Benjamin Franklin: A Modest Enquiry

Benjamin Franklin, A Modest Enquiry into the Nature and Necessity of a Paper-Currency, 1729

Ben Franklin's Enquiry was originally published in April, 1729, and has since been reprinted in various sources, including Andrew MacFarland Davis's Colonial Currency Reprints, Volume II, pp. 336-57. Franklin was an advocate of paper money, and wrote this pamphlet in support of a currency emission then under consideration in the Pennsylvania assembly. When the assembly assented, Franklin wrote in his Autobiography, "My friends there, who consider I had been of some service, thought fit to reward me by employing me in printing the money; a very profitable job, and a great help to me."

There are many interesting aspects to Franklin's monetary theory. Franklin believed the supply of money determined the interest rate, and through the interest rate influenced the value of land, capital investment, and trade. Modern economists often associate these ideas with Keynes, although Keynes himself noted in the General Theory that many so-called merchantalists had advanced similar notions.

Franklin advanced the notion that if paper money were put into circulation through a land bank -- that is, lent on mortgage security -- that the mortgages would secure the value of the paper money, preventing it from depreciating. Some of Franklin's contemporaries condemned this reasoning as seriously confused. Most modern economists would side with Franklin's critics: the notes were not redeemable in land, or any commodity, and nothing limited the quantity of money that land banks might create. It is interesting to note, however, that the argument continues on into modern times.

Franklin also presented a labor theory of value; that is, he attributed the relative prices of goods to their relative labor inputs. This idea was central to classical economics in the early 19th century, and Franklin is sometimes credited with being among the first to advance it. However, William Wetzel argues persuasively in Ben Franklin as an Economist, Baltimore, 1895, pp. 30-31, that Franklin lifted his discussion of the labor theory of value from Sir William Petty's Treatise on Taxes and Contributions (1662).

There is another copy of this pamphlet on the web, but it is incomplete. The entire text is included here.

A MODEST
ENQUIRY
INTO THE
Nature and Necessity
OF A
PAPER-CURRENCY.

Quid asper
Utile Nummus habet; patriae, carisque propinquis
Quantum elargiri deceat. - Aulo Persio Flacco

PHILADELPHIA.

Printed and Sold at the New PRINTING-
OFFICE, near the Market. 1729.

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