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Proposals to Replace Paper Currency with Coinage, 1715-1748: Introduction

In addition to the various small change coinage proposals discussed in the section on the small change coinage of ca. 1700, there were also some more ambitious coinage plans. In all, three plans are known to have been put forward to either replace or supplement depressed colonial paper currency with coinage. The earliest was proposed for Massachusetts in 1715, another was suggested for Connecticut in 1739 and a final proposal for all the English colonies in the New World is known from 1748. None of these proposals were well thought out and none of them were ever implemented. Two proposals for small change coins, one from Connecticut in 1721 (possibly a revaluation rather than a coining proposal) and a more comprehensive plan from North Carolina in 1754, were discussed as addenda to the small change proposals of ca. 1700.

The 1715 Proposal for Massachusetts

A coining proposal for Massachusetts Bay was put forward in 1715. Although it was not long after the small change coinage proposal of 1703, this plan did not have anything to do with creating a supply of small change, rather it was an opportunity some individuals saw to make a profit. Information concerning this proposal is contained in a letter from Jeremiah Dummer, one of the two agents appointed by the colony to represent them in London. The letter, dated April 5, 1715 was addressed to the Massachusetts General Court and was copied into the record of the General Court by the court secretary Isaiah Addington. In the letter Dummer mentioned he had received the instructions sent to him following the last October session of the court and that he would follow them. One of the instructions was to oppose any attempt to incorporate a private bank in the colony to which Dummer stated he would not need to do anything as the people who had made the proposal had abandon the plan. He then went on:

Some other people having heard of it, [that is, the abandoning of the bank proposal] & of the Exigency which the Countrey was reduc't to for want of money, or some other medium of trade, have started a project for the coining base money here, (that is to Say, one third copper, and the rest silver) to pass in New England, which they pretend will answer all the necessities of trade, tho' in truth it will answer nothing but their own private gain, which they propose by it. Upon the first notice I had of this project, I waited on Several of the Ministry in order to speak to 'em of the destructive consequences of it, Should it take Effect, but their Lordships would not hear me upon it; for they were so clear in it, that they assur'd me at once that no such thing should be done.       (Crosby, pp. 141-142)

The proposed bank was to be a loan office bank that would print paper currency and issue the currency to colonists as loans that were to be repaid with interest over a period of years. As the loans were secured by land, such banks were often called land banks. When the land bank proposal fell through others speculators felt it opened up an opportunity they could exploit. They suspected the lack of the Land Bank would leave Massachusetts without a sufficient supply of currency, therefore they came up with an alternative to the land bank system. They did not propose to mint small change coins but rather to produce higher denomination coins that could be circulated in place of paper currency. It was evident to Dummer the intrinsic value of these coins would be far below their face value. This would simply put a profit in the minter's pocket and leave the colonists with coins that were actually worth less than their face value. The undervaluation of silver coins was the primary objection the royal mint had expressed about the Boston Oak and Pine tree coinages and was the main reason they did not permit any colonial mints to open. As Dummer quickly discovered the ministers were just as adamantly against allowing English investors to debase silver coinage as they were against allowing the colonists to do it.

The 1739 Proposal for Connecticut

In 1739 a poorly conceived proposal was sent to the Connecticut legislature from a Bostonian named John Reed who hoped to make a profit by minting copper coins in Connecticut. On October 15, 1739 Reed wrote a letter addressed to both houses of the Connecticut General Court. He explained how the paper currency of the New England colonies was losing value, for too many bills were being printed. He then proposed Connecticut should retire its paper currency and replace half of it with a new paper currency redeemable in coppers and to directly replace the other half of the old paper with copper coins. Since copper coins had an intrinsic value Reed felt they could not become deflated as had happened to the paper currency. What he proposed was:

[the] best expedient will be the Coining of English half pence & farthings out of Copper produced in Connecticut of Sterling value, make that the standard of all your money ... [call in current bills then] make a bank of the new bills & Copper money payable on demand one half in bills now to be renewed & redeemable at ye periods you have already set (which then shall be redeemed with copper money) & the other half in Copper money...       (Crosby, p. 204)

In his long letter he proposed the colony of Connecticut procure a patent from the King to allow them to mint copper money. Reed offered to pay any costs incurred by the colony's London agent in procuring the patent. Reed received no reply to this nor to a follow up letter. In a third letter written on November 12, 1739 Reed stated he had several associates in the Simsbury area (the copper mining center of Connecticut, where the Higley coppers were being produced at this time) who would join him in procuring a London agent and taking the plan forward.

This proposal attempted to combine the production of small change coins with the replacement of paper currency. One wonders if Reed had contemplated the problems the colony would have in collecting and storing a sufficient quantity of copper halfpence to redeem large denomination paper currency or the problems merchants would encounter if half of the currency was replaced by small change coins. Small change would be plentiful but then the problem would be in making larger purchases! Additionally, one wonders if Reed really meant he would coin "English half pence & farthings," which would, of course, be counterfeits, or if he simply hoped to produce similar type coins. Further, it is not evident what Reed meant by "sterling value" most likely he meant he would produce coppers at the British authorized weight. This, of course, would produce a problem in Connecticut as the Connecticut pence and shillings of account were valued at a rate substantially less that sterling, thus sterling coins traded at a premium in Connecticut as they did elsewhere. Apparently, Reed was urging the colony to unilaterally adopt a sterling standard. It appears the Connecticut General Court viewed this proposal with considerable suspicion. As best as can be determined the speculator Reed never received a reply from the Connecticut General Court.

A 1748 British proposal for the New World Plantations

On July 14, 1748 Alexander Cuming put forward a proposal to abolish the deflated paper currencies of New England and the Carolinas as well as ending the dependence of the various Islands (as Jamaica) on clipped Spanish silver. He proposed £200,000 in sterling coin be minted at the Tower of London to be used to set up a bank for all British plantations in America. The bank would issue notes to the value of the sterling. However the plan did not specify if the notes were to be secured at the sterling rate or at the proclamation rate. The bank would disseminate the currency by issuing secured loans that would be repaid with interest. As the notes would be backed by gold and silver specie Cuming felt their value would not decline. This seems to be a rather simplistic attempt by an Englishman to solve the monetary problems of the colonies. No mention is made as to where the £200,000 will come from, nor is mention made of the fact that it was illegal to take British silver or gold coins out of the country. Further one wonders if he realized there were several different rates for monies of account with the colonies. Nothing came of this proposal.

References

Crosby, pp. 141-144 and 204-206; Mossman, p. 138.

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