Give Me Liberty: The Struggle for Self-Government in Virginia

by Thomas Jefferson Wertenbaker

The controversy over the Two-penny Act came at a time when the Board of Trade was at odds with the Virginia Assembly over the repeated issues of paper money. Had Dinwiddie and Fauquier not assured them that without these issues there would have been no funds with which to carry on the war, they would certainly have put a stop to them. As it was, all they could do was to urge that steps be taken to prevent the paper from declining in value and to protect the interests of the British merchants.

Prior to 1757 each issue had borne five per cent interest, and taxes had been voted for their redemption. But in April of that year the notes were all called in and new ones issued in their place bearing no interest. This, with a new issue of £80,000 brought the total to £179,962.10.0. This was more than was needed to carry on the business of the colony, and the value of the notes began to sink.[20] In 1748 an act had been passed declaring that debts contracted in sterling could be paid in Virginia currency at a twenty-five per cent advance, or one pound five shillings for one pound sterling. But as the rate of exchange was not long in rising above this figure, the merchants feared large losses.

The London merchants, speaking not only for themselves, but for those of Bristol, Liverpool, and Glasgow, laid their complaint before the Board of Trade. The issuing of large amounts of paper money could be most injurious to trade by putting it upon an uncertain basis, they said. And to pay debts contracted in sterling in depreciated colonial currency was as unjust as it was unwise. So they asked the King to instruct the Governor to urge the Assembly to amend the act of 1748 to make all debts due to persons in Great Britain payable according to the real difference in exchange.[21]

It seems strange that the merchants and the Board of Trade did not know that what they asked for had already been done. In 1755 the act of 1748 had been amended so as to direct the courts in cases where contracts had been made in sterling, to order payment in Virginia money at the rate of exchange they thought just.[22] "The merchants do not know the law," Fauquier wrote the Board. "Let the value of paper currency fall as much as they please ... exchange will rise as fast, and they will obtain for a sterling debt just as much of the paper currency as will purchase a good sterling bill of exchange. And what injury is done them unless ... the whole court combine in a barefaced villainy to defraud them?" At the last court the exchange had been fixed at 35 per cent.[23]

The amendment to the law of 1748 had had no clause suspending its operation until the King had given his assent, and, like the Two-penny Act, was a clear infringement on the royal prerogative. But since it had merely anticipated the King's wishes, it drew no rebuke from him. None the less, it was one more step toward autonomy, one more demonstration that in internal affairs the Virginians were a self-governing people.

The fixing of the rate of exchange quieted the merchants for the time being, even though they looked on uneasily as Fauquier assented to further emissions, for £57,000 in September, 1758; £52,000 in February, 1759; £10,000 in November, 1759; £20,000 in March, 1760; £32,000 in May, 1760; and £30,000 in March, 1762. The whole totalled nearly £413,000, and William Hunter's printing press at Williamsburg was kept busy stamping out notes of £10, £15, £3, 10 shillings, 3 shillings, etc. In the meanwhile, only £51,156.10.0. had been retired and burnt, leaving £362,000 in circulation.[24]

Long before this figure had been reached, opposition to paper money had grown within the colony itself. The law which protected the British merchants did not apply to Virginia creditors, since their contracts usually had been made in the local currency. So, as the flood of paper continued to mount, the small farmer or shopkeeper who had borrowed from his wealthy neighbor, could pay him back in depreciated notes. And as they were legal tender, he had to accept them. "Debtors pursued their creditors relentlessly and paid them without mercy."

In 1762, though a bill to issue £30,000 in paper money passed the House by a vote of 66 to 3, it hung fire in the Council. At the time there were only six members in attendance, three of whom opposed any further emissions, so Fauquier got the Speaker to hold back the bill while he sent out a hurry call for the others. In the end the bill passed by a vote of five to four. "On this occasion I have stretched my influence to the utmost pitch," the Governor wrote the Board.[25] The four dissenting Councillors—William Nelson, Thomas Nelson, Richard Corbin, and Philip Ludwell Lee—all of them rich men, made a vigorous protest, which was entered upon the Journal.[26]

Not satisfied with this, Corbin took the step, unusual for a member of the Upper House, of complaining to the Board of Trade against an act of Assembly. He was astute enough to base his case, not on his personal losses, but on the losses to the revenue and to the merchants. Taxes had been paid in the depreciated currency. In turn this had made it impossible to meet the needs of the government and at the same time sink the outstanding notes. As for the merchants, though it was true that sterling contracts were to be paid at the current rate of exchange, and though the judges who determined it seemed to be impartial, the rate might rise from five to fifteen per cent between the date of their decision and the date of settlement, to their great loss.[27]

When the British merchants heard that some of the most prominent men in Virginia had sided with them in urging that an end be put to currency inflation, they were encouraged to renew their complaints to the Board of Trade. The Board, in turn, wrote Fauquier to urge the Assembly to give them satisfaction. So the Governor, on May 19, 1763, addressed the House, pointing out that common justice required that every man should receive full payment for debts due him. And the support of the public credit, so vital for a trading country like Virginia, made it absolutely necessary to redeem the paper in circulation at the dates fixed by law.[28]