POSSESSIONS, however extensive they may be, are incapable of yielding happiness. The wants of men are, for the most part, factitious, and in­crease in proportion to their acquisitions of property. Nevertheless, by a desire of dominion over external things, and a thirst for that superiority which arises from wealth, we are urged on to exertion. Almost eve­ry one, who can achieve a fair prospect, will exert all his ability to gather the fruit of it. This propensity, has a manifest tendency to the advancement of the pub­lic interest; and will produce the prosperity of the community, where it is exerted; unless the public mind is so corrupted, as to embrace wealth, in prefer­ence to virtue, by making property a qualification to the public confidence, superior to those of integrity, industry, learning, and ability.

EVERY member of civil society, has a clear right to gain all the property which vigilance and industry, reg­ulated [Page 6] by the laws of the state, can bestow upon him. Every thing he acquires in this way, advances the in­terest of the public, and shews him to be deserving of applause. Such a man, is the just man spoken of in the sacred writings. He is not, perhaps, the good man, for whom "one would dare to die;" but he is a character which no one need to fear, and which must gain the approbation of his fellow citizens: But the good man, who loves his neighbor as himself; who wishes to do good unto all; who relieves the distresses of the poor, in proportion to his ability, and wishes the prosperity of all men, as he does his own, is another character. Such men are not every where to be found; and where they are seen, they are trusted with caution; because their character is frequently counterfeited, for base and vile purposes.

THE divine Author of the human race, has seen fit to place us under various, and very different situations. Some men appear, as if they were formed for successful enterprise; and others, as if disappointment was given them, as the fruit of every undertaking. This is, no doubt, wisely ordered by HIM whose plans are incom­prehensible to us, and whose measures are all founded in the most perfect wisdom. But the rules and regula­tions, adopted by civil society, ought always to be such, as not to afford to any individual, or particular com­pany of men, an accidental opportunity, or a superior privilege, for the acquirement of property. Man­kind are naturally emulous, and it is sometimes very [Page 7] difficult to find the line where justifiable emulation ends; giving place to the deadly, and corrosive passion of envy.

WHEREVER the laws, or the measures of state policy, give to one man, or one order of men, an exclusive right to acquire property, or a greater and more advan­tageous opportunity to improve his, or their talents, than is given to all, there is a just cause of complaint.

BY a measure, which is not founded in perfect equal­ity, a few men may frequently derive great advantages to themselves, and accumulate great wealth; while others, who are fully as deserving as they are, remain under the ordinary advantages arising from industry and frugali­ty. This tends greatly to the disquiet and unhappiness of civil society; because men, who, before they observ­ed such an undue and unusual increase of their neigh­bor's property, were contented with their own posses­sions, become very uneasy. They have new and fac­titious wants upon them; and what they before enjoyed as a competency, they now esteem as only the dreadful tokens of inferiority, and the marks of comparative pov­erty. This is clearly wrong in a free and equal gov­ernment. There are some men, who will live idly, and repine at that prosperity of their neighbor, which is pro­duced by industry and attention to business; these ought to be pitied: but their malady can never be rem­edied by human laws.

[Page 8]GREAT estates are not originally acquired, unless it be by conquest, or by commerce. The conquest of countries, we hope, will no more deluge the world in blood, or be ever more suffered to make the innocent and unoffending inhabitants of newly discovered regions, the unhappy victims of cruel avarice. But commerce is intended to give great and beneficial advantages to mankind. It is the life and support of civilized states; and the great medium of communication between the people of different climates. It gives the various na­tions of the terraqueous globe, a friendly intercourse with each other; and will finally, form a chain of con­fidence and friendship throughout the world. To hast­en this important and glorious event, nothing is needed but a spirit of commercial enterprise, conducted with fairness, and unshaken integrity.

COMMERCE had its origin in the superfluous produce of countries, aided by a prevailing taste of the inhabit­ants of each particular climate, for the produce of for­eign soils. This important negociation, no doubt, be­gan by exchanging one article for another: a desire of gain, promoted and supported by a curiosity, existing naturally in the bosom of the people of all nations, brought it to that height of perfection where we now contemplate it.

AGRICULTURE, and the arts, pursued with unabat­ing industry, must give support to commerce; for, without this, there never can be a superfluous produce [Page 9] to export, or an enticing mixture of the arts, with the exported articles of produce, to tempt foreign nations to a consumption of them.

ORIGINALLY, there could be no settled rule for the measure of exchanging one commodity for another, or for appreciating or settling a fixed value upon the ar­ticles offered in exchange. Their value was founded in the necessity of the receiver, and the abundance of the deliverer's stock on hand, with the probable pros­pect of plenty, or scarcity of the article, and the ex­penses of preserving it to a future period. The value of each article was estimated by the eyes, which gave the measure of quantity, upon a view of the bulk of the commodity under the power of the transfer. This may be fairly concluded from the practice of uncivilized nations more recently discovered. Recuial, in his his­tory of the voyages of the Dutch East-India company, assures us, that in the island of Formosa, when first dis­covered, the inhabitants had no other way of traffic; and travellers, who may be relied upon, tell us, that in Ethiopia, the commerce of gold is carried on so at the present day.

THE extension and benefits of commerce, could never have been very great under such intolerable dis­advantages, and clogged with so many embarrassments; it therefore became absolutely necessary, to find out something which would serve as the acknowledged re­presentative of property, and as the established standard [Page 10] of the value of the articles passing in commerce; for there was no way to bring the articles offered in ex­change, to an exact, or even value with each other, and they were not always, or perhaps frequently, capable of being divided without being injured, or destroyed by it.

METALS offered themselves, as the most suitable sub­stance for this important purpose. As they could not be well subjected to liquid, or lineal measure, the use of weights and balances, were necessarily resorted to. Shells, pieces of particular wood, salt, grains, fruits, and other substances, had been used as money, or as the agreed representative of the articles of commerce, and some of them are, in various countries, used in that way at the present time.

THESE signs were very inconvenient and troublesome, and therefore the moment metals were discovered, it was easily seen that they were well suited to this use. They were found in all climates where civilization was introduced. Their hardness and solidity, raise them, generally, above the accidents to which other kinds of money are liable. They may be divided without di­minishing their value. Their scarcity also, contributed to raise their value in the estimation of the world; and the common consent of commercial people, gave them a currency as the representative and measure of the va­lue of things in the market.

IN some countries, their institution was very ancient. Abraham brought gold and silver from Egypt; and, ac­cording [Page 11] to the account given by Moses, he returned very rich from that country. And we find, that in those days, Abimelech gave Abram one thousand pieces for a trespass committed against him.

WHEN metals were first introduced into commerce as money, their value was determined by their weight alone. There was no stamp of public authority upon them, expressive of their relative value arising from their weight and fineness. Abraham gave an hundred shekels of silver for a sepulchre, and weighed them be­fore all the people. In some countries, where gold and silver are used as money to this day, they are cut in pieces and passed by weight. This is practised in some parts of China, in Tonquin, and in Abyssinia.

THE weighing metals, as money, where commerce is extensive, must be very inconvenient; and therefore it has become necessary to fix a sign, or mark, upon each piece, expressive of its true value, according to its weight and fineness. If this was to be done by each individu­al at his pleasure, there could be no confidence in deal­ing in them; and therefore it has been considered as the prerogatives of government alone, to fix the stand­ard of alloy, and the weight of all pieces of metal established as current money. There is no danger of fraud or deception in this way, for the honor, and al­most the existence of each nation, depends upon their rectitude on this point.

[Page 12]AS antiquarians are much divided in their opinions, respecting which nation it was who first coined money, I shall not attempt to settle it in this essay. Herodotus ascribes it to the Lydians, and others to Ithonus the son of Ducaliver. Some say it was the Assyrians; and Diodorus gives it to the Egyptians, because he finds that counterfeiting of it in their country, was very early punished with the amputation of the hand of the of­fender.

THE practice of coining money, introduced what is called imaginary money, or money of account. There are no pieces of money now, agreeing with our pounds, shillings and pence, or with the French livres, sols and deniers. But this mode of computation is intended to facilitate the stating of accounts, and for keeping them on a regular footing. When money becomes scarce, the articles of commerce are lowered proportionably in their price, and they rise as money grows plenty. But still, the nominal standard used in accounts, is not al­tered. Sometimes, when a nation is involved in a war, and the public debt is too great for the public resourc­es, the imaginary, or nominal price or value has been raised, to the great injury of public or private charact­ers, who are in such cases defrauded. Such measures are generally evidences of public or private insolvency, and are seldom attempted.

AS coined metals were established in the commercial world, as the representative sign of the articles of com­merce, if each country possessed an equal proportion of [Page 13] money, according to the quantity of property offered for sale in it, there would exist no other difference of price in the same article in different countries, except­ing what would arise from the transportation of it from one country to another, and from the demand for it in the market. Whereas, at present, the quantity of money existing in a country, has a great effect upon the price of every article. Money is always like water, seeking a level; and when it becomes plenty in one country, or place, it is necessarily urged away to another. He therefore, who involves himself in debt, when money is plenty, is sure of being injured or ruined, if his debt rests upon him, until it grows scarce.

THE burden and risque of transporting metals from one place to another, as a general medium of commerce, rendered it necessary, to select the most valuable of them for that purpose. If gold and silver were as plen­ty as other metals, it would be very difficult, if not im­possible, to raise their value, separately, so much above that of the others, as it now is. There is a fineness and beauty in them, which originate and support a prefer­ence in their favor; but this would not give them the rank they now sustain, if their comparative scarcity did not yield a powerful aid in their cause.

THE transporting metals, however precious they may be, from one country to another, for the use of com­merce, cannot be effected without risque and expense. This difficulty, though small in its appearance, has been sufficient to produce one other sign, or evidence of [Page 14] wealth, which may be called a secondary representative of the articles in commerce. The ideas of a paper me­dium for this purpose, is of very ancient date.

THE origin of bills of exchange has employed the cu­rious inquirers much in the same way as they have been employed upon other ancient matters, which had their birth from accident, or necessity, and which were thought to be of but little consequence, when they were at first produced. It is generally agreed, that the Jews, when they were banished from France, or the Gibelins, when they were banished from Italy, by the faction of the Guelphs, invented this method of exchange to save their effects from confiscation: thus, by delivering their effects and money to a friend, and taking his bill for a delivery of an equivalent from his effects or credits, in the country where they were to seek an asylum from per­secution, they found the means of an invisible, easy, and sure mode of procedure, to place their estates be­yond the reach of the extended hand of tyranny.

THE doctrine of exchange was encouraged by laws made in England, in the reign of Edward the third. When it was abused, by being used as an engine of op­pression, it was prohibited; but the facility it afforded to the then dawning commerce of that country, again revived, and gave it a legal standing.

THIS idea of exchange, by a paper medium, introduc­ed divers other species of paper, as the representatives of real money, which assumed a value upon the assur­ance [Page 15] they afforded, of the possessors having the money on demand; or of the certainty of his receiving it at a future day, with a premium for the use of it, until it should be paid.

ONE species of this paper, is commonly called stocks. This word, generally, means a capital used in com­merce, where a number are concerned in a common en­terprize, and have a capital arising from their contribu­tions in shares. But the appellation, when applied to the funded credits of a government, is entirely arbitrary, and needs an explanation before it can be understood: for in this kind of business, there is no existing stock, unless the plighted public faith may have that appella­tion.

THE foundation of this kind of paper, has lately be­come very familiar to the people of America. The re­public has stood in need of aids and supplies. The individuals, who form the nation, have afforded these supplies upon the credit and faith of government. The republic cannot, from its resources, satisfy the demands with real money; they are not possessed of metals in quantities sufficient for that purpose, and therefore a rea­sonable and equitable use ought to be engaged, for the delay; and the payment of the debt assured upon a future day. The premium upon one part of the debt is at six per cent. per annum, another at three per cent. and on another there is no provision yet in actual execution; but a dependence upon the justice and resources of the [Page 16] nation, is such, as to give the deferred stock a value to the possessors, and a ready exchange in the market, for money, at a certain rate of discount.

WHILE the nation of united America, shall be able to pay an annual interest with punctuality, upon their public debt, and shall convince the possessors of the public securities that the public resources are finally equal to the discharge of the principal, these evidences of a right to receive money will hold a firm and per­manent value; and the possessor can at all times ex­change them for gold and silver, because there will be at all times men in the country, who will wish to have a part of their property in the hands of others, from whom they may derive a use for it, and from whom they may be assured to receive it again at a fu­ture period.

THIS project has furnished a large, an active capital, for commerce in this country, and answers as extensive a purpose as to internal commerce, as would be answer­ed by real money: and so far as foreigners are concern­ed in our public debt, it answers the purposes of real money for foreign commerce. Nevertheless, it is a great grievance and burden to the people; because, while it answers some of the purposes of real money in com­merce, the people have to pay a certain rate of interest for it, by which those who are in possession of the pub­lic securities, derive great pecuniary advantages from the toil and labors of them, who have none. And though the rate of interest appears small, yet it is an in­voluntary [Page 17] contribution, and deprives the people who pay it, of a great share of their profits in trade: I can­not therefore agree with those who consider a public debt, as a public benefit.

BESIDES this, there is another consideration which ought to have weight; it is very possible that America may be so unfortunate as to be engaged in another war. Large supplies may be called for, by which the exigen­cies of the government may exceed its national re­sources, and the payment of principal and interest may be necessarily deferred to a future day. Should this ever happen, the stocks will sink in the hands of the proprietors. Stockjobbers will be multiplied, and public securities be again made the engines of cruelty and oppression. The transactions of our own age exhib­it a variety of examples of this kind, and our integrity ought to urge us to every exertion that can have a ten­dency to prevent a repetition of them. It will there­fore certainly be well to use every means which indus­try, economy, and frugality can point us to, for the sinking of our public debt. If there is any thing in the observation, that a public debt is a security to a gov­ernment, it can be only where a government founded on a revolution, is in danger from a counter revolution. Perhaps the idea was introduced into Great-Britain upon the large debt contracted to support the war which ex­pelled the house of Stuarts: If there had been a coun­ter revolution there, the men who had aided William with money, would have lost their property; it was [Page 18] therefore, in that instance, their interest to support the government under the revolution. We are very apt to borrow maxims from a nation from whom we derive our common language, without examining their origin, or inquiring strictly into their application to the cir­cumstances of our own country.

WHILE there are stocks transferable by their constitu­tion, there will be stockjobbers, or men who will buy and sell stocks for themselves and others. While this business is conducted with truth, sincerity and fairness, it may be considered as reputable and honorable; but when in this, or in any other business, chicane, cunning, deceit and fraud, are adopted as the ordinary means of making a good bargain, the men, who practise in this way, renouncing the principles of truth, honor and honesty, are contemptible and dangerous in society.

IN Europe there are a great number of men who devote themselves to this kind of traffick, and who avail themselves of every art and accident to rob the unwary and necessitous part of the community. News of victories won by armies which had never seen an en­emy, of wars raging where nothing but peace prevails, and of treaties of peace between nations which had nev­er considered of preliminary articles, furnish but a small part of the vile means used to deceive and defraud the less attentive and more industrious part of the people.

IN our own country, and at the present day, stock-jobbing has not been carried to such a height as it has [Page 19] been in England; but we have no reason to conclude that all who have concerned themselves in the business have, in every instance, taken the same care of their neighbors' interest as they have done of their own.

WE have other kinds of paper which we call bank stock. It may be well, therefore, to say something on the nature of banks in general.

THE word bank is derived from the Italian word ban­co, or banca; because those of that nation who used to exercise themselves in this kind of business in the pub­lic places of trading cities, seated themselves upon forms with benches to write their letters, count their money, or to draw their bills of exchange. When they failed, and became unable to pay their debts, their benches were broken as a mark of infamy: from which the word bankrupt is derived.

A BANK now signifies a public office for keeping or circulating money, to be employed in exchanges, dis­counts, the loans of government, &c.

BANKS are kept by private men on their own ac­count, or by public bodies incorporated by an act of government for that purpose.

PRIVATE bankers are generally men of large proper­ty; their business is lucrative according to their stocks and reputation. By obtaining a credit, and by creating a confidence in the public mind, they induce men who have their property in cash, to deposit it in their hands [Page 20] for security; for which the banker gives a paper evi­dence of the property, assuring the punctuality of its being redelivered on demand. This paper being, by its tenor, transferable, the possessor of it can immediate­ly, if his banker is known, exchange it for money or for any article in commerce, without any discount or depreciation; and derives all the benefits from it which he could derive from real money, without a liability to those accidents which would attend the keeping a large quantity of coin by him. But the value of this paper is founded altogether upon the assurance that the money is ready when called for. While this assurance exists, the bill will continue to circulate with all the credit of real specie; but the moment there arises a doubt on this point, it falls into a useless, worthless state.

TWO principal advantages result to the banker from such deposits. Having ready money by him, he can exchange money for private securities payable at a short but future day, receiving a reasonable premium for ad­vancing the ready money. Thus if A, who lives in America, draws a bill of exchange upon B, who lives in Europe, requesting him to pay to C, or order, one thousand pounds at sixty days after the bill shall be presented to him; C, or his assignee or indorser, pre­sents the bill to B, and gives his acceptance of it; but as C wants the money immediately, he may go to a banker, and if the drawer, acceptor and indorser, or either of them, can be relied on, the banker will pay the money for a reasonable discount or premium, for wait­ing [Page 21] the sixty days. If there is any hazard in the busi­ness, the premium will be increased in proportion to the risque attending it, and whether it exceeds the legal rate of interest or not, there is no law to control it: because the idea of a hazard upon the principal, takes off the idea of illegal usury.

THE plan of depositing money with a banker, neces­sarily led to that of rendering bank notes a currency in the medium of trade. From this idea the banker de­rives great advantage, because, that by his business, there is a constant stream of cash issuing through his chest; by means of which he is enabled to issue notes for a much larger sum than what he holds as his own private property: and thus by premiums on discounts he accumulates a profit proportioned to the reputation he sustains, and the opinion the public holds of his in­tegrity and responsibility. But this opinion depends for its support altogether on the security he takes for the notes he emits: should the securities he discounts upon, prove in frequent instances, to be bad, it will destroy his credit, and ruin his business. The idea he issues his notes upon is, that the money is at the com­mand of the possessor of them; and the securities he takes constitute a part of the stock wherein this assur­ance is grounded; and in proportion as they fail in their punctuality, the stock fails on which he issues his notes. It is very extraordinary and curious, to see how far the men concerned in this kind of business in England, France and Holland, are capable of deciding instantly, [Page 22] upon the credit of the drawer and acceptor of every bill of exchange offered to them for a discount: it shews also, in a very convincing manner, what great proficien­cy men can make in a business to which nature has fit­ted them, and to which alone they pay all their atten­tion.

PUBLIC banks are corporations established by legisla­tive authority, with an expectation in the government of deriving certain aids and supplies from them.

THE bank of England, from the nature of its consti­tution, cannot be considered as a public national bank, because the nation owns no part of the stocks which compose it, although the public derive great advantag­es from it, by way of loans given upon the discount of certain and fixed annuities. Where there is a national bank the interest of every considerable private banker is quite incompatible with it: hence in England, because of the national advantages derived from the establish­ed bank, the parliament have laid private bankers under certain restrictions; and, amongst others, that contained in a statute made in the reign of Ann, which provides that there shall be no association of more than six per­sons, in their private capacity, for the business of bank­ing. The number of separate private bankers in that country, is, however, very great; but the sums they dis­count are not considerable enough to interfere with the business of the public bank, which could not frequent­ly attend to small discounts without great inconven­ience.

[Page 23]THE convenience of placing specie in banks, where it is secured by strong bars and faithful guards from thieves, and by deep vaults from the ravages of the flames, is found to be so great in commercial countries, that it is universally adopted. The possession of paper which bears a demand for an immediate exchange of gold and silver, without a possibility of denial, gives it all the advantages as a circulating credit which the im­agination can conceive of. Such paper embraces all the articles of commerce; and in countries where public faith and private banks are well established in the com­mercial opinion, there is but very little real money used as the measure of trade.

IN a commercial country it is of but very little con­sequence to have a bank in credit with the people of the country where it exists, unless it possesses the faith of foreigners coming there to trade.

PUBLIC banks are of two kinds; those of the first are wholly instituted on the public account, and placed un­der the direction of magistrates, or officers of the gov­ernment, who are to take care of the bullion or specie de­posited in them for the use of the proprietors, and by their order to be managed for profit or advantage. Such is the famous bank in Amsterdam, which is con­ducted with so much fidelity and exactness, that one of the magistrates was executed for appropriating a small sum, although he returned it in a short space of time, and before the fact was discovered. The regulation of that bank is such as gives it the highest public confi­dence, [Page 24] by means of which there is scarcely an instance of any money which has once been there deposited, having been taken out. Convinced, that the money is always ready when demanded, the man who is to re­ceive a payment from another, is contented to appear at the bank, and to be credited the sum in bargain, on the bank books; and he again transfers it in the same way to another; so that the same sum will be passed in a thousand payments without being seen, weighed or count­ed by any one, excepting him who first deposited it in the bank. Thus millions are negociated in a week, with­out weighing or counting money. This easy mode of doing business is supported by an unshaken confi­dence, that the money is ready at all times, when call­ed for by the person in possession of the paper eviden­tial of its being deposited. Should this confidence be once brought into doubt, all the authority of a most arbitrary government, exerted by a most vindictive and independent magistracy, would not be able to maintain the character of the bank, or to give currrency to its credits for one day.

IT is confidently asserted by writers, that the money deposited in this bank amounts to three thousand tons of gold, or as some say twenty eight millions sterling. Sir William Temple, who examined that bank with the prejudice of an incredulous Englishman, tells us, that ‘the place where the treasure of this celebrated bank is lodged, is a great vault under the town house, provided with doors, locks, and every other security [Page 25] necessary to the preservation of the contents. And that whoever goes there will discover a vast treasure in bars and ingots of silver plate, and also an incredi­ble quantity of sacks full of metal, said to be gold and silver; but as there are none but the Burgomas­ters who have the direction of this bank, and as there are none who keep an account of what is brought in, or carried out, it is impossible to know, or even to guess, with exactness, the proportion there is between the real and imaginary treasure of it. It does not solely depend upon the effective gold and silver actually deposited for its credit, but is supported by the credit of the city and of the states; of which the funds and revenues are as great as those of some kingdoms.’

BY the constitution of this bank and the laws of the state, all the payments on bills of exchange, and for wholesale goods, are to be made at the bank only, un­less the sum is not so high as three hundred guilders; so that the debtor is obliged to carry his money into the bank, and the creditor is obliged to go there to receive it.

WRITERS say that the city of Amsterdam is support­ed in the real magnificence in which it appears, by the profits of this institution, while all the people are fond­ly willing to lodge their money where it will safely rest secured from every possible accident, and where they can use it without the trouble of telling or of weighing it.

[Page 26]THIS bank makes no negociable bills, but gives re­ceipts for money deposited, which are good to the pos­sessor for the sum mentioned, and which may be trans­ferred by certain established forms.

THE profits of this bank are immense, though the sources of them are concealed with the usual secresy and silence of the Dutch people. But it may be easily seen that they give receipts for deposits, which exist only in securities, and on which they receive unlimited premi­ums for their discounts.

THE bank of Paris was erected upon the scheme of Mr. Law, a Scotchman, in the year 1716; and in its history gives a striking instance of the impracticability of supporting a paper medium without an unfailing assurance of a ready exchange for specie.

THIS attempt was made during the regency of the Duke of Orleans, and has been very severely treated by English writers; but the account here given of it is taken from Voltaire's works, and may be relied on.

THERE are two classes or characters of men who are naturally avaricious; the one is composed of them who heap up wealth with an ambitious view to excel their neighbors in point of property; the other of them, who have no regular bounds to their expenditures, and are therefore always streightened in their finances, let their income be what it may. The regent of France was in the latter class. His demands for money in his pri­vate [Page 27] and in his public capacity, were insatiable; a pro­ject, therefore, for affording ample supplies, was very flattering to him.

MR. Law projected his plan upon principles which, if they had been strictly pursued, would have been an improvement on all the preceding plans in Europe; but he wished to flatter the court. He proposed that he and his associates should supply the funds that should be administered by the authority of the government; and that the bank should have the appellation of the bank royal. This plan was approved by the council, and was finally adopted.

THE bank thus organized, effected all the purposes which were expected from it. The quantity of circu­lating medium was exceedingly increased. The people had a great facility in the payment of imposts. Com­merce received new life, and derived new vigor from the aid of the institution. In the second year of its ex­istence, the government ordained that the bank notes should be received as cash in every branch of the reve­nue.

THE success of the bank was so astonishing, that in the second year the government wished to be the sole proprietor, as well as the only director of it, and ac­cordingly purchased all the stock.

THE power of this government being uncontrola­ble, the plan of urging into circulation a medium by [Page 28] the voice of sovereign authority, without adequate funds for the support of it, was conceived. The event was such as might be expected. The bank notes were dis­covered to exceed the real specie deposited and the funds provided as a constituent for them, and they therefore depreciated with great rapidity. In the year 1722, they were thrown out of circulation; and one writer observes that they were not finally worth the value of the paper on which they were printed. Com­merce in that country received a shock from which it has never been recovered. The finances of the nation became deranged, and the ability of the government was exceedingly disgraced.

THERE were men then who made great estates from the public calamity; and by the splendor of their fortunes intoxicated the people in England and in the Netherlands. Hence arose the South Sea bubble in Great Britain, divers mad schemes in Holland, and the fa­mous land bank in New-England, which for several years controled the elections of the province, created incura­able confusion, and finally ruined a great number of families.

THE emission of paper bills of credit in the New-England states was first no other than the anticipation of particular taxes; but as the specie could not be pro­duced to be exchanged for them at all times when de­manded, they could not avoid a depreciation. This depreciation virtually lessened the quantity of medium, and created a necessity for a further emission; whence [Page 29] it has happened that there never has been an instance of emitting bills but where they have been redeemed at a depreciated value, if redeemed at all.

NEW-HAMPSHIRE had paper money at all times be­fore the year 1768. The situation and character of the people were changed for the better, almost immediately on their having a regular, unfluctuating medium of commerce.

RHODE-ISLAND being more out of the control of the government of the mother country, has always had a paper medium, or a bank without stock. The effects are too easily seen to need a comment.

THE bank of Genoa is the most ancient bank in Eu­rope; the date of its institution is not certainly known. This bank was first constituted from certain branches of the public revenue, upon which, sums were borrowed during the exigencies of the commonwealth, and which, for a long time, were not violated through any per­plexities. But by their state being involved in the wars of the last and present centuries, they exhausted their treasury, went beyond their public resources, and for ever destroyed the credit of their bank. The com­merce of their country died with it. The state lost, and has never yet regained its importance.

THESE are not the only instances which history af­fords of the extreme folly of attempting to support the credit of a paper representative of money by the mere authority of government, without being able to com­mand [Page 30] real money, promptly, to support the credit of it.

THE situation of all the states severally in 1775, and of all conjointly represented at that time in Congress, produced instances where the most determined patriot­ism, struggling for what was justly considered as the foundation of all that could render life and property worthy of possessing, attempted in vain to support a paper credit upon the mere authority of law. Severe penalties were annexed to even speaking against the va­lue of the currency. Very singular and terrible tribu­nals were instituted, with summary and arbitrary pro­cesses, to punish those who dared to consider the signs of money, which never existed, as unequal to gold and silver; but all was ineffectual, the depreciation became exceedingly rapid. It was with great address suggest­ed, that the money did not fall, but that the articles of commerce rose in consequence of the war. And the two last remedies attempted, were stopping the auctions and regulating prices by laws. Had the laws of na­ture admitted of paper bills of credit, where there was no real money to exchange for them, being capable of representing the money of the world, these efforts could not have failed of success, more especially when the greatest penalty of all was the stigma of a want of pat­riotism, and the unhappy offender's being held up to the people, by committees, as an enemy to his country's liberty.

[Page 31]I DO by no means condemn the extraordinary mea­sures above mentioned; they were indispensibly neces­sary to the salvation of the greatest cause which the world has seen; but I conclude, that they are inadmis­sible, unless it is on some great and similar occasion.

THERE are other public banks in Europe; but there is no necessity of paying a particular attention to them in this essay, excepting that which is established by au­thority in London. For by the observations already made upon others, and which shall be made on that, the general principles, as well as the public utility of banks, under proper limitations, will be seen.

IN former times, the idea of improving the public credit, as an active efficient capital, with all the advan­tages of a full, circulating medium, was never conceiv­ed. The kings of the nations in Europe, when pres­sed by the exigencies of the state, used to borrow money on pledging the jewels of the crown, or on mortgag­ing the lands of the royal domain, or by some other pledges of valuable property.

THE Jews are remarkable for strong traits of nation­al character, but for none more than their ability and adroitness in managing money. When they were banish­ed France, and Italy, they resorted to Germany, and to the Netherlands; where they were cordially received, and where their invention for turning money to advan­tage, increased their own wealth, and instructed their neighbors to increase theirs.

[Page 32]WHEN William the third, had expelled James from the throne of England, and had, by the war through which that revolution was effected, involved the nation in a heavy debt, he had recourse to the principles, and the practices of the children of Israel for relief. Un­der the exigencies of his affairs, his ministers introduc­ed plans, which other nations, as well as America, have been glad to imitate. Amongst which was that of the famous bank of England. One Mortimer, who wrote in the year 1761, supposes that William had been initi­ated into the principles of state banking, at Amsterdam, by his friends of that city.

THIS bank was erected in the year 1693, to com­mence in June 1694. The king and queen, by an act of parliament, were empowered to issue their commis­sion, under the great seal, appointing commissioners to take subscriptions by any persons, natives or foreigners, for raising one million two hundred thousand pounds: and the parliament agreed to raise one million five hun­dred thousand pounds upon certain annuities, and to pay the governor and company of the bank one hundred thousand pounds annually. The bank loaned the gov­ernment one million six hundred thousand pounds. The one million two hundred thousand pounds was the stock in real money, deposited by the subscribers, and the debt due from the government on the above loan, and for which was pledged the faith of parliament upon the above stipulated annuities, constituted another part of the stock. The bank stock has been increased by [Page 33] new subscriptions, according to divers acts of parlia­ment, and the charter of the bank continued during the existence of the annuities pledged by government for the money borrowed. The last act of parliament for that purpose was made in the year 1781, in considera­tion of a loan of two millions to pay off a debt of the navy department.

THE acts regulating the bank, provide that their debts shall never exceed their capital stock, and that if they should, at any time, exceed the capital, the indivi­dual members shall be liable, of their own private estates, for such excess. The money lent to the gov­ernment being on the credit of the nation, that credit is considered as good stock, because certain duties are irrepealably pledged; and there can be no reason to believe that any possible exigency would induce them to violate their faith in a matter upon which the credit and commerce of their nation so much depends. A failure in that bank would derange the finances of the government, destroy their commerce for a time at least, and involve the nation in a great and almost irretrieva­ble calamity. To prevent this, the parliament guaran­tees the credits of the bank, by providing that their notes or bills, drawn to the amount of one hundred thousand pounds, originally payable by the govern­ment annually, and the increase of that sum, by subse­quent acts on loans, shall be distinguished from the others; and if they shall be demanded at the bank on days of discount, between the hours of nine and twelve [Page 34] in the forenoon, and not paid, then, on affidavit being made of the fact, they shall be immediately paid in the exchequer, without any further process or delay, and without any other warrant. The sums so paid, are to be charged to the one hundred thousand pounds, and the increase of it annually payable by the nation to the bank. The other credits are warranted by act of par­liament, providing, that when judgment shall be ren­dered against the governor and company of the bank, and the money not paid on producing the execution, that the same shall be brought into the exchequer, and be there discharged by the public treasury without any further warrant or delay. This provision is absolutely necessary to the credit of the company, because their private estates are not liable for any thing more than what their debts shall exceed their capital, and their corporate property cannot become at to be taken in ex­ecution.

THE interest originally allowed by the nation to the bank, was four pounds for the annual loan of one hun­dred pounds; but it was afterwards, on other loans, al­tered to four and an half per cent. on others again to four; and on the loan of 1781 it was reduced to three per cent.

THUS we see, that this mighty piece of machinery, on which almost all the national movements of Great-Britain depend, is supported by the certainty which the creditors realize, that they can receive, when they shall call for it, the real money for their paper, evidential of [Page 35] the deposit. Some of their writers have advanced prin­ciples which no sober man will agree in, that a nation has a right to establish what they please for a medium of commerce, and that it is quite immaterial what that medium is composed of. If by this assertion they mean, that a people, by their unconstrained, common consent, have a right to receive what they please in exchange for articles of commerce, they are right; and this me­dium, or measure of appreciation, is money to all who receive and can pass it. But there is no government, however forcible it may be in other matters, which can impose any thing besides the precious metals, on the people, as money, for any considerable time together. The paper of the bank of England is the money of that country, but it is not established as such, by legal au­thority. It was never attempted as a tender for debts, but has rested on the voluntary consent of the commer­cial people, as receivable on the idea, that it represent­ed money which is at all times ready to be produced.

SOME of their writers bestow the most extravagant encomiums on this institution; while others, who are apparently as patriotic, as learned, and as candid, con­demn it as a bubble which will finally burst; as an engine of oppression and cruelty which tends to tyranny, and will finally ruin the nation.

THE bank of the United States of America, is on principles of the same class with those on which the bank of England is established, but depends upon the credit of the government for a greater proportion of its [Page 36] stock. There is only one quarter part of that stock in real money; the other three quarters are in public se­curities of the public funded debt at six per cent. in­terest, and three per cents. at half the nominal value. The value of them securities depends upon the assur­ance of their final payment, and on the punctual pay­ment of the interest stipulated. Should there be an ex­pectation of a failure in either of these, the credit of the bank would be proportionably injured; but them secu­rities are, by the economy of the treasury, so blended with that of the bank, and that of the bank with the existence of the government, that they must be the last pillars which will be suffered to be overturned by a public calamity. Whether it was either fair or neces­sary to give, in the operation of this system, particular holders of a part of them kind of public securities this great advantage, is not necessary now to be decided: but the advantages resulting from a part of the stock, being composed of them, is so immense, that the bank cannot fail of a support, as far as the proprietors are able to support it.

SEVEN millions and an half of dollars, three quar­ters of the stock which arises from the subscription of individuals, is composed of them securities; so that this three quarters of the stock, are a loan to government, upon six per cent. interest, and the stockholders have a right to issue bank notes to the full amount of their capi­tal, at the same rate of interest, by means whereof the pro­prietors of the bank, have a legal right to receive twelve [Page 37] per cent. upon that part of their stock; and this makes a use of ten and an half on the whole, including the part which consists in hard money. Upon this idea, the subscribers to the bank would have been glad to have sunk the interest to three per cent. if they could not have become subscribers without. The advantage aris­ing from their having a right to extend their credits to the amount of all the money deposited for safekeeping; and the determination of the treasury to deposit all the monies arising from the revenue in their hands, is so ex­ceedingly great, that this would have been a good bar­gain on the side of the stockholders at three per cent. for their securities.

THE debts due from the corporation are never to ex­ceed their capital, and the money actually deposited in the bank for safekeeping. They are not to trade, or to buy or sell any thing but bills of exchange, and silver and gold; and should their debts ever exceed ther capi­tal, and the specie in deposit for safekeeping, in such case the directors who issue the notes, and all the pro­prietors who shall be then present, and shall not enter their dissent to the measure, shall be liable in their per­sons and in their private estates.

BY the above provision, the creditors of the bank are completely secured, provided that the directors and acting proprietors are either faithful, or of sufficient ability. Should this precaution be inadequate, there are other checks provided, which are able to afford the highest assurances that can be raised on the principles of banking upon public credit.

[Page 38]THE officer at the head of the treasury department, has, by the act of incorporation, full authority to de­mand a state of the debts, and credits; an account of their stock actually existing in effective money, and of the deposits in their hands; moreover, the act provides, that their notes shall be received in the payment of all duties and revenues, in the room of real money. This will give the bank a credit as extensive as the quantity of money in demand, for all imposts, excises and du­ties, and fully guarantees their credit, unless they shall swell it beyond the limits of the revenue. Upon every view of this corporation, we must conclude, that while so great a part of their stock shall consist of public se­curities, and the credit of them shall be fully support­ed, the advantages of the bank will be exceedingly great to the proprietors. The United States further guarantee the seven million and an half of dollars, by allowing them to be in public securities. The advantages of this corporation by far exceed any thing of the kind which has heretofore been attempt­ed, excepting the Parisian bank: that was attempted as a public, this is a private advantage.

THERE can be no wonder that the opening a subscrip­tion, which offered such immense and unprecedented profits to the people who should be lucky enough to be concerned, should raise such a bustle among the specu­lators in paper securities, and finally afford so much chagrin at the disappointment of the unsuccessful part of the community. If the members of congress had been [Page 39] men of like passions with the other citizens of America, possessing the same jealousy in regard to private interest which men generally have in private life, we might have wondered that they should suffer a few men to em­brace such extraordinary privileges in exclusion of all others, and to ravish very great estates from the public exigency, which others were as fairly entitled to as they were. Congress seemed to have been aware of what was to be expected upon opening the subscription; for they attempted what, perhaps, some of them thought to be a sure and salutary preventative, by the supplement­ary act. By that it was provided, that no one person should subscribe more than thirty shares in one day; but no provision was made against subscribing in false or in unauthorized names. It was clearly evident that the subscribers would throng on the occasion; and yet no effectual measures were adopted to prevent monopo­ly, frauds and impositions.

THESE advantages were foreseen by nearly all the people; but the members of congress did not discern them in their public capacity. The house appropriat­ed to receive subscriptions, was, as soon as the auspi­cious day dawned, crouded by an incredible number of people: if a golden mountain had been kindled, emit­ting from its crater a lava of the purest gold, liquid, yet tangable, the croud would not have been greater, or exhibited more intense eagerness to share in the plunder.

THOSE who appeared on this occasion, were not all of them patriots, who had saved their country, or the [Page 40] most deserving part of the community of united Amer­ica. The men who had risqued their lives in the war, or who had parted with their patrimonies or hard earned estates, to save the public liberty, stood at a distance, and with astonishment beheld the singular and unexpect­ed phenomenon. The securities which they received for their services and properties, in the place of gold or silver, and had sold at two shillings and six pence in the twenty shillings, resumed their pristine value in the hands of their new possessors, and greatly enlarged their new and unexpected value by the machinery of the American bank.

AS an apology for such undue advantages to a part of civil society, it is said, that it is of no consequence to the government which of the citizens possesses the property. This is not true: a great part of our wants are factitious, arising from what we see in the possession of others; and therefore, when a few men, by an in­equality of operation in the laws of the ruling power, accumulate fortunes, and live in unequalled splendor, it corrupts the taste of the other part of the communi­ty, and draws their attention from their ordinary means of business. It produces a spirit of envy, and renders those unhappy, who before had been quite contented with their situation. There are but a small part of mankind who can look with contentment, like David, on the greatness of wicked men, and console them­selves, that they are only like a green bay tree, which flourishes for a little time, and then is not to be found.

[Page 41]GOLD and silver is the acknowledged representative of property of every kind; but paper is the representa­tive of nothing but money; and where the money is not actually existing, ready to be exchanged for the pa­per, then the paper represents nothing but public or private credit, and the credit may be good or bad, ac­cording to a variety of different circumstances, acci­dents and events.

I SHOULD not do justice to my readers if I did not transcribe a page from a pamphlet written by Dr. Price, on the nature of civil liberty, in the year 1776.

IT was expected at that time, that Doctor Price's pamphlet would have had some tendency to prevent the ministry of Great-Britain from prosecuting the Ameri­can war: but as we had nothing ourselves to depend upon but bills of public credit; and these too without any specie, or any public stipulated funds whereon to found them; the argument was stronger against us, than against our enemies. We had however, been in some measure used to a paper medium, and enthusiasm sup­plied the place of faith, and confidence: and whilst the people parted with their property to defend their rights, they considered all as a necessary sacrifice to liberty.

MANKIND have a natural disinclination to labor and exertion. In a state of nature, hunger is a stimulous to the savage, or he would continue idle and inactive. In society, ambition, that natural, and avarice, that arti­ficial passion, urge men to exertion; but nevertheless, labor is irksome, and all they who can devise some oth­er method of gratifying their inclinations, and obeying the commands of their passions, will most certainly do it: hence it is, that we find every one, who can drive a bargain to advantage, forsaking the plough to do it.

MONEY is scarce or plenty in a country, according to the demand for it. As it represents the articles exposed [Page 44] to commerce, and as commerce increases in proportion to the quantity of money found to pursue it with, there can never be a very long space of time together in which money can be plenty in comparison with the de­mand for it.

THE public securities of the United States of Amer­ica were a dead, inactive kind of property, previous to the establishment of the constitution of the new govern­ment; they then became at once the object of avarice. They before had an existence, as to value, on the slen­der hope of having something done for them at some distant future period; and obtained a motion only from the sagacity of a few, who happened to be right in their conjectures respecting the then future events of American financiering. Upon the adoption of the new system of government, they assumed all the properties of a rising credit, and became an immense active capital for commerce; but not for such a commerce as was advantageous to the people; their activity centered in themselves; and while they swelled the medium, they created proportionably a demand for more. The ap­parent success of some speculators, increased the num­ber engaged in that kind of traffic, until the great towns and cities were filled with that kind of gentry.

THE plan of the bank still gave a new force to this kind of traffic, for it gave an opportunity to some part of the community to turn their speculations to immense and unexpected advantage. While all the public se­curities [Page 45] might be considered as an active medium, the constitution of the bank gave the proprietors authority to add seven millions and an half of dollars to the whole: besides this, their having authority to issue notes in proportion to the money actually deposited for safekeeping, will prevent the dormancy in effect of any real money.

WE owe specie for all the paper which is now in cir­culation, and yet the specie in fact in the country, bears no proportion to it. This has been the case with us before; for we have once and again crouded the specie out of the country by floods of paper money, and have passed through two or three states of national bankruptcy with all the calmness of a company of philosophers.

SOLOMON tells us that the rich have many friends; but our Secretary of the Treasury, by making others rich, has obtained money; and his reputation derives support, as well from the greatness of his character for enterprise, as from the pecuniary interest which so many rich men have in the support of it. But the game he has played is very deep, as well as very splendid, and the whole fabric he has raised with so much eclat, may be at once overthrown by a run upon the bank. He will therefore guard, with the utmost caution, the emitting quality of it; for should it ever be induced by the exi­gencies of the public, or by any other means, greatly to exceed its capital, he may have to follow Mr. Law to Venice, in order to find an asylum from the public re­sentment. When he shall be removed from office, it [Page 46] will be difficult to find a successor who shall obtain the confidence which he has acquired, and the day of suc­cession will, no doubt, be a day of hazard, expectation and anxiety.

THE bank of the United States must be maintained, if it can be done, by the means of credit. But while the bank of England, which owes no more than sixteen millions sterling more than its specie capital stock, has the support of a nation which has in circulation sixty millions; the bank of the United States, which will owe seven, perhaps eleven millions of dollars more than its capital stock in specie, is supported by a nation in which there is not existing more than eight millions of dollars in specie; its situation must deserve great at­tention, and its economy be taken care of with great circumspection.

THE government of Great-Britain, in order to secure their bank, are under a necessity of restraining and of regulating even private bankers, while all the govern­ments in united America are vieing with each other in establishing private banks, or banks for the benefit of private companies. In fact, the idea of a paper curren­cy is so familiar with us, that we seem incapable of re­sisting any one temptation that is offered to us for the emission of paper bills of credit. If this spirit continues to prevail, according to the ideas and on the principles at present advocated, our bank bills will very soon be on a par with the old continental money. The bank of the United States, on which the honor and safety of [Page 47] the nation so effectually depends, will be exceedingly injured, if not rendered insecure and useless.

AMIDST the various schemes which have been adopted for giving a currency to paper bills, that of establishing the corporation called the Massachusetts Bank, is the one which deserves the most attention. When nations have been pressed with expensive wars, or other intolerable calamities, they have had recourse to their public credit; in the support of which, every member of the civil community has been in some mea­sure interested. But the idea of giving a few men a corporate capacity to issue, regulate, and control the medium of commerce among a great trading peo­ple, was before unprecedented, and serves rather to evince the inattention than the skill of those who estab­lished it.

THIS plan was conceived in the year 1785, in a time of profound peace, and without any view to sink a pub­lic debt, or to procure a public conveniency; it was an indulgence to a few men in the state, who happened to ask the legislature to grant it to them, without the prof­fer of any kind of reward. By means of this authority, the proprietors of that bank have had it in their pow­er to govern the medium of commerce in and about the metropolis of the state. By emitting large sums they have raised the price of public securities, and of other articles in the market; and by refusing again to loan, have brought on an artificial scarcity of money, and sunk the price of the same articles; this has given [Page 48] them all the advantages which could be gathered from the most enormous monopolies. Trade has been per­plexed by a capricious and unsteady medium; great quan­tities of property, more especially public securities, have been sacrificed to a punctuality, to a corporation which never had it in its power to be punctual itself if there had been a run upon it.

THE subscribers to this bank, with their associates, were incorporated without any limitation of time or credits. Their stock is never to exceed five hundred thousand pounds; but, upon this, they had a right to issue as much paper as they could obtain a market for, and were under no obligation as to the quantity of cap­ital, only that it should not exceed the sum abovemen­tioned; and let them issue as much as they will, the public, or the holders of their notes, have no remedy against their private estates. This is an agreed point, for the shares being transferable in their nature, it is quite impossible to know who the proprietors are. The act of congress for establishing the bank of the United States, has provided, that the directors and the proprie­tors actually present, when there shall be an agreement to issue more than their capital and deposits, shall be held liable in their natural capacity. The same pro­vision is made by parliament respecting the bank of England; from all which we may conclude, that the proprietors are not liable by law in their natural capa­cities, without such provision; for if they were so lia­ble for all the debts of the corporation, there could be [Page 49] no necessity for the special provision in the institution of a bank.

THE notes issued by the Massachusetts' bank are not by force of any law receivable in taxes or revenues, or a tender in any case as money; neither are they in any other manner warranted to the possessors by the gov­ernment. They are issued under the authority of the government, and yet the state is not responsible for their credit.

THE corporation of the Massachusetts' bank then amounts to nothing more than an authority delegated to a few men, in exclusion of all others, to make as much paper money as they shall please to issue, and to draw an interest upon it from the borrower at six per cent.

THEY have not failed to improve an authority so very singular and advantageous, for they have had nearly one million of dollars in circulation at a time, when they had no pretensions to have in their vault more than two hundred thousand dollars. This gave them an interest of thirty per cent. upon their real money, if they had the sum abovementioned actually deposited in stock, while the rest of the community were under heavy penalties if they should take more than six per cent. for the loan of their monies.

THE General Court, in their session of the winter 1792, became alarmed at the operation of this bank; but, perhaps, the alarm was given by the men who were interested in the northern branch of the American [Page 50] bank. They sent a committee who inquired, but never explicitly reported upon the credits and debts of that corporation. It seemed to be understood in the house of representatives that it was a matter which ought not to be spoken upon, and a bill was passed, limitting the issues of their credits to double their capital.

THIS measure was much more extraordinary than the original institution; because that, in 1785, the subject was new in the country; but the principles of banking had been under a free discussion in the year 1791, while the American bank was in consideration; and the Gen­eral Court took up the matter of the Massachusetts' bank, expressly, to inquire into and to regulate it; and yet they set it down again upon principles which were never adopted in any other part of the world.

ALL other banks are confined in their credits to the stock actually deposited, and to the deposits of private individuals; but this bank is allowed to issue double its capital without any assurance or guarantee from the public, that their credits shall be maintained. Their capital may be five hundred thousand pounds, of con­sequence they may have in circulation, and draw inter­est upon five hundred thousand pounds which does not exist, upon a paper currency which in fact represents nothing, upon a representative which has no constitu­ent. Thus they are incorporated with power to make thirty thousand pounds a year, without making any con­sideration for it. The interest upon their loans they anticipate by taking it at the time of the loan, and thus [Page 51] raise a compound interest, which pays all their charges, and leaves them twelve per cent. upon their capital be­sides. But if this was not the case, they are not at so much expense in loaning, and in collecting the money they loan, as individuals would be at in managing the same quantity of property.

THEY pretend, that there can be no want of security, because, when they issue their notes, they draw good se­curity from the borrowers. Upon this idea, their notes are so far from being the representative of real money, that they are nothing more than the representative of the credit of men, with whom the possessor has no ac­quaintance, and of whose circumstances he is totally ig­norant.

THESE men have led the government into the dis­reputable idea of giving a corporation authority to act as private bankers, without their private estates be­ing liable for their debts. The notes of private bank­ers are issued upon the credit of their reputation and private estates. It is a matter between them and their creditors, and the public have no concern in the busi­ness. If they fail, the state is under no necessity, by equity or honor, to warrant their credits.

NO doubt, there are some gentlemen of that corpo­ration, whose honor and conscience would oblige them to pay their dividend, out of their private estates, if there should be a failure; but they would not consider them­selves as held for more than their own shares. And [Page 52] even this resource, precarious as it is, may soon fail; for these men are mortal, and we know not who will hold the shares a few years hence which they now hold.

BY this institution this company has taken six per cent. upon nearly all the commerce in and about Boston. And what is more extraordinary, they have had it in their power to swell and lessen the medium of the country when they pleased, and consequently, to raise or fall the price of articles in commerce as they saw fit. We have seen so much misery in our own age, arising from the bad economy of paper money, that we are called upon by every principle of honor and justice to avoid it in future. If we sin again we must do it against the strongest light and the clearest information.

THE increase of the number of banks in other states, is no reason for their being multiplied in this. We have been long in the habits of a paper medium: in the year 1745 we issued a large sum, which, after a rapid fall, was redeemed at a great depreciation by a grant from the mother country. We were then obliged to prohibit the paper money issued in the other New-England states, from being received in this. For this purpose all persons elected to any kind of office, and all those who wished to take an execution for a debt, were obliged, pre­viously, to take an oath that they had not taken any bills of credit of the other provinces within this.

IF bank notes are valuable, only as they represent specie ready to be exchanged for them, we ought to be very careful of our conduct respecting banks.

[Page 53]THERE is a natural propensity in mankind to obtain property by art, by accident, and by any thing besides labor and industry: when peculiar advantages are pro­posed from a plan which will gratify them, however preposterous it may be, or however incompatible with the public interest, it cannot fail of obtaining votaries. The accumulation of wealth by the proprietors of the American bank, and of those who are proprietors of the Massachusetts' bank, have intoxicated a great part of the community; and it may be well to examine the princi­ples which ought to move the legislature in this business. The people of Salem have petitioned for a bank, and have obtained the sanction of one branch of the legisla­ture in favor of it. Another bill for establishing a ton­tine has been arrested in its career, only by a majority of one in the senate. If the Salem people, and the ton­tine association, or either of them, should finally pre­vail, there are many other people in the state who have an equal claim with them, and who will openly, and with good reason, charge the government with grant­ing exclusive privileges to one set of citizens in prefer­ence to the others, unless they are indulged in the same way. The great complaint is, that the favors of the go­vernment are partially bestowed, and the advantages of the laws unequally distributed. The complaint will gain strength by each act of government in this way, until all are benefited to their own satisfaction, or in a way to convince them, that the weakness of a govern­ment is the destruction of the subjects.

[Page 54]THE true idea of erecting corporations is to enable them more easily and advantageously to improve the pro­perty which they have; but the idea of giving them corporate powers to gain money by taking an interest on a capital which does not exist, is creating a property for them. It amounts to a gift from the state, and is quite inadmissible; yet the proposed Salem bank, the tontine, and the Massachusetts' bank, are all calculated on this idea.

THE creation of banks gains exceedingly in the pub­lic opinion, in the same way that emissions of paper mo­ney have heretofore obtained in this state, obtain now in some others, and lately in Rhode-Island. But if paper currency is the representative of specie, where is the specie to be found? The specie now active in the country bears no proportion to the paper in circula­tion. As the paper increases, the silver will grow scarce. Our commerce is with foreign countries, who will very soon, if our banks are multiplied, refuse our paper currency, and our mighty bubbles may burst up­on us.

IT will be doing nothing more than justice to this subject to give the reader Dr. Price's opinion upon it in his own words.

‘PUBLIC banks are, undoubtedly, attended with great conveniencies; but they also do great harm: and if their emissions are not restrained and conducted with great wisdom, they may prove the most per­nicious [Page 55] of all institutions, not only by substituting fic­titious for real wealth; by increasing luxury; by rais­ing the prices of provisions; by concealing an unfa­vorable balance of trade; and by rendering a kingdom incapable of bearing any internal tumults or external attacks, without the danger of a dreadful convulsion; but particularly by becoming instruments in the hands of ministers of state, to increase their influence, to les­sen their dependance on the people, and to keep up a delusive shew of public prosperity, when perhaps ruin is near.’

THE plan of a public bank for private emolument is still more dangerous. If it is given to a few only, they will be able to command the markets, monopolize by themselves, or their confidential connections, what arti­cles they please, to fix a capricious estimate upon every thing, and unduly to influence all the measures of the government. If it is general, then we must have a flood of paper medium, which, like our former paper curren­cy, will sink in the hands of the possessors.

SINCE the taste of the public is raised insatiably for a bank, it may be necessary to have one; but it ought to be upon such a plan as will allow a great number of the people to participate of its advantages, and to be for the good and benefit of all the citizens in the state.

THERE is one objection generally made to this plan, that a paper currency will give us an overflowing medi­um, and finally do great injustice. There is great [Page 56] weight in this objection; but we are to take mankind as we find them. To contend against all the follies and weakness of the people would be but a poor way to govern them. If there is no other bank than the two now in Boston, the people, the trade, and the regula­tion of the medium, will be wholly given up to their ca­price and humor. They will emit all the paper which they can lend upon good security, without any regard to the sufferings of the people, and at such times only as shall tend to their own emolument in another way. They will act in concert, for the proprietors of each are gen­erally interested in both banks.

I THEREFORE venture to propose another bank, in which all the people, as members of the state, shall be interested, and a great number more, as private proprie­tors.

THIS plan ought to originate with the General Court, without any regard to private petitions, or associations; for why should a number of men, merely because they associate and petition, have superior or exclusive privi­leges to gain advantages, alike due to all? Upon the expectations of such associations, speculations have been set on foot, and large sums of money have been made upon a mere sporting with the weakness and condescen­sion of the government. We are all on the same grade of privileges, and nothing can induce our representa­tives to divide us from our equal rights of free citi­zens.

[Page 57]SHOULD the state erect a bank, that one called the Massachusetts' Bank ought to be immediately repealed, or if the state does not erect one, still that bank ought not exist; or if that bank exists upon the restriction in the late act respecting it, all laws against excessive usury ought to be repealed; for to give one part of the community a legal right to take twelve per cent. upon the loans of their monies, while others are severely pun­ished for taking more than six for theirs, is making a cruel and an inviduous distinction between the people, and ought never to be allowed in a free country.

THERE is no lawyer in the state, who is disinterested, that will give it as his opinion, that the legislature has not a right to repeal the act of incorporation of that so­ciety. It is by no means a charter of privilege; if it is, the General Court had no right to grant it, because the constitution expressly provides, that no exclusive privilege shall be granted to any man, or body of men. It is not like an incorporation to build a bridge, or to cut a canal, because, in the first case, the government grants a property in a river, which belongs to the state; and in the last it is only a grant of power to use the property and soil which they have bought, or may buy of others. But the incorporation of this bank is an open, express privilege of taking more interest for their money than other people have a right to take. If it is not a grant of exclusive privilege, it is on the same foot of other legislative acts, sush as incorporating towns and proprietors, which laws may be repealed at pleasure. [Page 58] Here was no contract between these people and the gov­ernment, nor did the latter receive any reward or con­sideration for the grant.

WHEN I say that there never was any other public bank established on principles similar to those of the Massachusetts' bank, I do not take into consideration the several banks established in America by the legisla­tures of the several states. I have not attended to their several institutions, and should not hold myself obliged to regard them, if their principles are now in the theory of banking. It is one of the defects of free and popu­lar governments, that the ruling power being depend­ent by frequent elections, upon the will of the people, and that people being liable to be influenced by party interests, many measures obtain which do not tend to the public good. The several banks in this country may have been obtained by fair means, but yet may, in themselves, be wrong. There is, as Cicero says, no power on earth capable of making that right in itself which is naturally pernicious, or to make injury a law­ful act.

IT is necessary to take notice of a measure adopted in congress in December 1781. Robert Morris, Esq. had proposed a plan for a bank of the United States. This bank was established by an ordinance, as far as con­gress had power to do it; but not on principles so ex­tensive as those contained in the plan proposed. In the plan it was provided that the bank notes should be received in payment of all taxes and duties in all the [Page 59] states: This would have given the proprietors of the bank full power to have emitted a paper currency for the whole union, and to have drawn an interest of six per cent. upon the whole annually. Congress did not in their ordinance, even provide that the bank notes should be received by the federal treasury. But the General Court of Massachusetts, in their act passed in March 1782, made provision that all debts due to the confederated states should be receivable in the notes of this company; and that no other bank should be erect­ed in the state.

THIS company were, by the ordinance of congress, restricted as to the quantity of property they should hold, but not as to the debts they might owe. They therefore might issue notes to as large an amount as they pleased; and there was no provision for making the directors or proprietors liable in their natural capacities for what should exceed their capital.

SOME of the states did not agree to this extraordina­ry attempt for money making; and it is rather difficult to find where it now is, or what was the final settlement of it.

THAT I may be better understood in my ideas of a bank for the commonwealth, I take the freedom to mention the outlines of it, without having an idea that the principles offered are perfect, but only hoping to suggest some useful thoughts on the subject.

THERE are several reasons which plead in favor of the measure.

[Page 60]THE commonwealth being a sovereign state, ought to possess resources independent of any other state or government. Should the state, by an insurrection, or by any accident or adventitious distress, be under a ne­cessity of anticipating a tax by the loan of money, a state bank would be very useful, and prevent the neces­sity of an application to an office where it might be re­jected.

THE establishment of a state bank will form an inter­est strongly opposed to the incorporation of any other. It will be the best of all interests, the interest of all the people: and the bank can, from time to time, be ex­tended, when it shall be necessary, by new subscrip­tions; and a proper proportion of the spare specie may he improved in that way.

THIS method, if there can be any trust or confidence in the governing power of the commonwealth, will pre­vent the incorporation of a number of banks which otherwise will be applied for and obtained. It will prevent a flood of paper money which will otherwise be issued on the credit of private men, under the sanction of the government, without any specie to be represent­ed by it. By this, individuals will be prevented from raising or falling the medium of commerce to answer particular purposes of speculation; and the measure of trade will be rendered permanent, certain and steady.

THERE is a complaint, that money is not plenty enough to answer the purposes of trade. There never [Page 61] was a long time together when this complaint did not exist. Gold and silver represent all other property; and when they abundantly increase in a country, the nomi­nal value of every thing which is offered to sale, or compared with them as with the measure of real value, will rise in proportion to their abundance, and there will be still a complaint for money, though silver and gold should be as plenty as stones on the earth,

SPAIN experienced a scarcity of money when gold and silver had become as plenty there as lead or any other common metal; and the influx of bullion ruined the nation.

IF our commerce was an interior commerce, paper, shells, iron, brass, salt, or any thing else, might do as the sign of wealth; but as the money which we want is to carry on our traffic with other nations, we must have those signs of wealth for a medium which the world has agreed to receive as such; and we may issue paper as frequently as we please, but if that paper cannot com­mand the silver and gold when called for, it must de­preciate. Every instance of depreciation gives a new demand for more emissions, in the same manner as if a part was sunk or struck out of circulation.

I KNOW that the English writers pretend that there is not in the bank of Amsterdam, one quarter part in gold and silver of the value of the sum represented by the paper issued from thence. I doubt the truth of the as­sertion: but if it is true, the people who receive the [Page 62] paper believe the real money to be there; and as none but the magistrates have access to the books, it cannot be contradicted by evidence. But we live in a coun­try, in an age, and are a people where no such decep­tion can take place. If we were ignorant enough to be thus practised upon, we should be incapable of possessing a free government.