American History Told by Contemporaries

Author: William Burnet  | Date: 1855

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U.S. History

A Defence of Paper Money (1724)


I AM very sensible of the disadvantage I lye under in writing upon this argument, and the misfortune it is to any cause to have already appeared in an odious light, as I am but too well convinced is the case of paper money Acts in the Plantations, by your Lordships last words in your letter of the 17th of june—That Bills for encreasing of Paper money will meet with no encouragement —I hope your Lordships will not think it presumption in me even after this declaration to endeavor to give you a more favorable opinion of such Acts and if I go too far in this, it is owing to the encouragement your Lordships have given me by receiving what I have offered on all occasions in so kind a manner and admitting the best constructions that my weak Reasoning will bear

I have already in my letter of the 12th of May last used several Arguments to justify the Paper Act in New Jersey, and therein I observed how well the Bills of New York keep up their credit and the reasons why they have not fall’n in value as those of Carolina and New England and that under a good regulation these Acts are both of Service to the Trade of the Plantations and of great Britain, for which that I may not repeat I beg leave to refer to my said letter of the 12th of May last and desire your Lordships would again take into your consideration when you are to determine your opinion on this present Act.—

But there are many things there only hinted at which I shall now lay before your Lordships and in which I shall cheifly argue from what is to be gathered from experience in Great Britain itself from observing the nature of credit and the events it has under gone, and in this I hope I may be the more patiently heard because what experience I have was purchased at no very cheap rate

Credit ought to be supported if it is possible, both by reason and common opinion. Reason tho ever so strong will not always do alone in the Beginning if common opinion is against it but it will carry all before it at the long run: Common opinion or humor will generally do for a time without reason nay, against it But then it is often attended with vast mischeif and danger—Of this we have a fatal Instance in the famous south Sea Scheme, which being left to common opinion without any restraint has produced the most terrible effects possible. If there had been a possitive Law, making all Bargains for South Sea Stock above some fixed Price as 150. void and making it a legal tender at 100 all these mischeifs would have been avoided but this would have been called compulsive Paper Credit, yet because in Reason it is worth so much as long as the Nation stands and because the Parliament has always kept their engagements all clamors against this would soon have blown over and no enemies would have been found to it but Brokers

To make this appear it is enough to prove, that at the bottom all the present voluntary credit stands upon this very foundation at last & no other

It is very certain that there is no proportion between the Specie & the great quantity of Bank Bills and Bankers Notes. commonly current who lend their notes on the several Branches of Government Securitys and seldom at a Rate under par very often above par When the Government is safe this would do when there is any danger, Common opinion pulls down her own work & Bankers break in abundance, and the Bank itself is put to Extremitys. An Instance of this I remember at the time of the Preston affair The Bank would have broke in a few days, if the victory there had not happened as soon as it did

And the Reason was plainly this because when they had paid away all their Specie they had nothing left but Exchequer Notes, and such other Securitys to exchange for their remaining Bank Notes and these would have been at such a discount that they must have broke, and compounded for such Payment at the Best

Thus it is plain that the foundation in Reason of the credit of the Bank it self, not to speak of Private Goldsmiths is the Government Security remaining at Par and yet the Parliament is so good as to provide an interest on these Exchequer Bills, and to pay the Bank so much more per cent for circulation whereas in fact when foul weather comes the Bank is a Staff of Reed and must lean on the Government to prop itself up and so increase the load instead of easing it

And this humour keeps up the imaginary value, when there is no real accasion for it; all Government Securities being at the same time commonly above par But upon any ill News the like Humor beats down all voluntary credit, in the same manner as it does Exchequer Bills &c and really carries the General Discredit as much further than it ought as it had advanced credit beyond its reasonable bounds before and if once the Bank had broke, then all this would have appeared to a demonstration . . .

From all which I beg leave to conclude, that is not the names things get for the present but the real nature of them, that will be found to hold against all events & that in the instance of Paper money where it is regulated by just Laws and where the Publick have not acted contrary to them their credit is in reason better established than the credit of any private Persons or Society and that the method used to catch the common opinion of mankind by offering them their money when they please is nothing but a fashionable Bubble which People are every day sufferers by when a Banker breaks & that even the best founded Societys can not maintain their Credit when there is the Greatest need of them. But that all Credit finally centers in the Security of ye Governmt

I take the liberty further to observe to your Lordships on how many occasions the Government of Great Britain has found it impracticable to raise all the money wanted within the year from whence all the present debts of the nation have arisen: The same necessity lyes often upon the Plantations where frequently a sum of ready money is wanted, which it would be an intollerable Tax to raise at once, and therefore they are forced to imitate the Parliament at home, in anticipating upon remote funds. And as there is no Bank nor East India company nor even private subscribers capable of lending the Province the money they want at least without demanding the extravagant Interest of 8 Pr Cent which is the common Interest here, but would ruin the publick to pay since this is a Case there is no possible way left to make distant funds provide ready money, when it is necessarily wanted, but making paper Bills to be sunk by such funds. Without this Carolina would have been ruined by their Indian War Boston could not now support theirs nor could any of the Provinces have furnished such considerable Sums to the Expeditions against Canada Nor could at present any of the necessary repairs of this Fort be provided for, nor the arrears of the Revenue be discharged, which is done by this Act in a Tax to be levyed in 4 years nor indeed any publick Service readily and sufficiently effected

And I may add one thing more that this manner of compulsive credit does in fact keep up its value here and that it occasions much more Trade and business than would be without it and that more Specie is exported to England by reason of these Paper Bills than could be if there was no circulation but of Specie for which reason all the merchants here seem now well satisfied with it

E. B. O’Callaghan, editor, Documents relative to the Colonial History of the State of New-York (Albany, 1855), V, 736–738 passim.


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Chicago: William Burnet, "A Defence of Paper Money (1724)," American History Told by Contemporaries, ed. E. B. O’Callaghan in American History Told by Contemporaries, ed. Albert Bushnell Hart (New York: The Macmillan Company, 1902), 251–253. Original Sources, accessed March 29, 2023,

MLA: Burnet, William. "A Defence of Paper Money (1724)." American History Told by Contemporaries, edited by E. B. O’Callaghan, Vol. V, in American History Told by Contemporaries, edited by Albert Bushnell Hart, Vol. 3, New York, The Macmillan Company, 1902, pp. 251–253. Original Sources. 29 Mar. 2023.

Harvard: Burnet, W, 'A Defence of Paper Money (1724)' in American History Told by Contemporaries, ed. . cited in 1902, American History Told by Contemporaries, ed. , The Macmillan Company, New York, pp.251–253. Original Sources, retrieved 29 March 2023, from