James Madison Papers

Outline for Speech Opposing Paper Money, [ca. 1 November 1786]

Outline for Speech Opposing Paper Money

Editorial Note

JM had long anticipated that an emission of paper currency would be attempted in the October 1786 session of the Virginia legislature (JM to Monroe, 4 June 1786). He made two sets of notes opposing paper money, one an expanded version of the other. Since the dating and order of preparation are matters of conjecture, the briefer of the two texts has been placed first and the date on which the pro-paper-money petitions from Brunswick and Campbell counties were rejected has been assigned to both documents.

[ca. 1 November 1786]

Paper emission

Unequal to specie. Bank notes. Stock. navy bills.1

objectn. tallies. Spanish paper. use less.
Unjust either to Credts. or dbtrs

1. alloy
2. weights & measures
3. brass made for silver by Romns.2
4. Case of dbtrs to other States
unconstitutional. 1 property seed. by bill of Rights

2. trial by Jury.
Unnecessary. 1. produce will bring specie
2. paper in Tobo. notes Warrts. &c

Hurtful. 1. by luxury increase, not cure the evil of scarcity of specie
2. destroy confidence public & private3
3. source of dissention between States see Confedn. as to regulation of coin
4. enrich collectors, speculators &—
5. vitiate morals
6. reverse the end of Govt. by punishing good Citizens & rewarding bad
7. discourage foreign commerce &c
8. dishonor our Repub[lic] [in?] the eyes of mankind.
Examples of other States & during war
Objectn. Paper good formerly
answer. 1 not true in N. E. Va. Maryd. 12 to 20 P[er] C[t.]
2. confidence then4
3. principles of money not then understood Such wd. not then nor now do in Europe

advantages from rejectg paper
1. Distinguish the State & its credit
2. draw commerce & specie
3. Set honorable example to other States5

Ms (DLC). On the verso of cover for Robert Johnson to JM, 23 Sept. 1786. The notes apparently were the outline for a speech in the House of Delegates debates on the paper currency petitions from Brunswick and Campbell counties on 1 Nov. 1786 (JHDV description begins Journal of the House of Delegates of the Commonwealth of Virginia; Begun and Held at the Capitol, in the City of Williamsburg. Beginning in 1780, the portion after the semicolon reads, Begun and Held in the Town of Richmond, In the County of Henrico. The journal for each session has its own title page and is individually paginated. The edition used is the one in which the journals for 1777–1786 are brought together in two volumes, with each journal published in Richmond in either 1827 or 1828 and often called the “Thomas W. White reprint.” description ends , Oct. 1786, pp. 15–16).

1“Navy bills” were interest-bearing scrip issued by the British Admiralty in lieu of cash payments, usually for naval stores (James A. H. Murray et al., eds., A New English Dictionary on Historical Principles [10 vols. in 24; Oxford, 1888–1928], XIII, 50).

2JM was familiar with Montesquieu’s The Spirit of Laws, in which the French author decried the debasement of coinage by the Roman emperors’ decrees “till under Galienus nothing was to be seen but copper silvered over” ([5th ed.; 2 vols.; London, 1773], II, 113–14). In JM’s expanded notes, he specifically cited an incident recorded by Sallust.

3JM had long held that the value of paper money was not related to its quantity in circulation but rather to “the credit of the state issuing it, and the time at which it is to become equal to gold and silver” (Papers of Madison description begins William T. Hutchinson et al., eds., The Papers of James Madison (9 vols. to date; Chicago, 1962——). description ends , I, 307). The same idea was advanced during the controversy over the paper-money issue in Pennsylvania during 1785. “It is a want of public and private faith, and distrust of all security, and not a scarcity of cash, which makes the difficulty” (A Citizen of Philadelphia [Pelatiah Webster], Seventh Essay on Free Trade and Finance [Philadelphia, 1785], p. 27).

4Webster pointed to the early experience with continental notes, which remained stable until April 1777, then plunged toward worthlessness in the summer of 1779. “Public promises, like all other promises that are broken, become of less and less value, the oftener they are repeated, and the more they are multiplied” (ibid., p. 15).

5Perhaps JM spoke with an eye cocked toward Maryland, where paper-money advocates had brought considerable pressure on the state legislature and a majority thought to be favorable to a currency emission had been elected to the House of Delegates in 1786 (John B. McMaster, A History of the People of the United States … [8 vols.; New York, 1883–1913], I, 283–84). JM must have thought that the news of a rejection by the Virginia General Assembly would hearten the hard-money men in neighboring states and carry a certain weight throughout the Union.

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