This currency of Pensylvania is receivable in all payments at the custom house, and for certain taxes, at its nominal value; yet it has sunk to two thirds of this value, in the few commercial transactions where it is received.
North Carolina, South Carolina, and Georgia, had recourse to the same wretched expedient to supply themselves with money; not reflecting that industry, frugality, and good commercial laws are the only means of turning the balance of trade in favor of a country, and that this balance is the only permanent source of solid wealth and ready money. But the bills they emitted shared a worse fate than those of Pensylvania; they expelled almost all the circulating cash from the States; they lost a great part of their nominal value; they impoverished the merchants, and embarrassed the planters.
The State of Virginia had too much wisdom to emit bills; but tolerated a practice among the inhabitants of cutting dollars and smaller pieces of silver, in order to prevent it from leaving the State. This pernicious practice prevailed also in Georgia.[48]
Maryland escaped the calamity of a paper currency. The house of delegates brought forward a bill for the emission of bills of credit to a large amount; but the senate firmly and successfully resisted the pernicious scheme. The opposition between the two houses was violent and tumultuous; it threatened the State with anarchy; but the question was carried to the people, and the good sense of the senate finally prevailed.
New Jersey is situated between two or the largest commercial towns in America, and consequently drained of specie. This State also emitted a large sum in bills of credit, which served to pay the interest of the public debt; but the currency depreciated, as in other States.
Rhode Island exhibits a melancholy proof of that licentiousness and anarchy which always follows a relaxation of the moral principles. In a rage for supplying the State with money, and filling every man's pocket without obliging him to earn it by his diligence, the Legislature passed an act for making one hundred thousand pounds in bills; a sum much more than sufficient for a medium of trade in that State, even without any specie. The merchants in Newport and Providence opposed the act with firmness; their opposition added fresh vigour to the resolution of the assembly, and induced them to inforce the scheme by a legal lender of a most extraordinary nature. They passed an act, ordaining that if any creditor should refuse to take their bills, for any debt whatever, the debtor might lodge the sum due, with a justice of the peace, who should giv notice of it in the public papers; and if the creditor did not appear and receive the money within six months from the first notice, his debt should be forfeited. This act astonished all honest men, and even the promoters of paper money making in other States, and on other principles, reprobated this act of Rhode Island, as wicked and oppressiv. But the State was governed by faction. During the cry for paper money, a number of boisterous ignorant men, were elected into the Legislature, from the smaller towns in the State. Finding themselves united with a majority in opinion, they formed and executed any plan their inclination suggested; they opposed every measure that was agreeable to the mercantile interest; they not only made bad laws to suit their own wicked purposes, but appointed their own corrupt creatures to fill the judicial and executiv departments. Their money depreciated sufficiently to answer all their vile purposes in the discharge of debts; business almost totally ceased; all confidence was lost; the State was thrown into confusion at home, and was execrated abroad.
Massachusetts Bay had the good fortune, amidst her political calamities, to prevent an emission of bills of credit. New Hampshire made no paper; but in the distresses which followed her loss of business after the war, the Legislature made horses, lumber, and most articles of produce a legal tender in the fulfilment of contracts. It is doubtless unjust to oblige a creditor to receive any thing for his debt, which he had not in contemplation at the time of the contract. But as the commodities which were to be a tender by the law of New Hampshire, were of an intrinsic value, bearing some proportion to the amount of the debt, the injustice of the law was less flagrant, than that which enforced the tender of paper in Rhode Island. Indeed a similar law prevailed for some time in Massachusetts; and in Connecticut it is optional with the creditor, either to imprison the debtor, or take land on an execution, at a price to be fixed by three indifferent freeholders; provided no other means of payment shall appear to satisfy the demand. It must not however be omitted, that while the most flourishing commercial States introduced a paper medium, to the great injury of honest men, a bill for an emission of paper in Connecticut, where there is very little specie, could never command more than one eighth of the votes of the Legislature. The movers of the bill have hardly escaped ridicule; so generally is the measure reprobated as a source of fraud and public mischief.
The Legislature of New York, a State that had the least necessity and apology for making paper money, as her commercial advantages always furnish her with specie sufficient for a medium, issued a large sum in bills of credit, which support their value better than the currency of any other State. Still the paper has raised the value of specie, which is always in demand for exportation, and this difference of exchange between paper and specie, exposes commerce to most of the inconveniencies resulting from a depreciated medium.
Such is the history of paper money thus far; a miserable substitute for real coin, in a country where the reins of government are too weak to compel the fulfilment of public engagements; and where all confidence in public faith is totally destroyed.
While the States were thus endeavoring to repair the loss of specie, by empty promises, and to support their business by shadows, rather than by reality, the British ministry formed some commercial regulations that deprived them of the profits of their trade to the West Indies and to Great Britain. Heavy duties were laid upon such articles as were remitted to the London merchants for their goods, and such were the duties upon American bottoms, that the States were almost wholly deprived of the carrying trade. A prohibition was laid upon the produce of the United States, shipped to the English West India Islands in American built vessels, and in those manned by American seamen. These restrictions fell heavy upon the eastern States, which depended much upon ship building for the support of their trade; and they materially injured the business of the other States.