ceffation of the effects; and it is greatly to be feared, that unless a timely ftop be put to the evil, the country will be involved in a general calamity. The remedy is in our own power. Should we neglect to apply it, or fuffer ourfelves to be fo far either influenced or deceived, by falfe representations and partial interefts, as to facrifice the general good to private views, we would neither deferve nor enjoy thofe means of national happiness that now lie within

our reach.

Let us then (to ufe the expreffion of an anonymous writer) coin our lands, and thereby obtain from thofe moft valuable of all mines, a fufficient circulating medium of commerce. For this purpose let loan-offices be inftituted in the feveral ftates, on principles fimilar to thofe whereon the loan-office of Pennfylvania was eftablished for many years. The medium furnished by means of this inftitution, is founded on the bafis of credit; and, as it is exprefsly calculated to promote, in the first inftance, the extenfion of agriculture, that great ftaple manufacture of this country, which of courfe forms the greatest part of its commerce-at leaft that branch which tends moft to its intereft-it is the beft medium we can employ to advance the national welfare. It is, befides, the only fpecies of money partaking of the nature of credit, that is not liable to abuse. For, being established on that

NOTE.

The author of the characteristics of the prefent political ftate of Great Britain. The fame writer obferves, "that the more the lands of any country are locked up, the lefs muft the country be improved: and the more easily lands can be transferred and exchanged in commerce-induftry, trade and manufactures, will be more fpeedily and fuccefsfully promoted."

kind of it, denominated* private credit, it cannot exceed, in quantity or nominal value, the actual and real worth of the fecurity which it reprefents. The demand for money must ever be proportionate to its uses; and thus the neceffary quantity may be eafily accommodated to the demand. Nor can there be any doubt of this being a proper ftandard of regulation, with refpect to a loan-office money; becaufe, the ufes originating from, and being applicable to, funds of the most valuable and fubftantial nature, namely lands, the borrower would not be willing to pay interest for a greater fum than he could reafonably fuppofe might be employed to his advantage. Added to this, that the fum lent would not exceed one half the estimated value of fuch fund, pledged as a fecurity for its repayment or redemption.

The value of lands is usually computed at the purchase of a certain term of years; that is, being themfelves a fund, the profits accruing from its employment within a given portion of time, will determine the value of the ftock producing those profits, compared with the profits arifing from the ufe of money, the measure of that value, in the fame country. So that, if the circulating medium of a country be duly proportioned to its commerce, and if that medium or money will yield an average profit of fix per cent. per annum, to thofe who make ufe of it, the value of lands in that country may be eftimated at about fixteen years purchase on the fame principle, the intereft of money is regulated, by a comparison with the

NOTE.

*Private credit is established upon a fecurity, real or perfonal, of value fufficient to make good the obligation of repayment both of capital and intereft: this is the moft folid of all." Sir James Steuart on political

œconomy.

productive value of labour and lands. This fuggefts the ufe of a weil-regulated credit; which, by operating as flock, augments the profit on the actual capital employed in conjunction

with it.

Here we trace the beneficial effect of the credit obtained by the agriculturist from a loan-office, in a fymbolical money. The lands, in an improved country only, can be valued at any certain number of years purchase. But in this new country, the progreffive improvement of the lands from year to year, is continually increafing the capital of the landholder. And this effect—this immense source of national wealth and fund of credit-will not cease, until the cultivation of our lands fhall have arrived at fuch a height, and become fo general, as that the annual profits of farming will not furpafs the intereft of money. The very low price which improveable lands bear in this country, is no criterion of their value; but arifes folely from the infufficiency of the means neceflary for acquiring and improving them; for an uncultivated foil is of as little ufe, as a diamond in the bofom of the mine.

As money derives its value from its ufes, it is evident, that, when the quantity does not exceed thofe ufes, its value will not be impaired. The difficulty, with refpect to a fymbolical money in general, is to afcertain the productiveness, and to fecure the certainty of the fund, which creates the ufes. Taxes are a fufficient fund

for fupporting the credit of a papermoney, provided due regard be had to thefe effential points. The credit of paper iffued by banks, founded entirely on mercantile credit, in thofe commercial countries which enjoy a favourable balance of trade, may alfo be rendered fufficiently ftable, by prudence and circumfpection in the managers. But in both inftances, neither can the productiveness of the fund be

afcertained, nor its certainty be fecured, by any real ftandard. The operations of a mere mercantile bank are, in a peculiar manner, liable to extend credit beyond its proper bounds, in countries which carry on a difadvantageous foreign trade: because the intereft of the proprietors will lead them to circulate a fictitious money, in their paper-credit, to as large an amount as they may fuppofe confiftent with their own fafety; and this very credit adds to the means of accelerating that trade, already prejudicial to the nation. The notes of fuch a bank are iffued on mercantile credit. " This," fays fir James Steuart, is established upon the confidence the lender has, that the borrower, from his integrity and knowledge in trade, may be able to replace the capital advanced, and the intereft due during the advance, in terms of the agreement." It is this kind of credit that the fame author ftyles, the most precarious of all."

The great temptations that lie in the way of banks on mercantile credit, on the one hand, and of states on the other, to iffue their paper on their refpective funds of mere confidence, in too great quantities, by over-rating the productiveness of those anticipated funds on which that confidence is grounded (and which are, neceffarily, fubject to fome uncertainty, from the nature of them)thofe very circumftances tend to render the credit of fuch paper very delicate.

But that fpecies of paper-money, that is iffued on the fecurity of lands, which are made an actual equivalent depofit for its redemption, from the moment of its going into circulation, is not liable to any objections on this fcore. The fund itself, that is, the land, is actually exifting; and the credit, established on it, reprefents the value of this fund, and not of the anticipated profits to be derived from the employment of it.

The more firmly to establish the credit of a loan-office money, no perfon can borrow from the itate more than one half the ellimated value of his land: and, in order to diffeminate the advantages of this credit the more extenfively, and to enhance its ufeful nefs, moderate fums only (not exceed ing, perhaps, two hundred pounds) are loaned to individuals, let the value of their lands be what they may; by which means, this inftitution is peculiarly adapted to benefit the new Lettlers and leffer proprietors of lands, a clafs of people who stand moft in aeed of encouragement in this country.

This kind of money, being eftablished on permanent and certain funds, is extremely well calculated, not only for a circulating medium within the particular ftate which if fues it, but alfo, as a medium of trade between the feveral states; for, as fir James Steuart obferves, "It is the interest of every trading ftate to have a fufficient quantity of paper, well-fecured, to circulate through it, fo as to facilitate payments every where, and to cut off "inland exchanges, which are a great clog upon trade, and are attended "with the rifque of receiving the paper of people, whofe credit is "bat doubtful."

"

It is a trite objection to paper-moaey, that it banishes gold and filver from the country where it obtains. This has been often invalidated. Dr. Franklin has fhewn, that it is an unfavourable balance of trade that draws the gold and filver out of the country, and that the "neceffity of fubfitating fome medium in their stead, has induced the making of papermoney, which could not be drawn way." So far is the paper-money from being the cause of this effect, that, by increafing alienation and the means of exciting induftry, it as a direct tendency to increafe the Lock of coin in the country. And, Vol. II. No. I.

as the quantity of paper-money in a country will not fuffer any diminution of its value, while it does not exceed its ufes, this currency can have no effect in raising the price of labour and commodities, while kept within those bounds.

A loan-office money being employed in the improvement of lands, becomes realized in a fpecies of property, which, in these states, is productive of much greater emoluments, both to the public and to the proprietors, than can be derived from the ufe of fmall monied capitals, in any manner of trade, honourable to an individual, or confiftent with the common weal.

At the fame time that the cultivator of the foil is, by this means, enriching himself, and increafing the real wealth of his country in a direct point of view, other falutary confequences refult from a loan-office credit. Its circulating paper, by filling up the chafm in the medium of alienation, occafioned by the fearcity of coin, encourages industry and genius; promotes arts and manufactures; enlivens commerce; gives the means of comfortable fubfiftence to the poor; and enables all claffes of people to contribute to the fupport of government, and establishment of public credit, by a regular and liberal payment of taxes. deed the revenue that might be obtained from the intereft on a loan-office money, would, of itself, form a very confiderable fund, applicable to public ufes.

In

The numerous and important advantages, accruing from this kind of inftitution, are by no means exaggerated. On the contrary, a little reflexion will fuggeft, to any perfon acquainted with this country, many other inftances wherein its operations must be extremely ferviceable: but the nature of the inftitution need to be only underflood to demonftrate its utility.

D

the field, nor maintain him there a day. Our fears removed, our hopes would be unbounded. A small fum of paper-money, prudently applied, might foon liberate us from debt and fpeculation, without any violation of public faith; and, when property can command its value, a rigorous execution of juftice (now impracticable) may enforce punctuality in individuals. Then would eafe and plenty unfurrow the brow of diftrefs, and scatter fmiles over this defolated land. But, to effect this, the legiflature must not fend forth paper, flamped with their own fufpicions. The people can never place confidence in that, of which they, who make and unmake, themselves exprefs a doubt. It must be current money, or it must not be at all.

By confining any perfon to the ufe of one metal only, his choice will foon determine the matter-gold will not make a good plough-fhare, and filver a very bad axe or faw.

Can the legislature ever make a good circulating medium of paper, that will not be subject to depreciation?

Yes, provided all finifter motives could be laid afide, and the law which gives it a political exiftence, as a medium of trade, be framed in fuch a judicious manner, as to fupport it in its credit and currency, without which, it will be of as little value as blank paper.

How is this defirable end to be effected?

By emitting no more than is neceffary for a medium of trade, making it a lawful tender, and diffufing it to every part of the state, fo that

money.

you

How is this to be done? Surely would not force people to take

1, for what they have to dispose of: even the people who fupply our markets, will not be compelled to take it; and if we attempt to force it upon them, they will not bring in their produce, and foon reduce us to their own terms.

By imposing a tax in this money, equal to one fourth of the fum emitted, to be collected in one year; but if the citizens, who are taxed, cannot, or rather will not, procure thefe bills to pay their proportion, caufe them, by law, to pay two fhillings per pound more in hard meney; this, alone, will caufe people in the most remote parts of the state, to procure a fufficient fum to pay their taxes. The custom-house will alfo take in a large quantity of it, and leave little chance for depreciation, and confequently fpeculation.

If you think this alone would infure the currency of the money, why would you wish to make it a lawful