BANKS DRIVE SPECIE OUT

49

Extravagances are encouraged in favor of a great Consumption
of British goods,” ! turning the balance of trade against the colonies.
 Money was made to seem more plentiful, stimulating the
purchase of domestic and foreign products alike.
Benjamin Franklin, on the other hand, in trying to dissuade the
Board of Trade from extending the prohibition of bills of credit to
those colonies outside of New England, dismissed the objection
that paper money drives gold and silver out of the colonies as a
“merely speculative’ opinion. “The truth is, that the balance
of their trade with Britain being greatly against them, the gold
and silver is drawn out to pay that balance; and then the necessity
 of some medium of trade has induced the making of paper
money, which could not be carried away.” 2
The committee appointed by the Pennyslvania Assembly in
1785 to consider the advisability of repealing the charter of the
Bank of North America, made much of the criticism that the bank
tended to “banish specie” from the country. In the debate that
ensued, this argument seems to have been the one most frequently
advanced by the bank’s opponents. The discussion of the point
was hardly edifying. One legislator argued that the bank was
“‘an engine of trade that enabled the merchants to import more
goods than were necessary, or than there was money to pay for,
[and that] by means of a bank the European merchants were
enabled to procure and carry off money for their goods: and to

! Douglass, Discourse (1740), p. 322 (Bullock’s edition).
* Franklin, “Remarks and Facts” (1764), Works, ii, 342. In a letter to Joseph
Galloway, written in London in 1767, Franklin seems to have had some misgivings
concerning his espousal of the view that an unfavorable balance of trade made the
issue of paper money necessary in the colonies. The English merchants, Franklin
thought, misunderstood their own interests when they protested against the further
issue of paper money in America. For, “should a scarcity of money continue among
us, we shall take off less of their merchandize and attend more to manufacturing and
raising the necessaries and superfluities of life among ourselves which we now receive
from them. And perhaps this consequence would attend our making no paper
money at all of any sort, that being thus by a want of cash driven to industry and
frugality, we should gradually become more rich without their trade, than we can
possibly be with it, and by keeping in the country the real cash that comes into it,
have in time a quantity sufficient for all our occasions. But I suppose our people
will scarce have patience to wait for this.” Letter to Galloway (August 8, 1767),
in Private Correspondence of Franklin, edited by W. T. Franklin, pp. 142, 143.