Page:History of Fiat Money and Currency Inflation in New England from 1620 to 1789.djvu/6

 bills out and to be emitted should not exceed £40,000. Undoubtedly this action was taken by the legislature to assure the people that the "paper money" was as good as "stampt silver" and certain of redemption since they were receivable for treasury dues. The paper currency of the government did not circulate very freely. The soldiers who received the bills at par were unable to get more than twelve or fourteen shillings a pound for them in trade. Very naturally these government bills increased in value in the hands of the taxpayers as the time for the payment of taxes drew near. Meanwhile the soldiers lost about one-third of their scanty pay in discounts, or more properly speaking depreciation from lack of confidence in the credit of the colony. To facilitate the movement of exchange and elevate the colonial and provincial evidences of debt to the dignity of fiat money the General Court ordered in 1692:

"that all Bills of publick creditt, issued forth by order of ye Generall Court of ye late Colony of ye Massachusetts Bay, shall pass current within this Province in all payments equivalent to money and in all publick payments at 5 per cent advance."

The inducement of a bonus on the bills of the government payable by a discount on the taxes to those who favored the government with patronage and moral support had a goodly effect on the government securities at times. When the taxes were due the bills were worth more than hard money. For nearly twenty years these legal tender bills of the province of Massachusetts Bay passed with nearly the same freedom as silver, though occasionally the public confidence wavered.

The bills of credit, which very soon became the ruling force in trade, were redeemed yearly by the government until 1704, when the General Court voted to extend the