Rhode Island managed her issues wildly. The history of her financial recklessness, by E. R. Potter, was published in 1837, and reprinted by Henry Phillips, Jr., in his Historical Sketches, etc. This paper as enlarged by S. S. Rider in 1880, constitutes no. viii. of the Rhode Island Historical Tracts, under the title of Bills of Credit and Paper Money of Rhode Island, 1710-1786, with twenty fac-similes of early bills. In 1741 Gov. Ward made an official report to the Lords Commissioners of Trade, rehearsing the history of the Rhode Island issues from 1710 to 1740, and this report, with other documents relating to the paper money of that colony, is in the Rhode Island Col. Records, vol. v. (1741-56).
Towards the end of Dudley’s time in Massachusetts, the party lines became sharply drawn on questions of financial policy. The downfall of credit alarmed the rich and conservative. The active business men, not many in numbers, but strong in influence, found a flow of paper money helpful in making the capital of the rich and the labor of the poor subserve their interests, as Hildreth says. There were those who supposed some amelioration would come from banks, private and public, and the press teemed with pamphlets.[396] The aggressive policy was formulated in A Projection for erecting a Bank of Credit in Boston, New England, founded on Land Security, in 1714.[397] Its abettors endeavored to promote subscriptions by appealing to the friends of education, in a promise to devote £200 per annum to the advantage of Harvard College.[398]
The small minority of hard-money men cast in their lot with the advocates of a public bank as the lesser evil of the two.
Gov. Dudley was no favorer of the Land-bank scheme[399] and his son, Paul Dudley, attacked it in a pamphlet, Objections to the Bank of Credit lately projected at Boston[400] (Oct., 1714), to which an answer came in Dec., from Samuel Lynde and other upholders, called A Vindication of the Bank of Credit.[401] “Of nearly thirty pamphlets and tracts, printed from 1714 to 1721,[402] for or against a private bank or a public bank,” says Dr. Trumbull,[403] “that of Dudley was the first, and is in some respects the ablest;” but he places foremost among the advocates of the scheme the author of A Word of Comfort to a Melancholy Country (Boston, 1721), purporting to be by “Amicus Patriæ,” or, as Trumbull thinks (p. 40) there is little doubt, by the famous Rev. John Wise, of Chebacco. (Cf. Brinley Catal., i. nos. 1,442-45.)
To forestall the action of the private bank, the province, by a law, issued £50,000 to be let out on mortgages of real estate, and these bills were in circulation for over thirty years, and the assembly took other action to prevent the Land-bank scheme being operative. The subsequent emissions of paper money can be traced in Felt, who also cites the contemporary tracts, ranged upon opposite sides, and supporting on the one hand the conservative views of the Council, and on the other the heedless precipitancy of the House. One of these, The Distressed state of the town of Boston considered ... in a letter from a gentleman to his friend in the country (1720), excited the attention of the council as embodying reflections on the acts of the government.[404]
In 1722 bills of as small a denomination as one, two, and three pennies[405] were ordered, to provide small change, which had become scarce.
The financial situation was rapidly growing worse. In 1710 an ounce of silver was worth eight shillings in paper, and in 1727 it had risen to seventeen shillings; and at this time, or near it (1728), there was afloat about £314,000 of this paper of Massachusetts indebtedness, to say nothing of a similar circulation issued by the other colonies, that of Rhode Island showing a much greater depreciation.[406] The fall in value was still increasing when in 1731 there were plans of bringing gold and silver into the country for a medium of trade;[407] but naturally the needy mercantile class opposed it. Thomas Hutchinson early (1737-38) distinguished himself in the assembly as a consistent opposer of paper money, and in 1740 he tried to push a scheme to hire in England 220,000 ounces of gold to meet the province bills, but he had little success. Another[408] scheme, however, flourished for a while; and this was one reviving the old name of the Land-bank, though sometimes called “Manufactory bank,” a bill for which was set afoot by Mr. John Colman, a needy Boston merchant, as Hutchinson calls him. Its principal feature consisted in securing the issues of the bank by a mortgage on the real estate of each associate to the extent of his subscription. It found its support in the small traders and the people of the rural districts, and was sustained in general by the House of Representatives. The leading and well-to-do merchants opposed it, and set up what was called a “Silver Scheme,”—an issue of notes to be redeemed in silver after the lapse of ten years.[409] “Mr. Hutchinson,” as this gentleman himself records, “favored neither, but considered the silver plan as without fraudulent purpose, which he did not think could be the case with the Land-bank.”[410]
RHODE ISLAND PAPER,—TWELVE PENCE.