44 TWENTY-FIRST REPORT. 



At any rate the essay was written when depreciation was, at most, very 

 slight ; and when, if it existed at all, it would have been discernible only to a 

 keen student of the subject. 



In the first essay Webster says that, if the quantity of the currency is 

 greater than that required for a medium of exchange, it will show itself in 

 several ways ; estates will be vested in goods of intrinsic value and hoarded ; 

 foreign trade will be discouraged because, in his words, "no one will import 

 goods for a medium that is worse than the goods themselves ; for, though the 

 profits may be nominal, the loss will be real." "It will discourage industry 

 for the same reason." 



These conditions which Webster clearly foresaw, later became the chief 

 causes of the difficulty of providing for the American army and, incidentally 

 of the suffering at Valley Forge and Morristown and they placed in jeopardy 

 the cause of the Revolution. 



These effects Webster thought could only be avoided by lessening the 

 amount of paper money and this decrease must be accomplished by taxation ; 

 to quote him, "This tax ought to be equal to the excess of the currency, so as 

 to lessen the currency down to that quantity which is necessary for the 

 medium of trade, and this in my opinion ought to be done by every state, 

 whether the money is immediately wanted in the treasury or not, for it is 

 better for any state to have its excess of money, though it were gold or silver, 

 hoarded in a public treasury — than circulated among the people." He then 

 uses a rather unfortimate illustration in which he confuses money and wealth. 

 After an eloquent appeal, he tells the colonists that there is no way to finance 

 the war except by taxes and that if they do not tax themselves, "as the price 

 of their liberty, their conquerors will do it more heavily as the price of their 

 chains." Tliey cannot carry on the war by means of paper money, for, he 

 says, "I conceive the value of the currency of any state has a limit, a ne plus 

 ultra, beyond which, it cannot go, and, if the nominal sum is extended beyond 

 that limit, the value will not follow." "Any attempt to extend such nominal 

 value must depreciate the whole. This limit, the amount of money which was 

 needed for trade, he estimated at eight or nine million dollars in 1779. The 

 nominal value he placed at $100,000,000. 



In August, 1770, Webster wrote that it followed from the above principle 

 that the debt had not increased for three years, that probably it was even 

 less. The expense of the war had then been born by taxation, but it was the 

 worst possible kind of a tux falling heaviest on widows and orphans." 



In the three years following 1770 he estimated the depreciation to be 50 

 per cent per annum. It is, he says, "easily demonstrated, yet so subtle as to 

 lead to remedies worse than the evil." 



Among these evils are the price schedules. In di.scussing them, he says, 

 "the value of money is nothing in itself, it is a mere relation, it is the propor- 



