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DEPRESSED CONDITION OF THE FINANCES.

test was developing into a struggle for bare existence. The enemy in strong force was in the very heart of the country, while the Continental government was almost without an army, was absolutely devoid of money and, as Robert Morris said, its authority was almost "reduced to a metaphysical idea."* Notes of credit were worthless and Congress had been compelled to acknowledge this fact, their bills of credit being no longer a legal tender or receivable in payment of taxes. The early issues were so worthless that barber shops were papered with it.† But the darker the outlook, the greater were the exertions of the patriots. Their agents abroad were instructed to obtain loans from France, Spain and Holland, and further internal taxes were laid and apportioned among the several States by whose authority they were to be collected. ‡

of our public situation."-See Gaillard Hunt, Life of Madison, p. 32; Gay, Life of Madison, p.

21.

* Sumner, Financier and Finances of the Revolution, vol. i., p. 286.

† Breck, Historical Sketch of Continental Paper Money, in Transactions of the American Philosophical Society, vol. iii., p. 18.

"About this time, the old continental money, by common consent, ceased to have currency. Like an aged man, expiring by the decays of nature, without a sigh or a groan, it fell asleep in the hands of its last possessors. By the scale of depreciation, the war was carried on five years, for little more than £1,000,000 sterling, and two hundred millions of paper dollars were made redeemable, by five millions of silver ones. In other countries, such measures would have produced popular insurrections, but in the United States, they were submitted to without any tumults. Public faith was violated, but in the

231

"Exclusive of these sums obtained abroad, the debts contracted by arrears of army pay and commissary certificates at home, and such specific supplies as had been received, the expenditures from the federal treasury for the year 1780 amounted to $83,000,000 in old tenor, and $900,000 in new; the whole value in specie at about $3,000,000, a great falling off from the expenditures even the last year, and an indication of the rapidly declining resources of Congress."'*

On March 18, 1781, Congress called upon the States for an additional $6,000,000, in quarterly installments, the payment of which was to be in money of specie value and to commence on June 1. This was in addition to the requisitions of last year which remained to a great extent undischarged. The domestic debt now opinion of most men, public good was promoted. The evils consequent on depreciation had taken place and the redemption of bills of credit, at their nominal value, as originally promised, instead of remedying the distress of the sufferers, would, in many cases, have increased them, by subjecting their small remains of property, to exorbitant taxation. The money had, in a great measure, got out of the hands of the original proprietors, and it was in the possession of others, who had obtained it at a rate of value, not exceeding what was fixed upon it by the scale of depreciation. Nothing could afford a stronger proof, that the resistance of America to Great Britain, was grounded in the hearts of the people, than these events. * The people saw the necessity which compelled their rulers to act in the manner they had done, and being well convinced that under other circumstances, would scarcely have been expiated by the lives and fortunes of their authors."-Ramsay, History of the American Revolution, vol. ii., p. 519.

* Hildreth, vol. iii. p. 331.

*

232

FINANCIAL NEEDS; DEPRECIATION OF CURRENCY.

amounted to $24,000,000, specie value, to which about $5,000,000, due abroad, were to be added the amount being estimated under the scale of depreciation adopted by Congress, the outstanding old tenor having sunk to 75 for 1. Beside this annual interest to the amount of $1,000,000 was already payable on the liquidated portion of this debt.

Including $500,000 of outstanding commissary certificates, it was estimated that the requirements for the year 1781 would be $19,500,000, specie value, to meet which the treasury officials counted on receiving $9,000,000 from the unpaid requisitions of the last year, and three of the quarterly installments of the $6,000,000 requisition lately made upon the States, which would give $4,500,000. Beside this, $3,200,000 were counted upon from the exchange of outstanding "old tenors " for bills of the new emission; $500,000 in commissary certificates would be produced by outstanding paper money requisitions; and it was hoped that the proposed import duty of 5 per cent. would yield another $500,000. But the estimated income did not reach the amount of the estimated expenditure, and when the time came for the actual transactions, the greater part of the income was not realized. The old tenor " old tenor " paper continued to depreciate, carrying with it the "new tenor." In May, 1781, besides recommending to the States that they repeal any laws

66

making paper bills of any sort a legal
tender, Congress informed the States
that the requisitions called for must
be met in "solid coin "
or its
equivalent. The "new tenor" hav-
ing now sunk to 4 for 1, it was not
an equivalent, and as further issues
would entail heavy loss on the gov-
ernment, Congress advised that they
be stopped. Thus rejected by its
creator, the paper money, of which
over $100,000,000 in "old tenor "
remained outstanding, declined more
rapidly than ever, falling to 100, 125,
200, 500 and finally to 1,000 for it,
being considered so valueless that
nobody would hold it for a day, even
the soldiers resolving not to take
it. It soon disappeared from circula-
tion.*

The management of financial affairs by means of a committee had now proven to be prejudicial to the interests of the country, and Congress therefore determined to introduce a thorough reform. It was decided to place one man at the head of the financial department who should be responsible to the country for the proper handling of its affairs. As there was a great disorder and waste in the finances, it was felt that the country could not secure a better person to make the desired change than Robert Morris, a man whose pure morals, ardent patriotism and vast knowledge of financial matters eminently fitted him for this im

* Hildreth, vol. iii., pp. 359-361.

MORRIS TAKES CHARGE OF FINANCES; BANK ESTABLISHED.

portant station. Accordingly, on February 20, 1781, Morris was elected superintendent of finances by the unanimous vote of the States, with the exception of Massachusetts, which abstained from voting.* On May 14 Morris was installed in officet and on the 17th laid before Congress a plan for a national bank,‡ concerning which he and Alexander Hamilton had corresponded freely. Morris planned to capitalize the bank at $400,000 in gold and silver, with power to increase this amount if necessary, its notes constituting the currency of the country and to be accepted as specie for duties and taxes by the Nation and by every State. Congress, however, had not the power to legalize such a bank and the proposition was submitted to the States. The vote was carried by New Hampshire, New Jersey and the five southernmost States, while Massachusetts voted in the negative, Pennsylvania was divided, and Madison alone of the Virginia members opposed it as being beyond the powers of the Confederation.§ The bank was incorporated as the "President, Directors and Corporation of the

* Journals of Congress, vol. iii., p. 580; Oberholtzer, Life of Robert Morris, pp. 65-73; Sumner, Robert Morris, p. 53 et seq.

Though he did not take the oath of office as Superintendent of Finance until June 27.

Journals of Congress, vol. iii., p. 624; Diplomatic Correspondence, vol. vii., pp. 444-449; Oberholtzer, p. 74.

|| Oberholtzer, p. 96 et seq.
§ Bancroft, vol. vi., pp. 26-27.

233

By bor

Bank of North America."*
rowing in the name of the govern-
ment through this bank, and pledging
for payment the taxes as yet uncol-
lected, Morris was enabled to antici-
pate them and to command a ready
supply of money. Though the gov-
ernment credit had failed, Morris
used his own private credit which
was considered excellent.t It has
been reported that large sums of
money were advanced by him out of
his own personal resources, but these
legends may be rejected as un-
founded.+

But America was indebted no less to her foreign representatives than she was to the exertions of the officials at home. Franklin, who in September, 1778, had been appointed minister plenipotentiary to France, obtained from Louis XVI. a gift of 6,000,000 livres (over $1,100,000) beside a loan of 4,000,000 livres (over $740,000). Holland, however, refused

Oberholtzer, p. 108.

Oberholtzer, p. 157.

Sumner, Robert Morris, pp. 61-63. For other details regarding Morris and his financial operations, see W. G. Sumner, The Financier and the Finances of the Revolution (2 vols., New York, 1891); Michael Nourse, Robert Morris, the Financier in Banker's Magazine, vol. ix., (1860); Charles H. Hart, Robert Morris, the Financier of the American Revolution, in Pennsylvania Magazine, vol. i.; Robert Waln, Jr., Robert Morris, vol. v. of Sanderson's Lives of the Signers of the Declaration of Independence (Philadelphia, 1823); Redwood Fisher, Revolutionary Reminis cences connected with the life of Robert Morris; Lawrence Lewis, Jr., A History of the Bank of North America (Philadelphia, 1882), the Letters to Robert Morris, 1775-1782, in Collections of the New York Historical Society for 1878.

234

FOREIGN LOANS; REVOLT OF THE PENNSYLVANIA LINE.

to loan the United States on their own credit, but the French monarch guaranteed the loan to the StatesGeneral, and on this security Congress obtained 10,000,000 livres (about $1,850,000) from Holland.* Spain refused to advance any money unless the United States would renounce the navigation of the Mississippi; but, as before stated, this before stated, this proposition was peremptorily jected.

re

Before the beneficent effect of these measures was felt, an event had occurred which threatened the most serious consequences. On January 1, 1781, about 1,300 soldiers of the Pennsylvania Line, because of nonpayment of salaries, etc., paraded under arms, refused to obey their officers and committed a number of outrages. They had enlisted for a term of three years, or during the war, and the officers contended that, according to the agreement, the soldiers should serve to the end of the war, no matter how far distant that end might be; while, on the other hand, the soldiers maintained that they had engaged to serve three years only, or during the war if it

See

* Sparks, Life of Franklin, p. 468; Parton, Life of Franklin, vol. ii., pp. 389-391; Fisher, Struggle for American Independence, vol. ii., pp. 447-449; Morse, Life of Franklin, chap. xii. also the various letters of Franklin, Vergennes, and others in Hale, Franklin in France, especially vol. i., pp. 455-456, vol. ii., p. 29.

† See Wayne's letter to Washington, in Sparks, Correspondence of the Revolution, vol. iii., pp. 192-193; Heath's Memoirs, pp. 248-249 (Abbatt's ed.)

should terminate before the three years had elapsed.* Consequently, when they were not allowed to return home at the end of their terms, they became highly disgruntled, which condition was further aggravated by their sufferings from extreme want. † They determined to obtain a redress of grievances, and, having seized six field-pieces, marched off toward Princeton, intending to go to Philadelphia to lay their situation before Congress. In an effort to bring the mutineers to submission, General Wayne interposed and threatened to shoot the most audacious, but hardly had he cocked his pistol when several bayonets were at his breast, the men exclaiming, "We respect you, General; we love you, but you are a dead man if you fire! Do not mistake us, we are not going to the enemy; on the contrary, were they to come out, you should see us fight under you with as much resolution and alacrity as ever;

* L. C. Hatch, The Administration of the American Revolutionary Army, in Harvard Historical Studies, vol. x., pp. 125-127; Thacher, Military Journal, pp. 240–241. There were several other causes for discontent among the Pennsylvania troops, for details of which see Stillé Wayne and the Pennsylvania Line, pp. 166-181, 215-218, 229-233.

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Wayne said in a letter: 'Poorly clothed, badly fed, and worse paid, some of them not having received a paper dollar for near twelve months; exposed to winter's piercing cold, to drifting snows and chilling blasts, with no protection but old worn-out coats, tattered linen overalls and but one blanket between three men. The delicate mind and eye of humanity are hurt, very much hurt, at their visible distress and private complainings."— See Irving, Life of Washington, vol. iv., p. 224.

Stillé, Wayne, pp. 240-243.

MUTINEERS SURRENDER; OUTBREAK OF JERSEY TROOPS.

but we wish a redress of grievances and will no longer be trifled with."* Wayne, however, argued the matter with the mutineers and finally induced them to put their demands in writing. The demands consisted of a request that all who had served three years should be discharged, an immediate payment of all arrears due them, and that future pay be in specie to all who remained in the service.† At Princeton the mutineers were met by a committee of Congress, joined by President Joseph Reed of Pennsylvania, and a satisfactory compromise was reached, whereupon the mutineers gave up their arms. The British commander had hoped to profit by this revolt, and emissaries were sent among the discontented troops, making them all sorts of inducements to join the British army. These offers were declined with indignation, as the troops had no idea. of turning traitors to their country, merely wishing justice at the hand of Congress.||

This movement had caused Washington no little concern and anxiety.

* Quincy's Memoir of Major Shaw, p. 85. Lossing, Field-Book of the Revolution, vol. i., pp. 312-313.

See the Diary of the Revolt in Pennsylvania Archives, series ii., vol. xi., pp. 631-674. See also Stillé, Wayne, p. 243 et seq.; and the letters in Sparks, Correspondence of the Revolu tion, vol. iii., pp. 194-199.

|| Hildreth, vol. iii., pp. 336-338; Heath's Memoirs, pp. 249-250; Thacher, Military Journal, pp. 242-243; Carrington, Battles of the Revolution, pp. 536-538; Sullivan's and Dickinson's letters in Sparks, Correspondence of the Revolution, vol. iii., pp. 199, 205–207.

235

He was perfectly well aware that the grounds for discontent were plenty, and was disposed to be as lenient as possible with men who had been driven to an extremity. Nevertheless, he realized the significance of the example of the Pennsylvania troops in inciting similar outbreaks, and therefore took effectual measures to quell every such attempt. He selected a body of troops in the Highlands, in whom he placed complete reliance, and held them in readiness to march at a moment's notice. Hardly had the organization of this force been completed, when on January 20 a part of the New Jersey Brigade rebelled and made demands similar to those to which Congress had yielded in the case of the Pennsylvania troops. The Jersey soldiers marched to Chatham, but Washington immediately dispatched General Robert Howe against them to crush the revolt by force, unless the men should unconditionally surrender and return to duty. Washington's orders were promptly executed, and having been taken by surprise, the Jersey soldiers immediately yielded. Two of the ringleaders were shot and the spirit of mutiny was thus effectually subdued.*

*

Hildreth, vol. iii., pp. 338-339; Sparks' ed. of Washington's Writings, vol. vii., pp. 380-381, App. no. x.; Thacher, pp. 244-245. On these revolts see also Gordon, American Revolution, vol. iv., pp. 16-22 (ed. 1788); Stillé, Life of Wayne, pp. 239-262; Ford's ed. of Washington's Writings, vol. ix., pp. 87-98, 100-102, 117-119, 121-123; Bolton, The Private Soldier Under

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