Page:History of Fiat Money and Currency Inflation in New England from 1620 to 1789.djvu/8

 The law of exchange is just as exact and inevitable as any of the laws of dynamics. It is, as the essayist says above: "To confine the currency of the bills (i. e., the currency of inflation or cheap money) and effectually to banish silver and gold." This is history.

Just prior to the period of inflation, the people's confidence in the credit of the province was considerably shaken. The decline in the value of the government paper rapidly increased. In 1710 an ounce of silver was worth eight shillings in paper. In 1727 it had risen to seventeen shillings. Connecticut, New Hampshire and Rhode Island issued bills of credit to defray the public debts and charges of the government. The experiences of these Anglo-American colonies with treasury bills had a marked bearish effect on the currency of the Massachusetts province. Rhode Island was particularly unfortunate in financial ventures, causing a large pecuniary loss to the holders of her bills in Massachusetts. It is obvious that the New England currency issued by the local governments early in the eighteenth century was merely a forced credit with no other security than the good-will and the chance of future prosperity of the government. Barring Connecticut with an issue of £33,500 of bills which were redeemed with little or no depression, most of the New England monetary kites never found the haven of redemption. The following is a brief reference to the period ranging from 1691 to