Page:A History of Banking in the United States.djvu/28

 them to juggling with the frauds of fluctuating prices and dishonest contracts.

The colonists were not worse than their time. The mysterious and powerful functions of credit were developed in northern Europe, half by accident, in the latter half of the seventeenth century. The Land Bank scheme, Mississippi scheme, South Sea scheme, etc., were aberrations due to lack of comprehension of the nature and limits of the power which had been evoked. It was a marvelous thing to discover that a corporation, or a civil body, could emit notes and so borrow, yet win interest instead of paying interest on what it borrowed. This is what the colonies attempted to do. They were "lending" to their citizens the capital which was so much needed, and were at the same time winning an interest which paid the expenses of the State, and all at no cost but that of a little engraving and printing. The notion of credit which prevailed was that it was a way of making formulas of words do the work of capital, if only the formulas were imposing enough, or were uttered by a body having competent prestige.

As the Land Bank did not receive much encouragement, in spite of its connection with education, an alliance with internal improvements, the other great make-weight with which it was always connected for the next hundred and fifty years, was brought into its support. "Fifty thousand pounds ought to be laid out for making a bridge over the Charles river, so that workmen might be employed and currency enlarged, as well as the public accommodated; and ruin will come unless more bills of credit are emitted."

Trumbull says that nearly thirty pamphlets and tracts were printed, between 1714 and 1731, for and against a private bank or a public bank, the emission of bills of credit, and paper currency in general. One of the most notable of these is entitled: "A Word of Comfort to a Melancholy Country" and is a lamentation over the defeat of the Land Bank. Trumbull attributes it to John Wise, who, he says, has been called "the first logical and clear headed American democrat." He is chiefly concerned that a sufficient medium may be provided. The medium need not have value. It will do its work better if it has not. Coin is too costly, and blew England cannot keep it. The merchants ship it off. The bills have done great things for Massachusetts. They have built the college, etc. He preferred a private bank under government inspection to a public bank.

In the meantime, the English had been going through a mania for joint stock companies, which were a new device of credit, the limits and conditions of whose utility had yet to be learned by bitter experience. After the crisis of this speculation in England, the Bubble Act was passed which recited that many companies had, since June 24, 1718, presumed to act as corporate bodies and to make assignable shares without having legal authority so to do. After June 24, 1720, all undertakings to the prejudice of trade,