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“The bills being all exchanged by the silver imported from England,” says Hutchinson, and provision made by law, that no bills of credit should ever after pass as money, there was a difficulty in providing money for the immediate service of government, until it could be raised by tax. Few people were at first inclined to lend to the province, though they were assured of payment in a short time with lawful interest. The treasurer, therefore, was ordered to make payment to the creditors of government in promissory notes, payable to the bearer in silver in two or three years, with lawful interest. This was really better than any private security; but the people, who had seen so much of the bad effects of their former paper money from its depreciation, could not consider this as without danger, and the notes were sold for silver at discount, which continued until it was found that the promise made by government was punctually performed. From that time the public security was preferred to private, and the treasurer's notes were more sought for than those of any other person whomsoever. This was the era of public credit in Massachusetts Bay."

In this paragraph Hutchinson sums up the situation in 1750 and epitomizes the story of methods of treasurysupply of the next quarter of a century. It will be observed that he indicates that the treasurer was ordered to give his notes, payable in silver. Such indeed was the practice, but it is not impossible that a part of the distrust with which these appeals of the government for assistance were at first received was due to the fact that although it was “Spanish milled dollars” that the government sought to borrow, the obligation which was at the outset offered to lenders did not contain a specific promise to pay in silver, or even in dollars, but the phraseology of the treasurer's receipt was couched in pounds. It was in June, 1750, that the first borrowing was effected, the alleged purpose of the loan being to defray the charges of the government. The process was renewed in October

1 Hutchinson's History of Mass., Vol. III., p. 10.
2 Acts and Resolves Province Mass. Bay, Vol. III., p. 513.

of the same year, and this time the treasurer promised “to pay the same number of like dollars."

In making these loans the government could only learn by experience the size of the note, or as it was called in these acts “the treasurer's receipt,” which would meet with the most favorable reception. In June, 1750, the treasurer was ordered not to give his receipt for any less sum than £50. In October the lowest note was to be £5, and thereafter the minimum limit was generally fixed at £6. It may be inferred from this that dependence was placed upon the people rather than the capitalists.

All of these notes bore interest, the rate down to 1765 being 6% and after that 5%. The needs of the government in excess of the amount derived from the import and excise was very small, but the redemption of a large number of bills of public credit, which remained in circulation, had to be provided for, even after the application of the reimbursement funds for this purpose and after the levy of a special tax to cover deficiencies. To retire these bills, special legislation was effected as late as 1754.' Following this drain upon the people, outside the ordinary annual charges of the government, there came first the expenses caused by Indian troubles in Maine, and later heavy charges consequent upon the outbreak of hostilities between England and France. The annual contribution to the Crown Point and Canadian expeditions, which then ensued, led to a steady increase of the amounts borrowed by the treasurer. In 1758, they passed the £200,000 mark. In 1760, they reached the sum of £242,714. In 1765, after a brief period of decline, a second culminaing point of £197,000 was reached, after which the size of the loans steadily declined, until in 1771-1772, there was no borrowing at all.

It was in 1765 that the rate of interest upon the loans was reduced. The province was then carrying a load of debt amounting to a little over £400,000, all of which would mature in the years 1766 and 1767. The secret of the credit of the government while staggering under such a burden is to be found in two causes: First, the British government had followed the precedent established in connection with the Louisburg campaign and had reimbursed the colonies for certain of the expenses incurred in the Canadian expeditions; and, second, the province, now that the war was over, had deliberately set to work to retire the outstanding treasurer's receipts, in annual instalments of such size that the tax levy would not cripple the resources of the province.

1 Acts and Resolves Prov. Mass. Bay, Vol. III, p. 717.

In 1765, Governor Bernard wrote to the Lords of Trade relative to the provincial act for supplying the treasury with £197,000 through the treasurer's receipts: ,

“The General Court reduces their debt by 50,000 pounds every year, and as they are obliged conformably to the Act of Parliament to confine their bills of Credit within 2 years, they annually borrow a sum less by £50,000 than what will be due at the end of the year, by which the whole debt appears on the face of the Bill and is every year £50,000 less than the former."'1

The reference by Bernard to the Act of Parliament gives a clue to the reason why no attempt was made to float a number of loans which should mature at different periods in the future and thus avoid the annual recurrence to the borrowing process. The province was trammeled in this regard by the Act of 24th George II., Ch. 53, which restrained the colonies in the emission of bills of public credit. This law made void any Act of the Assembly, creating any paper bills or bills of credit of any kind or denomination whatsoever, except bills for the current service of the year where provision was made for their repayment within two years. It is true that under stress, the province had emitted treasurer's

Quoted in Acts and Resolves Prov. Mass. Bay, Vol. IV., p. 863.

receipts, which ran for three years. This had been overlooked, but in 1775, the question was gravely discussed in the Privy Council whether certain of these treasurer's receipts which ran for two years and four days were not emitted in contravention of law.' Hutchinson, in his Diary," says regarding this transaction:

“I did not believe the obligations given by the Treasurer could be considered as the Bills of Credit intended by that Act”: and then adds: “for though they were assignable, they passed as money between man and man in the Paper-Money Colonies.”

From which one might infer that they ought so to have been considered.

Bernard's characterization of the treasurer's receipts as “bills of credit," and this remark of Hutchinson brings us face to face with the close resemblance of the financial proceedings at this time, to those of the paper-money period. Then an emission of bills of public credit was made each year adequate to meet the requirements of the province. Simultaneously a future tax was ordered which was pledged for the retirement of the bills. Now, the province borrowed what it needed each year, giving the lenders interest-bearing treasurer's receipts in sums not less than £6, which were protected by a future tax pledged for their payment. The important points of difference between the proceedings at these different dates were: 1st. The reception of the treasurer's receipts was purely voluntary, while the bills of public credit were forced upon the people by their legal tender attribute and through the fact that they then constituted the only circulating medium; 2nd. The receipts bore interest and hence would be held in reserve by capitalists, thus releasing a corresponding amount of coin for circulation. Their

Quoted from the papers of the Board of Trade in Acts and Resolves Prov. Mass, Bay, Vol. V., p. 411.

? Quoted in Acts and Rosolves Prov. Mass. Bay, Vol. V., p. 411.

effect, therefore, so far as they tended at this time to increase the circulating medium, was not disastrous, as would have been the case of interest-bearing notes in the days of paper-money; 3rd. The size of the minimum receipt was high for ordinary purposes of circulation. We must not overlook the fact, however, that we are no longer dealing with times when the treasurer recorded that he had given his note for nine pounds. In 1765, Governor Bernard wrote:

“This winter a gentleman who had acted considerably as a Banker, stop't payment for £170,000 Sterling."!

Six pound notes were certainly not too large for the ordinary use of a gentleman who could fail for this sum, and if there were many more in Boston whose transactions were on a similar scale, it well may be that in certain channels these notes found circulation. Yet we must bear in mind that Hutchinson himselfsaid that:

“From an aversion to silver currency, the body of the people changed in a few months, and took an aversion to paper, though it had silver as a fund to secure the value of it."

Taking this into consideration, his qualification that these notes circulated “in the Paper-Money Colonies"

Quoted in Acts and Resolves Prov. Mass. Bay, Vol. IV., p. 793. The amount of this failure seems incredible, but I am assured by our associate, Mr. Hubert Hall, of H. M. Public Record Office, that the letter is correctly quoted in the Aots and Resolves, &c. Mr. Hall adds, “ It appears that the person in question was a hanker, and that explains much. It is said to have been like 'an earthquake' in the town.”

Mr. H. E. Woods, the editor of the Historic Genealogical Register, was kind enough to endeavor to identify the person of the bankrupt. He sends me these references from the House Journal:

Page 216, 6 Feb., 1765: "A petition of creditors of Nathaniel Wheelwright of Boston, Merchant, who hath lately stopped payment," etc.

Pages 220-223, 7 Feb., 1765: "An Act for protecting the person of Nathaniel Wheelwright, of Boston, Merchant," etc.

Mr. Woods also calls my attention to references on pages 55 and 74 of " Letters and Diary of John Rowe, Boston, Merchant, &c.,” which seem to identify Wheel wright as the bankrupt in question.

? Hutchinson's History of Mass., Vol. III., p. 9.

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