Thomas Paine on Paper Money
“Most of the advocates for soft laws are those who have debts to discharge, and which take refuge in such a legislation, to violate their contracts and cheat their creditors”
I remember a German farmer expressing as much in a few phrases as the whole subject requires; “ cash is money, and papers is paper. ”
All of the invention of man are unable to make them otherwise. The goldmacher may cease his labors, and the hunter after the philosopher’s stone go to rest, in case paper can be metamorphosed directly into gold and silver, or made to answer the same purpose in all cases.
Gold and silver would be the emissions of nature: papers is the emission of art. The value of gold and silver is ascertained by the quantity which nature has made in the earth. We cannot make that amount more or less than it is, and therefore the value being dependent upon the amount, depends not on guy. Man has no share for making gold or silver; everything that his labors and ingenuity can accomplish is, to collect it from the mine, improve it for use and give it an impression, or stamp this into coin.
Its being stamped into coin adds considerably in order to its convenience but nothing to its value. It has then no more value than it had before. Its worth is not in the impression however in itself. Take away the impression but still the same value remains. Change it as you will, or even expose it to any bad luck that can happen, still the value is not diminished. It has the capacity to resist the particular accidents that destroy other things. It has, therefore , all the requisite qualities that money can have, and is a fit material to make money of— plus nothing which has not all those properties can be fit when it comes to money.
Paper, considered as a material whereof to make money, has nothing of the requisite qualities in it. It is too plentiful, and too easily come from. It can be had anywhere, as well as for a trifle.
There are two ways in which I actually shall consider paper.
The only proper make use of for paper, in the area of money, is to write promissory notes and obligations of payment in specie upon. A piece of paper, thus written and signed, is worth the sum it is given for, if the person who gives it is able to pay it, because in this case, the law will oblige him. In case he is worth nothing, the particular paper note is worth absolutely nothing. The value, therefore , of such a take note, is not in the note alone, for that is but document and promise, but in the person who is obliged to get it with gold or even silver.
Paper, circulating in this manner, and for this particular purpose, continually points towards the place and person where, and of whom, the money will be had, and at last discovers its home; and, because it were, unlocks its master’s chest and pays the particular bearer.
But when an assembly undertakes in order to issue paper since money, the entire system of safety and assurance is overturned, and property set afloat. Paper records given and taken between individuals as a promise associated with payment is one thing, but paper issued by a good assembly as money is another thing. It is like putting an apparition in the place of a man; it vanishes with looking at it, and nothing remains but the air.
Money, when considered as the fruit of numerous years’ industry, as the reward of labor, sweat and toil, as the widow’s dowry and children’s portion, and as the means of procuring the necessaries and alleviating the afflictions of life, and making old age a picture of rest, has something in it sacred that is not to be wore with, or trusted to the airy bubble of papers currency.
By what power or authority an assembly undertakes to make paper money, is difficult to state. It derives none from your Constitution, for that is silent on the subject. It is one of those issues which the people have not delegated, and which, were these people at any time assembled together, they will not delegate. It is, consequently , an assumption of strength which an assembly is not really warranted in, and which might, one day or other, be the means of bringing some of them to punishment.
I actually shall enumerate some of the evils of paper money plus conclude with offering opportinity for preventing them.
One of the evils of papers money is that it turns the entire country into stock jobbers. The precariousness of its worth and the uncertainty of its fate continually operate, night and day, to produce this destructive effect. Getting no real value by itself it depends for support on accident, caprice, and celebration; and as it is the interest of some to depreciate and of others to raise its value, there is a continual invention happening that destroys the morals of the country.
It was horrid to see, and hurtful to recollect, how reduce the principles of proper rights were left, by means of the particular paper emissions during the battle. The experience then had can be a warning to any assembly how they venture to open such a harmful door again.
As to the romantic, if not hypocritical, tale that a virtuous people need no gold and silver, and that papers will do as well, it requires most contradiction than the experience we now have seen. Though some well-meaning people may be inclined to see it in this light, it is certain that the sharper continually talks this language.
There are a set of guys who go about making purchases upon credit, and buying estates they have not wherewithal to cover; and having done this particular, their next step is to fill the newspapers with paragraphs of the scarcity of money and the necessity of a paper emission, then to have a legal soft under the pretense of helping its credit, and when out, to depreciate it as fast as they can, get a deal from it for a little price, plus cheat their creditors; and this is the concise history of paper money schemes.
But why, since the general customs of the world has generated money as the most convenient medium of traffic and commerce, should paper be placed in preference to gold and silver? The particular productions of nature are surely as innocent because those of art; and in the case of money, are abundantly, if not infinitely, more so. The appreciate of gold and silver may create covetousness, but covetousness, when not connected with dishonesty, is not properly a vice. It is frugality run to an extreme. But the evils of paper money have zero end. Its uncertain plus fluctuating value is continuously awakening or creating new schemes of deceit. Every single principle of justice can be put to the rack, and the bond of society blended. The suppression, therefore , associated with paper money might quite properly have been put into the act for preventing vice and immorality.
The pretense for papers money has been that there was not a sufficiency of silver and gold. This, so far from as being a reason for paper emissions, is a reason against them.
As gold and silver are certainly not the productions of North America, they are, therefore , articles associated with importation; and if we setup a paper manufactory pounds, it amounts, as far as it really is able, to prevent the importation of hard money, or to send it out again as fast it comes in; through following this practice we will continually banish the specie, till we have none remaining, and be continuously complaining from the grievance instead of remedying the cause.
Considering gold and silver as articles of importation, there will in time, unless all of us prevent it by papers emissions, be as much in the united states as the occasions of it require, for the same reasons there are as much of other imported articles. Yet as every yard associated with cloth manufactured in the country events a yard the much less to be imported, so it is simply by money, with this difference, that will in the one case we manufacture the thing itself and in the other we do not. We now have cloth for cloth, yet we have only paper dollars for silver ones.
As to the assumed power of any assembly for making paper money, or document of any kind, a legal tender, or in other language, a compulsive payment, it is a most presumptuous attempt at arbitrary energy. There can be no such strength in a republican government: the folks have no freedom— and home no security— where this particular practice can be acted: and the committee who shall pull in a report for this purpose, or the member who moves for it, and he who seconds it merits impeachment, and sooner or later might expect it.
Of all the various sorts of base gold coin, paper money is the basest. It has the least intrinsic value of anything that can be put in the place of gold and silver. A hobnail or a piece of wampum significantly exceeds it. And there would be more propriety in making these articles a legal tender in order to make paper so.
It was the issuing base coin, and creating it as a tender, which was one of the principal means of finally overthrowing the power of the Stuart family in Ireland. The article is worth reciting as it has such a resemblance to the procedure practiced in paper cash.
Brass plus copper of the basest kind, old cannon; broken bells, household utensils were assiduously collected; and from every single pound weight of this kind of vile materials, valued with four pence, pieces were coined and circulated to the amount of five pounds regular value. By the first proclamation they were made current in every payments to and from the California king and the subjects of the world, except in duties in the importation of foreign products, money left in trust, or due by mortgage, bills or bonds; plus James promised that when the money should be decried, he would receive it in all payments, or make full satisfaction within gold and silver. The nominal value was afterwards raised by subsequent proclamations, the original restrictions removed, and this base money was ordered to be received in all kinds of payments Since brass and copper grew scarce, it was made of still viler materials, of tin and pewter, and previous debts of one thousand lbs were discharged by items of vile metal amounting in order to thirty shillings in intrinsic value. ( Leland ‘ s History of Ireland , vol. iv. g. 265. )
Had King James considered paper, he needed not to have been at the trouble or expense of collecting metal and copper, broken alarms, and household utensils.
The laws of the country ought to be the standard of equity, and calculated to impress on the minds of the people the moral along with the legal obligations of reciprocal justice. But tender laws and regulations, of any kind, operate in order to destroy morality, and to break down, by the pretense of legislation, what ought to be the principle associated with law to support, reciprocal justice between man and man— and the punishment of a associate who should move just for such a law ought to be death.
When the recommendation associated with Congress, in the year 1780, for repealing the tender laws was before the Assembly of Pennsylvania, on throwing up the votes, for plus against bringing in a bill in order to repeal those laws, the particular numbers were equal, and the casting vote rested in the speaker, Colonel Bayard.
“ I provide my vote, ” said he, “ for the repeal, from a consciousness of justice; the tender laws work to establish iniquity by law. ” But when the bill had been brought in, the House rejected this, and the tender laws continued to be the means of fraud.
If anything got or could have a value equal to gold and silver, it would require no tender law; and if it had not that value it ought not to have got such a law; and, therefore , all tender laws are tyrannical and unjust plus calculated to support fraud and oppression.
Most of the advocates for tender laws are those who have debts in order to discharge, and who take refuge in such a law, to violate their contracts plus cheat their creditors. But as no law may warrant the doing a good unlawful act, therefore the appropriate mode of proceeding, need to any such laws be passed in future, will be to impeach and execute the people who moved for and seconded such a bill; and put the debtor and the creditor in the same situation these were in, with respect to each other, before such a law was passed.
Men needs to be made to tremble at the idea of such a bare-faced act associated with injustice. It is in vain to talk of restoring credit, or complain that money cannot be borrowed at lawful interest; until every idea of tender laws is totally plus publicly reprobated and extirpated from among us.
As to paper money, in a light it can be viewed, it really is at best a bubble. Regarded as property, it is inconsistent in order to suppose that the breath of an assembly, whose authority runs out with the year, can give in order to paper the value and timeframe of gold. They cannot actually engage that the next assembly shall receive it within taxes. And by the precedent (for authority there is none), that one assembly makes papers money, another may do the same, until confidence plus credit are totally expelled, and all the evils of depreciation acted over again. The total amount, therefore , of paper money is this, that it is the bogus offspring of assemblies, and when their year expires, they leave a vagrant at the hands of the public….
Paper money is like dram-drinking, it relieves for the moment by deceitful sensation, but gradually diminishes the natural heat, and simply leaves the body worse than it found it. Were not this the case, and could money be produced of paper at enjoyment, every sovereign in European countries would be as rich when he pleased. But the truth is, that it is the bubble and the attempt vanity. Nature has provided the proper materials for money: gold and silver, and any attempt of ours in order to rival her is ridiculous….
Paper cash appears at first sight to be a excellent saving, or rather that it costs nothing; but it may be the dearest money there is. The ease with which it is emitted by an assembly initially serves as a trap to catch people in at last. It operates as an expectation of the next year’s fees. If the money depreciates, right after it is out, it then, when i have already remarked, has the a result of fluctuating stock, and the individuals become stock-jobbers to toss the loss on each other.
If it does not depreciate, it is then to be sunk by taxes at the price of hard cash; because the same quantity of produce, or goods, that would procure a document dollar to pay taxes along with, would procure a gold one for the same purpose. Consequently , in any case of paper cash, it is dearer to the country than hard money, by all the expense which the papers, printing, signing, and other attendant charges come to, and at last goes into the fire.
Suppose one hundred thousands of dollars in paper cash to be emitted every year by assembly, and the same amount to be sunk every year by taxes, there will then become no more than one hundred thousand bucks out at any one time. When the expense of paper plus printing, and of persons to attend the press while the sheets are striking off, signers, etc . be five %., it is evident that during twenty years’ emissions, the main one hundred thousand dollars will cost the country two hundred thousand dollars. Because the paper maker’s and printer’s bills, and the expenditure of supervisors and signers, and other attendant charges can in that time amount to just as much as the money amounts to; for that successive emissions are but a recoinage of the exact same sum.
But gold and silver require to be gave but once, and will last a hundred years (better than paper will one year) and at the end of that period be still gold and silver. Consequently , the saving to govt, in combining its help and security with that of the bank in procuring difficult money, will be an advantage in order to both, and to the whole local community.
The case to be provided against, after this, will be that the government do not lend too much of the bank, nor the bank lend more notes than it can redeem; and, consequently , should anything of this type be undertaken, the best way will be to begin with a moderate sum, and observe the effect of it. The interest given the bank operates as a bounty on the importation of hard money, plus which may not be more than the money expended in making paper emissions.