But already there was a pernicious principle at work,—protested against by experience wherever tried, and still repeatedly tried anew,—the assumption by Government of the power to regulate the prices of goods. The first instance carries us back to 1618, and thinking men still believed it possible in 1777. The right to regulate the prices of labor was its natural corollary, bringing with it the power of creating legal tenders and the various representatives of value, without any correspondent measures for creating the value itself, or, in simpler words, paper-money without capital. And thus, logically as well as historically, we reach the first issue of paper-money in 1690, that year so memorable as the year of the first Congress.
New England, encouraged by a successful expedition against Port Royal, made an attempt upon Quebec. Confident of success, she sent forth her little army without providing the means of paying it. The soldiers came back soured by disaster and fatigue, and, not yet up to the standard of '76, were upon the point of mutinying for their pay. To escape the immediate danger, Massachusetts bethought her of bills of credit. They were issued, accepted, and redeemed, although the first holders suffered great losses, and the last holders or the speculators were the only ones that found them faithful pledges. The flood-gates once opened, the water poured in amain. Every pressing emergency afforded a pretext for a new issue. Other Colonies followed the seductive example. Paper was soon issued to make money plenty. Men's minds became familiar with the idea, as they saw the convenient substitute passing freely from hand to hand. Accepted at market, accepted at the retail store, accepted in the counting-room, accepted for taxes, everywhere a legal tender, it seemed adequate to all the demands of domestic trade. But erelong came undue fluctuations of prices, depreciations, failures,—all the well-known indications of an unsound currency. England interposed to protect her own merchants, to whom American paper-money was utterly worthless; and Parliament stripped it of its value as a legal tender. Men's minds were divided. They had never before been called upon to discuss such questions upon such a scale or in such a form. They were at a loss for the principle, still enveloped in the multitude and variety of conflicting theories and obstinate facts.
One fact, however, was clearly established,—that a government could, in great needs, make paper fulfil, for a while, the office of money; and if a regular government, why not also a revolutionary government, sustained and accepted by the people? Here, then, begins the history of the Continental money,—the principal chapter in the financial history of the Revolution,—leading us, like all such histories, over ground thick-strown with unheeded admonitions and neglected warnings, through a round of constantly recurring phenomena, varied only here and there by modifications in the circumstances under which they appear.
It is much to be regretted that we have no record of the discussions through which Congress reached the resolves of June 22, 1775: "That a sum not exceeding two millions of Spanish milled dollars be emitted by the Congress in bills of credit for the defence of America. That the twelve confederated Colonies" (Georgia, it will be remembered, had not yet sent delegates) "be pledged for the redemption of the bills of credit now to be emitted." We do not even know positively that there was any discussion. If there was, it is not difficult to conceive how some of the reasoning ran,—how each had arguments and examples from his own Colony: how confidently Pennsylvanians would speak of the security which they had given to their paper; how confidently Virginians would assert that even the greatest straits might be passed without having recourse to so dangerous a medium; how all the facts in the history of paper-money would be brought forward to prove both sides of the question, but how the underlying principle, subtile, impalpable, might still elude them all, as for thirty-five years longer it still continued to elude wise statesmen and thoughtful economists; how, at last, some impatient spirit, breaking through the untimely delay, sternly asked them what else they proposed to do. By what alchemy would they create gold and silver? By what magic would they fill the coffers which their non-exportation resolutions had kept empty, or bring in the supplies which their non-importation resolutions had cut off? What arguments of their devising would induce a people in arms against taxation to submit to tenfold heavier taxes than those which they had indignantly repelled? Necessity, inexorable necessity, was now their lawgiver; they had adopted an army, they must support it; they had voted pay to their officers, they must devise the means of giving their vote effect; arms, ammunition, camp-equipage, everything was to be provided for. The people were full of ardor, glowing with fiery zeal; your promise to pay will be received like payment; your commands will be instantly obeyed. Every hour's delay imperils the sacred cause, chills the holy enthusiasm; action, prompt, energetic, resolute action, is what the crisis calls for. Men must see that we are in earnest; the enemy must see it; nothing else will bring them to terms; nothing else will give us a lasting peace: and in such a peace how easily, how cheerfully, shall we all unite in paying the debt which won for us so inestimable a blessing!
It would have been difficult to deny the force of such an appeal. There were doubtless men there who believed firmly in the virtue of the people,—who thought, that, after the proof which the people had given of their readiness to sacrifice the interests of the present moment to the interests of a day and a posterity that they might not live to see, it would be worse than skepticism to call it in question. But even these men might hesitate about the form of the sacrifice they called for, for they knew how often men are governed by names, and that their minds might revolt at the idea of a formal tax, although they would submit to pay it fifty-fold under the name of depreciation. Even at this day, with all our additional light,—the combined light of science and of experience,—it is difficult to see what else they could have done without strengthening dangerously the hands of their domestic enemies. Nor let this be taken as a proof that they engaged rashly in an unequal contest, even though it was necessarily in part a war of paper against gold. They have been accused of this by their friends as well as by their enemies: they have been accused of sacrificing a positive good to an uncertain hope,—of suffering their passions to hurry them into a war for which they had made no adequate preparation, and had not the means of making any,—that they wilfully, almost wantonly, incurred the fearful responsibility of staking the lives and fortunes of those who were looking to them for guidance upon the chances of a single cast. But the accusation is unjust. As far as human foresight could reach, they had calculated these chances carefully. They knew the tenure by which they held their authority, and that, if they ran counter to the popular will, the people would fall from them,—that, if they should fail in making their position good, they would be the first, almost the only victims,—that, then as ever, "the thunderbolts on highest mountains light." Charles Carroll added "of Carrollton" to his name, so that, if the Declaration he was setting it to should bring forfeiture and confiscation, there might be no mistake about the victim. Nor was it without a touch of sober earnestness that Harrison, bulky and fat, said to the lean and shadowy Gerry, as he laid down his pen,—"When hanging-time comes, I shall have the advantage of you. I shall be dead in a second, while you will be kicking in the air half an hour after I am gone." But they knew also, that, if there are dangers which we do not perceive till we come full upon them, there are likewise helps which we do not see till we find ourselves face to face with them,—and that in the life of nations, as in the life of individuals, there are moments when all that the wisest and most conscientious can do is to see that everything is in its place, every man at his post, and resolutely bide the shock.
While this subject was pressing upon Congress, it was occupying no less seriously leading minds in the different Colonies. All felt that the success of the experiment must chiefly depend upon the degree of security that could be given to the bills. But how to reach that necessary degree was a perplexing question. Three ways were suggested in the New-York Convention: that Congress should fix upon a sum, assign each Colony its proportion, and the issue be made by the Colony upon its own responsibility; or that the United Colonies should make the issue, each Colony pledging itself to redeem the part that fell to it; or, lastly, that, Congress issuing the sum, and each Colony assuming its proportionate responsibility, the Colonies should still be bound as a whole to make up for the failure of any individual Colony to redeem its share. The latter was proposed by the Convention as offering greater chances of security, and tending at the same time to strengthen the bond of union. It was in nearly this form, also, that it came from Congress.
No time was now lost in carrying the resolution into effect. The next day, Tuesday, June 23, the number, denomination, and form of the bills were decided in a Committee of the Whole. It was resolved to make bills of eight denominations, from one to eight, and issue forty-nine thousand of each, completing the two millions by eleven thousand eight hundred of twenty dollars each. The form of the bill was to be,—
Continental Currency.
No. Dollars.
This bill entitles the bearer to receive —— Spanish milled dollars or the value thereof in gold or silver, according to the resolutions of the Congress held at Philadelphia on the 10th day of May, a. d. 1775.