96. THE SPIRIT OF THE TIMES1 Wednesday, June 16, 1779. You are requested to meet on the floor of the Old Scotch Meeting House to-morrow morning, at 9 o'clock, at which time the bells will ring. Rouse and catch the Philadelphia spirit; rid the community of those monopolizers and extortionators, who, like canker worms, are gnawing upon your vitals. They are reducing the currency to waste paper, by refusing to take it for many articles; the infection is dangerous. We have borne with such wretches, but will bear no longer. Public example, at this time, would be public benefits! You then that have articles to sell, lower your prices; you that have houses to let, refuse not the currency for rent; for inspired with the spirit of those heroes and patriots, who have struggled and bled for their country, and moved with the cries and distress of the widow, the orphan and the necessitous, Boston shall no longer be your place of security! Ye inhabitants of Nantucket, who first introduced the accursed crime of refusing paper money, quit the place, or destruction shall attend your property, and your persons be the object of VENGEANCE. N.B. Lawyers, keep yourselves to yourselves. It is our determination to support the reputable merchant and fair trader. 97. THE EXCUSE FOR CONTINENTAL CURRENCY' BY CHARLES J. BULLOCK The Continental Congress has often been blamed for resorting to the disastrous expedient of issuing paper money, but the financial policy of the Revolution was practically settled by the provincial assemblies. Congress did not convene in Philadelphia until May 10, and did not determine to issue bills of credit until June 22. Meanwhile, Connecticut had decided in April to emit paper money; and Massachusetts had adopted a similar measure seven days before Congress assembled. Before the month of May had expired, Rhode 1 From Phillips, Historical Sketches of the Paper Currency, p. 128. 'Adapted from The Monetary History of the United States, pp. 60-63. (The Macmillan Co., 1900.) Island pursued a similar course; and, in June, New Hampshire, Pennsylvania, and South Carolina followed suit. During the next few months all the other colonies, without a single exception, decided to provide the sinews of war by means of bills of credit. Although the Continental Congress was a revolutionary assembly which might conceivably have attempted to assume all the authority of a strong national government, it is almost certain that such a course would have resulted in the downfall of that body. It was in reality a consultative assemblage, whose powers were limited by the wishes of the several colonies. In order to exist and to maintain any respect for its authority, Congress had to be governed by the temper of its constituents; and, in respect to the proper financial policy, the wishes of the people of America had already been indicated with sufficient clearness by the action of the various provincial assemblies. These bodies had commonly pledged the half or the whole of their estates for the preservation of their sacred liberties, but they had shown a uniform determination to raise money by sacrificing only the estates of those people who were helpless to avoid the losses of a depreciating currency. It is perfectly true that the expenses of any war must, apart from help secured in foreign countries, be defrayed out of the annual produce of the industry of a people; and that taxation is the safest, surest, and wisest method of meeting such expenditures. But the hands of Congress seem to have been bound by its lack of authority and the manifest desires of the people. The New York assembly, and probably some others, had conveyed to the men gathered in Philadelphia explicit statements of their sentiments; and the actions of various provincial congresses in actually issuing paper were more significant than any words. Thus the Continental Congress and the individual colonies of states, undertook to carry on the struggle for independence by the aid of bills of credit. The dangers of such a course were fully appreciated by many men, but the temper of the great body of the people could not be mistaken. Recent historians have investigated with great care and entire fairness the extent and character of the opposition which the revolutionary movement encountered from many of the most intelligent and respectable persons in America, and have assured us that earlier writers have failed to do justice to the strength and honesty of that party which considered separation from the mother-country to be unnecessary and undesirable. With the history of colonial paper currencies before us, it is reasonable to believe that the fear of reckless issues of bills of credit was certainly one cause for the hostile attitude assumed by a large portion of the conservative, propertied classes. 98. PAPER CURRENCY OF THE CONFEDERACY' By G. C. EGGLESTON The history of the South during the Civil War furnishes one of the best illustrations on record of the disastrous consequences of relying mainly upon the issue of irredeemable paper currency as a means of financing war. There were some slight tax levies, it is true, and some borrowing through the use of bonds, but paper money was looked to from the first as the chief fiscal resource of the government. There was only one difficulty incident to the process of printing treasury notes enough to meet all the expenses of the government, namely, the impossibility of having the notes signed in the Treasury Department as fast as they were needed. There happened, however, to be several thousand young ladies in Richmond willing to accept light and remunerative employment in their homes, and as it was really a matter of small moment whose name the notes bore, they were given out in sheets to these young ladies, who signed and returned them for a consideration. I shall not undertake to guess how many Confederate treasury notes were issued. Indeed, I am credibly informed by a gentleman who was high in office in the Treasury Department, that even the secretary himself did not certainly know. The acts of Congress authorizing issues of currency were the hastily formulated thought of a not very wise body of men, and my informant tells me that they were frequently susceptible of widely different construction by different officials. However that may be, it was clearly out of the power of the government ever to redeem the notes, and whatever may have been the state of affairs within the Treasury, nobody outside its precincts ever cared to muddle his head in an attempt to get at exact figures. We knew only that money was astonishingly abundant. Provisions fell short sometimes, and the supply of clothing was not always as large as we should have liked, but nobody found it difficult to get money enough. It was to be had almost for the asking. Money was so easily got, and its value was so utterly uncertain, that we were never able to determine what was a fair price for anything. We fell into the habit of paying whatever was asked, knowing I Adapted from A Rebel's Recollections, pp. 78-105. (Hurd & Houghton, 1875.) that tomorrow we should have to pay more. Speculation became the easiest and surest thing imaginable. The speculator saw no risks of loss. Every article of merchandise rose in value every day, and to buy anything this week and sell it next was to make an enormous profit quite as a matter of course. Naturally enough, speculation soon fell into very bad repute, and the epithet "speculator" came to be considered the most opprobrious in the whole vocabulary of invective. The feeling was universal that the speculators were fattening upon the necessities of the country and the sufferings of the people. Nearly all mercantile business was regarded with suspicion, and much of it fell into the hands of people with no reputations to lose, a fact which certainly did not tend to relieve the community in the matter of high prices. The prices which obtained were almost fabulous, and singularly enough there seemed to be no sort of ratio between the values of different articles. I bought coffee at forty dollars and tea at thirty dollars a pound on the same day. My dinner at a hotel cost me twenty dollars, while five dollars gained me a seat in the dress circle of the theater. I paid one dollar the next morning for a copy of the Examiner, but I might have got the Whig, Dispatch, Enquirer, or Sentinel for half that sum. For some wretched tallow candles I paid ten dollars a pound. The utter absence of proportion between these several prices is apparent, and I know of no way of explaining it except upon the theory that the unstable character of the money had superinduced a reckless disregard of all value on the part of both buyers and sellers. A facetious friend used to say prices were so high that nobody could see them, and that they "got mixed for want of supervision." He held, however, that the difference between the old and the new order of things was a trifling one. "Before the war," he said, "I went to market with the money in my pocket, and brought back my purchases in a basket; now I take the money in the basket, and bring the things home in my pocket." In the winter of 1863-64 Congress became aware of the fact that prices were higher than they should be under a sound currency. If Congress suspected this at any earlier date, there is nothing in the proceedings of that body to indicate it. Now, however, the newspapers were calling attention to an uncommonly ugly phase of the matter, and reminding Congress that what the government bought with a currency depreciated to less than 1 per cent of its face, the government must some day pay for in gold at par. The lawgivers took the alarm and sat themselves down to devise a remedy for the evil condition of affairs. With that infantile simplicity which characterized nearly all the doings and quite all the financial legislation of the Richmond Congress, it was decided that the very best way to enhance the value of the currency was to depreciate it still further by a declaratory statute, and then to issue a good deal more of it. The act set a day, after which the currency already in circulation should be worth only two-thirds of its face, at which rate it was made convertible into notes of the new issue, which some, at least, of the members of Congress were innocent enough to believe would be worth very nearly their par value. This measure was intended, of course, to compel the funding of the currency, and it had that effect to some extent, without doubt. Much of the old currency remained in circulation, however, even after the new notes were issued. For a time people calculated the discount, in passing and receiving the old paper, but as the new notes showed an undiminished tendency to still further depreciation, there were people, not a few, who spared themselves the trouble of making the distinction. The financial condition got steadily worse to the end of the war. I believe the highest price, relatively, I ever saw paid, was for a pair of boots. A cavalry officer, entering the little country store, found there one pair of boots which fitted him. He inquired the price. "Two hundred dollars," said the merchant. A five hundred dollar bill was offered, but the merchant having no smaller bills, could not change it. "Never mind," said the cavalier, "I'll take the boots anyhow. Keep the change; I never let a little matter of three hundred dollars stand in the way of a trade." Will the reader believe that with gold at a hundred and twentyfive for one, or 12,400 per cent premium; when every day made the hopelessness of the struggle more apparent; when our last man was in the field; when the resources of the country were visibly at an end, there were financial theorists who honestly believed that by a mere trick of legislation the currency could be brought back to par? I heard some of these people explain their plan during a two days' stay in Richmond. Gold, they said, is an inconvenient currency always, and nobody wants it, except as a basis. The government has some gold-several millions, in fact and if Congress will only be bold enough to declare the treasury notes redeemable at par in coin, we shall have no further difficulty with our finances. So long as notes are redeemable in gold at the option of the holder, nobody wants |