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This Week In History
January 30 - February 5, 1690
America's First Paper Money

January 2011

We go back this week all the way to 1690, to colonial Massachusetts, where, on Feb. 3 of that year, the first paper money in America was issued. This act, which occurred during a brief period of uprising against the English Crown's crackdown against Massachusetts' freedoms, represented a step toward sovereignty. It is an action that Americans should come to understand today.

The Commonwealth of Massachusetts was established by men with a vision of building a continental republic from the very start.* Around great intellects such as John Winthrop and his son, John Winthrop, Jr., was created a tradition of republicanism, which was then picked up by the family of Increase and Cotton Mather, and eventually by Cotton Mather's protégé, Benjamin Franklin. These men believed in developing a nation on the basis of science, progress, and man made in the image of the Creator. Yet Massachusetts' charter of freedoms had to be constantly fought for, especially after the restoration, in England, of the monarchy under Charles II.

In 1684, Charles declared the Massachusetts charter of self-government null and void, and put the Commonwealth under a royal Governor. The second of those governors, Sir Edmund Andros, proceeded to move toward dictatorship, imposing heavy taxation, establishing the Anglican Church and discriminating against the dominant Congregationalists (descendants of the Puritans), and eliminating the traditional town meeting. The Mathers, as the republican leadership, were also in danger of losing life and/or freedom.

Then came the Revolution of 1688, when the Dutch William of Orange took control of the English throne. Amidst the turmoil, the republican leadership of New England decided to move. The patriots not only launched an armed revolution, but they proclaimed an independent New England, with sovereign court systems, trade governance, coinage, and a new system of credit for productive economic improvements. They set up a Committee for the Safety of the People, which, in turn, established another body to issue bills of public credit.

Cotton Mather

We know how Cotton Mather was thinking about this matter, because in 1691, he produced a pamphlet to defend the move. Under the title Some Considerations on Bills of Credit, Mather asserted that the public bills of credit—the paper money—represented the "Credit of the whole Country." His father, Increase Mather, also published a defense of the measures, in which he agreed with their critics, that such public credit would allow New England to develop its own mining and industry, and increase the wealth of the Commonwealth.

Similar arguments would be raised decades later by Cotton Mather's protégé Benjamin Franklin, when he was fighting for a system of public credit in Pennsylvania—and by Alexander Hamilton later, as he devised a system for the newly won nation.

What the Mathers, Franklin, and Hamilton understood, which many Americans fail to comprehend today, is that sovereign control over credit, and currency, is a primary tool for the development of the future of one's nation. Those who scream and yell about "hard currency," confuse the ownership of things, with real economics. Economics means investing in the increase of man's power over nature, per capita and per hectare, for future generations. That means pledging the resources of the society for the benefit of posterity—and that can only be done through credit secured by a trustworthy institution, such as government.

Thus, paper currency as a means of public credit, is as good as the investments in which it is being made. If those investments involve building factories and infrastructure, and truly scientific institutions, then that currency reflects a wise use of the resources of the society. That policy—not the simple printing of money—was what the republicans in Massachusetts were pursuing—and which Americans had better begin to fight to re-establish here in the United States today.

*This report on the Massachusetts fight for public credit is based on H. Graham Lowry's How the Nation Was Won, vol. 1, which was published by EIR in 1988. Call  703-297-8368 to order the book.

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