been induced to adopt for the following reasons. The issuing of a
large paper medium converted the coin of the country into a commodity,
so that much of it was exported and the remainder concealed. The
depreciation of our paper has so lessened our currency, that there is
not a sufficiency for commerce and taxation, without creating by the
latter such distress in the former, as must injure every order of men
in the community. It is necessary, therefore, to fill up the
deficiency in such proportion as it may be called, and with such
medium as may preserve its value.
I have already in my letter of the 4th instant stated the want of
ability in the people to lend, and of credit in the government to
borrow. An additional reason, therefore, for establishing a bank is,
that the small sums advanced by the holders of bank stock may be
multiplied in the usual manner by means of their credit, so as to
increase the resource, which government can draw from it, and at the
same time, by placing the collected mass of private credit between the
lenders and borrowers, supply at once the want of ability in the one,
and of credit in the other.
An additional reason for this institution is, to supply the place of
all our other paper, which it is my design to absorb as soon as
possible, and thereby to relieve the people from those doubts and
anxieties, which have weakened our efforts, relaxed our industry, and
impaired our wealth. But this must not be done, without the
substitution of other paper, for reasons which I have already
assigned, and because that our commerce would suffer for the want of
that facility in money transactions, which paper alone can give.
Finally, one very strong motive, which has impelled my conduct on this
occasion, is to unite the several States more closely together, in one
general money connexion, and indissolubly to attach many powerful
individuals to the cause of our country, by the strong principle of
self-love, and the immediate sense of private interest. It may not be,
perhaps, improper to show and explain this plan to the Spanish
Ministry. They will then perceive how, by an advance of money, they
may in this instance increase our resources and our efforts in a
degree much superior to the immediate sum, and they may be assured,
that on a variety of other occasions, similar benefits will result
from it. I take this opportunity, however, to observe to you, that I
do not mean this, or any other communication, should be absolutely
made. It is, on the contrary, my unalterable opinion, that a prudent
Minister on the spot should be left to act with large discretionary
power, being always furnished with such details, as will enable him to
judge with propriety, and act with decision.
It will undoubtedly strike your observation, that the sum of four
hundred thousand dollars is very small, considering the object which
it is my design to effect. I acknowledge that it is so, and when I
tell you, that I was very apprehensive that we should be unable to
fill a larger subscription, and when I add, that it is far from
certain we shall get all of this moderate sum, you will see still more
clearly the force of those observations which I have already made. But
it is weakness to be deterred by difficulties from a proper pursuit. I
am, therefore, determined that the bank shall be well supported, until
it can support itself, and then it will support us. I mean that the
stock, instead of four hundred thousand dollars, shall be four hundred
thousand pounds, and perhaps more. How soon it will rise to that
amount, it is impossible to foresee. But this we may venture to
assert, that if a considerable sum of specie can be speedily thrown
into it, the period when its force and utility will be felt and known
is not far off.
After I had determined to make the application to the Court of Madrid,
which is contained in my letters, it was my next object to obtain for
you such support as might materially favor your operations. For this
purpose I have written to Dr Franklin, and have told him, that you
would receive by this conveyance, and forward to him, copies of those
resolutions and letters, which may be necessary to explain my
appointment and powers. I lay this task on your Secretaries, because
the want of clerks in my office, and the many things to be done,
together with the short time allowed me by the departure of the
vessel, prevent me from having duplicates made out. I have written to
the Doctor to apply to the Court of Versailles, to further your
negotiations with their influence. I am confident his application will
not be unsuccessful; but how you may derive most benefit from the
cooperation of the French Court, you best can tell. Major Franks,
therefore, is instructed to take your orders for Passy, and return
thence to Philadelphia; so that you will have an opportunity of
communicating fully with the Doctor on any subject you think proper.
You may write to me by any opportunity, if this should arrive safe,
because our cypher will prevent you from being exposed to interested
or impertinent curiosity.
To obtain for you still further assistance, I have applied (in the
absence of M. de la Luzerne, who is gone to camp,) to M. de Marbois
for letters to their Ambassador at the Court of Madrid. I have stated
my views, my hopes, and wishes, with that candor which is proper on
such occasions, and which I wish to preserve on all occasions. M. de
Marbois has, in consequence, written a letter on the subject, in which
he informs the Ambassador of our conversation, states the disorders of
our finances, and makes polite mention of my operations, my designs,
and abilities, as well as the confidence reposed in me by Congress,
and by the people at large. He details the proposed plans, and
particularly that of the Bank, and shows forcibly the advantages,
which would result from a considerable advance of money by Spain. He
assigns also very proper reasons to show why it ought to be
considerable, if it be made at all. The great interest of France in
this business, as well as the open and candid manner, which has marked
all transactions I have hitherto had with the Minister of that nation,
induces me to believe that this letter is more than a compliment, and
that as it is intended, so it will operate to produce the desired
effect.
That nothing in my power might be wanting to the success of a
business, which you must be convinced I have very much at heart, I
have also applied to Don Francisco Rendon, who at present acts here
for Spain, and I have every reason to believe that he will write to
the Spanish Court such a letter as I wish. But after all, much, my
Dear Sir, must depend on your prudence, your activity, and your
attentions to incline, to stimulate, to lead the Ministry into our
views, to remove the obstacles, surmount the difficulties, and crush
the procrastinations, which retard the completion of an object so
essential to your country. I am happy to add, that I have the utmost
confidence in your abilities, your industry, and integrity.
There is a possibility that money may be obtained from Portugal, and
though I confess there is not a very solid ground to build on, and
though it must be owned that appearances are against us, yet I think
it best not too much to trust appearances, either favorable or
unfavorable, and to leave nothing unattempted which may be useful. It
was for reasons of this sort that my letter of the 9th instant, which
I enclose you a copy of, was written to Congress. In consequence of
it, on the 11th they passed a resolution, of which I also enclose you
a copy, and have only to add, that you will act entirely according to
your own discretion on this occasion. I cannot pretend to know the
situation of the Court of Lisbon, and therefore I will not attempt to
measure out a line of conduct to be pursued there. You are, for every
reason, more competent to this business than I am, and therefore I
submit it to your management entirely.
You will observe that a material part of my letter of the 9th remains
unnoticed by Congress. The Committee had not yesterday reported upon
it. Should anything be done previous to the departure of this vessel,
you shall know it. But you are so well acquainted with the delays
incident to public assemblies, that you will not be surprised if you
hear nothing further on the subject.
It is unnecessary for me to make any other mention of Major Franks,
except to inform you, that after a critical examination into his
conduct by a court of inquiry, he was honorably acquitted of all
improper connexion with his late General.[29] For the rest, you are
perfectly acquainted with him, and will therefore take that notice of
him which he deserves.
I am, Dear Sir, your most obedient and humble servant,
ROBERT MORRIS.
FOOTNOTE:
[29] Major Franks was Aid to General Arnold at the time his treachery
was discovered, but he was honorably acquitted from all suspicion of
having any knowledge of Arnold's designs.
* * * * *
_Plan of a Bank, referred to in the preceding Letter._
1. That a subscription be opened for four hundred thousand
dollars, in shares of four hundred dollars each, to be paid
in gold or silver.
2. That the subscription be paid into the hands of George
Clymer and John Nixon, or their agents.
3. That any subscriber of less than five shares, pay the
whole sum on the day of his subscription.
4. That every subscriber of five shares or upwards, pay one
half the sum on the day of his subscription, and the other
half within three months of that day.
5. That every holder of a share shall be entitled to vote by
himself, his agent, or proxy, properly appointed, at all
elections for directors, and that he have as many votes as he
holds shares. And that every subscriber may sell and transfer
his share or shares at his pleasure, the transfer being made
in the bank book, in presence and with the approbation of the
proprietor or his lawful attorney, the purchaser then to
become entitled to the right of voting, &c.
6. That there be twelve directors chosen from among those
entitled to vote, who at this first meeting shall choose one
as president.
7. That there be a meeting of the directors quarterly, for
the purpose of regulating the affairs of the bank; any seven
of the directors to make a board, and that the board have
power to adjourn from time to time.
8. That the board of directors determine the manner of doing
business, and the rules and forms to be pursued, appoint the
various officers, which they may find necessary, and dispose
of the money and credit of the bank for the interest and
benefit of the proprietors, and make from time to time such
dividends out of the profits as they may think proper.
9. That the board be empowered from time to time, to open new
subscriptions, for the purpose of increasing the capital of
the bank on such terms and conditions as they shall think
proper.
10. That the board shall, at every quarterly meeting, choose
two directors to inspect and control the business of the bank
for the ensuing three months.
11. That the inspectors so chosen shall, on the evening of
every day, Sundays excepted, deliver to the superintendent of
the finances of America, a state of the cash account, and of
the notes issued and received.
12. That the bank notes, payable on demand, shall by law be
made receivable in the duties and taxes of every State in the
union, and from the respective States, by the Treasury of the
United States, as specie.
13. That the superintendent of the finances of America shall
have a right at all times to examine into the affairs of the
bank, and for that purpose shall have access to all the books
and papers.
14. That any director or officer of the bank, who shall
convert any of the property, monies, or credits thereof to
his own use, or shall any other way be guilty of fraud or
embezzlement, shall forfeit all his share or stock to the
company.
15. That laws shall be passed making it felony, without
benefit of clergy, to commit such fraud or embezzlement.
16. That the subscribers shall be incorporated under the name
of the President, Directors and Company of the Bank of North
America.
17. That none of the directors shall be entitled to any
pecuniary advantage for his attendance on the duties of his
office of director, or as president, or inspector, unless an
alteration in this respect shall hereafter be made by the
consent of a majority of the stockholders at a general
election.
18. That as soon as the subscription shall be filled, Mr
George Clymer and Mr John Nixon shall publish a list of the
names and sums respectively subscribed, with the places of
abode of the subscribers, and appoint a day for the choice of
directors, to whom, when chosen, they shall deliver over the
money by them received.
_Observations on the above Plan._
ART. 1st. The objects and use of a bank are too obvious to need
illustration. But it may not be amiss to take notice, that the first
moment of its getting into action, the credit arising from its funds
can be made use of by the government of the United States in
anticipation of taxes, in consequence of special agreements to be made
between their superintendent of Finance and the directors for that
purpose; and as the capital and credit of the bank increase, so may
this mode of anticipation be increased, to answer all the purposes of
government. It is, however, evident at the first view, that four
hundred thousand dollars are not sufficient for those purposes, nor
those of private commerce, because no considerable circulation of
paper can be founded on so narrow a basis; yet it is dangerous to
attempt more. It is not possible to determine what is the highest sum,
that could speedily be obtained by subscription. To ask more than
could be obtained would have a fatal effect; to ask less is a partial
evil. It is, however, an evil which admits of a remedy, as is
provided in the plan.
ART. 2d. Before the corporation is formed, and much more so before the
subscription is opened, by which the company is to be determined, no
authority can be bestowed under the corporation. At the same time, it
must be remembered, that in circumstances like ours, the loss of time
involves in it the loss of many advantages. It becomes necessary,
therefore, to appoint individuals to manage the subscription and
receive the money. Mr Clymer and Mr Nixon having been formerly
directors of the Bank of Pennsylvania, and being thereby generally
known in that line, their names naturally present themselves for this
purpose.
ART. 3d & 4th. The difference as to payments of large and small, is so
common an incitement to subscribers, on such occasions, as to speak
for itself.
ART. 5th. The subscribers, it is expected, will consist of citizens of
every State in the Union; and, possibly, foreigners may subscribe or
purchase bank stock; therefore the necessity and propriety of enabling
them to vote by proxy; and this being a monied institution, it is just
that every share be entitled to a vote.
ART. 6th. As the stockholders will mostly be absent from the place
where the bank is kept, the number of twelve seems quite sufficient
for the direction, as they will generally be chosen from the
residents, and there ought to be room left for rotation among these.
ART. 7th & 8th. This plan, if adopted, will be considered as the
constitution of the Bank, and therefore necessary to establish in it
the powers of government by by-laws, rules, and regulations, and
making dividends out of the profits; it is meant that they should
annually pay a dividend of five or six per cent to the proprietors of
the stock, and then settling the accounts of the bank, declare
publicly, if necessary to give credit and confidence, what capital
remains after such dividend. It will be observed, that such dividends
are confined to be made out of the profits; consequently, the capitals
can never be touched.
ART. 9th. When the directors, by paying a dividend out of the profits,
establish the credit of the bank firmly in the minds of the
stockholders, and by declaring the capital stock at the same time to
be increased, give it equal confidence in the general opinion, there
is little doubt but they may open new subscriptions for increasing the
capital with certainty of success.
ART. 10th, 11th & 12th. As credit is the soul of all operations of
this kind, every precaution should be taken to support it. In the
course of things, much of the private property of America may be
dependent on the conduct of affairs at the bank. Care, therefore,
should be taken to prevent fraud and mismanagement. If the
transactions were opened to public inspection, it would be impossible
to do the business amidst the continued interruption; besides that, in
this way, the national enemies would be apprized of our resources and
operations. It is necessary, therefore, by instituting a check, to
guard against the ill consequences which lie in the way, as the public
will have much connexion with the bank, and, at times, deposit
considerable sums of money in it, and always be availing themselves of
its credit. The check should be in the hands of that officer who is
appointed to manage the monied interests of America.
ART. 13th & 14th. The penalties on fraud and embezzlement are derived
from the same source, and are supported by the same reasoning.
ART. 15th & 16th. The necessity of incorporating the bank is obvious,
and the propriety of rendering the office of a director honorable,
rather than lucrative, arises from this circumstance, over and above
the difference between motives of fame and interest, that at present,
any adequate salaries would absorb the profits, and in future the care
of their own interests as stockholders will be an additional
inducement to the first characters to accept the direction, for it is
not doubted but every subscriber will increase his capital in the
bank, so soon as he finds not only the national advantages it will
produce, but sees clearly his private interest advanced beyond his
most sanguine expectations.
* * * * *
ROBERT MORRIS TO JOHN JAY.
Office of Finance, August 15th, 1781.
Sir,
Enclosed you have a list of sundry bills of exchange drawn on you. I
wrote you relatively to these bills on the 29th day of July last, with
sundry enclosures explanatory of my letter. I am now to inform you,
that the advices contained in that letter must, from particular
circumstances, be totally disregarded. Should any of the bills,
mentioned in the enclosed list, come to your hands, you will be pleased
to protest them, and assign, if you please, as a reason therefor, that
you have express instructions to that purport. The uncertainty,
whether you have received my cypher, prevents my using it on this
occasion. The importance of the subject obliges me to write, and as I
send many copies, the risk of capture and inspection is too great to
be more particular.
The gazettes will furnish you with our latest intelligence. That of
New York announces the arrival of near three thousand Hessian troops,
and the capture of the Trumbull frigate. Neither of these is a very
agreeable circumstance. However, we must wait the course of events,
and struggle, as well as we can, against adverse fortune. Our affairs
to the southward wear no unpleasing aspect. And, although it is
impossible, at this distance, to determine what effect European
movements may have on American politics, our government acquires daily
a firmness and stability, which will not easily be shaken.
I have the honor to be, &c.
ROBERT MORRIS.
* * * * *
JAMES LOVELL TO JOHN JAY.
Philadelphia, August 15th, 1781.
Sir,
Herewith you will receive according to the resolution of Congress of
the 10th, such information relative to the surrender of Pensacola, and
the subsequent arrival of the garrison at New York, as I have been
able to obtain, which you will make use of according to your
discretion, and the spirit of the enclosed resolution.
I am, Sir, your friend and very humble servant,
JAMES LOVELL.
_P. S. August 16th._--It appears to me not amiss to enclose to you a
report of a committee on the 10th, as it stands negatived on the
journals of Congress. J. L.
* * * * *
TO THE PRESIDENT OF CONGRESS.
St Ildefonso, September 20th, 1781.
Sir,
Your Excellency's favor of the 5th of July last, with the papers
therewith enclosed, were delivered to me on the 29th ult. by Major
Franks, whom the procrastination of the Minister still obliges me to
detain.
The new commissions, with which Congress have honored me, argue a
degree of confidence, which demands my warmest acknowledgments, and
which, so far as it may be founded on an opinion of my zeal and
integrity, they may be assured will not prove misplaced.
At the commencement of the present troubles, I determined to devote
myself, during the continuance of them, to the service of my country,
in any station in which she might think it proper to place me. This
resolution, for the first time, now embarrasses me. I know it to be my
duty, as a public servant, to be guided by my own judgment only in
matters referred to my discretion, and in other cases faithfully to
execute my instructions, without questioning the policy of them. But
there is one among those which accompanies these commissions, which
occasions sensations I never before experienced, and induced me to
wish that my name had been omitted.
So far as personal pride and reluctance to humiliation may render
their appointment contra-agreeable, I view it as a very unimportant
circumstance, and should Congress, on any occasion, think it for the
public good to place me in a station inferior and subordinate to the
one I now hold, they will find me ready to descend from the one, and
cheerfully undertake the duties of the other. My ambition will always
be more gratified in being useful than conspicuous; for, in my
opinion, the solid dignity of a man depends less on the height or
extent of the sphere allotted to him, than on the manner in which he
may fulfil the duties of it.
But, Sir, as an American, I feel an interest in the dignity of my
country, which renders it difficult for me to reconcile myself to the
idea of the sovereign independent States of America submitting, in the
persons of their Ministers, to be absolutely governed by the advice
and opinions of the servants of another sovereign, especially in a
case of such national importance.
That gratitude and confidence are due to our allies, is not to be
questioned, and that it will, probably, be in the power of France
almost to dictate the terms of peace for us, is but too true. That
such an extraordinary extent of confidence may stimulate our allies to
the highest efforts of generous friendship in our favor is not to be
denied, and that this instruction receives some appearance of policy
from this consideration may be admitted.
I must, nevertheless, take the liberty of observing, that however our
situation may in the opinion of Congress render it necessary to relax
their demands on every side, and even to direct their Commissioners
ultimately to concur (if nothing better could be done) in any peace or
truce not subversive of our independence, which France determined to
accede to, yet that this instruction, besides breathing a degree of
complacency not quite republican, puts it out of the power of your
Ministers to improve those chances and opportunities, which in the
course of human affairs happens more or less frequently to all men.
Nor is it clear, that America, thus casting herself into the arms of
the King of France, will advance either her interest or reputation
with that or other nations.