Paper money has long been debated in the United States since the beginning. Paper money was used in the colonies and much of the American Revolution was financed by printing what was called “Continental currency“, which was controlled by the Continental Congress.
These notes were printed in large quantities to pay for the war, but in such excess that they became virtually worthless. The memory of this was fresh in the minds of those at the Constitutional Conventions and can be seen in notes on debate that took place on August 16, 1787.
A debate occurred over the language of Article 1, Section 8, Clause 2 of the US Constitution which originally read:
“To borrow Money AND EMIT BILLS on the credit of the United States; ”[emphasis added]
A motion was made to strike out “and emit bills”, a second motion was made and a debate ensued. The concern was primarily over the issue of whether such ‘bills’ would be considered ‘legal tender’ in the form of paper money or simply contained to be an instrument of debt. The following quotes are highlights from the debate. [Notes on the Convention]
Mr. Govr. MORRIS moved to strike out “and emit bills on the credit of the U. States”-If the United States had credit such bills would be unnecessary: if they had not, unjust & useless.
Mr. ELSEWORTH thought this a favorable moment to shut and bar the door against paper money. The mischiefs of the various experiments which had been made, were now fresh in the public mind and had excited the disgust of all the respectable part of America. By witholding the power from the new Governt. more friends of influence would be gained to it than by almost any thing else. Paper money can in no case be necessary. Give the Government credit, and other resources will offer. The power may do harm, never good.
Mr. WILSON. It will have a most salutary influence on the credit of the U. States to remove the possibility of paper money. This expedient can never succeed whilst its mischiefs are remembered, and as long as it can be resorted to, it will be a bar to other resources.
Mr. BUTLER. remarked that paper was a legal tender in no Country in Europe. He was urgent for disarming the Government of such a power.
Mr. READ, thought the words, if not struck out, would be as alarming as the mark of the Beast in Revelations.
Mr. LANGDON had rather reject the whole plan than retain the three words “(and emit bills”)
From the debate notes it is clear that their primary concern was that the language of “emit bills” could be used to permit the issuance of paper currency by the new legislature. With direct statements like those from Oliver Ellsworth, their intent to ‘shut the door on paper money’ was unambiguous and leaves little to the imagination.
The motion to strike out the phrase “and emit bills” was approved with a vote of 9 to 2.
Other Quotes on Paper Money from the Period:
“Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”
– George Washington, Letter to Thomas Jefferson on Aug. 1, 1786
“Paper money is unjust…Unconstitutional [as it] affects Rights of property as much as taking away equal value in land.”
– James Madison, Notes for Speech Opposing Paper Money, 1 Nov. 1786
“Paper is poverty,… it is only the ghost of money, and not money itself.”
–Thomas Jefferson to Edward Carrington, 1788
“Experience has proved to us that a dollar of silver disappears for every dollar of paper emitted.”
– Thomas Jefferson to James Monroe, 1791
“Specie [hard money] is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.”
–Thomas Jefferson to John Wayles Eppes, 1813
“The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals… it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.”
– Thomas Jefferson to John W. Eppes, 1813
“Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us.”
– Thomas Jefferson to John W. Eppes, 1813
“That paper money has some advantages is admitted. But that its abuses also are inevitable and, by breaking up the measure of value, makes a lottery of all private property, cannot be denied.”
– Thomas Jefferson to Josephus B. Stuart, 1817