the other three cannot be reached by it at all. Perhaps I ought rather to have faid, that they cannot be directed by it, but they may be greatly counteracted; as people have naturally a ftrong disposition to resist force, and to escape from restraint. Accordingly, we found in this country, and every other society, whoever tried fuch measures, found, that they produced an effect directly contrary to what was expected from them. Instead of producing moderation and plenty, they uniformly produced dearness and scarcity. It is worth while to observe, that fome of our legiflatures saw so far into these matters, as to perceive, that they could not regulate the price of commodities, without regulating the price of the industry, that produced them. Therefore, they regulated the price of day-labourers. This, how ever, though but one species of industry, was found to be wholly out of their power.

There were some instances men. tioned at the time, when these meafures were in vogue, which superficial reasoners supposed to be examples of regulating laws, attended with good effects. These were the regulation of the prices of chairs, hackney-coaches, and ticket porters, in cities, public ferries, and some others. But this was quite mistaking the nature of the thing. These in ftances have not the least connexion with laws regulating prices in voluntary commerce. In all these cases, the persons who are employed, folitit the privilege, obtain a licence, and come under voluntary engage ments, to ask no higher prices; so that there is as complete a free con☑ tract, as in buying and selling, in I open shops. I am so fully convinced of the truth and justice of the above principles, that I think, were it ; proper at this time, I could shew, that even in the most enlightened nations of Europe, there are still

fome laws subsisting, which work in direct oppofition to the intention of their makers. Of this kind, in general, are the laws against forestalling and regrating. They are now, indeed, most of them, asleep, and in what the lawyers call defuetude; but so far as they are executed, they have the most powerful tendency to prevent, instead of promoting, full and reasonable markets. As an example of our own skill, in that branch, a law was passed, in Pennsylvania, in time of the war, precisely upon that principle. It ordained, that in all imported articles, there should be but one step between the importer and confumer, and therefore that none but those who bought from the ship, should be allowed to fell again. I cite this instance, by memory, but am certain that fuch was the spirit of the law. The makers of it, confidered, that every hand, through which a commodity passed, must have a profit upon it, which would, therefore, greatly augment the coft to the confumer at last. But could any thing in the world be more abfurd? How could a family, at one hundred miles distance from the sea-port, be supplied with what they wanted? In oppofition to this principle, it may be safely affirmed, that the more merchants, the cheaper goods; and that no carriage is so cheap, nor any distribution so equal, or fo plentiful, as that which is made, by those who have an interest in it, and expect a profit from it.

I have gone into this detail in order to shew, that tender-laws, arming paper, or any thing not valuable in itself, with authority, are directly contrary to the very first principles of commerce. This was certainly the more necessary, because many of the advocates for such laws, and many of those, who are instrumental in enacting them, do it from pure ignorance, without any bad intention. It may probably have some effect, in opening their eyes, to observe, that no paper whatever is a tender in any nation in Europe. Even the notes of the bank of England, which are as good as gold, and those of the bank of Holland, which are confiderably better", are not armed with any fuch fanction, and are not a legal tender, in the proper sense of that word. That is to fay, though I suppose both of them, or any other paper, circulating in fall credit, may be a tender in equity, so far as that the person offering them without suspicion of their being refused, could not be condemned in any penalty or forfeiture; yet, if the person who was to receive the money, should say, I am going abroad, I want gold filver-it would lie upon the debtor, and not the creditor, to go and get them exchanged. We may, perhaps, even fay more, viz. that the coinage of gold and filver, in any country, is not so much, if at all, to oblige persons to receive it at a certain value, as to afcertain them that it is of the value stamptupon it. Without this, ignorant perfons would be continually at a loss to know the fineness and the weight

or

NOTE.

Perhaps it may be proper to inform some readers, what this expreffion refers to. It refers to the agio of the bank of Holland. A bill of that bank generally goes for a little more in payment, with any dealer, than the sum it specifies; and this advance of difference is called the agio of the bank, and rises or falls like the rate of exchange. This, probably, arifes from its perfect security, and the very great advantage in point of ease and expedition, in transferring, reckoning, and concealing of paper above gold and filver. It gives occafion to the vul gar saying, in that country that money goes into the bank, but never

of pieces offered to them. This will appear, from the two following remarks. 1. If, by any accident in the coinage, or fraud in the officers of the mint, some of the pieces had not the full quantity, or were not of sufficient fineness, though the stamp were ever so genuine, if I could difcover the defest, I should be justified in refusing them. 2. There is sometimes, a fluctuation in the comparative value of gold and filver, and in these cafes, though, no doubt, a debtor, till the error that has crept in, be rectified by authority, has a right to pay in any lawful money; yet, if I were felling goods, and gold had fallen in its value, I might fafely say to the customer, in what coin are you to pay me? I will give you a yard of this filk, for twentyone sterling silver shillings; but if you give me a guinea, I must have another shilling, before I will part with it. The whole of this ferves to shew, that nothing short of real money, which is of standard value, ought to be enforced by law, in a well-regulated fociety.

4. The principles above laid down, will enable us to perceive clearly, what is the nature of paper circalating as a medium of commerce; what is its real and proper use; and what are its dangers and defects. As to its nature, it is a fign, but not a standard. It is properly, an obligation; or, to use a modern commercial phrafe, it is a promiffory note. It is not money, as has been shewn above; but it is a promife, of some person, or body of men, to pay money, either on demand, or at a particular time, or fome general undefined future time. Obligations, of this nature, are of more sorts than one. Sometimes they are given, byparticular persons, or trading companies, who are confidered as persons; and, frequently, in America, they have been given by the legislature of the state. In the general definition, I

and ftate emiffions. Bills of exchange are not supposed to pass through many hands, but to proceed, as speedily as may be, to the place of their payment. Government securities

are

only bought and fold, like other property; and so, any bonds, or other private obligations, may be transferred as often as people are willing to receive them; but the notes of bank. ing-companies, and the state-emiffions of this country, are intended to be, properly speaking, a circulating medium. They are of various regular denominations, and intended to anfwer all the purposes of money, in the smaller transactions of society, as well as the larger, and even to go to market for purchasing the neceffaries

of life.

As to value, such obligations must plainly depend upon the credit of the fubfcriber or obligor, and the opinion or expectation of the receiver, These are mutually necessary to their ufe in commerce. Let the resources or wealth of the subscriber be what they may, it is the public opinion that must ultimately give them currency. This opinion, however, may be, in fome instances, better, and, in some, worse founded. That paper which may with most certainty and expedition be converted into gold and filver, feems evidently to have the advantage on this account. Therefore the notes of banking-companies, while they maintain their credit, and continue to pay on demand, appear to be the best calculated for general ufe. They feem aiso to have another advantage, that private perfons and companies are upon a footing with the holder of the bills. He can arreft them; whereas he cannot call the legiflature to account, but must wholly depend upon their fidelity as well as resources. Yet it

the states, have obtained full confidence, and met with no impediment in circulation.

Let us now consider, what is the proper use of the paper-currency, or whether it be of any real use at all. Many persons in Europe have declared against it altogether, as pernicious. I will endeavour to ftate this matter, with all the clearness I am capable of, and to give the reasons for what I shall advance. We have feen, above, that nothing can be more abfurd than to say we now want a circulating medium, and that paper is necessary for that purpose. A circulating medium we have already, not in too small, but in too great a quantity; so that any person who understands the subject, may perceive that gold and filver, especially the last, is losing at least one of the qualities neceffary for that purpose, and becoming too bulky and heavy for easy and convenient transportation. Brafs, as has been shewn above, was once as just and proper a medium of commerce, as gold and silver are now. It has all the qualities necessary for that purpose still, except rarity; so that, if it were not too plentiful and too cheap, it would be money to this day. It is probable that this circumstance of the abundance and weight of the precious metals, is what gives to many, fuch an inclination for papermoney. This will appear strange to fome, yet, I believe, it is, at bottom, just. The cry with many, is, we must have paper for a circulating medium, as there is such a scarcity of gold and filver. Is this just.? No. They mistake their own poverty or the nation's poverty, for a scarcity of gold and silver; whereas, in fact, gold and silver, used as a circulating medium, are so cheap, and the quantity of a moderate sum is fuch an encumbrance, that we want paper,

which can be much more easily carried, and much more effectually concealed. So that, contrary to the vulgar idea, we are obliged to have recourse to paper, in several cafes, not for want of gold and silver, but their too great abundance.

This will appear to be a very uncouth idea to many perfons. What, they will fay, too great abundance of gold and filver! when I go about from day to day, and cannot collect what is due to me; when my creditors are calling upon me, and I cannot fatisfy them. There is a scarcity of money every where. What shall be faid to fatisfy these persons? I must tell them plainly, it is their poverty, or the nation's poverty, and not a want of gold and silver; and if there were an hundred times as much gold and filver in circulation as there is, their poverty and difficulties would be just the fame. If these persons read the scriptures, they may there learn, that in Solomon's time the filver was as plentiful as stones in Jerufalem; probably, they will think, that all the people in Jerufalem, at that time, must have lived like princes, but they must be told, that it was added, as a necessary confequence, that it was nothing accounted of, in the days of Solomon.

If paper, then, is not needed, as a circulating medium, what benefit arises from it? I answer, the uses of paper, substituted for money, may be summed up, under the two folowing heads. 1. It is useful for facilitating commerce. 2. It is ufeful for anticipating property, or extending credit. First, it is useful for facilitating commerce. Nothing can be more advantageous, for that purpose, than bills of exchange, which, without the actual transportation of money or goods, can transfer property, even to the most distant places, with the most perfect facility. There have been many perfons, who have doubted, whether any other sort

We

Sup

of paper-currency is not, upon the whole, hurtful; but the benefit of this is beyond all question. shall afterwards compare the advantages and disadvantages of papermoney; but, at present, let us leave out the confideration of the evil that it does, and it is manifest, that there is so great a facility and safety in the transportation of paper, above that of gold and filver, that it must greatly expedite all mercantile transactions, internal and external. pose one hundred thousand pounds were to be transported, but three hundred miles-if it were to be carried in filver, what an immense load would it be? But, besides the weight, as it could not be concealed, there would be a very great risk of inviting robbers to share in it. Let it be carefully observed, that this good effect of paper, is not from the additional quantity, thrown into circulation; but from its possessing fome advantages superior to gold and silver, provided, that the credit of it be supported. Nor must it be forgotten, that it is in great and extenfive negociations only, that this advantage is possessed by paper; for, in smaller bargains, and that intercourse between man and man, that is carried on every hour, it poffefses no advantage at all; on the contrary, it is liable to wear and waste, and therefore the smaller coins are, in all respects, to be preferred.

2. Another use of paper, in commerce, is, to extend credit. Though in very large transactions, the advantage of paper may be great, as it facilitates commerce; yet, when we confider paper, as generally circulating and doing the office of gold and tilver, it is by the extenfion of credit only, or chiefly, that it can be of any advantage. It is unneceffary for me, and, perhaps, not in my power, to mention all the ways in which credit may be encreased or facilitated, by paper. Some will,

probably, be mentioned afterwards; at present, my business is to shew, that giving credit is one of the advantages, and, indeed, in my opinion, it is the principal advantage, to be derived from paper-circulation, of any kind. There are many people, whose industry is damped or limited, by want of stock or credit, who, if they were properly affifted, in these respects, might do sig nal service to them selves, and the community of which they are members. It has been generally faid, and I beHeve with truth, that the institution of the banks in Scotland, has improved that country, in the course of little more than half a century, to a degree that is hardly credible. It is also probable, that the manufactures and commerce of England, have been greatly promoted by the eafy and regular methods of obtaining credit from the public and private banks. I am sensible, that fome

all

Let us next confider the evil that is done by paper. This is what I would particularly request the reader to attend to, as it was what this difcourse was chiefly intended to evince, and what the public seems but little aware of. The evil is this: paper, introduced into circulation, and obtaining credit, as gold and filver, adds to the quantity of the medium, and thereby, as has been shewn above, increases the price of industry, and its fruits. ↑ This consequence is unavoidable, and follows as certainly from good paper, as bad, or rather more certainly, for the medium is increased only by that which obtains credit. At the same time, this consequence is local, because the paper does not pass among other nations, and therefore, it works against the interest of the people who use it, and necessarily draws off their gold

NOTES.

con

it does more harm than good. It is not neceffary, for me, to enter into the arguments on either fide of that question. All that I am concerned to prove, is, that if it does good upon the whole, or whatever good it does in any degree, arifes from the

credit which it is the occafion of extending: and this, I think, can hardly be denied.*

NOTE.

the experience of the last thirty or forty years appears to be dealers in money and bills, which I confider as effentially the fame. † This will, perhaps, be misapprehended, by some readers. They will say, a high price for our industry! This is just what we want, and what all defire. But the price, I mean here, is not the price which you get for your industry, but that which you pay for it. A high price, by a great demand from foreign nations, is your profit; but the cost which you pay for servants, tools, rent of land, &c. lessens that profit, and it is that which is increased, by increafing the circulating medium, and not the other. Make us much money as you please, this will not make foreign nations call for any more of your grain, fish, lumber, tobacco, rice, &c. but it will just as certainly make them cost you more, before you can bring them to the market, as adding two to three will make five.

H