first chartered bank in Massachusetts, is found in a brief reference to it made by the anonymous author of a pamphlet printed in 1714." "Our fathers, about twenty-eight years ago, entered into a partnership to circulate their notes founded on land security, stamped on paper, as our Province bills, which gave no offence to the government then, etc."[1]
The first bills of credit, as they were called by a seventeenth century expression, which is said to have been applied to the goldsmiths' notes in London, were issued in 1690 by the government of Massachusetts Bay, to pay the expenses of an unsuccessful expedition to Canada. Of these bills of credit, Cotton Mather said, in a pamphlet, that they were disposed of by the first receivers at 14 or 15 shillings in the pound. He urged the impossibility of collecting them in corn "at overvalue," whereby he bears testimony to the error and mischief of the barter currency. He has heard that some individuals in New York or Connecticut have circulated notes on their credit and is indignant that these of Massachusetts, based on all the wealth of the Province, should not be sustained. "Silver in New England is like the water of a swift running river; always coming and as fast going away," but this paper currency "is an abiding cash; for no man will carry it to another country, where it will not pass, but rather use it here, where it will, or, at least ought;" etc.[2]
A committee of the General Court, in 1701, proposed a bank, but it was negatived by the Council. Another movement for the establishment of a private bank was started, in 1714, by several gentlemen of Boston. Hutchinson says that they were "persons in difficult or involved circumstances in trade, or such as were possessed of real estates, but had little or no ready money at command, or men of no substance at all."
The scheme was that, £300,000 should be subscribed and the same amount of notes issued. The subscribers were to mortgage their estates as an ultimate security against mismanagement, etc. Each subscriber was to take out between one quarter and one half of his stock in notes and keep them out at least two years, paying interest for them. All partners agreed to take the notes at a rate equal to the bills of credit of the colony. The tenor of the notes was that all the members of the company would take them in all payments "in lieu of" so many shillings, and that they would be so received for any pawn or mortgage in the bank.
One important allegation in favor of the bank, revealing a line of thought which we shall meet with often hereafter, was that it "would sever the connection between money and might." We also find the Land Bank seeking favor by propositions of a class often met with in the nineteenth century. They proposed to give a sum annually to the use of a hospital or charity school for the poor children of Boston, provided the inhabitants, at or before their general meeting in March, 1715, would order the Treasurer to accept their bank bills in payment of town taxes and assessments.
