PRINCIPLES OF NOTE ISSUE

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vogue of land banking and of paper currency, which became most
extensive about the years 1714, 1720, and 1740, was intimately
connected with cheap-money agitation; and in part the failure
to provide for convertibility into specie was caused by the fact
that the projects of the time were intended to remedy the very
difficulty that the supply of specie was supposedly inadequate.
Even if a convertible currency were to be preferred, it was commonly
 argued, the want of sufficient specie prevented its adoption.
 Paper money possessed this superiority over metallic
money, namely, that the country could not be deprived of it by
an unfavorable balance of trade.! This raised the question, with
which we have dealt in a preceding chapter, whether the issue of
paper money had caused the drain of specie, or the reverse.
It must not be thought, however, that there was none to insist
that paper money should be payable in specie. “I would thank
no man,” wrote one critic, “for his Note or Bond, obliging himself
 always to owe me a Thousand Pounds, for if he always owes
it, he never pays it, and so I shall never be the better for it.” 3
The land security given for notes, Governor Hutchinson observed,
“Is a sufficient Surety to the Province, that they shall be paid in
again, but it is no Security to the Possessors or the Persons that
give a Credit to them, that they shall purchase as much Silver
or Gold the next Year, as it does the present.” ¢
Most of the proposals for specie-paying banks contemplated
notes redeemable in silver at some future date. The silver for this
purpose was usually to be secured by requiring that the loans
through which the notes had been put into circulation should be
repaid in metallic money, perhaps by installments.’ The foundt
 “A Word of Comfort,” etc. (1721), Reprints, ii, 167; “Inquiry into the Nature
and Uses of Money” (1740), Reprints, iii, 412-423.
¢ See Chapter III.
3 “Addition to the Present Melancholy State,” etc. (1719), Reprints, i, 381.
Cp. “Objections to the Bank of Credit,” etc. (1714), Reprints, i, 252.
* “A Letter to a Member of the House,” etc. (1736) Reprints, iii, 153.
* “A Project,” etc. (1720), Reprints, ii, 140 ff.; “A Letter to a Member of the
House,” etc. (1736), Reprints, iii, 157; “Communication to the Weekly Journal”
(Jan. 1, 1740), Reprints, iii, 289-297. An interesting suggestion, rejected by its
author as impracticable, was that of Hugh Vance for a bank to issue bills “‘ promising
a certain Sum payable in 3 or 6 Months, to the Possessor, in Sterling-Drafts.”
‘Inquiry into the Nature and Uses of Money” (1740), Reprints, iii, 413.