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security of land, — and asserted that this had been successfully done in 1671 and 1681.1
A few years later another plan, the suggestion of Captain John Blackwell, an intimate friend of Dudley, was presented to the Council over which Dudley himself was presiding.2 By this scheme, a number of subscribers were to unite and choose managers and assessors. The latter were to have the real power and to direct the policy of the bank; and the four men named by initials were Joseph Dudley/William Stoughton, Wait Winthrop, and John Blackwell. The capital was to be provided by subscriptions of £500 each from the twenty-one managers, making in all a total of £10,500. Instead of subscribing cash, the managers might substitute lands or goods for the security of the circulation, thus doing away with any idea of a cash capital. That a close connection between the bank and the government was to be maintained is seen from the fact that three of the four assessors were members of the Council, and also from the significant statement that twelve of the one hundred and twelve shares of the profits were to go
1Trumbull (ibid. 275) says that a "bank of credit was started in Massachusetts in 1671, and was carried on in private for many months — though without issue of bills, and that, ten years later, a private bank of credit was established and began to issue bills in September, 1681." So also Bullock, Monetary History of the United States, 31; and Weeden, Economic and Social History of New England, 329. But Davis (Currency and Banking, ii. 72) takes the more reasonable ground that these were but notes of individuals, to which the colony was accustomed, and that the mere statement in the pamphlet that "He did in September begin to pass forth Bills" is not sufficient for the assertion that a private land bank was established.
'This plan is probably the original of "A Model for Erecting a Bank of Credit," published in London, 1688, and reprinted in Boston, 1714 (Davis, Tracts, 35-68; see also Davis, Currency and Banking, ii. 75). Felt (Massachusetts Currency, 46-47) gives the preamble of the Council vote, but falls into the error — in which he is followed by Trumbull — of thinking that this bank was a chartered corporation (see Davis, Currency and Banking, ii. 79, note 1). The clearest account of this scheme is by Davis, ibid. 75-81.
to friends of the bank. Moreover, Dudley, writing on December 22, 1687, to Sir Edmund Andros, as it is conjectured, says, "Further speech about the matter I judge not convenient until we are further advanced and have received your express direction to attend a very good and large dividend of profit."1 It is probable that nothing was actually done by the partners; for Blackwell wrote in July, 1688, that the whole scheme had been abandoned and that the press was to be sold.2 The plan was evidently a purely colonial one, and it may be surmised that it did not appeal to Sir Edmund Andros and the other English officials. At all events, it was not renewed until just before Dudley came to Massachusetts as governor. In 1700, a committee was appointed to consider the methods of reviving and supporting the trade of the colony.3 In March, 1700-1701, this committee reported in favor of establishing a bank of credit which should have the monopoly to issue notes during the term of years for which it was chartered. This plan, however, was rejected, and the matter did not come up again until 1714.4
On February 1 and 8, 1713-1714, the Boston News Letter contained an advertisement requesting all persons interested in the project of erecting a bank of credit to meet at the Exchange Tavern, where subscriptions would be received, and a petition would be prepared to present to the governor and the Assembly.6 This petition was probably presented, for on February 16 the Assembly appointed a joint committee of the House and the Council to consider whether it was expedient to issue a medium of exchange to supply the deficiency of
1 Quoted in Davis's Currency and Banking, ii. 78.
* Ibid. 70-80; Andros Tracts, iii. 84.
* Records of the General Court (Ms.), viii. 11o, June 25, 1700.
money; and, if the members were of the opinion that it was advisable to issue such a medium, they were to consider whether it were best to found it upon a public or a private bank. On the following day, the committee reported that it was advisable to issue some medium of exchange and that it should be founded on a public rather than on a private fund.1 This report was accepted and the House voted to appoint a joint committee to consider it; but for some reason the Council did not concur and the matter was left over until the fall. Although the General Court had expressed a decided opinion in favor of the emission of bills based upon public rather than private credit, the private bank party continued its agitation; and to keep the matter before the public reissued a pamphlet published in London, in 1688, which described the plans put forward by Dudley and Blackwell thirty-five years before.2 This pamphlet discusses the subject under seven heads, beginning with "Some things premised for Introduction, touching Banks in general," in which it is asserted that "Money, whether Gold or Silver, is but a measure of the value of other things," that the lack of gold and silver money "hath put divers Persons and Countreys upon contrivances how to supply that Deficiency, by other Mediums; some of which have happily pitch'd upon that of Banks, Lumbards, and Exchange of Moneys by Bills, which have thriven with them. . . . The best Foundation for such an Attempt is, that of Real and Personal Estates, instead of the Species of Gold and Silver." The bank is then defined as an emission of bills to the half or two-thirds value of the land or goods mortgaged by the projectors. These projectors were to be organized as managers and assessors, the latter having the
1 Records of the General Court (Ms.), ix. 354 et seq.
oversight and control of the affair. The rules of the bank are set forth, and then follow certain examples from practical trade to show the usefulness of the plan. In the sixth part objections are met in the form of questions and answers: "Q. 1. Can I have Monyes for Bank-bills, when I have Occasion? Answ. 1. 'Tis not propounded to be a Bank of Moneys (which is liable to inexpressible & unforeseen hazards) but of Credit to be given forth by Bills; not on Moneys advanced, as in other Banks; but (on Lands or Goods, as aforesaid,) to supply such as cannot get Moneys (by reason of its scarcity) with whatsoever may be had for Moneys." Lastly, the general advantages of the scheme are summed up in the conclusion "That there will arise many more Convienences & Advantages, by this Bank, to such Countreys where they shall be erected, than have been enumerated, in the several foregoing instances; or, well, can be. . . ."1
This plan, an evident repetition of the Dudley-Blackwell scheme, was put forward to attract attention and possibly to forestall opposition on the part of the government. In addition, the projectors presented a plan of their own, which with certain modifications was later embodied in a pamphlet entitled "A Projection for Erecting a Bank of Credit in Boston, New-England. Founded on Land Security."2 This was in the nature of an agreement to be signed by the subscribers, and opened with the familiar statement, "Whereas there is a sensible decay of Trade within His Majesties Plantations in New-England, for want of a Medium of Exchange . . . and there being no other Expedient in our view . . . but by Establishing a Fund or Bank of Credit upon Land Security,
•"A Model for Erecting a Bank of Credit," London, 1688, reprinted 1714; conveniently found in Davis's Tracts, 35-68. •Printed 1714; reprinted ibid. 69-84.
which may give the Bills Issued there-from a General Currency amongst us," etc. The capital of the proposed bank was fixed at £300,000, of which no subscriber was to take more than £4000; and every subscriber was required to make over his real estate to the amount of his subscription as a security for the notes to be issued. The subscribers agreed to give the bills issued the same currency as the bills of the province, and any person mortgaging real estate could obtain a loan in bills according to the rules of the bank. Regulations establishing the interest paid on the bills at five per cent, and directions for the valuation and mortgaging of certain kinds of property, were given. Not the least interesting of the provisions were those which provided that, when £150,000 had been issued, there should be paid out of the profits £400 a year for establishing a charitable school in Boston, provided the town would agree to receive the bills of the bank for taxes. In addition, the sum of £200 a year was to be given to Harvard College for the establishment of professorships and scholarships.
The projectors, thus frankly advocating cheap and ready money, held several meetings and decided to prepare a petition to the General Court and endeavor to enlist the support of the governor. Dudley was placed in a difficult position. The Land Bank party had used his plans of thirty-five years before to awaken interest in its own scheme, and had modelled its bank after the one which he sought to establish in 1686. In an interview which the members of the party held with him, Dudley, they asserted, told them that he opposed the establishment of any form of a public bank and declared "that he would be the first Person that would take out Three Hundred Pounds of their Bills to promote their Credit, and encourage them to proceed to take Subscriptions, in order to lay it before the General Assembly for their Allowance; and