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that the shadow of the king's mandate rested upon the colonies during the whole period from the first issue of paper-money by the General Court of Massachusetts in 1690, down to the day, in 1780, when, in sympathy with an aroused public sense of justice, the Continental Congress by resolution begged the States to repeal their legal-tender enactments, and to make an equitable settlement with the holders of Continental bills. In view of what was and what might have been, the story of the struggles of the people of the colonies with paper-money, looked at from an economic standpoint, becomes pathetic. There was not, from first to last, any proper conception of the real nature of paper-money: that to give it stability, it must be redeemable in coin on demand-that it is a growth of individual credit-that it must have a local habitation and personal supervision-had not yet entered the minds of the most advanced monetary students; the people lived out their lives, generation after generation, in mental slavery to the idea that it was the duty of the state to supply their medium of exchange.

We need not recite the many fruitless attempts of the colonists to produce an efficient paper-money; the story forms an interesting and instructive chapter in the history of our country. Nothing is plainer

to the thoughtful reader who is looking for causes, than the fact that metallic money in the colonies became inadequate to the demands of their growing trade, and that this inadequacy created a condition which threw the balance of advantage into the scale of the money holder. The time had indeed come for the people to use credit-money, but they did not understand its governing principles; they did not realize that the stability and efficiency of this kind of money are dependent upon public confidence, and that public confidence is simply an aggregation of the individual confidence; that individual confidence is a thing of spontaneous growth which can never be brought into being at sovereign command. The colonists looked to the state as the only power that could supply their medium of exchange, and had not the least idea that it was to themselves they should look-that the state could do nothing to aid them beyond preventing fraud and certifying fact.

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THE

PAPER-MONEY IN COLONIAL TIMES.

HE paper-money, or bills of credit, of the different colonies varied more or less in minor details, but in its more important features it may be divided into two kinds: that which had only the guaranty of the colony for its redemption, and that which had in addition a real or personal security. As this latter money was the best ever issued by the colonists, and came to be held in special favor by them, we may confine ourselves to the consideration of this kind. It was put into circulation by the colony's lending it for a term of years on interest, and taking from the borrowers real or personal security; but as none of it was redeemable within a year of its issue, and much of it ran for five or for ten years, it could not maintain stability. The idea that paper-money could be made to maintain par value in circulation by redeeming it in coin on de

mand, seems not to have occurred to the colonists; they looked to the credit and authority of the state to impose this quality upon their money. The lack of public confidence in the money appeared to them to arise solely from a lack of confidence in its ultimate redemption; the thought evidently did not suggest itself to them that the most absolute certainty of remote redemption could not serve the bill-holder whose immediate necessities demanded metallic money, and that if there were but one such bill-holder among a hundred, the whole volume of paper-money would depreciate until his needs were satisfied.

The first issue of bills of credit was made by Massachusetts in 1690: it was not then known in England or in America why clipped coin should hold its place in the circulation, while coin of full weight could not; although this problem had been solved by Sir Thomas Gresham more than a hundred years before, its solution was not known to the colonists; it was therefore not to be expected that they should understand the workings of their papermoney. England, in common with monarchical Europe, had long before fallen into the way of looking at money as of the king's creation, and what England thought in reference to money, the colonists

thought. The crown arrogated to itself the power to fix the value of money, and nobody questioned that power. In the years following the introduction of paper-money in the colonies, it came to be understood that metallic money was but a commodity with which the people were as competent to supply themselves as with any other commodity; but this knowledge was confined to the few, and even the few never understood the nature of paper-money. Nor is there any evidence that the law of metallic money was sufficiently assimilated by any one to enable him to perceive that it was beyond the power of the state to regulate the value of it, or that the assumption of such power by the state was not one of the legitimate prerogatives of sovereignty.

The repeated failures of the colonists to produce a paper-money that would possess the stability of coin, were attributed by them to the nature of the money itself, and not to its inconvertibility; if they had understood the governing principles they need never have been without a sufficiency of good, serviceable money. The whole difficulty was that they looked upon money as a thing that only the state could supply, and they never freed themselves from this mental delusion. The power they depended upon to supply them was not only incompetent for

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