Today, banks have lobbyists and economists to convince the central banks to create money. In 1786, no such niceties existed. That created an economic mess in New Hampshire, where farmers and tradesmen could not get credit. So a New Hampshire farmer, Moses French, led a small army determined to force the government to adopt an easy money policy.
In 1786, the currency situation in New Hampshire was chaotic. With the American Revolution over, the state operated on its own. The New Hampshire government had to decide what money to recognize and honor and what had no value.
In an early attempt to keep the peace, the Legislature ruled that all currencies would be acceptable in trade and for payment of taxes. That resulted, perhaps predictably, in debts paid with useless paper currency and the printing of currency as needed. Then many currency holders began refusing to part with the cash they expected to hold value. They also refused to accept payment in other currencies that they doubted. Rhode Island faced a similar situation, settled in court.
With no cash to circulate, the economy — other than bartering — grew sluggish. Colonial governments had typically issued ‘bills of credit’ to help increase the money supply. These bills, similar to modern currency, were accepted for payment of debts and taxes.
Frequently there was a great tug of war over whether bills of credit should be issued, as they tended to deflate the value of the British pound. Wealthy merchants who sat on a stockpile of pounds typically resisted creation of bills of credit as it would reduce their wealth. In New Hampshire, those merchants tended to live on the Seacoast.
However, in the chaos and straitened circumstances after the war, the citizenry needed a reliable supply of currency. The British certainly weren’t sending any.
The Legislature had considered issuing bills of credit to ease the crisis, and 30 towns had endorsed a petition demanding the government do just that. The Legislature, meanwhile, still sided with those who already had a pile of money.
Enter Moses French. Some 200 New Hampshire men elected him to head their band. They then rode to Exeter to prod the Legislature to allow bills of credit — at the point of their guns.
On Sept. 20, 1786, Moses French presented the petition to the Legislature at Exeter and a three-way standoff ensued. Samuel Livermore, leader of the General Court, appointed a committee to meet with the protesters on the issue. John Sullivan, leader of the Senate, disagreed. He led the Senate in declining to join the meeting. Sullivan, a Revolutionary War general, had been richly rewarded by the French for his service (and his votes in the early Congress). Likely he had no dire need of a local currency.
Moses French, meanwhile, arrived with junior Revolutionary War officers from Londonderry and other western parts of the state.
Sullivan finally agreed to meet the rabble and explain his position. It would be improper, he said, for the government to meet and discuss issues with the men while under threat of violence. Further, he noted, he would summon the local militia to disperse the crowd. This he did, and after a full night holed up in its meeting house at gun point, the members of the legislature were finally allowed to go free and return to their homes when rescued by more than 1,000 militia.
No one was injured in the insurrection, and several of the leaders were taken prisoner. All, however, eventually left the matter behind them with an apology, and charges at later trials were dismissed.
With the ratification of the U.S. Constitution in 1788, the issued died once and for all when states were formally prevented from issuing bills of credit — a power given only to the federal government.