Paper Currency. 213 



seller must know how the purchaser proposed to pay. The merchant 

 had four prices for his goods, " pay " " pay as money," " money," and 

 " trusting/' It was understood that "pay" meant barter, at a rate 

 fixed by the government. " Pay as money " meant barter with a re- 

 duction of one-third below the government rate. " Money " meant 

 Spanish or New England coin. " Trusting " meant that the price was 

 to be increased according to the time given. 



Under such a condition of affairs it is easy to understand how there 

 must have been considerable friction in doing business. The troubles 

 reached such proportions that in 1763 Parliament interfered and de- 

 clared all colonial acts authorizing the issue of paper money, void. 

 Ten years later, however, Parliament was prevailed upon to make the 

 bills a legal tender in the settlement of obligations at the treasury of 

 the colony issuing the same. 



Conspicuous among the names of those who had espoused the cause 

 of paper money, we find that of Benjamin Franklin. He disapproved 

 of the act of Parliament in 1763, and published a pamphlet, in which 

 he contended that " any well-founded credit is as much an equivalent 

 as gold or silver." Later we find him urging upon the Continental 

 Congress the passage of the bill authorizing the issue of Continental 

 paper money, based on a virtual mortgage of the whole continent. It 

 was claimed that this was "the safest possible currency." In May, 

 1775, it was ordered; and, the following August, $300,000 of paper 

 money, made redeemable in gold or silver in three years after date, 

 was issued, and was exchanged for an equal amount of Spanish dollars. 

 This issue was such a success that other issues followed; and when 

 $9,000,000 were in circulation, with no prospect of stopping the busi- 

 ness, depreciation commenced. For one year these issues were kept 

 on a par with gold; in two years it took two dollars of paper to equal 

 one of gold; in three years their relative value was 4 for 1; in nine 

 months more, 10 for 1; in September, 1779, it was 20 for 1, when 

 Congress decided that the total issue should not exceed two hundred 

 mdlions, and, in its wisdom, passed a resolution declaring that the 

 paper was not depreciated, and that the difference between the value 

 of paper and gold was simply owing to an advance in the value of the 

 latter. The government undertook to sustain the bills by adopting 

 h *rsh measures. Public meetings were held, and those who were in 

 ayor of metallic money were denounced in unmeasured terms. 



1 he following is a copy of a hand-bill which was circulated as its 

 date indicates. 



