The confusion was general; the regent and Law were obliged to fly the kingdom; and both died in obscurity, the one in Italy, and the other, if I mistake not, in the Netherlands. In France there was a total change of property; poor men made fortunes by speculation, and the rich were beggared. The result of the whole was, that the paper was called in at a discount, by means similar to the forty for one act of the United States.
But the principal view I have in stating this example is, to show the effect of a sudden inundation of money upon industry and morals. No sooner did the nation feel an increase of the quantity of money, but the kingdom was overrun with speculators; men who left useful occupations, for the prospect of rapid accumulations of wealth. Knavery, over reaching, idleness, prodigality, and every kind of vice prevailed, and filled the kingdom with distress, confusion, and poverty.
The South Sea bubble, in England, was a farce of a similar kind, but its effects were less extensiv.
The continental currency was not the sole cause of the idleness and speculation, which prevailed in this country, about the years 1780, 1781, and 1782. Vast quantities of specie were introduced by the French army, by the Spanish trade, and by a clandestine intercourse with the British garrisons. At the close of the war, there was more than double the quantity of gold and silver in the country, which was necessary for the purposes of a regular commerce.
This extraordinary circulation of specie had its usual, its certain effect; it prompted multitudes to quit manual labor for trade. This circumstance, in conjunction with the disbanding of the army, which left great numbers of men without employment, and with a rage for foreign goods, which was always strong, and was then increased by a long war, filled our commercial towns with hosts of adventurers in business. The consequent influx of goods and enormous credit necessary to obtain them, are evils that deeply affect this country. I will not attempt a detail of the state of commerce in the United States; but observe that the necessary exportation of specie was the happiest event that could befal the United States; the only event that could turn industry into its proper channel, and reduce the commerce of the country to a proportion with the agriculture.
Dissipation was another consequence of a flood of money. No country perhaps on earth can exhibit such a spirit of dissipation among men, who derive their support from business, as America. It is supposed by good judges, that the expenses of subsistence, dress and equipage, were nearly doubled in the commercial towns, the two first years of the peace. I have no doubt the support of the common people was enhanced twenty five per cent. This augmentation of expenses, with a dimunition of productiv industry, are the consequences of too much money, and a scarcity is our only remedy.
Short sighted people complain of the present scarcity; but it is the only hope of our political salvation; and that Legislature which ventures to remove popular complaints, by a coinage of great quantities of specie, or by its substitute, paper, checks industry, keeps alive a spirit of dissipation, and retards the increase of solid wealth. If this has been necessary, it is a necessity sincerely to be lamented.
But there is one source of idleness and corruption, which is general in America, and bids fair to be of long duration. I refer to the different species of federal and State securities, which are every where diffused, and of fluctuating value. These evidences of our debts open such prospects for rapid accumulations of property to every class of people, that men cannot withstand the temptation: Thousands are drawn from useful occupations into a course of life, which cannot possibly benefit society; which must render them useless, and probably will render them bad men, and dangerous members of a community.
What remedy can be applied to so great an evil, it is not for me to determin. But if I may offer my sentiments freely, I must acknowlege that I think no measure can produce so much mischief, as the circulation of a depreciated changeable currency. Let all our debts be placed on the footing of bank stock, and made transferable only at the treasury; or let the present evidences of it be called in, and new notes issued, payable only to the creditor or original holder; or let the securities be purchased at their current discount, let some method be adopted to draw them from circulation; for they destroy public and private confidence; they cut the sinews of industry; they operate like a slow poison, dissolving the stamina of government, moral principles.
No paper should circulate in a commercial country, which is not a representativ of ready cash; it must at least command punctual interest, and security of the principal when demanded. Without these requisits, all notes will certainly depreciate. Most of our public securities want all the requisits of a paper currency. But if they did not; if they were equal in value to bank notes or specie, still the sums are much too large for a circulating medium in America. The amount of the continental and State certificates, with the emissions of paper by particular States, cannot be less than seventy millions of dollars, which is seven times the sum necessary for a circulation.