An inquiry into the evils of a fluctuating medium of exchange...

A Caveat Against Injustice

Roger Sherman

If what is used as a medium of exchange is fluctuating in its value, it is no better than unjust weights and measures, both which are condemned by the laws of God and man.

Roger Sherman is the author of Article 1 Section 10 of the United States Constitution: “No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts”

Roger Sherman
        Roger Sherman

Original publication, 1752

Forasmuch, as there have been many disputes arisen of late concerning the medium of exchange in this colony, which have been occasioned chiefly by reason of our having such large quantities of paper Bills of Credit on some of the neighboring governments passing in payments among us, and some of those governments having issued much larger sums of Bills than were necessary to supply themselves with a competent medium of exchange, and not having supplied their treasuries with any fund for maintaining the credit of such Bills; they have therefore been continually depreciating and growing less in their value, and have been the principal means of the depreciation of the Bills of Credit emitted by this colony, by their passing promiscuously with them; and so have been the occasion of much embarrassment and injustice in the trade and commerce of the colony, and many people — and especially widows and orphans — have been great sufferers thereby.

But our Legislature having at length taken effectual care to prevent further depreciation of the Bills of this colony, and the other governments not having taken the prudent care, their Bills of Credit are still sinking in their value, and have in fact sunk much below the value of the Bills of this colony.

Yet some people among us, by long custom, are so far prejudiced in favor of a sinking medium, and others not being really sensible of the true state of the case, are inclined to think that Bills of Credit on the neighboring governments ought to be a legal tender in payments in this colony for all debts due by Book and otherwise where there is no special contract expressly mentioning some other currency, and others being of a different opinion, the disputes have been carried on so far as to occasion some expense in the law, and may be likely to occasion much more, unless prevented by those prejudices being some way removed.  And since it is a cause wherein everyone is more or less interested, I have ventured to show my opinion, with a sincere desire to have peace and justice maintained and promoted in the colony.  I do not desire any person to approve of my observations any further than he finds them agreeable to the principles of justice and right reason.


Suppose a man comes to a trader's shop in this colony to buy goods, and the trader sells him a certain quantity of goods and tells him the price is so many pounds, shillings and pence, (let it be more or less) to be paid at the expiration of one year from that time, and the man receives the goods but there is nothing said either by seller or buyer, what currency it is to be paid in, but the goods are charged according to the value of Bills of Credit Old Tenor on this colony.

Now I ask: What does the creditor have a right to demand for a debt so contracted? Or what can the debtor oblige him to accept in payment?

The creditor says that since the debt is being contracted in the Colony of Connecticut, he ought to have what is known by the laws of said colony to be money: and that he has no right to demand anything else.

The debtor says that Bills of Credit on the neighboring governments have for many years passed promiscuously with the Bills of Credit on this colony as money in all payments (except special contracts), and that people in general where the contracts lie at large have expected, and do still expect, that any of the Bills of Credit on any of the governments in New England that are commonly used as currency in this colony will answer in payment, and in as much as the creditor did not give him any notice to the contrary when he bought the goods, therefore he thinks that such Bills of Credit ought to be accepted in payment for the aforesaid debt.

And although there is no particular statute in this colony that such Bills of Credit shall be a legal tender in payments of money: yet the practice has been so universal for so long a time, and the creditor himself has both received and passed them as money constantly without making exceptions against them until this debt was contracted, and for many years all demands on book debts have been for Old Tenor Money indifferently, without distiction of colonies, and judgments in all courts have been given thereon accordingly: and any of the aforesaid Bills of Credit have passed in payment to satisfy all judgments so obtained, and this universal custom, the debtor says, ought to be esteemed as common law and ought not without some special reason to be set aside, and that in this case there is nothing special; and therefore the creditor ought not to make demand or obtain judgment different from the common custom of the colony.

In answer to this, the creditor says that although Bills of Credit on the neighboring governments have for a number of years been passed and received in payments, it has been only by the voluntary consent of the persons receiving them, and not because they were under any obligation to receive them; and that it is no argument that a person shall be obliged to receive any species where it won't answer his end, because in time past he has received it when it would answer.

And the creditor further says that such Bills of Credit are of no intrinsic value, and their extrinsical value is fluctuating and very uncertain, and therefore it would be unjust that any person should be obliged to receive them in payment as money in this colony (since neither the colony nor any of the inhabitants thereof are under any obligation either to refund said Bills or to maintain the credit of them), for money ought to be something of certain value, it being that whereby other things are to be valued.

I think it is a principle that must be granted that no government has the right to impose on its subjects any foreign currency to be received in payments as money which is not of intrinsic value; unless such government will assume and undertake to secure and make good to the possessor of such currency the full value which they oblige him to receive it for.  Because in so doing they would oblige men to part with their estates for that which is worth nothing in itself and which they don't know will ever procure him any thing.

Rhode Island Bills of Credit have been so far from being of certain value and securing to the possessor the value that they were first stated at, that they have depreciated almost four seventh parts in nine years last past, as appears by their own Acts of Assembly.  For in the year 1743, it appears by the face of the Bills then emitted that twenty-seven shillings Old-Tenor was equal to one ounce of silver. And by an Act of their General Assembly passed in March last, they stated fifty-four shilling Old-Tenor Bills equal to one ounce of silver, which sunk their value one half.  By another Act in June last, (viz. 1751) they stated sixty-four shillings in their Old-Tenor Bills equal to one ounce of silver.  By another act in August last they gave order and direction to the courts in that colony to make allowance to the creditors in making up judgment from time to time as the bills shall depreciate for the future, which shows that they expect their Bills of Credit to continue to depreciate in the future.

The value of the Bills of Credit depends wholly on the rate at which they are stated and on the credit of the government by whom they are emitted, and that is the only reason and foundation upon which they obtained their first currency and by which the same has been upheld ever since their first being current.  Therefore, when the public faith and credit of such government is violated, the reason upon which such Bills obtained their currency ceases and there remains no reason why they should be any longer current.

And this I would lay down as a principle that can't be denied: that a debtor ought not to pay any debts with less value than was contracted for, without the consent or against the will of the creditor.

The creditor further says that his accepting Rhode Island Bills of Credit when they stood stated equal to silver at twenty-seven shillings an ounce, can be no reason that he should receive them at the same value when they are stated equal to silver at fifty-four shillings an ounce, and still to receive them at the same rate when they are so reduced down that sixty-four shillings is equal to but one ounce of silver, and whoever does receive them so must not only act without, but against reason.

The debtor cannot truthfully plead that he expected to pay in Rhode Island Bills of Credit at their present value and under their present circumstances, (that is, for debts contracted before the aforesaid Acts of Rhode Island were published) because there was no such thing (as those Bills are under their present circumstances) existing at the time of contract, for as was observed before, the value of such Bills of Credit depends wholly upon the rate at which they are stated and on the credit of the government by whom they are emitted, and a Bill of Credit for the same sum that is stated equal to silver at twenty-seven shillings an ounce, must be of more than double the value of one stated equal to silver at sixty-four shillings an ounce if the credit of the emitter may be depended on.  But if the emitter's credit can't be depended on, then neither of the Bills aforesaid are of any value, because it is evident that no Bills of Credit have any value in themselves, but are given to secure something of intrinsic value to the possessor.  Therefore, arguments drawn from custom are of no force, because the reasons upon which that custom was grounded do now cease.

I grant that if anything having both intrinsic and unchanging value should obtain a currency as a medium of exchange for a great number of years in any colony, it might with some reason be urged that it ought to be accepted as payment for debts where there is no special agreement for any other species. But if what is used as a medium of exchange is fluctuating in its value, it is no better than unjust weights and measures, both which are condemned by the laws of God and man, and therefore the longest and most universal custom could never make the use of such a medium either lawful or reasonable.

Now suppose that gold or silver coins that pass current in payments at a certain rate by count should have a considerable part of their weight filed or clipped off.  Will any reasonable man judge that they ought to pass for the same value as those of full weight?

But the state of these Bills of Credit from Rhode Island colony is much worse than that of coins that are clipped, because what is left of those coins still has intrinsic value.  But the General Assembly of Rhode Island, by depreciated their Bills of Credit, has thereby violated their promise from time to time, and there is just reason to suspect their credit for the future for the small value which they now promise for said Bills, and they have not only violated their promise as to the value, pretended to be secured to the possessor by said Bills; but also as to the time of calling them in and paying the same, they have lengthened out the time fifteen years.

So that if the possessor must be kept out of the use of his money until that term is expired (and the Bills secure nothing to him sooner), one ounce of silver paid down now would be worth more than seven pounds ten shillings in such Bills of Credit computing the interest at 6 percent per year.

These things considered, can any reasonable man think that such Bills of Credit (or rather of no credit) ought to be a legal tender in payment of money in this colony for debts for which the debtor received species of much more value than those Bills (provided the creditor could get the full value of them in silver that they are now stated at)?


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