Providence Feby. 9 2 1778

The reduced state of our paper medium, or wch. is the Same thing the very encreased prices of all Comodoties must need Alarm the fears of every Freind to our cause, the fundamental Evil seems to be this, that we carry on the War in the sam at an Expence multiplied in the same proportion as the prices are above those wn. we began the War, this Expence we pay by bills expressing the Value of silver Dollars, & shocking must be thought to suppose they will not be redeemed with silver &c according to their expressed Value, What then must be event of such a multiplied Expence? to restore the Value of our bills & reduce the prices & Expences, has been a grand Object for some time, the report of the Convention at Springfeild, has, according to my information, met generall Approbation; the main principle of wch. was the reducing the quantity of medium & prevent its future encreasing by making no more; in Order speedily to reduce the quantity the most Obvious Method was the stopping the Currency of the perticular States money, in doing of wch. other advantages arise, in produces a uniformity of Currency thrô the States; delivers us from the multiplied uncertainties of good money; two methods were proposed of doing this, either by Calling it in by taxes loan or by taxes, the former has this perticular Advantage, that it as effectually takes the bills out of Circulation, & leaves taxation unincumbered, to be applied for further beneficial purposes;

the necessity of some wise & ingenious Measures and the propriety of the above plan have taken such hold of my Attention that it hurts me to find that some of undoubted abilities & Patriotism are either doubting the expediency of these measures or delaying the Execution of them; I flatter my Self therefore yr. Excellency will not Consider me as officious if I offer some Sentiments on the Subject, hoping that yr. honble. assembly will be satisfyed of the propriety of the measures & immediately Stop the currency of yr. States money by Loaning it;

every one seems sensible of the undue quantity of medium & if a scarcity of some foreign Articles had not occasioned them to encrease in price, & home productions to be encreased in comparison with them, we might fairly Argue that money is multiplied as much as prices, for it is an undoutd observation, that money being only the representative of property its value 16 keeps pace with the comparitive quantity or wt. is the same thing the prices of Goods keep pace with the quantity of money. Thus saith Montiesquieu “After the working the mines in Peru the money became doubled in Europe & this was evident by the prices of Merchandise being doubled”,3 but that there is many times too much money is wt. none I think will deny, or that the natural consequence of it is a proportional encrease of prices, other circumstances perhaps may carry the prices still higher, as scarcity &c, nor will they deny that the longer this political disorder of high prices are Suffered to continue, the more firmly will they be rooted & with more difficulty removed, therefore as soon as the disorder took place & the remedy was discovered it should have been applied, & if neglected the more urgency is there for applying it immediately. Can we possibly Suppose that the distress of our case will admitt to call in the States money to have a currency till it can be collected by tax? is not the undue quantity of money a deadly Evil? why may we put off a political reformation any more than a moral one? Suppose the sinking it by taxation should be persisted in as the best method? What connection has that with stopping Suffering it to do mischief by its currency till the tax calls for it? may not its Currency be Stop’d to every purpose but paying taxes? the suffering the states money to run in Currency till the taxes take it up, appears to me like a Man who tho’ he sees an inundation of Water like to break down the Damm of his mill, instead of opening his Wast Gates and giving it all the vent possible to the Water, Consoles himself with considering that the return of the Sun, that great tax gatherer of Water will in the Natural Order of things dry up the flood & relieve his difficulty, mean while, away goes his Damm,

but I hope upon mature Advisement & calculation that your States Money will be sunk by Loan; great has been the opposition by some persons to this Method, the grand objn. is that it encreases the Debt; no doubt true it is that Principle & Interest Amount to a larger sum than Principle only, but it doth not follow from thence that the public Debt is encreased; perhaps, had we in the begining of the War, emitted no more Money than just enô for a currency & supported our Expences by taxes & Loans, We Should for paying 6 pr. ct. for Interest for the money we borrowed beyond what we could bear to tax for, have saved 200 pr. ct. in prices we have paid in bills as good as Dollars, the pr. ct. is Conjectural, but the true Canon is this, for our paying Six pr. ct. in Interest we should have Saved as many pr. ct. as our Expences have encreased by prices on acct. of that encrease of Currency wch. loaning would have prevented, is 17 not this Mathematically true? if so, that loaning encreases our Debt, may not be relatively true, i:e we must consider other circumstances to determine it: if we can afford to call in the States money by taxing without weakning our Abilities to reduce the quantity of currency further by taxing, undoubtedly it is the best way, but it must be Considered that there is a certain Quantity of taxation beyond wch. the course of business will not admitt, & as Taxation is among the obnoxious parts of wholesome Goverment it should be accomodated as much as possible, if therefore the current Expenses of Govermnt. & the War amount to as high or higher Sum than we can possibly pay by tax, it enevitably follows, we must loan Somewhere, & if so, to what purpose is it to sink the States money by taxes, under the Idea of saving 6 pr. ct. Interest money, wn. we must immediately proceed to loaning Somewhere to pay the Current Expences, so that the question seems only to be, in what office shall the Loans be taken; & what is more we lay at the good Will of the money lender whether he will loan his Money; but the States money is in our power & if sunk by loan Notes all the taxes is Saved for other purposes; as for the popular Objn. that the money has got into the hands of Monopolizers & there can be no force in that unless we can support our Expences, witht. loaning at all, if we can’t We must get the money where it is & some other method must be taken to make such persons pay their due proportion of Expences; the whole matter seems to be brought into this narrow View, the Surplusage of money requires it to be suddenly lessned in a great proportion therefore the states money must be stopt, the largeness of our Expences requires to raise as much money as possible by taxes, therefore no taxes can be spared to sink the states money, therefore it must be lessnd Sunk by loan; if any one thinks they can strain taxation to Sink their States money & pay current charges, I wish they may not try the dangerous Experiment, either they may find that either the taxes come in slow in proportion to Such undue Magnitude & so the treasury be not Sufficiently Supplied, or that the People will revolt at so heavy a burden & oblige the Legislature to alleviate the taxes & have recourse to the measure they meant to avoid when they may not be able to effect it Vizt. loaning. When we consider the natural aversion of the people to taxation, the very great public taxation that must unavoidably be set on foot, the <very> great private taxation or private Advances of money to Raise the army, I think we ought to be very cautious the Absolute Necessity of keeping up the Spirit of paying taxes among the people, & how distressed we shall be if they make oposition 18 to it, I think we & how necesserary all these measures are to execute the State regulating Bill witht. Wch. we shall pay 200 pr. ct. instead of Six I think we ought to be very Cautious of overburthening that great Engine Taxation, by charging it with Sinking the State money which may as well be done otherways, excuse my troubling you with these observations, if they Appear pertinent you will make such use of them as you think proper, wishing we may execute the best plan with the most Spirit I rest yr. &c

Dft. ; organized according to internal notations. Internal address: “To hon. Titus Hosmer Esqr.”; endorsed in another hand: “To Titus Hosmer—Providence Feb. 1778. On the Currency.”

1.

Titus Hosmer (1736–1780) was a 1757 Yale graduate and a member of the Continental Congress from Connecticut in 1778 (Biographical Directory of the U.S. Congress).

2.

Date supplied from RTP Diary.

3.

A paraphrase rather than a direct quote from Montesquieu, The Spirit of Laws. RTP had a two-volume edition which he had purchased at John Gerrish’s vendue, May 28, 1762, for 8s.8d.