A

SHORT HISTORY

OF

PAPER MONEY AND BANKING.

CHAPTER I.

Of the Medium of Trade, before the Introduction of
Paper Money.

The first settlers of a country may be greatly in want of capital, but they do not need a great sum of money as a medium of domestic trade. A few exchanges of products for gold and silver coin, will regulate barter transactions with sufficient accuracy for general dealings. A great portion of the stock of money which the original emigrants brought with them, was, therefore, soon exchanged for the comforts and conveniences which Europe could supply, and trade by barter became the custom of the country.

If the Government had not interfered, all would have been well. But, as early as 1618, as is stated by Holmes, in his American Annals, Governor Argall of Virginia, ordered "that all goods should be sold at an advance of 25 per cent., and tobacco taken in payment at three shillings per pound, and not more or less, on the penalty of three years servitude to the colony." "'*

Mr. Burk says, in the appendix to the first volume of the History of Virginia

"I find in the proclamations of the Virginia Governors and Councils, the rates of some commodities and something like a scale of exchange between specie and tobacco. During the administration of Captain Argall, tobacco was fixed at three shillings the pound. In 1623, Canary, Malaga, Alicant, Tent, Muskadel, and Bastard wines, were rated at six shillings in specie, and nine shillings the gallon payable in tobacco. Sherry, Sack, and Aquavitae, at four shillings, or four shillings and six pence tobacco. Wine vinegar at three shillings, or four

In 1641, as we learn from the same authority, the General Court of Msssachusetts "made orders about payment of debts, setting corn at the usual price, and making it payable for all debts which should arise after a time prefixed." In 1643, the same General Court ordered "that Wampompeag should pass current in the payment of debts to the amount of forty shillings, the white at eight a penny, the black at four a penny, except for county rates.”

Wampompeag being an article of traffic with the Indians, had a value in domestic trade, but an attempt to fix its value by law was an absurdity, and making it a legal tender was something worse than absurdity. The measure was, however, in perfect accordance with the orders given by the General Court in 1633, declaring, "that artificers, such as carpenters and masons, should not receive more than two shillings a day, and proportionably, and that merchants should not advance more than four pence in the shilling above what their goods cost in England."

shillings and six pence tobacco. Cider and beer vinegar at two shillings, or three shillings in tobacco. Loaf sugar one shilling and eight pence per pound, or two shillings and six pence in tobacco; butter and cheese eight pence per pound, or one shilling in tobacco. Newfoundland fish per cwt. fifteen shillings, or one pound four shillings in tobacco. Canada fish, two pounds, or three pounds ten shillings in tobacco. English meal sold at ten shillings the bushel, and Indian corn at eight. After a careful inspection of the old records, I cannot find any rates of labor specified, although they too are mentioned, as forming a part of the subject of proclamations."

Holmes, in his Annals, supplies one deficiency in Burk's price current, namely, the price of a passage from Europe.

"The enterprizing colonists being generally destitute of families, Sir Edward Sandys, the treasurer, proposed to the Virginia Company to send over a freight of young women to become wives for the planters. The proposal was applauded; and ninety girls, "young and uncorrupt," were sent over in the ships, that arrived this year, (1620) and, the year following, sixty more, handsome and well recommended to the company for their virtuous education and demeanor. The price of a wife, at the first, was one hundred pounds of tobacco: but, as the number became scarce, the price was increased to one hundred and fifty pounds, the value of which, in money, was three shillings per pound. This debt for wives, it was ordered, should have the precedency of all other debts, and be first recoverable."

The Rev. Mr. Weems, a Virginia writer, intimates that it would have done a man's heart good, to see the gallant, young Virginians, hastening to the water side, when a ship arrived from London, each carrying a bundle of the best tobacco under his arm, and each taking back with him a beautiful and virtuous young wife.

In Pennsylvania, as well as in the other colonies, a considerable traffic was carried on by barter: and we recollect having read in the Minutes of Assembly, that, about the year 1700, a proposition was made to make domestic products a legal tender, at their current rates. The proposition was rejected. But Holmes states that, in Maryland, as late as the year 1732, an act was passed "making tobacco a legal tender at one penny a pound, and Indian corn at twenty pence a bushel.'

The colonists had hardly become numerous enough to require more than two or three hundred thousand dollars of medium for domestic uses, before specie began to flow in abundantly. Their trade with the West Indies and a clandestine commerce with the Spanish Maine, made silver so plentiful, that, as early as 1652, a mint was established in New England for coining shillings, sixpences and three penny pieces.

Gabriel Thomas, in his account of Pennsylvania, published about the year 1698, says silver was more plentiful in that province than in England.

Plentiful, however, as it was, there was not enough to satisfy the wishes of every body. Attempts were, therefore, made to keep the precious metals in the country, by raising the official value of the coin. Virginia, in 1645, prohibited dealings by barter, and established the Spanish piece of eight at six shillings, as the standard currency of

"The law enacted that "Massachusetts" and a tree in the centre, be on the one side and New England, and the year of our Lord, and the figure XII, VI, III, according to the value of each piece, be on the other side," -Massachusetts Laws. The several coins had N. E. on one side, and the number denoting the number of pence, with the year 1652, on the other. The date was never altered, though more coin was stamped annually for thirty years."-Holmes.

In 1662, the Assembly of Maryland besought the proprietary "to take orders for setting up a mint," and a law was passed for that purpose. "The great hindrance to the colony in trade for the want of money" is assigned as the reason for the measure. It was enacted, that the money coined shall be of as good silver as English sterling; that every shilling, and so in proportion for other pieces, shall weigh above nine pence in such silver; and that the proprietary shall accept of it in payment of his rents and other debts. This coin being afterwards circulated, the present law of Maryland was confirmed in 1676. This is the only law for coining money, which occurs in colonial history, previous to the American Revolution, excepting the ordinance of Massachusetts in 1652."-Chalmers, 1. 248.

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that colony. The other colonies affixed various denominations to the dollar, and the country exhibited a singular spectacle. Its money of account was the same nominally as that of England. Its coin was chiefly Spanish and Portuguese. But, what was a shilling in Pennsylvania, was more than a shilling in New York, and less than a shilling in Virginia.

In the third year of Queen Anne, an attempt was made to put an end to this confusion, by a Royal Proclamation and act of Parliament, fixing the plantation pound at two ounces sixteen pennyweights sixteen grains of silver, of the fineness of common pieces of eight, at six shillings and ten pence half-penny per ounce; but, from various causes, the act proved effective in Barbadoes only. In South Carolina, the dollar was estimated at 4s. 8d., in Virginia and New England at 6s., in Pennsylvania, New Jersey, and Maryland at 7s. 6d., and in New York and North Carolina at 8s.

These are to be understood as the rates at which the currencies of the different colonies were finally settled. They were varied from time to time to suit the varying views of the lawgivers.* Confusion in dealing was thereby introduced, and some injustice was done to individuals: but the chief object of these changes, namely, that of keeping a great stock of the precious metals in the country, was not effected. In proportion as the denominations of the coin were raised, the merchants raised the price of their goods. The laws of nature counteracted the laws of the land. The people exchanged their surplus gold and silver for such things as they wanted still more than gold and silver-leaving just as much money in the country as its domestic trade required, and not one shilling more.

* Dr. Franklin, in his Historical Account of Pennsylvania, says, "During this weak practice, silver got up by degrees to eight shillings and nine pence per ounce, and English crowns were six, seven, and eight shillings a piece."