Part 48

“Est et Hamiltonus nomen venerabile, cujus Intemerata fides.”——J. Beveridge, A.M.

Footnote 201g:

Mr. Penn actually gave to Mr. Barton, not long afterwards, the use of a valuable farm, on which were three tenants, situated in the neighbourhood of Lancaster. This farm, which was part of one of the proprietary-manors, Mr. Barton held during his life.

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The name of the Rev. Mr. Barton, which has hitherto been so often introduced in the course of these Memoirs, is closely connected with that of Mr. Rittenhouse, in many of the more striking traits of his Life: the writer cannot, therefore, restrain himself from acknowledging, that he is happy in having this fair opportunity of rendering some small tribute of respect—and, for himself, of filial veneration—to the memory of a man distinguished by his virtue, his talents, and his learning; one, who, independently of those considerations, alone, which arose out of the American revolution, long enjoyed the friendship and esteem of many of the most prominent characters in America, by reason of his abilities and usefulness, as well as the urbanity of his manners. To have said less of this person, would be doing injustice to the life and character of Mr. Rittenhouse: to say more, would perhaps be deemed irrelevant to the subject; if not indecorous, as it regards the writer.

To return, however, more particularly to Mr. Rittenhouse. On the 10th day of March, 1780, he was elected, by the general assembly of Pennsylvania, a trustee of the loan-office of the state.

The institution here mentioned was a measure of financial policy, which had its origin in Pennsylvania, at an early period of the provincial government: and, from an experience of its beneficial effects, it was not only continued, at various intervals of time, from the year 1723, to the termination of that government; but was resorted to, and for some time continued, by the state legislatures after the revolution. The scarcity of gold and silver, among the earlier settlers of the province, subjected them to many and great inconveniences, and suggested to the legislature the necessity of adopting some rational and efficient means of remedying the evil. The expedient was, the emiting, and making current, bills of credit; which were loaned to cultivators of the soil on the security of their lands, and repayable with interest, in annual payments, within an assigned term of years. The first act of assembly for this purpose was passed the 11th of May, 1723; and the preamble to that law is expressive of its object: it states, that, “Forasmuch as through the scarcity of money, the trade of this province is greatly lessened and obstructed, and the payment of the public debts of this government rendered exceeding difficult, and likely so to continue, unless some medium in commerce be by law made current, instead of money: for remedy whereof, may it please the governor that it be enacted, and be it enacted by Sir William Keith, baronet, Governor, &c.” This act then goes on to direct the emission of “fifteen thousand pounds, current money of America, according to an act of Parliament made in the sixth year of Queen Anne, for ascertaining the rates of foreign coins in the Plantations;” and provides for the loaning of these bills, by persons thereby appointed “trustees of the general loan-office;” to be loaned out, upon the security of mortgages of real estates, within the province, of at least three times the value of the sums lent: which sums so loaned were made repayable in those bills, in eight years, in annual payments of one-eighth part of the amount of the principal with the addition of an interest of five per cent. per annum. The act also contains a provision (but one which was omitted in the subsequent loan-office laws,) for lending these bills upon the security of plate also, for the term of one year. This paper-money, thus established upon indubitable funds, was made a legal tender in the payment of debts;—and it never suffered any depreciation of its nominal value.

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Footnote 202:

While the credit of the loan-office bills of credit, emitted in moderate sums by the assembly of Pennsylvania, was fully supported, during the course of seventy years, the quantities of paper-money issued at different times, by the legislative body of Massachusetts, down to the year 1748, had then depreciated that currency, for want of it being bottomed on sufficient funds, to one-eleventh part of its nominal value. Fortunately, about that period, a large sum in specie arrived from England, having been granted by the British parliament to reimburse the monies expended by the colonists in the expeditions against Louisburg and Canada. In Massachusetts, this money was wisely applied by its legislature to the redemption of the bills of credit of that colony, then in circulation; which were sunk, in the succeeding year, at the rate of fifty shillings, in those bills, for one ounce of silver. Thus, the mint-price of an ounce of sterling silver being five shillings and two pence, the bills were redeemed at the rate of nearly nine shillings and eight pence, of their nominal value, for one shilling in English coin.

Footnote 203:

How different, in this respect, from that species of paper-credit, which, during the American war, succeeded it, under the denomination of continental money! But this had nothing but the faith of government pledged for its redemption; while the loan-office bills of credit were bottomed (as all government-paper ought ever to be) on an appropriated, sufficient, and substantial fund. For want of such a foundation, Dr. Morse remarks, that “The whole history of the continental paper is a history of public and private frauds. Old specie debts,” says he, “were often paid in a depreciated currency; and even new contracts, for a few weeks or days, were often discharged with a small part of their value. From this plenty, and the fluctuating state of the medium, sprung hosts of speculators and itinerant traders, who left their honest occupations for the purpose of immense gains in a fraudulent business, that depended on no fixed principles, and the profits of which could be reduced to no certain calculations.” See his Geographical work.

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Hence, an interesting fact is presented to the view of the reader; that, ninety years ago, so small was the population, and so slender were the agricultural and commercial resources of Pennsylvania, that the scanty amount of a sum equivalent to forty thousand dollars, was deemed adequate to the relief of the public and private difficulties in the province, arising from the want of a sufficient circulating medium at that time. Yet such was the increase of population and trade, and such were the improvements in agriculture, in Pennsylvania, in half a century afterwards, that the last loan-office law, under the provincial government, directed the emission of ten times the original sum; to be applied, in aid of land-improvements, in loans for the term of sixteen years; and repayable in like manner, with an annual interest of six per centum.

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Footnote 204:

Passed 26th February, 1773.

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The same policy was pursued by the independent government of Pennsylvania. Under the first loan-office law of that state, the sum of fifty thousand pounds was issued in bills of credit; and eight years afterwards, a further sum of half a million of dollars (or 187,500l.) was appropriated for the purposes of a loan-office on similar principles, in pursuance of a law of the state. But, as the individual state-governments were prohibited by the constitution of the United States, then recently established, from emitting bills of credit, or making any thing but gold and silver coin a tender in payment of debts,—the money to be employed in loans, on mortgages of real estates, was to be borrowed, according to the provisions of the law last mentioned, from the bank of Pennsylvania; a power which the state had reserved, for that express purpose, in the act to incorporate the subscribers to that bank.

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Footnote 205:

Passed 4th April, 1785.

Footnote 206:

Passed 11th April, 1793.

Footnote 207:

Passed 30th March, 1793.

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This loan-office law was, however, the last in Pennsylvania. The establishment of banks, for facilitating the purposes of trade, together with the great improvements and wealth to which the landed interest of the state had attained, by means of a widely extended foreign commerce, coming in aid of the benefits which the cultivators had previously derived from the loan-office system, superseded, in a great degree, the utility of this institution. In one year after the last loan-office was erected, the law for that purpose was repealed; the repealing act declaring—that it had been found inexpedient, and not to answer the purposes intended by the legislature. In fact, the establishment of banks in the interior of the country, not only supplies the place of a loan-office, in relation to the farmer, but greatly facilitates the extensive inland trade of the state. Experience has demonstrated, that, operating in this way, they are productive of all the important advantages of the loan-office system: and of this institution, the late governor Pownall speaks in these remarkable words—“I will venture to say, that there never was a wiser or a better measure; never one better calculated to serve the uses of an increasing country; that there never was a measure more steadily pursued, or more faithfully executed, for forty years together, than the loan-office in Pennsylvania, formed and administered by the assembly of that province.”