William Graham Sumner

“ It would go beyond the limits of our subject to pursue this device as an experiment in currency. It may suffice to say that the colonists, in their issue of bills of credit, had hit upon a fact in monetary circulation which they did not understand and which is not, perhaps, fully understood yet. If they had been contented to use their bills of credit within very strict limits, to be ascertained by experiment, they might have carried on the system indefinitely, with complete success, and have conquered all their troubles from a "lack of a medium." ”

“ He inferred that money itself need have no value. He wanted to provide some ultimate security in land, and in a pledge of merchandise, and he aimed to carry out the transactions by book debts, or bills of exchange, or change bills, according to the nature and size of the transactions. He also lays great stress on the advantages which would come from a more abundant supply of money. The project is like those which were put forth in England a little later by Chamberlain and Briscoe for land banks. ”

“ The notion of a cheap money would, of course, have been a pure fallacy. No money can be cheap except to the issuer. If he gets it at the cost of manufacturing bits of paper, and can exchange these for commodities, in as large amounts as he could get for the coins whose names and denominations the paper bears, the currency would be cheap to him ”

“ The persons who possess land in a new country are under an absolute necessity for some capital. The amount of capital that can be employed on the land is small, because no high culture would pay; but the amount of capital that is necessary for superficial culture is absolutely indispensable. ”

“ It is only at particular seasons of the year that money is more needed and that its circulation is more active. Money should therefore be drawn from commercial centers at those times and then returned to them. Otherwise the expense of maintaining money enough all the time to suffice at the times of need is really great. The distance of the colonies from England, the difficulty of communication, and the obstructive legislation which was in fashion, made it impossible that money should go to and fro with facility as wanted. ”

“ It would be forced to go without other things in order to get money, because the lack of money would arrest the operation of the industrial and commercial organization on which its members would depend for the supply of all needs. But new settlers, destitute of everything, begrudge the investment of capital in money, which is only a tool of exchange. They want to put all the capital they can get into the circulating capital which is turned over in every period of production and brings the full business rate of profit. ”

“ If they take the place of money, they become cash. They deteriorate, however, into negotiable instruments and not cash so soon as the slightest shade of difference arises between their value and that of specie. Notes issued on the security of anything but specie, or on specie, if not strictly held to the standard, are negotiable instruments. No matter how great and good the security behind them may be, it is always possible that for some reason, a divergence may arise between the paper instrument and cash. ”

“ The possessors of our bills are more and more uneasy every day as that part of their estates lies useless by them, and so incessant in their worries, that the directors have in their late advertisement implicitly threatened to be on the possessors' side against the delaying partners."
This bank is heard of again and again during the following twenty years. The surviving or solvent stockholders and their heirs were subject to repeated demands from the noteholders, which they seem to have evaded to the best of their ability. ”

“ The tradition may more probably be based upon an Association referred to in an act of 1777: "Whereas divers persons have presumed upon their own private security to issue bills of credit or notes payable to the bearer in the nature of paper currency," a penalty is imposed upon those who "issue or offer in payment" any such notes without the authorization of the Commonwealth, of ten times the amount of the note, half to go the informer. ”

“ The author shows how the depreciated paper money hurt the wages and salaried classes, because the depreciation with respect to specie never measured the loss in purchasing power. "The shopkeepers are become, as it were, bankers between the merchants and tradesmen [mechanics] , and do impose upon both egregiously. Shop notes [store-pay] , that great and insufferable grievance of tradesmen, were not in use until much paper money took place." The author thinks that he can prove that the specie value of the whole currency constantly declined as greater issues were made ”

“ In any such primitive agricultural community the circulation of money is extremely sluggish, because the organization is low and the households largely supply their wants from their own direct efforts. ”

“ The Governor was strictly enjoined by the authorities in England not to consent to any further issue of bills of credit. On this account, the treasury notes having been cut off, in 1733, "a number of merchants and others of Boston, in order to supply the deficiency of such a medium of trade, had recently engaged in a project of issuing paper to the value of £110,000. Rhode Island had also ordered a large emission of their bills, which, as usual, were expected to have their chief circulation in Massachusetts. ”

“ He is chiefly concerned that a sufficient medium may be provided. The medium need not have value. It will do its work better if it has not. Coin is too costly, and blew England cannot keep it. The merchants ship it off. The bills have done great things for Massachusetts. They have built the college, etc. He preferred a private bank under government inspection to a public bank. ”

“ Gallatin, who was a competent observer, and who lived in the midst of these primitive facts in western Pennsylvania, said of the people there: "The principle almost universally true that each country will be naturally supplied with the precious metals according to its wants did not apply to their situation." ”

“ All the popular arguments were on its side. The Governor and Council forbade any private company to issue bills of credit for circulation without the authority of the General Court. Nevertheless the bank proceeded to make issues. In 1716 another "public bank" was made. £100,000 "was committed to the care of the county trustees; was proportioned to each county according to its tax; secured by mortgage estates of double the value of the sum borrowed; each loan not exceeding £500 nor being under £25, for ten years, at five per cent., paid annually ”

“ Noteholders were given a right of action against each partner for the amount and interest, although by the tenor the note might not yet be due. Any person suffering harm might recover treble damages and costs ”