[DR. WILLIAM DOUGLASS]
A LETTER TO MERCHANT IN LONDON CONCERNING A LATE COMBINATION IN THE PROVINCE OF MASSACHUSETTS BAY . . . TO IMPOSE OR FORCE A PRIVATE-CURRENCY CALLED LAND-BANK MONEY, 21 FEBRUARY ,1740
I have the favour of yours of 1st December per the Bladen, with Copies of the Reports of the Board of Trade and Plantations, and of the Committee of Council for Plantation Affairs; concerning our Land-Bank so called: I observe that having examined into the Nature of the Scheme, and of the refusal of the House of Representatives to pay any regard to the Governour’s Message concerning the same; they approve of the Governour and Councils Proceedings, and do declare that the said Scheme appears to them to be not only Illegal, but of dangerous Tendency; and must create great Confusion, and Interruption in Business, as well to the Traders in New-England, as in Great-Britain; and in Order that the said Land-Bank may be as speedily and effectually suppressed as possible, they are pursuing Methods to put a Stop to the same, until such Time as the Legislature of Great Britain shall take the State of the Paper Currencies of all the Plantations into Consideration.
You desire a particular Account of this monstrous (as you call it) Combination, lately made, to evade Resolves of Parliament, and King’s Instructions….
The Land-Bank, or Manufactory Scheme (the designed Subject of this Letter), being a late Combination of a vast Multitude of necessitous, idle, and extravagant Persons; with all the Signs of a genuine Bubble; contrived to have what they call Money, at an easy Rate; and to pay their Debts in a precarious fallacious Kind of Bills, very ill, or not at all, secured; of no determined Value; bearing no Interest; not payable (the Possessor cannot oblige to an Acceptance) until after twenty Years, and being a very large Sum (equal to all the then provincial Bills of New-England) of Six hundred thousand Pounds, will, if not remedied, depreciate all Paper Currencies, that are not determined by a Silver Value, consequently prove a great Prejudice to private Property in the Province, and great Loss and Damage to the Merchants of Great-Britain, trading to New-England.
Your Surmise is groundless, That perhaps some of our Merchants, who have suffered much by depreciating publick Bills, have, jesuitically, and as it were behind the Curtain, prompted the unthinking Multitude, to a Scheme, running into unheard of Extremities of Sum, and Period; and at this critical Time, when all Paper Money is under the Censure of the Boards and Parliament of Great-Britain, on purpose to bring the Parliament under the Necessity of speedily and effectually suppressing Paper Money of all Kinds.
The Rise of this Scheme, was from a few evil-minded Men, contrived only for their own Benefit, and have admitted a great Multitude of Subscribers, by their Numbers
to give it a Circulation, and to contribute towards indemnifying them against all Acts of Government. Its being contrived only for the Benefit of the Directors, appears by their Constitution.
1st, They are to be Directors in Perpetuity.
2dly, They are to have a Negative in all Resolves of general Meetings.
3dly, Their Sallaries, other Charges of Management, and their living sumptously, at Free-Cost, will amount to Two per cent per annum, of the original Stock; (the original South Sea Stock of Ten Millions was allowed only Eight thousand Pounds for Management, which is scarce One 12th per cent per annum). They design to convert Sixty thousand Pounds of the principal Stock into Trade, that they may have a greater Latitude of imposing upon the Partnership. The Bank of England, and all other well constituted Banks, are restricted from trading, that their Stock may remain good at home, ready to answer all Demands. Their ludicrous Pretence is, That since the Merchants will not sell them Goods for this worthless Money, they will import all sorts of Merchandise, for the Benefit of the Partnership: Their Directors cannot seriously pretend to understand Trade, only one of their Number is called Merchant, or rather a Factor for some Marooners or Logwood-Cutters, in the Bay of Honduras.
4thly, They alter the Articles of Partnership at Pleasure, without Consent of a general Meeting, pretending (contrary to all good Regulation) that private Consent of the Members, without Deliberation or Debate, is sufficient; this is the Reason of their Scheme being so often botched: Their Scheme now sent to you, is their last, as it stands in the County Register; it was refused a Record in the Secretary’s Office: How soon it may be altered, we know not.
5thly, The County Registers being lately searched by Order of the Governour and Council, to find out the civil and military Officers, guilty in this Combination; It was discovered, That the principal Projectors, or Bubblers, the Directors, etc., had given no Security to the Partnership for their good Management, and for their Quota of this Money, taken up some Months since: The sham Reason they give, of being very busy; is not only weak, but fully discovers the Cheat and Imposition; because in all well ordered honest Schemes, the Directors, or Managers, are the first who give Security.
You desire to know the Nature of our landed Interest, which by these evil-designing Men, is set up in competition with the trading Interest. In Great-Britain, the Landed Interest consists generally of Gentlemen very Rich, with valuable Rent-Rolls; Our Freeholders generally are labouring Men, who earn less, and fare worse, than many in Boston, and without any Rent-Rolls. Indulge me here, to cast a Vail, over the Nakedness of our Country: This Country seems designed by Nature for Trade, not for Produce: We Import Provisions at much easier Rates from the Southern Provinces, than we can afford to raise them here. I am concerned in Lands, and therefore can have no sinister End in disparaging of them. On the other side, Our Trade is not Inferiour to that of any of his Majesty’s Plantations; and Our Navigation much exceeds any of them. The Truth is shortly this; The Debtor part of the Country (which is vastly the most numerous) are contriving to baulk their Creditors by reducing the Denominations of Money (by their huge and ill-secured Emissions) to a small or no Value; that they who have laudably acquired Fortunes by Industry and Frugality, may reap no Benefit thereof, but be upon a level with the Idle and Extravagant: We all have learnt by Experience that large Emissions with distant Periods, have sunk a great Part of Debts, without any Consideration.
The Projectors gave to this Bubble the specious Name of, A Bank—It has not the least Affinity to Banking. Banking is issuing of Cash-Notes, payable upon Demand: or Merchants having lodged their Cash, the Bank transfers Cash from one Merchant’s Folio, to that of another, when required.
1st, This Sham-Bank has no Stock in their Treasury; and the Face of their Bills promising to accept them for Stock in the Treasury is an arrant Bubble: It is true, that for some short Time the Directors decoyed some Graziers and Hog-Drivers, to part with their Provisions for this their I and-Bank Money, but have shipped it off in Trade for the Profit of the Directors, and perhaps to help to indemnify themselves when obliged to make good the Bills by them signed.
2dly, These Bills, tho’ carrying no Interest, cannot make an effectual Demand of Acceptance till after Twenty Years, and then not payable in current Cash, but in Goods of an Arbitrary Assortment and Value.
3dly, As Produce and Manufacture are more valuable than depretiating Bills; all Payments of the Partnership of Interest, and Parts of Principal, will be in these Bills; and consequently no Produce, or Manufacture, will be found in their Treasury.
4thly, Being no Body-Corporate, they are under no Limitation: The Directors, who are for this very Purpose the Signers, may and will emit Bills in indefinitum, or until at length their Value become near equal to the Charge of manufacturing them.
5thly, If we can suppose their Board of Bill-Makers to be honest-Men, and that in Conscience (they having no other Check but Conscience) they emit no more than according to their first Articles, as they have no exclusive Patent, any other Number of desperate Men may follow the same Money-making Trade, and Bills may multiply as in the former Case.
6thly, In other Countries, the Opulent, the Honest, the Men of Credit, become Bankers; here the Indigent, the Debtors, the Fraudulent, set up for Bankers: A Bank of a Numerous, but poor People, who pretend to circulate 600,000 l. without any Stock.
7thly, To compleat the Farce, the Securities for circulating and paying off these Bills, are within themselves, and may be stifled at Pleasure….
The Projectors and Managers of this Scheme have Debauched the Minds of the People, by Instilling unto them some pernicious Principles, destructive of all Society, and good Government:
1st, That common Consent, or the Humour of the Multitude, ought to be the Ratio Ultima in every Thing and particularly in Currencies; whereas not only according to the Constitution of Great-Britain, but of all polite Governments, Money or Currencies are the Prerogative of the
Sovereigns, and have followed the universal Custom of Merchants, whereby Silver from its own natural Qualifications, could not avoid becoming the universal Medium of Trade. If we may suppose a Country entirely separated from the trading Part of the World, common Consent may admit of any Thing for a Currency, according to the Humour, or Profit of the Projectors; but this will fluctuate from one thing to another, until at length the most proper Material obtain a permanent Consent: It is doubtless a high Misdemeanour to assert strenuously, the Priviledge of the People, to emit and pass any Thing as a Currency, in defiance, of the King’s prerogative of Currencys. Middleton, a neighbouring Town, has lately unanimously voted, that This Bank-Money shall be received as Cash for Town Rates.
2dly, That every Landed Man, even to the mortgaging of his last Acre, has a Right to make Money: This is a most destructive and wicked Principle, the Security and Bulwark of a Country, are these People who have valuable Possessions and Effects to loose; whereas they who are much in Debt, become desperate, and bad Subjects, and have nothing to hinder them from relinquishing their Country to the first Invader.
3dly, That the Industrious Merchants, and frugal monied Men, are the Bone of a Country; because they expect their Debts and Dues to be honestly paid: Whereas a Country without Trade is of little Value, and would soon return to its primitive Waste. People of Genius for Trade grow rich by the Labour of Peasants, and the Peasants or Labourers happy by being employed: This Province noted for Trade would soon become a Habitation of rude Rusticks.
4thly, To value themselves as being formidable by their Numbers, Two Thousand Principals, as they publish, and many Thousand Abettors: This is Ruffian like, by Superiority of Numbers, to endeavour to make honest People buy the Rabbit. Such dangerous bare-faced Combinations, are not to be connived at in Government; they openly threaten, that in the next Assembly, no Body shall be a Representative, or of the Council, but those who are Principals or Abettors in this Scheme; and thus have formed an Imperium in imperio. If this Wickedness of Combinations, under the Name of Banking, should spread into our neighbouring Charter Governments (in Providence of Rhode-Island they have gone some Lengths in it) where all the Negatives, or Branches of the Legislature are elective by the People, they would become Masters in all Affairs of Legislature and Government; their Dependance upon and Subjection to Great-Britain, would soon vanish. At this Time, in Neglect or Contempt of the Resolves of Parliament, and subsequent King’s Instructions, Connecticut have emitted One hundred and eight thousand Pounds, and Rhode Island, Eighty thousand Pounds, Province Bills.
5thly, By the inclosed News-Papers, printed in Boston, you may see, and we here upon the Spott do daily hear, how the Managers spirit the People to Mutiny, Sedition, and Riots: One gives it for Law, That no Orders from the Boards at Whitehall, nor Acts of Parliament, can put a Stop to their Proceedings; Others say, We shall humble the proud Merchants; That if the Merchants will not receive these Bills in Pay, they must blame themselves for any Outrages that may happen; That We had as good perish by the Sword as by Famine, that is, by being Dragooned, as by Want of Money; That upon a French Invasion, if we submit, We cannot be worse than at present; that is poor and in Debt; because the Government or private Combinations will not let us have Paper Money, to the Ruin of the good People of the Province.
Upon desire to know what has been done by the Government of the Province towards their Suppression: One of the Negatives, I mean the House of Representatives, stand out; so that the Legislature can do nothing. The Governour and Council have acted with much Prudence and Fortitude; and are dismissing all Officers, Civil and Military, of their Appointment, who are concerned in this Combination; only the Chairman of the Directors, and the Indorser, their Commissions or Warrants being from Great Britain, cannot be dismissed; but their Dismission, by their Constituents at home, may be expected.
You take the Liberty to surmise, a Liberty which you would not allow to me:
1st, That for the present, the most summary Way of proceeding against this Combination, would be, To send for the Treasurer, Directors, and Indorser, to Great-Britain, by a Messenger, with a Secretary of State’s Warrant, to bring them upon Examination, concerning this high Crime and Misdemeanour: But this would ruin them in their small Fortunes, and render them less capable to satisfy the Possessors of the Bills, when returned upon them.
2dly, That the Mortgages of Lands in the Partnership cannot be sued out by the Managers; because there was no valuable Consideration received. Thus the Possessors having only the Estates of the Signers liable, would not receive above Two Shillings in the Pound.
3dly, That the Possessors having had sufficient Warning from the Government, can claim none of their Compassion.
We hope that the Government, who are the Parents and Guardians of the People, will act, as natural Parents do with their Children, guilty of some Follies, after repeated Admonition.
In all Bubbles, Combinations, etc., the Guilt of the Projectors and Managers is from a corrupt Principle; but the Error in their Followers, the Multitude, is only from a Mistake in Judgment.
I have now given you my Thoughts of this singular Piece of Iniquity, in the most impartial Manner I am able, and hope it will be satisfactory to you, assuring you I am, with all possible Respect….