The domestic business of every country, it has been shown in the second book of this Inquiry, may, at least in peaceable times, be transacted by means of a paper currency with nearly the same degree of conveniency as by gold and silver money.It is convenient for the Americans, who could always employ with profit in the improvement of their lands a greater stock than they can easily get, to save as much as possible the expense of so costly an instrument of commerce as gold and silver, and rather to employ that part of their surplus produce which would be necessary for purchasing those metals in purchasing the instruments of trade, the materials of clothing, several parts of household furniture, and the ironwork necessary for building and extending their settlements and plantations; in purchasing, not dead stock, but active and productive stock.The colony governments find it for their interest to supply the people with such a quantity of papermoney as is fully sufficient and generally more than sufficient for transacting their domestic business.Some of those governments, that of Pennsylvania particularly, derive a revenue from lending this paper-money to their subjects at an interest of so much per cent.Others, like that of Massachusetts Bay, advance upon extraordinary emergencies a paper-money of this kind for defraying the public expense, and afterwards, when it suits the conveniency of the colony, redeem it at the depreciated value to which it gradually falls.In 1747, that colony paid, in this manner, the greater part of its public debts with the tenth part of the money for which its bills had been granted.It suits the conveniency of the planters to save the expense of employing gold and silver money in their domestic transactions, and it suits the conveniency of the colony governments to supply them with a medium which, though attended with some very considerable disadvantages, enables them to save that expense.The redundancy of paper-money necessarily banishes gold and silver from the domestic transactions of the colonies, for the same reason that it has banished those metals from the greater part of the domestic transactions in Scotland; and in both countries it is not the poverty, but the enterprising and projecting spirit of the people, their desire of employing all the stock which they can get as active and productive stock, which has occasioned this redundancy of paper-money.In the exterior commerce which the different colonies carry on with Great Britain, gold and silver are more or less employed exactly in proportion as they are more or less necessary.Where those metals are not necessary they seldom appear.Where they are necessary they are generally found.
In the commerce between Great Britain and the tobacco colonies the British goods are generally advanced to the colonists at a pretty long credit, and are afterwards paid for in tobacco, rated at a certain price.It is more convenient for the colonists to pay in tobacco than in gold and silver.It would be more convenient for any merchant to pay for the goods which his correspondents had sold to him in some other sort of goods which he might happen to deal in than in money.Such a merchant would have no occasion to keep any part of his stock by him unemployed, and in ready money, for answering occasional demands.He could have, at all times, a larger quantity of goods in his shop or warehouse, and he could deal to a greater extent.But it seldom happens to be convenient for all the correspondents of a merchant to receive payment for the goods which they sell to him in goods of some other kind which he happens to deal in.The British merchants who trade to Virginia and Maryland happen to be a particular set of correspondents, to whom it is more convenient to receive payment for the goods which they sell to those colonies in tobacco than in gold and silver.They expect to make a profit by the sale of the tobacco.They could make none by that of the gold and silver.Gold and silver, therefore, very seldom appear in the commerce between Great Britain and the tobacco colonies.Maryland and Virginia have as little occasion for those metals in their foreign as in their domestic commerce.They are said, accordingly, to have less gold and silver money than any other colonies in America.They are reckoned, however, as thriving, and consequently as rich, as any of their neighbours.
In the northern colonies, Pennsylvania, New York, New Jersey, the four governments of New England, etc., the value of their own produce which they export to Great Britain is not equal to that of the manufactures which they import for their own use, and for that of some of the other colonies to which they are the carriers.A balance, therefore, must be paid to the mother country in gold and silver, and this balance they generally find.
In the sugar colonies the value of the produce annually exported to Great Britain is much greater than that of all the goods imported from thence.If the sugar and rum annually sent to the mother country were paid for in those colonies, Great Britain would be obliged to send out every year a very large balance in money, and the trade to the West Indies would, by a certain species of politicians, be considered as extremely disadvantageous.But it so happens that many of the principal proprietors of the sugar plantations reside in Great Britain.
Their rents are remitted to them in sugar and rum, the produce of their estates.The sugar and rum which the West India merchants purchase in those colonies upon their own account are not equal in value to the goods which they annually sell there.A balance, therefore, must necessarily be paid to them in gold and silver, and this balance, too, is generally found.