The Currency Act below is from the year 1746 and comes to us from The Statutes at Large, a collection of early American legislative acts. This act was passed in the South Carolina legislature in an attempt to give more paper currency to the people for business transactions. Early on in the currency debate this was a popular option. Several acts were passed that put some amount of currency into the economy on the basis of gaining that back through a better economy, and an interest rate placed on the bills themselves. In this particular act land or an “other good security” is used to insure the value of the paper money, along with an interest rate to be “constantly paid in silver or gold.”
All the irregularities and conflict that arose from the use of paper money can be traced back to England. British currency was just not prevalent enough to account for every transaction that occurred in the colonies, which meant the colonies had to do something for themselves. Issuing paper money as legal tender bills of credit was one of the only solutions. This half-step of not going to a fully supported system of legal tender, only offering bills of credit, was an attempt to appease England. This way British currency still maintained its high value in the colonies so England continued to reap the economic benefits of their colonial venture. The common practice for these currency acts was to issue a certain amount of legal tender money for a certain number of years (often too much at one time) that would later be made up for through taxes. The constant injections of money inevitably led to depreciation however, earlier currency often became worthless far before the colony could recoup the cost through taxes. It is easy to imagine the strain this constant fluctuation in the value of money put on businesses trying to operate in the colonies.
This excerpt of the act shows the colonies’ attempt at controlling the distribution of money. There is specific mention for the attempt to recover the value for the money printed, and even precise instructions on how to get rid of the paper currency when it exits circulation. Pieces of legislation are always interesting because they show the most pressing issues of the time period, and the currency debate lasted a long time.
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Currency Act of 1746
VII. And whereas, the bills of credit now extant are a debt owing by the public, which ought to be paid off and discharged, and that hereafter all the paper currency in this Province may be on one and the same foundation of a public loan, the principal to be land or other good security, and the interest constantly paid in silver or gold, as aforesaid, by means whereof the mutation or depreciating in value of the bills of credit to be issued as aforesaid will be effectually prevented, and the evil heretofore complained of happily remedied; Be it further enacted by the authority aforesaid, That five eighth parts of the silver and gold which shall be paid as interest into the hands of the trustees, shall by them be annually put out on interest at the rates or value aforesaid, until the whole principal out on bonds secured as aforesaid shall amount unto the sum of two hundred and ten thousand pounds, at which time the said debt of one hundred thousand pounds will be entirely paid off and discharged, and after which time the said five eighths shall be applied in such manner as the General Assembly shall direct; and other two eighths of the said interest shall be annually applied for the further subsisting poor protestants who shall arrive in this Province and settle in the new townships; and the other remaining one eighth of the interest shall be applied for paying the commissioners of trustees appointed by this Act for signing, exchanging and putting out to interest the bills of credit, silver or gold, as aforesaid and for paying their clerk.
VIII. And in order again to sink the said bills of credit so let out at interest, Be it further enacted by the authority aforesaid, That the repayment of the principal shall commence at the time aforesaid of the old debt being paid off and discharged, and thenceforward annually the obligor or borrower shall, over and besides the interest due on his or their bond, respectively pay to the said trustees one tenth part of the principal, and such payments yearly and every year to be made, so that the whole principal be fully paid and discharged in the space of ten years; and the sums so received in discharge of the principal aforesaid, shall be annually burnt to ashes by the said trustees in presence of three or more members of his Majesty’s honorable Council, who shall regularly certify in some proper book in the said trustees office, the sum or sums so burnt.