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-3-
FOR BETTER OR WORSE:
CHAPTER ONE:
AN ECONOMIC HISTORY FROM KING WILLIAM'S WAR
TO THE CIVIL WAR (1690-1861)
Text: “Thou shalt have a perfect and just weight, a perfect and just
measure shalt thou have: that thy days may be lengthened in the land
which the Lord thy God giveth thee.” (Deuteronomy 25:15)
Colonial Currency
The year 1690 was momentous in
the history of America because in that year the colonial government of
Massachusetts printed the first paper "money” this continent had ever
seen. It was issued to pay the soldiers returning from Quebec after
fighting the French. Other colonies followed her example and began
printing their own currency. But in 1751, the British forbade the
practice declaring all such “money” was unlawful because it was not
backed by gold or silver.
The vestiges of the Reformation still lingered in the
hearts of Englishmen and the thought of being governed by a foreign king
chafed their spirits until they chose to ignore Britain's prohibition,
and resumed the ungodly practice. Paper "money" lacks intrinsic value
and therefore its "value" rests solely on the promise of the issuing
institution to "make it good." For this reason such notes are called
"fiat" or “Promissory” notes.
God said, "Thou shalt have a perfect and a just weight." Therefore, when a person, a state, or a nation elects to ignore the righteous law of God, they will be punished. “Inflation” is God's chastisement for the rejection of a standard of just weights and measures, and the American colonies suffered its crushing tyranny.
Continental Currency
In July 1775, the Continental
Congress voted to issue its own currency. By January 14,1779, a silver,
Spanish-milled dollar could purchase for what 8 paper Continental
"dollars” could be exchanged. On April 2, it required 17 "dollars" in
currency to change hands for what one silver dollar could buy. The
value of one thing compared to another is called "parity," therefore the
parity between silver and Continental currency was 1 to 17. On May 5,
the parity of a dollar of silver and a paper "dollar" was 1 to 24. By
January 1781, the parity was 1 to 100; and by May of that year, a
person could purchase with one silver "dollar" what required 500-1000
Continental paper "dollars"
for an exchange.
Shopkeepers. came to require 82,500 paper Continental
"dollars" in exchange for a suit of clothes. Sailors made suits with the
worthless paper, and a barber in Philadelphia wallpapered his shop with
them (Saussy, 12-13). Barbers came to require 750 paper “dollars" in
exchange for a haircut, and butchers 350 paper "dollars" in exchange for
one pound of pork (Jenkins).
The Constitutional Convention
In 1787, the infant Republic was drafting its Constitution. On August 16th, discussion arose over the wording of Article I, Section 8, which read, "The Legislature shall have the power to ...coin money ...and emit bills on the credit of the United States." The controversy centered on the words, "emit bills on credit" which would have allowed Congress to issue paper "money." The framers of the Constitution struck out the pernicious words, and thus denied Congress that power.
On August 28th, debate erupted regarding the wording of Article I, Section 10 --"No state shall coin money . . ." Roger Sherman stood and declared the words should be, "No state shall make any thing but gold and silver coin a tender in payment of debts." His wording was adopted.
National Repentance
God created gold and silver with intrinsic value. By "intrinsic value" I mean that for thousands of years, people all over the world have acknowledged it is by Divine ordination that these metals are precious. In order to prevent the arbitrary fixing of value God placed banking under law. He told Israel, “Thou shall have a perfect and just weight, a perfect and just measure shall thou have." (Deuteronomy 25:15)
The American colonies had experienced the oppression of inflation caused by paper "money." Therefore the wording of these two sections by the framers of the Constitution constituted a national repentance: the “money” of the United States would be established upon the God-given values of gold and silver.