The Burgesses responded by adding to the fund for sinking the paper money by laying additional taxes on slaves, wheel carriages, licenses, etc.[29] But they would not budge from their determination to keep all the notes legal tender. And they made a long and able reply to the Governor, drawn up by Charles Carter, Edmund Pendleton, Wythe, and Richard Henry Lee, justifying their proceedings and claiming that the merchants had no just grounds for complaint. In it they inserted a declaration of American rights which the British Ministry would have been wise to take to heart. Their dependence upon Great Britain they acknowledged as their greatest happiness and only security. But this was not the dependence of a conquered people, but of sons sent out to explore and settle a new world for the mutual benefit of themselves and their common parent. It was the dependence of the part upon the whole, which, by its admirable constitution, diffused a spirit of patriotism which made every citizen, however remote from the mother kingdom, zealous for the King and the public good.[30]
But the merchants were far from being satisfied, and a group in Glasgow sent another appeal to the Board of Trade. They thought that part of the trouble came from the ease with which paper money could be counterfeited. And they were sure that the hundreds of counterfeit notes, passing from hand to hand in Virginia, partly accounted for the enormous heights of exchange. But they supported the Assembly in continuing the legal tender clause. To take it off might make the currency debts "more fluctuating, uncertain, and less valuable." The only effectual remedy was to forbid further issues of paper money, to see that notes as they were brought into the treasury were duly burnt, to order that circulating notes bear five per cent interest, and to remedy any deficiency in the taxes.[31] When Parliament passed an act to prohibit future emissions in the colonies, they seemed satisfied.
But there was a strong underlying sentiment in the colony against burning the notes. The soil of tidewater Virginia, after a century and a half of cultivation, was beginning to wear out, and thousands of acres were gradually reverting to forest land. This, with war taxes and an occasional drought, had brought hard times. But the planters, instead of tightening their belts, continued the old extravagant mode of living by borrowing money. "I fear they are not prudent enough to quit any article of luxury till smart obliges them," observed Fauquier.[32] So for many cheap money meant salvation from ruin.
These men made their influence felt in the House when a scheme for borrowing £240,000 from the British merchants was passed in May, 1765. Of this sum £100,000 was to be used for a new currency to replace old notes, and £140,000 to be lent out at five per cent interest. But when the bill came up to the Council it was bitterly opposed by Corbin and finally defeated.[33]
In the meanwhile, people were wondering why the rate of exchange did not drop. They were not ignorant of the quantative law of currency, and they knew that the amount of paper in circulation ought to have been reduced each year. So they were surprised to find it remaining between sixty and sixty-five per cent. Behind this apparent contradiction of economic law there must be some mystery.[34]
The mystery was explained in May, 1766, when a bomb exploded which shook the colony from the capes to the Alleghenies. That month the beloved John Robinson, Speaker and Treasurer, died. Fauquier had called him "the darling of the country." The Gazette lamented his loss and praised "the many amiable virtues which adorned his private station."
So there was universal astonishment when the examiners of his accounts found a deficit of £100,000. Robinson had not taken the money for his own use. Even had he been dishonorable enough to do so, there would have been no need for it, since he was one of the richest men in the colony. What he had done was to lend his friends thousands of pounds from the public funds.[35] In this he was guilty of two serious breaches of his duty. Since the Assembly had refused to establish a public loan office, he must have known that he had no right to do so on his own responsibility. And there could be no excuse for his disregard of the law which required that he burn the paper money as it came in.
But when his friends came to him in distress begging loans to save them from ruin, he did not have the strength of character to refuse them. Thousands of pounds went out to men in all parts of the colony, among them members of some of the oldest and most distinguished families—William Byrd III, Charles Carter, Jr., George Braxton, Henry Fitzhugh, Lewis Burwell, etc. Robinson's estate was large enough to cover all these loans, but it took many years for his executors to recover even part of what was due him.
Robert Carter Nicholas, Robinson's successor as Treasurer, was bitter in condemnation of what he had done. "The seeming mysteries of our exchange now begin to unfold themselves," he wrote in a letter to the Gazette. "It comes out that a great part of the money squeezed from the people for their taxes, instead of being sunk ... was thrown back into circulation." The Assembly had given their word that they would protect the interests of the British merchants by burning the paper promptly on the dates of their retirement. What must the world think when these good intentions had been in part defeated by a strange kind of misconduct? What made it worse was the need the colony had for the friendship of the merchants at a time when the great men in England had their eyes fixed upon all the Assemblies. "The consequences are as glaring as the sun in the meridian."[36]
Nicholas saw to it that the law was obeyed. As the notes came in they were burnt. As a result the exchange began to drop until in a few months it became normal. The day of easy money was over, and the host of debtors faced ruin. For many months the pages of the Gazette were crowded with notices of slaves and plantations for sale.