Part 5

At the expiration of the loans interest ceased and repayment was made in ten equal annual instalments. The amount legally outstanding in January 1740-1 was £340,000, (sterling value £88074-16s. 10-3/4d.) the actual amount was doubtless greater, as we know that repayment was not always promptly made. In addition to the Banks the General Assembly had from time to time made direct issues of bills of credit. Before 1739, however, these issues were principally to replace worn and torn bills and did not increase materially the circulation. According to a report made in October 1739 the amount issued up to that time (including everything but the banks) was £117,001-15s. This sum had been offset by bills burnt to the amount of £105,704-15s. 3d., leaving an increase of circulation due to these issues of £11296-19s. 9d. Under the stress of war which now began and continued for several years these issues were largely increased. According to a report prepared in February 1749/50, for transmission to the English government, there was issued from September 1740 to February 1747 £206,000. The committee sums up its report in regard to these bills as follows: "At divers times, from the year 1710, to the year 1747, the colony has emitted bills of credit to the amount of £312300, old tenor; and there hath been called in and burnt at several times from the year 1728 to 1748, £176,964, 6s. 10d.; and by the last settlement of the general treasurer's account, it appears that there was then in the public treasury, £24,891 10s. 10d. from all which it appears that there is now outstanding of the bills issued to supply the treasury, £110,444 2s. 3d.; the whole of which outstanding sum was issued in the years 1746 and 1747,and is equal to £10,040 7s. 5d. sterling.". The amount legally outstanding in bank money was £390,000 old tenor (£210,000 nominal) sterling value £35,444, 9s. 2d. The increased issues had depreciated the paper money so rapidly that its relation to sterling was now as 11 to 1. As in 1739, the actual amount outstanding the legal amount. By the aid of remittances from England for the reimbursement of war expenditures Massachusetts succeeding in sinking her paper bills. Rhode Island with much larger proportional issues failed to follow the same course.

Douglas in 1748 estimated the total amount of bills of all kinds outstanding at £550,000 old tenor and even this seems to have been an under rather than over estimate.

In 1751 came the ninth and last bank, of a nominal value of £25,000 equal to £237000 old tenor. The issue of this bank was the last victory of the paper money party. For many years a strong opposition had been developing. As early as 1731 a protest against the issue of the fourth bank, signed by prominent citizens, had been sent to the king. Protests were also entered against the seventh and eighth banks, and in 1750 another petition against paper money issues signed by seventy two persons, representing the merchants of Newport, the commercial centre of the colony, was presented to the king. In 1751 parliament passed an act which, supported by the growing sentiment in favor of better financial methods, may be said to mark the downfall of the paper money policy. The principle provisions of the act were that, after September 29, 1751, bills of credit could be issued only with the consent of the home-government, and that provision must be made for calling them in within two years in the case of issues to meet current expenses, and in five years in the case of emergencies such as war. The time of the bills already out was not to be extended, and no bills issued or to be issued were to be made a legal tender. It seems best to anticipate for a moment and trace to its end the history of the issues already made. First, as to the bills issued to supply the treasury. Of those which had been called in and burnt previous to 1749, £88725 had been sunk by means of grants made by parliament to reimburse the colonies for the expenses incurred in King George's War. In 1751 £24280 more wore sunk in like manner. Between this date and 1785 £17368 were sunk from the proceeds of taxes leaving outstanding £93688. This sum was called in by a tax for the exact amount levied in 1769.

Provision for calling in the bank money by repayment of the loans had been made as we have seen in the acts of issue. The whole amount should have been repaid by 1767, but instead of this a report made to the general assembly in May 1770 shows that there was still outstanding £92615 old tenor value.

The bills continued to depreciate rapidly. In 1763 the following table was adopted as a standard for the determination of old tenor debts.

£. s. d. In the year 1751 a Spanish milled dollar was worth 2 16 0 In the year 1752 a Spanish milled dollar was worth 3 00 0 In the year 1753 a Spanish milled dollar was worth 3 10 0 In the year 1754 a Spanish milled dollar was worth 3 15 0 In the year 1755 a Spanish milled dollar was worth 4 05 0 In the year 1756 a Spanish milled dollar was worth 5 05 0 In the year 1757 a Spanish milled dollar was worth 5 15 0 In the year 1758 a Spanish milled dollar was worth 6 00 0 In the year 1759 a Spanish milled dollar was worth 6 00 0 In the year 1760 a Spanish milled dollar was worth 6 00 0 In the year 1761 a Spanish milled dollar was worth 6 10 0 In the year 1762 a Spanish milled dollar was worth 7 00 0 In the year 1763 a Spanish milled dollar was worth 7 00 0

At the same time it was "enacted and declared, that lawful money of this colony is, and shall hereafter be silver and gold coin; and that nothing else shall be taken and understood to be lawful money of this Colony." Old tenor suffered a still further depreciation, until in the tax act of February 1769 it was ordered that it be received at the rate of $1 for £8. By act of September 1770, its circulation was forbidden after January 1, 1771. The rapid depreciation since the issues at the time of King George's War together with the return of Massachusetts to a specie currency at the end of the war seems to have been disastrous for Rhode Island commerce which was mostly with the West Indies. The disturbance was aggravated by the approaching war, and so numerous did mercantile failures become that a general insolvency act was passed in 1756.

Financial History 1751-1790.

Financial History 1751-1775.

During the French and Indian war paper money was issued in large quantities but provision was made for its redemption in accordance with the Act of Parliament in 1751, and an earnest attempt was made to meet the obligations thus incurred.

The period from 1751 to 1775 was really a period of war financiering, for the debt incurred for war purpose was not extinguished until the beginning of the Revolution, and we shall treat it as a whole.

The sources of revenue were loans, bills of credit, treasury notes, grants made by the English government, and taxes.

Loans.

These were usually advanced by private individuals. Unfortunately the accounts entered in the colony book by the auditing committees were not kept in such a manner as to enable us to determine with satisfactory certainty either the amounts borrowed or the times of repayment. The difficulty is the greater with regard to the latter point. So far as the books show the sums borrowed between 1751 and 1775, reduced to sterling, amounted to about £28,441, of which all but about £4,000 was borrowed during the six years 1755-1761.

Bills of Credit.

The history of the bills issued up to the year 1751 we have already considered. It remains to describe the issues of the present war.

The first of these issues was in 1755 to meet the expenses of the Crown Point expedition. The bills were of the old tenor denomination, amounting to £240,000 equal to £13,500 sterling. They were to circulate two years without interest and then be called in and sunk. The subsequent issues were all in what were known as lawful money bills. They were issued at various times from 1756 to 1767, the total amount being £97,569 equal to £73,360 sterling. All but £6660 were issued on or before August 1762, £14,000 issued in 1756 were to run for two years and without interest. The other emissions were for five years with interest at 5%. The bills were declared equal to silver at 6s. 9d. per ounce.

Treasury Notes.

These were interest bearing notes issued to meet the bills of credit, bonds given for money borrowed or other treasury notes as they fell due, when receipts from other sources did not suffice for redemption. The practical effect was to work an extension of the debt. As shown by the treasury reports these notes seem to have been issued for the most part between the years 1765 and 1775 and amounted to £46,549 lawful money equal £34,999 sterling. The greater part seem to have been redeemed at the outbreak of the Revolution.

Receipts from England.

These were grants made by the English government to reimburse the colony for expenses incurred in the war. These grants made throughout the course of the war amounted to about £50,000 sterling and there was received from the English commanders in this country about £4000 or £5000 more, making in round numbers £55,000.

Taxes.

We now come to the source of revenue which concerns us most nearly. A slight attempt to resume taxation had been made at the time of King George's war. A tax of £10,000 old tenor (£1677 sterling) had been ordered in 1744 and another of £5,000 new tenor (£2000 sterling) in 1747/8, but the paper money party was still in the ascendant and it was not until after the overthrow of that party that the policy of taxation was seriously resumed in 1754.

The following table will show the taxes levied from that date to the beginning of the Revolution, together with their sterling values at the time the tax was ordered.

(o. t. = old tenor. l. m. = lawful money. The second column contains the sterling values.)

1754 £35,000. (o. t.) £2102 1755 70,000. (o. t.) 3710 1756 53,000. (o. t.) 2274 4,000. (l. m.) 3008 1757 100,000. (o. t.) 3917 150,000. (o. t.) 5875 4,000. (l. m.) 3008 1758 6,000. (l. m.) 4512 110,000. (o. t.) 4129 1759 11,000. (l. m.) 8271 1760 15,547. (l. m.) 11689 1761 16,000. (l. m.) 12030 1762 8,000. (l. m.) 6015 1763 12,000. (l. m.) 9023 1764 12,000. (l. m.) 9023 1765 12,469. (l. m.) 9375 1766 6,000. (l. m.) 4511 75,000. (o. t.) 2252 1769 6,000. (l. m.) 4511 93,688. (o. t.) 2638 1770 12,000. (l. m.) 9023 1771 £12,000. (l. m.) £9023 1772 12,000. (l. m.) 9023 1773 4,000. (l. m.) 3008 1774 4,000. (l. m.) 3008

This would give an average annual taxation for the twenty-one years of £6,950 sterling or $33,777. in our money, equal to about 70 cents per capita.

Taxation, however, varied greatly at different periods. For the eleven years 1756-1766 the average annual tax was $43,707., about $1.00 per capita; for the five years 1757-1761 it was $51,935., equal to $1.18 per capita. Taxation reached its height in 1760 and 1761 amounting to $57,637. a year and $1.28 per capita. By 1773 it had fallen off to $14,619. a year, or a trifle less than 25 cents per capita. An estimate of the rateable property in 1762 gave a valuation of £26,105,423 old tenor, equal to about $4,224,178. Using this as a basis the rate of taxation in 1760 and 1761 would have been about 1.36 per cent. on the value of rateable property. An estimate of 1769 gave a property valuation of $7,706,449. (£2111356 lawful money). The rate of taxation in 1773 and 1774 was only .19 per cent. on this valuation. The average rate for the whole period seems to have been about one half of one per cent. By far the greater part of this taxation was for war purposes. The regular expenses of colonial government do not seem to have exceeded $7300. (£2000 lawful money) per annum, which towards the end of the period would amount to not more than 12 cents per capita, or one tenth of one per cent on valuation.