notes which were to do the work of money. There was a very active speculation on banks going on in England, and many of the speculators were working at schemes for banks founded on land values, which were a very different thing in an old country from what they were in a new. It was very natural that these ideas should be taken up eagerly by the colonists.
It must be added, however, that there were circumstances of difficulty connected with the supply of money. In any such primitive agricultural community the circulation of money is extremely sluggish, because the organization is low and the households largely supply their wants from their own direct efforts. It is only at particular seasons of the year that money is more needed and that its circulation is more active. Money should therefore be drawn from commercial centers at those times and then returned to them. Otherwise the expense of maintaining money enough all the time to suffice at the times of need is really great. The distance of the colonies from England, the difficulty of communication, and the obstructive legislation which was in fashion, made it impossible that money should go to and fro with facility as wanted. Gallatin, who was a competent observer, and who lived in the midst of these primitive facts in western Pennsylvania, said of the people there: "The principle almost universally true that each country will be naturally supplied with the precious metals according to its wants did not apply to their situation."
The American colonists gave up the struggle to maintain themselves on a money system. They fell back upon barter and established a system of barter currency as their money of account. This fact is of the first importance for understanding the financial and monetary phenomena of the period.
In 1667 a pamphlet was published in Massachusetts in which the ideas which have been described were very fully set forth. The writer had perceived that, if exchanges could only be brought into coincidence, there was need of little or no money. He inferred that money itself need have no value. He wanted to provide some ultimate security in land, and in a pledge of merchandise, and he aimed to carry out the transactions by book debts, or bills of exchange, or change bills, according to the nature and size of the transactions. He also lays great stress on the advantages which would come from a more abundant supply of money. The project is like those which were put forth in England a little later by Chamberlain and Briscoe for land banks. An institution on this plan appears to have been actually started in Massachusetts, in 1671, "and was carried on in private for many months," although without issuing notes. Another similar bank was set up in 1681 which did issue notes. Nothing is known of its history.
John Blackwell and others made a proposition to the authorities of the colony, in 1686, to set up a bank to issue notes and make loans on the security of land and imperishable merchandise. The scheme was approved and authorized. "All that is known of the history of this Association, the
