GIFT OF

SEELEY W. MUDD

and

GEORGE I. COCHRAN MEYER ELSASSER

DR. JOHN R. HAYNES WILLIAM L. HONNOLD

JAMES R. MARTIN MRS. JOSEPH F. SARTOR!

to the

UNIVERSITY OF CALIFORNIA

SOUTHERN BRANCH

L__

This book is DUE on the last date stamped below

f9^

URL

A«4/?9

Southern Branch
of the

University of California

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Form L 1 11 Q^

M3Da

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Proceedings of the American Academy of Arts and Sciences.
Vol. XXXllI. No. 12. — Febkuauy, 1898.

CERTAIN CONSIDERATIONS CONCERNING THE COIN-
AGE OF THE COLONY AND THE PUBLIC BILLS
OF CREDIT OF THE PROVINCE OF THE MASSA-
CHUSETTS BAT.

By Andrew McFauland Davis.

85532

DIAGRAM SHOWING DISAPPEARANCE OF SILVER, INCREASE OF

PROVINCIAL CURRENCY AND CORRESPONDING MOVEMENT

OF SILVER RATE, 1700-1750.

Price of

Silver,

7s. 1700 to 60s. 1750.

■-

7SHII.

;

,,;

--...

^■-''

<I>

^y'

,IM<

^p. ■, \ ■•■■•„■, /v/O^ocoi

^-^ /72.0 /730

/74-0 77.50

Bills in
Circulation.

2200

2100

2000

1900

1800

1700

1600

1500

1400

1300

1200

1100

1000

900

800

700

600

500

400

300

200

100

100
200

Volunie of Currency

Price of Silver

A. Quebec Expedition, £50,000 Loan.

B. €50,000 Loan.

C. £100,000 Loan.

D. £50,000 Loan.

E. ,€(;0,000 Loan.

F. Merchants' Notes.

G. W. I. Expedition, Land Bank.
n. Cape Breton Expedition.

I. Price of Silver checked by propo.sed reimbursement.

Unit of Scale of Silver Price one shilling.

Unit of Scale of Circulation £1 ,000.

The shaded block underlying the currency represents the Silver Circulation in New England.

The years are indicated along the base line between Currency and Silver.

CERTAIN CONSIDERATIONS CONCERNING THE COINAGE
OF THE COLONY AND THE PUBLIC BILLS OF CREDIT
OF THE PROVINCE OF THE MASSACHUSETTS BAY.

By Andrew McFauland Davis.

Presented June 9, 1897.

The New England shilling was, according to the terra.s of the Act
establishing a Mint,* to be of the just alloy of new, sterliog, English
money, and for value to be twopence in a shilling of lesser value than
the corresponding English coin. It was to weigh tliree penny-weights,
Troy weight. Like the guinea, this shilling is to-day a mere reminis-
cence, yet until a very recent period it held its own in many parts of
New England, in the price lists of tradesmen, as the sixth of a dollar.
Douglass says : f "At the first settling of the New England Colonies,
their medium was sterling coin at sterling value, and barter. When
they got into trade a heavy piece of eight passed at 5s. A. 1652, they
proceeded to coin silver shillings, sixpences, and threepences, at the
rate of 6s. to a heavy piece of eight." There is no reference to the
value of the piece of eight in the Act establishing a Mint, but it will
be seen that the conversion of the New England shilling into sterling
would have been on the basis of exchange at 120, whether the rate be
estimated from the corresponding values given in the Act in pence, or
from those given by Douglass in pieces of eight. Douglass, however,
states elsewhere,^ that the actual value of the piece of eight was only
4s. Qd. If this was so, then the New England shilling was from the
outset worth only ninepence and the normal rate for the conversion of
New England currency to sterling was 133. These are the rates thitt
prevailed during the period of the Province, and the only question is
whether the shilling ever did have the value of tenpence according to

" * Mass. Col. Rec, Vol. Ill pp. 261, 262.
t A Discourse concerning tlie Currencies, etc., p. 10. In addition to the above
coins, silver twopences were authorized in 1662. Mass. Col. Hec, Vol. IV. p. 51
t A Discourse, etc., p. 8.

192 PROCEEDINGS OF THE AMERICAN ACADEMY.

the language of the act. The heavy jiiece of eight not only passed
within the Colony at five shillings in early days, but, according to
Douglass,* it was remitted to Great Britain on that basis. This being
the case, it is easy to understand how the law makers came to rate a
piece actually worth only ninepence sterling at tenpence, an effective
value accomplished through the remittance of pieces of eight at a rate
above their market value, and we need no explanation for its decline
from this nominal rating to its proper place in the scale of exchange, so
soon as the immediate causes which led the London tradesmen to accept
this discrimination against them should have passed away.

The mint was established in the hope of retaining a metallic currency
in the Colony, through the agency of the lighter coinage, but it was
soon evident that it was not performing this work, and in August, 1654,
a law was passed against the exportation of coin.f Mere legislation,
however, was no more effective than the system of coinage, and in
May, 1669, searchers were appointed with extraordinary powers whose
duty it was to examine outgoing vessels which had weighed anchor with
the intention of leaving our waters.^ They were to seize all money
which they should find, and were invested with power to break open
packages and examine personal effects. Notwithstanding these arbitrary
proceedings silver still left the country, and in October, 1672, the
General Court prefaced an Act legalizing the currency of pieces of
eight with a preamble in which it was stated that these coins were of
more value to carry out of the country than they woidd yield at the
mint, and, what was of more consequence, that they were actually carried
out of the country instead of being taken to the mint. To prevent this,
it was ordered that pieces of eight, of full weiglit and good silver, Mexico,
Seville, and Pillar, should pass current at six shillings, after they had
been duly stamped at the mint with the letters N. E. to indicate that
they had been inspected. § Light weight pieces of eight were to be
stamped with their actual weight, and to pass for a proportionate
value.

This is the first point at which we obtain a legal rating of the piece of
eight in New England currencj'^, and it might be inferred that this value
was assigned in consequence of the depreciation of the coinage from the
rate at which it was originally minted. If this opinion should prevail,

* A Discourse, etc., p. 8.
t Mass. Col. Kec, Vol. III. pp. 353, 354.
t Mass. Col. Rec, Vol. IV. p. 421.
§ iMass. Col. Rec, Vol. IV. p. 533.

DAVIS. — MASSACHUSETTS CURRENCY. 193

the date of this Act will be accepted as that at which the value of
niuepence sterliug was recognized as the true value of the New England
shilling. It seems much more probable, however, that the Act was the
result of two circumstances : first, that, the piece of eight having a
recognized value, people could and did avail themselves of it as a medium
of trade without paying seigniorage at the mint for its conversion into
New England money ; and second, that the General Court was desirous
of protecting the public against the light weight pieces, if possible. So
far as this latter reason may have had influence in promoting this legis-
lation, it is evident that it produced little result; for in May, 1682,* the
General Court authorized the currency of light weight pieces of eight
according to their weight. Under the Province, it was enacted in 1692
that pieces of eight, Seville, Pillar, and Mexico, should pass current if
of full seventeen penny-weight at six shillings, and this value was again
assigned them in 1697.t The expression " full seventeen penny-weight,"
is probably the equivalent of " not less than seventeen penny-weight."
The rate of silver per ounce to be deduced therefrom is a little over
seven shillings. The same year the legislation against the export of
bullion or money was renewed,^ and shipmasters on clearing were
required to take an oath that they did not have on board their vessels
over five pounds in bullion or current silver money.

In 1704, a proclamation was issued by Queen Anne fixing the rates at
which certain foreign coins should pass current in her Majesty's dominions
in America. The weight and intrinsic value of these coins were given,
and also the rates at which they should pass in the Plantations, the latter
being fixed in terms of New England currency. It may be inferred from
this proclamation and the parliamentary statute passed in 1706 for en-
forcing it, as well as from colonial legislation, both before and after this
date, with regard to the value at which pieces of eight should pass, that
the New England coinage had been supplanted by the Spanish and INIexi-
can dollars and fractional parts thereof. The mint had been closed fur
twenty years when the proclamation was issued, and thenceforth New
England money when used to express silver values was known as " proc-
lamation money " or '• lawful money," equivalent expressions, found in
the acts of the several governments, meaning nothing more nor less than
the rate fixed at which coined silver should pass when measured in terms

* Mass. Col. Rec, Vol. V. p. ?..51,

t Province Laws, Vol. I. pp. 70 and 296.

t Province Laws, Vol I. p. 306.

VOL. XXXIII. — 13

194 PROCEEDINGS OP THE AMERICAN ACADEMY.

of the New England currency.* By this proclamation, the Seville piece
of eight, old plate, and the Mexican piece of eight, were each valued at
4s. 6rf. and the weight of each was given at 17 dwt. 12 grs. The Pillar
piece of eight was given a slightly higher value in this table. The rate
at which these coins were to circulate was fixed at 6s. the same value as
that assigned by the pi-ovincial legislation " if of full seventeen penny-
weight." The rate of conversion was exactly 133, the 4*. Gd. sterling
being equal to 6s. New England money. The rate for silver in London
was then os. 2d. per ounce. At 17^ dwt. for the piece of eight, silver was
rated at Gs. lOfrf. per ounce, or at a fraction less than 5s. 2c?. sterling.

The Provincial Act of 1697 seems to have been the basis for the
rates fixed in the proclamation. In 1706, the Lords of Trade informed
Governor Dudley that this was the fact. " You are further to represent
to the Assembly," they said,t " that there lies a particular obligation on
them to enforce a due obedience to her Majesty's commands herein, for
that the regulation of the rates at which foreign coins are to pass was
calculated from a law of their own." The establishment of the value at
which foreign coins should pass in the Plantations, by the standaird fixed
for the value of the New England shilling in an Act passed by the
General Court of Massachusetts, instead of reversing the process and
taking sterling money as the basis, at first glance seems peculiar. It
must be remembered, however, that at that date, apart from the fact that
the Province was dependent upon foreign silver for its currency, New
England money was to a great extent but a nominal measure of value,
the mint having been closed for over twenty years and the Province
having been compelled in tlie mean time to resort to legislation against
the export of silver, in order to keep within its borders the miscellaneous
coins then in circulation. Moreover, the circumstances connected with
the silver coinage in Great Britain at that time were such as may serve
to some extent to explain this readiness to accept a measure of value
set by the Province itself in terms of a foreign coin. The table of
values for foreign coins contained in the proclamation was prepared by

* Felt, on page 116 of his Historical Account of Massachusetts Currency, saj's,
" As debtors, who confided in the last emission of Go vernment notes, had promised to
pay lawful money, meaning these bills. ..." This expression is susceptible of
the interpretation that Felt thought the public bills of the issue referred to were
lawful money, which may or may not have been liis intent. The statute which
he was interpreting was passed for the purpose of relieving debtors who had
incautiously agreed to pay lawful money for debts incurred in public bills.

"The Editor has been unable to find any definition or explanation of what is
meant by 'proclamation money.'" — New Hampshire Prov. Papers, Vol. V. p. 672.

t Province Laws, Vol. I. p. 580.

DAVIS. — MASSACllUSKTTS CURRENCY. 195

Sir Isaac Newton, who had been called to the charge of the mint for the
purpose of sui)erintending the recoinage of the silver of the realm. Prior
to this process and during its continuance, the relations of the values of
English gold and silver coins were greatly disturbed. After the recoin-
age, contidence was re-established in London, but it was still fresh in
the minds of men that the upward career of the guinea, when measured
in the clipped and sweated silver in circulation prior to this measure, had
been decreed by parliamentaiy enactment to stop at 30s., and that by
successive laws its measure in silver had been ordered to be reduced to
22s., while as a matter of fact it had, at the time the table was made,
actually fallen to 21s. 6(/. Thus it will be seen that the recent instability
of the English silver coinage may have influenced the politic course
taken in accepting the measure of value, established in terms of a foreign
coin, by the colonists themselves. The rate having been thus fixed
between a nominal measure of values and an actual coinage, there was
nothing to disturb it, and it was passed on to our day, six New England
shillings being equal to the dollar, Mexican or Spanish, and to their
successor, our own dollar, 13os. New England money being in the days
of the Province equal to 100s. sterling.

Until dollars came into use, all transactions in Massachusetts were stated
in New England money. All accounts given in terms of " lawful money "
must therefore be reduced twenty-five per cent if we would obtain the
corresponding amount in sterling. During the progress of the currency
inflation which took place iu this counti-y in the first half of the eigh-
teenth century, the Province of the Massachusetts Bay was the leader.
The other New England Colonies copied the form of note first issued in
this Province, which was in effect a mere certificate that the bill was due
from the Province to the possessor and should be in value equal to money,
and oil these terms would be accepted by the Treasurer in all public pay-
ments. The bills of the different governments circulated side by side
promiscuously, even after legislation was invoked to prevent it, no matter
what the terms on wliich they were issued or the amounts outstanding of
the bills of the several governments, and when they all of them became
so seriously depreciated that they were worth only about twenty-five
per cent of the value at which they originally circulated, Massachusetts
adopted a new form of bill in which the value of the bill was expressed
in coined silver or gold. The other Colonies also adopted the new form,
and bills of the respective forms were thereafter known as old and new
tenor bills. Of the new tenor bills Massachusetts used three different
forms, but they all preserved the feature of stating a value in silver at

196

PROCEEDINGS OF THE AMERICAN ACADEMY.

which the bill should pass, though changes were made in the silver rate
and in the phrase which defined their use in payments. The new tenor
bills were at first held at the rate of one for three, but very shortly there-
after the fact that the depreciation of the old tenor bills was not fully
recognized in this estimate compelled the establishment, when the second
form of new tenor bills was adopted, of the ratio of one to four. Old and
new tenor bills were sometimes emitted, side by side, in the same Act, and
thus it became necessary that one of these forms should be accepted as
the measure of value. Inasmuch as all values had been stated in old
tenor up to the issue of the new form, and as there were for a short time
two forms of new tenor having different measures of value in old tenor, it
was customary for writers to convert the bills of the new tenor into old
tenor in making statements of the amount in circulation. When, there-
fore, it is stated that there was in circulation in 1749 £1,900,000 of
public bills of the Province of the Massachusetts Bay, it must be
remembered that, if the taxes which were laid for the purpose of with-
drawing from circulation the old tenor bills had been paid exclusively in
these bills, there would have been in circulation at that time only
£475,000 in bills of the different forms of new tenor, and exchange,
instead of being 1100 or thereabouts, would have been only 275. While
such facts as these add greatly to the confusion of the situation, no just
appreciation can be acquired of the statements which I am about to sub-
mit, showing the movements of exchange, etc. during this period of
inflation, which does not take into consideration that in 1737 these disturb-
ing elements were introduced through the emission of the new tenor bill.
The following table, showing the rate of exchange and the price of
silver at different dates, 1702 to 1749, was made up by Dr Douglass.*

Periods.

Exchange
with London.

1 oz. Silver.

Periods.

Exchange
with London.

1 oz. Silver.

A. D. 1702
1705
1713
1716
1717
1722

1.33
135
150
175
225
270

6s. lO^d.
7s.
8s.
9s. .3a.

12s.
14s.

A. D. 1728
1730
1737
1741
1749

340
380
500
550
1.100

IBs.
20s.
20s.
28s.
60s.

* Douglass's Summary, Historical and Political, etc., "Vol. I. p. 494.

DAVIS.

M.VSSACIIUSETTS CUUIJKNCY.

107

The Suffolk files funii.';h us with two papers which give the fiuctuations
in silver somewhat more in detail tluiu the foregoing table between 1700
and 1738, inclusive. This record is copied from a book kept by Edward
Winslow, who was sheriff of Suffolk County, and it has therefore a
certain ollicial character. *

Years.

Rate of Silver
per Ounce.

Years.

Rate of Silver
per Ounce.

Years.

Rjite of Silver
per Ounce.

1700 to 1704

7s.

1721

J 12s. Gd., 13s.,
j 13s. 6d.

1731

S 18s. 6d.,
( 19s.

( 19s. 6d.,
\ 20s.,
/20s. Gd.

1705 to 1710

8s.

1722

14s -14s. Gd.

1732

1711

8s. 4d.

172;]

\ 14s.6d.-15s.,
( 15s. Gd.

(21s.,21s.Gd.,
{22s.,22s.Gd.,
/23s.

1733

1712, 1713

8s. Gd.

1724

16s.-16s. 6d.

( 24, 25, 26s.,
\ 26s. Gd.,
/27s.

1714, 1715

Os.

1725

16s.-15s.

1734

1716, 1717

10s.

172G, 1727

IGs.
\ 16s Gd.-17s.,

1735

27s. Gd.

1718

lis.

1728

I 18s.

1736

27s., 26s. Gd.

1719

12s.

1729

S 19s.-19s. 6d ,
■( 20, 21, 22s.

1737

1738

26s. 6d., 27s.
27s.

1720

12s. 4d.

1730

21,20, 19s.

From scattered sources we can fill in the missing quotations from 1738
to 1749, with sufiicient accuracy for our purposes. f As to the rate of
exchange at the latter date, the confusion was so great that no person
knew just what it was, but silver was generally quoted at about 60s.,
and exchange at about 1100. In 1700, the Province was practically on
a specie basis, and exchange was quoted at its normal rate, 133. Doug-
lass gives silver in 1702 at Gs. \i)yL Hutchinson practically adopts
the same rate. J If the piece of eight was permitted to circulate on the

* Suffolk files, 40,289 and 46,659. There is a table incorporated in the draught
of an act wliicli failed of passage, given in the Massachusetts Arcliives, Vol. CI.,
p. 473, wliich includes tlie rates from 1710 to 1727. Anotlier is to be found in the
Diary and Letters of Tliomas Hutchinson, p. 53. Felt gives the table from the
Archives, Historical Account of ^lassachusetts Currency, p. 83.

t The important points being 1744, 30*-.; 1745, 36s.; 1746, 41s.; 1747, 60s.;
1750, 60s.

I History of Massachusetts, Vol. II. p. 393.

198 PROCEEDINGS OP THE AMERICAN ACADEMY.

basis of 17 dwt. the rate of silver was 7-^\s. per ounce. If the condi-
tions of the proclamation of 1704 were adhered to, then the rate was
6s. lOfd. per ounce. The general rating of the period appears, however,
to have been that given by Winslow, 7s. per ounce. A committee of the
General Court recommended tl)at pieces of eight should pass at 7s. per
ounce, in 1701.* Another committee in 1703 f proposed that plate,
bullion, and silver of sterling alloy should pass at 7s. per ounce. Seven
shillings may therefore be adopted as the generally accepted value at
that time. I

All through the Provincial legislation 6s. Sd. is treated as the normal
rate of silver in lawful money, and os. 2d. as the sterling rate. With
exchange at 133, and silver rated at os. 2d. sterling, the rate in lawful
money should liave been Gs. llr^., a fraction above the rate to be derived
from the proclamation. The question naturally arises, Whence came
this rate of Gs. Sd. ? My conjecture is that it dates back to the days of
the Colony, at which time silver is sometimes quoted at 5s. § This ster-
ling rating would be the equivalent of 6s. 8d. New England money. Its
use would in that event have been merely traditional, but a traditional
rate might have fixed itself upon a denominational money.

During the period of the decline of the notes, the influence of the
Governors and of the Councillors, especially after the decline became

* Mass. Archives, Vol. CI. p. 18i.

t Court Records, Vol. VII. p. 373.

J Tlie autlior of " Observations on the Scheme for £60,000 in bills of a new
Tenour," p. 18, gives the rate in 1702 at seven shillings. The same author, how-
ever, in " An Inquiry into the Nature and Uses of Money," etc., p. 4, gives the
rate the same year as eight shillings. Deeember 27, 1704, Dudley announced that
he had received the proclamation. Court Records, Vol. III. p. 95. On the .^d
of March, 1701-5, the Council passed an order that no money should pass by tale
but what was of due weight, according to her Majesty's proclamation. Light
money and plate of sterling alloy were to pass until further provision should he
made at the ne.xt session of the Assembly at seven shillings per ounce. The
House non-concurred, and the Governor summoned them to a conference. After
the conference, the order was amended by striking out the seven shillings, and
making it read that light weight coins, etc. should pass and be good in payments
by the ounce Troy pro rata until the end of the session of the Court in May.
Court Records, Vol. III. p. 113. On the same day Dudley issued a proclamation
to that effect. Mass. Arcliives, Vol. CI. pp. 287 and 290.

§ A Discourse, etc., p. 24. Douglass, speaking of the effect of the depreciation
of the currency on the salaries of clergymen, says the preachers " when silver
was at 5s. had £3 per week ; at present, silver at 29s. per oz., they have only £6
to £8, equal to 40s. of former times."

DAVIS. — MASSACHUSETTS CURRENCY,

199

sufficiently pronounced for them to recognize tiie causes, was as a rule
on tiie side of conservatism. Tliey had no remedy to propose, but the
Governors in tlieir speeches repeatedly pointed out the evils which would
arise from failure ou the part of the Assembly to call iu the notes at the
appointed time, and the Council many times refused to concur in hills
which by their terms postponed the withdrawals. The effect of the
decline was felt most by individuals living upon salaries, or having fixed
incomes payable in current funds, but it also reached certain branches of
the government. The post office, for instance, was dependent for its
support upon a schedule of fixed charges, and no compensation was pos-
sible for the loss occasioned by the decline of tlie currency. In 1713,
the department lodged a complaint with the Board of Trade, for this
reason.* The Governors not infrequently pointed out that the allowances
made them for their services ought to be increased proportionately to the
diminution in the purchasing power of the bills, and the members of the
Board and of the House took care that their joer diem pay was at least
approximately adjusted. "I own, some part of this community can
fence against this evil," said Governor Sliute, in 1716, "and ward it off
from themselves by advancing their commodities, but the other part mu.<t
unavoidably suffer. All rents must fall of consequence, and what will
your ministers do, who are highly worthy of their salaries? how heavily
it will fall upon them and their families, when what they are paid in
grows low in value, and tlieir necessaries of life are daily advancing."
Douglass saw that through the changes made in the allowances to the;
Governors and in the per diem pay which the members of the General
Court voted to themselves, a sort of scale could be constructed with
which to measure the diminution of the purchasing power of the bills,
and he therefore put together the following table. f

A. D.

1702.

1720.

1730.

1740.

1743.

1745.

1747.

1748.

Gov'nors j

Dudley

Shute

Ijek'lier

Belcher

Shirley

Siiirley

Per Ann. )

£600

£1,000

£2,400

£3,600

£5,400

£6,000

£7,600

£9,600

Councillors
per day

5s.

6s.

10s.

1.5s.

18s.

ms.

40s.

Kepresenta-
tivesperday

3s.

4s.

Gs.

10s.

12s.

20s.

30s.

Rates

£6,000

£.35,000 £60,000

£120,000

£168,324

£381,672

* Board of Trade .Tournnl, quoted by Palfrey, Vol. IV. p. .332.
t Douglass's Summary, etc., Vol. I. j). 508.

200

PROCEEDINGS OP THE AMERICAN ACADEMY.

The growth of the rates or annual charges of the government is almost
as instructive as the advance of tiie pay of the legislators, but is of
course complicated by causes outside the currency. The changes in the
pay of the Councillors and Representatives, as laid down in the Province
Laws, are as follows.

A. D.

lC!t2.

1714.

1728,
1737.

1738,
1740.

1741.

1742,
1746.

1747.

Councillors
per day

Representa-
tives per (lay

5s.

OS.

4s.

10s.

Gs.

15s.
10s.

12s.

8s.

18s.
r2s.

30s.
20s.

It will be seen that the records practically confirm Douglass's table, so
far as the per diem pay of the legislators is concerned, the brief varia-
tion in 1741 not being of sufficient importance for consideration. The
increase in the Governor's pay in 1748, would indicate a probable increase
at the same time in the pay of the Councillors and Representatives; but
there is no record preserved of any action on tins point. The Annual
Tax Acts all contain statements of the amounts respectively levied for
the Province tax and for Representatives' pay and fines. If the service of
the Representatives had been uniform each year, we conld test the table
by a comparison of the appropriations for Representatives' pay for diflFer-
ent years ; but an examination of these amounts from year to year shows
that the growth to be found there does not exactly follow the law which
would be deduced from the amount of the per diem pay. It is a fact,
however, that while the amount assessed in June, 1747, for Representa-
tives' pay and fines, was £2878 l\s. Gd., the corresponding amount in
the levy next year was £4508 5s. The presumption is tliat Douglass
was correct in the figures which he gave for the pay of the Councillors
and Representatives in 1748.

A variety of circumstances complicates the attempt to analyze the
allowances made the Governors during tliis period, but on the whole
Douglass's table fairly represents the changes. Phips had three annual
allowances of £500 each. Bellamont, who was very popular, had two
allowances of £1000 each. Dudley was allowed £500 in 1702. Shute
was at first allowed £1200, but this was afterwards cut down to £1000.
Belcher's first allowance was £2400, from 1731 to 1737 inclusive he was
allowed £3000, then for three j'ears the sum was fixed at £3600. From
this point Shirley's allowance was advanced by stages to £5400, £5760,
£6000, £7600, and finally it was, in 1748, £9600.

DAVIS.

MASSACIiUSH;TTS CURRENCY.

201

It was stated hy a contemporary writer that there was in circulation
in the four New England Colonies, when the first issues of Province
bills were made, about £200,000 in silver.* Douglass says that in 1713,1
one third in value of the circulating medium of the New England gov-
ernments was silver, and the other two tliiids paper. The bills he esti-
mated at £175,000. Silver was then rated at 85. per ounce. They
were therefore equivalent to 437,500 ounces of silver. He called them
438,000 ounces, and thus got a total of 657,000 ounces. A comparison
of some of these estimates may be useful.

Year.

Silver in
Circulation.

rills in rivcnln-

tioii in all New

England.

R;ito of Silver
per Ounce.

Corresponding
ounce.s of Silver
in Circulation.

V;ilne of Ciicu-

lation at Gs. 8d.

per Ounce.

1700
1713
1718
1731
1739

£200,000
21U,000 oz.

4.38,000
300,000
470,000
030,000

7s.

8s.

12s.

20s.
29s.

571,428
657,000
500,000
470,000
434,482

£
190,476

219,000

106,660

150,666

144,827

If there is any rule to be deduced from the foregoing table it would
seem to be substantially the same as that laid down by Douglass: J '* The
more paper money we emit, our real value of currency or medium be-
comes less, and what we emit beyond the trading credit of the country
does not add to the leal medium, but rather diminishes from it by creat-
ing an opinion against us, of bad economy and sinking credit."

The apparent exception to the rule, in the excess in the purchasing
capacity of the circulation shown in 1713, may be capable of explana-
tion. When the Colony began the emission of public bills of credit there
was in circulation an amount of silver i^ractically adequate for the trans-
actions of local business affairs. Until it had been totally displaced and
superseded by paper money, any estimate of the amount remaining in
circulation at any given time nnist have been conjectural. Douglass's
estimate of one third in circulation in 1713 may have been too higli,
and was indeed disputed by one of his contemporary controversialists.
Whether this be so or not, time was required for the emissions to pro-
duce their effects upon the discount of the bills and the displacement of

* The .Second Part of South Sea Stock, p. 22.

t A Discourse, etc., p. 29. J A Discourse, etc., pp. 29, 30.

202 PROCEEDINGS OP THE AMERICAN ACADEMY.

silver, and it is quite probable that the £50,000 emitted for the Hill and
Walker expedition against Quebec in 1711 had not then fully done its
work. Still another exception to the rule is to be found in 1749. There
were outstanding that year, in the month of May, about £2,200,000 old
tenor. A tax of £75,000 new tenor was laid that summer. This was
equal to £300,000 old tenor, and reduced the amount outstanding to
£1,900,000. Silver was then quoted at 60s. an ounce, and the outstand-
ing circulation, thus reduced, was equivalent to 633,333 ounces, which at
6s. Sd. an ounce was equal to £211,111. It must not be forgotten, how-
ever, that when that tax was laid it was known that the government of
Great Britain had completed its preparations for reimbursing the Province
for its expenditures in behalf of the Cape Breton expedition, and a law
had been passed in the Province fixing the terms of the redemption of
the bills. One cause of the delay in paying over the money to the Prov-
ince was the opposition of certain merchants in London, who believed
that speculators were gathering in the bills in the hope of reaping a
profit out of their redemption. These exceptions, therefore, do not fur-
nish adequate reasons for doubting the correctness of the rule deduced
by Douglass.

The influence of large emissions on the part of the Province of the
Massachusetts Bay upon th& silver quotations can be easily distinguished,
and in some instances, where the rise of silver was stimulated by causes
not connected with the issues of this Province, the coincidence with large
emissions in Rhode Island furnishes an adequate explanation of this
change in rate. Douglass was of opinion that two thirds of the bills
emitted by Rhode Island were absorbed in the circulation of Massachu-
setts. The table on the opposite page, mainly made up from facts brought
together by Douglass in his pamphlets, will illustrate these points.

Wages did not rise proportionately with silver. In a pamphlet pub-
lished in 1721, when silver was between 12 and l3s. an ounce, the writer
says,* " I will next ask the poor laborer that works for five shillings per
day, half money, half goods, whether he lives better now than when he
received four shillings per day in good silver money at the rate of
seventeen penny-weights for six shillings." Douglass, writing in 1739
concerning the effect of the depreciation on wages, says : f " How much
they have suffered and continue to suffer is obvious. For instance, a
carpenter, when silver was at 8s. per oz., his wages were 5s. a day all

* The Second Part of South Sea Stock, p. 16.
t A Discourse, etc., pp. 23, 24.

DAVIS.

M.\SS.\CHUSETTS CUHUENCV,

•203

Vear.

Rate of Silvor
per Ouiiie.

Loans and Extraordinary Emissions.

1700
1706
1712
1715
1717
1722
1728
1732
1733
1738

7s. '

8s.

8s. 6(1.

9s. 2(1.
12s.
14s.
18s.
21s.
27s.
29s.

£50,000 atlvanccd ace. Quebec Expedition.

£50,000 loan, 1714. £40,000 R. I., 1715.

£100,000 loan.

£50,000 loan, 1721. £40,000 R. I.

£60,000 loan, 1727. £40,000 R. I., 1728.

£60,000 R. I. loan, 1731.

£76,000, 1733; £104,000, R. I. ; £50,000 Conn.

£100,000 R. I. loan.

cash. The Towa House, A. 1712, was built at this rate; whereas at
preseut, A. 1739, from the bad influence of paper money, silver being
29s. per oz., he has only 12s. a (3ay, equal only to 3s. 4d. of former
times ; and even this is farther reduced, by obliging him to take one
half in shop goods at 25 per cent or more advance above the money
price." He then proceeds to show how the purchasing power of the day's
wages has diminished, selecting butter for his illustration on the ground
that it rose the most uniformly of all provisions. When wages were 5s.
per day, butter was Ad. per pound, and the laborer could buy 15 pounds
with one day's wages. His 12s. would only jiurchase 7 pounds, butter
being then 20c?. a pound. The salaries of clergymen had more than
doubled, but the purchasing power of the salaries had diminished thirty-
three per cent.

There is much to be learned from a study of the attempts at remedial
legislation during this period. The subject of the adjustment of the
relations between debtors and creditors, and the application of the legal
tender function to the bills, raised complications which occupied much of
the time of the General Court, and the various attempts to reconcile
the divergent interests of the debtor and creditor classes are entitled to
cai'eful consideration. The material bearing upon these questions is, how-
ever, too prolific for any attempt at analysis here.

The form of the public bill has already been indicated. It was in
effect a certificate of indebtedness, and on that theory, when it found its

204 PROCEEDINGS OF THE AMERICAN ACADEMY.

way back to the treasury, the debt was extinguished and the temporary
function of the bill was perfui'med. Under this theory the amounts
originally issued each year were simply intended to meet the immediate
needs of ihe government, and provision was made for their I'etirement
in the next tax bill. The withdrawal from circulation, and the lucking
up in the hands of a treasurer, of large sums collected by taxation, is
recognized as a serious disturbance to the circulating medium of a
government, and various devices are to-day resorted to in order to pre-
vent as far as possible the consequent reduction of the circulation. In
a similar way, after the country became dependent for a circulating
medium upon the amounts thus annually emitted, the sudden emission
and the withdrawal each year of so large a proportion of the medium of
trade must have created a serious disturbance in commercial affairs,
and the cry of a scarcity of bills during the period of the year when the
taxes were being collected was based upon a genuine want, even when
the bills were most abundant. The increase in the amounts issued, the
postponement of the periods for retirement, and the distribution of the
withdrawals ovt;r several years, were only partial remedies for this evil.
Confidence in the bills was based upon their ultimate withdrawal, and the
greater the emissions the greater the taxes that must be levied to provide
for their retirement. While this was evidently true, and while there
were indications that pointed to a loss of confidence in the bills when
the Assembly failed to provide the promised fund for the withdrawal of
an emission, yet it cannot be doubted, however paradoxical it may
seem, that whenever a fund was called in for the purpose of redeeming
the government, promises and maintaining confidence in the bills, it was
expected that there would be an emission to fill the gap thus occasioned
in the circulating medium.

The emissions in Massachusetts from 1702 to 1749 reached the sum
of £4,630,000, while the withdrawals during the same period, includ-
ing the £300,000 in 1749, were £2,730,000. It was doubtless to over-
come the disturbance occasioned by this annual process of absorption
and emission, that the system of distributing bills of public credit
among tiie inhabitants, on loans secured by real estate, w^as resorted to.
£310,000 was thus put out at different times. The first loan was to
the Boston merchants who furnished supplies for the Quebec expedition
in 1711. This was only a temporary loan, to enable them to carry the
sterling exchange paid to them by the paymasters of the expedition,
until it should be met in London. In 1714, when it was about to
be paid, it was replaced by a loan of £50,000 to the inhabitants of

DAVIS. — BIASSACHUSETTS CURRENCY. 205

the Province. Wlieii the first instalments on this loan fell due, in 17 IG,
£100,000 was put out and this was followed by £50,000 more imme-
diately after the last instalments on the first popular loan were payable,
in 1721. When by the terms of these loans they should have been
i-etired, a new loan of £60,000 was made, and doubtless this process
would have been continued but for the interference of the Board of
Trade. The meaning of the attempt is obvious. The Assembly was
seeking to furnish a medium for trade, which should not be subject to
the annual calls for retirement under which bills for government expen-
diture were issued.

Among the various experiments then made there were but two
attempts to give these bills a credit based upon a promise that they
should be paid in coin, the first being of little consequence, as it ap-
plied to only £1500 emitted in 1693.* The ^aromise in this, as well as
in the later and more important instance, was not on the face of the bill,
but was in the Act of emission, and in the second case was so worded
that in [)ractical operation it did not prove beneficial for the bills in
question. The Act under which the £9,000 in bills of the first new
tenor were emitted in February, 1736-7, contained a provision for
levying a tax in 1741, adequate for their retirement, payable not only
in the bills themselves, but in old tenor bills or in certain produce. It
was further provided that after that session, and until 1742, the duties of
impost and excise should be j)aid in coin, and although it was thought
that the several funds established for the retirement of the outstanding
bills would be adequate for the purpose and all would be out of the way
by that time, these duties were pledged as a still further security. If by
chance it should happen that any of these new tenor bills should be
outstanding at any time after December 31, 1742, the possessor was to
be entitled to receive from the treasurer for every six shillings and
eightpence in these bills, an ounce of silver or the like value in gold.
All of the first new tenor bills were issued with this promise of redemp-
tion in December, 1742, attached, and all of them were declared to be in
value equal to silver at six shillings and eightpence an ounce, an esti-
mate which was above the true rating of silver based upon sterling
exchange, as has already been pointed out, and also above the rate at
which the bills circulated, as appears from the discussions which subse-

* The dehisive promises to be found in some of the later Acts of emission, to
the effect that the silver and gold wliich should be received for commodities
timed in by tax collectors were to be held for the benefit of possessors of bills,
were not entitled to grave consideration.

206 PROCEEDINGS OP THE AMERICAN ACADEMY.

quently took place iu conuection with the adjustment of debts. These
bills were declared to be worth three times as much as bills of the
corresponding denominations of the old tenor form, and were to be
received by the treasurer on the basis of one of the new tenor for three
of old tenor. In January, 1741-2, when the second new tenor form was
first issued, the bills were rated in the Act on the basis of one of the
form mentioned in the Act for four of old tenor, no provision being
made in the Act for their redemption in coin. From that time until
December, 1742, the Province saw circulating side by side two forms
of bills, each declared to be equal to silver at six shillings and eight-
pence an ounce, one of these forms being rated in the statutes at a
premium of 33 per cent above the other, and the bill that was at a
discount having behind it a specific pledge for its redemption in coin
within less than twelve months. It was also true that at the same time
Rhode Island bills issued on twenty-year loans, to an amount vastl\ dis-
proportioned to the resources of the Colony, when compared with the
circulation of the Massachusetts bills, were freely received at a premium
above these first new tenor bills. It is possible that the discredit iu
which these bills were held during the spring and summer of 1742 was
intentional, for the Assembly, just in time to save the credit of the
Province, made provision for the exchange of such as were outstanding
December 31, 1742, on terms nearly equivalent to their redemption in
coin. Thus ended this absurd attempt to give credit to the public bills
by promising to redeem in silver and gold such as were outstanding
after the fund provided for their withdrawal from circulation was closed.
How far it may have affected public opinion at the time, and prevented
a more liberal and reasonable attempt at the establishment of a currency
redeemable in coin on demand, must be a matter of personal judgment,
but it will be admitted that this experience was capable of an interpre-
tation in the hands of those hostile to such a movement which would
have militated against any such experiment.

I have prepared and submit herewith a table showing the various
amounts annually emitted, inclusive of loans from 1702 to 1750. In
parallel columns with these, the amounts retired each year and the amount
left outstanding are given, the withdrawals being made up on the
assumption that the loans were called in when due. It is known that
this was not the case, but it would be impracticable to attempt to follow
these payments in detail. It is also known that the tax collectors were
at times delinquent in their returns, so that the funds provided for the
withdrawal of the bills were not collected according to the terms of the

DAVIS. — MASSACHUSETTS CURRENCY. 207

legislation, but in the long ruu these things took care of themselves.
The emissions in tlie table are procured from the Acts and Kesolves of
the General Court. The Tax Acts furnish the withdrawals or i-etire-
ments. The figures to be obtainetl from this table corresj)ond in their
final result with those given by contemporary writers as to the amount
outstanding in 1749. There are some fj-agments of treasurer's state-
ments and some committee reports showing the amounts outstanding at
different dates. These reports require examination before they can be
applied to test the accuracy of this table. The treasurer was apparently
accustomed to charge himself with all bills which w'ere emitted against
future funds, but the bills intended for loans he charged to the commis-
sioners of the loans, and they made their reports direct to the Assembly.
The treasurer's reports, tlierefore, as to the amount of bills outstanding
at any given date require correction by the addition of the loans then
outstanding to the net amount with which he stands charged after
having deducted from the emissions the credits to which he was entitled.
For instance a report, the bulk of which is given by Felt,* shows that
up to November llih, 1724, the treasurer stood charged with bills
amounting to £397,006 Is. During the interval which his statement
covered, there had been paid in £194,917 25. 10c/., which had been
burned by committees of the General Court, and there was in the
treasury at that date £10,558 12s. If/., leaving outstai.ding according to
this statement £191,530 C)S. Id. Now there were actually outstanding
at that time the entire amounts of the £100,000 loan and the £50,000
loan of 1721, and in addition thereto the taxes were to a great extent
pledged for several years ahead as funds for the retirement of bills
which must then have been in circulation. The estimate of the amount
outstanding to be found in my table, which is made up from the-Acts
and Resolves of the General Court, shows £326,000 in May. If we add
the £150,000 loans to the treasurer's statement we get £341,000 in
November. This difference might easily be explained, but not all the
comparisons of the figures to be obtained from these reports with the
estimates given in the table will turn out so favorably as this.

The diagram setting forth the disappearance of the silver circulation
of the Province and the line of growth of the currency shows also the cor-
responding movement which took place in the price of silver, all values
being stated in the old tenor currency of the Province. Had it been
possible to sustain the bills at par until the amount in circulation was

* Historical Account of the Massachusetts Currency, p. 80.

208 PROCEEDINGS OP THE AMERICAN ACADEMY,

equal to the silver in use in 1700, we should have had the starting point
for the curve of the silver rate at the date when the emissions were in
excess of the trading wants of the Province. The circumstances of the
Province necessarily controlled and limited its trading capacity. A
greater amount than was needed could not have been kept in circulation.
Hence the maintenance at par of an adequate substitute for the silver
could only have been attained by the displacement of that metal. If the
currency had remained at par up to the point suggested, there would
have been no necessity for considering the relations of the increase of
the currency to the decrease of the silver. Each emission of bills would
have required the displacement of a corresponding amount of coin in
order that it should circulate. As a matter of fact, however, the rise of
silver began almost as soon as the Province adopted a form of bills of its
own. Up to 1702, use was made of the Old Colony bills, to meet by
emissions the extraordinary wants of the Province. The adoption at
that date of a form of bill specially adajDted to the use of the government
was a practical announcement that the policy of emitting public bills was
to be continued, and was followed so promptly by a rise in silver that
the (luotation in 1704 shows an advance of a shilling. The displacement
of silver was apparently slower in taking effect, so that it would appear
that the bills increased slightly the purchasing capacity of the circulation
for a few years.

The graphic delineation of the disappearance of the silver is based
upon the statement of one of the pamphleteers of the day as to the
amount of silver required for the trade of New England,* and the
assertions of Dr. Douglass that there were 219,000 oz, still remaining in
circulation in 1713 which had entirely disappeared in 1718.t Since the
disappearance of the silver was practically simultaneous throughout New
England, the only effect of adjusting this representation to the proportion
in use in Massachusetts alone would be to reduce slightly the area in-
cluded between the two curves. The main features would be the same.

With regard to the time of the disappearance of silver, it is not im-
probable that the £100,000 loan at the end of 171 6, following so closely on
the £50,000 loan of 1714, caused the coin to be hoarded in 1717, Then
came the process of ailjustment, through which the silver rate reduced to
its just proportion a paper medium having a nominal valuation in excess of
the trading needs of the Province. When distrust and lack of confidence

* Tlie Second Part of South Sea Stock, p.'22.
t A Discourse, etc., p. 29.

DAVIS. — MASSACHUSETTS CURRENCY. 209

added the force of their weiglit, this reduction actually brought the pur-
chasing capacity of the bills in circulation, notwithstanding the "reat
excess of their denominational value, below the amount forinei'h- deemed
essential for the use of the Province.

By reference to the table showing the coincidences between certain
movements in the price of silver and emissions of large amount by this
Province and the Colony of Rhode Island, the dates of some of the
Rhode Island loans can be obtained. A glance at the diagram will
disclose the effect of these emissions, but it is desirable for the iull
appreciation of this effect to take note of certain facts in connection
with affairs in Massachusetts at the same time. A contemporary writer*
says, in 1740, that the highest point which the Massachusetts currency
had then reached was in 1721. This statement would be true, if no
consideration were had of the £50,000 loan made that year ; but when
this is borne in mind, the culminating point prior to 1741 would seem to
have been in 1726. The necessity of including the emissions of the
other governments, if we would deduce any law from the subject under
consideration, is forcibly illustrated by the divergence, between 1727 and
1741, of the lines which mark the currency volume on the one hand, and
the silver rate on the other. Under pressure from the Board of Trade
the Provinces of the Massachusetts Bay and New Hampshire were not
only prevented from further increasing their public bills of credit during
this pei-iod, but were actually compelled to reduce the amounts in circu-
lation. Meantime Rhode Island had flooded the Province with emission
after emission of public bills, some issued upon funds, but nearly all
loaned out at interest for terms varying from ten to thirteen years, and
then to be liquidated in annual instalments covering ten years more. Of
these bills there were £340,000 outstanding in 1741, the greater part of
which were in circulation in Massachusetts. Owing to their presence, the
Assembly of this Province had witnessed the silver rate advance from
16s. in 1727 to about 29s. in 1741, in the face of the fact that the circula-
tion of their own public bills had been reduced from £396,000 in 1726 to
£229,000 in 1741. The purchasing capacity of the bills of the Province
in circulation, rated in silver at 6s. 8d. per ounce, had through this cause
been reduced from £165,000 to less than £53,000. Attempts had been
made, without success, to pi'event the circulation of the bills of the neigh-
boring governments. The Colony of Rhode Island was drawing a reve-
nue from the interest of the loans. The borrowers were able, in turn, to

* An Inquiry into the Nature and Uses of Money, p. 19.
VOL. xxxiii. — 14

210 PROCEEDINGS OF THE AMERICAN ACADEMY.

lend in Massachusetts the public bills which they thus secured at a higher
rate of interest than that charged by the Colony, so that they in turn
made a profit. The privilege of obtaining shares in these loans com-
manded a ready sale at a premium. Douglass quotes the premium on
the privilege to subscribe to the £100,000 loan in 1738 at 35 per cent.
To all of this the people of the Province of the Massachusetts Bay had
to submit, through the obstinacy and stupidity of the traders, who in-
sisted upon giving currency to the Rhode Island bills.

The rate of silver should naturally have gone in 1748 above seventy
shillings, but the belief that the expenses of the Cape Breton expedition
would be reimbursed must have held it in check. Certainly this must
have been the case after the passage of the Act in January, 1748-9,
providing for the future redemption of the bills, if the coin should be
received by the Province, in settlement of the claim for reimbursement.
Furthermore, this Act contained arbitrary measures for the prohibition of
the circulation of the bills of the other governments, and this again had
a tendency to reduce the silver rate.

The addition of another line to the diagram, showing the volume of
the entire currency in circulation, including the contributions of the other
governments, might perhaps have added to its interest. It will not be
difficult, however, to make use of the figures heretofore given to obtain
an approximate result of this sort. In its present shape, the diagram
brings forth vividly the peculiar condition of this Province, just prior to
the inflation under Shirley, when suffering vicariously for the sins of
Rhode Island. The Province had responsibilities enough of its own to
bear in this connection, and it is well that so much of the burden as can
be lifted shall be deposited where it belongs.

DAVIS.

MASSACHUSETTS CURRENCY.

211

EMISSIONS AND RETIREMENTS MAY 1 TO MAY 1,
INCLUDING LOANS.

Tear.

Emissions.

Retirements.

Outstanding.
£

1702

5,000

170;3

32,000

6,000

5,000

1704

32,000

22,000

31,000

1705

22,000

41,000

1706

40,000

26,000

41,000

1707

32,000

22,000

55,000

1708

32,000

22,000

65,000

1709

46,000

75,000

1710

44,000

22^006

121,000

1711

95,000

143,000

£50,000 loan. ace. Quebec Expedition.

1712

25,000

22^000

238,000

1713

14,000

22,000

241,000

1714

64,000

47,000

233,000

£50,000 loan to inhabitants of Province. The
payment of the loan aoc. Quebec Expedition

1715

8,000

47,000

250,000

1 was about this time. Wirhdrawals arbitra-
1 rily assigned to the years 1714 and 1715.

1710

111,000

32,000

211,000

\ £100,000 loan passed Dec. 4, 171fi. Emitted
l_ 1717. The £60,C00 loan of 1714 wa.s to l.o
j paid in five annual instalments, £10,000 each
1 1715-1719 inclusive.

1717
1718
1719

9,000
11,000
15,000

82,000
32,000
26,000

290,000
267,000
246,000

1720

65,000

27,000

235,000

1721

17,000

16,000

273,000

1 £50,000 loan to towns, to be drawn in by
( taxes, 1726-1730 inclusive.

1722

45,000

16,000

274,000

1723

40,000

17,000

303,000

1724

55,000

25,000

326,000

1725

70,000

30,000

356,000

1726

25,000

39,000

396,000

1727

88,000

142,000

382,000

£100,000 loan expired in 1727.

£50,000 loan to towns, paid in instalments,

1728

36,000

39,000

328,000

- 1726-1730.

1729

20,000

30,000

325,000

£60,000 loan to towns, to be paid in taxes in

1730

13,000

30,000

815,000

the years 1734-1738 inclusive.

1731

24,000

298,000

1732

26,000

298,000

1733

79,000

21,000

272,000

1734

27,000

47,000

380,000

1735

39,000

58,000

310,000

1736

48,000

59,000

291,000

£60,000 loan withdrawn by taxes.

1737

81,000

280,000

1738

26,000

62,000

280,000

1739

244,000

1740

80^000

95!ob6

244,000

1741

120,000

229,000

1742

117,000

86,000

349,000

1743

85,000

95,000

380,000

1744

344,000

115,000

370,000

1745

1,040,000

140,000

599.000

1746

741,000

124,000

1,499,000

1747

208,000

168,000

2,116,000

1748

400,000

415,000

2.216,000

1749

300,000

2,201,000

1750
Total

1,901,000

4,630,000

2,729,000

855:^;^

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