Rogues' Island Nation
In New England, many a landholder found himself in crushing debt. Farmers demanded relief. In 1785 the bailout party gained control of the Rhode Island legislature by championing the creation of paper money to pay off the debt. John Fiske writes:
“The legislature of 1786 showed an overwhelming majority in favor of paper money. The farmers from the inland towns were unanimous in supporting the measure. They could not see the difference between the state making a dollar out of paper and a dollar out of silver. The idea that the value did not lie in the government stamp they dismissed as an idle crotchet, a wire-drawn theory, worthy only of ‘literary fellows.’ What they could see was the glaring fact that they had no money, hard or soft; and they wanted something that would satisfy their creditors and buy new gowns for their wives, whose raiment was unquestionably the worse for wear.”
The script was not respected as a store of value or a unit of trade. It was heavily discounted as fast as it was printed. Fiske writes:
“But the depreciation began instantly. When the worthy farmers went to the store for dry goods or sugar, and found the prices rising with dreadful rapidity, they were at first astonished, and then enraged. The trouble, as they truly said, was with the wicked merchants, who would not take the paper dollars at their face value. These men were thus thwarting the government, and must be punished. An act was accordingly hurried through the legislature, commanding every one to take paper as an equivalent for gold, under penalty of five hundred dollars fine and loss of the right of suffrage.”
Those evil greedy merchants! How dare they want real money! What did those selfish mercenaries do next?
“The merchants in the cities thereupon shut up their shops. During the summer of 1786 all business was at a standstill in Newport and Providence, except in the bar-rooms. There and about the market-places men spent their time angrily discussing politics, and scarcely a day passed without street-fights, which at time grew into riots. In the country, too, no less than in the cities, the goddess of discord reigned. The farmers determined to starve the city people into submission, and they entered into an agreement not to send any produce into the cities until the merchants should open their shops and begin selling their goods for paper at its face value. … the farmers threw away their milk, used their corn for fuel, and let their apples rot on the ground, rather than supply the detested merchants.”
That’ll teach ‘em. Those damn farmers! The people are to blame!
“The farmers were threatened with armed violence. Town-meetings were held all over the state, to discuss the situation, and how long they might have talked to no purpose none can say, when all at once the matter was brought into court.”
The court ruled that no one had to take the paper money at face value but the legislature removed the judges. But …
“… among the farmers there were some who had grown tired of seeing their produce spoiled on their hands; and many of the richest merchants had announced their intention of moving out of the state. The new forcing act accordingly failed to pass, and presently the old one was repealed. The paper dollar had been issued in May; in November it passed for sixteen cents.”
The attempt to evade economic law leads to far worse consequences both materially and spiritually as society degenerates into warring factions.
“These outrageous proceedings awakened disgust and alarm among sensible people in all the other states, and Rhode Island was everywhere reviled and made fun of. … and forthwith the unhappy little state was nicknamed Rogues' Island.”
Events such as these motivated our founding fathers to “form a more prefect union” where legislative power was checked, mob rule discouraged, judicial review protected the rule of law, property rights respected, and economic regional warfare avoided.
Rhode Island sent no delegates to the convention and was the last to ratify the new constitution.
Have we become a Rogues’ Island nation?