Page:History of Fiat Money and Currency Inflation in New England from 1620 to 1789.djvu/10

 was to loan to the people, on interest payable annually. In this cauldron of finance, the faction which created the greatest commotion was the land bank party. They desired to do business on the basis of a "Land Security as a Fund for Bills and Notes to be Circulated." The agitation by the private bank advocates virtually compelled the General Court to issue a loan of £50,000 in bills of credit to the people at 5 per cent per annum, one-fifth of the principal to be paid annually. This measure of the government virtually established a public bank which loaned bills of credit on mortgages of land. The business interests soon felt the want of a larger circulation. Their demands were temporarily appeased by a loan of £100,000 in 1716, secured by mortgaged estates of double the value of the sum borrowed for ten years at 5 per cent annually. The income from this issue of paper bills was to aid the government in liquidating public charges. When the period of redemption lapsed the bills were to be retired and burnt. The emission of this batch of government obligations depreciated the currency still more. A part of this loan was still in circulation in 1739.

A considerable portion of the people was favorably impressed with the private bank scheme which was advocated by the financiers, who were trying to grope their way out of the difficulties into which the legislators had led them. After 1714 the idea of a private bank scheme found a welcome in the minds of the people. It grew in popularity because its proposed function was simply to issue a circulating medium. The impression current in the trades circles was favorable to any emission of paper currency whether it had the seal of the province or of a private corporation. The public felt morally certain that the prosperity [238]