Page:History of Fiat Money and Currency Inflation in New England from 1620 to 1789.djvu/5

 of deteriorations and losses. From the scanty figures preserved in the treasurer's records, it appears that from January 1, 1689, to April 17, 1689, a period of three and one-half months, the losses to the treasury from the sale of 9977¾ bushels of grain were no less than £99 1s. 3d., or at a rate of nearly £400 per year. The loss connected with country pay currency was only a logical sequence of the system which stamps as money any commodity of variable value.

The inter-colonial war between the possessions of France and England involved the province of Massachusetts Bay in serious financial difficulties. The expedition against Canada in 1690 was a failure. To provide for the payment of the soldiers and sundry considerable debts the government had recourse to an expedient which proved fruitful of mischief to the colony through two generations. December 10, 1690, the government of Massachusetts ordered the emission of "the first bills of public credit known in the American colonies." These treasury notes or bonds issued with the function of circulation were declared to "be in value equal to money, and were to be accordingly accepted by the Treasurer and Receivers subordinate to him in all publick payments and for any Stock at any time in the Treasury." The Colony of Massachusetts assumed the office and obligations of a "bank of credit." The colony virtually went into the banking business by anticipating the taxes with bonds which were to serve the people as "paper money"—the first paper currency in this country. The first issue of these bills was limited to £7000. Another installment was ordered February 3, 1691. Some time in May of the same year, the General Court ordered that the