Page:History of Fiat Money and Currency Inflation in New England from 1620 to 1789.djvu/16

 part on land security into money redeemable in twenty years by merchandise or produce at an arbitrary price. This private corporation was a revival of the land bank idea of 1714. In 1740 this institution issued and loaned about £35,000 which circulated as money. The government was restricted from issuing any more bills of credit, as there were £210,000 in circulation, redeemable in 1742, but no royal charge had been received interfering with the operations of a private bank. The time limit fixed for the redemption of the province bills was the year 1742. A number of prominent men, fearing that there would be a contraction of the currency when the province bills should be redeemed, organized the Land Bank to supply a medium of exchange. The mercantile community and a majority of the representatives in 1740 favored the scheme. Edward Hutchinson was the father of another private enterprise which issued paper money redeemable in fifteen years in silver at 20s. an ounce. The bills were denominated merchants' notes. This specie issue was called the silver scheme, and was looked upon by the governor and council with less disfavor than the Land Bank. Private banks received a check by act of parliament early in 1741. The specie Paying Bank placed the limit of its bills at £120,000. The bank enjoyed public confidence because the bills read redeemable in silver. The restrictive measures of parliament precipitated the affairs of the Land Bank into the hands of a commission. Nearly every responsible director was ruined by its failure, since every director was held accountable for the payment of bills which were circulated by the bank with interest. The affair caused no end of trouble, turmoil and disaster, and dragged on for nearly thirty years. The investors lost heavily. Former