In all historical studies we should still bear in mind the difference
between the point of view from which one looks at events and that from
which they were seen by the actors themselves. We all act under the
influence of ideas. Even those who speak of theories with contempt are
none the less the unconscious disciples of some theory, none the less
busied in working out some problems of the great theory of life. Much as
they fancy themselves to differ from the speculative man, they differ
from him only in contenting themselves with seeing the path as it lies
at their feet, while he strives to embrace it all, starting-point and
end, in one comprehensive view. And thus in looking back upon the past
we are irresistibly led to arrange the events of history, as we arrange
the facts of a science, in their appropriate classes and under their
respective laws. And thus, too, these events give us the true measure of
the intellectual and moral culture of the times, the extent to which
just ideas prevailed therein upon all the duties and functions of
private and public life. Tried by the standard of absolute truth and
right, grievously would they all fall short,--and we, too, with them.
Judged by the human standard of progressive development and gradual
growth,--the only standard to which the man of the beam can venture,
unrebuked, to bring the man with the mote,--we shall find much in them
all to sadden us, and much, also, in which we can all sincerely rejoice.
In judging, therefore, the political acts of our ancestors, we have a
right to bring them to the standard of the political science of their
age, but we have no right to bring them to the higher standard of our
own. Montesquieu could give them but an imperfect clue to the labyrinth
in which they found themselves involved; and yet no one had seen farther
into the mysteries of social and political organization than
Montesquieu. Hume had scattered brilliant rays on dark places, and
started ideas which, once at work in the mind, would never rest till
they had evolved momentous truths and overthrown long-standing errors.
But no one had yet seen, with Adam Smith, that labor was the original
source of every form of wealth,--that the farmer, the merchant, the
manufacturer, were all equally the instruments of national
prosperity,--or demonstrated as unanswerably as he did that nations grow
rich and powerful by giving as they receive, and that the good of one is
the good of all. The world had not yet seen that fierce conflict between
antagonistic principles which she was soon to see in the French
Revolution; nor had political science yet recorded those daring
experiments in remoulding society, those constitutions framed in
closets, discussed in clubs, accepted and overthrown with equal
demonstrations of popular zeal, and which, expressing in their terrible
energy the universal dissatisfaction with past and present, the
universal grasping at a brighter future, have met and answered so many
grave questions,--questions neither propounded nor solved in any of the
two hundred constitutions which Aristotle studied in order to prepare
himself for the composition of his "Politics." The world had not yet
seen a powerful nation tottering on the brink of anarchy, with all the
elements of prosperity in her bosom,--nor a bankrupt state sustaining a
war that demanded annual millions, and growing daily in wealth and
power,--nor the economical phenomena which followed the reopening of
Continental commerce in 1814,--nor the still more startling phenomena
which a few years later attended England's return to specie-payments and
a specie-currency,--nor statesmen setting themselves gravely down with
the map before them to the final settlement of Europe, and, while the
ink was yet fresh on their protocols, seeing all the results of their
combined wisdom set at nought by the inexorable development of the
fundamental principle which they had refused to recognize.
But we have seen these things, and, having seen them, unconsciously
apply the knowledge derived from them in our judgment of events to which
we have no right to apply it. We condemn errors which we should never
have detected without the aid of a light which was hidden from our
fathers, and will still be dwelling upon shortcomings which nothing
could have avoided but a general diffusion of that wisdom which
Providence never vouchsafes except as a gift to a few exalted minds.
Every school-boy has his text-book of political economy now: but many
can remember when these books first made their appearance in schools;
and so late as 1820 the Professor of History in English Cambridge
publicly lamented that there was no work upon this vital subject which
he could put into the hands of his classes.
When, therefore, our fathers found themselves face to face with the
complex questions of finance, they naturally fell back upon the
experience and devices of their past history: they did as in such
emergencies men always do,--they tried to meet the present difficulty
without weighing maturely the future difficulties. The present was at
the door, palpable, stern, urgent, relentless; and as they looked at it,
they could see nothing beyond half so full of perplexity and danger.
They hoped, as in the face of all history and all experience men will
ever hope, that out of those depths which their feeble eyes were unable
to penetrate something would yet arise in their hour of need to avert
the peril and snatch them from the precipice. Their past history had its
lessons of encouragement, some thought, and, some thought, of warning.
They seized the example, but the admonition passed by unheeded.
Short as the chronological record of American history then was, that
exchange of the products of labor which so speedily grows up into
commerce had already passed through all its phases, from direct barter
to bank-notes and bills of exchange. Men gave what they wanted less to
get what they wanted more, the products of industry without doors for
the products of industry within doors; and it was only when they felt
the necessity of adding to their stock of luxuries or conveniences from
a distance that they experienced the want of money. Prices naturally
found their own level,--were what, when left to themselves they always
are, the natural expression of the relations between demand and supply.
Tobacco stood the Virginian in stead of money long after money had
become abundant; procuring him corn, meat, raiment. More than once, too,
it procured him something better still. In the very same year in which
the Pilgrims landed at Plymouth, history tells us, ninety maidens of
"virtuous education and demeanor" landed in Virginia; the next year
brought sixty more; and, provident industry reaping its own reward, he
whose busy hands had raised the largest crop of tobacco was enabled to
make the first choice of a wife. And it must have been an edifying and
pleasant spectacle to see each stalwart Virginian pressing on towards
the landing with his bundle of tobacco on his back, and walking
deliberately home again with an affectionate wife under his arm.
But already there was a pernicious principle at work,--protested against
by experience wherever tried, and still repeatedly tried anew,--the
assumption by Government of the power to regulate the prices of goods.
The first instance carries us back to 1618, and thinking men still
believed it possible in 1777. The right to regulate the prices of labor
was its natural corollary, bringing with it the power of creating legal
tenders and the various representatives of value, without any
correspondent measures for creating the value itself, or, in simpler
words, paper-money without capital. And thus, logically as well as
historically, we reach the first issue of paper-money in 1690, that year
so memorable as the year of the first Congress.
New England, encouraged by a successful expedition against Port Royal,
made an attempt upon Quebec. Confident of success, she sent forth her
little army without providing the means of paying it. The soldiers came
back soured by disaster and fatigue, and, not yet up to the standard of
'76, were upon the point of mutinying for their pay. To escape the
immediate danger, Massachusetts bethought her of bills of credit. They
were issued, accepted, and redeemed, although the first holders suffered
great losses, and the last holders or the speculators were the only ones
that found them faithful pledges. The flood-gates once opened, the water
poured in amain. Every pressing emergency afforded a pretext for a new
issue. Other Colonies followed the seductive example. Paper was soon
issued to make money plenty. Men's minds became familiar with the idea,
as they saw the convenient substitute passing freely from hand to hand.
Accepted at market, accepted at the retail store, accepted in the
counting-room, accepted for taxes, everywhere a legal tender, it seemed
adequate to all the demands of domestic trade. But erelong came undue
fluctuations of prices, depreciations, failures,--all the well-known
indications of an unsound currency. England interposed to protect her
own merchants, to whom American paper-money was utterly worthless; and
Parliament stripped it of its value as a legal tender. Men's minds were
divided. They had never before been called upon to discuss such
questions upon such a scale or in such a form. They were at a loss for
the principle, still enveloped in the multitude and variety of
conflicting theories and obstinate facts.
One fact, however, was clearly established,--that a government could, in
great needs, make paper fulfil, for a while, the office of money; and if
a regular government, why not also a revolutionary government, sustained
and accepted by the people? Here, then, begins the history of the
Continental money,--the principal chapter in the financial history of
the Revolution,--leading us, like all such histories, over ground
thick-strown with unheeded admonitions and neglected warnings, through a
round of constantly recurring phenomena, varied only here and there by
modifications in the circumstances under which they appear.
It is much to be regretted that we have no record of the discussions
through which Congress reached the resolves of June 22, 1775: "That a
sum not exceeding two millions of Spanish milled dollars be emitted by
the Congress in bills of credit for the defence of America. That the
twelve confederated Colonies" (Georgia, it will be remembered, had not
yet sent delegates) "be pledged for the redemption of the bills of
credit now to be emitted." We do not even know positively that there was
any discussion. If there was, it is not difficult to conceive how some
of the reasoning ran,--how each had arguments and examples from his own
Colony: how confidently Pennsylvanians would speak of the security which
they had given to their paper; how confidently Virginians would assert
that even the greatest straits might be passed without having recourse
to so dangerous a medium; how all the facts in the history of
paper-money would be brought forward to prove both sides of the
question, but how the underlying principle, subtile, impalpable, might
still elude them all, as for thirty-five years longer it still continued
to elude wise statesmen and thoughtful economists; how, at last, some
impatient spirit, breaking through the untimely delay, sternly asked
them what else they proposed to do. By what alchemy would they create
gold and silver? By what magic would they fill the coffers which their
non-exportation resolutions had kept empty, or bring in the supplies
which their non-importation resolutions had cut off? What arguments of
their devising would induce a people in arms against taxation to submit
to tenfold heavier taxes than those which they had indignantly repelled?
Necessity, inexorable necessity, was now their lawgiver; they had
adopted an army, they must support it; they had voted pay to their
officers, they must devise the means of giving their vote effect; arms,
ammunition, camp-equipage, everything was to be provided for. The people
were full of ardor, glowing with fiery zeal; your promise to pay will be
received like payment; your commands will be instantly obeyed. Every
hour's delay imperils the sacred cause, chills the holy enthusiasm;
action, prompt, energetic, resolute action, is what the crisis calls
for. Men must see that we are in earnest; the enemy must see it; nothing
else will bring them to terms; nothing else will give us a lasting
peace: and in such a peace how easily, how cheerfully, shall we all
unite in paying the debt which won for us so inestimable a blessing!
It would have been difficult to deny the force of such an appeal. There
were doubtless men there who believed firmly in the virtue of the
people,--who thought, that, after the proof which the people had given
of their readiness to sacrifice the interests of the present moment to
the interests of a day and a posterity that they might not live to see,
it would be worse than skepticism to call it in question. But even these
men might hesitate about the form of the sacrifice they called for, for
they knew how often men are governed by names, and that their minds
might revolt at the idea of a formal tax, although they would submit to
pay it fifty-fold under the name of depreciation. Even at this day,
with all our additional light,--the combined light of science and of
experience,--it is difficult to see what else they could have done
without strengthening dangerously the hands of their domestic enemies.
Nor let this be taken as a proof that they engaged rashly in an unequal
contest, even though it was necessarily in part a war of paper against
gold. They have been accused of this by their friends as well as by
their enemies: they have been accused of sacrificing a positive good to
an uncertain hope,--of suffering their passions to hurry them into a war
for which they had made no adequate preparation, and had not the means
of making any,--that they wilfully, almost wantonly, incurred the
fearful responsibility of staking the lives and fortunes of those who
were looking to them for guidance upon the chances of a single cast. But
the accusation is unjust. As far as human foresight could reach, they
had calculated these chances carefully. They knew the tenure by which
they held their authority, and that, if they ran counter to the popular
will, the people would fall from them,--that, if they should fail in
making their position good, they would be the first, almost the only
victims,--that, then as ever, "the thunderbolts on highest mountains
light." Charles Carroll added "of Carrollton" to his name, so that, if
the Declaration he was setting it to should bring forfeiture and
confiscation, there might be no mistake about the victim. Nor was it
without a touch of sober earnestness that Harrison, bulky and fat, said
to the lean and shadowy Gerry, as he laid down his pen,--"When
hanging-time comes, I shall have the advantage of you. I shall be dead
in a second, while you will be kicking in the air half an hour after I
am gone." But they knew also, that, if there are dangers which we do not
perceive till we come full upon them, there are likewise helps which we
do not see till we find ourselves face to face with them,--and that in
the life of nations, as in the life of individuals, there are moments
when all that the wisest and most conscientious can do is to see that
everything is in its place, every man at his post, and resolutely bide
the shock.
While this subject was pressing upon Congress, it was occupying no less
seriously leading minds in the different Colonies. All felt that the
success of the experiment must chiefly depend upon the degree of
security that could be given to the bills. But how to reach that
necessary degree was a perplexing question. Three ways were suggested in
the New-York Convention: that Congress should fix upon a sum, assign
each Colony its proportion, and the issue be made by the Colony upon its
own responsibility; or that the United Colonies should make the issue,
each Colony pledging itself to redeem the part that fell to it; or,
lastly, that, Congress issuing the sum, and each Colony assuming its
proportionate responsibility, the Colonies should still be bound as a
whole to make up for the failure of any individual Colony to redeem its
share. The latter was proposed by the Convention as offering greater
chances of security, and tending at the same time to strengthen the bond
of union. It was in nearly this form, also, that it came from Congress.
No time was now lost in carrying the resolution into effect. The next
day, Tuesday, June 23, the number, denomination, and form of the bills
were decided in a Committee of the Whole. It was resolved to make bills
of eight denominations, from one to eight, and issue forty-nine thousand
of each, completing the two millions by eleven thousand eight hundred of
twenty dollars each. The form of the bill was to be,--
_Continental Currency._
_No. Dollars._
_This bill entitles the bearer to receive ---- Spanish milled
dollars or the value thereof in gold or silver, according to
the resolutions of the Congress held at Philadelphia on the
10th day of May_, A. D. 1775.
In the same sitting a committee of five was appointed "to get proper
plates engraved, to provide paper, and to agree with printers to print
the above bills." Both Franklin and John Adams were on this committee.
Had they lived in 1862 instead of 1775, how their doors would have been
beset by engravers and paper-dealers and printers! What baskets of
letters would have been poured upon their tables! How would they have
dreaded the sound of the knocker or the cry of the postman! But, alas!
paper was so far from abundant that generals were often reduced to hard
straits for enough of it to write their reports and despatches on; and
that Congressmen were not much better off will be believed when we find
John Adams sending his wife a sheet or two at a time under the same
envelope with his own letters. Printers there were, as many, perhaps, as
the business of the country required, but not enough for the eager
contention which the announcement of Government work to be done excites
among us in these days. And of engravers there were but four between
Maine and Georgia. Of these four, one was Paul Revere of the midnight
ride, the Boston boy of Huguenot blood whose self-taught graver had
celebrated the repeal of the Stamp Act, condemned to perpetual derision
the rescinders of 1768, and told the story of the Boston Massacre,--who,
when the first grand jury under the new organization was drawn, had met
the judge with, "I refuse to sarve,"--a scientific mechanic,--a leader
at the Tea-party,--a soldier of the old war,--prepared to serve in this
war, too, with sword, or graver, or science,--fitting carriages, at
Washington's command, to the cannon from which the retreating English
had knocked off the trunnions, learning how to make powder at the
command of the Provincial Congress, and setting up the first powder-mill
ever built in Massachusetts.
No mere engraver's task for him, this engraving the first bill-plates of
Continental Currency! How he must have warmed over the design! how
carefully he must have chosen his copper! how buoyantly he must have
plied his graver, harassed by no doubts, disturbed by no misgivings of
the double mission which those little plates were to perform,--the good
one first, thank God! but then how fatal a one afterward!--but resolved
and hopeful as on that April night when he spurred his horse from
cottage to hamlet, rousing the sleepers with the cry, long unheard in
the sweet valleys of New England, "Up! up! the enemy is coming!"
The paper of these bills was thick, so thick that the enemy called it
the paste-board money of the rebels. Plate, paper, and printing, all had
little in common with the elaborate finish and delicate texture of a
modern bank-note. To sign them was too hard a tax upon Congressmen
already taxed to the full measure of their working-time by committees
and protracted daily sessions; and so a committee of twenty-eight
gentlemen not in Congress was employed to sign and number them,
receiving in compensation one dollar and a third for every thousand
bills.
Meanwhile loud calls for money were daily reaching the doors of
Congress. Everywhere money was wanted,--money to buy guns, money to buy
powder, money to buy provisions, money to send officers to their posts,
money to march troops to their stations, money to speed messengers to
and fro, money for the wants of to-day, money to pay for what had
already been done, and still more money to insure the right doing of
what was yet to do: Washington wanted it; Lee wanted it; Schuyler wanted
it: from north to south, from seaboard to inland, one deep, monotonous,
menacing cry,--"Money, or our hands are powerless!"
How long would these two millions stand such a drain? Spent before they
were received, hardly touching the Treasury-chest as a starting-place
before they flew on the wings of the morning to gladden thousands of
expectant hearts with a brief respite from one of their many cares.
Relief there certainly was,--neither long, indeed, nor lasting, but
still relief. Good Whigs received the bills, as they did everything
else that came from Congress, with unquestioning confidence. Tories
turned from them in derision, and refused to give their goods for them.
Whereupon Congress took the matter under consideration, and told them
that they must. It was soon seen that another million would be wanted,
and in July a second issue was resolved on. All-devouring war had soon
swallowed these also. Three more millions were ordered in November. But
the war was to end soon,--by June, '76, at the latest. All their
expenditures were calculated upon this supposition; and wealth flowing
in under the auspices of a just and equable accommodation with their
reconciled mother, these millions which had served them so well in the
hour of need would soon be paid by a happy and grateful people from an
abundant treasury.
But early in 1776 reports came of English negotiations for foreign
mercenaries to help put down the rebellion,--reports which soon took the
shape of positive information. No immediate end of the war now: already,
too, independence was looming up on the turbid horizon; already the
current was bearing them onward, deep, swift, irresistible: and thus
seizing still more eagerly upon the future, they poured out other four
millions in February, five millions in May, five millions in July. The
Confederacy was not yet formed; the Declaration of Independence had
nothing yet to authenticate it but the signatures of John Hancock and
Charles Thompson; and the republic that was to be was already solemnly
pledged to the payment of twenty millions of dollars.
Thus far men's faith had not faltered. They saw the necessity and
accepted it, giving their goods and their labor unhesitatingly for a
slip of paper which derived all its value from the resolves of a body of
men who might, upon a reverse, be thrown down as rapidly as they had
been set up. And then whom were they to look to for indemnification? But
now began a sensible depreciation,--slight, indeed, at first, but
ominous. Congress took the alarm, and resolved upon a loan,--resolved to
borrow directly what they had hitherto borrowed indirectly, the goods
and the labor of their constituents. Accordingly, on the third of
October, a resolve was passed for raising five millions of dollars at
four per cent; and in order to make it convenient to lenders,
loan-offices were established in every Colony with a commissioner for
each.
Money came in slowly, but ran out so fast that in November Congress
ordered weekly returns from the Treasury, not, of sums on hand, but of
what parts of the last emission remained unexpended. The campaign of '77
was at hand; how the campaign of '76 would close was yet uncertain. The
same impenetrable veil that hid Trenton and Princeton from their eyes
concealed the disasters of Fort Washington and the Jerseys. They still
looked hopefully to the lower line of the Hudson. They resolved,
therefore, to make an immediate effort to supply the Treasury by a
lottery to be drawn at Philadelphia.
A lottery,--does not the word carry one back, a great many years back,
to other times and other manners? The Articles of War were now on the
table of Congress for revision, and in the second and third of those
articles officers and soldiers had been earnestly recommended to attend
divine service diligently, and to refrain, under grave penalties, from
profane cursing or swearing. And here legislators deliberately set
themselves to raise money by means which we have deliberately condemned
as gambling. But years were yet to pass before statesmen, or the people
rather, were brought to feel that the lottery-office and gaming-table
stand side by side on the same broad highway.
No such thoughts troubled the minds of our forefathers, well stored as
those minds were with human and divine lore; but, going to work without
a scruple, they prepared an elaborate scheme and fixed the first of
March for the day of drawing,--"or sooner, if sooner full." It was not
full, however, nor was it full when the subject next came up. Tickets
were sold; committees sat; Congress returned to the subject from time
to time: but what with the incipient depreciation of the bills of
credit, the rising prices of goods and provisions, and the incessant
calls upon every purse for public and private purposes, the lottery
failed to commend itself either to speculators or to the bulk of the
people. Some good Whigs bought tickets from principle, and, like many of
the good Whigs who took the bills of credit for the same reason, lost
their money.
In the same November the Treasury was ordered to make every preparation
for a new issue; and to meet the wants of the retail trade, it was
resolved at the same time to issue five hundred thousand dollars in
bills of two-thirds, one-third, one-sixth, and one-ninth of a dollar.
Evident as it ought now to have been that nothing but taxation could
relieve them, they still shrank from it. "Do you think, Gentlemen," said
a member, "that I will consent to load my constituents with taxes, when
we can send to our printer and get a wagon-load of money, one quire of
which will pay for the whole?" It was so easy a way of making money that
men seemed to be getting into the humor of it.
The campaign of '77, like the campaign of '76, was fought upon
paper-money without any material depreciation. The bills could never be
signed as fast as they were called for. But this could not last. The
public mind was growing anxious. Extensive interests, in some cases
whole fortunes, were becoming involved in the question of ultimate
payment. The alarm gained upon Congress. Burgoyne, indeed, was
conquered; but a more powerful, more insidious enemy, one to whom they
themselves had opened the gate, was already within their works and fast
making his way to the heart of the citadel. The depreciation had reached
four for one, and there was but one way to prevent it from going lower.
Congress deliberated anxiously. Thus far the public faith had supported
the war. But, they reasoned, the quantity of the money for which this
faith stood pledged already exceeded the demands of commerce, and hence
its value was proportionably reduced. Add to this the arts of open and
secret enemies, the avidity of professed friends, and the scarcity of
foreign commodities, and it is easy to account for the depreciation.
"The consequences were equally obvious and alarming,"--"depravity of
morals, decay of public virtue, a precarious supply for the war,
debasement of the public faith, injustice to individuals, and the
destruction of the safety, honor, and independence of the United
States." But "a reasonable and effectual remedy" was still within their
reach, and therefore, "with mature deliberation and the most earnest
solicitude," they recommended the raising by taxes on the different
States, in proportion to their population, five millions of dollars in
quarterly payments, for the service of 1778.
But having explained, justified, and recommended, the power of Congress
ceased. Like the Confederation, it had no right of coercion, no
machinery of its own for acting upon the States. And, unhappily, the
States, pressed by their individual wants, feeling keenly their
individual sacrifices and dangers, failed to see that the nearest road
to relief lay through the odious portal of taxation. Had the mysterious
words that Dante read on the gates of Hell been written on it, they
could not have shrunk from it with a more instinctive feeling:--
"All hope abandon, ye who enter here!"
Some States paid, some did not pay. The sums that came in were wholly
insufficient to relieve the actual pressure, and that pressure,
unrelieved, grew daily more severe. They had tried the regulating of
prices,--they had tried loans,--they had tried a lottery; and now they
were forced back again to their earliest and most dangerous expedient,
paper-money. New floods poured forth, and the parched earth drank them
greedily up. One may almost fancy, as he looks at the tables, that he
sees the shadowy form of sickly Credit tottering feebly forth to catch a
gleam of sunshine, a breath of pure air, while myriads of little
sprites, each bearing in his hand an emblazoned scroll with
"Depreciation" written upon it in big yellow letters, dance merrily
around him, thrusting the bitter record in his face, whichever way he
turns, with gibes and taunts and demoniac laughter. But his course was
almost ended: the grave was nigh, an unhonored grave; and as eager hands
heaped the earth upon his faded form, a stern voice bade men remember
that they who strayed from the path as he had done must sooner or later
find a grave like his.
It was not without a desperate struggle that Congress saw the rapid
decline and shameful death of its currency. The ground was fought
manfully, foot by foot, inch by inch. The idea that money derived its
value from acts of government seemed to have taken deep hold of their
minds, and their policy was in perfect harmony with their belief. In
January, 1776, they had solemnly resolved that everybody who refused to
accept their bills, or did anything to obstruct the circulation of them,
should, upon due conviction, "be deemed, published, and treated as an
enemy of his country, and be precluded from all trade or intercourse
with the inhabitants of these Colonies." And to enforce it there were
Committees of Inspection, whose power seldom lay idle in their hands,
whose eyes were never sealed in slumber. In this work, which seemed good
in their eyes, the State Assemblies and Conventions and Committees of
Safety joined heart and hand with Congress. Tender-laws were tried, and
the relentless hunt of creditor after debtor became a flight of the
recusant creditor from the debtor eager to wipe out his responsibility
for gold or silver with a ream or two of paper. Limitation of prices was
tried, and produced its natural results,--discontent, insufficient
supplies, heavy losses. Threatening resolves were renewed, and fell
powerless. It was hoped that some relief might come from the sales of
confiscated property; but property changed hands, and the Treasury was
none the better off: just as in France, a few years later, the whole
landed property of the kingdom changed hands, and left the government
assignats what it found them,--bits of waste-paper.
Meanwhile speculation ran riot. Every form of wastefulness and
extravagance prevailed in town and country,--nowhere more than at
Philadelphia, under the very eyes of Congress,--luxury of dress, luxury
of equipage, luxury of the table. We are told of one entertainment at
which eight hundred pounds were spent in pastry. As I read the private
letters of those days, I sometimes feel as a man would feel who should
be permitted to look down upon a foundering ship whose crew were
preparing for death by breaking open the steward's room and drinking
themselves into madness.
An earnest appeal was made to the States. The sober eloquence and
profound statesmanship of John Jay were employed to bring the subject
before the country in its true light and manifold bearings,--the state
of the Treasury, the results of loans and of taxes, and the nature and
amount of the obligations incurred. The natural value and wealth of the
country were held to view as the foundations on which Congress had
undertaken to build up a system of public finances, beginning with bills
of Credit because there was no nation they could have borrowed of,
coming next to loans, and thus "unavoidably creating a public debt: a
debt of $159,948,880, in emissions,--$7,545,196-67/90, in money borrowed
before the first of March, 1778, with the interest payable in
France,--$26,188,909, money borrowed since the first of March, 1778,
with interest due in America,--about $4,000,000, of money due abroad."
The taxes had brought in only $3,027,560; so that all the money supplied
to Congress by the people was but $36,701,665-67/90.
"Judge, then, of the necessity of emissions, and learn from whom and
whence that necessity arose. We are also to inform you, that, on the
first day of September instant, we resolved that we would on no account
whatever emit more bills of credit than to make the whole amount of
such bills two hundred million dollars; and as the sum emitted and in
circulation amounted to $159,948,880, and the sum of $40,051,120
remained to complete the two hundred million above mentioned, we, on the
third day of September instant, further resolved that we would emit such
part only of the said sum as should be absolutely necessary for public
exigencies before adequate supplies could otherwise be obtained, relying
for such ratios on the exertions of the several States."
Coming to the depreciation, they reduce the causes to three
kinds,--natural, or artificial, or both. The natural cause was the
excess of the supply over the demands of commerce; the artificial cause
was a distrust of the ability or inclination of the United States to
redeem their bills; and assuming that both causes have combined in
producing the depreciation of the Continental money, they proceed to
prove that there can be no doubt of the ability of the United States to
pay their debt, and none of their inclination. Under the head of
inclination the argument is divided into three parts:--
First, Whether, and in what manner, the faith of the United States has
been pledged for the redemption of their bills.
Second, Whether they have put themselves in a political capacity to
redeem them.
Third, Whether, admitting the two former propositions, there is any
reason to apprehend a wanton violation of the public faith. The idea
that Congress can destroy the money, because Congress made it, is
treated with scorn.
"A bankrupt, faithless Republic would be a novelty in the political
world.... The pride of America revolts from the idea; her citizens know
for what purposes these emissions were made, and have repeatedly
plighted their faith for the redemption of them; they are to be found in
every man's possession, and every man is interested in their being
redeemed.... Provide for continuing your armies in the field till
victory and peace shall lead them home, and avoid the reproach of
permitting the currency to depreciate in your hands, when, by yielding a
part to taxes and loans, the whole might have been appreciated and
preserved. Humanity as well as justice makes this demand upon you; the
complaints of ruined widows and the cries of fatherless children, whose
whole support has been placed in your hands and melted away, have
doubtless reached you: take care that they ascend no higher....
Determine to finish the contest as you began it, honestly and
gloriously. Let it never be said that America had no sooner become
independent than she became insolvent."
But it was not only the Continental money that was blocking up the
channels through which a sound currency would have carried vigor and
health. The States had their debts and their paper-money too,--wheel
within wheel of complicated, desperate insolvency. The two hundred
millions had been issued and spent. There was no money to send to
Washington for his army, and he was compelled for a while to support
them by seizing the articles he needed, and giving certificates in
return. The States were called upon for specific supplies, beef, pork,
flour, for the use of the army,--a method so expensive, irregular, and
partial, that it was soon abandoned. One chance remained: to call in the
old money by taxes, and burn it as soon as it was in; then to issue a
new paper,--one of the new for every twenty of the old; and the whole of
the old was cancelled, to issue only ten millions of the new,--four
millions of it subject to the order of Congress, and the remaining six
to be divided among the States: the whole redeemable in specie within
six years, and bearing till then an interest of five per cent., payable
in specie annually or on redemption, at the option of the holder. By
this skilful change of base it was hoped that a bold front could still
be presented to the enemy, and the field, which had been so long and so
obstinately contested, be finally won.
But the day of expedients was past. The zeal which had blazed forth with
such energy at the beginning of the war was fast sinking to a fitful,
smouldering flame. Individual interests were again taking the precedence
of general interests. The moral sense of the people had contracted a
deadly taint from daily contact with corruption. The spirit of gambling,
confined in the beginning and lost to the eye, like Le Sage's Devil, had
swollen to its full proportions, and, in the garb of speculation, was
undermining the foundations of society. Rogues were growing rich; the
honest men who were not already poor were daily growing poor. The laws
that had been made in the view of propping the currency had served only
to countenance unscrupulous men in paying their debts at a discount
ruinous to the creditor. The laws against forestallers and engrossers,
who, it was currently believed, were leagued against both army and
country, were powerless, as such laws always are. Even Washington wished
for a gallows like Haman's to hang them on; but the army was kept
starving none the less.
The seasons themselves--God's visible agents--seemed to combine against
our cause. The years 1779 and 1780 were years of small crops. The winter
of 1780 was severe far beyond the common severity even of a Northern
winter. Provisions were scarce, suffering universal. Farmers, as if
forgetting their dependence on rain and sunshine, had planted less than
usual,--some from disaffection, some because they were irritated at
having to give up their corn and cattle for worthless bills, and
certificates which might prove equally worthless. Some, who were within
reach of the enemy, preferred to sell to them, for they paid in silver
and gold. There were riots in Philadelphia, put down at the point of the
sword. There was mutiny in the army, and this, too, was put down by the
strong hand,--though the fearful sufferings which had caused it
justified it almost in the eye of sober reason.
It is easy to see why farmers should have been loath to raise more than
they needed for their own use,--why merchants should have been unwilling
to lay in stores which they might be compelled to sell at prices so
truly nominal that the money which they received would often sink to
half they had taken it for before they were able to pass it. But it is
not so easy to see why this wretched substitute for values should have
circulated so freely to the very last. Even at two hundred for one, with
the knowledge that the next twenty-four hours might make that two
hundred two hundred and fifty, or even more, without the slightest hope
that it would ever be redeemed at its nominal value, it would still buy
everything that was to be sold,--provisions, goods, houses, lands, even
hard money itself. Down to its last gasp there were speculations afoot
to take advantage of the differences in the degree of its worthlessness
at different places, and buy it up in one place to sell it at
another,--to buy it in Philadelphia at two hundred and twenty-five for
one, and sell it in Boston at seventy-five for one. It was possible, if
the ball passed quickly from hand to hand, that some might gain; it was
very manifest that some must lose: and thus outcrops that pernicious
doctrine, that true, life-giving, health-diffusing commerce consists in
stripping one to clothe another.
And thus we reach the memorable year 1781, the great, decisive year of
the war. While Greene was fighting Cornwallis and Rawdon, and Washington
watching eagerly for an opportunity to strike at Clinton, Congress was
busy making up its accounts. One circumstance told for them. There was
no longer the same dearth of gold and silver which had embarrassed them
so much at the beginning of the war. A gainful commerce was now opened
with the West Indies. The French army and the French fleet were here,
and hard money with them. Louis-d'ors and livres and Spanish
dollars,--how welcome must their pleasant faces have looked, after this
long, long absence! With what a thrill must the hand which had touched
nothing for years but Continental bills have closed upon solid gold and
silver! It is easy to conceive that a new spirit must soon have
manifested itself in the wide circle of contractors and agents,--that
shopkeepers must speedily have discovered that their business was
shifting its ground as they obtained a reliable standard for counting
their losses and gains,--that every branch of commerce must have felt a
new vigor diffusing itself through its veins. But it is equally evident,
that, while the gold and silver which flowed in upon them from these
sources strengthened the people for the work they were to do and the
burdens they were to bear, the comparisons they were daily making
between fluctuating paper and steadfast metal were not of a nature to
strengthen their faith in money that could be made by a turn of the
printing-press and a few strokes of the pen.
Another circumstance told for them, too. The accession of Maryland had
fulfilled the conditions for the acceptance of the Confederation so long
held in abeyance, and the finances were taken from a board and intrusted
to the hands of a skilful and energetic financier. Robert Morris, who
had protested energetically against the tender-laws, made
specie-payments the condition of his acceptance of office; and on the
twenty-second of May, though not without a struggle, Congress resolved
"that the whole debts already due by the United States be liquidated as
soon as may be to their specie-value, and funded, if agreeable to the
creditors, as a loan upon interest; that the States be severally
informed that the calculations of the expenses of the present campaign
are made in solid coin, and therefore that the requisitions from them
respectively, being grounded on those calculations, must be complied
with in such manner as effectually to answer the purpose designed; that,
experience having evinced the inefficacy of all attempts to support the
credit of paper-money by compulsory acts, it is recommended to such
States, where laws making paper-bills a tender yet exist, to repeal the
same."
Another public body, the Supreme Executive Council of Pennsylvania,
dealt it another blow, fixing the ratio at which it was to be received
in public payments at one hundred and seventy-five for one. Circulation
ceased. In a short time the money that had been carted to and fro in
reams disappeared from the shop, the counting-room, the market. All
dealings were in hard money. Gold and silver resumed their legitimate
sway, and men began to look hopefully forward to a return of economy,
frugality, and an invigorating commerce.
The Superintendent of Finance set himself seriously to his task. One
great obstacle had been removed; one great and decisive step had been
made towards the restoration of that sense of security without which
industry and enterprise are powerless. As a merchant, he was familiar
with the resources of the country; as a Member of Congress, he was
familiar with the wants of Government. His resources were taxes and
loans; his obligations, an old debt and a daily expenditure. Opposed as
he was to the irresponsible currency which had brought the country to
the brink of ruin, he was a believer in banks and bills resting on a
secure basis. One of his earliest measures was to prepare, with the aid
of his Assistant-Superintendent, Gouverneur Morris, a plan of a bank,
which soon after, with the sanction of Congress, went into operation as
the Bank of North America. Small as the capital with which it started
was,--only four hundred thousand dollars,--its influence was immediately
felt throughout the country. It gave an impulse to legitimate enterprise
which had long been wanting, and a confidence to buyer and seller which
they had not felt since the first year of the war. In his public
operations the Superintendent used it freely, and, using it at the same
time wisely, was enabled to call upon it for aid to the full extent of
its ability without impairing its strength.
Henceforth the financial history of the Revolution, although it loses
none of its importance, loses much of its narrative-interest. No longer
a hand-to-hand conflict between coin and paper,--no longer the
melancholy spectacle of wise men doing unwise things, and honorable men
doing things which, in any other form, they would have been the first to
brand with dishonor,--it still continues a long, a wearisome, and often
a mortifying struggle: men knowing their duty and refusing to do it,
knowing consequences and yet blindly shutting their eyes to them. I will
give but one example.
After a careful estimate of the operations of 1782, Congress had called
upon the States for eight millions. Up to January, 1783, only four
hundred and twenty thousand had come into the Treasury. Four hundred
thousand Treasury-notes were almost due; the funds in Europe were
overdrawn to the amount of five hundred thousand by the sale of drafts.
But Morris, waiting only to cover himself by a special authorization of
Congress, made fresh sales upon the hopes of the Dutch loan and the
possibility of a new French loan, and still held on--as cautiously as he
could, but ever boldly and skilfully--his anxious way through the rocks
and shoals that menaced him on every side. He was rewarded, as such men
too often are, by calumny and suspicion. But when men came to look
closely at his acts, comparing his means with his wants, and the
expenditure of the Treasury Board with the expenditure of the Finance
Office, it was seen and acknowledged that he had saved the country
thirteen millions a year in hard money.
And now, from our stand-point of the Peace,--from 1783,--let us give a
parting glance at the ground over which we have passed. We see thirteen
Colonies, united by interest, divided by habits, association, and
tradition, engaging in a doubtful contest with one of the most powerful
and energetic nations which the world had ever seen; we see them begin,
as men always do, with very imperfect conceptions of the time it would
last, the lengths to which it would carry them, or the sacrifices it
would impose; we see them boldly adopting some measures, timidly
shrinking from others,--reasoning justly about some things, reasoning
falsely about things equally important,--endowed at times with singular
foresight, visited at times by incomprehensible blindness: boatmen on a
mighty river, strong themselves and resolute and skilful, plying their
oars manfully from first to last, but borne onward by a current which no
human science could measure, no human strength could resist.
They knew that the resources of the country were exhaustless; and they
threw themselves upon those resources in the only way by which they
could reach them. Their bills of credit were the offspring of enthusiasm
and faith. The enthusiasm grew chill, the faith failed. With a little
more enthusiasm, the people would cheerfully have submitted to taxation;
with a little more faith, the Congress would have taxed them. In the
end, the people paid for the shortcomings of their enthusiasm by seventy
millions of indirect taxation,--taxation through depreciation; the
Congress paid for the shortcomings of their faith by the loss of
confidence and respect. The war left them with a Federal debt of seventy
million dollars, and State debts of nearly twenty-six millions.
Could this have been avoided? Could they have done otherwise? It is
easy, when the battle is won, to tell how victory might have been bought
cheaper,--when the campaign is ended, to show what might perhaps have
brought it to an earlier and more glorious close. It is easy for us,
with the whole field before us, to see that from the beginning, from the
very first start, although the formula was _Taxation_, the principle was
_Independence_; but before we venture to pass sentence, ought we not to
pause and weigh well our judgment and our words,--we who, in the fiercer
contest through which we are passing, have so long failed to see, that,
while the formula is _Secession_, the principle is _Slavery_?