Paper currency in colonial Pennsylvania

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TABLE OF CONTENTS Chapter I* SIR WILLIAM KEITH, CHAMPION OF PAPER MONEY . . . * A# Paper money In other colonies prior to 1723* B* Agitation for a paper currency In Pennsylvania before 1725* C. The currency acts of 1725* D. The attitude of the British government towards Pennsylvania's new currency lave* E* Economic effect of the paper currency* F* Governor William Keith's relations with the pro­ prietors end the British government* II* PERIOD OF CONSERVATIVE POLICY.......... . * . . . A* Benjamin Franklin's agitation for additional Paper money, 1728* B* The first conflict between the governor and the assembly on the question of paper currency* C* The currency act of 1728* D* Minor currency acta of 17SQ-55; the panic of 1758. E* The currency acts of 1739; opposition from the proprietary interests* F# Economic theories on paper currency in Pennsylvania, 1740-80. G* The question of whether Pennsylvania paper currency had depreciated; exchange to London. Ill* DEADLOCK * * * » * » » . . * . * « * . . .


A. Increasing Parliamentary interference with colonial currency. B* Governor Hamilton's six year struggle with the assembly* C. The French and Indian War as a pressing reason for printing additional paper money. D. Br&ddock's defeat* E* Final compromises and the paper currency act of November, 1755. F. The growth of an anti-proprietary party, led by Franklin.

Chapter IV. FINANCING THE FRENCH AND INDIAN WAR IN PENNSYL­ VANIA* 1756-60.........................


A. Appropriations of paper money for the defense of the province. 1. £150*000* September* 1756. 2* £>45*000* March, 1757. 3. £>55*000* toe, 1757. 4. £0.00*000* in 1758. 5. £100*000, In 1759. 6. Re-emission of the £>80,000 emitted on loans* 1759. 7. £>100*000, in 1760. B. Concessions won by the assembly from the governor in the above acts. C. Removal of Governor Denny for passing paper cur­ rency acts contrary to his instructions. D. The British attitude towards Pennsylvania■s paper money appropriations. E. The great hearing before the Board of Trade of the proprietors and the colonial agents; decision In favor of the proprietors. F. Benjamin Franklin*s efforts to save the situation from utter defeat. V. THE END OF THE EXPERIMENT IN LEGAL TENDER PAPER CUR­ RENCY AND A NEW EXPERIMENT IN RON-LEGAL TENDER MONEY .


A. Struggle of the governor with the assembly* 1761-64. B. Non-legal tender emissions amounting to £>200,000, 1767-75. C. War time emissions* 1776-77. D. The act of Parliament of 1765 on paper currency, efforts of Franklin to secure its repeal. E. Paper money as a cause of the American Revolution. F. Plans for a general colonial currency, 1764-70. G. The Pennsylvania experiment in paper currency re­ garded from an economic standpoint. H. Pennsylvania currency during the Revolutionary War. BIBLIOGRAPHY


CHAPTER I SIR WILLIAM KEITH, CHAMPION OF PAPER MONEY On March 2, 1725 th© General Assembly of Pennsylvania inaugu­ rated what proved to be a forty year experiment in a regulated, legal tender, paper currency*

On that day the assembly waited on the gov­

ernor and passed an *Act for th® emitting and making current fifteen thousand pounds in bills of credit*# This practice of Issuing bills of credit, then begun, m s not finally abandoned until the Constitu­ tion of the Halted States vent into operation in 1789* But Pennsylvania was not the only province to indulge in this apparently Innocent, but highly dangerous practice of emitting prom­ ises to pay on the credit of the government*

On th® contrary, it was

due to th® conservatism of her Quaker assembly that this province was among the last to resort to this device* This resort to paper money by the various colonies indicate® a scarcity of a medium of exchange. An examination of conditions in these colonies proves this to be the case*

As is almost invariably the case in a new country, an unfavor­

able balance of trade existed between the colonists and their mother country# They were constantly in debt to the English merchants*


1717 Pennsylvania imported from England goods to th© value of h£2,505 and exported to that country only £4,449 worth of producePayment of this unfavorable balance of trade eventually had to be mad© in some form of hard money*

Although this was offset in part by a favor­

1, Samuel Hazard, Register of Pennsylvania* I (Philadelphia, 1828), ?* 5,

able trade with the West Indies, yet there was a constant drain of specie from the colonies to England. This lack of a medium of exchange seems to have been felt almost from the beginning* bacco had become a sort of standard of value* accepted in payment of taxes*

In Virginia to­

Oftentimes produce was

In Massachusetts2 this system resulted

in a depleted government treasury*

Here, when the treasury was empty,

the soldiers returned from the expedition of 1690 against Quebec with­ out the anticipated spoils of war and without pay* Whereupon the as­ sembly decided to print £7,000 in bills of credit* These were merely provisory notes supported only by the credit of the government and in anticipation of future taxes* Two years later they were made full legal tender in an effort to prevent further depreciation*


1711 definite inflation had set In* Over £200,000 had been emitted, which was far above the needs of the colony* little more than half their 1710 value.

In 1727 the bills were

It was not until the decade

following 1710, after inflation had already set In, that bins were emitted on loans, with real estate as security, as was done in all the emissions of Pennsylvania from the beginning*

Connecticut and New

Hampshire followed the example of Massachusetts* Hew Jersey^ likewise made her first emission as an emergency war measure in 1709* Three emissions totaling over £10,000 were made 2. F. f m McLeod, ^History of Plat Money and Currency Inflation in New England, 1820-1789# In Annals of the American Academy of Political and Social Science, XII (Philadelphia, 1888)* S* W# W* Br&dbeer, 1*8ew Jersey Paper Currency,# in Proceedings of the Hew Jersey Historical Society. Jan*, 1928 (Newark, Hew Jersey)*

by the year 1716* Ho emissions were made on loan until 1724, the year after Pennsylvania^ first ©mission*

South Carolina^ too, resorted to

bills of credit as a means of financing a war expedition*

In this

case, £6,000 was struck to pay the soldiers who had taken part In an expedition against St* Augustin© in 1703* These boro 12# to the holder, and for this reason wore hoarded instead of passing readily into circu­ lation*

Here again, it was not until 1712, after depreciation had be­

gun, that any emission was mad© on loan*

In 1722 th® exchange between

South Carolina bills of credit and English money was four to one* And yet that very year an additional £40,000 was struck "for paying th© public debt*#® Hew fork had also emitted bills of credit before 1723* This was the situation when Pennsylvania made her first venture into th© troubled water©. Truly, the opponent© of the measure had reason to oppose it*

In Massachusetts and South Carolina it had re­

sulted in radical inflation and In the other colonies only to a lesser degree*

On the other band, the very fact that most of th© other col­

onies had already issued bill© of credit caused the champions of paper money in Pennsylvania to become more insistent In their demands* Pennsylvania seems to have been handicapped from the beginning for want of a medium of exchange*

In the first fifteen years of its

existence several laws were made making produce current pay at market price*6 As this method began to prove more and more unsatisfactory 4* Edward K©Grady, The History of South Carolina Under the Proprietary Govermect (Hew York, 1897), pp. 482-483, 523-824* 5. Edward McCrady, Tho Hlstory of South Carolina tinder the Royal Gov­ ernment (Hew York* 1899)* p* 64 s Acts of the Privy Council Ccol* ser«),III (Hereford, 1911), pp* 85-56. 6. Charter to William Penn and Laws of the Province of Pennsylvania (Harrisburg, 1879), pp. 162, 229*

other suggestions were made.

As early as 1717 th© assembly had re­

ceived the "Petition of Sundry Persons, praying an Alteration be made in the Currency of Money, and that Country produce should be made cur­ rent pay at a certain p r i c e * T h © assembly waited six years before it took effective steps to remedy this situation*

This may have caused

dome individual suffering! nevertheless it likewise resulted in a more conservative, well-planned policy than could have been effected in an emergency measure*

In 1721 Francis Bawl© published a pamphlet in

favor of a paper currency entitled, "Some remedies proposed for restor­ ing the sunk credit of the Province of Pennsylvania} with Some remarks on Its trade*"3 More will be said of him later* The immediate causes for this agitation seem to be five in num­ ber*

In the first place there were those who deliberately desired in­

flation as a device to lessen the load of the debtor*

Belated to this

was a feeling that the debtor was being taken advantage of by the charg­ ing of high interest rates* On January 2, 1723 th© assembly received a petition from the freeholders and inhabitants of Philadelphia complain­ ing of the "great leas and growing Ruin" of themselves*3 Governor William Keith, of whom we shall hear more later, in an address to the assembly referred to the uncommon number of lawsuits for payments of

10 debt* Thirdly, a marked decrease in th© volume of trade was attribu7* L. J* Carey, franklin1© Economic Views (Bow York, 1928), p. 3, quoted Votes of the Assembly. II, p* 227* 9* %bld.. p* 4 and footnote* 9* Ibid.. p, 4, quoted Votes of the Assembly. II, p. 53S, 10. C. W. MfccFarlane, "Pennsylvania Paper Currency," in Annals of the American Academy of Polittcal and Social Science, VIII (Philadel­ phia, 1896), pp. SO—SI*

tad to a lack of money* Logan, Secretary of th© governors council, and very conservative, wrote in 1785, "We have very little Trade and 11 less Money." More fundamental than the above reasons was a lack of

specie* Francis ftawle, writing in 1724 and referring to 1725 and pre­ vious, reported that "Silver and Gold, the only legal currency being almost totally exhausted or kept up j/hoarded7* * • at

last scarcely

any money could come to answer his ^/th® farmer'^7 occasions, much less to pay hie Debts*"

The petition of January 2, 1725, from the inhabit­

ants of Philadelphia, already referred to, also complained of the "want of a medium to buy and sell with*”

A final cause of the demand for a

paper currency was the lack of any elasticity in the economic system* There was no bank to absorb money or extend credit as th® occasion de­ manded* This defect was remedied only in part by the system which Pennsylvania adopted* The situation leading to the first emission in Pennsylvania stands out in marked contrast to those in the other colonies* That peaceful Quaker government was not encumbered with any war debts*


conservatism had protected it from financial embarrassment* Kere the demand was for an adequate volume of a medium of exchange rather than for government funds*

For this reason the assembly was not forced Into

any ill-conceived emergency program* But the situation gradually became worse* Philadelphia.

People were leaving

Benjamin Franklin later referred to the many sign®, "To

11* Logan to Goldney, April 9, in Pennsylvania Archives (2nd s©r*), VII (n.p., 1895), p* 77* 12* W • R# Biddell, "Benjamin Franklin and Colonial Currency," In Penn v^nift Maga&ine of History end Biography. LI? (Philadelphia, 1950),ju 64, quoted Francis Bawl© in Wears and Means for the Inhabitants of Delaware to become rich (Philadelphia, 1725).

15 be let,0 on houses when he oarae to Philadelphia In 1725* Governor Keith reported that "over two hundred houses in the city of Philadel­ phia stood empty," and laboring people were leaving the city daily*^*4 Obviously the situation was serious* Fven the staid old Quaker aris­ tocracy could not afford to allow their Quaker city to be deserted. When th© assembly met In th© autumn of 1722 the situation was rip© for action* The debate centered around the question of paper money*

Finally, on January 10, 1725, our conservative friend, James 15 Logan, submitted the "Sentiments of divers gentlemen and merchants" to th© assembly*

It was a petition against paper money. Two weeks

later a reply to this petition was submitted to the assembly by the champions of paper money* It took up the arguments of the first peti16 tion point by point and attempted to refute them. It was not long un­ til th© authors of the first petition submitted the "Further Sentiments of diver© gentlemen and merchants" to the assembly, defending their pre­ vious stand and refuting th© arguments of those who had made reply to 17 it* Because these petitions reflect the economic theories of the time, we shall inquire into them in detail. In th© first petition the opponent© of paper money offered ©cm© "heads ^rguaentj7 which may be supported by solid argument when the 15* Albert Henry Smyth, Life and Writings of Beniamin Franklin. I (Hew Tork, 1907), p* 506* 14, G* ?* Keith, "Sir William Keith,” in Fa* Mag, of Hist* and Bio.. XII (Philadelphia, 1838), p# 17, quoted William Keith's "Discourse on the Medium of Commerce." 15* Proud, jgg. cit*» II, pp. 151-160* 16. Ibid.* II, pp* 155-155, footnotes* 17. Ibid.. II, pp* 157-168, footnotes*

house thinks fit to require them."

Under the first head they maintained

that it was contrary to the practice of Great Britain and that her de­ pendents should follow her example*

England, they claimed, had adhered

to gold and silver for her standard even under stress of war.


champions of paper money replied that they agreed that it was proper to follow the precedent of Great Britain but that she often had raised and lowered the weight of her coin to the loss of many Individuals,

To this

the opponents of a paper currency retorted in their second petition that England had not made the least alteration in her currency since 1696, in spite of what their opponents had said. The opponents also held that when England did issue bills of credit she took great pains to support their value which would be impossible in Pennsylvania,

This quite pos­

sibly is true, but the champions of an emission of bills of credit side­ stepped the argument by saying that they agreed with their opponents that the bills should be so protected that they could not depreciate. The opponent®, in their "heads" of arguments, further held that the proposed money would drop in value inasmuch as the terms were easier than those on gold and silver.

But th© reply was that if loans

were based on good security th© easy terms of repayment would not les­ sen their value.

As a further means of preventing depreciation it was

suggested ‘What th© paper currency be made legal tender, but the oppo­ nents hold, and rightly so, that "no stamp of authority" could give value to such a currency. The radicals accused th© conservatives of opposing a paper currency because the emission of such a currency would destroy the "comer" which the conservatives had on the specie of the province*

If It was made in larger quantities, it would depreciate*

if only In email quantities, it could not be lent to all who needed it,

•0 W claimed the opponents* Thus it could mot benefit all Impartially* To this the radicals replied that it would be advantageous to all* The laborer* without any security on which to borrow, would receive higher wages as a result* Finally, the opponents of paper currency, under their "heads" of argument, held that when depreciation would set in, the borrower would gain an unfair advantage* The radicals glibly replied that the proposed currency would not depreciate "if raised on a good founda­ tion* * They claimed that the reason specie had risen in the other col­ onies was due to the fact that certain persons had cornered the gold in those colonies and not because those colonies had Issued paper money* The conservatives replied that the price of specie depended on market demand* From this brief survey one is inclined to feel that the conserv­ atives had th© best of th© argument* Surely the radicals were too op­ ioid,stic as to the effects of a paper currency.

let these conservatives

ended their petition very weakly by saying that if they must have a paper currency it should be of a limited quantity, sunk in a short time, and that adequate measures should be taken to force its retirement in a given period of time# But the radical® would not b© satisfied even with this concession* They insisted on enough to answer for a medium of ex­ change* A® to th© time allowed for retiring it, they contended quite foolishly that "that which is a benefit for five years will be a further benefit for a longer term*" By the time the conservatives had submitted their second petition the question seemed to be, not whether they should have a paper currency or not, but what policy should be followed in in­ troducing it# The conservatives claimed that their opposition had never

amounted to anything more than an attitude of caution* They concluded their second petition with a clear account of the state of paper money in the other colonies, which, as we have already observed, was not in a healthy condition, and suggested that emission on government credit was preferable to loaning paper money to private individuals* This last observation seems to be erroneous and the government was possibly quite fortunate that it did not adhere to this advice* However, before the second petition of the opponents was pre­ sented, Governor Keith, fearing that the bill under consideration would 18 be too conservative for him, addressed the assembly suggesting certain changes*

It is probably due to the liberal attitude of the governor as

much as to any other one thing that the conservatives abandoned their stand against paper money* A survey of these suggestions indicates the craftiness of Governor Keith in obtaining his ends* Credit may, no doubt be compared to mathematics, Insofar as both sciences will admit of deducting solid conclusions from self evident and dear principles} and yet by the subtility of an artist truth or falsehood in either of them is often so wrapped up and involved, that it is lost unto or mlssapprehended by the plainest, and generally speaking, much the honsatest part of mankind* Be then proceeded to enlighten this "plainest * * * j&v&J honestest part of mankind•” He held that money encouraged trade In manufactured goods, therefore it would eventually encourage manufacturing* He glibly informed the "honestest part of mankind" that there would be no danger of depreciation at all since the money would be supported by land double the value of the currency as well as by th© credit of a government free from debt* Today it Is an accepted principle that, other things being 18* Proud, £g* eft** II, pp* 168-170*

-1Gequal, the value of a medium of exchange tends, in the long run, to be determined by the supply and demand for that medium* Thus we rauet con­ clude, In spite of the statement of Governor Keith, that neither gov­ ernment credit nor the value of the lands on which the currency was loaned would In themselves prevent depreciation* However, insofar as the government was a conservative one, and insofar as the land on which money could be loaned was scarce, this far those two factors did limit the supply and this kept up th© value of the bills.

But Governor Keith,

It is obvious, was not the one who would bo inclined to keep the supply within limits* He urged that th® emission be large enough that "usurers and sharpers" could not corner it as they were doing with ©liver and gold.

He also warned against demanding too much security because those

most needing the money would in that way be deprived of a means of getting It* By recommending a decrease in the amount of security he unwittingly made it easier for inflation to take place* Finally he sug­ gested that the bills of credit be emitted for a longer period of time than the proposed five years*

Governor Keith, a© well as Benjamin

Franklin, whom we shall consider later, appears not to have realised that an excessive emission would lead to depreciation of the currency. This stand of the governor had thus encouraged th© radicals, who thought of money as a cure-all, and still stronger demands were made* Among them was a request^ that th© proposed money be made legal tender for previous contracts, that the tens of emission be lengthened, the amount be enlarged and the security required be diminished, Th© bill as passed represented a compromise between the conservative and radical 19* MacFarlane. on* eft*, in Annals of Amer* Acad*. VIII, p. 66*

—11 — factIona* A man who did seem to realise the danger of Inflation was Francis Bawls.

At least in 1724 we find him warning against Issuing more money

than the needs of trade demand.^ We have already noted him as the author of a paper money pamphlet in 1721. In 1725 he was chairman of the com­ mittee which drew up the first paper money bill.^* He was named in that 22 act as one of the signers of the bills of credit. The act as finally oS passed*4* on March 2, 1728 represented a fairly conservative measure. In view of the fact that later money acts were very similar we shall con­ sider It in some detail. The amount of the emission was set at £16,000 as compared to the original motion lor MO,000 and a later one for £12,000. These hills of credit were' to be emitted in denominations ranging from one to twenty shillings end signed by the major part of four designated persons.


provided for a general loan office and named certain men as trustees of the loan office. Their function was to loan the new currency to indi­ viduals as provided for in the act. Five per cent interest was to be charged. Much of the cost of the government was to be defrayed in the coming years by this five per cent interest charge. These loans were not to exceed fcLOO to a person nor to fall below fel2, and were to be se­ cured by mortgages of twice the value of the loan or, on buildings, of three times the value of the loan# The bills were to be retired in 20, W* H» Riddell, jgg, pit., in Pa. Mag.. LIV, p. 64 j quoted Francis Rawle, jDg. cit. 21. Carey,

j^t,, P* 4,

£2. Pennsylvania Stat# at larae. Ill (M.P., 1836), p. 326. 23. Ibid,, pp. 324-838.

eight years, one-eighth of the principle with Interest to ho repaid yearly V the borrower. The Mile were declared to be legal tender and refusal to receive them tn payment of debt relieved th© debtor from further obligation*

Counterfeiting was to be punished by setting

the culprit upon the pillory, cutting off both his ears, publicly whip­ ping him on his bare back with thirty stripes "well laid on*11 A fine of B100 might be included In the punishment, and if the culprit was un­ able to pay he might be sold into servitude for seven years* The inscription on the bill was similar to that of a provisory . 24 notec This indented bill of . . current money of America, according to the act of Parliament made in the sixth year of the late Queen Anne "for ascer­ taining the rates of foreign coins in the plantations," due from the Province of Pennsylvania to th© possessor thereof, shall be in valueequal to money, and shall be accepted accordingly by th© provincial treasurer, county treasurers and the trustees for th© general loan office of the province in all public payments, and for any fund at any time In any of the said treas­ uries and loan office* Bated in Philadelphia, the day of in th© year of our Lord one thousand seven hundred and twenty-three, by order of th© Governor and General Assembly* This inscription differed in two respects fro® the inscription on all bills emitted later*

It is in the form of a promlsory note and it does

not indicate that the bill itself shall be legal tender*

Mils issued

in later emissions, although supported by th© credit of government, were not printed in the form of a provisory note but did indicate that they were legal tender* We have now considered th© main features of th© act* In marked contrast to the first ©missions of the other colonies, it represented

••IB* ft rather conservative, well-formed bill*

The first ©missions of Massa­

chusetts, Haw Jersey, and South Carolina were all paid out by the gov­ ernment as a sort of emergency war measure to pay for supplies already used and services already rendered* In Pennsylvania no such emergency celled for Immediate radical action* Vo Indian wars had troubled that province| end therefore the government vac not encumbered with a large war debt* Although revenue wae becoming scarce, there m m no immediate demand for funds for the colonial government*

Ag&lnsi the demand for

paper money the conservative assembly had stood for six years* Thus, the whole question was given public attention for a considerable time* This, too| acted as a check against radical action* It is to be noted that besides being supported by a government whose credit was good, the bills of credit were based on a security that was constantly rising In value*

Our conservative friend, James Logan wrote soon after this emis­

sion that it would probably benefit trade within the province but would be to the detriment of the colonists in their trade with England* He concluded, flBut it was impossible to oppose it, a majority was for it, and the Governor was very much for

But a month later something

seems to have changed his opinion for he wrote on May 7, 1725 to Benry Goldneys^ *X acquainted thee in my last letter that our Assembly had struck 15000 lbs* in Bills of Credit, which if we have no more of it, may prove rather useful than injurious to us*” This second letter shows almost ft complete reversal of attitude to that of a month earlier* Only evident indications that conditions were improving would have lead 25* Logan to Henry Goldney, April 9, 1725, In flu Arch* (2nd ear*), V II (H*P., IBM), p* 77* 2®* ftbjci* (2nd »er*), VII, p# 81*

-14this conservative leader to make such an admission*

Hevsrthelees, m

me shall see, he remained opposed to a further emission* However, the champions of paper money mere not to he satisfied with a mere 615,000 and on December 1% of the same year another hill v>as passed27 for the further emission of 650,000 In bills of credit*


act was very similar to the previous one except that the loans were to he repaid in yearly installments over a period of twelve and one-half years instead of eight years as in the previous act* The inscription cm the hills of credit this time indicated an attempt to give the hills the character of fiat money rather than that of a promisor/ notes wThle indented hill shall pass current for

in all payments,

according to a law of Pennsylvania*« It may likewise be noted that its i legal tender nature was referred to in this inscription, whereas the first hills of credit, although legal tender by low, did not have that fact printed upon their face* While this second measure was being formed, a petition2® was pre­ sented to the assembly in which it was urged that the said bill should not he put into effect until the King should give bis assent, and that all debts due to the proprietors, and to the English merchants should sot he affected by this proposed law providing for a second emission of paper currency* This proposed law made paper money legal tender in payment of debt as well as in all other c&$$s, and did not exempt the proprietors and merchants from its provisions* Although little atten­ tion was paid to this petition at this time, yet it is an interesting £7. Fa*Stat« at targe* III, pp* $59-407? Minutes of Prov* Council of £&., III (Philadelphia, 1552), p* 229* 28* '•The Case of th© Heir at haw and Exeeutric” from Penn Papers. His­ torical Society of Pa., in Pa. Mag** XXXIX (Philadelphia, 1915), pp* 204—205*

-ISfaot that it® suggestions were, for the moat part, the points contended for by the succeeding governors in later years* On the same day that this second paper currency act m e passed, 29 Governor Keith, with many misgivings, wrote & letter to the English Board of trade, submitting these two currency acts of 1725 for Its ap­ proval, as he was required to do, and pleading their Justice and his own innocence of any evil intention. He wrote#

"It is indeed a dis­

couragement to me that X do not have as in the other colonies j^ts7 Ii/aj68ty'i7 orders and Instructions to consult and direct mo*0 He de­ fended the Idea of ncoined land0 which Benjamin Franklin was to take up later* He also emphasised its Influence on trade, contending that, in the absence of any other medium of exchange, it was the only alternative left* The Board of trade on receiving the communication of Governor Keith, referred th® acts to several lawyers* Mr* Blchard West, legal advisor to the Board, replied5^ that these acts "related to the estab­ lishing a paper credit in Pennsylvania* and were of the same nature as the acts in other colonics which the Board had disapproved. Therefore he thought that these Acts of Pennsylvania ought not to he confirmed by the crown* However, Hr* Joshua Gee, noted economist, feared that nsev~ 51 era! ill consequences might attend the repeal of these acta" and there­

fore recommended that they be confirmed by the crown, but that the gov­ 29. folaadw of State Papers for toortca and Soot ladies. 1722-172S (tofidoa, 1054), pp. 58&-50O* 50. P% 8feat. at Large. IH, pp. 8I7-SL8. 51. Journal of ftnmriaatfflwrg for Trade and Plantations. 1722-1728 (tondoR, 1928), pp. 285-256*’ •

-16ernor be warned against passing future acts of this nature. The advice of the latter was adhered to and on May 11, 1726 the Governor of Penn­ sylvania was sent a warning against future emissions of paper currency* Referring to the sets of 1725 the communication advised that "if it were not out of tenderness to those persons into whose hands the bills may have passedM they would even advise the crown to repeal the exist­ ing laws*52 However| when this warning reached Pennsylvania two important events had taken place affecting the situation*

In the first place

Major Patrick Gordon had replaced Sir William Keith as governor. This we shall consider later*

In the second place Pennsylvania had, in the

55 meantime, passed another paper money law for the "re-emitting and con­ tinuing the currency of such bills of credit * . . as by former acts are directed to be sunk and destroyed and for the striking and making current fclQ,QQQ in new bills to supply those that are torn and de54 faced*n This was one of the last acts passed by Governor Keith be­ fore hie recall*

Soon after Patrick Gordon became governor h® received

the warning from the Board of Trade which we have already noticed. He was thus in a dilemma*

He had received instructions against passing

paper money laws after such a law had already been passed* The gov­ ernor feared that the Board of Trade would carry out Its threat and 52. Board of Trade to Gov* Gordon, May 11, 1726, In Pa* Arch. (1st ser.), I (Philadelphia, 1652), pp* 186-187$ Minutes of Prov. Council. Ill, pp* 261-262} Pa. Statutes at Large* III, pp. 520521. 55. Minutes of,Prov. Council. Ill, p. 250* 54. Pa* Stat. at Large* IV (H.P., 1697), p. 58 ff.

-17recommend that the act be repealed by the crown* Ob om occasion


tbs governor ooniaunioated bio fears to th© assembly bat hoped that the Increase In trade m d the continued high value of th® bills of credit would Influence the Board to consent to this last act also*

As lat©

as April 7, 1727, BticaJ&h Ferry, agent for Pennsylvania in London, wroto to the province ho m & representing that % « * as to ye affair of thepaper currency 1 very much despair of success, the Lords of Trade eta

being very much averse to things of that nature.n

However, it stems

that no action vas taken by the Board, and the act was allowed to re­ main in force. It is significant that this first group of lavs net serious opposition from th© Crown and from the proprietors.

It is more sig­

nificant that every important paper currency law which woe to follow was to meet a similar opposition*

It is still more significant that

the bill which caused the final break between the governor and the assembly on June 50, 1775 was a measure for emitting $58,000 in bills of credit. At that time the governor vetoed the measure, whereupon th© assembly withdrew and resolved, in its extra-legal character, to emitt the 588,000 in bills of credit. From th© standpoint of th© economist what was th© result of this group of laws?

James Logan was of the opinion that too much money had

been issued and that it had resulted in ”v«ry great inconvenience,” 57 which he feared would greatly increase. As usual, a faction sdvo85. Pa. AroiU.Yg.8 (4th aar.), I (BMWiBburg, 1900), pp. 4S6-487. 88. P&. Archiveft (Igt ear.), I, pp. 187-198. 87. Logan to Taylor, Sept. S5, 1724, in Fa. Mmt #. XOT (Philadelphia, 1911), p. 274#

—18— Gated & still greater emission

but the conservative assembly had gone

surprisingly far already so that a further emission would be strongly opposed#

that these "great Inconveniences" were, of which Logan spoke,

we do not know# He seems to have been very fearful that they would in­ crease beyond control#

The general opinion seemed to be contrary to

that of Logan* Benjamin Franklin, who had arrived In Philadelphia in 1725 and was destined to become the leader of the paper money party in Pennsylvania, could see nothing but benefit in the results of the exper­ iment# He was "persuaded that the first small sum struck in 1728 had done much good by increasing the trade, employment, and number of in­ habitants In the province * # . *" In 1729 he "saw all the old houses inhabited, and many new ones building," whereas, in 1725 he saw many houses "with bills on their doors, *To be let,* which made me think the inhabitants of the city were deserting it one after another*"®® It some quite apparent that Franklin was patting two circumstances together which may have arisen independently of each other# However, it seme that there must have been some connection between prosperity and paper money#

A study of exports and imports in this period reveals a rapid

increase in imports and exports following 1725# Th© following table^ is quite conclusive proof that the immediate effect of paper money was goodI

58# Logan to Taylor, Sept* 26, 1724, in Pa* Mag** XXI?, p* 274* 59* Smyth, Life and Writings of Franklin* 1, p# 506* 40* Hasard, le&*._of .£i*» I, p# 5#



1721 172® 1728 1724

8,037 6,882 8,332




Smste £1,546 20,307 15,992 80,524 42,209

Already in 1724 imports had doubled and in 1728 exports also increased greatly*

Between 1722 and 1724 the number of ships built at Philadel­

phia per year was doubled* In 1725 ninety-nine vessels cleared out to sea from Philadelphia. dolphia.

In 1725 one hundred forty vessels left Phils-

All these statistics indicate a remarkable revival of pros-

parity in 1724 and 1725* Francis Bawl© in his book entitled, wWays and Means for the Inhabitants of Delaware to become rich,1* written in 1724, attributed much of the increase in trade to paper money. We can only conjecture to what extent this is true* In 1727 Governor Gordon mad© mention of an attempt to counter>

felt*42 This was a problem difficult to contend with and finally lead to imposing th© d~atb penalty for all counterfeiters* Meanwhile Sir William Keith was suffering keenly for bis radical views on paper money*

During most of bis administration there was strife

among the heirs of William Penn and for this reason he was left to do quite as he pleased* However, as reports began to reach England concern­ ing his paper currency legislation, the heir® began to take steps to cur­ tail his .power* Mrs* Hannah Penn, widow of William Penn, sent him In­ struction® that ha should pass no law® contrary to th® wishes of th© council (which «as supposed to be only an advisory body to the governor)» 41. Data taken from Hazard, £&* cit*. I, pp. 5-0. 42. Minutes* III, p* 268*

Being & conservatlv © body, the council could- be counted on to oppose radical money bills*

Instead of obeying these instructions he turned

the letter bearing them over to th© assembly.

This body, always jealous

of it® powers and greedy for more, became very much incensed at this at­ tempt to give legislative power to the council, contrary to the charter of the province. This action of Governor Keith Increased the opposition of th© heirs and so they presented & petition^3 to the Crown for the re­ moval of Sir William Keith as governor anti presenting Major Patrick Gordon as their candidate for the governorship. strong termst

Governor Keith was Indicted in

"The people of Pensiivania J®,1^7 who have always been dis­

tinguished for a pe&cable people continued such until the year 1725, when the said Sir William Jjl®i%7 ia opposition to the true interests of his Majesty*s Subjects in that Province, and the English merchants trading thither, encouraged and promoted a paper currency and accordingly past j$i$7 an Act for emitting &15,OOQ Paper Money to be lent and upon credit of Lands of the Borrowers— Tie true, the opposition made to this Act by the Merchants and Men of th® bast circumstances in that Government, did occasion some uneasiness, but it mas all owing to Sir William*® animat­ ing th© common People against th© Council, and th© Merchants to a very large degree," The petition further accused the governor of supporting th© second {h'30,000) act after receiving specific instructions from the Board of Trade that h© should not pass any more laws "for the making of Paper Money*" It seems that the last accusation is untrue, for th© Board of Trad® did not know of these laws, or at least did not take official action on them, until Sir Keith*© letter bearing both laws reached Eng43, The full account of Keith*® radical measures Is given in this patition, "The Case of th© H*ir at Law and Sxecrutrix." Penn Facers, in Pa- Mag,* m i X $ pp, 201-200,

lead in the spring of 1724» Therefore he could not here received in­ structions after the first lew wee passed and yet before the second one was passed, since both were transmitted to England at the same time. Another error was made by the petitioners in stating that the second paper money act was passed in 1724, whereas the correct date was December 12, 1725, Finally, the petition accused the governor of Ignoring sugges­ tions that the new money should not be Issued until the Crown's approval was received, and that debts due to the Crown, the proprietors and the English merchants be payable in sterling and not in bills of credit, After a study of the later struggles between the proprietors and the as­ sembly it I© evident that the chief worry of the proprietors, even at this time, was concerning the payment of their qult-reat# in depreciated currency, the other reasons for their opposition to paper currency were given merely to disguise this fact. Nevertheless, many of the accusa­ tions of the proprietors were true, Th© governor probably did not de­ sire the payment of quit-rent# in sterling* Be opposed a "suspending clause" (a clause suspending the operation of the act until the Crown's approval could be had), it is true,

because he felt that, once the paper

currency was In circulation, the Crown would be less Inclined to repeal the act, Whether the accusations made In the petition were serious enough t© justify th© removal of Governor Keith from office was for the Crown to decide* At about the earn© time that the petition for hia removal was pre­ sented, two other petitions were submitted favoring th© retention of Keith aa governor.

Former Governor Spottawood defended Keith whole-

—22 — 44

heartedly In one of these*

He claimed that, while there wee confusion

among the heirs, Keith had governed the province well.

Moreover, he

claimed that the instructions given to Governor Keith by Mrs* Hannah Penn were unreasonable and not according to the charter of the colony* It was these instructions, he contended, and not Sir William Keith that had upset the tranquility of the province, caused remonstrances from the assembly and petitions from the people* A new governor, trying to abide by Mrs* Penn's instructions would "certainly raise the People's Dissatis­ faction and Anger*" finally, he accused the heirs of seeking to remove Governor Keith as the easiest method of covering certain practices in which the heirs had been engaged, in the lower counties (later called Delaware)* The other petition*5 that Governor Keith be retained came from hie creditors who feared that his removal would likewise remove all possibility of their collecting his debts to them* The Privy Council 40

decided in favor of the proprietors,

removed Sir William Keith, and

appointed Major Patrick Gordon in his stead* Various studies have been made of the sincerity and uprightness of this soldier of fortune.

It has been held that "If Keith was the in­

ventor of thia plan, providing a circulating medium, representing lands put under the control of the state, and running a government without taxation, not by borrowing money but by lending it, he was a greater 44* "The Petition of Col* Spottswood in behalf of Sir William Keith," from Penn Papers> in Pa* Mar*. XXXIX, pp* 210-212* 45* "The Humble Petition of * * * Creditors of Sir William Keith * , * *" from Penn Papers, in Pa* Mag*. XXXIX, pp* 212-216* 46* Acts of Privy Council (col. ser.), Ill, p. 124; Minutes, III, p p . 260-261.

financier than ©any a nan who has derived fane from the restoration of national credit#Whether h® was a mean politician or a staunch ideal1st, it appears that, his plan, inasmuch as it was his, of Issuing hills of credit on loan, the interest to he used in the support of the govern­ ment, was successful in eliminating practically all direct property tax for over thirty years, His removal is significant to us only because it came almost entirely as a result of his activities in support of a paper currency# Thus, In 1725 the liberal view of Governor Keith on paper money caused his removal by the Grown* In 1759 Governor Denny was removed for the same reason* The conflict continued until the assembly, 1775, resorted to extra-legal means for the first time, when it resolved to print 655,000 in bills of credit in spite of the governor*u veto on the measure*

47. C* P# Keith, "Sir William Keith," in Pa. Mag*. XII, p* 19

CHAPTER II PERIOD OF CONSERVATIVE POLICY In his Autobiography. Benjamin Franklin, referring to the econ­ omic condition© of 1728, ©ays that "About this time there was a cry among the people for more paper money, only fifteen thousand pound® being extant in the province and that soon to be s u n k . I t is doubt­ ful whether Franklin was deliberately prevaricating, nevertheless It Is true that according to the re-emission act of March 5, 1726,^ and 5 according to a report of a committee of the assembly to Parliament In 1739, there was nearly £40,GOO in circulation in 1726 and there­ fore, by the system of small annual repayments, very little less would have been in circulation In 1728*

At any rate, a reduction from

£40,000 t© £15,000 would have been Impossible under the existing laws* This little discrepancy in Benjamin Franklin*s account serves only to indicate that Franklin *s views on paper currency were not always based on accurate, scientific observation*

Especially in his

earlier views, as we shall see, he seemed quit© extreme in his atti­ tude toward® paper currency* Benjamin Franklin came to Philadelphia in 1723^ in the midst of the depression.

At that time he was impressed with the sign© of

1* Smyth, Franklin* I, p# 306* 2* Fa* St&t* at Large* IV, p# 38ff* S. Minute©* IV {Philadelphia, 1851), pp* 361-363* 4. Carey, og. eit*. p* 5* -2 4 -

-25economic decay


evident In the city* He came to Philadelphia from

Massachusetts, where paper money had been used since 1690 and where some of it® evil effects were already to be seen.

During the years

1720 and 1721 at least seventeen pamphlets on paper currency were pub­ lished in Hew England* His own brother, for whom Franklin worked, published two of these.

One of these advocated a private bank to loan

money on real estate security} the other urged curtailment of luxuries and government loans on real estate mortgaged to the governmentAs a member of the poorer class at Boston he seems to have seen only the favorable aspects of paper currency and none of its defects.


after his arrival at Philadelphia, Franklin established himself in the printing trade, in which he continued to have interest for about forty years* In 1728 Franklin became interested in a further emission of bills of credit,


not without a mercenary motive, as we shall see*

In this, of course, h© was merely taking part in the great "cry for money" that was arising in the province.

In his Autobiography® he

discusses the part b® played in agitating for paper money at that time1

"We had discussed this point in our Junto, where I was on the

side of an addition," He then goes on to describe the favorable ef­ fects of former emissions as quoted in the previous chapter. This discussion so possessed him, he says, that he "wrote and printed an 5, Data of this paragraph based on Carey,

0 £#

pit,, pp, 1-5,

6, Smyth, op, eft,, I, p# 506, 7, W, T* Hoot, The Relations of Pennsylvania with the British Governpant (Haw Tork, 1912), p. 198. 8, Snyth, _0£. clt.. p. 306.

-26anonymous pamphlet on it, entitled, nThe Nature and Necessity of a Paper Currency*" This pamphlet "was wall received by the common people in generalj but the rich men disliked it * . »


happening to have no'writers among them that were able to answer it, their opposition slackened and the point carried by a majority in the House.n This pamphlet which Franklin wrote and published anonymously, "A modest Inquiry into the Nature and Necessity of a paper currency, seems to have been one of the most popular and well known articles on paper currency in colonial A m e r i c a A s such it become® necessary to examine it more closely, although it is not entirely economically sound. First, Franklin said that "There is a certain proportionate Quantity of Money requisite to carry on the trad© of & county freely and currently." Then he proceeded to show that "want of money in a country reduces the Price of that part of its Produce which is used In trade" and attributed the recant increase in trad© solely to paper money.

He claimed that "want of money" discouraged immigration and

encouraged emigration* Moneyed men and lawyers, he argued, would op­ pose a new issue*

So far one can agree with most of the contentions

of Franklin except possibly the one attributing the increase in Trade solely to the bills of credit.

However, he proceeded to rather far­

fetched conclusions in the remainder of the pamphlet.


would not make the value of paper money sink "very much," he claimed, 9. Smyth* QO# clt.. II (New York, 1905), pp. 153-155. 10. Carey,

clt*. p. 7.

-27in part because it was secured by land which was rising in price* Even an overissue of currency would "have no Effect towards making the Currency as a Currency of less value than when there was but enough; because the overplus® will not be used in trade, but be some other way disposed of*”

The reasons paper money depreciated in value

in New England and South Carolina, he claimed, were imprudence and poor security* He made no mention of a possible excessive emission in those states* How may one explain thee© last statements of Franklin?


seems, to say the least, that he was rationalising* He realised that, Should he be successful in his efforts, he would probably be rewarded 11 by being hired to print the bills* Carey thinks this prospect was 12 largely responsible for his Interest in a paper money emission* Be­ tween 1751 and 1752 he received over hi,000 for printing the paper IS money of Pennsylvania alone* And since he was public printer until 14 1764, It is quits possible that he profited by much more than fcl,000 by printing the very large emissions of 1755-61*

Even he himself ad-

mitted that the printing of paper money was very lucrative*


At any

rate, hia minimizing the possible effects of an excessive issue was not baaed on sound economic principles* Franklin, as already quoted, seemed to imply that his pamphlet was almost wholly responsible for 11.

Smyth, Franklin*I,p. 506.


Carey, J2£* clt**


Ibid** p* 6*


Ibid.* p* 18*

pp.6, 7.

15. Smyth, jgtB# jg£t## I, pp* 506-507.

the emission of 1729*

Possibly he was assigning too much importance

to himself, nevertheless it is significant that his pamphlet was fol­ lowed shortly by the paper money act of 1729#

In the seventeen-fif­

ties we shall again find Franklin, a bitter opponent of everything for which the proprietors stood, as an ardent supporter of a paper cur­ rency to be sunk by a tax on all estates including the ©states of the proprietors* However, before another paper money bill was to be passed, the governor had to be persuaded by fair mean® or foul to disregard the warning of 1726 from the Board of Trad®, referred to previously, that nif any further acts are passed for Creating more Bills of Credit than those already issued their Lordship© will certainly think themselves obliged to lay the® before his Majesty for his Disallowance#”1® Gov­ ernor Gordon, not without cause, remembering that his predecessor had been removed largely because he had passed certain paper money bills, was not inclined to pass any similar laws* Thus, in 1729, we find the stage set for the first serious conflict between the governor and th© assembly#

It is true, there had been so&e conflict in 1786 when Gov­

ernor Keith "by the unanimous consent of the council preemptorlly , » , j5?©fua0, ^ t , f In Annals of 4m. Acad., VIII, pm 62; Jared Sparks, The Works of Beniamin Franklin, II (Boston, 1636), pp, 555-364, footnote. 63, In supplement to IS. 1. Riddell, "Benjamin Franklin and Colonial Money," in Fa.,.lag,, IVS (Philadelphia, 1930), pp, 00-63,

■104following decade would have been avoided* Suffice it to say that Frank­ lin's plan was an attempt to solve a perplexing problem which the Brit­ ish continued to Ignore until it was too



received favorably inAmerica*

Franklin's plan would have been

It is to be doubted

The control of such a currency would have been taken too much out of the hands of the Individual colonies to have conformed to their grow­ ing desire for autonomy, especially in matters of finance. It remains only to consider briefly whether or not th© Pennsyl64 vania experiment was a success* Thomas Pownall saids I will venture to say that there never was a wiser or better measure, never one better calculated to serve th© usee of an increasing country, that there never was & measure more steadily pursued, or more faith­ fully executed, for forty years together, than th© loan office in Pennsylvania, formed and administered by the assembly of that province* He continueds In a country under such circumstances money lent upon interest to settlers, creates money* Paper money thus lent upon interest becomes a revenue that will pay the chargee of government. This currency is th© true P&ctollan stream which converts all into gold that is washed by It, It is on this principle that the wisdom and virtue of th© assembly of Pennsylvania established under the sanction of government an office for the emission of paper money by loan* Governor Pownall was a little excessive in his praise but his statements are not altogether false* The most interesting part of the experiment is this idea of paying th© ordinary government expenses by the interest on th© paper currency loaned out* let it seems that this 64* 0* S. Callender, Selections from the Economic History of the United States (Boston, 1909), p. 6 6 * ...


w&s actually done until 1762 when all money emitted on loan was retired. Governor John Pen/;* whom on© would not suppose to be favorable to the system, being a proprietor, stated that until 1760 (he did indicate from what date) the ordinary expenses of th© government were paid by the five per cent interest charge on the 680,000 in bills of credit 65 emitted on loan* It seems that the essence of the system was that the government had a monopoly on the medium of exchange and that, as long as it could control this monopoly, th© proceeds from it were sufficient to supply the running expenses of the government* This gov­ ernment ownership of the medium of exchange seems to be quite unique* I believe we can say without question that Pennsylvania*a system of emitting bills of credit on private loans was successful* But when it comes to the practice of emitting money to be sunk by future taxes, as Pennsylvania did during th© French and Indian war, we cannot make such an unqualified statement as we have concerning that money emitted on loans* Of course, what it amounted to was gov­ ernment borrowing, with, however, the additional danger of Inflation* It seems that Pennsylvania had not emitted money at any time beyond 66 her power to redeem it* Therefore we cannot accuse Pennsylvania of borrowing In excess of her ability to pay* It appears that Pennsylvania*^ currency policy may be defended as a method of raising a government revenue and as a method of govern­ ment borrowing (as in th© French and Indian War)* There remains on® more standpoint from which to judge her financial policy. The oppon65. Pa, Arch* (4th ssr*), III, p. 542* 66.

Ibid* (4th sor*), III, p« 542.

106 ants of flat money In all ages have maintained that recourse to flat money eventually leads to Inflation* due to the almost inevitable ten­ dency to emit more than is needed In commerce and trade. The question of whether this was true to Pennsylvania is a difficult one* Benjamin Franklin* as m have already noted* declared in 1767 that no deprecia­ tion of currency had taken plaoe In Pennsylvania* M&cFarlane has made 67 an Intensive study of this problem in order to teat the truth of Franklin's assertion* By use of many tables he has compared the prices of goods during the entire period under consideration (1723-1764). He has come to the conclusion that*

"this currency suffered no material

depreciation for half a century.” His records show that* while prices of some commodities increased* those of other commodities were levered* He suggests several reasons why depreciation did not take place in Pennsylvaniaas it did in many of the other colonies* Prior to 1750 it would seem that there never was actually enough money to provide for the needs of trade* Furthermore* until 1760* the method of emission was based on sound economic principles* The money was emitted on loan. These loans* with Interest* were to be repaid in annual installments. The increase in the volume of paper money between 1755 and 1760, al­ though rapid* never rose beyond the commercial needs of th© province* Hr* HacF&rl&ne would claim* He concludes by suggesting that the volume of paper currency was either kept below or equal to the needs of trade during the whole period. This, combined with the fact that Pennsyl­ vania was a growing community seems to explain why that colony was no successful in so dangerous an experiment* 67. Qp. clt,* in Annals of Am. Acad*. VIII* pp* 50-126*

-107Howevsr, It seeme that Mr* M&cParlane has omitted a factor which should not bo overlooked. Most of the very first emissions in other colonies, as we have noticed In th© first chapter, were made on hasty, ill-conceived plans*

Consequently depreciation set in almost laaaedi-

ately and thus destroyed th® confidence of the people in any paper money. Even though those colonies might have Improved their currency system ever so much, yet the confidence of the people was lost. With the confidence of the people gone, it was, of course, difficult to pre­ vent further depreciation. In Pennsylvania the first emission was con­ servative and well planned and confidence was established. Consequently when, during the French and Indian War, the volume was suddenly greatly increased, confidence that the government would eventually redeem the money as promised was not greatly shaken* Hence, while we must admit that the well regulated control of the amount of currency in circula­ tion was probably of primary importance in preventing depreciation in Pennsylvania, yet psychology, th© confidence of the people in paper cur­ rency, was in part responsible for the fact that when the volume Was in­ creased fourfold (1756-00) there was very little, if any, depreciation.

In the decade of 1715-25 Pennsylvania had a currency problem. England should have helped her solve it. Instead England attempted to prohibit Pennsylvania herself from solving it, nevertheless Pennsyl­ vania was able to solve it after a fashion. Other colonies had th© gam® problem and solved it with varying degrees of success. Of these various attempts to solve the currency problem, that of Pennsylvania

-108was* If not th© most successful* among the most successful. On the other hand the paper currency struggle probably m s a greater con­ tributing cause of the American Hevolution in Pennsylvania than in any other colony*

Although it has been the purpose of this paper to cover only the colonial period, yet it may be worthwhile to take a passing glance at Pennsylvania's currency problem during the Revolutionary to.



tween March* 1777* when the first emission was made under the Revolu­ tionary government and March* 1760* no emissions were made* At the 69 end of that period an additional bl0 0 ,0 0 0 was put in circulation and in the following year a 6800*000 emission was nade,^ All this time the money was depreciating* but never as fast as was the contin­ ental money. In December* 1780* the rate of exchange between state and continental money m s seventy five of the latter to one

ofthe former*

An effort was made to prevent depreciationin 1780


bymaking the

bills issued that year interest bearing at th© rate of five per cent. 62QG*OGO of th© 6500*000 emitted in 1781 was to be used to sink former emissions at their depreciated value* It Is difficult to determine how much was actually used for this purpose. Many factors enter in to mfcke a comprehensive study of the cur­ rency of the Revolution quit© difficult, the confusion of money was 68.

Pa* Stat. at Large. IX, pp. 97-105.

69. Ibid.. X, pp. 185-190. 70* Ibid.. X* pp. 501-508. 71. Ibid.. X* pp. 249-251.

-109great* A report of David Rlttenhouse, State Treasurer* In 1782 in72 dicated that only 6200,000 of state Currency were in circulation* If this is true, depreciation can only be explained by a loss of confidence of the people in the government* The extent of the con­ fusion ie shown in an address by Governor Mifflin to the assembly in 1790* In this address^ he enumerated the emissions of bills of credit for which the state had pledged Itself* He mentioned the emissions of June, 1780; of April, 1781j of March, 1785, "State Island Money," "Resolve end Commonwealth Money," "funded and militia certifi­ cates," "certificates issued for interest," "depreciation certificates," 74 and "certificates given for Horses and provisions during war*" Cer­ tain It Is that even Pennsylvania money depreciated to a small fraction 75 of its nominal value near the close of the war* It was only when the constitution of the United States was adopted, prohibiting the emis­ sion of bills of credit, that a final check was placed upon that sort of currency Inflation*

72. pa. Arch. (1st ear.), IX, p.

66 *.

78. Ibid. (l»t ear.), XII, p. 84, 74*

See Also Albert S. Holies, Pennsylvania* Province and State. II Philadelphia, 1899), p* 105*

75* Ibid*, p. 105*

BIBLIOGRAPHY I* General Accounts 1* Berkey, 11111am A. The Legal Tender Paper Monetary Srtffesa of the United States. Grand Rapids, Mich*, 1876. This account touches only briefly on the subject matter of the thesis. 2* Bullock, Charles J* The Monetary History of the United States. Hew York, 1900* This is an excellent general account. 5* Callender, G» S. Selections from the Economic History of the United Stately. Boston, 1909* 4* DeKnight, William F* History of the Currency of the Country and of the Loans of the United States. Washington, 1900* This account, though general, is very concise* 5* Dewey, D&yis Rich. Financial History of the Uftlted States. 6th ed., Mew York, 1922* It touches very briefly on colonial currency* 6

. Greene, Everts Bo&tell. Provincial America, 1690-1740, Mew York, 1905* Valuable largely for its bibliography*

7* Hepburn, A. B* A History of Currency in the United States. Mew York, 1924. Contains several statements not in accordance with the conclusions of the thesis* 8*

Osgood, Herbert L. The American Colonies in the Eighteenth Century. Mew York, 1924* Vole. II and III cover the period under consideration*

9. Sumner, W. G* A History of American Currency. New York, 1878. Inaccurate as far as it is concerned with th© currency of Penn­ sylvania. 10* Van Tyne, G. H* Causes of the War for Independence. New York, 1922. II. Public Documents 1. Acts of the Privy Council. Colonial Series. Vole* III-VI, Hereford, 1910-12, edited by f* L* Grant and James Munro. Contains important documents and reports* 2,

Afghlvea of the State of Mew Jersey* First Series. Vol. IX, Newark, N. J*, 1885. Contains a report of the Board of Trade on the Parlia­ mentary currency act of 1785*

-1 1 0 -

-1118. Calantor of atata Ptcara. Colonial Series, toarlea and Bast Indies. 1722-28, London, 1954, edited by Cecil Headlam. This volume contains an important letter of Governor Keith to the Board of Trade* Journals of the Commissioners for Trade and Plantations. 172265, 7 vole*, London, 1926-35* Invaluable for a study of the atti­ tude of Great Britain towards colonial currency* 6*

Minutes of the provincial Council of Pennsylvania. Vol. Ill, 1852, Philadelphia; Vols# IV-X, 1851-52, Harrisburg. The most valuable source on the political aspects of the currency struggle*


Pennsylvania Archives, ed. by Samuel Hazard, 12 vole., Philadel­ phia, 1852-66.

7. JNnnnrlTanla archive*. Second Series. Vol. II, Harrisburg, 1890t Vol* VII, B. P., 1895, edited by f. H . Bgl® and John B. Linn* These volumes contain correspondence of importance* 8*

Pennsylvania Archives. Fourth Series (Papers of the Governors), Vols* I-III, Harrisburg, 1900, edited by George E. Reed. Con­ tain correspondence and messages of the governor's to the Assembly*

9* Statutes at Large (British), Vols* IV, VII, London, 1769; Vol* tX, (London, 1770* These volumes contain those acts considered in this thesis* 10* Statutes at Large of Pennsylvania* Vols* XXI-XIX, 1896-1906, Harrisburg, edited by J« T* Mitchell and Henry Flanders* This work contains all the laws of Pennsylvania during the period in question* It has large appendices which provide documentary material on the history of the laws recorded therein* XXX* Special forks 1.

Behrens, K. L. Paper Money in Maryland. Johns Hopkins, 1928.

2. Bollee, A. S. Pennsylvania Province and State. 2 vols., Phila­ delphia, 1899. 5,

Carey, L* J. yranklin's Economic Views. How York, 1928*

4. Keith, C* P* Chronicles of Pennsylvania. Vol. II, Philadelphia, 1917* An excellent secondary source* 5.

Lincoln, C. H* Revolutionary Movement in Pennsylvania. 1760-1776, Philadelphia, 1901* Only slightly valuable for our purpose*


MoGrady, Edward. The History of South Carolina Under the Pro­ prietary Government. 1670-1719, Hew York, 1897.

7* McCrady, Edward* The HistprY o l j i n d s r Government, Hew York, 1899* 8*

the Royal

Proud, Robert* The History of Pennsylv^fa. Vol. XI, Philadelphia, 1796* Contains documents on the beginnings of the currency strug­ gle not to be found elsewhere*

9. Root, Winfred Trexler* The Relations of Pennsylvania with the British Government. Hew York, 1912* An excellent monograph Including an accurate, brief account of the history of paper currency in Pennsylvania to 1784. 10. Sharpies®, Isaao. A Quaker Experiment in Government. Philadelphia, 1898* Contains an important letter, for our purposes* 11. Shepherd, William Robert. History of the Proprietary Government in Pennsylvania. Hew York, 1898, in Vol. VI of the Studies In History, Economics and Public Law* Contains a chapter on th© paper currency of Pennsylvania. IV. Privately Published Sources 1. "Brief in behalf of the Proprietaries in opposition to the Approval of certain acts of the assembly" in the Pennsylvania Magazine of History and Biography. Vols# XXIII, XXIV, XXV* A very important document on the struggle between the proprietors and the assembly. 2* "The Case of the Proprietors of Pensilvania about the Appointing a new Deputy-Oovemor," from the Penn Papers, in the Pennsylvania Magazine of History and Biography. Vol, XXXIX. 3. Life and Writings of John Dickenson. Vol. II, ©d, \jy P. L. Ford, in Memoirs of the Pennsylvania Historical Society. Philadelphia, 1895. Contains a protest by Dickenson against th© act of Parlia­ ment of 176$.against paper currency in the colonies. 4. Life and Writings of Beniamin Franklin, ©d. by Albert Henry Smith, 10 vols., New York, 1806-1907. 5. The Works of Beniamin Franklin, ©d. by Jared Sparks, 10 vols*, Boston, 1656. 6.

British Rova! Proclamations Relating to America. 1605-1785, Worchester, 1911, edited by Clarence S. Brigham, Vol, XII of the Transactions and Collections of the American Antiquarian Society. Contains Queen Anne's currency proclamation of 1705, V. Special Papers

1. Br&dbeer, William W. "New Jersey Paper Currency" in Proceedings of the New Jersey Historical Society. January, 1925, Newark, N, J.

-U S 2, Keith, C. P, "Sir William Keith" in Pennsylvania Magazine of History and Biography. Vol. XII, A defense of Governor Keith* 5. MacFarlano, C, W. "Pennsylvania Paper Currency" in Annals of the American Academy of Political and Social Science, Vol. VIII. A scholarly study of inflation In Pennsylvania, 4. McLeod, Frank F, "Th© History of Fiat Money and Currency Infla­ tion in Hew England from 1620 to 1789" in Annals of the American Academy of Political and Social Science. Vol, XII, 5. Riddell, 1. R, "Benjamin Franklin and Colonial Currency" in the Pennsylvania Magazine of History and Biography. Vol, LIV. VI. Periodicals 1. Register of Pennsylvania, ed. by Samuel Hazard, Vol. I, January 8 , 1628. Contains statistics on the trade and commerce of Philadel­ phia including a record of exports and import© for th® period under consideration. 2. The Pennsylvania Magazine of History and Biography. Vols. I-LVIII, Philadelphia, 1877-1954* 5. Annals of the American Academy of Political and Social Science. Vol. VIII, Philadelphia, 1896j Vol. XII, Philadelphia, 1898. These volumes contain several monographs listed elsewhere.