University of Virginia Library

CHAPTER III.
THE CURRENCY CONFLICT UNDER DUDLEY AND SHUTE.

The relations of the house of representatives to the royal governors under the provincial charter were from the beginning replete with perils of conflict. If under the administration of Phips the actual encounter was postponed, it was partly, no doubt, because the colonists had not yet learned how far they were to be shorn of the privilege of self government which they had enjoyed in the days of the colony. The province charter was heralded to them as a blessing by the boastful Mather and he claimed that his countrymen owed him a debt of gratitude for his services in procuring its issue. Until the Privy Council entered upon the critical supervision and wholesale rejection of the laws passed during the first three years under this charter, the representatives could not have known how far the home government meant to exercise the reserved rights of disapproval of provincial legislation. The passionate and ill-balanced governor nominally at the head of affairs was no longer in the province when the news arrived of the action taken at the meeting of the Privy Council held August 22, 1695, at which amongst so many others, the act in which the exclusive right of taxation was reserved to the General Court met with disapproval. Through knowledge of this action the province was brought face to face with the fact that the Privy Council proposed to exercise actual surveillance over legislation and also did not intend that the possible claim on the part of parliament of a right to tax the

colonists should be baldly surrendered.[96] Under these circumstances the probable action of the friends of the old charter became a question of importance. It was well, perhaps, that the fiery Phips, who had already collided with some of the leaders of that party, was not then at the actual head of the government. His representative, Lieutenant-Governor Stoughton was not aggressive enough to please Edward Randolph, the royal collector of customs, who sums up his estimate of the man in the words "he was a good scholar but not bred to military discipline."[97] Stoughton, through his politic affiliations and by his prudent avoidance of self-assertion, warded off collision at that time and maintained a peaceful attitude during his entire administration of affairs, both before and after the brief presence of the Earl of Bellomont.

It is quite probable that the enthusiasm with which Bellomont was received and the trust which his genial deportment aroused would have given place to other sentiments if his stay here had been prolonged, but, as it happened, he retained the confidence and good will of the people so long as he remained in the province.

His successor in the gubernatorial chair was a man of widely different surroundings and his advent aroused none of that enthusiasm with which the coming of the Earl of Bellomont was hailed. Joseph Dudley, although a native of Massachusetts, was known to be a courtier and was distrusted by his countrymen. He had already

suffered imprisonment, after the overthrow of the Andros government, at the hands of some of the very men who were now prominent in provincial politics. Under the most favorable circumstances a collision between him and the local government might have been expected. As the representative of an autocratic government, himself fully imbued with the notion that the colonies were to be treated as mere dependencies of the crown, he could not have co-operated with a body of men who were seeking to save from the wreck of the old charter some of the planks of self-government which had so long served them in their navigation of the political seas during the days of the colony. It forms no part of my purpose to trace in detail the history of the conflict between the provincial governors and the assembly. Conspicuous as was its function in the formation of the political opinions which made the revolution a possibility, it is mainly important to us because it affected questions connected with the currency.

After the wild plunge was made in the emission of bills for loans, and the recklessness of the province legislature was thoroughly appreciated, the influence of the Board of Trade, which was organized to relieve the Privy Council of the supervision of colonial affairs, that of the royal governors and also, as a rule, that of the province council, was exerted, on the side of conservatism and sound money. The royal instructions, often impolitic and sometimes impracticable, were after that time uniformly couched in restraint of excessive emissions, and the respective royal governors, although at times they connived at evasions of the instructions, generally exerted themselves to secure obedience thereto. The council held a position midway between the governors and the representatives, and their relations to

the subject were somewhat in accordance to this position. Although elected by the assembly, still the tradition which attached to them as a sort of upper house, having special powers confided to their execution by the charter, influenced the selection of prominent men as members, who were generally possessed of more than average wealth. Their relations with the governor were closer than their connection with the house, and they were to be relied upon to support him unless some recognized question of principle was involved in the matter under conflict. So that, as we run through the various points of controversy which arose between the governor and the assembly, we find the council sometimes opposed to the house, sometimes acting the role of peacemaker, but occasionally joining hands with the representatives in asserting some principle of self-government. The house, throughout the contest, was persistent in the maintenance of all rights granted to that body by the charter, but on questions of finance it was often unreasonable and intemperate, readily following the lead of any persuasive advocate who might propose a financial heresy and resisting to the utmost all attempts to impose restraint upon its action. In the effort to take into its own hands not only the origination of all appropriations, but also the control of all disbursements, which soon became the settled policy of the representatives, the relations between the house and the governor and council finally assumed such a character of hostility, that reasoning upon that point was thrown away and in the discussions which ensued arguments were wasted. Even as early as 1702, the house locked horns with the board under circumstances so utterly indefensible that it was compelled to abandon its position. The representatives had refused to comply with the request of the governor that they should make an appropriation for the fort at Pemaquid, a work which he had been specially instructed to forward. The board requested a conference on the subject, which conference the house peremptorily declined to grant. Whereupon the board declared that this refusal of a conference upon a matter relating to the government was an infringement of their rights and privileges, and in the end, the house yielded the point.

There were two questions which Dudley under his instructions was compelled to press upon the attention of the assembly, both of which were sure to meet with resistance, and unless the discussions which would inevitably ensue should be conducted with great judgment, feelings would be engendered which would greatly diminish his influence over that body. One of these was the construction of the fort at Pemaquid, the other was the fixing of a salary for the governor of the province. On both of these points the representatives were unwilling to follow the instructions, nor was there any way in which Dudley or any of his successors could overcome their objections and secure obedience. The council, notwithstanding the recent conflict with the house, supported the position assumed by that body with regard to the salary. In his communications with the representatives, Dudley was often abrupt, almost to discourtesy, and in this instance he had curtly called upon them to carry out the instructions. They informed him that the stating of perpetual salaries was not to her Majesty's interest and when he sent down for the house journal in order to inspect it, they told him he might see it in their chamber but declined to send it up to him. The strained relations thus early established through the governor's attempt to enforce

his instructions were made more pronounced at a later date by the exercise on his part of the power lodged by the charter in the governor, of negativing councillors not grateful to him, and the attempt on his part to exercise the same power with regard to the speaker whom they had chosen. Thus it came to pass, almost at the beginning of his career as governor, that Dudley established with the body which controlled the making and shaping of the supply bill, relations of such a nature that the representatives would not patiently listen to any advice that he might give them. Nevertheless he felt it incumbent upon him to say something from time to time upon the subject of the currency and it would have been well if they had hearkened to his warnings.

"The particular business you have before you," he said in 1703, "is the making good the votes of the two last Assemblies in raising the tax for the bills already issued." May 27, 1708, the governor sought to secure legislation which should prevent the bills of credit from declining. "We are all," he said, "sensible of the great service and benefit we have by the bills of credit. It behooves us to be very jealous of their disparagement, and as we always deposited a just fund for their support, so I think now it may be proper to make some Act of the Assembly to prevent their being undersold, and thereby defamed, with penalties thereupon." During the summer of 1711, £50,000 in bills of credit were loaned temporarily to Boston merchants, to enable them to furnish supplies to the Hill and Walker expedition, payment for which supplies was made to the merchants by sterling drafts on London. May 29, 1712, while these bills were still out, the governor said, "I think it necessary also to move you to consider the state of the

bills of credit, in which the province has honored themselves by keeping up their just value hitherto." The public bills loaned to the Boston merchants, although the amount was undoubtedly large enough to have had a perceptible influence upon the rate at which the bills were current, could not have been included among those towards which the governor directed his remarks. No obligation rested upon the government to provide by legislation for their retirement. The loans were for a specific period and at maturity the return of the bills to the treasury could be enforced. The apprehensions which Dudley felt for the credit of the bills were, therefore, aroused in behalf simply of the bills which had been issued to meet the charges of the government, but so great was his solicitude that in December, 1712, he recurred to the subject, saying: "Gentlemen, the province has had the benefit of these bills of credit through the course of their long and heavy war and now since her Majesty's wise and steady counsels have brought us into view of peace, we must take care to honor them by passing through the payment of them in such course and method as we have projected in the several acts of the Assembly made and provided for that purpose."

In June 1715, the representatives asserted that the trade of the province was greatly obstructed by the exportation of coin; that the only medium of exchange then passing was bills of credit; that so few of these were in circulation that it would occasion trouble to call in the bills which by the terms of the resolves under which they were issued should by right be called in that year; as a remedy for the trouble they proposed that a part only of these bills should be called in. No damage would accrue from this proceeding, they said,

either to the public or to private persons, but on the contrary, it would be for the advantage of all. On the 20th of July, the governor protested against this doctrine and informed them that the bills would be sure to decline if upon any pretext whatsoever they should fail to redeem their promises in calling them in. The representatives showed the value in which the governor's advice was held by them, by voting, the same day, to postpone the retirement of a part of the bills.

The accession of George I, August 1, 1714, produced a lull in the conflict between the governor and the representatives. By an act of Parliament the commission of the governor remained in force for six months after the decease of Queen Anne. It was known that, with her death, Dudley's power at court was greatly diminished, and pending the appointment of a successor, he evidently wished to avoid collision as far as possible. At the expiration of the six months, the governor having no longer a semblance of authority, the council assumed control of the government, to be superseded in turn by Dudley, whose powers were temporarily extended by royal proclamation. March 17, 1715, Elizeus Burgess received the appointment of governor of the province. Burgess was a colonel in the army and had seen service. His appointment was made at a time when the feelings still ran high between the advocates of a currency secured upon real estate, to be issued by a private bank, and their opponents who, in order to defeat the incorporation of the private bank, favored the emission of bills of credit by the province to be loaned for a term of years to citizens. The public bank, as this scheme was denominated, was triumphant. The private bank was frowned upon by the authorities and in November, 1714, £50,000 public bills were issued

and loaned to the inhabitants of the province on real security for five years at five per cent. interest, the interest and one-fifth part of the principal to be paid annually.[98] In all this the hand of Joseph Dudley had been felt, and for that reason those who favored the private bank actively opposed his reappointment and were anxious that his successor should take charge of the government. It became known that Col. Burgess did not intend to assume office for some time but proposed to prolong his stay in England and the unusual step was resorted to of procuring and forwarding to Boston exemplified copies of his commission and of the new commission of the Lieutenant-Governor, Colonel William Tailer, who had secured a re-appointment. Both of these were published on the 9th of November. Tailer thereupon assumed the administration of the affairs of the government. He was a native of New England, and a connection of Stoughton's by marriage. He was known to be in favor of the private bank, a fact which secured him the support of a faction in the house of representatives and which was, perhaps, the secret of his brief administration of affairs at this time, but which also served as an obstacle for his retaining the office of lieutenant-governor after Burgess determined not to come to Massachusetts. His views on the subject of banking cost him the support of those who, as it chanced, were able to influence the appointment of a successor to Burgess, and simultaneously the appointment of a new lieutenant-governor. Sir William Ashurst alleged in a letter that the true reason of Tailer's popularity was "his being at the head of the private bank", and this, he added, "I take to be a new and strong reason for putting him out of his employment; and in this I do not rely upon my own judgment, but upon the judgment of many principal gentlemen in the Bank of England, who condemn it [the private bank] as mischievous to the country and calculated to serve private sinister views." The importance of Sir William Ashurst's friendship at this juncture will be apparent if we turn to the pages of Hutchinson for an account of what was then being done in this connection in London. It is there recorded that "Mr. Belcher, afterwards governor, who was very opposite to the bank party, was then in London; he joined with Mr. Dummer, the agent, and they engaged Sir William Ashurst with them, and prevailed upon Burgess for a thousand pounds sterling, which Belcher and Dummer advanced equally between them, to resign his Commission that Colonel Shute might be appointed in his stead."[99]

The Colonel Shute whose commission was secured through this advance by Boston capitalists, belonged to a family of dissenters. He had served in the field under King William and had been wounded in one of Marlborough's engagements in Flanders. He stood well at court, was thought to be a "friend of liberty", as the phrase then went and had the reputation, according to Hutchinson, of being humane, frank and generous. Chalmers, whose contempt for him seemed boundless, says: "He was one of those well meaning men, who in private life gain some respect because

they are harmless, but he possessed not even the minute intelligence which enables official men of little parts to transact great affairs."[100]

William Dummer, a native of New England, and a son-in-law of Governor Dudley was at the same time appointed lieutenant-governor. He was a discreet and politic man, who when in charge of the administration yielded upon occasion, even when the prerogatives of his office were undoubtedly invaded, rather than jeopardize the true interests of the province.

It may well be doubted whether the Boston capitalists, who advanced money to secure the appointment of Shute in place of Burgess, gained much by the change. One thing it will, however, be well to note in connection with this extraordinary transaction. Those gentlemen would never have resorted to a method the obvious tendency of which was to bring into disrepute the royal governors of the province, if it had been thought possible at that time to secure the influence and direct the power of the Board of Trade against the private bank. At a later date this was not only accomplished but Parliament itself intervened. It is evident, however, that at this time the opponents of the private bank could find nothing in the English statutes which made the proposed scheme for a bank unlawful and hoped for no aid from the Board of Trade through which they could defeat the supporters of the private bank. It is incredible, otherwise, that they should have resorted to such discreditable methods.

On the 22nd of June, 1716, a committee for promoting the produce and trade of the province reported a bill for emitting £100,000 in bills of public credit. The bill failed to pass at that time, but was again brought

before the attention of the General Court and on the 1st of August the lieutenant-governor recommended its passage, saying, "I hope if agreed to [it] will greatly tend to the support of the government and the encouragement of trade, therefore I cheerfully recommend it to you." The passage of the bill was not, however, secured at that time, but was still in abeyance when the new governor assumed the administration of affairs. Shute's commission was dated June 15, 1716, and he arrived in Boston on the 4th of October following. He at once put himself into the hands of the opponents of the private bank and in his first speech to the assembly he said, "It is my lot to enter upon this government at a time when your commerce (a very important article of the people's happenings) is under a very great discouragement by an universal want of money, which is the medium of trade. I must, therefore, recommend to you as a matter worthy of your greatest application to find out some effectual measures to supply this want and thereby restore trade to a flourishing condition in which you shall have my best endeavors and hearty concurrence."

The temporary loan of £50,000 to Boston merchants was at that time nearly all paid up, but the £50,000 loaned, at interest, in 1714 was still afloat. Profiting by the experience gained by these emissions, which avoided the necessity of laying taxes for calling in the bills and which through interest on the loans could be made to contribute towards the support of the government, the legislature acted on this advice and December 4, 1716 passed an act for emitting £100,000 to be distributed proportionately to the counties and to be loaned to the inhabitants of the province at five cent. interest, on real security for ten years, alleging in the

preamble that "the bills of credit on the Province, being yearly called in, are now grown very scarce, and few of them passing in proportion to the great demand for the same."[101] The marked effect of this loan on silver and exchange seems to have opened Shute's eyes to the situation, for in April, 1717 he spoke of the "intolerable discount" on the bills, concerning which he said in May of the same year that he could not forbear alluding to it again as a matter of great importance.

There was a clause in the £100,000 loan act which authorized the commissioners to lend again any sums which should be paid in before the expiration of the ten years for which the sums were to be loaned. The obvious purpose of this was to keep the entire sum afloat during the period of the loan, in the hopes that it would relieve the pressing demand for currency. As early as February, 1718, Shute became convinced that this would work badly and on the sixth of that month he urged the repeal of this clause. He placed himself squarely among the advocates of a metallic currency the same month, saying: "We shall never be upon a firm and lasting foundation, 'til we recover and return to silver and gold, the only true species of money."

In May he urged the assembly to find some means to advance the sinking credit of the public bills, saying that the ill consequences of not giving the matter due attention were daily increasing and would inevitably end in the ruin of the province if not timely prevented. Delays, he said, were highly dangerous. The miserable record of their neighbors at Carolina, he thought, might awaken them. If nothing were done at this session he was persuaded that it would prove thereafter to be too late. A committee, appointed by the governor and

council on the second of June, 1718, to consider of some fit expedient for raising the value of the bills of credit of this province, and recovering the trade out of its present decay, could suggest no better remedies than are to be found in the following propositions:—1. That credit be limited; 2. That the governor's recommendation as to the repeal of the clause in the £100,000 emission, which has been already alluded to, be carried out; 3. That the exportation of silver and gold be prohibited.[102]

May 28, 1719, Shute called attention to the fact that his Majesty was always inculcating from the throne the danger of postponing the payment of parliamentary securities and the necessity of constantly supporting the credit of Great Britain. He felt it to be his duty to give the same advice to the assembly. Again, on the 13th of July 1790, he urged the General Court not to postpone the bills as they had too often done, to the detriment of the government and the lessening of the value of the bills. On the 19th the representatives satirically expressed their great pleasure and satisfaction at the successive reminders they had received from the governor upon the necessity of maintaining the bills, but included in their message a recommendation that produce, as well as bills, should be received in the treasury in payment of taxes.

In 1721, on the 15th of March, the governor in a speech told the representatives that he had consulted with some of the principal gentlemen and merchants of Boston as to some scheme to redress the grievances under which they were laboring for want of a medium of trade. He then added, "The redress seems to be very much within the compass of every man's capacity,

I mean to be frugal and industrious, without which the mines of Peru and Mexico would not make you a happy and prosperous commerce." The representatives replied that they agreed with the governor in his opinion that further issues would depreciate the bills, and they had as a remedy passed a bill restraining traffic in money except at the rates fixed by the act of Parliament.

Notwithstanding the governor's opinion that silver and gold were the only true money, he approved another loan bill in March, 1721, at which time £50,000 were distributed among towns, to be loaned on real or personal security, the interest on the loans being intended to be for the benefit of the towns. The rate was not specified. The loans were to be called in, £10,000 a year, 1726-1730 inclusive.[103]

By the summer of 1721, the various points at issue between the governor and the representatives had reached so great a magnitude and the conflict had assumed such an acute form that the usefulness of Shute at the head of the administration was much impaired. The import duty laid upon English merchandise in 1718 and the tonnage duty imposed upon English built ships at the same date had brought down upon the assembly the rebuke of the Lords Justices who in the absence of the King were administering the affairs of the kingdom.[104] A new instruction was sent to Shute by the Board of Trade in 1721. This was known as the

14th instruction and by its terms he was required to submit to the crown for approval all acts authorizing the issue of bills of credit unless the same were issued to meet necessary charges. The acts thus to be submitted were required to contain a clause suspending their execution until approved by the crown. Hutchinson makes the statement that this instruction was not occasioned by the bad effect of the bills upon the currency but by a complaint from some merchants of New York relative to a specific act passed by the New York assembly; whereupon to prevent similar acts in the future this instruction was issued.[105]

On the tenth of June the house inquired of the governor how this instruction was to be applied. On the 13th he requested the representatives to state what the difficulty was which they had encountered. They replied that the exception in the instructions was the cause of their trouble. Under this exception, bills could be issued for raising and settling a public revenue for defraying the necessary expenses of the government according to the instructions already given. Can the governor, said they, give his assent to an act or order for raising and settling a revenue, that is, by fixing a settled salary on himself and other officers in the government, without inserting the clause, that the act shall not take effect until approved by the crown, or must any act making such an allowance contain the clause referred to? This point was what the representatives

Plate 5

[Description: Three 1s. bills, 1713 Plates.]

wished to have cleared up and they felt themselves inadequate for the task since this instruction referred to other instructions which had not been communicated to them. Shute fell into the trap and submitted the question to the council, who unanimously decided that appropriations of this sort did not require the approval of the crown before they should become operative. A precedent was thus established which became of great value to the representatives in their discussions upon this point at a later day.[106]

This triumph of the representatives over the governor, and it may also be said over the Privy Council was to all intents and purposes the end of the conflict between the governor and the house on matters connected with finance, so far as the prerogatives of the office or the instructions under which the governor acted were concerned. During the remainder of the time that Shute was in the province the representatives occupied what time they devoted to this subject in a heated contest with the council, over the control of the disbursements under the supply bill. In 1721, the house inserted in the supply bill a clause limiting the application to the purposes expressed in the resolve in these words: "and for no other ends or uses whatsoever." To the use of this phrase the council demurred and for a time no appropriation was possible, each party to the contest asserting

that the responsibility for the situation rested with the other.

In March, 1722, a resolve was passed authorizing the issue of bills to meet the expenses of the government, in which the obnoxious phrase was not inserted, but the purposes of the house were accomplished through a clause at the end of each appropriation to the effect that the aforesaid amount was "to be drawn out of the Treasury for the ends and uses above appropriated only."

The sudden and unexpected departure of Shute from the province in 1723, produced consternation in the minds of the representatives. They assumed that he had gone to England and that his purpose was to lay his grievances before the crown.[107]

The overthrow of the projectors of the land bank, in 1714, temporarily checked the discussion of projects of that nature. It did not, however, entirely check the publication of pamphlets treating of matters connected with the currency. A writer in 1716 discussed the projects for banks which had been submitted by their friends.[108] He was a believer in paper money and thought the province might furnish it through loans to towns or better yet the business men of the province might organize a private bank and emit an adequate supply.

In 1719, another writer took up the subject and published two pamphlets in which he attacked the whole system under which the bills had been issued and

demonstrated with clearness and vigor the many fallacies which existed concerning them.[109]

In 1720 and for a time thereafter the advocates of a private bank were quite active and there were numerous publications during this controversy. The first among these was a pamphlet entitled "The Distressed State of the Town of Boston," which was written by John Colman, whose subsequent connection with the Land Bank of 1740 made him notorious.[110] Undue importance was attached to this publication and the author was arrested in a criminal suit for libel. This resulted in the appearance of a number of controversial pamphlets most of them being of little importance.[111]

Among the pamphlets brought forth at this time was one which contained a suggestion for a bank which should emit long term notes on security, the same to be paid in commodities.[112] Another advocated a resumption of

specie payments upon a plan similar to the subscription loan which was attempted a few years later. Merchants were to borrow from the province public bills of credit and repay the province in silver.[113]

The form of the bill which the writer proposed to emit is rather interesting since it states the value in proclamation money or rather in the standard established by the proclamation.[114]

A writer who believed that the prosperity of the country rested upon trade and that the amount of exports should exceed the imports in order that this should be advantageous, advocated the restoring and upholding of the public credit as a good way to end these controversies.[115]

An advocate of paper currency set forth his opinions in 1720 in a letter to an eminent clergyman,[116] and another holding similar views demonstrated in 1721 that the evils of the situation were to be traced to the extravagance of the people.[117]

The Reverend John Wise of Chebacco came to the rescue of the friends of a private bank in a long pamphlet in 1721.[118] This year was also signalized by the publication of an extremely valuable tract which contains a great deal of information difficult to find elsewhere in print. The author, who is opposed to paper money, devoted himself to an historical investigation of the origin of the bills and to a discussion of their effects upon the prosperity of the province.[119] After this the activity of the pamphleteers temporarily ceased.