posted on Jun, 3 2008 @ 10:00 PM
How America created its own money in 1750
Benjamin Franklin tells what made New England prosperous
In 1750, the American colonies were more prosperous than the home country of England. How did this happen?
Before the Declaration of Independence and the war that followed, the colonized part of what is today the United States of America was a Crown
possession of England. It was called New England, and was made up of 13 colonies, which became the original states of the great Republic.
In 1750, the prosperity of the colonies prompted Benjamin Franklin to write:
"There was abundance in the Colonies, and peace reigned on every border. It was difficult, even impossible, to find a happier and more prosperous
nation on all the surface of the globe. Comfort prevailed in every home. The people, in general, kept the highest moral standards, and education was
When Franklin went over to England to represent the interests of the Colonies, he saw a completely different situation; the working population of the
home country was gnawed by hunger and plagued by inescapable poverty. "The streets are covered with beggars and tramps," he wrote. He asked his
English friends how England, with all its wealth, could have so much poverty among its working classes. His friends replied that England was prey to
a terrible condition: it had too many workers! The rich said they were already overburdened paying wages and taxes, and could not pay more to
relieve the needs and poverty of this great mass of workers. Several rich Englishmen of that time actually believed what economist Thomas Malthus
later wrote, claiming that wars and epidemic disease were necessary to rid the country from "a surplus of manpower."
People in London asked Franklin how the American Colonies managed to collect enough money to support their poorhouses, and how they could overcome
this plague of unemployment and pauperism.
Franklin replied; "We have no poorhouses in the Colonies, and if we had some, there would be no one to put in them, since in the Colonies there is
not a single unemployed person, not a single beggar in the streets nor a single tramp."
His cohorts could not believe their ears, or understand how this situation could be anything but exaggeration. They knew when the English poorhouses
and jails became too cluttered, England shipped the wretched inmates like cattle to be dumped on the colonies overseas, such as New England or
Australia, assuming they survived the hardships of the journey. (In those days English debtors went to jail if they could not pay their debts, and
few escaped, since in jail they could not earn money.)
Franklin's acquaintances, in view of all this, asked him how he could explain the remarkable prosperity of the New England Colonies.
Franklin told them:
"Why, that is simple! In the Colonies, we issue our own paper money. It's called 'Colonial Scrip.' We issue it to pay the government's
approved expenses and charities. We make sure it's issued in proper proportion to make the goods pass easily from the producers to the consumers.
In other words, we make sure there is always adequate money in circulation for the needs of the economy.
In this manner, by creating ourselves our own paper money, we control its purchasing power, and we have no interest to pay, to anyone. You see, a
legitimate government spends money into circulation, while banks can only lend money, and they can never lend but a tiny fraction of the money the
people need. Thus, when your bankers here in England place money in circulation, there is always a debt to be returned and interest to be paid. The
result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too
little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury."