necessary or convenient for them to do so.
The scarcity of those metals, therefore, must
be the effect of choice, and not of necessity.
It is for transacting either domestic or foreign
business, that gold or silver money is
either necessary or convenient.
The domestic business of every country, it
has been shewn in the second book of this Inquiry,
may, at least in peaceable times, be
transacted by means of a paper currency, with
nearly the same degree of conveniency as by
gold and silver money. It is convenient for
the Americans, who could always employ with
profit, in the improvement of their lands, a
greater stock than they can easily get, to save
as much as possible the expense of so costly
an instrument of commerce as gold and silver;
and rather to employ that part of their
surplus produce which would be necessary for
purchasing those metals, in purchasing the instruments
of trade, the materials of clothing,
several parts of household furniture, and the
iron work necessary for building and extending
their settlements and plantations; in purchasing
not dead stock, but active and productive
stock. The colony governments find
it for their interest to supply the people with
such a quantity of paper money as is fully
sufficient, and generally more than sufficient,
for transacting their domestic business. Some
of those governments, that of Pennsylvania,
particularly, derive a revenue from lending
this paper money to their subjects, at an interest
of so much per cent. Others, like that
of Massachusetts Bay, advance, upon extraordinary
emergencies, a paper money of this
kind for defraying the public expense; and
afterwards, when it suits the conveniency of
the colony, redeem it at the depreciated value
to which it gradually falls. In 1747,[80] that
colony paid in this manner the greater part of
its public debts, with the tenth part of the
money for which its bills had been granted.
It suits the conveniency of the planters, to
save the expense of employing gold and silver
money in their domestic transactions; and it
suits the conveniency of the colony governments,
to supply them with a medium, which,
though attended with some very considerable
disadvantages, enables them to save that expense.
The redundancy of paper money necessarily
banishes gold and silver from the
domestic transactions of the colonies, for the
same reason that it has banished those metals
from the greater part of the domestic transactions
in Scotland; and in both countries, it is
not the poverty, but the enterprizing and projecting
spirit of the people, their desire of
employing all the stock which they can get,
as active and productive stock, which has occasioned
this redundancy of paper money.
In the exterior commerce which the different
colonies carry on with Great Britain, gold
and silver are more or less employed, exactly
in proportion as they are more or less necessary.
Where those metals are not necessary,
they seldom appear. Where they are necessary,
they are generally found.
In the commerce between Great Britain and
the tobacco colonies, the British goods are
generally advanced to the colonists at a pretty
long credit, and are afterwards paid for in tobacco,
rated at a certain price. It is more
convenient for the colonists to pay in tobacco
than in gold and silver. It would be more
convenient for any merchant to pay for the
goods which his correspondents had sold to
him, in some other sort of goods which he
might happen to deal in, than in money. Such
a merchant would have no occasion to keep
any part of his stock by him unemployed, and
in ready money, for answering occasional demands.
He could have, at all times, a larger
quantity of goods in his shop or warehouse,
and he could deal to a greater extent. But
it seldom happens to be convenient for all the
correspondents of a merchant to receive payment
for the goods which they sell to him, in
goods of some other kind which he happens
to deal in. The British merchants who trade
to Virginia and Maryland, happen to be a
particular set of correspondents, to whom it is
more convenient to receive payment for the
goods which they sell to those colonies in tobacco,
than in gold and silver. They expect to
make a profit by the sale of the tobacco; they
could make none by that of the gold and silver.
Gold and silver, therefore, very seldom
appear in the commerce between Great Britain
and the tobacco colonies. Maryland and
Virginia have as little occasion for those metals
in their foreign, as in their domestic commerce.
They are said, accordingly, to have
less gold and silver money than any other colonies
in America. They are reckoned, however,
as thriving, and consequently as rich, as
any of their neighbours.
In the northern colonies, Pennsylvania, New
York, New Jersey, the four governments of
New England, &c. the value of their own
produce which they export to Great Britain
is not equal to that of the manufactures which
they import for their own use, and for that of
some of the other colonies, to which they are
the carriers. A balance, therefore, must be
paid to the mother-country in gold and silver,
and this balance they generally find.
In the sugar colonies, the value of the produce
annually exported to Great Britain is
much greater than that of all the goods imported
from thence. If the sugar and rum
annually sent to the mother-country were paid
for in those colonies, Great Britain would be
obliged to send out, every year, a very large
balance in money; and the trade to the West
Indies would, by a certain species of politicians,
be considered as extremely disadvantageous.