The New-Jersey gazette — Burlington [N.J.], 1779-06-30 00:00:00, page 1

From the Pennsylvania Packet, June 22, 1779.
Mr. D UNLAP.
SIR,
The following plan was framed by a gentleman
who appears to have thought on the fubjed of our
finances with some degree of attention. For reasons
belt known to himfelf, he has declined fending it to
the press ; but as he has permitted copies to be taken
by his friends, I imagine it will not give him offence
to fee it in print; and as it may afford some ufeful
hints to those who are deviling means for the restora
tion of the credit of our paper money, I now offer
it to you for publication. Your's, T. S.
J PLAN proposed for railing the necessary /applies
of Money mriibout farther emifftons, and for giving
the Bith already emitted a mere ready currency at a
certain known value.
, —ff "~,HE depreciation of the money emitted by
g Congress has arisen from causes of two
kinds; one of which may be called natural,
M the other imaginary. By the former I
mean the quantity thrown into circulation beyond
what is requisite for commercial purposes. Ido not
pretend to eltimate precisely the degree of deprecia
tion arising from this cause, but I luppofe it to be
nearly in mathematical proportion, to the excels of
money emitted. What sum the commerce of the
United States would bear in common times, without
causing any depreciation, and what deduction ought
to be made for the present diminution of trade, I do
not know : but in order to explain my meaning, I
will make a calculation on supposed sums. Suppose
that in ordinary times commerce would bear a cir
culation of thirty millions of dollars, and that the
reduced Rate of our trade would require a deducti
on of one-third from this sum; the remainder,
which is the fum' commerce would bear ip our pre
fentfondition, would be twenty millions. It then
the sum in circulation, be one hundred millions, the
rCural depreciation mull be as f.vc tb me, or it the
like proportion be the refpedive sums what they
may. The depreciation arising from this cause can
not therefore, I imagine, be removed in any other
way than by reducing the quantity of money abroad,
or by extending commerce till it shall naturally re
quire the sum in circulation as a medium.
The causes of the second kind are wild and fanci
ful, governed by no fixed rules, and affect the
opinions and conduct of men by the influence they
have on thdfr patlions: These may, and ought to be
done away as speedily as possible. I shall therefore
endeavour to shew what they are, and to point out
the mode in which I conceive they may be effectually
removed. These causes may be arranged under the
following heads:
1. The continual increase in the quantity of money
by depending on emissions for current supplies.
This increase is, in a compound ratio, as the ac
cumulated depreciation from a combination of all
causes, and the advance on prices from a scarcity of
articles, make larger nominal funis requisite to effect
any given quantity of business. These emiffiuni,re
therefore considered as unbounded ; and, as c ?ry
one knows that the depreciation muff increalt in
proportion to the increase of the quantity of money
in circulation, every one of course anticipates a fu
ture depreciation in every contrast he makes for
money ; for no one would chufe to purchase a com
modity to Ro,e up on a falling market, cfpecially
when he contemplates an unlimited increase of the
fame article at a market already glutted.
2. A want of confidence in the foundation of the
NEW-JERSEY GAZETTE.
money.
The different States have not yet explicitly adopted,
por made provision by law for finking their refpe&ive
quotas of money iffiied ; and hence an apprehension
has arisen, which some have but too fuccefsfully la
boured to promote, that the money issued, or great
part of it, may fink in the hands of the pofletfors.
3. The want of feme way in which people may em
ploy their money with a proved of profit, or at leaf a
fccurity from loss.
Whenever the quantity of money in circulation is
greater than- is necessary for the purposes of com
merce, there will be individuals who would gladly
lend it on interest if they could be allured that they
should receive the principal at some future day in
as good plight as they lent it, and the growing in
tcreft, as it becomes due, in like manner. The
terms now held out by the public to induce loans,
do not fufficientlv give this assurance ; as the prin
cipal is redeemable at the end of three years at what
ever depreciated value money may then bear, and the
interest payable in the mean time in money of equally
unce- °u c . Hence the backwardlleh of monied
[Vol. IL]
W E DNESD A .Y, June 30, 1779.
If these are the true causes of the present extra
vagant depreciation of money' , and the motives
which influence the conduct of the people at large,
especially the monied men, it appears to me that
the adopting some such plan as the following, would
probably raise fufficient fupplics, without farther
emissions, reflere ! money to a fettled and known
value tho' at some degrce of depreciation for the
present, and put an end to the enormous mifehiefs
arising from a growing and whimsical depreciation,
and a consequent decay of public credit.
The generality pf people who arc pofleffed of mo
ney have receivecMt, either immediately from the
public or from individuals in the course of bulinefs,
at a depreciated value ; it -an therefore be no hara
mip on them to pitv. .. t as good a rate or
better than that at which they purchased it ; and 1
am periuaded moR of them would think it a good
bargain, if they coulC cfcablilh what they have in
pofleflion, at 6 or 8 for one, of the original value.
What rate of depreciation it may be proper to fix
on for the present, I shall not undertake to deter
mine ; perhaps 5 or 6 tor one may be nekieß the
point of natural depreciation; but as some given rate
m'uß be fixed on as a rule to go by, 1 d.an luppofe
fix for one, of Rerling. I take rterhng as the ftandaid
as being more fixed and Jess liable to fickle changes
than any other, and our commercial intercourse with
Europe will keep up a mercantile course of exchange,
nearly in proportion to the degree of depreciation ;
whereas gold and silver, from an undue avidity for
them in the minds of difafieded people, and their
instrumentality in carrying on a clahdeftine trade
with the enemy, have too capricious a value for this
purpofc. And as I take it to be an eiTential point
to afeertain the outline degree of depreciation, I
would fix on the most certain rate to be found as a
Randard. We muR not, however, expert the prices
of commodities will be immediately reduced to this
Randard, a considerable part of their present advance
being owing to a scarcity. Many articles, even of
country produce, would now command double their
old prices, were money on its original value ; and
many imported articles much more.
Three things are necessary to form the system I
would propole, for reducing the money to a certain
value.
In limiting the sum to be emitted, it may be pro
per to look forward to about 50 millions more, than
shall have beefl issued at the time of publishing the
resolution, which may serve as a Rock to go upon,
till fuppiies shall be raised by loans. And when the
sum is afeertained, it may be necessary for Congicfs to
give a full assurance, that no more than that sum shall
011 any account be emitted ; promising at the fame
time to issue no more of the laid 50 millions, than
shall be absolutely necessary for current expenditures,
till money for that purport, shall be furnifhed by
loans ; and probably lets than half the sum may be
fufficient. This will h^vc a tendency to induce think
2d. Funding the money emitted, by charging it in
quotas on the several States, and they making pro
vilion by law for linking their refpedive quotas at
future periods.
3d. Borrowing money for current expences on the
credit of the United States, at a given rate of depre
ciation, and securing the repay ment of it, at as good
or a better rate.
ift. Limiting the sum to be emitted, with a solid
assurance, that the limitation shall be Itridly adhered
to.
men to place their money in the Loan Office —And,
to let it lie idle, fubjecls them to a loss Rill more
certain. Every one is therefore desirous to invert bis
money in land, or in some kind of merchandize of
intrinsic value, which mull rife in price in some
proportion to the growing depreciation of money.
This creates an artificial scarcity of aM laleable arti
cles, and of course enhances the prices as well to the
public as to individuals, who must puichafe them
for use and consumption. And as the quantity of
money is rapidly increasing, and the quantity of Lie
able articles rattier diminishing (the consumption of
imported articles keeping full pace with the importa
tions) the prices of all faleable commodities are
extended so as to be commeufurate with the sum of
money in being ; for every one possessed cf money
Rrives to invert it in some of these articles, whatever
may be the price, rather than let it depreciate in his
hands. I verily believe that the greater part of that
speculation, as- it is called, which is now complained
of as a public mifchia is produced in this \Qy, that
is, to avoid loss rather than with a direct view to c;ain.
And thus the apprehension of further depreciation,
like fear on many other occasions, accelerates che
evil it means to ihun.
T, II E
ing men to be speedy in turning their money intothe :
loan office, as well to put an early Hop to cniilhous,
as to avoid being precluded from the chance of lend
ing, for I doubt not the quotas will soon be raised.
As to funding-the money, 1 should think it advis
able that it be warmly recommended to the different
States, to be fpepdy in making provision by law, for
linking their rclpeCtive quotas of it at certain [ eriods.
These periods should not commence during the war,
as the money which may be railed by taxes within
that time, ihould be reserved m the dilpofition of
Congrels, to be used as a check on the value of the
money in circulation; that is, by cancelling such
part of it as may be found necessary to guard againf:
farther depreciation, and by applying so much of it
to the payment ui the intcrcft of the money borrowed,
and perhaps redeeming part of the principal, as may
guard against too hally an appreciation ; for all the
appreciation, while any loan certificates are out,
above the rate at which the money was benowed,
would be an unjust augmentation of the public debt ;
and all depreciation below it would beequally a public
loss, These early taxes, however, Ihould be as high as
the different Legislatures shall find their ref; edive
circumstances will bear; and whenever it may be
found inexpedient to apply the produce of tl^rato
cither of the purposes I have just mentioned, it may
be issued again as money, and there! y dcGcn the
neceflity of borrowing. 'I he keeping cf money at a
certain, fixed and known value, I take to be an ob
jed of very great importance, as it will, in my ap
prehension, be the heft regulator of prices that can
poflibly be devised, and will do more towards putting
<n end to that mifehievous jobbing and speculating,
from which we have experienced lo & much evil, than
all the penal laws that human nature- is capable of
framing. As soon as the money thereafter to be
borrowed, shall be repaid, and the'taxes and other
revenues shall produce more than may be necefla: y
for current expences, .he whole surplus of these ri
venues may be applied to linking the money in cii
culation, and then it will naturally appreciate to
wards its original value, that is towards' in equality
with gold and lilver, in proportion as by the reduc
tions of its quantity, it shall approach the sum merely
requisite, as a medium of commerce. But perhaps
when that time arrives, some mode may be devifed
by means of a fund established abroad, either by a
foreign loan or otherwise, to fink even the sum in
circulation, at a depreciated rate, without doing in
justice to the porteffors ci it. How far such a fund
would aid my present plan, I have not pi ecifely con
sidered, being uninformed of the means of procuring
it ; but it cannot be doubted, but that it would make
the work more sure and easy. As to the money al
ready borrowed, I meddle not with it. The public
faith is already pledged, for the repayment cf it on
certain principles, which, I doubt not, will be per
formed in a manner confirtent with national honor.
The third branch of the system proposed, namely,
borrowing money for current expences, on the credit
of the United States, remains to be considered. To
effed this, I would propose, that an estimate be
made of the sum that may be wanted by the public
for a given time, not more than a year ; and that it
be recommended to each State, to furnifh its quota
of this sum on loan, and for that purpose to establish
as many loan-offices in each State as may be necessary
to accommodate the people, perhaps one for every
two or three counties may be fufficient. A time
ihould be limited, during which the loan office is to
be open, if the sum be not sooner railed ; and if any
State should fail of railing its quota within the time
limited, some other State or States, which have fur
nifhed their quotas and are willing to furnilh more,
should have leave to supply the deficiency. Every
person paying in fix hundred pounds current money
(if fix for one be the proportion fixed on) Ihould
have a certificate for one hundred pounds Rerling,
bearing interest at fix per cent, per annum, pay
able in current money, either at fix for one, or
at the current mercantile exchange, at the time it is
demanded, at the option of the holder of the certi
ficate: The principal to be redeemable at the plea
fare of C'ongrefs, at any time after one year, or
such other period as Congress shall think proper to
fix, in current money, either at fix for one, or at
the then current mercantile exchange, at the option
of the holder of the certificate as aforefaid.
Thus the lender will have the double inducement
of being secured against farther depreciation, and
the chance in his favour of such appreciation as may
happen. On this encouragement it can scarcely be
doubled but that fufficient fopplies may be speedily
borrowed, and that money would as speedily appre
ciate to the rate t hus established, and regain its usual,
[Numb. 82.1