To Benjamin Franklin from Jonathan Williams, Jr.: Memorandum, [1779?]
From Jonathan Williams, Jr.: Memorandum
AD: American Philosophical Society
[1779?]7
Money like any other Merchandise becomes cheaper (or depreciates) in proportion as the quantity at Market exceeds the Quantity demanded.
Suppose the public Emission of Congress paper to be in
| Dollars. | 48 millions | |
| If this money is worth but about one quarter its real value it may be concluded that one quarter the Sum is sufficient for the medium of Trade |  |
12 millions |
| The Surplus unnecessary quantity is | 36 millions |
which if taken out of the market (or out of Circulation) would bring the remaining paper to the value of Gold & Silver.
If Foreign merchants who have recd this Paper Money for their Goods were to lend the whole to Congress for 10 or 20 Years so much as they lend would be so much taken out of Circulation8 (the annual Expences of the States being funded by Taxes) and the value of the remainder would increase in proportion as its quantity approachd the quantity necessary for the purposes of Trade. Thus if 9 million be at once lent to Congress, the remaining 39 millions in Circulation would increase in value as 9 is to 36 or one quarter. The Price of Merchandise would be reduced in that proportion & the supplies to carry on the War would be procur’d in that proportion more advantageously; this would so encrease the confidence in our Funds, and give such encouragement to foreign Trade, that another 9 millions might be borrowed with much facility & that done the money would be one half better & Goods would of Course be still cheaper. The War would be carried on at still less Expences. The Taxes raised for the Expences of the State, at first but just sufficient, would become more than necessary, & throw another surplus out of Circulation & so the advantage would continue augmenting till Paper money becomes as good as Gold & Silver, and people instead of wishing to part with it would keep it in preference to Gold & Silver as they used to do in Philadelphia before the War.9
At the End of this, Congress will owe say 36 millions of Dollars for which they will pay an annual Interest 5 per Ct one million 800 thousand Dollars & this will then be our national Debt, which as our circumstances may be, may either be paid of or, like the Stocks of England remain transferable from one to another, the dividend or Interest to be paid at certain periods.—
The provincial Paper should be sunk by Provincial taxes & but one Sort of money(?) should be current.
Endorsed: Jona Williams about Money
7. If JW is using real figures for his suppositions on the amount of currency emitted by Congress he could have drafted this document as early as late 1778 or the beginning of 1779. Emissions of continental currency reached $48 million sometime in 1778, while the rate of depreciation in July, 1778, is calculated at 4 to 1: Ferguson, Power of the Purse, pp. 28, 30, 32; Morris Papers, IV, 354, 612. He might also have written it later in the year, when the subject of persuading French merchants to supply America’s wartime needs could have been in the forefront of his mind; see our headnote to BF’s letter to him, Dec. 22, below. Elizabeth M. Nuxoll, editor of the Morris Papers, and Professor John J. McCusker helped us to understand and date this document.
8. By lending to Congress JW means investing in loan office certificates. BF also received an undated, unsigned, three-page memorandum in French explaining the needs of foreign merchants. It argues that until the time comes when the U.S. can pay its foreign debts and achieve a balanced trade, it ought to do everything it can to encourage commerce with France. Interest alone motivates merchants, and a good return on their money will prompt them to trade. Commerce will be stimulated by making the interest payable directly to the debtors, as European nations already do, rather than by issuing loan office certificates as the U.S. is now doing. APS.
9. Paper money, whose value was known, was accepted in preference to gold and silver coins, whose varying weight might affect their worth: John J. McCusker, Money and Exchange in Europe and America, 1600–1775: a Handbook (Chapel Hill, N.C.), p. 119.