28 BANKING THEORIES IN UNITED STATES

Many urged that this should be remedied by bounties encouraging
home industry, sumptuary laws reducing the use of imported
commodities, and like practices made familiar to us by the
English Mercantilists.
Yet the notion that want of specie currency rendered the issue
of a paper substitute necessary did not long go unchallenged.
As early as 1714, one writer, while demanding that colonial bills
of credit be issued to supply the want of a circulating medium,
recognized that a land bank, such as that projected at Boston in
that year, would ‘“make Money Vile and Contemptible,” and
argued that, “that which really makes the Value of Money,
among other things, is its Rarity: So that upon the whole, the
Remedy proposed by these Projectors, will be much worse than
the Disease.” ! In 1719 another pamphleteer urged reduction of
the quantity of bills of credit in order to raise their value, and
criticized the cry that there was scarcity of circulating medium,
claiming that the real trouble was the driving out of silver by the
operation of Gresham’s Law, as a result of the depreciation of the
vast amount of bills of credit issued? In 1734 Governor Belcher
warned: “Of late, it is most certainly apparent that emissions of
bills of what sort soever, have sunk the value of all bills that
were extant before, more or less in proportion to the sums that
have been emitted.” ?
The staunchest friend of a sound currency, however, and
the ablest of all the writers of the colonial period, was Dr.
William Douglass, whose works gained him the distinction of
favorable mention in the Wealth of Nations, and whose Discourse
heads McCulloch’s Select Tracts on Paper Currency and Banking.
Douglass contributed a number of pamphlets to the controversy
then taking place, the principal ones being his Essay of 1738 and
trade with the mother country being against them, must suffer a constantly decreasing
 quantity of silver money; a cerlain quantity of paper-money is necessary.”
Administration of the British Colonies (5th edition, 1744), i, 104.
1 ¢« Objections to the Bank of Credit,” etc. (1714), Reprints, i, 253, 254. The
quantity theory had first been definitely stated by Locke in 1691. (See J. L. Laughlin,
 Principles of Money, p. 227.)
2 «Addition to the Present Melancholy Circumstances,” etc. (1719), Reprints,
i, 386, 387.
3 Felt. Historical Account of the Massachusetts Currency, p. OI.