FINANCIERING
Whether the financiering of the American Revolution is to be looked upon
in a pathetic or in a comical light must depend upon the mood of the
observer. The spectacle of a young people, with no accumulated capital,
engaged in supporting the charge of a mortal struggle against all the
vast resources of Britain, has in it something of pathos. But the
methods to which this people resorted to raise funds were certainly of
amusing simplicity. It was not until the appointment of Robert Morris,
in 1781, that a treasury department came into existence and some slight
pretense of system was introduced into the financial affairs of the
confederation. During the years prior to that time Congress managed the
business matters. But Congress neither had funds nor the power to obtain
any. It had an unlimited power for contracting debts: absolutely no
power for collecting money. It used the former power freely. When
creditors wanted payment, requisitions were made upon the States for
their respective quotas. But the States were found to be sadly
irresponsive; probably the citizens really had not much ready money;
certainly they had not enough to pay in taxes the cost of the war; no
civilized state has been able to conduct a war, even a small one, in
modern times without using the national credit. But the United States
had absolutely no credit at all. It was well enough to exclaim "Millions
for defense; but not one cent for tribute!" This was rhetoric, not
business; and Congress soon found that the driblets which trickled
tardily to them in response to their demands on the several States would
hardly moisten the bottom of the great exchequer tank, which needed to
be filled to the brim.
Two methods of relief were then adopted, crude, simple, but likely for a
time to be efficient; and provided only that within that time the war
could be finished, all might go well. One of these methods was to issue
irredeemable paper "money;" the other was to borrow real money abroad.
The droll part was that both these transactions were audaciously entered
upon by a body which had absolutely no revenues at all to pledge as
security, which had not a dollar of property, nor authority to compel
any living man to pay it a dollar. A more utterly irresponsible debtor
than Congress never asked for a loan or offered a promissory note. For
the security of a creditor there was only the moral probability that in
case of success the people would be honest enough to pay their debts;
and there was much danger that the jealousies between the States as to
their proportionate quotas might stimulate reluctance and furnish
excuses which might easily become serious in so unpleasant a matter as
paying out hard cash. At home Congress could manage to make its paper
money percolate among the people, and could pay a good many American
creditors with it; but there were some who would not be thus satisfied,
and few European creditors, of course, would meddle with such currency.
So to pay these people who would have real money Congress solicited
loans from other nations. It was like the financiering of a schoolboy,
who issues his IOU's among his mates, and refers the exacting and
business-like tradesman to his father. France was cast for the rôle of
father to the congressional schoolboy for many wearisome years.
The arrangement bore hard upon the American representatives, who, at
European courts and upon European exchanges, had the embarrassing task
of raising money. It was all very well to talk about negotiating a loan;
the phrase had a Micawber-like sound as of real business; but in point
of plain fact the thing to be done was to beg. Congress had a
comparatively easy time of it; such burden and anxiety as lay upon that
body were shared among many; and after all, the whole scope of its duty
was little else than to vote requisitions upon the States, to order the
printing of a fresh batch of bills, and to "resolve that the Treasury
Board be directed to prepare bills of exchange of suitable denominations
upon the Honorable Benjamin Franklin [or sometimes Jay, or Adams, or
another], minister plenipotentiary at the court of Versailles, for----
thousand dollars _in specie_." Having done this, Congress had fulfilled
its simple part, and serenely waited for something to turn up.
The plan which seemed most effective was to send a representative
accredited to some foreign government, and instructed to raise money at
once. Without wasting time by waiting to see whether he arrived safely,
or was received, or was successful in his negotiations, the next ship
which followed him brought drafts and bills which he was expected to
accept, and at maturity to pay. Having thus skillfully shifted the
laboring oar into his hands Congress bestirred itself no further. Poor
Jay, in Spain, had a terrible time of it in this way, and if ever a man
was placed by his country in a painful and humiliating position, it was
he. He faced it gallantly, but had to be carried through by Franklin.
From first to last it was upon Franklin that the brunt fell; he had to
keep the country from financial failure as Washington had to save it
from military failure; he was the real financier of the Revolution;
without him Robert Morris would have been helpless. Spain yielded but
trifling sums in response to Jay's solicitations; Holland, which was
tried by Adams, was even more tardy and unwilling, though towards the
end some money was got there. Franklin alone, at Paris, could tap the
rock and make the waters flow. So upon him Congress sent in an endless
procession of drafts, and compelled him to pay all their foreign bills
and indebtedness; he gathered and he disbursed; to him were referred all
the drafts upon Jay and others, which they themselves could not pay, and
he discharged them one and all. A heavier task never fell upon any man,
nor one bringing less recognition; for money matters usually seem so dry
and unintelligible that every one shirks informing himself about them.
We read about the horrors of the winter camp at Valley Forge, and we
shudder at all the details of the vivid picture. The anxiety, the toil,
the humiliation, which Franklin endured for many winters and many
summers in Paris, in sustaining the national credit, do not make a
picture, do not furnish material for a readable chapter in history. Yet
many a man would far rather have faced Washington's lot than Franklin's.
I do not intend to tell this tale at length or minutely, for I could
trust no reader to follow me in so tedious an enterprise; yet I must try
to convey some notion of what this financiering really meant for
Franklin, of how ably he performed it, of what it cost him in wear and
tear of mind, of what toil it put upon him, and of what measure of
gratitude was due to him for it. It may be worth mentioning by the way
that he not only spent himself in efforts to induce others to lend, but
he himself lent. Before he embarked for Philadelphia on his French
mission, he gathered together all that he could raise in money, some
£3000 to £4000, and paid it over as an unsecured loan for an indefinite
period to the Continental Congress.
It is not probable that from any records now existing the most patient
accountant could elicit any statement, even approximating to accuracy,
of the sums which Franklin received and paid out. But if such an account
could be drawn up, it would only indicate some results in figures which
would have little meaning for persons not familiar with the national
debts, revenues, and outlays of those times, and certainly would not at
all answer the purpose of showing what he really did. The only
satisfactory method of giving any passably clear idea on the subject
seems to be to furnish some extracts from his papers.
The ship which brought Franklin also brought indigo to the value of
£3000, which was to serve as long as it could for the expenses of the
commissioners. For keeping them supplied with money later on, it was the
intention of Congress to purchase cargoes of American products, such as
tobacco, rice, indigo, etc., etc., and consign these to the
commissioners, who, besides paying their personal bills, were sure to
have abundant other means for using the proceeds. Unfortunately,
however, it so happened that the resources presented by this scheme were
already exhausted. In January, 1777, a loan of one million livres had
been advanced on a pledge of fifty-six thousand hogsheads of tobacco to
the Farmers General of the French revenue; and the rice and indigo had
been in like manner mortgaged to Beaumarchais. Congressional jugglery
could not quite compass the payment of different creditors with the same
money, even supposing that the money came to hand. But it did not; for a
long while no cargoes arrived; of those that were dispatched, some were
run away with by dishonest ship-masters, some were lost at sea, others
were captured by the English, so that Franklin sadly remarked that the
chief result was that the enemy had been supplied with these articles
for nothing. But he preserved his resolute cheerfulness. "The destroying
of our ships by the English," he said, "is only like shaving our beards,
that will grow again. Their loss of provinces is like the loss of a
limb, which can never again be united to their body." When at last a
cargo did arrive, Beaumarchais demanded it as his own, and Franklin at
last yielded to his importunities and tears, though having no really
sufficient knowledge of his right to it. Later a second vessel arrived,
and Beaumarchais endeavored to pounce upon it by process of law. That
one also Franklin let him have. Then no more came, and this promising
resource seems never to have yielded one dollar for Franklin's use.
Already so early as January 26, 1777, it was necessary to appeal to
Thomas Morris, from whom remittances had been expected on account of
sales made at Nantes: "You must be sensible how very unbecoming it is
of the situation we are in to be dependent on the credit of others. We
therefore desire that you will remit with all possible expedition the
sum allotted by the Congress for our expenses." But the commissioners
appealed in vain to this worthless drunkard.
Strange to say, the instructions given by Congress to the commissioners
at the time of Franklin's appointment said nothing about borrowing
money. In view of what he had to do in this way it was a singular
omission; but it was soon repaired by letters. In March, 1777, Franklin
writes to Lee: "We are ordered to borrow £2,000,000 on interest;" also
to "build six ships of war," presumably on credit. In this same month
Franklin wrote a paper, which was widely circulated in Europe, in which
he endeavored to show that the honesty, the industry, the resources, and
the prospects of the United States were so excellent that it would
really be safer to lend to them than to England. It was a skillful piece
of work, and its arguments had evidently persuaded the writer himself;
but they did not induce the money-lenders of the old countries to accept
moral qualities and probabilities as collateral security.
Fair success, however, was soon met with at the court of France, so that
the commissioners had the pleasure of assuring Congress that they could
safely be depended upon to meet the interest on a loan of $5,000,000,
which by this aid Congress probably would be able to contract for. But
that body had no idea of being content with this! March 17, 1778,
Franklin writes to Lee that they have been drawn upon for 180,000
livres, to pay old indebtedness of the army in Canada; also that other
bills have been drawn. The number and gross amount of these were not
stated in the advices; but the commissioners were ordered to "accept
them when they should appear." "I cannot conceive," said Franklin, "what
encouragement the Congress could have had from any of us to draw on us
for anything but that interest. I suppose their difficulties have
compelled them to it. I see we shall be distressed here by these
proceedings," etc., etc. Congress was composed of men far too shrewd to
await "encouragement" to draw for money!
July 22, 1778, he wrote to Lovell: "When we engaged to Congress to pay
their bills for the interest of the sums they could borrow, we did not
dream of their drawing on us for other occasions. We have already paid
of Congress's drafts, to returned officers, 82,211 livres; and we know
not how much more of that kind we have to pay, because the committee
have never let us know the amount of those drafts, or their account of
them never reached us, and they still continue coming in. And we are now
surprised with drafts from Mr. B. for 100,000 more. If you reduce us to
bankruptcy here by a non-payment of your drafts, consider the
consequences. In my humble opinion no drafts should be made on us
without first learning from us that we shall be able to answer them."
Congress could not fairly exact great accuracy from the drawees of its
bills, when it never took pains to give notice of the facts of the
drawing, of the number of bills drawn, of dates, or amounts; in a word,
really gave no basis for account-keeping or identification. No more
helter-skelter way of conducting business has ever been seen since
modern business methods were invented. The system, if system it may be
called, would have been aggravating and confusing enough under any
condition of attendant circumstances; but it so happened that all
attendant circumstances tended to increase rather than to mitigate the
difficulties created by the carelessness of Congress. One naturally
fancies that a nation deals in few and large transactions, that these
drafts may have been for inconveniently large sums, but that at least
they probably were not numerous. The precise contrary was the case. The
drafts were countless, and often were for very petty amounts, much as if
a prosperous merchant were drawing cheques to pay his ordinary expenses.
Further, the uncertainty of the passage across the Atlantic led to these
bills appearing at all sorts of irregular times; seconds often came to
hand before firsts, and thirds before either; the bills were often very
old when presented. Knaves took advantage of these facts fraudulently to
alter seconds and thirds into firsts, so that extreme care had to be
taken to prevent constant duplication and even triplication of payments.
It would have taken much of the time of an experienced banker's clerk to
keep the bill and draft department in correct shape. It is not
improbable that Congress lost a good deal of money by undetected
rascalities, but if so the fault lay with that body itself, not with
Franklin.
Amid the harassments of these demands, Franklin was much vexed by the
conduct of Arthur Lee and Izard in drawing money for their own expenses.
In February, 1778, each insisted that he should be allowed a credit with
the banker, M. Grand, to an amount of £2000, as each then expected to
depart on a mission. Franklin reluctantly assented, and was then
astonished and indignant to find that each at once drew out the full sum
from the national account; yet neither went upon his journey. In
January, 1779, Izard applied for more. Franklin's anger was stirred;
Izard was a man of handsome private property, and was rendering no
service in Paris; and his requirements seemed to Franklin eminently
unpatriotic and exorbitant. He therefore refused the request, writing to
Izard a letter which is worth quoting, both from the tone of its
patriotic appeal and as a vivid sketch of the situation:--
"Your intimation that you expect more money from us obliges us to
expose to you our circumstances. Upon the supposition that Congress
had borrowed in America but $5,000,000, and relying on the
remittances intended to be sent to us for answering other demands,
we gave expectations that we should be able to pay here the
interest of that sum as a means of supporting the credit of the
currency. The Congress have borrowed near twice that sum, and are
now actually drawing on us for the interest, the bills appearing
here daily for acceptance. Their distress for money in America has
been so great from the enormous expense of the war that they have
also been induced to draw on us for very large sums to stop other
pressing demands; and they have not been able to purchase
remittances for us to the extent they proposed; and of what they
have sent, much has been taken, or treacherously carried into
England, only two small cargoes of tobacco having arrived, and they
are long since mortgaged to the Farmers General, so that they
produce us nothing, but leave us expenses to pay.
"The continental vessels of war which come to France have likewise
required great sums of us to furnish and refit them and supply the
men with necessaries. The prisoners, too, who escape from England
claim a very expensive assistance from us, and are much
dissatisfied with the scanty allowance we are able to afford them.
The interest bills above mentioned, of the drawing of which we have
received notice, amount to $2,500,000, and we have not a fifth part
of the sum in our banker's hands to answer them; and large orders
to us from Congress for supplies of clothing, arms, and ammunition
remain uncomplied with for want of money.
"In this situation of our affairs, we hope you will not insist on
our giving you a farther credit with our banker, with whom we are
daily in danger of having no farther credit ourselves. It is not a
year since you received from us the sum of 2000 guineas, which you
thought necessary on account of your being to set out immediately
for Florence. You have not incurred the expense of that journey.
You are a gentleman of fortune. You did not come to France with any
dependence on being maintained here with your family at the expense
of the United States, in the time of their distress, and without
rendering them the equivalent service they expected.
"On all these considerations we should rather hope that you would
be willing to reimburse us the sum we have advanced to you, if it
may be done with any possible convenience to your affairs. Such a
supply would at least enable us to relieve more liberally our
unfortunate countrymen, who have long been prisoners, stripped of
everything, of whom we daily expect to have nearly three hundred
upon our hands by the exchange."
At this same time Franklin wrote to Congress to explain how it had
happened that so large a sum as £4000 had been allowed to these
gentlemen; for he feared that this liberality might "subject the
commissioners to censure." The explanation was so discreditable to Lee
and Izard that it is charitable to think that there was some
misunderstanding between the parties.[68] The matter naturally rankled,
and in May Franklin wrote that there was much anger against him, that he
was charged with "disobeying an order of Congress, and with cruelly
attempting to distress gentlemen who were in the service of their
country."
[Note 68: See Franklin's _Works_, vi. 294.]
"They have indeed," he said, "produced to me a resolve of Congress
empowering them to draw ... for their expenses at foreign courts;
and doubtless Congress, when that resolve was made, intended to
enable us to pay those drafts; but as that has not been done, and
the gentlemen (except Mr. Lee for a few weeks) have not incurred
any expense at foreign courts, and, if they had, the 5500 guineas
received by them in about nine months seemed an ample provision for
it, ... I do not conceive that I disobeyed an order of Congress,
and that if I did the circumstances will excuse it.... In short,
the dreadful consequences of ruin to our public credit, both in
America and Europe, that must attend the protesting a single
Congress draft for interest, after our funds were out, would have
weighed with me against the payment of more money to those
gentlemen, if the demand had otherwise been well founded. I am,
however, in the judgment of Congress, and if I have done amiss,
must submit dutifully to their censure."
Burgoyne's surrender had a market value; it was worth ready money in
France and Spain. Upon the strength of it the former lent the States
3,000,000 livres; and the like amount was engaged for by Spain. But,
says Bancroft, "when Arthur Lee, who was equally disesteemed in
Versailles and Madrid, heard of the money expected of Spain, he talked
and wrote so much about it that the Spanish government, who wished to
avoid a rupture with England, took alarm, and receded from its
intention."[69]
[Note 69: Bancroft, _Hist. U. S._ ix. 480.]
In February and March, 1779, came demands from the officers of the
frigate Alliance for their pay; but Franklin was "neither furnished
with money nor authority for such purposes." It seemed, however, too
hard to tell these gallant fellows, whose perilous and useful service
was in European waters, that they could not have a dollar until they
should get safely back to the States; so Franklin agreed to pay for one
suit of clothes for each of them. But he begged them to be as "frugal as
possible," and not make themselves "expensively fine" from a notion that
it was for the honor of the State, which could be better promoted in
more sensible ways.
May 26, 1779, he complains to the committee of foreign affairs that,
whereas the commissioners had agreed to find in Paris means of paying
interest on a loan of $5,000,000, that loan had been doubled, while, on
the other hand, they had been "drained by a number of unforeseen
expenses," including "orders and drafts" of Congress. "And now," he
says, "the drafts of the treasurer of the loans coming very fast upon
me, the anxiety I have suffered and the distress of mind lest I should
not be able to pay them, have for a long time been very great indeed. To
apply again to this court for money for a particular purpose, which they
had already over and over again provided for and furnished us, was
extremely awkward." One would think so, indeed! So he fell back on a
"_general_ application" made some time before, and received naturally
the general answer that France herself was being put to enormous
expenses, which were aiding the States as efficiently as a direct loan
of money could do. The most he could extort was the king's guaranty for
the payment of the interest on $3,000,000, provided that sum could be
raised in Holland. The embarrassing fact was that the plea of poverty
advanced by the French government was perfectly valid. Turgot said so,
and no man knew better than Turgot. He had lately told the king that
even on a peace footing the annual expenditures exceeded the annual
receipts of the exchequer by 20,000,000 livres; and he even talked
seriously of an avowal of national bankruptcy. The events preceding the
French Revolution soon proved that this great statesman did not
exaggerate the ill condition of affairs. Yet instead of practicing rigid
prudence and economy, France had actually gone into a costly war for the
benefit of America. It was peculiarly disagreeable to be ceaselessly
appealing for money to an impoverished friend.
Another vexation was found in the way in which the agents of the various
individual States soon began to scour Europe in quest of money. First
they applied to Franklin, and "seemed to think it his duty as minister
for the United States to support and enforce their particular demands."
But the foreigners, probably not understanding these separate
autonomies, did not relish these requisitions, and Franklin found that
he could do nothing. On the contrary, he was hampered in effecting loans
on the national credit; for these state agents, hurrying clamorously
hither and thither, gave an impression of poverty and injured the
reputation of the country, which, indeed, was already low enough upon
the exchanges without any such gratuitous impairment.
February 19, 1780, there was an application from John Paul Jones for
money for repairs on his ships. Franklin approved keeping the vessels in
serviceable condition, but added: "Let me repeat, for God's sake be
sparing, unless you mean to make me a bankrupt, or have your drafts
dishonored for want of money in my hands to pay them."
May 31, 1780, he complains that he has been reproached by one of the
congressional agents whose unauthorized drafts he had refused. He has
been drawn upon by Congress, he says, for much more than the interest,
which only he had agreed to furnish, and he has answered every demand,
and supported their credit in Europe. "But if every agent of Congress in
different parts of the world is permitted to run in debt, and draw upon
me at pleasure to support his credit, under the idea of its being
necessary to do so for the honor of Congress, the difficulty upon me
will be too great, and I may in fine be obliged to protest the interest
bills. I therefore beg that a stop may be put to such irregular
proceedings." It was a reasonable prayer, but had no effect. Franklin
continued to be regarded as paymaster-general for the States in Europe.
We next hear of his troubles in paying the bills which Congress,
according to its usual custom, was drawing upon Jay. They sent Jay to
Spain, and told him to borrow money there; and as soon as they had got
him fairly at sea, they began drawing drafts upon him. He soon found
himself, as he said, in a "cruel situation," and the torture of mind
which he endured and the responsibility which he assumed are well known.
He courageously accepted the bills, trusting to Providence and to
Franklin, who seemed the agent of Providence, to arrange for their
payment. Franklin did not fail him. One of Jay's earliest letters to
Franklin said: "I have no reason as yet to think a loan here will be
practicable. Bills on me arrive daily. Be pleased to send me a credit
for the residue of our salaries." Five days later: "Bills to the amount
of $100,000 have arrived. A loan cannot be effected here." And so on. In
April, 1781, his appeal became pathetic: "Our situation here is daily
becoming more disagreeable from the want of our salaries; to be obliged
to contract debts and live on credit is terrible. I have not to this day
received a shilling from America, and we should indeed have been greatly
distressed, had it not been for your good offices." An American minister
without resources to pay his butcher and his grocer, his servant and his
tailor, presented a spectacle which moved Franklin to great efforts! In
plain truth, Jay and his secretary, Carmichael, were dependent upon
Franklin for everything; they not only drew on him for their salaries to
pay daily household expenses, but they sent him lists of the bills
accepted by them for the "honor of Congress," and which they had no
means of paying. It was fortunate that these two men were willing to
incur such peril and anxiety in behalf of this same "honor of Congress,"
which otherwise would soon have been basely discredited; for that body
itself was superbly indifferent on the subject, and did not pretend to
keep faith even with its own agents.
Thus matters continued to the end. Congress pledged itself not to draw
bills, and immediately drew them in batches. Jay could report to
Franklin only scant and reluctant promises won from the Spanish court;
and small as these engagements were, they were ill kept. Perhaps they
could not be kept; for, as Jay wrote, there was "little coin in Egypt,"
the country was really poor. So the end of it always was that Franklin
remained as the only resource for payments, to be made week after week,
of all sorts of sums ranging from little bills upon vessels up to great
totals of $150,000 or $230,000 upon bankers' demands. Such was the
burden of a song which had many more woeful stanzas than can be repeated
here.
By way of affording some sort of encouragement to the French court,
Franklin now proposed that the United States government should furnish
the French fleet and forces in the States with provisions, of which the
cost could be offset, to the small extent that it would go, against
French loans. It seemed a satisfactory arrangement, and France assented
to it.
At the same time he wrote to Adams that he had "long been humiliated
with the idea of our running about from court to court begging for money
and friendship, which are the more withheld the more eagerly they are
solicited, and would perhaps have been offered if they had not been
asked. The proverb says, God helps them that help themselves; and the
world too, in this sense, is very godly." This was an idea to which he
more than once recurred. In March, 1782, in the course of a long letter
to Livingston, he said: "A small increase of industry in every American,
male and female, with a small diminution of luxury, would produce a sum
far superior to all we can hope to beg or borrow from all our friends in
Europe." He reiterated the same views again in March, and again in
December, and doubtless much oftener.[70] No man was more earnest in the
doctrine that every individual American owed his strenuous and
unremitting personal assistance to the cause. It was a practical as well
as a noble patriotism which he felt, preached, and exemplified; and it
was thoroughly characteristic of the man.
[Note 70: Franklin's _Works_, vii. 404; viii. 236.]
What was then the real financial capacity of the people, and whether
they did their utmost in the way of raising money to support the
Revolution, is a question about which it is easy to express an opinion,
but difficult to prove its accuracy by convincing evidence. On the one
hand, it is true that the strain was extreme and that much was done to
meet it; on the other hand, it is no less true that even beneath this
stress the national prosperity actually made a considerable advance
during the war. The people as a whole gathered money rather than
impoverished themselves. In the country at large the commercial instinct
fully held its own in competition with the spirit of independence. There
was not much forswearing of little luxuries. Franklin said that he
learned by inquiry that of the interest money which was disbursed in
Paris most was laid out for "superfluities, and more than half of it for
tea." He computed that £500,000 were annually expended in the States for
tea alone. This sum, "annually laid out in defending ourselves or
annoying our enemies, would have great effect. With what face can we ask
aids and subsidies from our friends, while we are wasting our own wealth
in such prodigality?"
Henry Laurens, dispatched as minister to the Hague in 1780, was captured
on the voyage and carried into England. But this little incident
mattered not at all to the Congress, which for a long while cheerfully
drew a great number of bills upon the poor gentleman, who, held in the
Tower of London as a traitor, was hardly in a position to negotiate
large loans for his fellow "rebels." In October, 1780, these bills
began to flutter down upon Franklin's desk, drawn by a sort of natural
gravitation. He felt "obliged to accept them," and said that he should
"with some difficulty be able to pay them, though these extra demands
often embarrass me exceedingly."
November 19, 1780, he wrote to de Vergennes announcing that Congress had
notified him of drafts to the amount of about 1,400,000 livres (about
$280,000). The reply was: "You can easily imagine my astonishment at
your request of the necessary funds to meet these drafts, since you
perfectly well know the extraordinary efforts which I have made thus far
to assist you and support your credit, and especially since you cannot
have forgotten the demands you lately made upon me. Nevertheless, sir, I
am very desirous of assisting you out of the embarrassed situation in
which these repeated drafts of Congress have placed you; and for this
purpose I shall endeavor to procure for you, for the next year, the same
aid that I have been able to furnish in the course of the present. I
cannot but believe, sir, that Congress will faithfully abide by what it
now promises you, that in future no drafts shall be made upon you unless
the necessary funds are sent to meet them."
Such a letter, though only gratitude could be felt for it, must have
stung the sensitiveness of Franklin, who had already a great national
pride. Nor was the pain likely to be assuaged by the conduct of
Congress; for that body had not the slightest idea of keeping the
promises upon which de Vergennes expressed a reliance perhaps greater
than he really felt. It is not without annoyance, even now, that one
reads that only two days after the French minister wrote this letter,
Congress instructed Franklin to do some more begging for clothes, and
for the aid of a fleet, and said: "With respect to the loan, we foresee
that the sum which we ask will be greatly inadequate to our wants."
December 2, 1780, Franklin acknowledges "favors," a conventional phrase
which seems sarcastic. These tell him that Congress has resolved to draw
on him "bills extraordinary, to the amount of near $300,000." These were
doubtless what led to the foregoing correspondence with de Vergennes. In
reply he says that he has already engaged himself for the bills drawn on
Mr. Laurens, and adds: "You cannot conceive how much these things
perplex and distress me; for the practice of this government being
yearly to apportion the revenue to the several expected services, any
after demands made, which the treasury is not furnished to supply, meet
with great difficulty, and are very disagreeable to the ministers."
A short fragment of a diary kept in 1781 gives a painful vision of the
swarm of bills:--
"Jan. 6. Accepted a number of loan office bills this day, and every
day of the past week.
"Sunday, Jan. 7. Accepted a vast number of loan office bills. Some
of the new drafts begin to appear.
"Jan. 8. Accepted many bills.
"Jan. 10th. Informed that my recall is to be moved for in Congress.
"Jan. 12th. Sign acceptation [qu. "of"? mutilated] many bills. They
come thick.
"Jan. 15th. Accepted above 200 bills, some of the new.
"Jan. 17th. Accepted many bills.
"Jan. 22d. M. Grand informs me that Mr. Williams has drawn on me
for 25,000 livres; ... I order payment of his drafts.
"Jan. 24th. A great number of bills.
"Jan. 26th. Accept bills."
February 13 he writes a general begging and stimulating letter to de
Vergennes. He says that the plain truth is that the present situation in
the States "makes one of two things essential to us--a peace, or the
most vigorous aid of our allies, particularly in the article of
_money_.... The present conjuncture is critical; there is some danger
lest the Congress should lose its influence over the people, if it is
found unable to procure the aids that are wanted;" and in that case the
opportunity for separation is gone, "perhaps for ages." A few days later
he was "under the necessity of being importunate for an answer to the
application lately made for stores and money." De Vergennes replied, in
an interview, that Franklin must know that for France to lend the
25,000,000 livres asked for was "at present impracticable." Also his
excellency mentioned other uncomfortable and distasteful facts, but
concluded by saying that the king, as a "signal proof of his
friendship," would make a free gift of 6,000,000 livres, in addition to
3,000,000 recently furnished for interest drafts. But the French court
had at last so far lost confidence in Congress that in order to make
sure that this money should be applied in aid of the army, and not be
vaguely absorbed by committees, a stipulation was inserted that it
should be paid only upon the order of General Washington. This was a
trifle insulting to Congress, and made trouble; and it seems that
ultimately the sum was intrusted to Franklin.
Almost immediately afterward he extorted from Necker an agreement that
the king of France would guaranty a loan of 10,000,000 livres, if it
could be raised in Holland; and upon these terms he was able to raise
this sum. Trouble enough the possession of it soon gave him; for the
demands for it were numerous. Franklin needed it to keep himself solvent
in Europe; Congress greedily sought it for America; William Jackson, who
was buying supplies in Holland, required much of it there. Franklin was
expected to repeat with it the miracle of the loaves and fishes.
2,500,000 livres he sent to the States in the same ship which carried
John Laurens. 2,200,000 Laurens disposed of in purchasing goods;
1,500,000 were sent to Holland to be thence sent to the States in
another ship, so as to divide the risk. But while he thus took care of
others, he himself was drawn upon by Jackson for £50,000; and at the
same time he was expected to provide for all the bills accepted by
Laurens, Jay, and Adams, and now rapidly maturing. He sent in haste to
Holland to detain the 1,500,000 livres _in transitu_. "I am sorry," he
said, "that this operation is necessary; but it must be done, or the
consequences will be terrible."
Laurens and Jackson, however, in Holland, had been actually spending
this sum, and more. "I applaud the zeal you have both shown in the
affair," said the harassed doctor, "but I see that nobody cares how much
I am distressed, provided they can carry their own points." Fortunately
the money still lay in the hands of the banker, and there Franklin
stopped it; whereupon Jackson fell into extreme rage, and threatened
some sort of a "proceeding," which Franklin said would only be
exceedingly imprudent, useless, and scandalous. "The noise rashly made
about this matter" by Jackson naturally injured American credit in
Holland, and especially rendered unmarketable his own drafts upon
Franklin. In these straits he journeyed to Paris to see Franklin,
represented that his goods were on board ship; that they were articles
much needed in America; that they must be paid for, or else relanded and
returned, or sold, which would be a public disgrace. So Franklin was
prevailed upon to engage for the payment, and was "obliged to go with
this after-clap to the ministers," a proceeding especially disagreeable
because, as he said, "the money was to be paid for the manufactures of
other countries and not laid out in those of this kingdom, by whose
friendship it was furnished." He was at first "absolutely refused," but
in time prevailed, and "hoped the difficulty was over." Not at all!
After all this exertion and annoyance, the officers of the ship said she
was overloaded, and turned out a large part of the goods, which were
accordingly put into two other ships; and then Franklin was offered the
option of buying these two vessels, of hiring them at a freight scarcely
less than their value, or of having the goods again set on shore. He was
now "ashamed to show his face to the minister," and was casting about
for resources, when suddenly he was surprised by new demands to pay for
the goods which he had every reason to believe had already been paid
for. This produced such a dispute and complication that the goods
remained long in Holland before affairs could be arranged, and the final
settlement is not clearly to be made out.
In the spring of 1781 John Adams was in Holland, and of course Congress
was drawing bills upon him, and equally of course he had not a stiver
with which to meet them. He had "opened a loan," but so little had
fallen into the opening that he was barely able to pay expenses; so,
still of course, he turned to Franklin: "When they [the bills] arrive
and are presented I must write to you concerning them, and desire you to
enable me to discharge them." He added that it was a "grievous
mortification to find that America has no credit here, while England
certainly still has so much." Apparently the pamphlet in which Franklin
had so convincingly shown that the reverse of this should be the case
had not satisfied the minds of the Dutch bankers.
In July, 1781, came a broad hint from Robert Morris: "I will not doubt a
moment that, at your instance, his majesty will make pressing
representations in support of Mr. Jay's application, and I hope that the
authority of so great a sovereign and the arguments of his able ministry
will shed auspicious influence on our negotiations at Madrid." This
fulsome language, intended of course to be read to de Vergennes, imposed
the gratifying duty of begging the French minister to second American
begging in Spain.
In the same month Franklin wrote to Morris that the French were vexed at
the purchasing of goods in Holland, and would not furnish the money to
pay for them, and he actually suggested a remittance from America!
"Otherwise I shall be ruined, with the American credit in Europe." He
might have had some motive besides patriotism in thus uniting himself
with the credit of his country; for he had been warned that the consul's
court in Paris had power even over the persons of foreign ministers in
the case of bills of exchange.
September 12, 1781, he announces triumphantly that "the remittances ...
which I requested are now unnecessary, and I shall finish the year with
honor," notwithstanding "drafts on Mr. Jay and on Mr. Adams much
exceeding what I had been made to expect."
He was now informed that Congress would not draw upon _other_ ministers
without providing funds, but that they would continue to draw on _him_
"funds or no funds," an invidious distinction which "terrified" him; for
he had been obliged to promise de Vergennes not to accept any drafts
drawn later than March, 1781, unless he should have in hand or in view
funds sufficient to pay them. But before long he began to suspect that
Congress could outwit the French minister. For so late as January, 1782,
bills dated prior to the preceding April were still coming; and he said:
"I begin to suspect that the drawing continues, and _that the bills are
antedated_. It is impossible for me to go on with demands after
demands." The next month also found these old bills on Laurens still
coming in. Congress never let the ministers know how many bills it was
drawing, perhaps fearing to discourage them by so appalling a
disclosure. Franklin now wrote to Adams: "Perhaps from the series of
numbers and the deficiencies one may be able to divine the sum that has
been issued." Moreover, he reflects that he has never had any
instructions to pay the acceptances of Jay and Adams, nor has had any
ratification of his payments; neither had he "ever received a syllable
of approbation for having done so. Thus I stand charged with vast sums
which I have disbursed for the public service without authority." The
thought might cause some anxiety, in view of the moral obliquity
manifested by Congress in all its financial dealings.
In November, 1781, came a long letter from Livingston; everything was
wanted; but especially the States must have _money_! December 31, a day
that often brings reflection on matters financial, de Vergennes sent a
brief warning; 1,000,000 livres, which had been promised, Franklin
should have, but not one livre more under any circumstances; if he had
accepted, or should accept, Morris's drafts in excess of this sum, he
must trust to his own resources to meet his obligations. Accordingly on
January 9, 1782, he wrote to Morris: "Bills are still coming in
quantities.... You will see by the inclosed letter the situation I am at
last brought into.... I shall be able to pay till the end of February,
when, if I can get no more money, I must stop."
Ten days later he writes to Jay that his solicitations make him appear
insatiable, that he gets no assurances of aid, but that he is "very
sensible" of Jay's "unhappy situation," and therefore manages to send
him $30,000, though he knows not how to replace it. In the sad month of
March, 1782, Lafayette nobly helped Franklin in the disagreeable task of
begging, but to little purpose; for at length there seemed a general
determination to furnish no more money to the States. The fighting was
over, and it seemed reasonable that the borrowing should be over
likewise.
In February, 1782, Franklin says that Mr. Morris supposes him to have a
sum "vastly greater than the fact," and has "given orders far beyond my
abilities to comply with." Franklin was regarded as a miraculous orange
which, if squeezed hard enough, would always yield juice! It could not
have been reassuring, either, to have one of the American agents at this
time ask to have 150,000 livres advanced to him _at once_; especially
since the frankly provident gentleman based his pressing haste upon the
avowed fear that, as business was going on, Franklin's embarrassments in
money matters were likely to increase.
February 13, 1782, Livingston wrote a letter which must have excited a
grim smile. He comforts himself, in making more "importunate demands,"
by reflecting that it is all _for the good of France!_ which thought, he
says, may enable Franklin to "press them with some degree of dignity."
Franklin's sense of humor was touched. That means, he says, that I am to
say to de Vergennes: "Help us, and we shall not be obliged to you." But
in some way or another, probably not precisely in this eccentric way, he
so managed it that in March he wheedled the French government into still
another and a large loan of 24,000,000 livres payable quarterly during
the year. March 9 he informs Morris "pretty fully of the state of our
funds here, by which you will be enabled so to regulate your drafts as
that our credit in Europe may not be ruined and your friend killed with
vexation."
He now engaged to pay all the drafts which Jay should send to him, so
that Jay could extricate himself honorably from those dread engagements
which had been giving that harassed gentleman infinite anxiety at
Madrid. Some of his acceptances had already gone to protest; but
Franklin soon took them all up. By the end of March he began to breathe
more freely; he had saved himself and his colleagues thus far and now he
hoped that the worst was over. He wrote to Morris: "Your promise that
after this month no more bills shall be drawn on me keeps up my spirits
and affords me the greatest satisfaction." By the following summer the
accounts between France and the States were in course of liquidation,
and Franklin called the attention of Livingston to the fact that the
king practically made the States a further present "to the value of near
two millions. These, added to the free gifts before made to us at
different times, form an object of at least twelve millions, for which
no returns but that of gratitude and friendship are expected. These, I
hope, may be everlasting." But liquidation, though a necessary
preliminary to payment, is not payment, and does not preclude a
continuance of borrowing; and in August we find that Morris was still
pressing for more money, still drawing drafts, in happy forgetfulness of
his promises not to do so, and still keeping Franklin in anxious dread
of bankruptcy. By the same letter it appears that Morris had directed
Franklin to pay over to M. Grand, the banker, any surplus funds in his
hands! "I would do it with pleasure, if there were any such," said
Franklin; but the question was still of a deficit, not of a surplus.
December 14, 1782, finds Franklin still at the old task, preferring "the
application so strongly pressed by the Congress for a loan of
$4,000,000." Lafayette again helped him, but the result remained
uncertain. The negotiations for peace were so far advanced that the
ministers thought it time for such demands to cease. But probably he
succeeded, for a few days later he appears to be remitting a
considerable sum. Peace, however, was at hand, and in one respect at
least it was peace for Franklin as well as for his country, for even
Congress could no longer expect him to continue borrowing. He had indeed
rendered services not less gallant though less picturesque than those of
Washington himself, vastly more disagreeable, and scarcely less
essential to the success of the cause.