Mower County transcript. [volume] (Lansing, Minn.) 1868-1915, 1874-04-30

AUSTIN MOWER COUNTY, THURSDAY APRIL 80 1874
THE HISTORY OF INITIATION.

" ~ l. AA\3 N1OVV A1t WV
THE HISTORY OF INITIATION.
Prof: Summer" Book on American Currency
| -PaSt Experiences for Prcscnt DcIcctN'
tiOn.
From tho Now York Evening Post.
The work on "American Currency,
by Prof. w. G. Sumner, of Yale col.
lege, just published by Henry Holt \
tho struggles of tho colonies Of thit
country with paper and other substitutes
for real money, warnings to which the
people of to-day should give faithful at
tention. From the work we condense
the following history of early American
finances:
| BARTER CURRENCY.
1.-THE colonies began, soon after the
settlement of Massachusetts, bay, to use
q barter currency, ostensibly because
they had not money enough really be-
cause they wanted to spare the worlds
currency; y;rpurchasei real capital, which
was their true need. lin 1886 musket
bullets were used for change at q far.
thing apiece, legal tender for sums un'
der twelve pence. } The currency history
of this country has been nothing but
repetition of this down to the present
hour. It has always been claimed that
new country must be drained of the
precious metals, or that it could not af.
ford So expensive medium. The new
country really needs capital in all forms.
The only question is whether, being
poor and unable to get all that it wants,
it can better afford to do without foreign
commodities without specie currency.
No sound economist can hesitate low to
decide this question. The LOSSES occa.
stoned by bad currency far exceed the
gains from imported commodities. The
history of the United States from the
landing of Winthrop to to-day is q re.
iterated proof of it. The best protection
to native manufacturers is TO keep due
proportion of the nations capital in a
specie circulation, and do without, or
find substitutes for, or learn to make,
the things which the people cannot af-
ford to buy from older and more. ad-
vanced countries.
Credit, in its legitimate forms, is
priceless to new community, butwhen
used in illegitimate forms, as in q pure
credit currency, or in q currency into
which credit enters as an indefinable
element, it makes legitimate credit I'M
possible. This history will do little
more than to expose the errors involved
in mistaking credit currency for money,
and money for capital l-errors which
are repeated to-day by the new states
and to show the bad results of those
errors.
The barter currency was inferior to
gold and silver in cost. When corn and
beaver, and, in fact, all other products,
were made legal tender, no one would
pay debts in specie. It was boarded
and paid away for imports.
A barter currency is also the most
rapid of all currencies in its deprecia-
tion. If a cow will pay taxes, the lean
est cow will be given. If corn will pay
a debt, the corn which is of poorest
quality, or damaged to certain extent,
will be given. If large number of
commodities are made legal tender, the
poorest quality of thec commodity, which
may be cheapest at the time of payment,
will be given. Credit operations are
therefore rendered impossible.
In 1852 the pine tree coinage was
established in Massachusetts, but the
barter currency was continued, the In
dian wampum or peag being also extern
sively circulated. AS the law forbade
the expectation of silver, it was either
smuggled or clipped. The principle
laid down by Sir Thomas Gresham, in
Queen Elizabeth's time, that better
and worse currency cannot circulate
together. but that the worse will drive
out the better, was the only secret:
THE FIRST PAPER MONEY.
In 169Oan expedition was sent against
Canada, the payment of which was to
come from the booty. The expedition
failed; and the first paper money was
issued to supply the demands Of the
soldiers for pay. $4,000 was issued
in notes from IS. to 45, receivable for
taxes, and for goods paid into the treas
ury for taxes
Sir William Phipps tried to sustain
the paper BY giving coin for some of it,
but the soldiers disposed of it at one
third discount. The issues were linn
tied to E4O, 900, and s1O, ,00Oin the treas
ury were ordered burned in 1851. In
1892 it was ordered that the bills be re-
ceived at 5 per cent. advance over coin
at the colonial treasury, and the court
promised to redeem them in money,
within twelve months. This kept the
paper at par for twenty years. In the
same year legal interest was reduced to
6 per cent. The barter currency now
ceased for time, or at least, become
less common. Folt and Bronson both
quote Nine. knights letter that, in
Connecticut, there are four prices
3rss.;ns Tbs Ss %sfgian ssG:a Ind
customer how he would pay before fix-
ing his price. Pay was barter at the
government rates. Money was Span
ish or New England coin, also wampum
for change. Pay as money was barter
at prices one-third less than
the government rates. Trusting was
enhanced price, according to time. A
sixpenny knife cost I'D. in pay, Sd. in
pay as money, and Cd. in coin.
To meet the expenses of second ex-
petition in 17O9, 440,OOO in bills of
credit were put in circulation, and in
I'LL G10, 900 more. In 1909, the time
for redemption was set at four years
in ITO, at five years in I'LL, at six
years this injured the credit of the
bills at the same time that they became
redundant. The depreciation now be-
gan. The paper was legal tender, its
acceptance being enforced from time to
time by more and moro stringent enact
ments.
EXPANSION AND PROSTRATION.
The next experiment was with bank
currency founded on the value of land.
This was no better method than the
previous issues, and loans issued for
five years were allowed to run over 80.
In 1715 there was a petition from
Boston merchants for more paper,
which was laid over. Gov. Shute re-
commended the assembly to take meas
ures to revive the low state of trade.
They issued 41O0,OOO of bills. be-
cause bills were scarce These were
issued on loan. Silver, worth 5s. I'd.
in 1862 had risen to 12s. per ounce.
South Carolina had issued bills in
17l2 for war expenses. This emission
fell third the first year. a half the
second, and continued to depreciate.
In 1720 Massachusetts, trade was
stagnant, and there was a great cry for
more bills. Let it be observed, says
MIR. Sumner, 'how this complaint is
heard again every four or five years,
although the amount of paper was con-
tinually increasing. It is the best in
stance in history of the wav in which