[dateline] Baltimore Feb. 12. 1777
[salute] Dear sir
The Certificates and Cheque Books for the Loan Office,1
I hope and presume, are arrived in Boston, before this Time, and notwithstanding the discouraging Accounts, which were given me, when I was there, I still hope that a considerable sum of Money, will be obtained by their Means.
It is my private opinion, however, that the Interest of four per Cent, is not an equitable Allowance. I mean, that four per Cent, is not so much, as the Use of the Money is honestly worth, in the ordinary Course of Business, upon an Average, for a Year. And I have accordingly, exerted all the little faculties I had, in endeavouring on Monday last, to raise the Interest to six per Cent.2
But after two days debate, the Question was lost by an equal Division of the States present, five against five. New Hampshire Massachusetts Bay, New Jersey, Pensilvania and Virginia on one side, and Rhode Island Connecticutt, North Carolina, South Carolina and Georgia, on the other. Here was an Example of the Inconvenience and Injustice of voting by States. Nine Gentlemen, representing about Eight hundred thousand People, against Eighteen Gentlemen representing, a Million and an Half nearly, determined this Point. Yet We must not be Startled at this.
I think it my duty to mention this to you, because it must be astonishing to most People in our State, that the Interest is so low. I know they are at a Loss to account for it upon any Principles of Equity, or Policy, and consequently may be disposed to blame their Delegates, but you may depend upon it, they are not in fault.
I tremble for the Consequences of this Determination:—if the Loan Offices should not procure Us Money, We must emit more, which will depreciate all which is already abroad; and So raise the Prices of Provisions and all the Necessaries of Life, that the additional Expence to the Continent, for Supplying their Army and Navy, will be vastly more than the two per Cent in dispute: besides all the Injustice, Chicanery, Extortion Oppression, and Discontent, which is allways, occasioned every where, by a depreciating Medium of Trade. I am much afraid of another Mischief. I fear that for Want of Wisdom to raise the Interest in Season, We shall be necessitated within a few Months to give Eight or Ten Per Cent, and not obtain the Money We want after all.
I have been So often a Witness of the Miseries of this after Wisdom, that I am wearied to death of it.
Had a Bounty of Twenty dollars a Man been offered Soldiers last Time, it would have procured more than the enormous Bounties that are now offered will procure.3
Had Government been assumed in the States, Twelve Months Sooner than it was it might have been assumed with, Spirit, Vigour and Decision, and would have obtained an habitual Authority, before the critical Time came on when the Strongest Nerves of Government, are necessary. Whereas, now, every new Government, is as weak as Water and as brittle as Glass.
Had We agreed upon a Non Exportation, to commence when the Non importation commenced, what an immense Sum Should We have Saved? Nay very probably We Should have occasioned a very different House of Commons to be chosen the Ministry to have been changed and this War avoided. Thus it is. You who will make no ill Use of these Observations may read them. But the Times are too delicate and critical to indulge freely, in such Speculations. It is best I believe that no mention Should be made, that the Rate of Interest has been again debated, lest Some Saving Men Should withold their Money, in hopes of compelling the Public to raise the Interest. If the Interest Should never be raised, those who lend in our State, will fare as well as others: if
it Should, the Interest of all will be raised, that which is borrowed now, as well as that which Shall be borrowed hereafter. I Sincerely wish that our People would lend their Money, freely. They will repent of it, if they do not. We shall be compelled to emit Such Quantities, that every Man except a few Villains will loose more by Depreciation, than the two Per Cent. Not to mention again the Scene of Anarchy and Horror, that a Continuation of Emissions will infallibly bring upon Us.
The Design of Loan Offices, was to prevent the further Depreciation of the Bills, by avoiding further Emissions. We might have emitted more Bills promising an Interest but if those had been made a legal Tender, like the other Bills, and consequently mixed in the Circulations with them, they would instantly have depreciated all the other Bills four Per Cent, if the Interest was four, and more than that too, by increasing the Quantity of circulating Cash. In order to prevent these Certificates from Circulation and consequently from depreciating the Bills, We Should give them such Attributes as will induce Men of Fortune and others, who usually lend Money, to hoard them up. The Persons who usually lend Money are 1. Men of Fortune, who live upon their Income, and these generally chose to have a Surplusage to lay up every Year, to increase their Capitals 2. opulent, Merchants, who have more Money than they choose to risque, or can conveniently employ in Trade. 3. Widows, whose Dower is often converted into Money, and placed out at Interest, that they may receive an annual Income to live upon, without the Care and Skill, which is necessary to employ Money, advantageously in Business. 4. orphans, whose Guardians seldom incline to hazard the Property of their Wards, in Business. 5. a few Divines, Phisicians, and Lawyers, who are able to lay by, a little of their annual Earnings. 6. here and there a Farmer and a Tradesman, who is forehanded and frugal enough to make more Money, than he has occasion to spend. Add to these 7. Schools Colledges, Towns, Parishes and other Societies, which sometimes let Money. All these Persons are much attached to their Interest and so anxious to make the most of it that they compute and calculate it, even to farthings and single days.
These Persons can get Six Per Cent, generally, of private Borrowers, on good security of Mortgages or sureties.
Now, is it reasonable in the State to expect, that monied Men, will lend to the Public, at a less Interest, than they can get from
private Persons? I answer Yes, when the Safety of the State is not in doubt: and when the Medium of Exchange has a stable Value. Because larger Sums may be put together, and there is less trouble in collecting and receiving the Interest and the Security is better. But the Case is otherwise, when Men are doubtfull of the Existence of the State, and it is worse still, when they see a Prospect of Depreciation in the Medium of Trade. All Governments in Distress are obliged to give an higher Interest for Money, than when they are prosperous.
The Interest of Money, always bears Some Proportion to the Profits of Trade. When the Commerce of a Country is small, in few Hands, and very profitable, the Interest of Money is very high. Charles the fifth was necessitated to give twenty four Per Cent. Afterwards it fell in Europe to Twelve, and since to six, Five, Four, and Three.
I think I never Shall consent to go higher than Six Per Cent, as much as I am an Advocate for raising it to that, and in this I have been constant for full Nine Months. The Burthen of Six per Cent, upon the Community, will very Soon be heavy enough. We must fall upon Some other Methods of ascertaining the Capitals We borrow. A depreciating Currency, We must not have. It will ruin Us. The Medium of Trade ought to be as unchangeable as Truth; as immutable as Morality. The least Variation in its Value, does Injustice to Multitudes, and in Proportion it injures the Morals of the People, a Point of the last Importance in a Republican Government.
Thus far I had written a long time ago, Since which, after many days Deliberation and Debate, a Vote passed for raising the Interest to six Per Cent.4
If this Measure should not procure Us Money, I know not what Resources We shall explore.
To read this will be Punishment enough for your omission to write to me all this While. I have received nothing from you since I left Boston. Yours,