Remarks on a South Carolina Currency Scheme
Printed in The Pennsylvania Gazette, May 31, 1733.
As there are frequently Things published in the neighbouring Provinces, which to see would be agreeable to my Readers, but being of too great a Length, I have been obliged either to retail ’em Piecemeal, which disjoints or breaks the Connection of Thoughts, or wholly to omit them; I am therefore lately advised to abstract and give the Substance of them, which I shall do for the future, as often as I imagine it may be any way useful or entertaining.
The South Carolina Gazette, of March 24. contains the Beginning of a Discourse upon Paper Currency, which is continued thro’ several other Papers.8 The Author observes, that the principal Obje[sym]ion against that Currency, is its being so liable to Mutation in its Value: That ’tis now about 30 Years since it first got Footing in the American Plantations; and that altho’ it has been design’d only as a present Expedient in Cases of Exigency, yet no Place where it was once establish’d has found itself afterwards in a Condition to do without it. And since (he says) there arises no Benefit to the Publick from cancelling every seven or ten Years Bills issued on Loan or otherwise because the Circumstances of a Country continuing the same, there is still the same Reason for making more, as at first, and much Clamour and some Expence always attends the Periods: He proposes, a Standing Paper Currency, to continue till the Country finds the Nature of its Trade will afford Silver and Gold, and to prevent its sinking in Value, he would have the Interest be paid in Silver and Gold, and the Bills taken only in Discharge of the Principal.
Remark upon this Scheme.
The Subjects of Trade and Money have always occasioned much Speculation, being in themselves, and especially when considered together, extreamly intricate and hard to be understood. And the Paper Currency being a Thing of great Importance to these Plantations, whatever is wrote to give us farther Light about it, whatever new Methods are proposed, should be received and examined with Candour.
With regard to this new Scheme, which proposes to fix the Value of the Bills by obliging the Borrowers to pay their Interest in Gold and Silver, the following Difficulties seem to arise, which perhaps if the Author himself were here, he might easily obviate.
1. Interest being now at 10 per Cent. in Carolina, if 50,000 proclamation Money (the Sum he mentions) is issued out upon Loan, £5000 Silver and Gold is yearly necessary to discharge the Interest; and only the Surplus of that Sum can be exported by the Merchant. Now allowing that the yearly Demand of so much Plate in the Country, must prevent its Exportation, Yet must not the Planter outbid the Merchant in order to have it? and if he gives 2 or 4 per Cent. in Paper for it, is not that a Raising their Interest to 12 or 14 per Cent. and does it not lessen the Value of their Bills, compar’d with Silver and Gold?
2. If the Merchant wants Silver and Gold, to make Returns, will he not raise the Price of his Goods till he can afford to purchase it? and the Planter being still oblig’d to have it, will not he be still forced to give more Paper for it?
3. If the Interest be all due at one Time of the Year, will not Silver be at that Time higher and Paper lower than at other Times, and so their Currency continually varying in Value, and very uncertain to Strangers?
These Queries, for ought I know may have little in ’em. If they serve to make a Paper Currency any thing more consider’d, and therefore better understood, it is enough.
8. The discourse was continued in the issues of March 31 and April 7, 1733.