A Collection of Essays and Fugitiv Writings

Most of the other States had new constitutions of government to form; they had a kind of interregnum; an interval, when respect for all government was suspended; an interval fatal in the last degree, to morals and social confidence. This interval between the abolition of the old constitution and the formation of a new one, lasted longer in Massachusetts than in the other States, and there the effects are most visible. But perhaps it is impossible to frame a constitution of government, in the closet, which will suit the people; for it is frequent to find one, the most perfect in theory, the most objectionable in practice. Hence we often hear popular complaints against the present governments in America: And yet these may proceed rather from the novelty of the obedience required, than from any real errors or defects in the systems: It may be nothing but the want of habit which makes people uneasy; the same articles which now produce clamors and discontent, may, after twenty years practice, give perfect satisfaction. Nay, the same civil regulation, which the present generation may raise a mob to resist, the next generation may raise a mob to defend.

But perhaps a more immediate and powerful cause of a corruption of social principles, is a fluctuation of money. Few people seem to attend to the connexion between money and morals; but it may doubtless be proved to the satisfaction of every reflecting mind, that a sudden increase of specie in a country, and frequent and obvious changes of value, are more fruitful sources of corruption of morals than any events that take place in a community.

America began the late war without funds of money, and its circulating specie was very inconsiderable. Commerce was regular, and speculation, a term unknown to the body of the people.

The emission of paper was an obvious and necessary expedient; yet it was bad policy to throw vast sums into circulation without taking some measures to recall it. It was the fate of America to receive in bills of credit, and in the course of three or four years, about twenty times the nominal value of its current specie; the bills depreciated in the same proportion, and the real value of the medium continued the same.

The first visible effect of an augmentation of the medium and the consequent fluctuation of value, was, a host of jockies, who followed a species of itinerant commerce; and subsisted upon the ignorance and honesty of the country people; or in other words, upon the difference in the value of the currency, in different places. Perhaps we may safely estimate, that not less than 20,000 men in America, left honest callings, and applied themselves to this knavish traffic. A sudden augmentation of currency flattered people with the prospect of accumulating property without labor.

The first effect of too much money is to check manual labor, the only permanent source of wealth. Industry, which secures subsistence and advances our interest by slow and regular gains, is the best preservative of morals; for it keeps men employed, and affords them few opportunities of taking unfair advantages. A regular commerce has nearly the same effect as agriculture or the mechanic arts; for the principles are generally fixed and understood.

Speculation has the contrary effect. As its calculations for profit depend on no fixed principles, but solely on the different value of articles in different parts of the country, or accidental and sudden variations of value, it opens a field for the exercise of ingenuity in taking advantage of these circumstances. The speculator may begin with honest intentions; and may justify his business, by saying, that he injures no man, when he givs the current value of an article in one place, and sells it for its current value in another; altho in this case he is a useless member of society, as he livs upon the labor of others, without earning a farthing. But he does not stop here; he takes an advantage of ignorance and necessity; he will, if possible, monopolize an article to create a necessity. Repeated opportunities of this kind gradually weaken the force of moral obligation; and nine persons of ten, who enter into the business of speculation with a good character, will, in a few years, lose their principles, and probably, their reputation.

Speculation is pernicious to morals, in proportion as its effects are extensiv. Speculation in the English funds is practised on principles destructiv of justice and morals; but it consists in the transfer of large sums; the contingencies on which it depends are not frequent, and the business is confined to a few sharpers in the metropolis. Such a speculation affects not the body of the people. The medium circulating in the kingdom, has a fixed permanent value, and affords no opportunities for irregular gains.

Very different is speculation in America. Here its objects are in every person's hands; changes of value are frequent; opportunities of gain, numberless; and the evil pervades the community. The country swarms with speculators, who are searching all places, from the stores of the wealthy, to the recesses of indigence, for opportunities of making lucrativ bargains. Not a tavern can we enter, but we meet crowds of these people, who wear their character in their countenances.

But the speculators are not the only men whose character and principles are exposed by such a state of the currency; the honest laborer and the regular merchant are often tempted to forsake the established principles of advance. Every temptation of this kind attacks the moral principles, and exposes men to small deviations from the rectitude of commutativ justice.

Such are the sources of corruption in commercial intercourse. A relaxation of principle, in one instance, leads to every species of vice, and operates till its causes cease to exist, or till all the supports of social confidence are subverted. It is remarked by people very illiterate and circumscribed in their observation, that there is not now the same confidence between man and man, which existed before the war. It is doubtless true; this distrust of individuals, a general corruption of manners, idleness, and all its train of fatal consequences, may be resolved into two causes: The sudden flood of money during the late war, and a constant fluctuation of the value of the currencies.

The effects of a sudden augmentation of the quantity of money in circulation were so obvious, during the war, and the example is so recent, that the subject requires no illustration, but a recollection of facts. Yet there is an example recorded in the History of France, so exactly in point, that I cannot omit it.

During the regency of the Duke of Orleans, one Law, who had fled from punishment in Scotland, and taken refuge in France, obtained, by his address, a great share of confidence in the councils of the regent. He formed a plan of drawing all the specie from circulation, and issuing bills upon the royal treasury. It is not necessary to name the expedients he used to effect his purpose. It is sufficient to observe, that by various methods, he drew most of the specie of the kingdom into the public treasury, and issued bills to about one hundred times the value of the specie, which had before circulated. The notes or securities depreciated as they were thrown into circulation, like our continental currency. The nature of a medium of trade, it seems, was not well understood: Such a sudden depreciation was a surprising phenomenon at that period; men of property, who were the holders of the paper, were alarmed; the kingdom was in confusion. When the bills had sunk to a fifth of their value, a royal edict was issued, ordaining that the remaining specie in circulation should be sunk to a level with paper. This resembles, in some respects, the regulation of prices in America. An edict, so rash and absurd, increased the evils it was meant to remedy, and filled the kingdom with clamor.

In a short time, the paper was sunk as low as our continental currency, before its death.

The confusion was general; the regent and Law were obliged to fly the kingdom; and both died in obscurity, the one in Italy, and the other, if I mistake not, in the Netherlands. In France there was a total change of property; poor men made fortunes by speculation, and the rich were beggared. The result of the whole was, that the paper was called in at a discount, by means similar to the forty for one act of the United States.

But the principal view I have in stating this example is, to show the effect of a sudden inundation of money upon industry and morals. No sooner did the nation feel an increase of the quantity of money, but the kingdom was overrun with speculators; men who left useful occupations, for the prospect of rapid accumulations of wealth. Knavery, over reaching, idleness, prodigality, and every kind of vice prevailed, and filled the kingdom with distress, confusion, and poverty.

The South Sea bubble, in England, was a farce of a similar kind, but its effects were less extensiv.

The continental currency was not the sole cause of the idleness and speculation, which prevailed in this country, about the years 1780, 1781, and 1782. Vast quantities of specie were introduced by the French army, by the Spanish trade, and by a clandestine intercourse with the British garrisons. At the close of the war, there was more than double the quantity of gold and silver in the country, which was necessary for the purposes of a regular commerce.

This extraordinary circulation of specie had its usual, its certain effect; it prompted multitudes to quit manual labor for trade. This circumstance, in conjunction with the disbanding of the army, which left great numbers of men without employment, and with a rage for foreign goods, which was always strong, and was then increased by a long war, filled our commercial towns with hosts of adventurers in business. The consequent influx of goods and enormous credit necessary to obtain them, are evils that deeply affect this country. I will not attempt a detail of the state of commerce in the United States; but observe that the necessary exportation of specie was the happiest event that could befal the United States; the only event that could turn industry into its proper channel, and reduce the commerce of the country to a proportion with the agriculture.

Dissipation was another consequence of a flood of money. No country perhaps on earth can exhibit such a spirit of dissipation among men, who derive their support from business, as America. It is supposed by good judges, that the expenses of subsistence, dress and equipage, were nearly doubled in the commercial towns, the two first years of the peace. I have no doubt the support of the common people was enhanced twenty five per cent. This augmentation of expenses, with a dimunition of productiv industry, are the consequences of too much money, and a scarcity is our only remedy.

Short sighted people complain of the present scarcity; but it is the only hope of our political salvation; and that Legislature which ventures to remove popular complaints, by a coinage of great quantities of specie, or by its substitute, paper, checks industry, keeps alive a spirit of dissipation, and retards the increase of solid wealth. If this has been necessary, it is a necessity sincerely to be lamented.

But there is one source of idleness and corruption, which is general in America, and bids fair to be of long duration. I refer to the different species of federal and State securities, which are every where diffused, and of fluctuating value. These evidences of our debts open such prospects for rapid accumulations of property to every class of people, that men cannot withstand the temptation: Thousands are drawn from useful occupations into a course of life, which cannot possibly benefit society; which must render them useless, and probably will render them bad men, and dangerous members of a community.

What remedy can be applied to so great an evil, it is not for me to determin. But if I may offer my sentiments freely, I must acknowlege that I think no measure can produce so much mischief, as the circulation of a depreciated changeable currency. Let all our debts be placed on the footing of bank stock, and made transferable only at the treasury; or let the present evidences of it be called in, and new notes issued, payable only to the creditor or original holder; or let the securities be purchased at their current discount, let some method be adopted to draw them from circulation; for they destroy public and private confidence; they cut the sinews of industry; they operate like a slow poison, dissolving the stamina of government, moral principles.

No paper should circulate in a commercial country, which is not a representativ of ready cash; it must at least command punctual interest, and security of the principal when demanded. Without these requisits, all notes will certainly depreciate. Most of our public securities want all the requisits of a paper currency. But if they did not; if they were equal in value to bank notes or specie, still the sums are much too large for a circulating medium in America. The amount of the continental and State certificates, with the emissions of paper by particular States, cannot be less than seventy millions of dollars, which is seven times the sum necessary for a circulation.

Were they equal in value to gold and silver, the whole medium would depreciate, specie as well as paper. But as they want every requisit of a paper currency, the whole depreciation falls upon the securities.

An alarming consequence of the State of our public debt remains to be considered. Want of confidence in the public, added to the vast quantity of paper, has sunk it to a third, sixth, or eighth part of its nominal value. Most of the creditors of the public have parted with their securities at a great discount, and are thus robbed of the monies which they earned by the sweat of the brow. Men of property have purchased them for a trifle, and in some States receive the interest in specie. In Massachusetts, this is the case with respect to some part of the State debt. When a man buys a note of twenty shillings value for five, and receives the interest, six per cent. in specie, he in fact receives twenty four per cent. on his money.

This is one source of the insurrection in Massachusetts. The people feel the injustice of paying such an interest to men who earned but a small part of it, and whose sole merit is, that they have more money than their fellow citizens who suffer the loss by depreciation. Those men in particular, who fought for our independence, or loaned their property to save the country, view with indignant resentment, that law which obliges them to pay twenty four per cent. interest on the securities, which they have sold for a fourth, or an eighth part of their honest demands.

This cannot justify the violent steps taken by the people; because petitions, and united firmness in a constitutional way, would have procured redress. But I state the facts to shew the effects of speculation, or rather, of the want of faith in public engagements.

Such are the consequences of a variable medium; neglect to industry; application to irregular commerce; relaxation of principles in social intercourse; distrust of individuals; loss of confidence in the public, and of respect for laws; innumerable acts of injustice between man and man, and between the State and the subject; popular uneasiness, murmurs and insurrections. And such effects will exist till their cause shall be removed. Not the creation of a Supreme Power over the United States, is an object of more importance, than the annihilation of every species of fluctuating currency.

That instability of law, to which republics are prone, is another source of corruption. Multiplication and changes of law have a great effect in weakening the force of government, by preventing or destroying habits. Law acquires force by a steady operation, and government acquires dignity and respect, in proportion to the uniformity of its proceedings. Necessity perhaps has made our federal and provincial governments frequently shift their measures, and the unforeseen or unavoidable variations of public securities, with the impossibility of commanding the resources of the continent, to fulfil engagements, all predict a continuation of the evil. But the whole wisdom of Legislatures should be exerted to devise a system of measures which may preclude the necessity of changes that tend to bring government into contempt.

A mild or lax execution of law may also have a bad effect in lessening the respect for its officers. In a monarchy, there is no reasoning with the executive; the will of the prince inspires terror. In our governments, the officers are often familiar, and will even delay justice as long as possible to assist the prisoner.

In some of the eastern States, the frequency and mildness of laws, have introduced very singular habits. The people of Connecticut respect the laws as much as any people; they would not be guilty of disobedience; they mean generally to pay their debts, but are not very anxious to be punctual. They suppose a creditor can wait for his money longer than the period when it is due, and think it hard if he will not.38

This mild execution of law, and a consequential habit of dilatoriness, which arise from the spirit of equality, are still prevalent amongst the body of the people. These gave rise to the late incorporation of several commercial towns, with large powers; an expedient which has answered the purpose of giving to commerce the advantage of energy and dispatch in the collection of debts. As most of the business is done in the cities, this effect will gradually extend itself, and form different habits.

The great misfortune of the multiplicity of laws and frequency of litigation, is, that they weaken a respect for the executiv authority, destroy the principle of honor, and transfer the disgrace, which ought to follow delinquency in payment, from a man's reputation, to the administration of justice. The lawyers and courts are impeached, when the whole blame ought to fall upon the debtor for his impunctuality. Honor, a substitute for honesty, has more influence upon men than law; for in the one case, a man's character is at stake, and in the other, his property. When a man's character suffers not, by a failure of engagements, and by a public prosecution, the collection of debts must be slow. But when a man's reputation is suspended on the punctual discharge of his contracts, he will spare no pains to do it; and this is or ought to be the case in all commercial countries.

Extensiv credit, in a popular government, is always pernicious, and may be fatal. When the people are deeply or generally involved, they have power and strong temptations to introduce an abolition of debts; an agrarian law, or that modern refinement on the Roman plan, which is a substitute for both, a paper currency, issued on depreciating principles. Rhode Island is a melancholy proof of this truth, and New Hampshire narrowly escaped the deplorable evils. In governments like ours, it is policy to make it the interest of people to be honest. In short, the whole art of governing consists in binding each individual by his particular interest, to promote the aggregate interest of the community.

Massachusetts affords a striking example of the danger incurred by too many private debts. During the war the operation of justice was necessarily suspended, and debts were constantly multiplying and accumulating. When law came to be rigorously enforced, the people were distressed beyond measure, particularly in the western counties, where people are poorer than in the parts of the State better settled, and nearer to market. These private debts crowded hard, and operated with the demands of the federal creditors, to push the people into violent measures.

The planters in Virginia owe immense sums of money to the British merchants. What is the consequence? a law, suspending the collection of British debts. The loss of their slaves is the ostensible excuse for this law; but a more solid reason must be, the utter impossibility of immediately discharging the debts. In our governments the men who owe the money, make the laws; and a general embarrassment of circumstances is too strong a temptation to evade or suspend the performance of justice. For this reason, the wisdom of the Legislature might cooperate with the interest of the merchant, to check a general credit. In some cases it might be safe and wise to withdraw the protection of law from debts of certain descriptions. It is an excellent law in one State, which ordains, that no tavern debt, of more than two days standing, shall be recoverable by law. It prevents tavern haunting and its consequences, idleness, drunkenness and quarrels. Perhaps laws of this kind have the best effect in introducing punctual payments. Their first effect is to prevent credit; but they gradually change a man's regard for his property, to a more activ and efficient principle, an attention to his character.

In the present anarchy in Massachusetts, monied men get credit with the merchant, and are punctual to fulfil engagements, as they are sensible that the merchant relies solely on their honor. The certain ultimate tendency of withdrawing the protection of law from particular kinds of debts, is to discourage tricks and evasions, and introduce habits of punctuality in commerce.

The present state of our public credit hath the same effect. Repeated violations of public faith, the circulation of a variable medium of trade, the contempt of law, the perpetual fear of new legislativ schemes for discharging our debts, and of tender laws, have made men very cautious in giving credit, and when they do give it, they depend more on the honor of a man than on any security derived from law. This one happy effect of want of confidence in the public, is some small consolation for an infinite variety of political evils and distresses.

Laws to prevent credit would be beneficial to poor people. With respect to the contraction of debts, people at large, in some measure, resemble children; they are not judges even of their own interest. They anticipate their incomes, and very often, by miscalculation, much more than their incomes. But this is not the worst effect; an easy credit throws them off their guard in their expenses. In general we observe that a slow, laborious acquisition of property, creates a caution in expenditures, and gradually forms the miser. On the other hand, a sudden acquisition of money, either by gambling, lotteries, privateering, or marriage, has a tendency to open the heart, or throw the man off his guard, and thus makes him prodigal in his expenses. Perhaps this is ever the case, except when a penurious habit has been previously formed.

An easy and extensiv credit has a similar effect. When people can possess themselves of property without previous labor, they consume it with improvident liberality. A prudent man will not; but a large proportion of mankind have not prudence and fortitude enough to resist the demands of pride and appetite. Thus they often riot on other men's property, which they would not labor to procure. They form habits of indolence and extravagance, which ruin their families, and impoverish their creditors.

Another effect of extensiv credit, is a multitude of lawyers. Every thing which tends to create disputes, to multiply debts, weaken a regard to commercial engagements, and place the collection of debts on law, rather than on honour, increases the encouragement of lawyers. The profession of law is honorable, and the professors, I scruple not to aver, as liberal, honest and respectable, as any class of men in the State. But their business must be considered as a public evil, except in the drafting of legal instruments, and in some real important disputes. Such is the habit of trusting to law, for the recovery of debts, that, in some of the eastern States, one half or two thirds of the lawyers are mere collectors. They bring forward suits for small debts, that are not disputed; they recover judgement upon default, they take out executions, and live upon their fees.

The evil is not so great in the middle States; but it is great in all the States. Never was there such a rage for the study of law. From one end of the continent to the other, the students of this science are multiplying without number. An infallible proof that the business is lucrativ.

The insurgents in Massachusetts enumerate lawyers among their grievances. They wish the Legislature to limit their number and their demands. Short sighted mortals! They seem not to consider that lawyers grow out of their own follies, and that the only radical remedy for the evil is, to contract no more debts than they can pay, with strict punctuality.