BANKS INCREASE THE COUNTRY’S CAPITAL 27
wars against the Indians, commercial and agricultural development
— “all is to be attributed to our Bills of Credit.”
The dominant theory among the colonists, however, was not
that increase in the quantity of media of payment was in
itself an addition to wealth, or that it need always lead to such;
but that, in the absence of a certain adequate supply of currency,
the issue of paper money would greatly stimulate industry and
trade. “There is a certain proportionate Quantity of Money,”
wrote Benjamin Franklin in 1729, in a passage typical of the
time, ‘requisite to carry on the Trade of a Country freely and
currently; More than which would be of no Advantage in Trade,
and Less, if much less, exceedingly detrimental to it.” 2 There
were few, however, to question that this necessary quantity was
lacking; and complaint of the scarcity of currency was made by
nearly ever writer.2 A number of them pointed to the frequent
resort to “truck trade,” or barter, as indicating this lack.* The
customary explanation of the want of media of payment was
that the unfavorable balance of trade with England caused the
metallic money of the colonies to flow to the mother country.®
1 “A Word of Comfort,” etc. (1721), Reprints, ii, 172-178.
2 “Modest Inquiry into the Nature and Necessity of a Paper Currency’ (1729),
Reprints, ii, 336. In his Autobiography (Weld edition, p. 113) Franklin informs us
that, upon the enactment of an inflation bill soon after the appearance of his
“Modest Inquiry” (which was published anonymously), his friends in the Pennsylvania
legislature ‘‘ thought fit to reward me by employing me in printing the money;
a very profitable job and a great help to me. This was another advantage gained
by my being able to write.”
3 The preamble of the Massachusetts act of 1690, authorizing the first emission
of bills of credit by any colony, reads, ‘Considering the present Poverty, and
(through Scarcity of Money) the want of an Adequat Measure of Commerce . . .”
(Reprints, ii, 307.)
Some of these preambles of colonial currency legislation make interesting reading.
In authorizing its public land bank of 1715, Rhode Island explained in a two-page
opening sentence that, “Whereas it hath pleased God to suffer the French and
Indians, our late Enemies, to maintain a long, bloody, and expensive War,” the
colony was sore distressed for want of circulating medium, and “Trade is sensibly
Decayed.” The “decay” of trade was a perennial complaint.
4 “Distressed State of . . . Boston Once More Considered” (1720), Reprints, ii,
74, for example.
8 Governor Pownall, upon whom the lessons of the colonial issues were not entirely
lost, wrote in 1774 that in “colonies, the essence of whose nature requires
a progressive increase of settlements and trade, and yet, who from the balance of
