"That is simple. In the Colonies we issue our own money.
It is called Colonial Scrip. We issue it in proper proportion
to the demands of trade and industry to make the products
pass easily from the producers to the consumers. In this manner,
creating for ourselves our own paper money, we control its
purchasing power, and we have no interest to pay no one."
by:
Benjamin Franklin
(1706-1790) US Founding Father
Source:
Explaining to Bank of England directors his ideas on why the colonies were so prosperous (1763); as quoted in The Money Masters (1995).
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Reader comments about this quote:
Ben's one of my heroes, so I feel bad giving him a thumbs down on this one. But, even the smartest people have their Achilles heel. Ben must not have been able to see the temptation to inflate associated with paper money which is not possible with honest, hard money. I'm sure if he could see the mess central banking has put us in now, he'd feel differently.
 -- Bryan Morton, Stuart, FL     
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    Being raised in Philly I have a soft spot for Ben. Those who always talk about the fed/treasury running the prresses confuse me. The supplu of green backs has not changed all that much over the years. That funds can be loosend by playing with things like fed rates, discount rates etc. is different but the actual supply of paper currency has not changed that much. Ben appears to be have been right. Paper currency is based on the good faith of the American people in each other. This is patriotism.
     -- Waffler, Smith, Arkansas     
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    Bryan said very well and I whole hardily agree. Paper can be an indicator of hard money.
     -- Mike, Norwalk     
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    I am an ardent supporter of hard currencies and an honest money system. Similar to today, the Americans were subject to the rule of a king and the rule of the Bank of England which issued 'money' at interest. When the colonists broke free of the bank, they prospered. Mind Ben's words -- "We issue it in proper proportion to the demands of trade and industry" -- this is a form of backing -- that the currency is backed by real goods. Since there can never be a law that prevents people from making agreements with each other or allowing a person to accept an IOU in lieu of payment, then we cannot ever rule out the need for script from time to time. Keep in mind that gold and silver were still accepted as 'money' and in fact were the standard definitions of such. The real problem is when the people lose the power to issue their own currency. For example, if the Fed was not a private bank operating for profit (and indeed its profits are gigantic), it could be wholly owned by the people themselves -- the profit of which would pay for national health care, education, and all the rest of the goodies that people seem bent on having the country provide. Of course, real money would also have to be in circulation and no one can be forced to take the People's Script. We would have two currencies -- one cash (in its truest sense -- gold or silver) and one credit (inflationary fiat). The founders did not do enough to check the power of banking -- and they admitted it. And how will a nation with a hard currency compete with a world of nations using fiat currencies -- eventually all the hard money will be bought up by the fake money. So it seems inevitable that a fiat currency will always be around even if its only form is an IOU. The challenge is to get the issuing power of the money supply back into the hands of the people where it belongs. The colonists did it, so can we. There is no law that prevents We the People from issuing our own 'colonial script' and using it among ourselves. In fact it is being done in numerous cities today -- it's not very popular, but towns are able to 'borrow' interest-free by issuing local script that local merchants will honor. If we don't break our dependency on federal reserve notes, we shall never regain our independence.
     -- E Archer, NYC     
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    Yes, Franklin may have thought this in 1763, but what did he think of it when the Continental Congress inflated the currency so drastically that it became worthless? I certainly don't want my currency to be backed by "patriotism". To say that the amount of green backs in the market has not changed drastically through the years is ignorant of nearly every financial, economic, inflation, and historical fact of our currency. How in the hell do you think inflation works? Arbitrary interest rates and the amount of worthless paper money flooded into the market (this is a basic fact discussed in the first few chapters of any Econ 101 book college book). Gold has retained its value (purchasing power) throughout history; whereas our dollar has become super-inflated (more money in circulation than before). This is such a moot point and common knowledge that I don't know why I've wasted my time -- I can't believe the onslaught of accepted ignorance some people purport.
     -- Logan, Memphis, TN     
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    You are a rhetorical thug Logan. There is approx. 500 billion green backs in circulation and it supports a 30 trillion dollar economy. I expect nothing less from you since you last used the term "The American Republic". The name or style of this nation has been set by the Articles of Conferation, it says "the style of this conferacy shall be "The United States of America". If you cannot get that straight I can fully understand that you cannot understand something like the word currency. Price inflation Logan is not a function of or directly connected with currency inflation. Do your research I see how the amount of currency has increased over the years.
     -- Waffler, Smith, Arkansas     
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    Just for you Logan! "Over the last twenty years, inflation has been effectively tamed. GDP since 1982 has more than doubled, growing by 111%" quote dated 2004 by Tim Kane, Phd. Heritage Foundation.
     -- Waffler, Smith, Arkansas     
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    Yes, inflation EXCLUDING food and energy have been quite tame since we have been buying our goods from third world rat-hole countries. That will soon come to an end as they climb out of the rat-hole and their people demand a better living standard. Real inflation has been running over 10% this year. The fed has cooked the books and everybody that eats and buys fuel knows it. Not everyone, however, is willing to tell the truth about it.
     -- Ken, Allyn, WA     
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    Paraphrasing Churchill, a federal central bank is the worst form of money supply, except for all the others. But it is important its actions be independent of the government It has kept the US dollar strongest in the world ...until now, when the fiscal policies of the government are overwhelming the monetary policies of the Fed. There is no way monetary policies can compensate for hundreds of billions of extra expenditures for war while cutting taxes.
     -- Jack, Green, OH     
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    Waffler, your ignorance knows no bounds. Over $800 billion dollars was spent on the Iraq war alone. Over a trillion dollars is being spent next year by Congress alone -- are you delirious? Only 500 billion dollars in circulation? 'Green backs'? This is not a monetary term -- this is a slang from the Civil War (by the way, bills used prior to greenbacks were printed with gold backs indicating that the note was backed by gold). You can't just redefine words to suit your opinions. Inflation is caused by issuing more currency without a corresponding increase in its backing. I don't know why I even bother trying to educate someone so dedicated to his ignorance.
     -- E Archer, NYC     
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    Napoleon Bonaparte-- "When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain"..... 9th Circuit Court, Banking quotes-- "... we conclude that the [Federal] Reserve Banks are not federal ... but are independent privately owned and locally controlled corporations... without day to day direction from the federal government" Quote from Mayer Amschel Rothschild-- "Give me control of a nation's money and I care not who makes the laws." -------- The U.S. is drained of its financial wealth and will only continue to be used as a war machine to accomplish the goals of the money makers. Witness the falling value of the dollar and the rise in the euro. Iran and China are the first (and not the last) to transfer assets from dollars into euros. We are witnessing the downfall of the once greatest nation on earth. And all because the American people handed over the power to create money to the Federal Reserve. And they really don't care if the debt gets paid back (they created the money out of thin air) so long as the whores in govt. continue to toe the line.
     -- Dan     
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    @ brian morton: " I'm sure if he could see the mess central banking has put us in now, he'd feel differently." the system we are under today is not the same one that ben believed in. ben believed in a full reserve banking system...with congress having the sole authority to print money. this is most definitely not the same system our forefathers intended...actually the system we are under today is the EXACT same system they fought to break away from.
     -- Scott McLendon, Birmingham, AL     
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    "...We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers..." The restriction on amount of issuance of money is banksters propaganda (proper proportion). Money is a tool of exchange and all people should have it in whatever amount they need it as any other tool.
     -- Stan, Vancouver     
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     -- Anonymous      
    Wow.. how stupid we have become!! I have read alot of the comments here and i have to say.. WOW .. we are in trouble!! here.. go here.. learn people!! http://www.lovethetruth.com/federal_reserve.htm
     -- kevin, Minnesota     
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    Bryan, he is not condoning the scrip money system. He is simply answering a question on how it had succeeded for them temporarily. He can still be one of your respected heroes without an Achilles heel.
     -- Kevin, Raleigh     
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    Only 3 percent of our ficticious currency now is ever printed on paper. The other 97 percent exists only in computer databases. And as for inflation, the volume of currency has slowly but steadily grown over a long period of time BUT recently (2009), the volume of printed money has skyrocketed, so prepare for inflation over the next few years. I wish America would have stayed on the gold standard, but in 1933 FDR perpetrated the biggest theft of the American people in history by demanding that all gold be transferred into worthless paper money. The government stole everyone's gold.
     -- Anonymous, Nashua, NH     
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    Inflation is a possibility with all sorts of money but credit especially. Ben Franklin's point was, however, that by issuing their own scrip instead of chartering private banks to do it, the nation was able to avoid the burden of paying rent on the money (interest) and was therefore better able to defend its sovereignty.
     -- Stephen Burgoyne COulson, Vancouver BC     
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    * No one knows how many US Dollars are in circulation, we estimate it from what we print. Also, no one knows how many counterfeit dollars are in circulation. Countries like N.-Korea, Iran, and Zimbabwe, have been accused of counterfeiting US Dollars to support their import needs. Japan did it during the war. I own one of their dollars and I own a "Brown Hawaiian Dollar" the Army's answer to the counterfeited green dollars. * Ben Franklin believed that there should always be a little inflation. * I believe, from my yearly expense tabulations, that US Government inflation statistics are under estimated.
     -- Big Bill, Cambridge, MA     
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    This law needs to be brought back from the "old days" - TO COUNTERFEIT IS DEATH
     -- J, Toronto     
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    Benjamin Franklin was not in favor of a central bank. He was strongly against it. Paper money and a central bank are two different things. Furthermore there is a huge difference between fractional reserve banking and paper money. "The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of colonists to get power to issue their own money permanently out of the hands of George the III and the international bankers was the PRIME reason for the Revolutionary War."- Benjamin Franklin. The problem is not paper money, that is easy to regulate properly and transparently. The problem is that the government does not issue their own money anymore. The Federal Reserve is a privately owned bank, NOT a government entity. We choose to let bankers create the money and we borrow it from them. Why should we borrow it from them at interest when we could just make it ourselves and not pay this interest? Why should taxpayers be burdened with paying this debt when it's an unnecessary one? Is there one single reason? We never had a financial crisis in this country for the majority of our history until the institution of central banking in 1913. Since then occasional financial disaster has been the norm.
     -- Joe, Salt Lake City, UT     
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    The quote at the top of this page is not found in any of the writings of Benjamin Franklin and therefore the entire discussion is completely off base. Please take the time to research the above quote and other supposed quotes by Franklin relative to colonial scrip. Bill Still and his Money Masters film and other writers have promoted this quote without confirming its authenticity. I have written papers on the Federal Reserve that were published by the BBC/CNN WorldNews Network with this false quote. It is easy to fall for a quote that sounds good but has no real substance in history.
     -- Darrell T, Arcata, CA     
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    This quote should be removed.
     -- Darrell T, Arcata, CA     
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    Are you people totally clueless? Yes, fiat currency is not as solid as asset backed currency. The point is our money is controlled by semi private Federal Reserve we pay interest on, which we wouldn't if congress printed it. And constitutionally are the only ones supposed to do that, not the Fed Partners, JP Morgan, Citigroup, Goldman Sachs, BOA, Credit Suisse, Deutsche Bank, Barclays. Trillions go overseas in profit and loans because of this.
     -- Jim, Morristown     
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    So that's where they learnt to corrupt the system.....
     -- Robert Edwards, Somewhere in Europe     
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     -- Leslie, Biddeford, ME      
    " We have no interest to pay no one " Lend without usury !! Or Oppression, a loan with a sting ! Franklin is spot on !
     -- Ronw13, Yachats Or     
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