IN the early ages of the world, when little communication subsisted between different countries; when the wants of men were confines to their necessities, and those necessities easI;y supplied with their own hands, by pasturage and the chace, barter readily answered all the purposes of money; and this is still the case amongst barbarous and uncivilized nations.

But when mankind became more polished, the conveniencies of life, and at length it's luxuries, were sought for; and these artificial wants the inhabitants of various climes

Barter became now inconvenience, as the commodities, offered on each side for ex­change, did not often suit the wants of both the parties.

This occasioned the necessity of making use of some substances, ^* which, from their [Page 8] universal scarcity, and certain inherent qua­lities of purity, possessed the greatest intrinsic value, to represent the real riches of every country.

Hence gold and silver were fixed on, as an universal medium of commerce: and be­cause one of these metals is much more precious than the other, the difference be­tween their comparative values was ascer­tained, and that difference made the stand­ard proportion between the two.

The nature of trade is such, that, in it, money made of these substances is not esti­mated at a higher rate than it's intrinsic value, which is founded in the rate or value according to which it is used to pass; so that, in the course of trade, money can have no higher value than a mass of the same metal and quantity would have, if given in barter for any kind of goods: but yet, in different places, on certain pressing occasions, the extrinsical value of money may be raised higher, at the discretion of the supreme power.

The real riches ^* of a country consist in [Page 9] it's trade, it's produce, and the labour of it's inhabitants; gold and silver being no otherwise riches, than by representing them; except as articles of merchandize: for if a fertile country, abounding with all the ne­cessaries ^* of life and industrious inhabitants, should, at any one point of time, lose all it's cash, it would be comparatively very little poorer; although totally deprived of that which is generally thought to constitute wealth, and which bears a very small pro­portion to the cattle, grain, and other com­modities of the country.

It may be laid down, therefore, as an in­controvertible position, that ^† that country is [Page 10] the richest, which has the largest extent of improveable land, contains the greatest num­ber of;aborious inhabitants, and where the most commodities are produced for foreign markets and their own consumption. La­bour and industry are the principal means of acquiring riches; and a fruitfull soil is an inexhaustible mine of wealth to those who will assiduously cultivate it.

Here the observation will occurm, that North-America enjoys, in a very high de­gree, those real riches, which, by an ex­tensive and unfettered foreign trade, will ever yield to her a proportionable quantity of gold and silver: And as the means of procuring these will, from the nature and peculiar advantages of this country, greatly and rapidly increase here, the actual acqui­sition of them will increase in the same de­gree. [Page 11] The additional supplies of money, obtained from time to time, and which re­presents the industry and labour by which it was procured, will operate, in a acompound ratio, in promoting continued accessions of it to the inhabitants: and thus industry and money would mutually produce each other, to a ^* certain limit.

But, as the prices of the commodities of any country, taken all together, must be determined by the quantity of money in it; at the same time, (though different circum­stances may vary the prices of particular articles) if that stock of commodities be increased by the industry of it's inhabitants, a larger quantity of money will be requisite to represent the increased value of this real wealth. The products of that industry of the people would, without doubt, add to the riches of the country, by procuring, in ex­change for them, such commodities as might be wanted for their oen consump­tion [Page 12] But as the demand for these might, at first, nearly equal, if not totally, the amount of their exports, little or no gold and silver could be imported.

In order, therefore, that such extra quan­tities of commodities may be produced for exportation, as to procure, in return, the necessary supplies, together with the balance in gold or silver, the industry of the people must be quickened.

To effect this, an increased quantity of money, of some kind, is necessary: for, as the labour and industry of a people constitute an essentail part of the real wealth of a country, the sign of that wealth ought to bear a certain proportion to it.

But, as the acquisition of the money, properly so termed, required to accelerate the industry of the people, so as to promote the introduction of gold and silver into a country, must, necessarily, be subsequent to the means of obtaining it, the absolute ne­cessity of substituting something in the stead ^* [Page 13] of money, under these circumstances, is produced.

This substitute, to supply the place of money, is denominated ^* Paper-Credit: which, when the term is applied to the paper emitted by government, represents the sums borrowed, for the public service, upon the public faith; and for the redemption of which, by a certain time, an adequate pro­portion of the riches to be acquired by the people, within that period, in pledged. In fact, it denotes the sums borrowed from one part of the nation by another; and becomes a national debt, for the security of which the [Page 14] Property and industry of the subject are mortgaged.

A public debt is a benefit ^* to a nation, provided it be confined within proper limits, as it increases the cash of the country, by the introduction of a new kind of currency. Perhaps the principle, that ascertains the extent of these limits, is, that no further sums should be borrowed by a government, than they would be able, without difficulty, to redeem, in a certain space of time: or, in other words, that no larger a portion of the national wealth should be anticipated, than it might be reasonably expected the people could have it in their power to re­place, against a certain day. It may, how­ever, be safely affirmed that paper-credit, under this restraction, must prove a great advantage to a country.

The paper bills of credit emitted by Con­gress, in pursuance of their resolution of the 18th of March, 1780, stand upon that foot­ing, precisely. They are considered as the anticipated product of the taxes of six years, [Page 15] To their amount, borrowed by the govern­ment, from the people, on interest: an equal value of their property which they already possess, or many acquire in the intermediate time by their industry, being pledged for their redemption.—And, indeed, this is the true principle on which paper-credit should be established.

In Great-Britain, such immense sums have been borrowed ^* for the public service, that it is with extreme difficulty they can now dis­charge the interest annually accruing upon them, besides defraying the expences of go­vernment. The produce of the sinking­fund, which was solemnly appropriated by the Parliament to the sole purpose of paying off the national debt, proves inadequate to that end; and has been so far perverted from the original design of it's institution, "That [Page 16] Not only large sums have been granted out of it, but further sums were borrowed on the credit of it, and the surplus was likewise made a collateral security to answer and supply all the deficiencies of the taxes raised for the payment of the interest due on the national debt."

Mr. Mortimer, (in his Book entitled, "Every Man his own Broker,") after speaking of his perversion of the sinking­fund, says, ‘“I hope what I have wrote on this head will serve to gratify curiosity, the only point I had in view; for the subject does not appear to me of much importance to the public in general, whose principal concern is, that the pay­ment of the interest of the money bor­rowed of them is regular, and at the ”same time well secured.’

It is certainly an object of great import­ance to them, that the payment of the in­terest be well secured, as the principal rests on so precarious a foundation, especially the unfunded debt: and, indeed, it is owing to their punctuality, ^* in this respect, that their [Page 17] Paper-credit has hitherto maintainmed it's ground.

From what has been said it is evident, that paper-credit is essentially necessary in North-America, as well to answer the pur­poses of commerce as those of government; and that no country is better furnished with the means of supporting it. And it may be plainly inferred, that, if he necessary pre­cautions, respecting it, are used, it must circulate upon a par ^* with specie. Disaf­fected and designing men will, without doubt, endeavour to depreciate it; and, when already done, to prevent it's appreciation: but their arts will prove ineffectual, if pro­per measures be taken ro prevent and coun­teract them. Before the present war, paper was emitted in several parts of this continent, which, owing to the caution of the Legislatures, passed equal to gold and silver, nothwithstanding the distant periods fixed for it's redemption. As a necessary preliminary, therefore, to evry other measure, such pru­dence [Page 18] And circumspection must be observed by our public councils, as may tent to re­store to the people that confidence in go­vernement, which has been impaired less by it's own misconduct, than by the artifices of it's enemies.

Independently of the advantages to go­vernment, it is the interest of the people to support the credit of a paper-currency: it's depreciation is a grievous and unequal tax; affecting every man through whose hands the money passes, but falling the heaviest upon the meritorious and those least able to bear it. Indeed it is much to be lamented, that the people should have so greatly deviated from their true interests, in this parti­cular, as it has occasioned much public and private mischief. But there is strange pro­pensity in mankind to consult their immedi­ate convenience, although to the prejudice of their ultimate good.

The depreciation of the paper-currency was, doubtless, first caused by an erroneous policy in Congress; but the evil might have been remedied, long before this time, had it not been for the co-operation of other causes, the machinations of the disaffected, and a mistaken notion, adopted by a great part of [Page 19] The well-affected, that depreciation served to promote their interests. This gave rise to a spirit of speculation, by which every man endeavoured to advance his own fortune, at the expence of the community: and the odious and unmeaning distinctions of ^* mer­cantile and landed interests took place, by the country gentlemen having imagined, that if they could shift their share of the public burthens off theid\r own shoulders, upon those of the merchants, they would finally reliev themselves.

Nothing could be more absurd than such policy: yet did this strange infatuation prevent the early imposition of ^† taxes, [Page 20] Thereby creating a principal source of depre­ciation. The issuing of paper-money, so far from rendering taxation useless, made it the more necessary; and enabled the govern­ment to draw from the people ^* greater sums for the public service. Taxes are that pro­portion of every man's property which he pays towards the support ofthat govern­ment, which protects him in the enjoyment of the remainder: if, therefore, taxation be ^† discontinued, or the sums raised by it be so small, as to be insufficient to answer the end proposed, government cannot exist; and, [Page 21] consequently, the person and property of the subject become insecure.

Having premised thus much, concerning the nature, use and advantage, of paper­credit, the next consideration is, what means are the most proper to be used, for it's sup­port. These are comprehended within this single principle—That it be made clearly the interest of every individual to keep the paper currency at a fixed and known value; and, of course, his loss to injure it.

For this purpose, the adoption of the fol­lowing measures is proposed—

I. That no more paper-money be emitted by the Assembly of any state; and that what remains in the treasury, of that struck by the present Assembly in their last session, be not issued.

II. That all our paper-monies be reduced, as soon as possible to one kind, viz. that emitted by Congress, in pursuance of the resolution of the 18th of March, 1780.

III. That the interest due on that money be paid, without delay; and that measures be taken to ensure the regular payment of the interest, to be become due on it, every year, until it be all redeemed.

[Page 22]IV. That one-sixth of all taxes, assesses in specie-value, be payable in gold or silver; except those of non-jurors, one-third of which to be payable in specie.

V. That the land-office be opened for the sale of the vacant and unappropriated lands belonging to this state, at a certain and reasonable price per hundred acres, in the current paper-money or in gold ans silver: whereby a very productive fund, to answer the purposes of the go­vernment, would be created; the neces­sity of laying the heavier taxes, for carrying on the war, lessened; and the people enabled to increase their estates, by the acquisition of real property.

VI. That, out of the specie obtained by taxation, in the manner already men­tioned, the interest due and to become due, to the creditors of government, be faithfully discharged.

VII. That the tender-laws be immediately repealed; experience having demon­strated their bad tendency and inefficacy.

VIII. That a ^* national bank be founded, on the plan hereafter proposed.

[Page 23]The honorable redemption of the bills pf credit, (issued according to the act of assem­bly of this state, of the 25th of March, 1780) which will be completed in a few weeks, will evince the determination of go­vernment to redeem the paper-currency, at it's full and original value: and had it been the interest of every individual to maintain the credit of that money, while in circula­tion, it would never have suffered any dimi­nution of it's value; whereas many, even of those who placed a proper confidence in it, affected to undervalue it, in order to get into their possession the greater quantity; thereby promoting it's depreciation. But the other money, established upon the prin­ciples here laid down, will stand upon a very different footing: for it would be evi­dent to every man, especially the disaffected, that if it would depreciated, he must inevitably be a loser; because his taxes would be pro­portionably increased, and he must still pay his one-sixth (and, if a non-juror, one-third) of the nominal sum thereof, in hard money.

[Page 24]As the reduction of the circulating me­dium, from time to time, by withdrawing from it large sums in paper, would not per­haps be counterbalanced by a proportionable influx of gold and silver to the country, in six years, to supply that deficiency, and to answer the purposes of an increasing com­merce, let an annual state-lottery be insti­tuted by Congress; the tickets thereof to be sold for specie only, and the prizes paid in the same:—let the products of this lottery, which should amount to one hundred thou­sand pounds, each year, be applied as a fund for erecting and establishing a ^* national bank, on the following principles, viz.

[Page 25]The monies annually produced by the state-lottery, for six years successively, to be vested in fifty gentlemen, most conspicuous for integrity, fortune, ability, and attach­ment to this country; who should be chosen by Congress, and incorporated under the name of the Governor and Company of the American Bank.

The stock of this bank to be limited to the value of one million of pounds; to be computed at the rate of seven shillings and six pence for a Spanish dollar.

At the expiration of every year, the cor­poration to elect, by ballot, a Governor and Directors for the succeeding year; who are to be sworn to the faithful discharge of their trust: but that no man be capable of serving as a director, more than three years out of five; except the directors first appointed by Congress, who may be continued in office four years of the first five, and be again eligible at the expiration of the fifth.

The directors, at the commencement of every years, to be severally bound to Con­gress, as representing the United States, in a sum equal to one twenty-fifth part of the capital which shall, at the conclusion of that year, belong to the bank, as a security there­for [Page 26] for; so that each director will, in the sixth year, stand bound in the penalty of forty thousand pounds: these obligations, taken collectively, will amount to twice the capi­tal-stock of the bank; for a further security of which, the faith of the Confederated Republic should be solemnly pledged by Congress.

The bank to issue ^* notes, annually, to three times the amount of their yearly fund of one hundred thousand pounds, and no more;—such notes to be payable at the bank, in specie, on demand.

One third part of the sum annually emit­ted in notes, the first four years, to be ap­propriated by Congress, towards completing the capital of the bank, in the manner here­after directed: and the remaining two-thirds during that time, and afterwards the whole, [Page 27] to be lodged, in notes, in the public trea­suries; subject to the disposal of Congress only.

Every person placing gold or silver in the bank, for conveniency or any other purpose, to receive notes to the same amount, ex­changeable for specie, on demand.

The directors to employ the stock of the bank to the best advantage, by discounting bills; by lending money on interest, redeem­able in three months, unless the bank think proper to prolong the term—upon the secu­rity of deposits, to twice the value of the sums lent, in commodities not of a quickly perishable nature, (such as bullion, plate, hemp, flax-seed, tobacco, iron, &c.) on the principle of the Lombard bank at Amster­dam; and by lending, on landed security, in the manner hereafter mentioned.

A general council, consisting of a majority of the directors, to be held at the bank, once a year, for arranging and transacting the business of the department.

The company to be entitled to all the profits, during the first four years, accruing from their stock, in consideration of their managing the concerns of the bank.

A committee, composed of one member [Page 28] from each state, and stiled Comptrollers of the Bank, to be yearly chosen out of Con­gress by the several Assemblies,—to examine, every six months, into the state of the bank, and to report the same to Congress.

That Congress mortgage the produce of the duty of five per cent, ad valorem, to be imposed by them on all merchandize import­ed into the United States, to the public, until it shall amount to four millions of dollars, being four-tenths of the national debt, exclusive of certificates: the several states to provide means for sinking the re­maining sum of six millions of dollars, re­deemable in six years from the date of their emission; Congress answering for unavoid­able deficiencies in any of the states.

According to the amount of these duties, which shall be paid every year into the treasury—and a sum equal to which, in the bills of credit aforesaid, emitted by Congress, shall be at the same time destroyed—Con­gress to pay off, with bank-notes, a pro­portionable part of certificates; together with the interest thereon, in notes or in bills of exchange: and that so much of those duties be appropriated for this use, as may be re­quisite; provided that not more than one [Page 29] hundred thousand pounds be paid in the year.

As the fund arising from the foregoing lottery, towards establishing the bank-stock of one million, would amount only to six hundred thousand pounds, the company to be authorized and enabled, by their charter, to lend money, on ^* mortgages of real estates; provided that the sums so lent shall not, at any one time, exceed four hundred thousand pounds.

As the notes issued by the bank would, at the expiration of the first six years, exceed the capital by eight hundred thousand pounds, subscriptions to that amount to be then opened at the bank; payable in notes or specie, within the year, in four quarterly deposits, and redeemable with interest in eight years, in as many successive equal payments. The fund for redeeming the monies so subscribed to be the produce of an [Page 30] annual state-lottery for that term mortgaged by Congress to the subscribers, and applied to replace the yearly disbursements made by the bank: this part of the bank-stock to be transferable, in the manner hereafter men­tioned, during the term of eight years—the interest accruing thereon being payable, within that period, by the bank, out of the profits of it's capital, to the subscribers or their assignees; and afterwards to the go­vernment, for twenty years. This addition to the capital of the bank would render it necessary that the securities given by the directors should be proportionably increased; and that the faith of the United States should be super-added, for the security of the whole.

The tickets and prizes of this lottery might be paid either in notes or specie, at the option of the purchaser or the fortunate adventurer: the end for which they were made payable, in the former lottery, in specie only, viz.—the acquisition of a certain specie fund, and the bringing some gold and silver into circulation, which might other­wise have lain dormant—having been suf­ficiently answered.

But as it would be most convenient for every person, lending money to government, [Page 31] to be at liberty to reimburse himself, when­ever he might have occasion for the capital, transfer-books to be opened at the bank, once a week, for transferring and accepting (or, in other words, for buying and selling) stock.

All commodities deposited in bank to be forfeited, unless redeemed in three weeks after the time of redemption; and (except bullion or plate) to be sold, at public auction, for the benefit of the company.

As the general council of the bank would meet annually, and the comptrollers every six months, to examine into the state of it's funds and the disposition thereof, and to settle and adjust the accounts of the com­pany, it would be necessary to ^* shut up the bank for eight or ten days, twice a year, besides holydays: and that the general council, at their meeting, should make a dividend of the profits of the bank, and appoint commissioners to superintend, direct and manage the business of that department the following year.

[Page 32]Let a mint be established, under the di­rection of Congress, where all bullion and plate deposited at the bank, that may be­come forfeited thereto, should be coined, agreeable to the sterling standard; and after making the necessary deduction, for defray­ing the expence of the coinage, (which should be fixed) and for too great alloy, the residue to be paid into the bank.

The charges of all other bullion and plate, coined at the mint, to be borne by the bank; so that every person bringing bullion or plate to be coined, shall receive an equal weight in coin, deducting only for base alloy. For in proportion as the circulating medium of specie is increased, will the demand for it, at the bank, be lessened; and, consequently, the company will be enabled to employ a greater part of their capital, for their joint emolu­ment. It is evident, that as much less than five per cent, as the bank pays for coinage, so much will they be gainers thereby, ex­clusive of other advantages.

Here arises an observation worth our at­tention; which is, that melting down the current specie of the country, for plate, is extremely injurious, by diminishing the cir­culating medium. A certain quantity of [Page 33] gold and silver are necessary for this pur­pose; but, when wrought into plate, they cease to be a medium of commerce, and be­come a dead, unprofitable mass of wealth, in the hands of the possessor. Hence, in Great­Britain, the melting down any current silver money is an offence against the laws; and the species, coined in England, are esteemed as contraband goods, and not to be export­td.— Foreign coin being considered only as having flowed into the kingdom by a for­tunate tide of commerce, which, by it's ebb, might carry out the same, to restore the balance of trade, (a kind of fluctuation not at all uncommon, in an extensive traffic) it is not subject to the same regulations: for should an unfavourable balance carry off the whole of it, their own coin remaining be­hind would, probably, be adequate to the purposes of their domestic trade, and the support of their paper-credit;—whereas the greatest part of what is wrought up, conti­nues in the kingdom; and, though it does not increase the circulating specie, adds wealth to the proprietors, and affords taxes to government.

It is not intended to examine into the policy of the duties upon plate, which are [Page 34] payable in England: the object of them is, no doubt, the prohibition of it, in some degree; so as to induce people to carry their gold and silver to the mint. The plan here proposed is calculated to obviate, in a great measure, the ^* disadvantages arising from large quantities of plate; by enabling every person, possessed of uncoined gold or silver, to make use of it, indirectly, as a circulating medium.

It should be made a fundamental article in the constitution of the bank, that it should not trade, nor suffer any person in trust for it to trade, with any of the effects of the corporation, in the buying or selling any forts of merchandize; except in the manner before mentioned, and in buying or selling bullion, gold or silver.

The bank should likewise be prohibited [Page 35] from advancing any monies to government, for a longer term than one year; and on no other security than the supplies to be raised within the year, previously mortgaged to the company.

It may not be improper here to observe, that, as the United States of America form one grand, intire Republic, composed of a number of small ones, confederated for their common safety and advantage, and distinct only for their greater conveniency, with respect to legislation and internal police, the supreme sovereign authority of the whole ought, most undoubtedly, to be lodged in Congress; and they shuld possess such pow­ers and privileges, not incompatible with the happiness of a free people, as usually appertain to sovereignty, in order to enable them to conduct and direct the common concerns of the United States, upon uniform principles, so as to afford equal advantages to each, and give energy to the whole.

Upon this ground, the propriety of vest­ing in Congress the sole and exclusive right of emitting paper bills of credit, and coining money, for the use of the republic, they represent is evident: and unless this be done, it will be extremely difficult, if not impos­sible, [Page 36] for any man or body of men, to regu­late and manage the finances of this country.

But if Congress has the right of emitting paper upon credit, that body should, neces­sarily, have in their own hands the means of supporting that credit. They ought, there­fore, to have the privilege, as part of their prerogative, to regulate the commerce of the United States, by the imposition of all du­ties upon imports; to lay a general land-tax, and to have the direction of the post-office.

The two first of these sources of revenue are common to all the states; and are of such a nature, that, if the duties and taxes arising from them are laid generally, ad valorem, they will be productive in the several states, in proportion to their respective funds of wealth, and will operate in such a manner as to preserve a just equilibrium, between the interests of all.

The post-office department is, in a pecu­liar manner, connected with every state, and extends through all.

It appears most proper, therefore, that the revenues accruing from this, and from the two first mentioned objects of taxation, should be subject to the appropriation of Congress: by which means, this important [Page 37] Assembly would not be left with the mere shadow of sovereign authority, without the right of controuling any state, of exacting obedience to their ordinances, and destitute of the means of executing their resolves.

The authority of Congress, at present, is very inadequate to the performance of their duties; and this indicates the necessity of their calling a Continental Convention, for the express purpose of ascertaining, defining, enlarging and limiting, the duties and pow­ers of their constitution.

It has been the endeavour of the Writer, in forming the foregoing plan, to make it coincide, as far as possible, with the measures already adopted by Congress. The proposal for erecting a national bank is dictated by a conviction of the necessity there is to establish some medium of paper-credit, that shall be unconfined to any particular state. By the scheme here proposed, the bank is to be under the patronage of the United States, and, by it's constitution, it would certainly be the interest of government, as well as of individuals, to protect and support it. On this account, all the revenues last mentioned, as belonging to the Confederated Republic, should be payable into the bank: as the exchequer or national treasury.

[Page 38]Violent prejudices have been conceived against banks, not only by the ignorant, but by some ingenious and learned men. They will, however, appear upon examination to be, for the most part, ill founded. The most material objection, that has been raised against banks, is, that so great a run may be made upon them, that they may not be able to answer their notes: but there is little danger of this happening, if the proper cautions be used:—besides, that this will be less likely to be the case [...] America, than any where else, from the vast extent of the country, and the great distances to which a very considerable part of these notes will be dispersed.

The numerous and important advantages that would result to this country, from an institution of this kind, must be obvious to every one. Exclusive of those already taken notice of, the bank-notes, always commanding specie, would circulate freely through all the United States: and mer­chants could make their remittances, from one state to another, with great safety and convenience, by such a medium. The go­vernment would derive similar benefits from so general a currency; as these notes, from [Page 39] their extensive circulation, would be ex­tremely well calculated for paying armies, composed of troops from different states, and stationary in none.

National banks have been established in many parts of Europe; and the advantages accruing from them to ^* trade seem, parti­cularly, to have pointed out the necessity of them, in great commercial countries.

England erected her bank in the reign of King William the Third, whilst engaged in a most expensive war; and when it was not expedient to draw from the people such annual sums, in taxes, as were requisite to defray the expenditures of the year:—it therefore became necessary, in order to enable them to prosecute the war with vigour and effect, to anticipate the revenues of their successors, by borrowing such sums as were wanted to answer the current exi­gencies; only providing for the payment of the interest, and leaving posterity to discharge the principal.

The bad policy of Britain has been in multiplying their paper, almost without any [Page 40] limitation; thereby creating an amazing quantity of imaginary wealth, unsupported by a necessary proportion of real; the nation having long since, abandoned the hope of being ever able to pay off their debt.

To conclude—From a thorough investi­gation of this subject, it will appear, that similar causes to those, which, in the reign of William the Third, occasioned the neces­sity of erecting the bank .of England, now exist in this country. That bank, notwith­standing it's impaired foundation, has stood a long time; and, hitherto, added strength to the kingdom: but the plan here exhibit­ed, for the establishment of an American Bank, is formed on such principles, as must place it on a secure and permanent basis.