The Debtors, the Creditors, and State Aid: The Paper Money Movement
THE PAPER money that was "hastening into popularity" in Virginia was one of the hottest issues in state politics during the Confederation. By 1786 clamorous public creditors and harassed taxpayers and debtors had forced seven of the states to adopt some form of paper money. The success of this movement in a majority of the states, and the threat of it in the others, created as much fear among conservative men of property as any other thing that happened during the Confederation. It was to this paper money movement that Edmund Randolph made particular reference in his opening speech in the Convention of 1787 when he spoke of the danger of democracy and the feebleness of the state senates as a check against it. The Constitution, when finished, included among the restraints on the states a clause forbidding the states to "coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts. . . ."
After the Convention, Madison explained to Jefferson that some negative on state laws was necessary to secure the rights of individuals, for "the mutability of the laws of the states is found to be a serious evil. . . ." He went on to say that "the evils issuing from these sources contributed more to the uneasiness which produced the convention . . . than those which accrued to our national character and interest from the inadequacy of the Confederation. . . ." Finally, he declared that he did not feel that there were adequate "restraints against paper emissions, and violations of contracts" in the Constitution.1____________________