Continental Paper Money

years, ordered in May and issued in August, 1775Paper for nine million dollars was issued before any depreciation began. The issues of the separate colonies must have affected it, but the popular enthusiasm went for something. Pelatiah Webster,* almost alone as it seems, insisted on taxation, but a member of Congress indignantly asked if he was to help tax the people when they could go to the printing-office and get a cartload of money. In 1776, when the depreciation began, Congress took harsh measures to try to sustain the bills. Committees of safety also took measures to punish those who *' forestalled " or " engrossed," these being the terms for speculators who bought up for a rise. The tyranny of the government was of course only a stimulus to the private committees. It is natural to suppose that malicious and criminal persons assumed the duty of public regulators, and committed those acts of violence and wrong* which equal or surpass anything of the kind under any despotism, but such an error as a legaltender act, enforced by * Political Essays. Philadelphia, 1791.

HISTORY OF AMERICAN CURRENCY. 45 pains and penalties, is responsible for the secondary evils which are sure to flow from it. Webster says of the paper : " We have suffered more from this cause than from every other cause or calamity. It has killed more men, pervaded and corrupted the choicest interests of our country more, and done more injustice than even the arms and artifices of our enemy." The enemy, perceiving the terrible harm the Americans were doing themselves, thought it well to help on the movement. They counterfeited the bills and passed them through the lines. At the end of 1779 Congress was at its wits' ends for money. Its issues had put specie entirely out of reach, and the cause was in danger of being drowned under the paper sea. Webster says : " The people of the States at that time had been worried and fretted, disappointed, and put out of humor by so many tenderacts, limitations of prices, and other compulsory methods to force value into paper money, and compel the circulation of it, and by so many vain funding schemes, declarations of promises, all which issued from Congress, but died under the 46 HISTORY OF AMERICAN CURRENCY.

most zealous efforts to put them into operation and effect, that their patience was all exhausted. I say these irritations and disappointments had so destroyed the courage and confidence of the people, that they appeared heartless and almost stupid when their attention was called to any new propositions." The French alliance helped more by giving" means of procuring loans in Europe than by military assistance. Congress promised to limit its issues to $200,000,000, and tried a new form of note ; also loan offices and lotteries. Over 350,000,000 were issued in all, but it is doubtful if more than 200,000,000 were out at any one time. In the spring of 1780 the bills were worth two cents on the dollar, and then ceased to circulate. Specie now came into circulation, being brought by the French, and also that expended by the English passing the lines. The paper was now worth more for an advertisement or a joke than for any prospect of any kind of redemption. A barber's shop in Philadelphia was papered with it, and a dog, coated with tar, and HISTORY OF AMERICAN CURRENCY. 47 the bills stuck all over him, was paraded in the streets.

On account of the peculiar character of American society, there are few family traditions of the Continental currency; but the contemporary literature shows that the suffering it caused was widespread and intense. It fell most heavily on the most patriotic and most helpless. Phillips quotes a letter addressed by a lady to the " Pennsylvania Packet" in 1779, saying that her father had left her a competence which her guardian had invested in real estate six years before. He now proposed to pay her fortune in paper. It is only a single instance. " The gradual depreciation was urged as a reason why the notes should not be redeemed at par. It was said to operate as a tax; as a most equal tax, because it acted in proportion to the amount held. The rich suffered largely on their vast sums; the needy but slightly on their scanty pittances. How fallacious thes'e reasonings, with which the Congress and the people solaced themselves, are, must be apparent.

Poor consolation it was to those who had been 48 HISTORY OF AMERICAN CURRENCY. beggared confiding in the honor and in the honesty of their country, to hear that their ruin had merely been a gradual tax; to know that from the operation of tender laws their property had been taken away and given to others ; to see the wealth accumulated by the dishonest multitudes of contractors and the many defrauders of that unhappy period, and to feel that it had been plundered from their own coffers for the aggrandizement of such people." * The trouble is that the government cannot make a forced loan by legal tender issues, without giving the opportunity for private individuals to take " forced loans " from their neighbors. " If it saved the State, it has also polluted the equity of our laws, turned them into enemies of oppression and wrong, corrupted the justice of our public administration, destroyed the fortunes of thousands who had most confidence in it, enervated the trade, husbandry, and manufactures of our country, and went far to destroy the morality of our people." f * Phillips: Colonial and Continental Paper Currency, II. 175.

f Webster /. c. 175, note.