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1 Psalm xii. 6.
The Hebrew word "Peace."
di, translated, in the 26th verse, "well"—"It is well,”—signifies primarily,
OLD COLONIAL CURRENCIES.
BY S. E. DAWSON.
OWEVER true it may be that the history of European nations is merely the biography of a few great men, such an assertion cannot be made concerning the history of America. Hence the history of the New World, though it may lack the strong personal interest which attaches to the record of great kings, statesmen, or generals, has the surpassing interest of being the record of the experiments, political, social and religious, of some of the most highly gifted races of Europe, made under conditions of singular freedom, both from the straitened forms of old-world society, and from the dominating individuality of Social experiments in America have succeeded or failed in consequence of their inherent virtues or defects, and have not been strained by outward pressure beyond their natural limits. Our present purpose is to chronicle some of the experiments which have been made in the New World in the important department of finance. We do not hope to establish any theory of money, or elicit any new principle. Experiments are still being made, and, doubtless, the true theory will in time appear.
In America, within a comparatively short period, every conceivable form of currency has been tried. The accounts of the New Netherlands (now New York State) were, in 1662, kept in wampum and beaver skins. That currency does not appear to have been more stable than others; for, in that year, complaints were made of its increasing depreciation, and the Chamber of Commerce at Amsterdam credited all its colonial officials with twenty-five per cent. additional salary in beaver skins to cover their loss, a precedent too seldom followed in later and more progressive times.
During the earliest period of the history of the English colonies whatever exchanges were not made by barter were made in a specie currency, consisting mainly of French and Spanish coins. These, being much worn and depreciated by constant clipping, were often weighed out in primitive style, and settlements were made, and salaries fixed, in ounces of silver-plate. Curious complaints were made to the Home authorities, and recriminations were frequent between the colonies regarding the clipping and defacing of coins. The dollar, or piece of eight reals, passed at a different rate in each colony, and the colonial legislatures all fancied that the best way of attracting money was to raise its nominal value. Competing traders, even in the same colony, vied with each other in giving the highest nominal value to the dollar. Pennsylvania endeavoured to draw money from New York by calling the legal value of a dollar 7s. 6d. New York had previously made the same attempt on Massachusetts by fixing upon 6s. 9d, and New Jersey got the better of both in the current opinion of that day by allowing 7s. 8d. for the same coin. These rates varied by colonial enactment from time to time, and Governor Hunter, of New Jersey, writing to the Board of Trade at London, "doubts if it be in the power of men or "angels to beat out of the heads of the people of this continent a silly notion that 'they gain by the augmentation of the value of pieces of plate," (i. e., dollars.) This notion is held to the present day in Prince Edward Island, where it is still supposed that money stays upon the Island because the nominal value of the shilling sterling is Is. 6d. currency. The Boston people of those days were not, however, so easily
beaten, although they kept the value of the dollar below the rate in the other colonies. One of the Governors of New York makes earnest appeal to London against them, because" having the main foreign trade, they "bring goods to New York which they will "sell only for good heavy money, which they "carry away and clip, and then send "back this light money to New York for "breadstuffs, which they ship to the West Indies and undersell the New Yorkers "there in their own productions." The indignant governor calls loudly for the interference of the Mother country to check those singular financial operations of the lively Bostonians. Throughout all the correspondence between the colonial governors and the Mother Country the necessity of one general standard of value was continually urged, and the efforts of the Home Government and their officers to that end were as continually and pertinaciously thwarted by the colonists in their various assemblies.
Still at that time, the currency, such as it was, was of gold and silver. Schuyler and Dillon, who made an expedition into Canada in 1698, report with apparent surprise that there the currency consisted of paper only, but the power of a paper currency was shortly after discovered by the English colonists, and Massachusetts, as usual, took the lead. Although the need of it was not so much felt in the town of Boston, which had a large foreign trade, the people elsewhere were often in great straits for the want of some medium of exchange. The colonists could live in a rough sort of abundance— they had no need for food or shelter; but the pressing wants of existence being easily satisfied there soon arose a demand for manufactured goods-the luxuries of the old world. Moreover the settlers were continually extending their boundaries—and subduing new land, and their capital was thus being fixed as fast as acquired, consequently they were always heavily in debt to the Mother country, the exportable money was
incessantly swept away to England by the adverse balance of trade, and large communities were frequently reduced to barter, for want of a common measure of value.
The Navigation Laws, so far as they were observed, tended greatly to increase this inconvenience by compelling, or seeking to compel, the colonies to trade with England alone, and thus aiming to centre in England all the profits of both sides of the American trade. The staples of America, such as tobacco, indigo, and (from the West Indies) sugar, could be exported to no other European country but England; they might be sent to other British colonies, but only on payment of an export duty. The colonists could legally import manufactured goods from England alone, thus paying the price demanded by the English merchant, while their own exports could not bring in the often glutted English markets their fair value in the markets of the world. No wonder, then, that the available money of America always gravitated towards England, and, if it had been possible to have enforced these laws strictly, the Americans could never have had any money with which to eke out their remittances in produce.
These laws were, however, in practice almost wholly disregarded. There grew up between the commercial colonies and the foreign West Indies and Spanish Main a large and lucrative traffic. The Boston merchants pushed their ventures everywhere, and the surplus produce of the colonies--the lumber, fish, and grain, found a near and ready market in the Spanish colonies of the Gulf of Mexico. There they were exchanged for specie—the gold and the silver, which were the staple exports of Mexico, and hence the coins of Spain, the doubloon, and especially the dollar, became the standard coins used in American trade, although the nominal currency was calculated in pounds, shillings and pence. the money so obtained remittances were made to England; for the Spaniards had lit
tle the colonists stood in need of. The English trade was thus fed by a systematic infraction of English law, connived at by everybody, so long as the French power remained unbroken in Canada. When that fell the latent divergence of interest became apparent, and the attempt of Parliament to stop this illicit trade by enforcing the Navigation Act was the real cause of the American Revolution-the Stamp Act was the pretext.
The specie thus obtained and the heavy tobacco remittances from Virginia could not pay the debts of the colonists and leave sufficient money for domestic use. The colonists were always pushing their settlements westward, and the drain of money to England was continual. Moreover the incessant wars with the Canadians and with the Indians often demanded great exertions from the Colonial Governments. Then the wonderful power of paper money was called into requisition. The various Governments (Virginia excepted) issued Bills of Credit for five shillings and upwards; with these they tided over great emergencies, and, as they became accustomed to them, they paid with these the current expenses of Government. It seemed to the colonists that they had discovered a new El Dorado. In some colonies loan offices were opened by Government, and these bills loaned to private parties on landed security at interest. In Rhode Island the interest might be paid in hemp, flax, or other produce, so that in appearance the Government derived an ample revenue without imposing a tax. The bills were made a legal tender, and as fast as one set of bills matured, others in increased amount were issued. The Government and the people were mutually accommodated, the currency passed readily from hand to hand, satisfying all the domestic exchanges, and causing for years a great apparent prosperity; but the inevitable result followed. There was no limit to the issue but the moderation of the people who were the
In 1738 one specie dollar in Massachusetts would buy five, in North Carolina fourteen, and in South Carolina eight paper dollars.
Massachusetts, ever in advance,
was the first to push these issues to the utmost, and the first to abandon them. The great efforts made by that colony in 1745 in fitting out the expedition which resulted in the capture of Louisbourg, brought the currency and credit of the Province to the lowest ebb; and the evils of unrestrained paper issues became so apparent that when England, exulting in the prowess of her daughter colony, refunded the cost of the expedition, the grant was used to place the currency upon a specie basis, which continued until the Revolution. The Government bought up all its outstanding bills by paying one Spanish dollar (six shillings legal par value) for every 45s. of the older, or 11s. 3d. of the more recent issue. This somewhat sharp financial operation was justified by the consideration that, the bills being no longer in possession of the original holders, and being largely depreciated, to pay their nominal value would be to impose a tax upon the people, to which the "people" generally objected.
The other colonies (Virginia excepted) never afterwards obtained a specie currency.
Pennsylvania in 1723 issued a small quantity of paper at five years date. In 1729 Benjamin Franklin was one of the most strenuous advocates for a further issue. His pamphlet "Considerations on the necessity and value of a paper currency" largely influenced public opinion, and the printing of the issue which was entrusted to him probably tended to strengthen his convictions. Writing in his later years he confesses, however, that his views had changed, and that paper money might be abused; but the current theory among the people then was, that as gold was a representative of value, so paper was a representative of gold, and of value, by a double substitution. So firmly wedded did the people become to
paper money that even in Massachusetts, had four different values in as many West when the Assembly were making efforts to India Islands, and a yet different one in return to a specie basis, riots occurred Nova Scotia and in Newfoundland. among the country people, who fancied that exchange book of Colonial days "Wright's it was a plot of the rich Boston merchants American Negotiator," was a thick octavo, to sweep up all the money for their English giving the rates of premium up to one remittances. thousand percent. These old currencies even now linger in the speech of the country people. In Massachusetts 163 cents is now often called a shilling, for it was the sixth part of a Spanish dollar, which used to pass for six shillings. In New York a shilling still means 121⁄2 cents, because the Spanish dollar was eight shillings at legal par in colonial days; and in Ontario the same usage, inherited from the U. E. loyalists, still prevails.
Paper money being, as before stated, a legal tender in most of the colonies, strange feats of finance were performed. Instead of remitting to England, payment was often made to a resident agent, who would be compelled to receive the amount in paper at its nominal value. Sometimes the debtor class would get the control of the issues, then money would be abundant, and mortgages, contracted in more unpropitious times, would be paid off. Again other interests would get the upper hand, issues would be checked and money would become scarce; then mortgages would be foreclosed and property brought to Sheriff's sale, when all who had ready money might buy to advantage. Specie was at a premium, varying in each colony with the amount of paper-issue, and differing at different times in the same colony. The injustice became so great that in the year of the Stamp Act, Parliament passed a law forbidding Colonial Legislatures to make paper a legal tender, a law which caused great bitterness in the Middle Colonies, and which is alluded to among others in the Declaration of Independence, where the king is arraigned for "having refused his assent to laws the most wholesome, just and good."
Putting aside, however, for the present all considerations of the fluctuations caused by paper money, it must be observed that there was all the while a legal par of exchange, differing in each colony, based on a value of the pound sterling. Thus in Massachusetts £1 stg. = £1 6s. 8d. currency. In New York £1 stg.=£1 15s. 634d. currency. In Pennsylvania £1 stg.=£1 13s. 4d. currency. In South Carolina 1 stg. =1 os. 8d. currency. The sterling pound
In all this chaos of currencies it is pleasant to find one fixed value which endured during nearly all the period we have been concerned with, and which, although it has disappeared in outward form, is yet present latently in every exchange calculation made even at this present day-we mean the old Spanish dollar. We have already seen how it became the almost universal coin in America, and during nearly the whole Colonial period, namely, up to the year 1772, it contained the same quantity of pure silver.
There were in circulation four kinds of dollars, viz. :-" Seville pieces of eight," "Mexican pieces of eight," "Pillar pieces of eight," "Peru pieces of eight." These pieces, of the value of eight reals Spanish. "old plate," were all called " dollars," and were all of the same weight-17 dwts. 9 to 12 grains of silver, of a standard fineness of II parts pure silver to one of alloy. But the legal par at which they passed differed very much in the colonies. At the time of the Revolution it was 6s. in Massachusetts, 8s. in New York, 7s. 6d. in Pennsylvania, and 4s. 8d. in South Carolina. Very early in Colonial history the inconvenience of a varying par was felt by many, and the governors especially urged the Home authorities to put a stop to it. Accordingly in 1707, the