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cases had hardly any more sense of justice than infuriated mobs. Newspapers were by no means wanting in the same direction.

"When paper money," says a writer of the time, in one of them, "circulates in the common course of trade, its value gradually rises and falls in proportion to its quantity, when relatively considered with the value of the real effects of a country, such as houses, lands, provisions, gold, silver, and merchandise of every kind; for though paper merely has not any significant value in itself, and has only such value as we place upon it, a single dollar bill being as large as an eight dollar bill, yet, as by general consent we agree to receive and pass this as one and that as eight, so long as this mutual confidence and resolution continues, they are to all intents and purposes of as much real worth as so much actual gold and silver, which are of themselves of no other absolute value than what mankind have been pleased to fix on them.1 . . .

"It is a grand continental experiment we are trying, and nothing but the experiment itself can determine the expediency: we are not to look on our present situation as a matter of choice, but of necessity; we have got into a labyrinth, and must get out of it as well as we can. If, by giving a general credit to our money and forcing a trade, we should weary out Great Britain, or involve her

1 This brief paragraph, written before the publication of the "Wealth of Nations," embodies the substance of all that was ever written upon the subject of paper money; and, compared with the loose and incoherent treatise of Adam Smith, is a model of conciseness both in thought and style. It shows the absurdity of any claim for him for originality upon the subject of money. All he did was to obscure and perplex, by irrelevant illustrations and unmeaning verbiage, a subject which had been most perfectly stated that is, according to his views, if he had any - by those who preceded him, but which he neither investigated nor understood.

"The American paper money," says John Adams, "is nothing but bills of credit, by which the public, the community, promises to pay the possessor a certain sum in a certain limited time. In a country where there is no coin, or not enough in circulation, these bills may be emitted to a certain amount, and they will pass at par; but as soon as the quantity exceeds the value of the ordinary business of the people, it will depreciate, and continue to fall in its value in proportion to the augmentation of the quantity." - Adams's Works, vol. vii. p. 296.

The writer who at the time best appreciated the nature and effect of paper money was Pelatiah Webster, who published a series of essays, the first under date of the 5th of October, 1776, which were continued during the war. He early presented, with great clearness and force, the danger that was being incurred from the issue of government notes, and constantly urged the retirement of the "superfluity," in order to avoid the catastrophe which he predicted and subsequently described. His essays are to be thoroughly studied, if one would gain any thing like an adequate picture of the time. He, however, by no means grasped the whole subject. It was the "excess" that he wished to get rid of, forgetting that every dollar of the kind is always in excess.

in a war with some of her European neighbors, we may then take our own time to pay off the debt we have been contracting, and every year will restore the currency nearer to its original value. To what extent a country may venture to run itself in debt is a question beyond my abilities to solve. Whether a community and an individual may with propriety be compared, I cannot pretend to determine; but, if the comparison would hold, I should say that as an individual has a right to spend or run in debt to the exact amount of what he is worth, without injury to his creditors, so may a community; if this be true, it may be easy to determine how much farther we may safely go." 1

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The arguments presented in the preceding paragraphs undoubtedly appeared conclusive enough to their writers when they were not immediately engaged in paying or receiving money; but when they came to act, they were governed by a law far more potent than that which their feeble natures attempted to set up. The loudest advocates of the doctrine that the value of money depended upon convention - upon its quantity, not upon its quality are not in the least degree influenced by their arguments. They never became parties to a convention to accept a note for $10, utterly worthless in itself, for merchandise equalling its nominal value in coin. Nor is there the slightest evidence or probability that the notes then issued ever circulated at any other than their estimated value; while it was inevitable that confidence in them should decline in ratio to the extraordinary efforts made to sustain their price. The writer also forgot that the money of a country represents the proper amount of its consuming power, which equals only its annual product, not its lands, machinery, public works, and the like, which are to form the basis of production, and are not the proper subjects of consumption.

The necessities of the government still continuing, with no other resource than its notes, it authorized, on the 6th day of May, 1776, a further issue of $5,000,000; one-half of which was to be made in June, and the other half in July of that year. A serious decline in the value of the notes followed. This was increased by a further issue of $5,000,000 in November. Gov

1 In illustration of the intense patriotic feeling which prevailed at the time, it may be stated that, early in 1776, some American privateers, who brought into Philadelphia $22,000 in specie captured from the enemy, offered that entire sum to Congress in exchange for its notes, and received the thanks of that body for their generous conduct.

ernment, to check the decline, directed General Putnam, then in command of the army at Philadelphia, to issue an order, under date of Dec. 14, 1776, that if any one refused to take the government notes in payment for goods, the goods should be forfeited, and the person so refusing should be thrown into prison.1 These orders produced no other effect than to increase the decline. The state of things near the close of the year will be best shown by a letter written by Robert Morris to one of the government agents in Europe, under date of 21st of December, 1776:

"I must add," he says, "to this gloomy picture one circumstance more distressing than all the rest, because it threatens instant and total ruin to the American cause, unless some radical cure is applied and that speedily: I mean the depreciation of the Continental currency. The enormous pay of our army, the enormous expenses at which they are supplied with provisions, clothing, and other necessaries, and, in short, the extravagance that has prevailed in most departments of the public service, have called forth prodigious emissions of paper money, both Continental and colonial. Our internal enemies who, alas! are numerous and rich have always been undermining its value by various artifices; and, now that our distresses are wrought to a pitch by the successes and near approach of the enemy, they speak plainly, and many persons peremptorily refuse to take it at any rate. Those that do receive

it, do it with fear and trembling; and you may judge of its value even amongst those, when I tell you that £250 Continental currency, or 666 dollars, is given for a bill of exchange of £100 sterling, sixteen dollars for a half-johannes, two paper dollars for one of silver, three dollars for a pair of shoes, twelve dollars for a hat, and so on. A common laborer asks two dollars a day for his work, and idles half his time.

"All this amounts to real depreciation of the money. The war must be carried on at an expense proportional to this value, which must inevitably call for immense emissions, and of course still further depreciations must ensue. This can only be prevented by borrowing in the money now in circulation. The attempt is made, and I hope will succeed by loan or lottery. The present

1 "PHILADELPHIA, Dec. 14, 1776.

"The General commanding, to his great astonishment, has been informed that several of the inhabitants of this city have refused to take the Continental currency in payment of goods. In future, should any of the inhabitants be so lost to public virtue and the welfare of their country as to presume to refuse the currency of the American States in payment for any commodities they may have for sale, the goods shall be forfeited, and the person or persons so refusing shall be kept in close confinement.

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troubles interrupt these measures here, and as yet I am not informed how they go on in other States. But something more is necessary: force must inevitably be employed, and I dread to see that day. We have already calamities sufficient for any country, and the measure will be full when one part of the American people is obliged to dragoon another, at the same time that they are opposing a most powerful external foe."

In a letter to the President of Congress, under date of Dec. 23, 1776, he speaks in a similar strain :

"It is very mortifying to me when I am obliged to tell you disagreeable things; but I am compelled to inform Congress that the Continental currency keeps losing in credit. Many refuse openly and avowedly to receive it; and several citizens that retired into the country must have starved, if their own private credit had not procured them the common necessaries of life when nothing could be got for your money. Some effectual remedy should be speedily applied to this evil, or the game will be up. Mr. Commissary Wharton has told the General that the mills refuse to grind for him, either from disaffection, or dislike to the money. Be that as it may, the consequences are terrible; for I do suppose the army will not consent to starve."

As the alarm and apprehension for the future increased, Congress, in order to allay them, adopted, on the 14th of January, 1777, the following preamble and resolution:

"Whereas, The Continental money ought to be supported at the full value expressed in the respective bills, by the inhabitants of these States, for whose benefit they were issued, and who stand bound to redeem the same according to the like value; and the pernicious artifices of the enemies of American liberty to impair the credit of the said bills, by raising the nominal value of gold and silver, or any other species of money whatsoever, ought to be guarded against and prevented:

"Resolved, That all bills of credit emitted by the authority of Congress ought to pass current in all payments, trade, and dealings in these States, and be deemed in value equal to the same nominal sums in Spanish milled dollars; and that whosoever shall offer, ask, or receive more in the said bills, for any gold or silver coins, bullion, or any other species of money whatsoever, than the nominal sum or amount thereof in Spanish milled dollars, or more in the said bills, for any lands, houses, goods, or commodities whatsoever, than the same could be purchased at of the same person or persons in gold, silver, or any other species of money whatsoever; or shall offer to sell any goods or commodities for gold and silver, or any other species of money whatsoever, and refuse to sell the same for the said Continental bills, every such a person ought to be deemed an enemy to the liberties of these United States, and

to forfeit the value of the money so exchanged, or house, land, or commodity so sold or offered to sale. And it is recommended to the legislatures of the respective States to enact laws inflicting such forfeitures and other penalties on offenders, as aforesaid, as will prevent such pernicious practices.

"That it be recommended to the legislatures of the United States to pass laws to make the bills of credit issued by Congress a lawful tender in payment of public and private debts; and a refusal thereof an extinguishment of such debts; that debts payable in sterling money be dischargeable in Continental dollars at the rate of 4s. 6d. sterling per dollar; and that, in discharge of all other debts and contracts, Continental dollars pass at the rate fixed by the respective States for the value of Spanish milled dollars; that it be recommended to the legislatures of the several States to pass resolutions that they will make provisions for drawing in and sinking their respective quotas of the bills emitted by Congress at the several periods fixed, or that shall be fixed, by Congress. That it be recommended to the legislatures of the several States to raise by taxation in the course of the ensuing year, and remit to the treasury, such sums of money as they shall think will be most proper in the present situation of the inhabitants; which sums shall be carried to their credit, and accounted in the settlement of their proportion of the public expenses and debts, for which the United States are jointly bound.”

The situation was indeed most critical. Congress was without means, except those raised through its notes, which were already largely depreciated, and becoming more so day by day, as no one would longer receive them at their nominal value. It passed, 27th of December, 1776, a resolution empowering Washington to raise forces, and take whatever could be found necessary for their subsistence or clothing; and if the owner would not sell at a fair price, to be paid in Continental money, he might be arrested, and kept in confinement. The Committee of Safety of Pennsylvania were, at the same time, requested to take speedy and rigorous measures to punish all who refused to receive the government notes. It acted with commendable promptness; and, on the 31st of December, of the same year, it resolved, and its resolution at such time had all the force of a legal enactment, that if any person should refuse to receive government notes offered to him in payment for goods, he should forfeit, for the first offence, the goods to the party seeking their purchase; and, in addition, be liable to a penalty of £5, where the amount to be purchased was under that sum ; and to a penalty equal in amount to that of the purchase, when it was above it. One-fourth part of the

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