Chapter M (5)

But our leading characters seem to pay no regard to rules, or their former practice. To know and embrace every change made in Great Britain, whether right or wrong, is the extent of their inquiries, and the height of their ambition. It is to this deference we may ascribe the long catalogue of errors in pronunciation and of false idioms which disfigure the language of our mighty fine speakers. And should this imitation continue, we shall be hurried down the stream of corruption, with older nations, and our language, with theirs, be lost in an ocean of perpetual changes. The only hope we can entertain is, that America, driven by the shock of a revolution, from the rapidity of the current, may glide along near the margin with a gentler stream, and sometimes be wafted back by an eddy.

The foregoing remarks suggest some of the causes which operate to defeat the true end of the revolution. Every man sees and feels our political embarrassments; the foes of the revolution ascribe them all to that event, and the friends charge them upon the enmity and resentment of our parent country. Both are wrong. The revolution is, and will ultimately prove, a happy event for us and for the world. The English, as a nation, are wise and respectable: As citizens of the world, we should esteem them: As a commercial people, we should cultivate a friendly intercourse with them; but as a foreign nation, whose political circumstances are very different from ours, we should not make them, in all cases, our standard. I repeat the declaration I before made: The independence of this country is incomplete: There has been a total change in government, with little or no change in the principles which give energy to the operations of government.

In the preceding remarks, I have endeavored to shew in what respect the revolution of America is yet incomplete, and that an independence of manners and opinion is necessary to give full effect to an independence of government. I propose now to make some remarks on government, to state the effects of the revolution on the morals of people, and the influence of money on mens' sense of justice and moral obligation.

It is perhaps a fundamental principle of government, that men are influenced more by habit, than by any abstract ideas of right and wrong. Few people examin into the propriety of particular usages or laws; or if they examin, few indeed are capable of comprehending their propriety. But every man knows what is a law or general practice, and he conforms to it, not because it is right or best, but because it has been the practice. It is for this reason that habits of obedience should not be disturbed. There are perhaps in every government, some laws and customs, which, when examined on theoretical principles, will be found unjust and even impolitic. But if the people acquiesce in those laws and customs, if they are attached to them by habit, it is wrong in the Legislature to attempt an innovation which shall alarm their apprehensions. There are multitudes of absurdities practised in society, in which people are evidently happy. Arraign those absurdities before the tribunal of examination; people may be convinced of their impropriety; they may even be convinced that better schemes may be projected; and yet it might be impossible to unite their opinions so as to establish different maxims. On the other hand, there are many good institutions, in which, however, there may be theoretical faults, which, if called into public view, and artfully represented, might shake the best government on earth.

Speculativ philosophers and historians have often described, and sometimes ridiculed the warmth with which nations have defended errors in religion and government. With the most profound deference for wise and respectable men, I must think they are guilty of a mistake; and that the errors which nations fight to defend, exist only in the heads of these theorists. Whatever speculation may tell us, experience and the peace of society, require us to consider every thing as right, which a nation believes to be so. Every institution, every custom, may be deemed just and proper, which does not produce inconveniencies that the bulk of mankind may see and feel. The tranquillity of society therefore should never be disturbed for a philosophical distinction.

It will perhaps be objected, that these doctrines, if practised, would prevent all improvements, in science, religion and government. By no means; but they point out the method in which all improvements should be made, when opinion and fixed habits are to be overthrown, or changed. They show that all reformation should be left to the natural progress of society, or to the conviction of the mind. They show the hazard and impracticability of making changes, before the minds of the body of the people are prepared for the innovation. I speak not of despotic governments, where the will of the prince is enforced by an army; and yet even absolute tyrants have been assassinated for not attending to the spirit and habits of their subjects.

In vain do rulers oppose the general opinion of the people. By such opposition, Philip IId, of Spain, kept one part of his subjects, for half a century, butchering the other, and in the end, lost one third of his dominions. By not regarding the change of habits in the nation, Charles Ist, of England, lost his head. By carrying his changes too far, Cromwell began to oppose the spirit of the nation, and had he lived to prosecute his system, that spirit would, in a few years, have brought his neck to the block. The general spirit of the nation restored to the throne, the son of the prince, whom that spirit had but a few years before arraigned and condemned. By opposing that spirit, James was obliged to leave his kingdom, and the sense of the nation still excludes the family which, by their own law of succession, has the best title to the throne. But there is no prescription against general opinion; no right that can enter the list against the sense of a nation; that sense, which after all our reasoning, will forever determin what is best.

The truth of these remarks is proved by examples in this country. An immense revenue might have been drawn from America without resistance, in almost any method but that which the British parliament adopted. But their first attempts were made upon articles of common necessity; the attempts were too visible; the people felt and resisted. Their apprehensions were alarmed; their fears, whether well founded or imaginary, were multiplied and confirmed by newspaper rhapsodies, and finally produced a combined opposition to all British taxation. Then Great Britain should have compounded; she did not; she opposed the general sense of three millions of her subjects, and lost the whole.

A dispute existed between Connecticut and Pensylvania, respecting a tract of land; a federal court decided the jurisdiction, or State claim, in favor of Pensylvania; five thousand inhabitants, seated on the lands, acknowlege the jurisdiction, but contend that their original purchase, and subsequent labor, entitle them to the lands. Notwithstanding the invalidity of their State claim, the settlers determin to maintain their lands. The question of right is at once suspended, and the only inquiry is, which is the best policy, to indemnify a few individuals by a pecuniary composition, or sacrifice five thousand subjects. This question, left to the commonwealth, would be decided by a great majority, in favor of the settlers, and against the very principles of right on which the State holds the jurisdiction.

I am not competent to judge of the merits of the dispute between New York and Vermont; but if the usurpation of Vermont were a conceded fact, and that usurpation to be defended by arms, and the question of granting them independence were left to the State of New York, I am confident that nine tenths of the people would decide for the independence of Vermont against their own rights.

Thus it often happens, that a general opinion, grounded on rational expediency, will, and ought to decide political questions, contrary to the strict principles of justice and equity.

I would, by no means, be understood to defend, by such doctrines, the insurrections of a neighboring State. I reprobate every thing that wears the least appearance of opposition to lawful authority. It is evident however, that the Legislature of Massachusetts were too inattentive to the general spirit of the State. The murmurs of the people were heard long before they broke out into rebellion, and were treated with too much neglect. They were a proof at least that something was wrong. This the Legislature acknowleged in their late acts, and the complaints of the populace might once have been silenced by such conciliatory measures.

But an opposition so violent must suddenly cease, or acquire system. In the latter case, the demands of the insurgents will rise in proportion to their strength; they will ask unreasonable concessions, and the sword must decide their claims. The insurgents took wrong steps to obtain redress; they should have rested their agrievances on petitions, and the event of an election; but one rash step leads to a second, and to a third. These fatal effects of popular discontent afford one useful lesson, that rulers should not attempt to carry a measure against the general voice of a people.[35] But a question will arise, how far may the people be opposed, when their schemes are evidently pernicious? I answer, this can never happen thro design; and errors, even of the populace, may gradually be removed. If the people cannot be convinced, by reason and argument, of the impolicy or injustice of a favorite scheme, we have only to wait for the consequences to produce conviction. All people are not capable of just reasoning on the great scale of politics; but all can feel the inconveniencies of wrong measures, and evils of this kind generally furnish their own remedy. All popular Legislatures are liable to great mistakes. Many of the acts of the American Legislatures, respecting money and commerce, will, to future generations, appear incredible. After repeated experiments, people will be better informed, and astonished that their fathers could make such blunders in legislation.

[35] Some have suspected from these sentiments, that I favor
the insurrection in Massachusetts. If it is necessary to be
more explicit than I have been in the declaration, "_I
reprobate, &c._" I must add, that in governments like ours,
derived from the people, I believe there is no _possible
situation_ in which violent opposition to laws can be
justified; because it can never be necessary. _General evils_
will always be legally redressed, and _partial evils_ must be
borne, if the majority require it. A tender law, which
interferes with _past_ contracts, is perhaps the wickedest
act that a Legislature can be guilty of; and yet I think the
people in Rhode Island have done right, in not opposing
their's, in a violent manner.

If the people of this State[36] are not already convinced, they certainly will be, that the addition of 150,000l. of paper, to the current specie of the State, did not increase the permanent value of circulating medium a single farthing. They were perhaps told that such a sum of paper would shut up the specie, or enable the merchant to export it; but their jealousy made them believe these the suggestions of interest; and nothing but the experiment could satisfy their wishes. Every man of reflection must regret that he is subject to the evils consequent on popular mistakes in judgement; but this is the price of our independence and our forms of government.

[36] Pensylvania.

Let us attend to the immediate and necessary consequences of the American revolution.

So great an event as that of detaching millions of people from their parent nation, could not have been effected without the operation of powerful causes. Nothing but a series of real or imaginary evils could have shaken the habits by which we were governed, and produced a combined opposition against the power of Great Britain. I shall not enumerate any of these evils; but observe that such evils, by twenty years operation upon the fears or feelings of the Americans, had alienated their affections or weakened those habits of respect, by which they were predisposed to voluntary obedience. When a government has lost respect, it has lost the main pillar of its authority. Not even a military force can supply the want of respect among subjects. A change of sentiment prepares the way for a change of government, and when that change of sentiment had become general in America, nothing could have prevented a revolution.

But it is more easy to excite fears than to remove them. The jealousy raised in the minds of Americans against the British government, wrought a revolution; but the spirit did not then subside; it changed its object, and by the arts of designing men, and the real distresses consequent on such a political storm, was directed against our own governments. The restraints imposed by respect and habits of obedience were broken thro, and the licentious passions of men set afloat.

Nothing can be so fatal to morals and the peace of society, as a violent shock given to public opinion or fixed habits. Polemic disputes have often destroyed the friendship of a church, and filled it, not only with rancor, but with immorality. Public opinion therefore in religion and government, the great supports of society, should never be suddenly unhinged. The separation of America, however, from all dependence on European government, could not have been effected without previously attacking and changing opinion. It was an essential step, but the effects of it will not easily be repaired. That independence of spirit which preceded the commencement of hostilities, and which victory has strengthened; that love of dominion, inherent in the mind of man, which our forms of government are continually flattering; that licentiousness of inquiry which a jealousy of rights first produced and still preserves, cannot be controled and subdued, but by a long series of prudent and vigorous measures.

Perhaps the present age will hardly see the restoration of perfect tranquillity. But the spirit and principles, which wrought our separation from Great Britain, will mostly die with the present generation; the next generation will probably have new habits of obedience to our new governments; and habits will govern them, with very little support from law.

The force of habit in government is most strikingly illustrated by the example of Connecticut. Most of the laws, customs and institutions, which the people brought with them from England, or which they introduced, on their first settlement, remain to this day, with such small alterations only as would naturally be made in the progress of society and population.

The government of Connecticut had formerly little more than a nominal dependence on England; independence therefore required but a little change of the old constitution. The habits of the people have not been materially changed; their respect for the government has not been suspended nor diminished. It would therefore be extremely difficult to raise an insurrection in that State against their own government;[37] for they have not been accustomed to dispute the propriety of their established maxims and laws. Whatever alterations in their constitution, a discerning Legislator might suggest, it would be highly impolitic to attempt any changes, which should disturb public opinion or alarm apprehension. When a law or custom becomes inconvenient, the people will feel the evil and apply a remedy.

[37] This assertion may seem to be contradicted by the
opposition of Connecticut to the half pay act; but that
opposition did not even threaten violence or arms: It was
conducted in a peaceable manner; and I do not know that the
State has furnished an instance of a tumultuous interruption
of law.

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]

[38] These remarks are not applicable to the mercantile part
of the people, who, since the revolution, have been
distinguished by their punctuality.

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.

The number of professional men in a State should be as few as possible; for they do not increase the property of the State, but liv on the property acquired by others.

There is little danger that the number of clergymen will be too great. In a few instances, religious parties may have multiplied their teachers to too great a number, and perhaps in some parts of the country, a few more ministers of the gospel would be very useful.

Physicians will multiply in proportion to the luxuries and idleness of men. They cannot be limited by law, for people will be as intemperate and as lazy as they please.

But an artful Legislature will take away some of the causes of litigation, and thus curtail the number of lawyers. We may always determin the degree of corruption, in commercial habits, by the number of civil suits in the courts of law. The multiplication of lawyers is a proof of private embarrassments in any State; it is a convincing proof that in America these embarrassments are numberless. The evil is of such magnitude in _some_ States, as to suspend the operation of law, and in _all_ it produces distrust among men, renders property unsafe, and perplexes our mutual intercourse. In this situation, with popular governments, and an unbounded rage for magnificent living, perhaps the only effectual remedy for a multitude of public evils, is the restraining of credit. It might even be useful to destroy all credit on the security of law, except debts of certain descriptions, where mortgages might be given. This would not check business, but it would oblige people to exercise a principle of honor, and to have recourse to industry, and ready payment for articles which their necessities or their fancies require. We should then be better able to determin, whether bucks and bloods, in high life, "who roll the thundering chariot o'er the ground," are sporting with their own property, or that of honest creditors.

I cannot close these remarks without observing how much this country owes to particular classes of people for the practice of the commercial virtues. To the Friends, the Germans and the Dutch, this country is indebted for that industry and provident economy, which enables them to subsist without anxiety, and to be honest and punctual, without embarrassment.

Happy would it be for this country, if these virtues were more generally practised. Paper money and foreign credit are mere temporary expedients to keep up the _appearance of wealth_ and splendor; but they are miserable substitutes for solid property. The only way to become rich at home and respectable abroad, is to become industrious, and to throw off our slavish dependence on foreign manners, which obliges us to sacrifice our opinions, our taste, and our interest, to the policy and aggrandizement of other nations.

No. VIII.

ON PAPER MONEY.

[Published at _Baltimore_, August 9, 1785.]

Messrs. PRINTERS,

I observed a paragraph of intelligence in your Journal, of the 26th of July, respecting the circulation of paper currency in North Carolina. I am not disposed to dispute the truth of the fact, that paper currency passes in that State at par with specie; but I should be very sorry to see it drawn into a precedent for other States.

_The scarcity of cash_ is a general complaint, and superficial observers impute the evil to a wrong cause, while shallow reasoners would remedy it by an emission of paper credit.

The real state of our commerce is this; since the ratification of peace, the quantity of goods imported into the United States has been much greater than what was necessary for the consumption of the inhabitants. Perhaps I shall not be wide of the truth, when I suppose that one third of the importations would supply the demands of people. The consequence is, the other two thirds continue on hand as a superfluity. The merchant finds no market for his goods, and erroneously imputes the evil to a scarcity of cash. But the real truth is, people do not want his goods; they purchase what they want, and find cash or produce to make payment; but the surplus remains in store.

In every trading nation, there ought to be a due proportion between the commercial interest, the agricultural and the manufacturing. Whenever the farmers and manufacturers are too numerous for the merchants, produce and manufactures will be plentiful and cheap; trade will of course be lucrativ. Whenever the merchants are too numerous for the laborers, the importations of the former will exceed the wants of the latter; of course goods will not find vent; and the merchant who owes nothing may lie and sleep in indolence, while the merchant who deals on credit _must fail_. The experience of almost every day proves the _truth of this reasoning_. I will suppose that the number of merchants, and the quantity of goods in Baltimore, are double to what they were two years ago; and the market for goods is nearly the same. The effect will be, that the same profit of business will be divided among double the number of men, while, at the same time, rents and the price of provision in market will be double. The clear profit of the merchant will therefore be reduced to one fourth part of what it was two years ago. I submit to the inhabitants of this _flourishing_ town, whether this is a mere supposition, or a moderate state of facts; and whether this reasoning will not, in a greater or less degree, apply to every commercial town in the United States.

But is not money scarce? With respect to the quantity of goods in store, _money is very scarce_: With respect to the produce of the country, there is _money enough_. Almost every article of home produce will command cash; but the merchant cannot get cash for his goods. Money is the representativ of goods bought and sold. I will suppose, for the sake of argument, that two years ago there was cash enough in the country to purchase all the goods in market at the usual advance. I will suppose that the quantity of goods has been trebled since that time. In this case, had the quantity of money continued the same, there would have been cash enough to purchase just one third of the goods. But suppose what is true, that at the time the quantity of goods increases in this proportion, the quantity of money in circulation diminishes in the same proportion. In this case there will be but one third of the cash to purchase three times the goods. Thus but one sixth part of the goods can be purchased by the circulating cash. The merchant must then lower the price of his goods to one sixth of their value, or keep them on hand. This reasoning, however mathematical, is just, and applies to all commercial countries. It is a fair state of facts in America. But though the quantity of money is greatly diminished, yet there is sufficient to represent the produce of the country, which in quantity continues the same. The price is however lowered by the diminution of the quantity of circulating cash.

Whether the quantity of cash is diminished, and the quantity of goods increased in the exact proportion above stated, is not material, the foregoing reasoning being sufficient to illustrate the principle. The probability is, that the disproportion between the goods in market and the cash in circulation, is greater than I have supposed.

The following propositions, I venture to assert, are generally, if not universally, true:

1. That the imports of a country should never exceed its exports. In other words, the value of the goods imported should never exceed the value of the superfluous produce, or that part of the produce which the inhabitants do not want for their own consumption.

2. That too great a quantity of cash in circulation, is a much greater evil than too small a quantity.

3. That too much money in a commercial country will inevitably produce a scarcity.

4. That the wealth of a country does not consist in cash, but in the produce of industry, viz. in agriculture and manufactures.

5. That in a commercial country, where people are industrious, there can never be, for any long time, a want of cash sufficient for a medium.

The first proposition is universally acknowleged to be true.

The second is less obvious, but equally true. Too much money raises the price of labor and of its effects; deprives us consequently of a foreign market; produces indolence and dissipation; than which greater evils cannot happen to a State. The sudden increase of money, by large emissions of paper credit, at the beginning of the late war, produced more luxury, indolence, corruption of morals, and other fatal effects, than all other causes that ever took place in America. We feel these evils to this moment. On the other hand, a scarcity of cash, tho it cramps commerce for a moment, always checks the evils before mentioned, lowers the price of labor, and produce will of course find a profitable market; it produces economy and industry, and consequently preserves the morals of the people; for industry goes further in preserving purity of morals, than all the sermons that were ever preached.

This leads to an illustration of the third proposition. If too much money in a country raises the price of labor and of produce, the consequence is, that people will go abroad for articles, because they are cheaper in foreign markets, and they will purchase as long as they can get cash. Importations will be multiplied till the country is drained of cash, and then business will return to a new channel. The history of trade in America, the last two years, is an illustration of this proposition.

The fourth proposition, also, is illustrated by facts. I will suppose that ten millions of dollars are sufficient for a medium in America: Let that sum be instantaneously augmented to twenty millions, and the country is not a farthing richer, for the price of goods will be immediately doubled. _Two_ dollars, in the latter case, purchase no more than _one_ in the former. People ignorantly suppose that goods rise in value; when the fact is, money falls in value. Continental currency was a proof of this. There was cash enough for a medium in the country before the war; and the addition of two hundred millions of dollars did not increase the wealth of the country one farthing; nor would the whole purchase more than the ten millions of specie which circulated before the war. Had the paper all been Spanish milled dollars, the effect would have been the same, had they continued in the country, and not been hoarded.

The fifth proposition depends on this simple fact, that money is a fluid in the commercial world, rolling from hand to hand wherever it is wanted, and there is any thing to purchase it. Let the produce of a country excel, in the least degree, the consumption, and it will never want money.

Admitting the foregoing observations to be true, both the necessity and policy of emitting paper, vanish at once. Supposing paper currency to preserve its credit, still so far from increasing the medium of trade, that in a few months it will drive all the specie from the country. Bank notes and bills of exchange are useful in facilitating a change or conveyance of property; but to issue paper credit, merely with a view to increase the circulating medium, in a country where the people may have just as much gold and silver as they are pleased to work for, is the height of folly. If people are indolent, or extravagant, all the paper currency under heaven will not make them rich, or supply their wants of cash. If people are industrious and frugal, and purchase no more foreign goods than they can pay for in superfluous produce, they will ever have cash enough. Their whole system of commerce stands on these single facts.