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the payment of the interest and prin- ber of inhabitants in each State. To cipal of the public debt solely, and remedy these conditions, Congress term of the act was limited to twenty now proposed that the Articles be five years. The collectors of the altered so that the proportions would revenues were to be appointed by the be more equitable. The proposition States, subject to removal by Con- of Congress was that the proportion gress.* In addition the various should be governed by the number of States were requested to enact laws white and other free citizens, includcovering the same period of time and ing those bound to servitude for a for the same object, so as to derive term of years, and three-fifths of all sufficient revenues to supply their other persons. In order to secure the proportion of $1,500,000 annually, consent of the States to this change, exclusive of duties on imports, the Congress presented an address to the proportion due from each State being various legislatures, which had been fixed in accordance with the Articles prepared by Madison, Hamilton and of Confederation.f

Ellsworth.* The object of this Up to this time the expenses of the revenue system was to give justice to government had never been appor- all the creditors of the United States. tioned among the States, in accord- It was a wise and judicious moveance with the rule prescribed by the ment, but the scheme was never Confederation. As yet no satisfac- adopted, although, as Mr. Curtis tory valuation of houses and lands points out,t it had a remarkable effect had been made as the difficulties of in saving the Union from speedy dissecuring the necessary information solution, and in directing the attenseemed almost insuperable. Previ- tion of the States to the fact that a ously the proportions had been regu- powerful central government was a lated according to the supposed num- great desideratum.

While this revenue system was un* Curtis, Constitutional History, vol. i., p. 118.

der consideration, Congress was still † Journals of Congress, Feb. 12, 1783, p. 126 ; March 20, pp. 154, 157, 158, 160; April 18, pp. struggling with the finances. About 185–189; Marshall, Life of Washington, vol. v., the only thing that could be done was pp. 35–36; Pitkin, Civil and Political History, vol. ii., pp. 180–181; Hunt, Life of Madison, pp.

to issue requisitions upon the States, 38–43. This sum of $1,500,000 was apportioned but these continued to be evaded, among the States as follows: – New Hampshire,

From November 1, 1781, to January $52,708; Massachusetts, $224,427; Rhode Island, $32,318; Connecticut, $132,091; New York, $128, 1, 1786, the requisitions for the pay242; New Jersey, $83,358; Pennsylvania, $205,

ment of interest on the domestic debt 189; Delaware, $22,443; Maryland, $141,517; Virginia, $256,487; North Carolina, $109,006; had amounted to $10,000,000, yet, South Carolina, $96,183; Georgia, $16,030. For the opposition of Rhode Island to this measure, * Curtis, Constitutional History, vol. i., p. 142 see Bates, Rhode Island and the Formation of et seq. the Union, p. 90 et seq.

+ Constitutional History, vol. i., pp. 124–126.

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354 THE DEBT AND PLANS TO LIQUIDATE IT. according to the reports of the Treas- 037 was due in France; $671,000 in ury Board, less than $2,500,000 (to Holland and $150,000 in Spain; while be exact $2,457,987.25) came into the a year's interest had not been paid Treasury.* For the last fourteen on the Dutch loan of 10,000,000 livres,

ths of this period, the income was amounting to $26,848. The first only $432,897.81, thus making an installment of the principal became average of less than $375,000 per due in 1787, and from that year year, which the board declared short $1,000,000 was due annually until the of the sum necessary “for the bare debt was extinguished. In 1784 the maintenance of the federal govern- arrears of interest on the domestic ment on the most economical estab- debt amounted to $3,109,000, but by lishment and in time of profound 1789 these had increased to $11,493,peace.”+ From this state of affairs 858, while the principal alone of the it was evident that the interest of the foreign debt rose from less than domestic debt could not be paid, and $8,000,000 to $10,098,707 in the same the money obtained in Europe was time.* It was therefore determined devoted entirely to the payment of to devise means for meeting the obliinterest on foreign loans. Conse- gations. That part of the p quently, the domestic debt was deemed stipulated that the States should of so little value that many people raise internal revenues for a period who had claims against the govern- of twenty-five years met with much ment sold them for about one-tenth opposition ;t and, becoming satisfied of their nominal value.

that it would be impossible to secure At the beginning of 1783 the domes- a general compliance with this part tic debt of the country was $34,115,- of the financial system, Congress con290, and the foreign debt $7,885,085, fined their requests for power to lay making a total of $42,000,375, on duties on imports, to which some of which the annual interest was $2,415,- the States finally yielded a reluctant 956.1 Of the foreign debt $7,037, consent. Delaware gave her consent

provided all the other States con* McMaster, United States, vol. i., pp. 356–357.

sented; North Carolina readily asSee the Report of the Committee in Journals of Congress, February 15, 1786, vol. xi., pp. 34-40. See also Curtis, Constitutional History, vol. i., p. April 8, 1783, bring the total domestic debt to 164; J. P. Gordy, Political History of the United $26,615,290. See Hunt's ed. of Madison's WritStates, vol. i., p. 35.

ings, vol. i., p. 443. Curtis, Constitutional History, vol. i., p. 115; * Charles J. Bullock, Finances of the United McMaster, United States, vol. i., p. 356. Mc States, 1775-1789, with Especial Reference to the Master's dates and figures are evidently wrong. Budget, pp. 145, note, 181 (in University of He says the debt in 1786 was $42,000,325, of which Wisconsin Bulletins in Economics, Political $7,885,035 was owed abroad, but he gives the Science and History, series i., no. 2. interest the same. Curtis' figures of the foreign † For some of the arguments for and against it debt do not bring the total as given by him. The see McMaster, vol. i., pp. 145–147, 266-267; Ban. figures as given by the Committee under date of croft, vol. iv., pp. 185-193.


355 sented to all the requests of Con- said that “ the requisitions of Congress; Massachusetts granted the gress. for eight years past have been general impost, but withheld the sup- so irregular in their operations, so plementary funds, as did New Hamp- uncertain in their collection, and so shire, Connecticut, New Jersey, Vir- evidently unproductive, that a religinia, South Carolina, and Pennsyl- ance on them in future, as a source vania, but the last named stipulated from whence moneys are to be drawn that she would collect these moneys to discharge the engagements of the as the legislature saw fit. New York, Confederacy, definite as they are in

Island, Maryland, and Georgia time and amount, would be no less at first refused to sanction the pro- dishonorable to the understandings of posed revenue system, as they were those who entertained such confiunwilling that the national treasury dence, than it would be dangerous to should receive the sums collected at the welfare and peace of the Union. New York, Providence, Baltimore and The Committee are therefore seriSavannah, to the exclusion of the ously impressed with the indispensState treasuries.*

able obligation that Congress are Congress therefore appointed a under, of representing to the immedicommittee to examine into the state ate and impartial consideration of of the finances and report on the best the several states the utter impossimethod by which the debt might be bility of maintaining and preserving discharged. The report of this com- the faith of the federal government, mittee recommended the impost as by temporary requisitions on the the most feasible plan and earnestly states, and the consequent necessity advised those States which had not of an early and complete accession of already consented to yield at once. · all the states to the revenue system of A new committee of five was appointed the 18th of April, 1783." The Comto consider the matter, and the report mittee said also: “ It has become the of this committee was presented by duty of Congress to declare most exRufus King, February 15, 1786. In plicitly, that the crisis has arrived, this report King said that the system when the people of these United of imposts was the best system of States, by whose will and for whose collecting revenue that Congress benefit the federal government was could devise and that the States

instituted, must decide whether they should adopt it at once. He further

will support their rank as a nation, by maintaining the public faith at

home and abroad; or whether, for * McMaster, United States, vol. i., p. 357; Bates, Rhode Island and the Formation of the Union, want of a timely exertion in estabpp. 96-99; McLaughlin, The Confederation and lishing a general revenue and thereby the Constitution, p. 80; Curtis, Constitutional History, vol. i., p. 194.

giving strength to the confederacy,



they will hazard not only the exist act should be enforced, granting the ence of the Union, but of those great power to regulate trade by restricand invaluable privileges for which tions on duties. * Congress therefore they have so arduously and so honor asked the States to make the various ably contended."* This report was laws uniform.t adopted and a set of resolutions New Jersey now became disdrawn up and passed.

gruntled and refused to pay her share The House then turned its atten- of the requisition of $3,000,000 made tion to the regulation of trade, and a in September, 1785, claiming that the committee was appointed to examine levy was unjust and that the Confedthe acts of the various States. This eration was not protecting her from committee reported that the acts were the encroachments and the ill-usage confusing and conflicting and clogged of New York. As New Jersey's with many restrictive conditions. t share of the requisition was $166,716, North Carolina, while assenting to Congress could not afford to lose it; all the requests of Congress, had for even if the sum were made a condition that, when the other would still be a deficit. So a committwelve States did likewise, the regu- tee, of which Nathaniel Gorham, lation of trade by Congress should William Grayson and Charles Pinckbecome an article of the Confedera- ney were members, was sent by Contion. Connecticut, Pennsylvania, and gress to expostulate with the LegisMaryland set a date when the act was lature of New Jersey, Pinckney makto become effective; Rhode Island ing the principal speech. As a result restricted the duration of the act to of the visit, New Jersey rescinded her twenty-five years; Massachusetts, acts refusing to pay her quota, but New York, New Jersey, and Virginia · she instituted no measures to provide would not consent to have the act go funds to meet the requisitions, nor into operation within their borders was such action taken until five until it had been adopted by all. months later. Delaware, South Carolina, and Geor- Meanwhile New York had granted gia had not given the request any con- the impost. This was due principally. sideration; and New Hampshire to the efforts of Alexander Hamilton. determined the manner in which the He drew up a petition to the Legisla

ture declaring that all the motives of * Journals of Congress, vol. xi., pp. 34–40. public honor and reputation de† As Madison said: “The States are every day manded that New York act favorgiving proofs that separate regulations are more likely to set them by the ears than to attain the * McMaster, United States, vol. i., p. 361; Bates, common object.”— Hunt's ed. of Madison's Writ. Rhode Island and the Formation of the Union, ings, vol. ii., p. 227. See also Story, Comment pp. 104–105. aries on the Constitution, vol. i., pp. 184-185 † Journals of Congress, vol. xi., p. 41. (5th ed.).

# McMaster, United States, vol. i., pp. 362–366.



ably. He induced large numbers to an “ extraordinary occasion', sign the petition; wrote pamphlets in existed. Later, in August, Congress favor of the impost; and advocated sent him a second and more earnest it in the press. Governor George application to reconvene the LegislaClinton, however, had used all his ture, but he made the same reply. * influence and ability to make New In the early part of 1787 the matter York the richest and the most power- was again taken up by the Legislaful State in the country; and, con ture, but on February 15, despite the sidering that the impost would drag endeavors of Hamilton to secure its the State down to the level of the passage, the measure was thrown out others, he labored mightily to have by a vote of 36 to 21.t the Legislature refuse assent to the There had been much discussion act. But on May 4, 1786, after much also in connection with the founding debate, the Legislature passed the of a system of national coinage. As act, though a clause was inserted previously stated, coins of the same which made the grant of the impost denomination were differently valued practically useless; for, instead of in the various colonies and there was vesting Congress with the power of also a large variety of coins, which, levying the duties, this right was except coppers, were the product of reserved to the State itself. The foreign mints, including English Legislature also made a condition guineas, crowns, shillings, and pence, that the collectors of the duty should and many French and Spanish and be appointed by the State and should some German coins. Of the Spanish not be' amenable to Congress. t coins, probably the most valuable in Thereupon, when considering this general circulation, was the Johanmatter in August, Congress deter- nes, called the “ Joe," valued at mined to have the State amend the about $16; next came the doubloon at act, and, as the Legislature had $15; then the half-joe at $8; the adjourned, sent a request to Clinton double Spanish pistole at $7te, and to call a special session. On August the pistole at half that value. Othe 16 Clinton replied that, according to gold coins were the moidore at $6; the Constitution of New York, he the English guinea and half-guinea, could convene the Legislature only the French guinea, the Carolin, the on “ extraordinary occasions "; and five and two and one-half moidore, as the present business had often the double Johannes, the Chequin, been before the Assembly during the the quarter and eighth Johannes, and late session, he did not consider that the French pistole. The silver coins


* Hamilton's ed. of Hamilton's Works, vol. ii., pp. 333–334.

McMaster, United States, vol. i., pp. 368–370.

* Bancroft, vol. vi., pp. 193–194; McMaster, p. 370.

† McMaster, p. 398.

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