Page:Cambridge Modern History Volume 7.djvu/100

 68 Currency difficulties. [1700- were given for ship-timber and naval stores ; but this class of products supplied another source of dispute, in the persistent and legitimate determination of British officials to retain the woods and unoccupied land as a source of supply for naval timber. There was yet another fruitful source of dispute between the home government and the colonial assemblies. The latter were constantly seeking to meet financial difficulties by the issue of paper-money. The causes of this desire were of two kinds, commercial and political. All the colonies suffered from lack of specie. In some the difficulty was partly surmounted by what one may call a system of modified and legalised barter. In Virginia, as we have seen, tobacco was the accepted form of currency. In New York beaver-fur held at one time the same position. There was in New England a curious and complex system by which certain commodities were declared to be legal tender at a fixed value. As might have been expected, the vendor indemnified himself by having two prices, one for specie, the other for what was called " country pay." The deficiency of specie naturally made men welcome the issue of paper; and this in turn reacted and diminished the supply of specie. For it is an accepted economical law that bad money drives out good ; or, to put it differently, if one form of currency will circulate more generally than another, no one will introduce that other into an area where both forms are of equal value, or keep it there. The demand for paper-money was further strengthened by administrative considerations ; for if payment in kind is inconvenient to the private trader, much more is it so to the collector of public dues. Moreover there is a natural tendency on the part of young and hopeful communities to escape from financial difficulties by mortgaging their future. The problem of raising funds for public purposes was also beset by special difficulties. For while there was plenty of wealth in the colonies, that wealth was mostly in the hands of men actively engaged in trade, and thus took the form of floating capital, not of those accumulations which are the easy and obvious prey of the public financier. It was natural that the home government should oppose such a policy, for the real inconveniences of a paper currency made themselves felt far more in intercolonial than in internal trade. Thus we find the records of almost every colony full of disputes between governors endeavouring to carry out their instructions prohibiting the issue of paper-money, and assemblies bent on taking a short road to financial relief and prosperity. In 1720 an order was issued by the King in Council forbidding governors of colonies in America to sanction the issue of bills of credit. It may be doubted how far this instruction was held to apply to the proprietary or chartered colonies, two of which Pennsylvania and Rhode Island were among the chief offenders. But this limitation did not apply to an Act of Parliament passed in