Scheme for Supplying the Colonies with a Paper Currency
Draft (first part only): American Philosophical Society; remainder
reprinted from Thomas Pownall, The Administration of the
Colonies (4th edition, London, 1768), pp. 243-53.
[February 11-12? 1765]
The Paper Money Act of 1739, being the compleatest of the kind,
as containing all the Improvements which Experience had from time
to time suggested, in the Execution of preceding Acts, an Account
of that Act will probably be most satisfactory.
The Sum thereby directed to be printed was
£80,000 Proclamation Money, to be emitted on Loan.
Five Persons were nominated Trustees of the
Loan-Office, under whose Care and Direction the Bills were to be
printed, and emitted.
To suit the Bills for a common Currency, they
were of small and various Denominations from Twenty Shillings
downwards to One Shilling.
Various Precautions were taken to prevent
Counterfeits, by Peculiarities in the Paper, Character, Manner of
Printing, Signing, Numbering, &c.
The Trustees took an Oath and gave Security for
the due and faithful Execution of their Office.
They were to lend out the Bills on real
Security of at least double the Value, for a Term of Sixteen Years,
to be repaid in Years Quotas or Installments, with Interest at Five
per Cent. Thus One Sixteenth Part of the Principal, was yearly paid
back into the Office. The Interest was apply’d to Publick Services;
the Principal during the first 10 Years, let out again to fresh
Borrowers.
The new Borrowers from Year to Year, were to
have the Money only for the remaining Part of the Term of Sixteen
Years, paying by fewer and of course proportionably larger
Installments, and during the last Six Years of the Sixteen, the
Sums paid in were not to be re-emitted, but burnt and destroyed, so
that at the End of the 16 Years, the whole might be call’d in and
sunk, and the Accounts compleatly settled.
The Trustees were taken from all the different
Counties of the Province, their Residence in different Parts giving
them better Opportunities of being acquainted with the Value and
Circumstances of Estates offered them in Mortgage.
They were to continue but Four Years in Office,
were to account annually to Committees of Assembly, and at the
Expiration of that Term they were to deliver up all Monies and
Securities in their Hands to their Successors, before their Bonds
and Sureties could be discharged.
Lest a few wealthy Persons should engross the
Money which was intended for more general Benefit, no one Person,
whatever Security he might offer, could borrow more than One
Hundred Pounds.
Thus Numbers of poor new Settlers were
accommodated and assisted with Money to carry on their Settlements,
to be repaid in easy Portions yearly, as the yearly Produce of
their Lands should enable them.
Great Inconveniencies had arisen in other
Colonies from a Depreciation of their Paper Money, occasioned by
emitting it in too great Quantities.
It was difficult to know before hand, what
Quantity would be sufficient for a Medium of Exchange proportion’d
to the Trade of The Colony, and not exceed the Occasions.
To prevent the Mischiefs attending an Over
Quantity, the Government of Pensilvania began with a small Sum,
£15000 in 1723, proceeded to encrease it gradually in following
Years, and thus prudently felt for a Proportion they could
not previously calculate. And as they never exceeded a
moderate Sum, the Depreciation was never so great as to be attended
with much Incovenience.
But the Act being expired, and the Proprietors
and People differing about the Terms of renewing it (the former
tho’ they and their Deputys had received annual Presents out of the
Interest and to near £40,000, yet insisting on greater future
Advantages, which the Assembly did not chuse to comply with) this
excellent Machine for Settling a new Country now no longer
exists.
And as by the late Act of Parliament no more
Paper Money can be issued in the Colonies, that shall be a legal
Tender, it may perhaps be necessary for Government here to make
some Provision of a Currency for the Colonies, since otherwise in a
short time there will be no means of satisfying Judgments in Courts
of Justice, or of paying either Debts or Taxes.
If this should be thought necessary, the
Pennsylvania Scheme which has by long Experience been found so
practicable and so useful, may with a few Changes to accommodate it
to more general Purposes, be safely and advantageously extended to
all the Colonies by an Act of Parliament as follows.
Let Millions in Bills of Credit,
be printed here for the Use of the Colonies.
Let a Loan Office be erected in each Colony, to
issue the Bills, take the Securities, receive and re-emit the
Quota’s or Installments yearly paid in.
Let the Bills be issued for Ten Years, payable
a Tenth Part of the Principal Sum yearly, with Interest at 6 per
Cent.
Let the Bills be made by the Act a legal Tender
in all the Colonies: and the Counterfeiting made Felony of
Death.
Let there be no Limitation of the Sum to be
borrowed by one Person, but that every one may borrow as much as he
can give double Security for by a Mortgage of real clear
Estate.
And to prevent an over Quantity existing, let
an Interest of 5 per Cent be allow’d for all Sums lodg’d in the
Office, during the Time the Owner suffers it to remain there. By
this means it is suppos’d the proportion will find itself, and
adapt itself from time to time to the Occasions of Commerce.
To keep the Value fixed, Let a Credit be rais’d
with the Bank of England, and the Trustees of each Loan Office be
always ready to exchange upon Demand any Quantity of the Bills, by
giving for them Drafts on the Bank at a fix’d Rate of Exchange,
viz. for £133 6s. 8d. Currency One Hundred Pounds
Sterling.
The Effects of this Scheme.
The Silver and Gold acquir’d by the Colonies
would all be sent to England.
Yet they would have a legal Tender.
They would also have a Sufficiency of Cash
current for all Purposes.
They would not have too much Current at one
time, as Allowing Interest for Sums lodg’d in the Office would
always bring in the Surplus.
The Settlement and Improvement of new Tracts of
Land would be greatly encouraged and promoted, Population
encreas’d, &c. Trade extended, &c.
The Means of Remittance to Britain, would be
always at hand, and the Commerce thereby facilitated.
A great annual Sum continually increasing will
arise to the Crown for Interest, to be apply’d to American
Purpose.
It will operate as a general Tax on the
Colonies, and yet not an unpleasing one; as he who actually
pays the Interest has an Equivalent or more in [the use of the
principal. But the tax, if it can be so called, will, in effect,
spread itself more equally on all property, perhaps more so than
any other tax that can be invented; since every one who has the
money in his hands, does from the time he receives it, to the time
he pays it away, virtually pay the interest of it, the first
borrower having received the value of it (to use for his own
profit) when he parted first with the original sum. Thus the rich
who handle most money, would in reality pay most of the tax.
[These bills having thus full credit,
the government can issue, on occasion, any quantity for service, in
case of an American war, without needing to send real cash
thither, by hurtful contracts.
[Plenty of money thus continued in the
Colonies, will keep labour high, and thereby prevent the
apprehended danger of interfering manufactures.
[For the more easy ascertaining of titles,
there should be a clause in the act, requiring that all transfers,
conveyances and incumbrances whatsoever should be recorded,—this of
itself would be a great advantage to the Colonies.
[The manner of carrying this proposal into
execution may be as follows.
[An office to be established in London, to be
managed by two Commissioners, appointed by the treasury; their
salaries per annum, with per annum, for clerks
and incidents of office, to be paid out of the revenue only,
arising from the interest.
[The business of this office to be
[1. The printing of the paper-money.
[2. The signing of it by the Commissioners.
[3.The distribution of it to the offices in
America.
[4. The entering of what is sent, according to
its number and denomination.
[5. The communication and correspondence with
the several loan-offices in the Colonies.
[6. The drawing up the instructions for the
same.
[7. The receiving from these offices, accounts
of the issuing the paper bills, these accounts to contain, 1.
Account of the numbers and dates of bills issued. 2. State of the
mortgages and securities. 3. Account of interest received. 4.
Account of interest paid for deposited money. 5. Account of
government drafts paid by the loan-office, and salaries paid to its
several officers. 6. Account of bills exchanged, for those that are
over-worn. 7. Account of receipts of principal money by
instalments, &c.
[And in general, the Commissioners from the
monthly reports of the several offices in America, of every branch
of their duty, are to form monthly abstracts and reports for the
treasury, of the state of the money current, of the amount of the
interest money in the loan-offices, at the government’s disposal,
of the state of each office, and the farther regulations from time
to time necessary to be made, either by orders from the treasury,
instructions from the Commissioners, or further legal powers, or
directions by act of parliament, or by instructions necessary to be
sent to the governors in America, recommending acts of assembly
proper to be made in that country.
[The Commissioners are also to draw up
directions and instructions to the Inspectors, whose office
will be hereafter described.
[And they are to superintend all the other
parts of the administration and execution of this scheme, as will
be more particularly pointed out hereafter, in the descriptions of
the several offices and officers in America, with their respective
duties.
[Loan-Office in each province.
[To consist of Trustees, Solicitor, and
Clerk. The province to be divided into districts. A large
province into eight districts, a small province into fewer.
[Each district to have a Trustee appointed
out of its own resident inhabitants, one who is a
freeholder that can give sufficient security to the crown within
the province. So that the loan-office of the largest province will
consist of eight Trustees, and the smaller in proportion to their
districts, into which they are divided, some not having more than
two.
[The Trustees to be appointed by act of
assembly, and upon their appointment to qualify themselves, by
giving the security required to the crown, and taking the usual
oaths (or affirmation) and oath (or affirmation) of office.
[Each Trustee to have £100, per annum.
out of the interest arising by the loans of the bills.
[The principal acting Trustee to reside in the
capital of the province where the office is to be kept, and to have
£200 or less in some provinces, for his constant attendance, and
the incidents of office, besides his salary in common with the
rest.
[The Trustees to be appointed, only for the
term of five years, at the expiration whereof, they are to account
fully to the governor in council, assisted by one of the inspectors
hereafter described, and deliver up all books, deeds, deposited
cash, &c. to their successors, upon which they are to receive
their quietus.
[All the Trustees are to meet once a month at
the office, to sign the bills to be issued, to consider the
applications for money, examine the goodness of the security
offered, and fix the sum to be lent on each security, not less than
a majority of the Trustees to order the loans, and not less than
two to sign and date the bills to be issued. They are also to take
charge of, and keep in some safe place, the security deeds
mortgaged, and they are to chuse a person, skilled in the
law of titles, to be their sollicitor, who is to be paid by
the fees arising in the office, viz. 20s. on every mortgage,
for which he is to examine, and make extracts of the titles or
securities offered, for the inspection of the Chief Justice
of the province, if referred to him, and of the Trustees; to
prepare the mortgage and counterpart, with the bond and warrant of
attorney, and to record the mortgage. He is also to keep a book of
applications, noting them down in the order of time in which they
are made, the sum desired, and the security offered in mortgage. He
is to get blank mortgages printed, of a prescribed form. There are
to be triplicates of each mortgage, the first is to be executed by
the mortgager, and lodged in the office, the second, an exact copy
delivered to the mortgager for his direction, as it contains the
times and proportions of payments, both of installments and
interest, the third to be kept in a bound book and there made the
record.
[The clerk is also to be appointed by the
Trustees. He keeps a book of allowances, so called, because therein
is put down what sums the Trustees think proper to allow or lend to
each applyer, according to their opinion, of the security offered.
He also computes the quotas or installments and interest, making
together, the sum to be paid each year, by the mortgager, and gives
a copy thereof to the Solicitor, to be by him, after the
approbation of the Trustees given to it, inserted in the mortgage.
He keeps also a day book, in which is noted,
[The emissions and receipts of each day,
viz.
[The sums lent in mortgage, and to whom.
[The sums received from each mortgager,
distinguishing principal and interest.
[The sums deposited in the office, for which 4
per cent. is to be allowed by the office.
[The returning of such sums, with interest
paid.
[The sums of new bills exchanged for old.
[The drafts of government for interest money,
as paid by the Trustees.
[The Trustees Salaries, when paid, and the
allowance for incidents.
[N.B. The person bringing any money bills to be
deposited in the office, for the purpose of receiving the 4 per
cent. is to prepare two schedules of said bills, one to be
signed by the acting Trustee, and delivered to him, the other to be
signed by him and delivered into the office, to be kept by the
Trustees. And no sum under £100 is to be deposited on the terms of
receiving interest, and the interest must not commence
till one month after the deposite made.
[The clerk is to keep a ledger, in which the
day book accounts are to be posted up, under their respective
heads.
[The Trustees, from these books, &c. are to
form monthly abstracts of the whole state of the currency, and the
business of the office, and to send the same signed by a majority
of the whole number, to the commissioner’s office in England, in
order that the commissioners may form states from time to time, as
the treasury shall require, of the whole of the currency throughout
the continent, as well as of the state of each office in the
respective Colonies.
[Provision for check and control of the execution of the office in
America.
[1. The direction and instructions of the
commissioners residing in England.
[2. Two Inspectors to be commissioned by
the treasury, to act under their instructions, and the instructions
of the commissioners, and to report to them. They are to visit all
the offices in America at least once a year, and to inspect the
accounts, cash, &c. as often as they shall see occasion, or
shall be directed by their superiors, and to join with the governor
and council of each province in the auditing of the accounts of the
office. And, if upon any of these inspections, an inspector shall
discover any mismanagement which requires immediate remedy, he is
not only to report to the commissioners in England, but to the
governor of the province, and if it appears to the governor and
council necessary, the governor to call together the assembly
immediately, in order to the appointing new Trustees, and to order,
by advice of council, the prosecution of the delinquent Trustees,
to the fortfeiture of their securities, and such other penalties as
they may have incurred.
[3. The governor and council (the inspector
assisting) to audit the accounts of the loan-office within each
province annually. The governor and council to be allowed
for their trouble.
[n.b. In those
provinces where the governor is not appointed by the crown, perhaps
some addition may be thought proper to be made to this board for
auditing.
[4. A committee of the assembly to inspect the
state of the office, for their own satisfaction and information,
that in case they discover any mismanagement or delinquency, they
may apply to the governor, that proper steps may be taken to remedy
the same.
[When the accounts are to be inspected and
settled, the Trustees will be charged with the loan money put into
their hands, and discharge themselves by producing mortgages for
the whole, or for part, and the remainder in bills.
[They will be charged with the new Bills put
into their hands, to exchanged such as by wearing are become unfit
for farther currency, and discharge themselves by producing such
worn bills for part, and the remainder in new bills
unexchanged.
[They will be charged by the account, of
interest received, and discharge themselves by their salaries, by
government draughts which they have paid, by interest they have
paid on sums deposited, and by producing the remainder in bills in
their hands.
[They will be charged with the parts of the
principal sums received yearly, as instalments, and discharge
themselves by mortgages on which the same was remitted, and the
remainder in bills.
[They will be charged with the sums deposited
in their hands, to bear interest, and discharge themselves by
producing receipts for what they have returned, and for interest
paid, and bills in their hands for the sums they have not
returned.]
624433 = 012-047b.html