Benjamin Franklin - The Paper Pusher
Franklin's Prosperity.
After a short trip to London, in 1726, Franklin returns to Philadelphia. He establishes deep roots in the community and starts the Junto discussion group in 1727. This group eventually became the American Philosophical
Society.
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Franklin buys the Pennsylvania Gazette newspaper in 1729. Over time, with the city of Philadelphia itself, he becomes prosperous. In 1757, he leaves for London as a provincial agent. Franklin, at age 51, has become a successful, even famous, printer, scientist, and Pennsylvania
assemblyman.
By 1757, Philadelphia has become a city of 14,000 and Pennsylvania, 180,000 inhabitants. However, in 1729, this future prosperity of Pennsylvania did not seem assured. The ffirst paper currency issued in 1723 was to expire in 1731.
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Paper currency vs. money.
Typically, paper currency was issued with a time limit. Before it expired, it could be used to pay taxes owed to the issuing government. The currency paid would be removed from circulation.
There was siginificant resistance from wealthy and political elites to a continuation of the paper currency experiment. This was out of fear that the paper currency might depreciate the same way it did in New England and South Carolina.
They wanted to use money. Only gold and silver coins should be used rather than paper currency in the province.
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Franklin's Opinions.
In 1729, Franklin discussed this issue, in the Junto. As a printer, he took the side favoring continuing paper currency.
The result of this discussion prompts him to write an anonymous pamphlet. It was one of the first to be published by his press. It was “A Modest Enquiry into the Nature and Necessity of a Paper Currency.”
Franklin is only 23 years old at the time.
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Franklin in his Early Days
Benjamin Franklin arrived in Philadelphia in 1723. He was 17 years old. There were about 6,000 people in Philadelphia, at the time. Pennsylvania’s population was about 35,000.
The province was in the doldrums. Franklin recalled seeing many vacant houses for rent, sluggish economic activity, and a decline in permanent residents. He noted that just prior to 1723, foreign trade had stripped Pennsylvania of its gold and silver coins. The colony had exchanged much of its gold and silver coins for manufactured goods imported from Europe. Without this money, local trade within the colony was difficult to transact.
Using gold and silver as money.In this era, money was used as a medium of exchange between colonies and countries, specifically gold and silver coins. These coins also served as a medium of exchange for internal trade within a colony or country. Pennsylvania did not produce gold or silver and only procured these coins through trade.
Typcially, Pennsylvanians would export goods to Spanish and Portuguese America. In exchange, they would receive gold and silver coins. These coins would be kept in the colony and used as a medium of exchange for internal trade. OR, they would be exported to Europe to pay for manufactured goods.
Franklin's Strange Observation.If coins were exported, the colony might not have enough money to conduct trade in the colony. Franklin often points to this in his writings. He would say that unless some measures are taken to prevent the export of gold and silver coins, foreign trade would lead to temporary shortages of gold and silver. This would inhibit internal trade within the colony.
The Pennsylvania legislature issued its first paper currency in 1723. It was the modest amount of £15,000 (the equivalent of just over 48,000 Spanish silver dollars). Another £30,000 was issued in 1724. This paper currency was not linked to or backed by gold and silver money. It was backed by...
- the land assets of subjects borrowing paper currency from the government and,
- by the future taxes due the government that would be paid in this paper currency.
After the legislature issued this paper currency, Franklin notes internal trade, employment, new construction, and the number of inhabitants in the province all increased.
Labels: colony, currency, franklin, money, Pennsylvania
