ls. This money was to be lent out, at interest, on security, and to
be redeemed gradually by the annual payment of one-twelfth part of the
sum loaned. The bills were made a legal tender; and the creditor who
should refuse them, lost his debt.

After the emission of these bills, exchange rose, the first year, to
one hundred and fifty, and in the second to two hundred per centum,
above par. The effect of this depreciation, and of the tender laws
which accompanied it, on creditors, and on morals, was obvious and
certain.

CHAPTER VIII.

Proceedings of the legislature of Massachusetts....
Intrigues of the French among the Indians.... War with the
savages.... Peace.... Controversy with the governor....
Decided in England.... Contests concerning the governor's
salary.... The assembly adjourned to Salem.... Contest
concerning the salary terminated.... Great depreciation of
the paper currency.... Scheme of a land bank.... Company
dissolved by act of Parliament.... Governor Shirley
arrives.... Review of transactions in New York.

{1714}

The heavy expenses of Massachusetts during the late war had produced
such large emissions of paper money, that a considerable depreciation
took place, and specie disappeared. The consequent rise of exchange,
instead of being attributed to its true cause, was ascribed to the
decay of trade.

The colony, having now leisure for its domestic concerns, turned its
attention to this interesting subject.

[Sidenote: Affairs of Massachusetts.]

Three parties were formed. The first, a small one, actuated by the
principle that "honesty is the best policy," was in favour of calling
in the paper money, and relying on the industry of the people, to
replace it with a circulating medium of greater stability.

The second proposed a private bank, which was to issue bills of
credit, to be received by all the members of the company, but at no
certain value compared with gold and silver. It was not intended to
deposit specie in the bank for the redemption of its notes as they
might be offered; but to pledge real estates as security that the
company would perform its engagements.

The third party was in favour of a loan of bills from the government,
to any of the inhabitants who would mortgage real estate to secure
their re-payment in a specified term of years; the interest to be paid
annually, and applied to the support of government.

The first pa