Excerpt of Hutchinson's History of Massachusetts-Bay
Thomas Hutchinson, then speaker of the Massachusetts House of Representatives, was the architect of the Massachusetts currency reform adopted in 1749 and implemented in 1750. The colony used the Parliamentary reimbursement awarded the colony for their expenses in the Cape Breton expedition to call in and exchange the colony's paper money for silver, returning Massachusetts Bay to a silver standard. Hutchinson was also the author of The History of the Colony and Province of Massachusetts-Bay, the most important contemporary history of the colony, and his account of the currency reform is one of the most interesting and informative we have. Hutchinson refers to himself in the third person in this passage, but the author of the account and the speaker of the house are one and the same. In reforming the currency, Hutchinson cooperated with Governor Shirley. Shirley's political enemies included many hard money merchants, whose distrust and dislike of Shirley led them, paradoxically, to oppose Hutchinson's plan. Douglass, author of the Discourse, was a spokesman for this faction.
Popular attitudes towards Hutchinson have fluctuated greatly over time. Because he served as the last royal Governor of Massachusetts, and thus became a symbol of royal authority, he went - in his own lifetime - from being one of the most admired men in the Bay colony to being one of the most despised. In the 19th century, Hutchinson was rehabilitated, as hard money historians looked upon him as a hero for his leadership in returning Massachusetts to a specie standard, and ending inflation in Massachusetts. Some 20th century historians have suggested that Hutchinson was involved in a disreputable scheme to profit from the currency reform. This innuendo has appeared in so many recent histories that it has displaced the 19th century view of Hutchinson as the hero of the episode. Having reviewed all the records, my opinion is that there is absolutely no evidence to suggest Hutchinson's complicity in any such scheme. The charge seems to have originated as a result of honest mistakes made by 20th century historians in the interpretation of contemporary documents.
The Account of the Currency Reform
contained in Thomas Hutchinson's
The History of the Colony and Province
Mr. Hutchinson, who was then speaker of the house of representatives, imagined this to be a most favorable opportunity for abolishing bills of credit, the source of so much iniquity and for establishing a stable currency of silver and gold for the future. About two million two hundred thousand pounds would be outstanding in bills in the year 1749. One hundred and eighty thousand pounds sterling at eleven for one which was the lowest rate of exchange with London for a year or two before, and perhaps the difference was really twelve for one, would redeem nineteen hundred and eighty thousand pounds, which would leave but two hundred and twenty thousand pounds outstanding, it was therefore proposed that the sum granted by parliament should be shipped to the province in Spanish milled dollars and applied for the redemption of the bills as far it would serve for that purpose, and that the remainder of the bills should be drawn in by a tax on the year 1749. This would finish the bills. For the future, silver of sterling alloy at 6s. 8d. the ounce, if payment should be made in bullion or otherwise milled dollars at 6s. each should be the lawful money of the province and no person should receive or pay within the province, bills of credit of any of the other governments of New-England. This proposal being made to the governor he approved of it as founded in justice and tending to promote the real interest of the province, but he knew the attachment of the people to paper money and supposed it impracticable. The speaker, however, laid the proposal before the house, where it was received with a smile and generally thought to be an Utopian project and, rather out of deference to the speaker, than from an apprehension of any effect, the house appointed a committee to consider of it. The committee treated it in the same manner but reported that the speaker should be desired to bring in a bill for the consideration of the house. When this came to be known abroad, exceptions were taken and a clamour was raised from every quarter. The major part of the people, in number, were no sufferers by a depreciating currency, the number of debtors is always more than the number of creditors, and although debts on specialties had allowance made in judgments of court for depreciation of the bills, yet on simple contracts, of which there were ten to one specialty, no allowance was made. Those who were for a fixed currency were divided. Some supposed the bills might be reduced to so small a quantity as to be fixed and stable and, therefore, were for redeeming as many by bills of exchange as should be thought superfluous; others were for putting an end to the bills, but in a gradual way, otherwise it was said a fatal shock would be given to trade. This last was the objection of many men of good sense. Douglass, who had wrote well upon the paper currency and had been the oracle of the anti-paper party was among them and, as his manner was with all who differed from him, discovered as much rancor against the author and promoters of this new project as he had done against the fraudulent contrivers of paper money emissions.
THE bills, it was said had sunk gradually in their value from 6s. 10d. ½ to 60s. the ounce, by this means creditors had been defrauded, it was but reasonable they should rise gradually that justice might be done. But the creditors and debtors would not be the same in one instance in a thousand, and where this was not the case the injury was the same, to oblige any one to pay more as to receive less than was justly due. Others were for exchanging the bills at a lower rate than the then current price of silver. The inhabitants had given credit to the government, when silver was at 30s. the ounce, and ought to be paid accordingly. Two of the representatives of Boston urged their being exchanged at 30s. which would have given a most unreasonable profit to the present possessor who had taken them at 55 or 60s. To draw over some of this party, concessions were made and the bills were exchanged at 50s. the ounce instead of 55 as was at first proposed.
SOME of the directors and principal promoters of the land bank scheme, being at this time members of the general court, unexpectedly joined with the party who were for finishing paper money, but the opposition was so great, that after many weeks spent in debating and settling the several parts of the bill and a whole day's debate at last in a committee of the whole house upon the expediency of passing the bill, as thus settled, it was rejected and the report of the committee accepted.
THE house, although upon some occasions exceptions are taken to motions and proceedings which come before them as not being in parliamentary form, yet are not strict in conforming to some of the most useful rules of parliament. A bill or motion is not only referred from one session to another, but a bill, after rejecting upon a second or third reading, is sometimes taken up and passed suddenly the same session. They have an order of the house, that when any affair has been considered, it shall not be brought before the house again the same session unless there be as full a house as when it was passed upon. This, if observed, would still be liable to inconvenience as any designing person might take an opportunity upon a change of faces, the number being as great as before, suddenly to carry any point, but even this rule, like many other of what are called standing orders, is too frequently by votes, on particular occasions, dispensed with, which lessens the dignity of the house.
IT seems to be of no consequence to the prerogative whether the currency of a colony be silver or paper, but the royal instructions from time to time for preventing a depreciating currency, caused meerly by a gracious regard to the interest of the people, had generally engaged what was called the country party in opposition to them and in favor of paper(1). It was the case at this time. However, the next morning, two members of the house(2) zealous adherers to this party and who had been strong opposers of the bill, came early to the house to wait the coming of the speaker and, in the lobby let him know, that although they were not satisfied with several parts of the bill yet they were alarmed with the danger to the province from the schemes of those persons who were for a gradual reduction of the bills and, by that means, for raising the value of the currency without any provision for the relief of debtors and, therefore, they had changed their minds and, if the bill could be brought forward again, they would give their voice for it, and others who had opposed it would do the same. The speaker, who had looked upon any further attempt to be to no purpose, acquainted them that he did not think it proper to desire any of the favorers of the bill to move for a reconsideration of it, inasmuch as it had been understood and agreed in the house the day before, that if upon a full debate had, the bill should be rejected, no further motion should be made about it. As soon as the house met, upon a motion by one of these members seconded by the other, the bill was again brought under consideration and passed the house as it afterwards did the council and had the governor's consent.
The provision made in this act for the exchange of the bills and for establishing a silver currency was altogether conditional and depended upon a grant of parliament for reimbursement of the charge of the Cape Breton expedition. This being at a distance and not absolutely certain, the act had no sudden effect upon the minds of the people, but when the news of the grant arrived the discontent appeared more visible, and upon the arrival of the money there were some beginnings of tumults, and the authors and promoters of the measure were threatened. The government passed an act with a severe penalty against riots, and appeared determined to carry the other act for exchanging the bills into execution. The apprehension of a shock to trade proved groundless; the bills being dispersed through every part of the province, the silver took place instead of them, a good currency was insensibly substituted in the room of a bad one, and every branch of business was carried on to greater advantage than before. The other governments, especially Connecticut and Rhode Island, who refused, upon being invited, to conform their currency to the Massachusets, felt a shock in their trade which they have not yet recovered. The latter had been the importers, for the Massachusets, of West India goods for many years, which ceased at once. New Hampshire, after some years, revived its business and increased their trade in English goods, which formerly they had been supplied with from the Massachusets. Perhaps, they have rather exceeded. . . .
The aversion, in the common people, to a silver and gold currency, had occasioned several tumultuous assemblies in and near the town of Boston. The paper, they said, was not worth hoarding, but silver and gold would all fall to the share of men of wealth, and would either be exported or hoarded up, and no part of it would go to the labourer, or the lower class of people, who must take their pay in goods, or go without. In a short time experience taught them, that it was as easy for a frugal industrious person to obtain silver, as it had been to obtain paper; and the prejudice in the town of Boston was so much abated, that when a large number of people from Abingdon [Abington], and other towns near to it, came to Boston, expecting to be joined by the like people there, they were hooted at, and insulted by the boys and servants, and obliged to return home disappointed.
The assembly being then sitting, it was thought proper to pass an act for preventing riots, upon the plan of the act of parliament known by the name of the Riot Act, except that the penalty is changed from death, to other severe and infamous punishment.
From an aversion to a silver currency, the body of the people changed in a few months, and took an aversion to paper, though it had silver as a fund to secure the value of it. A sufficient quantity of small change could not be procured in England, when the grant made by parliament was sent to America. The assembly, therefore, ordered a deposit to remain in the treasury, of three thousand pounds in dollars, and issued small paper bills of different denominations, from one penny to eighteen pence; and every person, possessed of them to the amount of one dollar or any larger sum, might exchange the bills at the treasury for silver upon demand. The whole sum was prepared, but a small part only was issued, and scarcely any person would receive them in payment, choosing rather a base coin imported from Spain, called pistorines, at 20 per cent. more than the intrinsick value.
From the first introduction of paper money, it had been the practice of government to issue bills for publick charges, and to make a tax for the payment of the sum issued, in future years, into the treasury again. The bills being all exchanged by the silver imported from England, and provision made by law, that no bills of credit should ever after pass as money, there was a difficulty in providing money for the immediate service of government, until it could be raised by a tax. Few people, at first, inclined to lend to the province, though they were assured of payment in a short time with interest. The Treasurer, therefore, was ordered to make payment to the creditors of government in promissory notes, payable to the bearer in silver in two or three years, with lawful interest. This was really better than any private security; but the people, who had seen so much of the bad effects of their former paper money, from its depreciation, could not consider this as without danger, and the notes were sold for silver at discount, which continued until it was found that the promise made by government was punctually performed. From that time, the publick security was preferred to private, and the treasurer's notes were more sought for than those of any other person whomsoever. This was the era of publick credit in Massachusets Bay.
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1. The Diary and Letters of His Excellency Thomas Hutchinson, edited by Peter Orlando Hutchinson, Boston: Houghton, Mifflin, & Co., 1884, vol 1, p. 52, Hutchinson writes:
From 1742 to 1749 some, and generally all the Town Members, were considered as of the Country Party, and he of the Court. Mr Allen and Mr Tyng particularly were very opposite to him.
2. Joseph Livermore the representative of Weston, and Samuel Witt, representative of Marlborough.