DAVIS. — CERTAIN OLD CHINESE NOTES. 285 



of as a circulating medium. We can see that through the prompt 

 retirement of the earlier emissions by means of taxation, confidence 

 in the bills of public credit was created, and thus the government was 

 enabled to float enough of them, to cover the expenses of administra- 

 tion at first for a single year and ultimately for several years. We 

 can watch the gradual disappearance of the metallic currency, concur- 

 rent with the increase of the quantity of the bills in circulation, and 

 after silver had been entirely withdrawn from general circulation 

 the continuous rise in prices which paralleled the steadily increasing 

 amount of bills emitted by the province. We can see two sorts of 

 bills circulating side by side, both emitted by the same government 

 and both dependent for the value at which they would circulate upon 

 the language used in the statement of value printed on the face of the 

 note, one of which was worth three times as much as the other, and 

 we can see that this circulation of notes bearing the same denomina- 

 tional values, of which three of the one were required to perform the 

 functions of one of the other, was made possible by the terms on which 

 the government would receive the notes. We can see that while the 

 government could force this unnatural circulation of the two kinds 

 of notes, it did not have the power to retain them or any of them on a 

 par with specie, but that they declined in proportion as the needs of 

 the people for trade were exceeded in the supply furnished for circu- 

 lation. 



The closure of this paper money experience in Massachusetts was 

 like that in China effected by the total abandonment of paper money 

 and the return to an absolute specie basis. There were, however, 

 many reasons which operated to prevent the colonists of Massachu- 

 setts from drawing correct inferences as to the economic laws which 

 governed the circulating medium. They had seen prices go up while 

 the amount of notes emitted by the province was being steadily 

 reduced. The reason for this apparent violation of an economic law 

 is easy to find, the notes of adjacent colonies more than filled the gap 

 in the circulating medium. To a certain extent this was understood 

 but the rebuff that the province had met with in attempting to reduce 

 the amount of the circulating medium, will explain why they felt that 

 the only relief was not alone to abandon the use of their own paper 

 money but also to do it in such a way as would cut off the circulation 

 of emissions by neighboring governments. 



It will thus be seen that the lessons to be learned from this fifty 

 year experience closely resembled on the whole that which was to be 

 derived from the incomplete accounts of what took place in the same 



