Franklin, Benjamin

Franklin, Benjamin

(1706–1790)

In addition to filling the roles of diplomat, newspaper publisher, inventor, scientist, and signer of the Declaration of Independence, Benjamin Franklin, perhaps the most American of the American revolutionaries, was a tireless advocate of paper money in the American colonies. As early as 1729 he wrote a pamphlet, A Modest Enquiry into the Nature and Necessity of a Paper Currency, and continued to advance proposals for paper money as an answer to economic ills that afflicted the colonies. Perhaps the same practical turn of mind that led Franklin to invent the lightning rod, bifocal glasses, and the Franklin stove also led him to take up the currency problems of the colonies, and seek answers in paper money schemes. By the time of Franklin’s death, and owing partly to his efforts, North America had experimented with more paper money issues than any other part of the world up to that time. Even today the United States 100-dollar bill bears an engraved portrait of Benjamin Franklin, symbolizing his long association with paper money in the United States.

The young Franklin apprenticed himself to the trade of printer, and in later years was publisher of the Pennsylvania Gazette. Franklin’s pamphlet on paper currency helped secure approval of a proposal continuing the issuance of paper money in Pennsylvania, paving the way for Franklin to receive the task of printing the paper money, which he described as “a very profitable job, and a great help to me.” Franklin’s involvement in the printing business may have favorably disposed him toward paper money.

The Colony of Pennsylvania had created a land bank that issued paper money as loans against real estate and precious metal plate. In 1765 British government officials asked for proposals to raise revenue from the American colonies in the least objectionable way. Parliament enacted the infamous Stamp Act to help service wartime debt and pay part of the expense of defending the colonies. Franklin argued forcibly with the British government for his “paper money scheme,” which would generate income from loans and at the same time supply the American colonies with a continental currency. Franklin wanted the English government to establish a loan office that would make loans secured by real estate. The interest-paying loans would be taken out as paper money issued under the authority of the British government, infusing the American colonies with much-needed money and raising revenue for the British government. According to Franklin, an annual interest rate would act as a general tax, but not “an unpleasing one.” This paper money would have been legal tender for public debts, including repayment of loans to the land bank. If England had adopted Franklin’s plan rather than the Stamp Act, perhaps history would have taken a different turn.

Franklin was noted for conservative philosophy in financial matters, and famous for sayings such as “A penny saved is a penny earned,” and “Early to bed and early to rise makes a man healthy, wealthy, and wise,” and “God helps them that help themselves.” That Franklin’s philosophy of thrift, honesty, and commerce could embrace the concept of paper money should have been taken as unerring signal that paper money was the wave of the future. Nevertheless, history has held up many examples showing that the abuses of paper money are harmful of the virtues that Franklin preached.