Double Standard Tried in Massachusetts—other Colonial Issues.

Scarcely had specie come into circulation in Massachusetts when it was found that, although the remittance had been in silver, gold from the West Indies began to stay in the colony. The question of making it legal tender as well as silver soon began to be agitated. It circulated of course, not being legal tender, at its weight. An act was passed in 1762 to make gold legal tender at 2½d. per grain. At this rate it was more profitable for the debtor to pay in gold than in silver. The currency was depreciated five per cent. by this operation, and, as Hutchinson declared at the time must follow, this drove silver out of circulation. Some hints also show that barter currency was still allowed in the payment of taxes. Silver now became scarce, and the next stage was a new agitation in 1767 for paper money.

In 1768 the House resolved that “in order to prevent the unnecessary exportation of money, of which this province has of late been so much drained,” they will do without foreign superfluities, and encourage the manufactures of this province. The same doctrine has been preached and avowed ever since, as the sum and essence of political economy, but it has been a signal failure. The colony was drained of money (silver) because it had adopted another legal tender, gold, which, though the best money for large exchanges, was so rated that it was the cheapest means of payment. It alone therefore remained, and the other metal was exported. It was not, however, exported for nothing, and no resolutions could make the people desist from using foreign superfluities which came back to pay for it. The same violation of coinage laws was twice repeated under the federal constitution, as we shall see below. In the same year (1768) the Massachusetts Council petitioned the House of Commons for relief from the new tax laws, pleading the great scarcity of money, which they ascribe to the balance of trade being against them.

Mr. Hickcox, writing on the New York paper money, says that the colony traded in 1720 with Madeira, the West Indies, and England. He expressed still more explicitly the theory underlying the above view on the subject. The trade “ to the West Indies was wholly to the advantage of New York, while that to Madeira was to our loss, the province consuming more wine from thence than could be purchased with its commodities. The money imported from the West Indies was not sufficient, however, to preserve a specie currency, a large amount being necessary to balance the exchange with England.”

The errors involved in this way of looking at the matter were most clearly exposed in connection with the “ Bullion Report,” and will be found noticed in Chapter II.

In 1763 Parliament declared any colonial acts for issuing paper money void. Franklin wrote a pamphlet in opposition to this act. He said that gold and silver owe their value chiefly to the estimation in which they happen to be among the generality of nations and the credit given to the opinion that they will continue to be so held. “ Any other well-founded credit is as much an equivalent as gold or silver.” When exchange rose he thought that this was only an advance in ex change, not a fall in paper. In 1773 Parliament allowed any bills issued by any colony to be a tender at its treasury. In 1774 Massachusetts was out of debt.

In 1775 representatives of the colonies of Connecticut and Rhode Island met the Congress of Massachusetts to concert measures for the war.

It was agreed, as their money was paper and they could not offer anything else, that this should be allowed to pass in Massachusetts.