Benjamin Franklin Papers

To Benjamin Franklin from Richard Jackson, 17 March 1754

From Richard Jackson

ALS and AD: American Philosophical Society

Inner Temple 17 Mar 1754


I would fain merit a Correspondence, I have so much Pleasure in, and have therefore ventured to digest and commit to paper the Thoughts I have before mentioned to you,2 on the Subject of a Medium of Commerce, including a Plan of a Provincial Bank, which if any way Eligible, you will be able to adapt to the Circumstances of the Province of Pennsylvania.

However imperfectly I may have executed my design, I am convinced my Principles are true: I think if they be not precisely so, it is the fault of my expression. Yet I am well aware that it is much more frequent, for us to Err in applying our Principles, than in deducing them. For tho’ it is a false Proposition that what is true in Theory, may be otherwise in Practice yet every days experience teaches us, that Sanguine Men will perpetually be building a Practice on a Theory that cannot support it. This I think proper to say to clear myself from the Imputation of deeming myself equal to a Task, that so many abler men have wisely declined.

Should a Bank of any kind be capable of receiving a firm Establishment in your Province I make no doubt, but it would provide an Ample Fund not only for the Publick Services, to which the Interest of your subsisting Loans are appropriated, but for the carrying into full execution all those Beneficent views, at this time entertained among you, and that too liable to abundantly fewer Casualties, both in its Birth, and Continuance: if I am not mistaken in this fact I need say nothing more to reccommend my Notion, especially at this juncture.

As I dare not consider my Papers as any thing more than meer speculation, I have now purposely turned to the 14 G 2.a Statute made to prevent the Erection of Banks in America,3 but from the Reccolection I have of that Statute It will not extend to a Bank on the foot I recommend one, and Incorporated by the Assembly, or even by Mr. Penn.

As I think it incumbent, on me to suggest all the difficulties, I can conceive may occurr in the Prosecution of the Affair, I will add that I cannot foresee to what amount, the Credit of a Set of Gentlemen, Empowered to Lend Money in Pennsylvania, however judiciously named, might reach in England, tho’ supported by Mortgage of the Provincial Revenue, but I Question not it would reach far enough.

I have long had it in my mind, to return an Answer to your favour of the 5th May,4 and am ashamed to own, that after having had 6 Mo. to do it in, I am prevented by Mr. Smiths5 return from Cambridge on his return to Philadelphia only a fortnight before I expected him. I will Endeavour to trouble you with a Sheet or two on this Head by the next Ship.

I ought to beg your Pardon for the little Ceremony I observe, in sending the Papers inclosed herewith. They are my first Draught from undigested Materials. My Servant has had time to make but one Copy and that an Incorrect one. Mr. Smith did me the favour to peruse that I now send, and judged it preferable. I am a Careless Writer, but you will excuse me.

I am greatly pleased with that Gentleman’s Company. He is a very Ingenious Modest Man, and my friends at the University, whose Conversation with him, I suppose has been more in the Literary Way, give him a great Character. I wish his stay there could have been somewhat longer, he would have made it profitable.

I have deferred writing my Letter until this Night, that I might at Court today have picked up some News worth your Attention, relating to the new Model of the Administration become necessary by the Death of Mr. Pelham. The General Confidence reposed in the Integrity of that Gentleman was a Cement as well as a support, to those with whom he shared the Power intrusted to them by the Crown. I fear they want both at present. The Lord Chancellor, The Duke of Newcastle, and most of the Old Friends of Sir Robert Walpole, and many of those who came in at his Resignation hold together, but they find it a difficult matter to satisfy Mr. Fox the Secretary at War.6 He is so considerable both by his Abilities and his Connections, (which last it is said extend even among the Royal Family) that he has been looked on as dangerous either satisfyed or disatisfyed. It was once agreed, that he should accept the Office of Secretary of State, and the D. of Newcastle for the present at least, be first Commissioner of the Treasury; but Mr. Fox afterwards discovering, he was not to Injoy as much Power in the H. of Commons as he thought himself intitled to, rejected this Offer, and today there are two Reports, One that he is to continue Secy. at War (I fear if he does, as no friend) the other that he is to quit Every thing. We that have no immediate concern wish only for Concord, as the Publick Service cannot but suffer by Dissension. I am Dear Sir with great Esteem your most Obedient much Obliged Servant

Richd Jackson

I write you no Secrets but I had [rather] they should not be known to come from me.


1. Whatever reason there may be to doubt, whether Political Welfare necessarily conduces to the Happiness of Individuals; it is generally admitted to do so; at least, Plenty of the Necessaries and Conveniencies of Life, Publick and Private Splendor, and Security from External and Internal Violence, to one of which Heads I believe every Article of Political Welfare may be reduced, are at this day the Ends of all Governments usually esteemed good ones.

2. These Ends are attained by the Accumulated Labour of the Collective Body of Individuals, who form the State, and that, exactly in a degree, proportionable to the Amount of all their Labour, under which Term I Include, as well the Operations of the Understanding, as those of the Hands and Arms.

3. The Means of adding to the Publick Stock, and of supporting the Private owner of them, Sir William Petty calls Efficiencies, in opposition to the National Wealth already acquired by past Labour; which last consists in the Means of Security, the Various species of Lasting Splendor, but principally in the Improvements made by its Inhabitants on the Natural Face of a Country, which may be partly referred to the last head, and partly to that of Plenty, as it renders the Earth capable of greater Annual Productions.

4. A Part of the Wealth or Stock of every Civilized People consists in Gold and Silver Coined or Uncoined Substances that would never have obtained a great Value, meerly as Commodities, but have acquired one greater than almost any other in the World, from their aptness, for what they are now universally become, a Medium of Commerce.

5. Should it be admitted that Commerce is not essentially necessary to Political Welfare, It is in Antient History, and not in the present State of the Globe that we are to search for the Latter without the former, for Neither the Stock of a State, nor its Efficiencies can be augmented, but by increasing the Labour of its Subjects or Multiplying its Effects, ( which is a work of the Understanding) and the Manners of the Present Age furnish us with no sufficient stimulus but Commerce.

6. That Constitution of Government and that set of Manners which most effectually promote universal Labour and Application are, Politically speaking, the best Government and the best Manners, and that which is necessary for Carrying on Commerce is Politically necessary to the Well being of a State.

7. Gold and Silver by the Common Consent of Mankind represent, and are in their respective different degrees capable of being converted into most of the things that are to be ranked under any of the 3 Heads of Political Ends, that is, into every thing that is an object of Commerce, or in other words they are as I said before a Universal Medium of Commerce.

8. The Use of a Medium of C[ommerce] is to assure to the Seller an Equal Value quam proximo of the same or one or more other objects of Commerce, in return for that he then parts with and for this it is a Pledge.

9. A Commerce carried on by a Medium, will always be preferable to one carried on by Barter, or otherwise, because it will be more extensive; and it will be more extensive, because by a Medium Labour will often receive its reward, and consequently its Incouragement, by the Effects of distant Labour that could never otherwise have reached it.

10. This is the more Evident when one Considers that, to carry on a Trade by Barter, 2 Commodities must actually be at the same time in Commercio, but Money supplys the place of that which is absent[,]is afterward convertible, into another Commodity, that nothing but money could have purchased, and thus Introduces Trade where it could not have come without a Medium.

11. Labour is not only encouraged but forced by a Medium for where there is no Medium, there can be little or no Trade, and the Necessaries of Life will be to be had with little or no Labour. Besides a Medium of Commerce is the Foundation of Accumulation, the Nature of which is to force Labour, on some side for present subsistence as it Locks up, or carries out of the Way, the Effects of Past Labour. And thus a Medium of Commerce propagates Labour and thereby increases the Efficiencies of a State.

12. It is Evident therefore that any Medium is better than none, provided it answers the purpose of a Pledge in any tolerable degree, if it does not, it is a snare and Engine of Fraud. Tobacco Sugar and Rice have been long used as Mediums of Trade with success, and Paper Money in Countries where the Legislature has been wise and honest as in Pennsylvania has been found liable to fewer Objections than any of them.

13. But the Universality of a Value set on Gold and Silver will not only upon Emergencies enable that Country which is possessed of either or of Credit convertible into either, to avail itself of the Labour of other Countries, but what is of much greater moment gives that Value a Steadiness.

14. This Steadiness tho by no means perfect, is greatly superior to that of any other Medium that ever was, or probably ever will be devised: because its Universality will in a great measure prevent the Effects of any Accession to its Quantity, even tho’ this Accession fall out in a Particular spot from whence it cannot be immediatly dispersed, for like Water spread over a great Tract of Land the Increase will quickly become imperceptible by being diffused, the Expectation of which will prevent all considerable Effects from its Increase before it be actually dispersed.

15. A Paper Currency not convertible at pleasure into Money can never become the Medium of a Commerce intended much beyond the Power of the Legislature that creates it.

16. Every Accession therefore to its Quantity must be immediatly felt, and cannot be made without Injustice to those, who are possessed of part of that already subsisting and to Creditors unless it be exactly in the same proportion as the Objects of Commerce actually in Commercio increase with it, and if it be not increased so fast, there is a kind of Injustice done to Sellers and Debtors.

17. But it is Inseperable from the Nature of a Medium of Commerce to be of as steady a Value as possible, because it is not like other Pledges of a Value superior to the thing for which it is Pledged; at most it is only inconsiderably so, unless it be used in a Concern that requires much Skill, and then that superiority is considered as the Price of that Skill.

18. A Currency liable to sudden Changes of Value must necessarily subject Buyers and Sellers, Creditors and Debtors to Risques which if they be unnecessary ought to be removed, because caeteris paribus Commerce will always thrive most where subject to fewest Risques.

19. If a Gold and Silver Currency can be introduced into Pennsylvania, these Risques are there unnecessary; and if there be a Balance of Trade in its favour it cannot want Gold and Silver for that purpose unless we suppose, there are reasons that induce those Persons who receive the Balance to invest it in Securities elsewhere. If this be the Fact, the Proposal I am going to make must be feasible.

20. But it is said, Gold and Silver will not stay in the Country, for that the Balance is apt to and this Case is by no means inconsistent with the Condition of a thriving Infant State, for Every State is thrifty that Superlucrates but if the Increase of Stock, the Improvement of Lands and Efficiencies produces a much greater Income than the Rate of Interest the Whole Superlucration may be expended this way together with a Debt, that may augment every year and yet the Country more able to support it; indeed where there is both Industry and Credit it must be so. Now Nobody denys that the Value of the Stock in Pennsylvania, and Annual Value of its Land increase at a prodigious Rate as well as its Efficiencies.

21. If the Individuals in such a Country want Credit it can only be for want of their Credit being manifested in a Country where Money is accumulated: which in proportion as it is the Case of any Country, Interest will be Low, so that Lowness of Interest is by no means the Test of Political Welfare, tho it is a Proof of an Accumulated Medium extra Commercium.

22. But in the Case of the Province of Pennsylvania admitting a yearly Balance at present to be against them the Consequence of which is, the [Interests?] must contract [illegible] debts, and yet supposing, there is a Considerable Superlucation but converted into Stock and Improvements all that is wanting to introduce an unvariable Medium of Commerce with as Low a Rate of Interest to be paid for it by Individuals, in that Province as possible, is that the Province stand Middle Man, and as such, acquire to themselves the Difference of Int[erest] paid and received, in consideration of the Risque they would be liable to, and in lieu of the Profit they now make of the Publick Loans, the former of which would be no greater, and the Latter, tho’ perhaps less at first, probably in time abundantly more and very soon surpass it.

My Proposal is to erect a Provincial Bank, by Act of Assembly, the Plan of which I am sure many gentlemen in that Assembly are far more capable of contriving than I am. I shall however offer a Sketch, that will serve at least for an Illustration of what I have been saying, and ’tho’ liable to objections from People better acquainted with the State of the Province, may admit of Improvements that will remove them.

Let this Bank be intrusted to the Management of the Gentlemen now Trustees of the Loan Office.

Let them be impowered to Issue Notes payable as our Bank Notes at sight, and vest in them the other Powers given by Parliament to the Corporation of the Bank of England.

If it be not too great an Undertaking at once (I mean if it be judged that the New Bank be able to support it) Let all the Subsisting Emissions of Paper Money be called in, and exchanged at a price fixed, for these Notes: And Let the Trustees at their discretion (under proper regulations) lend to every body as great a sum more of these Notes as they are able to secure the Repayment of, with reasonable Interest.

If it be true that a Balance of Trade remains with England against Pennsylvania, more than the latter receives from the rest of the World, which is one Reason why the Province Bills have been many years below Par, its Notes will be often brought for Payment by those who want Credit in England, and tho’ the Want of a Medium for Circulation, (more likely to increase than diminish) must speedily carry these out again upon Loan, yet the Bank will find itself necessitated at first to contract, and afterwards from time to time to augment a debt in England, until either this Balance ceases, or which is not to be expected, the Bank becomes capable to Circulate without assistance all its Note Credit.

Here the New Bank will find itself in the situation of Middle man, and the Danger inherent to this situation I had in view, when I left room for the Objection that it would be too great an undertaking to change all the Paper Money for Notes at once.

Whether this be ventured on or not; it will be necessary, to borrow a sum of Money in England greater or less in proportion to the Extent of the Design, on the Public Security of the Province; a Part of which I believe it would be proper to lay out in India Bonds or somewhat of like Nature, which tho’ it make less Interest than the Bank itself pays will be a Security, (not quite dead) to be deposited with the Bank of England, or some Considerable Bankers in London, for the Money, they may pay on the Draughts of the Provincial Bank, Another Part of this Money must be shipped for Pennsylvania to be there applyed for Payment of all Notes brought for that Purpose.

And tho’ I have above said that this Debt in England will Augment, I think it is not impossible but that, the Profits made by the Bank above so much as shall be appropriated to Publick Services together with a Part of the Money first borrowed if the Increase of the Credit of the Bank shall render the residue sufficient to Circulate its Notes, may pay the Balance, that must certainly run the Province in Debt and consequently the Bank if it be not thus paid: but I rather think they will not for many years at least be sufficient.

Besides this original and probably increasing Loan, I suppose it would be proper, to fortify the Credit of the Bank by taking in a Subscription like that called here the Bank Circulation, that is a Subscription of Substantial Persons who undertake on a Call to advance their respective proportions of the whole sum subscribed, and make a Deposit of £10 per Cent as a security for their performance, in consideration of which they receive an Extraordinary Int[erest] on this 10 per Cent.

It has often been said that sending Money to Pennsylvania, to serve as a Medium of Trade is but hedging in a Cuckoo, for that it will immediatly, and must necessarily come to England again, to pay this Balance I spoke of before. This Objection I conceive I have already answered in substance, For I do not propose the Money to be sent as a Medium, but to support a Note Credit that will be so, and therefore it is probable whatever Balance be paid to England the Cash in the Bank in Philadelphia need be very small, and may be easily preserved from removal thus. If the Bank can borrow money in England to pay this Balance as I suppose it may, and will give Bills ¼ per Cent below the Market Price no body can draw but themselves. These Draughts will be paid by their Bankers in London or the B. of England and the Money replaced by fresh Loans, while the Bond I mentioned before, stand as a security to the Bankers, or Bank of England.

Should this Debt thus Augmenting become very large, it will always be greatly inferior, and must naturally every day become more and more inferior to the Value of the Notes Circulated in America, and as the Excess of Int[erest] paid by the Borrowers in Pennsylvania, above what the Bank pay in England will probably defray all charges of Management, the Interest of the Difference, between the Amount of the Debt and that of the Circulated Notes, will be clear Gains to the Province, in lieu of that now made on their Loans.

In short the Benefits of this Plan will be

1. Trade will feel no Shock, nor Obstruction by the calling in the Paper Money, the Place of which will be immediately supplied by a better Currency.

2. Neither Buyers nor Sellers, Creditors nor Debtors can suffer any Loss, or run any risk by the Variation in Value of this Currency for there never can be more or less of it in Circulation than is truely necessary for the Purposes of Domestic Commerce and had it no other advantage over Paper Money this is a very visible one, that it will spontaneously flow and Ebb in Quantity as it is wanted.

3. This Increase being spontaneous will remove all mischiefs that may now arise for want of a sufficient Medium, and effectually obviate Evils that may as things stand at present be irreperable before an Additional Medium is created, and this without those Struggles in the Legislature, that frequently may otherwise leave Animosities that cannot but have Pernicious Consequences.

4. A Bank of this Kind cannot fail in a very short time of becoming the Mint of all N. America and it will be impossible to prevent their Notes from pervading wherever Commerce finds its way in that Country, except by erecting Banks of equal Credit, a hard matter to effect when this has so much the Start of them; thus the Bank of Philadelphia may hereafter even in a few years, Circulate £1000000 of Notes, which puts me in mind that I could wish them payable in Sterling Money.

At present the Loans of £80000 are thought not near sufficient for the use of the Province.

40000 [written above: £20000] more are deemed not enough. It cannot therefore be supposed that less than £200000 would be immediatly Circulated in a Country where Trade is increasing every day.

These Notes might be Circulated on a Bottom of £40000 borrowed for that Purpose, of which £10000 might be the 10 per Cent on 100000 Circulation subscription. Perhaps the whole of this £40000 would be best left in England, at most a Small sum would be enough for the Reasons above to send into Pennsylvania.

[Note numbering follows the Franklin Papers source.]

2See above, p. 148.

314 George II, c. 37 (1741), “An Act for Restraining and Preventing Several Unwarrantable Schemes and Undertakings in His Majesty’s Colonies and Plantations in America,” which extended the Bubble Act to the colonies.

4Not found, but see above, IV, 477, for the letter some have surmised BF’s letter was. Nor have Jackson’s promised “Sheet or two” in reply been found.

5William Smith, soon to be made provost of the Academy of Philadelphia.

6Henry Pelham died March 6, 1754. The others mentioned here are Philip Yorke, Lord Hardwicke, who was lord chancellor, 1737–56; Thomas Pelham-Holles, Duke of Newcastle, who resigned 1756; Henry Fox, later Baron Holland, who became secretary at war after Pelham’s death, 1754, and secretary of state succeeding Sir Thomas Robinson, 1755.

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