Front Page Titles (by Subject) AN ESSAY On the Danger of too much circulating Cash in a State, the ill Consequences thence arising, and the Necessary Remedies. [ Published in the Pennsylvania Evening Post of Oct. 5, 1776, under the signature of A Financier. ] - Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects
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AN ESSAY On the Danger of too much circulating Cash in a State, the ill Consequences thence arising, and the Necessary Remedies. [ Published in the Pennsylvania Evening Post of Oct. 5, 1776, under the signature of A Financier. ] - Pelatiah Webster, Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects 
Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects, published during the American War, and continued up to the present Year, 1791 (Philadelphia: Joseph Crukshank, 1791).
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AN ESSAY On the Danger of too much circulating Cash in a State, the ill Consequences thence arising, and the Necessary Remedies.
THE computations of the value of the Free States of America by Conti—and Doria, in the Evening Post of Sept. 21, rather prove that value to be immense than reduce it to a certainty. Perhaps another method of computation might be admitted, viz. from the quantity of land within the present inhabited part of those states, which is at least two hundred millions of acres, and worth a dollar per acre I should think at least, some say two or three dollars, and perhaps the personal estate may be computed at as much more, which I do not think is reckoning high, and will make the amount four hundred millions of dollars. All these computations prove with certainty enough that the funds, on which the Continental money depends, are sufficiently great to support a very much larger quantity than is already emitted.(a) I would farther observe that the American States owe nothing to any body but themselves, and employ no ships, soldiers, &c. but their own, so that they contract no foreign debt; and I take it to be a clear maxim, that no state can be ruined, bankrupted, or indeed much endangered, by any debt due to itself only; nor can it ever be much impoverished by any war, if the war and other casualties do not destroy mankind faster than the women produce them, and the people that are left at home can furnish the provisions, clothing, &c. necessary for themselves and the soldiery, together with all other necessary stores and implements of the war.
There requires no more to preserve such a state in a war of any length of time than good economy in bringing the burden equally on all, in proportion to their abilities; but then I think it very necessary that they should pay as they go, as near as may be. The soldier renders his personal services down on the spot, the farmer his provisions, the tradesman his fabrics, and why should not the monied man pay his money down too? Why should the soldier, tradesman, farmer, &c. be paid in promises, which are not so good as money, if the fulfilment is at a distance?
Payment in promises or bills of credit is a temporary expedient, and will always be dangerous, where the quantity increases too much, at least it will always have the consequences of a medium increased beyond the necessities of trade; and whenever that happens, a speedy remedy is necessary, or the ill effects will soon be alarming, and, if long neglected, will not be easily remedied. The remedy or rather prevention of this evil I take to be very easy at present.
If the quantity of Continental currency is greater than is necessary for a medium of trade, it will appear by a number of very perceptible effects, each of which point out and facilitate the remedy. One effect will be, that people will choose to have their estates vested in any goods of intrinsic value rather than in money, and of course there will be a quick demand for every kind of goods, and consequently a high price for them; another effect will be discouragement of industry, for people will not work hard to procure goods for sale, while the medium for which they must sell them is supposed to be worse than the goods; and of course, another effect will be a discouragement of trade, for nobody will import goods, and sell them, when imported, for a medium that is worse than the goods themselves; for in that case, though the profits may be nominal, the loss will be real.
These effects all point out their only remedy, viz. lessening the quantity of the circulating medium, and this can be done by but three ways that I know of: First, the destruction of it by some casualty, as fire, shipwreck, &c. or secondly, exportation of it, which cannot happen in our case, because our medium has no currency abroad, and I think it very well for us that it has not; for in that case our debt would soon become due to people without ourselves, and of course less sensible, more difficult to be paid, and more dangerous; the third, and, in my opinion, the only practicable way of lessening the quantity is by a tax, which never can be paid so easy as when money is more plenty than goods, and of course, the very cause which makes a tax necessary, facilitates the payment of it.
The tax ought to be equal to the excess of the currency, so as to lessen the currency down to that quantity which is necessary for a medium of trade, and this, in my opinion, ought to be done by every state, whether money is immediately wanted in the public treasury or not, for it is better for any state to have their excess of money, tho’ it were all gold and silver, hoarded in a public treasury or bank, than circulated among the people, for nothing can have worse effects on any state than an excess of money. The poverty of the states of Holland, where nobody can have money who does not first earn it, has produced industry, frugality, economy, good habits of body and mind, and durable and well-established riches, whilst the excess of money has produced the contrary in Spain, i. e. has ruined their industry and economy, and filled them with pride and poverty.
But there is, besides this general principle, a special reason in our case, why we should pay a large part of our Continental debt by a present tax; the great consumption of our armies, and stoppage of our imports, make a great demand for the produce of our lands, the fabrics of our tradesmen, and the labor of our people, and of course raises the prices of all these much higher than usual, so that the husbandman, tradesman, and laborer get money much faster and easier than they used to do, and it is a plain maxim, that people should always pay their debts when they have a good run of business, and have money plenty; many a man has been distressed for a debt when business and money were scarce, which he had neglected to pay when he could have done it with great case to himself, had he attended to it in its proper season; this applies to a community or state as well as to a private person.
These last observations will apply with great exactness to those parts of the Continent which sie nearest to the great scenes of the war, and have suffered most by it; and if they can bear the tax, I think those who lie at a distance from those horrors, and have felt little more than a sympathy of the distress of their brethren, can have no reason to complain, if they are called on for their share of the expense.
The Continental money is to be considered as a debt fastened on the person and estate of every member of the United States, a debt of great honor and justice, of national honor and justice, not barely empty honor, but that essential honor and credit in which the safety of the state is comprised, and therefore by confession of every body must be punctually and honorably paid in due time; otherwise all security arising from public credit must be lost, all confidence of individuals in our public councils must be destroyed, and great injustice must be done to every possessor of our public currency, to the detriment of all, and ruin of many who have placed most confidence in our public administration: and nothing but shame, scandal, and contempt can ensue, for which nothing but most inevitable necessity can be any reasonable excuse.(b)
And in this great argument is every individual of our United States so deeply interested, that I cannot conceive one sensible person can be persuaded to risk these consequences for the sake of a little delay of payment of that which must one day be paid, or we must all be ruined together. The Continental debt is already a heavy one, and there is no way of sinking it but by paying it while we can; it is still increasing fast; and without a speedy tax, and a very sufficient one, it will grow upon us beyond any possibility of payment. If a man only suffers his rents, butcher’s and tradesinan’s bills, &c. to be unpaid a number of years, it will endanger his whole fortune. An expense account ought always to be paid up as soon as it becomes due; these are accumulating sums, and it is dangerous to neglect them.
I have heard some people say, it is no matter for the present payment of the Continental debt, we are a country of rapid increase, and what is contracted by three millions of people, will soon be paid by six. But how unfatherly and ungenerous is it to load posterity with an immense debt, which we have an advantage in sinking a good part of ourselves; besides, it will be a great discouragement to foreign emigrants to settle in this country, to be told that the country is loaded with an immense debt, and their first title to an enfranchisement will be by beginning to pay it.
We are engaged in a cause which, in all annals of time, has ever been deemed most honorable and glorious, and most characteristic of noble and generous minds, viz. spurning off slavery, and asserting our liberty. As things now stand, the most hardened, impudent Tory does not pretend that if we fail of supporting our cause, we have any other chance but that of absolute submission and pardon, and even hat pardon, doubtless, with numerous exceptions. Good GOD! Who can bear the thought of absolute submission and pardon? Pardon! for the greatest virtue of a civil nature that the human mind is capable of! Who can think, without distraction, of coming under the domination of tories, and suing to them for favors and intercessions? Tories! with standing armies at their heels, and soldiers with bayonets ready to enforce all the respect and submission they may claim.
This dreadful apprehension introduces, with great force on my mind, another reason why we ought to sink, by a sufficient tax, as much as we can of the continental debt, viz. That without this it is not possible to continue the war, and avoid absolute submission.
I conceive the value of the currency of any state has a limit, a ne plus ultra, beyond which it cannot go, and if the nominal sum is extended beyond that limit, the value will not follow. No human wisdom, or authority, can be able to stretch the nominal currency beyond such real value. The consequence of any attempt to extend such nominal addition, must depreciate the value of the whole, till it is reduced within said limit.
I will explain my meaning thus:(c) Suppose that thirty millions of dollars was the utmost limit of currency to which the United States of America could give real, effectual value, and they should emit thirty millions more; I say the last thirty millions would add nothing to the value of the whole, but would sink the value of the whole sixty millions down to its limit, viz. thirty millions; i. e. the whole sixty millions in that case would not purchase more real, substantial goods, than the thirty millions would have done, before the other thirty millions were added to it.
It follows from this, that any attempt to continue the war, by increasing the currency beyond the abovesaid limit, is vain, and must fail of the effect intended, and ruin all those who possess the currency already emitted. Whether the currency already emitted rises to the said limit, is a question of fact that may admit some doubt, but that it is not greatly within it, I think can be no doubt with people well acquainted with the nature and circumstances of this great subject; and be that as it may, I think every inconvenience arising from it is easily remedied by a sufficient tax. I do not apprehend we have yet suffered by a depreciation of the currency, because I cannot observe that the general prices of goods are more raised than the circumstances of the war would make necessary, were our money all gold and silver, and farther extremities may produce farther effects of the same kind, without depreciating the currency at all.
No kind of necessaries have risen to the excess of price given last winter in Boston for fresh provisions, tho’ their currency was all gold and silver, increase of risk must raise the price of all imported goods, scarcity of laborers must raise the price of labor, and of consequence the price of every thing produced by labor, scarcity of tradesmen (many of whom are gone into the war) and demand for tradesmen’s fabrics, must raise the price of them; besides, many raw materials used by the tradesmen, must be imported at great risk, and I do not see that the prices of most or all these are greater than they would be, if every Continental dollar was a silver one.
But should we admit that we are on the verge of a depreciation, or that our currency hath suffered some little already in its value, two consequences will follow, which deserve great and immediate consideration.
First, That a speedy remedy is immediately necessary, which shall operate effectually, and prevent the ruin of our currency; and the second is, that the remedy by this very means becomes more easy and practicable than otherwise it could be, because a tax will be paid much more easily in this case than it could be, if money was in credit enough to be avariciously hoarded, and this holds, let the tax be of any nature, such as general assessment of polls and estates, excises, imposts, or duties on goods, lotteries, &c. &c. in any or all these ways, our currency may be lessened much easier, when its credit is a little doubted, than when it is at its highest.(d)
What contributes not a little to this facility is, that it may be done by general consent, without public uneasiness and disturbance, for a depreciation of currency can be wished for by nobody, but those who are deeply in debt, the weight or numbers of whom I have reason to believe is not great at present in these States; it is the mighty interest of all the rest of the inhabitants to prevent a depreciation, and I conceive every man of estate who has cash in hand, or due to him, would be willing to contribute his share to the lessening our currency, and so preserving its credit. Yea, would eagerly choose this, rather than risk his own loss by a depreciation of the cash he has in hand, and in debts due.
In this time of distress the public has a right to every man’s best thoughts. I have not the vanity to think I can exhaust the subject, but I have said so much on it, as I hope will set abler heads and pens on a thorough disquisition of it, for I think all will agree, that the subject is a very important one, and deserves most immediate and most serious attention.
[(a) ] The first emission of Continental money was dated May 10, 1775, but was not really issued into actual circulation till some months afterwards, but the quantity multiplied so fast that it became somewhat alarming at the time when this essay was written.
[(b) ] The citizen, at the time of writing this, had no conception that the continental money could continue to be a quick currency at 500 for 1, and finally run itself out to nothing, and die, not only without any tumult, but with the general satisfaction of the people.
[(c) ] No estimate of the current cash of the Thirteen States had been made on any sure data when this essay was published, but it was generally computed at about 30,000,000 of dollars, which is somewhat less than one third of the current cash of Great Britain; but on a more critical examination of the subject, this computation appeared much too high: perhaps, about 12,000,000 of dollars may be near the truth.
[(d) ] However plain the necessity of a tax at that time to prevent the excessive increase of the continental money, may appear to us now, it was then not so clear; for after many debates in Congress, that measure was not adopted for a long time. I am told, one member of Congress rose during those debates with this exclamation, “Do you think, Gentlemen, that I will consent to load my constituents with taxes, when we can send to our printer, and get a waggon-load of money, one quire of which will pay for the whole?”