LAND BANKS, Massachusetts. Early in the 18th century Massachusetts paper cur rency had driven abroad nearly all her coin, broken her credit and demoralized her business, and the failure of the Quebec expedition in 1711 carried the embarrassment to a climax. Encouraged by the success of the South Sea scheme in England, some Boston merchants in duced the General Court to make the bills of credit of the province legal tender for debts of seven years previous and three years subse quent. Besides this, a number of notable men including Peter Faneuil, devised the scheme of a bank whose resources should rest on real estate mortgages, to make loans of its own notes; to encourage subscriptions it was pro posed that Harvard College should have $1,000 a year out of the proceeds. Governor Dudley opposed it strongly; his son, the Attorney-Gen-1 eral, memorialized the General Court against it, and the latter forbade them even to print their scheme till they had laid it before the court, which then refused to incorporate it. To ward it off and produce the same result, at Dudley's suggestion a public bank was founded, with a capital of $250,000provided by the Geri eral Court, to lend bills of credit for five years at 5 per cent, one-fifth to be repaid each year, the whole secured on real estate mortgages. In 1739, with the bad state of the finances in creased by the still worse state created by the paper money of Rhode Island, and silver rated at 27 to 1, the project of a land bank was again brought forward. Several hundred persons
were to form it; notes were to be issued up to $750,000, the a mortgage on each partner's real estate in proportion to his hold ing, or sureties also possessed of sufficient estate, and each partner paying 3 per cent on the loans made him, in bills or in kind, at a rate fixed by the directors. The House of Representatives was largely favorable, but Gov ernor Belcher denounced it as tending to fraud, disturbance of order and confusion of business, and he set aside the election of the speaker and nearly half the council for connection with the bank, besides displacing many office holders. Despite this, the company began operations, ex pecting that the notes would circulate readily. They were mistaken: not over $300,000 were issued. But in 1741 Parliament not only ex tended to the colonies an act forbidding the issue of bills not payable in coin at the end of the term, but made the directors liable to the holders of tile bills for their face with in terest. As a large part of them had been issued at a discount, the partners (though many had little to lose) were threatened with 'ruin, and Parliament had to permit relief measures. One of these partners, who lost all his property, was the father of Samuel Adams.