Paper Money Is Like A Good Wife

"[John] Wise [an Ipswich, MA minister] and other writers acknowledged that commodity prices had risen since paper money came into use and that some merchants occasionally discounted public bills slightly. But, Wise pointed out, these were minor faults that the advantages attending paper money more than made up for. 'Gentlemen! You must do by your bills, as all Wise Men do by their Wives,' he noted facetiously: 'Make the best of them.' Since paper money was integral to the colonial economy, Bay Colonists would do well to 'set them High in your Estimation,' since complaints about the bills' weakness would only serve to devalue them more. He predicted that public faith, consistent policy, and a committed provincial government would eventually stabilize paper money's value in related specie." (194) --Margaret Ellen Newell, From Dependency to Independence: Economic Revolution in Colonial New England

In the first half of the 18th century in New England, one of the most contested political issues was whether and how much paper money should be issued by the colonial governments. Proponents of paper money argued that it facilitated internal trade within the colony by making assets more liquid. The consequently increased internal trade could create new wealth as well as develop and diversify the New England economy. They advocated free trade and few economic regulations. This would create a more robust and self-sufficient colonial economy. Paper money advocates included farmers, country traders, and large landowners.

A bill from 1690 in Massachusetts. This bill
was from one of the first emissions of paper
money by the General Court.
From: http://www.celebrateboston.com/

Opponents of paper money had a strict understanding of the value of money--the only money worthy of the name was specie--i.e., gold and silver. They argued that paper money allowed New England consumers of British goods to get into too much debt. They did not believe that an imbalance of trade between the colonies and Britain was economically healthy (throughout the colonial period, colonists' imports surpassed their natural resource exports in value). Anti-paper money figures tended to be wealthy merchants involved in the Atlantic trade. Therefore, they had plenty of access to specie and did not have to worry about the liquidity of their assets.

Massachusetts was compelled to finance a series of wars in the 1690s and early 1700s through issuing paper money. The way this worked was that the colonial government would print the money, then use it to pay soldiers and war suppliers. These people could in turn purchase goods from others with the paper. Its value was upheld by the fact that the colonial government made taxes payable with the paper money. However, if the war became expensive, it was very easy to print too much money--more money than could be taxed back into the government in any reasonable period of time. At this point, paper money would begin to depreciate--it was a fear that people would try to pay their creditors (who were often merchants) using depreciated paper money that added another argument against paper. But people like John Wise, an Ipswich minister, believed that, despite its potential failings, paper money had an overall positive effect on the New England economy. Kind of like a good wife... despite some downsides, you make the best of her. (I hope I don't get in big trouble with you-know-who for this!)