenditures; this will prevent the increase of the money, will make a great demand for it through the Thirteen United States, will give it a brisk circulation, will exhibit a most convincing proof that it may be all called in and redeemed, and that it is the real design of Congress to do this.
Let people see the money collecting through the Continent, and the sources of revenue actually opened, and the whole matter in train, there can remain no doubt but the whole of the Continental money will be redeemed, and every one will venture to trust the credit of it; and in this confidence it will be soon sought after and grasped with greediness, and hugged and hoarded with avidity.
This will put life into all our public measures, civil and military, will give our government the command of the fullest supplies of men, money, and stores that are in the country, and that can be made or procured, will give spirit to our people, will animate industry, and will be a total cure of the mischiefs we now feel from the low credit of our currency.
Here is an object highly worthy of our attention, as every one will admit without hesitation: I conceive a vein of conversation of this sort not at all founded in truth, for several reasons. It is rare that the people refuse burdens or even grumble under them, when, by general conviction, they are necessary for the public good. And I dare say, that the absolute necessity of fixing and establishing our currency is become obvious to almost every individual on this Continent, and the real necessity of taxes for this purpose clearly seen by all.
As far as my acquaintance with people of middling rank extends, they have been generally in favor of taxing for three years past; they say this money must be paid first or last, and we can better pay it now whilst we have little use for our money, whilst it is plenty and easy to be got, than in future time, when we can perhaps not so well spare it, and when the getting it will be much more difficult.
The enormity of the sum required for this purpose consists much more in sound than substance; a quarterly tax of one bushel of wheat, or two bushels of Indian corn per head, on all persons in the Thirteen States, would be amply sufficient. The number of souls are computed at 3,,, in all the States, and of course this would produce 12,, bushels of wheat, which at 20 dollars per bushel the lowest present price will be ,, millions of dollars, a sum greatly exceeding any annual exigence of these States; each State might apportion this as they pleased, so as to relieve the poor, and increase the share of the rich, but the middling farmer, who has ten in family, would have 40 bushels of wheat or its value, to pay in a year.
I admit this would be a high tax; but is there any thing impossible or ruinous in this. In the best of times, it would have been 40 dollars or 15l.
This is a durable, a finished remedy; all others that have been proposed are at best but temporary, and should they succeed, would involve us and our posterity in great difficulties, involve us in a vast debt, which would lie so heavy on the country as would greatly check our future prosperity, and discourage foreigners from coming to settle with us. For nobody likes to move into a country where taxes are very high and burdensome. I submit it to every man, whether it will not be much easier for us by a spirited exertion, for a short time, to collect large sums of our present currency, and pay our expenses as fast as they arise, than if a foreign loan could be obtained, to pay a vast debt of hard money with interest to foreigners in future time, when every dollar we pay, must go out of the country never to return again.
Every man ought to consider that his proportion of the public debt is as much a debt fastened on his estate, and becomes to all intents and purposes as much a burden and charge on it, as any of his private debts of the same amount, and must as surely one day be paid; is it not better then to pay it now than to have it lie a burden on him, to be paid in in future time, which may be called for when he may not be in condition to pay it so easy as now.
Every prudent man does this with respect to his private debts, and what reason can be given why the same prudence should not extend to the debt which he owes the public? Can any reason be assigned why the States should not imitate the prudence Edition: To facilitate this, I humbly propose one thing more, viz. To take off every restraint and limitation from our commerce.
Let trade be as free as air. Let every man make the most of his goods and in his own way, and then he will be satisfied. Let every man taste and enjoy the sweets of that liberty of person and property, which was highly expected under an independent government. It is a sad omen to find among the first effects of independence, greater restraints and abridgments of natural liberty, than ever we felt under the government we have lately renounced and shaken off. Let the laws point out the duty, and be the bulwark of security of every man. Nothing gives the people such high satisfaction with any system of government they live under, as the actual enjoyment of the inestimable blessings of perfect liberty and full fecurity under it; this will most effectually induce them cheerfully to support it.
No burdens will be thought heavy, or difficulties discouraging, which the exigencies of government may require, when every man finds his own happiness involved in the establishment of the State. If, on the freedom of trade, any articles should rise in their price, the mischief facilitates this remedy, it makes the payment of the taxes more easy and tolerable. Whereas, if the taxes were collected during the limitation of the market and stagnation of business, the payment would be extremely difficult, and the murmurs high and reasonable; it would be almost like the Egyptians demanding brick without straw.
But when the circulation of money is brisk, and the price and demand for goods high, every one knows that money may be raised and taxes may be paid much more easily than in dull times of stagnated business. And this ought to be noticed on another account. How is the army to be supplied? The method I propose, if it can be adopted, will undoubtedly fix the currency and create a great demand for money, and a quick circulation of it; this will of course open all the stores in the State to any purchasers that may offer, and a little prudence used in purchasing, may supply the army to the full, at reasonable prices.
Indeed I am rather afraid of overdoing the thing in this way, so far as to cause an appreciation of the money, which I do not think ought ever to be done, for I see no reason why the States should be taxed to raise the money in my pocket to twenty times the current value of it; but this is a great argument, and may be the subject of future discussion. I must add here, that this method will not only fix our currency and support our army, but will afford another advantage of no small moment: I will just note here, that however intolerable the means I propose may appear at first sight, I cannot think them impracticable; the tax I propose is not more than two thirds of the annual taxes in Great Britain; the whole revenue raised every year there is about 12,,l.
This, if it can be done, will undoubtedly save us, restore our finances thoroughly, fix our currency, and supply our army; without this, I do not see how these great objects can be effected. If any other method can be devised, it is more than all the united wisdom of America has yet been able to find and accomplish, nor do I conceive we have any long time to hesitate; something speedy and decisive must avert our fate.
Thus I have offered my best thoughts freely to the public, and with most upright intentions; I hope they may be received with candour. The facts and reasonings are all open to the examination of every one; if they do not convince, I hope at least they may induce some abler person to sketch out something more perfect and adequate to the great subject.
It follows hence, that the value of the current money in any country, cannot be increased by any additions made to its quantity. I do not pretend that these propositions are absolutely universal—I know that money may be so lessened in its quantity, as to be inadequate to the purposes of trade; in which case, an addition to its quantity would doubtless add to its value and use.
It is equally true, that the quantity of money may be increased to such an immensity of excess, that the very bulk or enormous mass would render it inconvenient for a medium of trade. I do not mean, nor does my argument require, that my propositions should be applied Edition: It follows from the above, that our national debt of Continental money has not increased in value for three years past, notwithstanding the vast increase of the bulk or nominal sum; and this proposition is proved from fact which is the best possible proof of any principle advanced in theory for it is evident that it would not require one farthing more real value, say country produce or hard money, to buy up every Continental dollar now in circulation, than would have been necessary three years ago, to purchase all that was then in circulation; i.
Indeed, I am of opinion, it rather exceeds this proportion, i. I think the enormity of the sum has carried it within the sensible influence of that fatal extreme which must finally destroy its whole value and use, if the quantity continues to increase.
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It appears then that we do not owe a shilling more of real value than we owed three years ago, except the debt abroad and the loans at home which have been contracted since; so that our finances are not in so deplorable a state as they seem to be, and a remedy is much more in our power than would be imagined on the first view of the matter, and may be adopted for three years to come, if the war should continue so long, with less burden, hardship, oppression, danger, damage, and loss than we have, to our sorrow, experienced for three years past.
It follows then, that all the expenditures of the war for three years past except the foreign debts and internal loans in which last I include the monies due for lottery prizes have been actually paid in depreciation of our currency, which is perhaps the most inconvenient method of levying public taxes that could be invented. As this proposition may be new to some people, I only beg they would not be startled too much at it, but have patience to read a few lines further, in which I shall consider both parts of it.
Without going into minute calculations of the depreciation, or determining with precision the present exchange, I imagine it will not be disputed that the depreciation for three years past has been at least fifty per cent. Try it for the year past: See if one hundred pounds will buy as much now.
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This is arguing on fact, which is stubborn and yields to the prejudice of no man. It appears then that a man who has kept one hundred pounds by him for the space of one year, is to all intents in the same condition he would have been in, if the hundred pounds had kept its value undepreciated, and he had paid one half of it in a tax, i. He has then, to all intents and purposes, paid a tax of fifty pounds for the year towards the depreciation, and has now fifty pounds less money than he would have had if no depreciation had taken place, as much in every respect as his cash would have lessened fifty pounds by paying a tax of that sum.
I have heard that this plea was made use of by the Agents of the New-England colonies, when the matter of reimbursements to those colonies, for their great expenditures in the two last wars, was debated and granted in the Edition: The question was, what sums those colonies had emitted for the service of the wars, and what was the value of the bills to be redeemed?
The argument is indeed a demonstrable one, and supported and justified by plain fact in every view; yet there is such a subtle and strong delusion in the depreciation as obscures the subject, and will almost cheat a man who views it under full conviction, and feels the effects of it; and this tends to render the mischief more ruinous than otherwise it would be, because people who feel it, often mistake the cause, and adopt from thence remedies altogether ineffectual, and sometimes very hurtful, and which often tend rather to increase than cure the evil.
Of this sort, I take to be the whole torrent of censure and abuse which has been thrown out and kept up against the merchants, farmers, and tradesmen, for raising the prices of their several fabrics and goods. These are only a few of the evils which arise from mistaken causes of the depreciation of our currency, and the consequent improper methods adopted for its remedy, all which prove the absurdity as well as the reality of defraying the expenditures of the war in that way, which naturally Edition: These contemptible, useless characters are enabled hereby, after keeping a creditor years out of his just due, to pay him off with one fourth, yea, one eighth, yea, one sixteenth, yea, one twentieth part of the value of the debt when it was contracted, by which the frugal and industrious are compelled to pay a very heavy tax to those useless, idle men, by which many of them have acquired great fortunes, and of course great weight among us, to the manifest damage of the public; for the weight and influence of this sort of men, ought never to be increased in any community, for wherever we see one of them taking the lead among the people, we have reason to believe that mischief is a brewing, and that the public peace and security is more or less in danger.
For the truth of this, I appeal to the experience and observation of all wife and good men. It oppresses the salary-men and all public officers, both in church and state, whose fees and salaries are reduced to almost nothing, and any applications for relief are apt to raise an unreasonable clamor against them, as if avarice and greediness of money was their principal passion. This prejudices the public service, in which they are employed, and discourages men of abilities from seeking or accepting such Edition: This discourages industry and trade; for if the profits obtained by these waste in the desk, there is little inducement to increase the stock.
Many would like the army very well, if they could live by the profession; but few are so attached to it as to be willing to be ruined there. The whole system is grounded in injustice, is contrary to the first maxims of upright dealing, and corrupts the whole course of trade and commutative justice, and of course will soon destroy all principles of morality and honesty in trade, among the people; for here it is to be considered, that money is not only the instrument or means by which trade is carried on, but becomes a sort of common measure of the value of all articles of trade; and therefore I should conceive it would be as dangerous to adopt any measures which would alter its value and render it fluctuating, as to alter the standard weights and measures, by which the quantity of goods sold in market is usually ascertained: We easily see the dangerous consequences, nor can there be any necessity to expose here the absurdities and mischiefs which must follow.
Enough has been said on this dreary subject; the mischiefs are too glaring to need further proof; a remedy is the great thing now to be sought: Because the sum depreciated has been paid by the country once already, by the depreciation itself in their hands, Edition: But execrable as this method of supplying the public exigencies may be, it has had its full effect, and therefore there can be no reason that payment should be made over again. The evil arises from the fluctuation and changeable state of the currency.
It matters little to the community whether it rises or falls, the fall of it has hurt the rich, the rise of it will ruin the poor; but to continue the fluctuation by appreciating it, is to continue the whole evil in all its destructive force and ruinous effects. The mischief is done, and ought by no means to be repeated, the widows and orphans are already ruined, and I think it needs no proof that almost all the money is now possessed by people who have bought it at the present value, and shall the widows and orphans, with the rest of the sufferers, be taxed to raise or appreciate the money in the coffers of the rich, up to twenty times the present value of it?
Verily I trow not. Any probable attempt to raise or appreciate the value of the money, would hoard it immediately, and. Destroy our trade; for the rise of money in the desk would be better than the profits of any trade it can be employed in. The sacrcity would soon make the payment of taxes impracticable. Every poor man would lie perfectly at the mercy of the rich, who alone would be benefited by his distress; for if the poor should run in debt to the rich in the beginning of the year, the debt would be much increased by the appreciation at the end of the year, and so from year to year, till the sum would rise beyond the utmost abilities of the poor man to pay it, and he must of course be perfectly at the mercy of his rich creditor.
Popular discontents, and perhaps insurrections would probably be the consequence, and after all. This plan of appreciation would not be any remedy to the principal sufferers by the depreciation; for not one tenth part of the appreciated currency would probably be found in the same hands that suffered by the depreciation; the increase of tax would be more to the greatest part of the people, than all the profits they would gain by the appreciation.
It is not supposable that thirteen General Assemblies would concur in voting and levying such a useless, burdensome, and pernicious tax: It appears that these reasons, which prove that this ought not to be done, all tend to prove that it cannot be done, and this is a good reason why it ought not to be attempted. But to sum up the whole argument in one word,. All the mischiefs arising from a depreciation, would equally arise from an appreciation; but in an inversed order, and I think it will appear plain to any person of discernment, who duly and attentively considers it, that inversing the order, will infer many mischiefs more ruinous to the community, than those we have already felt from the depreciation: I beg leave to insert here one proposition more, which I think deducible from the foregoing ones, viz.
This increased quantity of money, if suffered to circulate, would depreciate till it had duly diffused itself over the country, when it would acquire a certain rate of exchange, and its value would become fixed in such a manner, that the value of the whole would be just equal to the value of the money which was in circulation before the increase happened, and consequently the country would gain nothing by it, but an increased nominal sum; just as if the standard yard should be shortened one half, and thereby increase the number of yards of cloth in the country to double the former number, but would not add one inch of new cloth, or enable the owners of all the cloth to make one garment more than before.
I conceive these mischiefs would prove a much heavier burden on the country, and would have much worse effects, than could arise from a tax to amount of the increased quantity of money levied on the inhabitants. The inhabitants could not be impoverished by such a tax, as there would be as much value of money, and as much goods and other estate in the country after the tax was levied as before, and all the loss to the country would be the time and charges spent in collecting it; for all the goods sold for the payment of this tax, would still remain in the country, and continue as valuable as they were before they were sold.
The contentions, resentments, and ill-humor, which a depreciation naturally generates, would by this method be prevented, which alone, in my opinion would, if not prevented, impoverish the country more than the whole tax, even if the money was all borrowed from abroad to pay it. Only observe two neighbours inflamed with rage and resentment against each other, and see what time, money, and labor they will spend, and how much they will engage their several friends in their quarrel, and how all kind offices of friendship and mutual assistance are totally lost between them during their anger.
By this we may form some guess at the degree of impoverishment which a country must suffer by general discontents, and numberless instances of personal injuries and consequent resentments. Hence it follows clearly, in my opinion, that it would be more for the interest of the Thirteen United States to call in and sink their Continental bills as fast as they issue, than to receive a sum of gold every year equal to the money issued, from some foreign power, as a perfect gift never to be repaid, i.
The tax would fix the currency, and thereby give establishment to every branch and department of business, trade, war, civil police, and religion, which has any connexion with money; but the gift would make such an increase of the circulating cash as would depreciate it for hard money can and will depreciate as well as paper bills, if increased too much and thereby every department of business, trade, war, civil police, and religion which has any connexion with money, must languish and be enervated.
The tax will promote the industry, prudence, and economy of the people, but the gift would naturally introduce and encourage idleness and dissipation. Few men will rise early and eat the bread of carefulness, when money flows in upon them without their own anxious care. A man, pressed with a demand for money for a tax or any other debt, does not yield to his own appetite, or the request of his wife or child for a luxury, so easily as the same man would do, with plenty of money, and no pressing demand: No virtue is so fixed in the human mind as to continue long undiminished without its usual motives and inducements, and it requires no great experience in the world to show us the danger of lessening any of these; the very beginning of remissness of virtuous habits ought to be as alarming as the swallowing of a slow poison; and this, as applied to my subject, is demonstrated by a very common observation, that fortunes suddenly acquired without the industry of the possessor, rarely ever increase his happiness and welfare, help his virtuous habits, or continue long with him; they most commonly ruin him.
Money in a state is like salt in cookery; some of it is very necessary, but too much of it spoils every dish, and renders the whole dinner unsavory to the taste, and hurtful to the health. The tax will operate in a way of justice to all, and therefore will give general peace and satisfaction to all good Edition: The operation of the tax would be just this; it would compel the man who stays at home and renders no actual service, and furnishes no supplies to the war, to pay as much as those do, who render the actual service and furnish the supplies: There can be no reason given why those that go into the war should render their service within the year, and those who stay at home should pay nothing, or be trusted to some future day.
This method is grounded on such manifest justice, that no Tory, however litigious, can with any good face object to it; and therefore, however chagrined at heart he may be, he must keep his mouth shut, or look out for some other subject of complaint to make a noise about; but the natural operation of the gift would be very contrary to this; there would be so many schemes and pretences set on foot to draw for the money before it could leave Spain; so many hungry favorites crowding round every office of distribution in every department, and in short, such a scramble for the biggest share of it; and so much chagrin, disappointment, and mortification occasioned; and so many jealousies, quarrels, and resentments excited by it, as would, in my opinion, injure and impoverish the States much more than the tax would do.
But all this I submit to those who have been best acquainted with public boards and offices. The most of the above arguments have been confirmed by facts in many notorious instances, which are the best proofs in matters of this sort which can be advanced: It follows hence, I conceive, very clearly, that the riches of a nation do not consist in the abundance of money, but in number of people, in supplies and resources, in the necessaries and conveniencies of life, in good laws, good public officers, in virtuous citizens, in strength and concord, in wisdom, in justice, in wise counsels, and manly force.
From all these considerations, it appears plain to me, that sudden acquisitions of money are dangerous to any country, and have in many instances proved very ruinous and fatal to states and kingdoms as well as individuals; from hence I think we may fairly and strongly conclude, that it is not the wisdom of America to attempt by any means of gift or loan, an acquisition of money from any foreign powers, but by strong exertions of our own to furnish our own supplies.
We have money enough for our own purposes, and as good as any in the world, if we can be wise and firm enough, by proper measures to fix its value, and preserve it from future fluctuation. But if these arguments should not be convincing, I will venture to add one more, which with me has great weight. By a tax we shall furnish our own supplies in a sure way, not liable to disappointment by any caprices of others, nor subjecting us to any sort of dependence on foreigners; we shall work out our own salvation without dependence on any power but Divine Providence, which we may ever acknowledge without danger of insult; but if we receive aids from foreign states by loan or gift, the obligation conferred on us will be ever great in their opinion, and should we ever have occasion in future time to adopt any measures not perfectly consistent with their views and demands, we must be insulted with large exhibitions of the present favors, and as large and plentiful accusations of ingratitude, and it may be long before we hear the last of it.
As it is more reputable for a man to acquire a fortune by his own industry, than by heirship, favor of friends, or sudden accidents, so I think our own deliverance and establishment, wrought out by our own strong exertions and virtuous efforts, will be more honorable and safe for us, than to receive these great blessings from the gift of a neighbour, were he willing to bestow them.
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Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects
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