Collection of the Museum of American Finance
Sight draft on Paris issued to William Hart for $ 12 in 60 livres tournois , dated November 1779 .
Upon John ’ s death , his son — also named John Hancock , and the famous signer of the Declaration of Independence — went to live with Thomas . The younger John went on to learn the rudiments of business from his uncle , becoming instrumental in the company ’ s overseas affairs , until eventually becoming one of the wealthiest men in the colonies when his uncle died and he inherited the business . His experience with the House of Hancock served him and the emerging nation well .
The House of Hancock had prospered by swapping promises to pay with English banks . The firm exported commodities , including whale oil and potash ( a form of salt ) to England . A man named Francis Wilks , the Hancocks ’ s agent in London , sold their goods and kept the sales proceeds . When the company purchased manufactured goods , they paid with bills of exchange . Those bills instructed Wilks to pay for the goods in London .
The Hancocks often issued bills of exchange to Wilks for more money than they had left with him , and to keep the Hancocks as clients , Wilks asked his bank to pay the bills . The bank then swapped Hancocks ’ s debts with its own . The debts of the English bank circulated as money in most countries , and with those debts the House of Hancock became the biggest merchant in Boston .
In 1775 , John Hancock was chosen as president of the Continental Congress . He and his fellow congressmen realized that they could take what they had learned as merchants dealing with English banks and use this knowledge against the British . There may not have been banks in the newly founded colonies , but there were plenty in those European nations hostile to England : France , Spain and Holland .
The Congress believed , rightly , that these nations would be willing to support them in their war effort against their common foe . Congress therefore did exactly as John Hancock and other colonial merchants had done , dispatching envoys to various European cities , issuing their delegates with international bills of exchange . It instructed the delegates to exchange the bills for bank debts , creating substantial amounts of bank money that could be used to buy more cannons and muskets back home . It was up to the envoys to persuade the local foreign banks to accept the exchange .
Congress believed that their best chance to make their strategy work would be in France , so in March 1776 they sent a man named Silas Deane — now known as one of the original Founding Fathers , and a shrewd merchant from Connecticut — to Paris . Deane ’ s role in helping to bankroll his new nation was certainly significant ,
but shortly after his arrival in Paris , a certain Benjamin Franklin joined him as another representative of Congress . And Franklin ’ s role , as so often in his extraordinary life , was game-changing .
French Money
Franklin took residence in Passy , on the outskirts of Paris . He rented a home near a certain Alphonse Ferdinand Grand . Grand was Swiss , and like the French finance minister , Jacques Necker ( the two were friends ), he was a banker . He was the managing partner of Grand & Cie , a merchant bank based in Paris and Antwerp . A number of states and countries banked with Grand ; Holland and Sweden were among his clients . Grand & Cie also traded the public debts of France , while raising funds for the kingdom ; Grand knew exactly how banks could profit from helping governments . And his new neighbor Benjamin Franklin knew that in Grand he had found the right partner to help him and his fellow colonists fight their war in America .
Grand kindly explained how banks create money by exchanging debts — or promises , as he called them — and proposed to Franklin some of the ways in which his bank could create promises that the Continental Congress could use as
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