204 PROCEEDINGS OF THE AMERICAN ACADEMY. 



way back to the treasurv, the debt was extinguished and the temporary 

 function of the bill was performed. Under this theory the amounts 

 originally issued each year were simply intended to meet the immediate 

 needs of the government, and provision was made for their retirement 

 in the next tax bill. The withdrawal from circulation, and the locking 

 up in the hands of a treasurer, of large sums collected by taxation, is 

 recognized as a serious disturbance to the circulating medium of a 

 government, and vai'ious devices are to-day resorted to in order to pre- 

 vent as far as possible the consequent reduction of the circulation. In 

 a similar way, after the country became dependent for a circulating 

 medium upon the amounts thus annually emitted, the sudden emission 

 and the withdrawal each year of so large a proportion of the medium of 

 trade must have created a serious disturbance in commercial affairs, 

 and the cry of a scarcity of bills during the period of the year when the 

 taxes were being collected was based upon a genuine want, even when 

 the bills were most abundant. The increase in the amounts issued, the 

 postponement of the periods for retirement, and the distribution of the 

 withdrawals over several years, were only partial remedies for this evil. 

 Confidence in the bills was based upon their ultimate withdrawal, and the 

 greater the emissions the greater the taxes that must be levied to provide 

 for their retirement. While this was evidently true, and while there 

 were indications that pointed to a loss of confidence in the bills when 

 the Assembly failed to provide the promised fund for the withdrawal of 

 an emission, yet it cannot be doubted, however paradoxical it may 

 seem, that whenever a fund was called in for the purpose of redeeming 

 the government promises and maintaining confidence in the bills, it was 

 expected that there would be an emission to fill the gap thus occasioned 

 in tlie circulating medium. 



The emissions in Massachusetts from 1702 to 1749 reached the sum 

 of £4,630,000, while the withdrawals during the same period, includ- 

 ing the £300,000 in 1749, were £2,730,000. It was doubtless to over- 

 come the disturbance occasioned by this annual process of absorption 

 and emission, that the system of distributing bills of public credit 

 among the inhabitants, on loans secured by i-eal estate, was resorted to. 

 £310,000 was thus put out at different times. The first loan was to 

 the Boston merchants who furnished supplies for the Quebec expedition 

 in 1711. This was only a temporary loan, to enable them to carry the 

 sterling exchange paid to them by the paymasters of the expedition, 

 until it should be met in London. In 1714, when it was about to 

 be paidj it was replaced by a loan of £50,000 to the inhabitants of 



