Note 221 — Chapter VII
Reading edition
The effect of so much paper was to drive all gold and silver out of circulation, to raise the nominal prices of all commodities, and to increase the rate of exchange on England. Great confusion and perplexity ensued, and the community was divided in opinion, the most being urgent for the issue of more paper money. For this purpose a project was started for a Land-Bank, which was established in Massachusetts, the plan of which was to issue bills upon the pledge of lands. All who were in difficulty advocated this, because they hoped that in the present case they might shift their burdens on to some one else. It was then resisted, and another plan was devised and carried (1714), namely, the issuing of £50,000 of bills of credit by Government, to be loaned to individuals at 5 per cent. interest, to be secured by estates, and to be repaid one-fifth part yearly. This quieted the Land-Bank party for a while. But the habit of issuing bills of credit continued, and was very seductive.
"In 1741, Rhode Island issued £40,000 in paper money, to be loaned to the inhabitants. In 1717, New Hampshire issued £15,000 paper money. In 1733, Connecticut issued £20,000 on the loan system for the first time, Rhode Island made another issue of £100,000." (Elliott's New England History, Vol. II., Chap, xii., p. 230.)