A Collection of Essays and Fugitiv Writings

Whatever were the real views of the framers of this institution, its design was generally understood to be harmless and honorable. The ostensible views of the society could not however skreen it from popular jealousy. A spirited pamphlet appeared in South Carolina, the avowed production of Mr. Burke, one of the judges of the supreme court in that State, in which the author attempted to prove that the principles, on which the society was formed, would, in process of time, originate and establish an order of nobility in this country, which would be repugnant to the genius of our republican governments, and dangerous to liberty. This pamphlet appeared in Connecticut, during the commotions raised by the half pay and commutation acts, and contributed not a little to spread the flame of opposition. Nothing could exceed the odium which prevailed at this time, against the men who had hazarded their persons and properties in the revolution.

Notwithstanding the discontents of the people were general, and ready to burst forth in sedition, yet men of information, viz. the officers of government, the clergy, and persons of liberal education, were mostly opposed to the unconstitutional steps taken by the committees and convention at Middletown. They supported the propriety of the measures of Congress, both by conversation and writing, proved that such grants to the army were necessary to keep the troops together, and that the expense would not be enormous nor oppressiv. During the close of the year 1783, every possible exertion was made to enlighten the people, and such was the effect of the arguments used by the minority, that in the beginning of the following year, the opposition subsided, the committees were dismissed, and tranquillity restored to the State. In May, the legislature were able to carry several measures which had before been extremely unpopular. An act was passed, granting the import of five per cent. to Congress; another giving great encouragement to commerce, and several towns were incorporated with extensiv privileges, for the purpose of regulating the exports of the State, and facilitating the collection of debts.

The opposition to the Congressional acts in favor of the officers, and to the order of the Cincinnati, did not rise to the same pitch in the other States as in Connecticut; yet it produced much disturbance in Massachusetts, and some others. Jealousy of power had been universally spread among the people of the United States. The destruction of the old forms of governments, and the licentiousness of war had, in a great measure, broken their habits of obedience; their passions had been inflamed by the cry of despotism; and like centinels, who have been suddenly surprised by the approach of an enemy, the rustling of a leaf was sufficient to giv them an alarm. This spirit of jealousy, which has not yet subsided, and which will probably continue visible during the present generation, operated with other causes to relax the energy of our federal operations.

During the war, vast sums of paper currency had been emitted by Congress, and large quantities of specie had been introduced, towards the close of the war, by the French army, and the Spanish trade. This plenty of money enabled the States to comply with the first requisitions of Congress; so that during two or three years, the federal treasury was, in some measure, supplied. But when the danger of war had ceased, and the vast importations of foreign goods had lessened the quantity of circulating specie, the States began to be very remiss in furnishing their proportion of monies. The annihilation of the credit of the paper bills had totally stopped their circulation, and the specie was leaving the country in cargoes, for remittances to Great Britain; still the luxurious habits of the people, contracted during the war, called for new supplies of goods, and private gratification seconded the narrow policy of State interest in defeating the operations of the general government.

Thus the revenues of Congress were annually diminishing; some of the States wholly neglecting to make provision for paying the interest of the national debt; others making but a partial provision, until the scanty supplies received from a few of the rich States, would hardly satisfy the demands of the civil list.

This weakness of the federal government, in conjunction with the flood of certificates or public securities, which Congress could neither fund nor pay, occasioned them to depreciate to a very inconsiderable value. The officers and soldiers of the late army were obliged to receive for wages these certificates, or promissary notes, which passed at a fifth, or eighth, or a tenth of their nominal value; being thus deprived at once of the greatest part of the reward due for their services. Some indeed profited by speculations in these evidences of the public debt; but such as were under a necessity of parting with them, were robbed of that support which they had a right to expect and demand from their countrymen.

Pensylvania indeed made provision for paying the interest of her debts, both State and federal; assuming her supposed proportion of the continental debt, and giving the creditors her own State notes in exchange for those of the United States. The resources of that State are immense, but she has not been able to make punctual payments, even in a depreciated paper currency.

Massachusetts, in her zeal to comply fully with the requisitions of Congress, and satisfy the demands of her own creditors, laid a heavy tax upon the people. This was the immediate cause of the rebellion in that State, in 1786. But a heavy debt lying on the State, added to burdens of the same nature, upon almost every incorporation within it; a decline, or rather an extinction of public credit; a relaxation and corruption of manners, and a free use of foreign luxuries; a decay of trade and manufactures, with a prevailing scarcity of money; and, above all, individuals involved in debt to each other: These were the real, though more remote causes of the insurrection. It was the tax which the people were required to pay, that caused them to feel evils which we have enumerated: This called forth all their other grievances; and the first act of violence committed, was the burning or destroying of a tax bill. This sedition threw the State into a convulsion which lasted about a year; courts of justice were violently obstructed; the collection of debts was suspended; and a body of armed troops, under the command of General Lincoln, was employed during the winter of 1786, to disperse the insurgents. Yet so numerous were the latter in the counties of Worcester, Hampshire and Berkshire, and so obstinately combined to oppose the execution of law by force, that the Governor and Council of the State thought proper not to intrust General Lincoln with military powers, except to act on the defensiv, and to repel force with force, in case the insurgents should attack him. The leaders of the rebels however were not men of talents; they were desperate, but without fortitude; and while they were supported with a superior force, they appeared to be impressed with that consciousness of guilt, which awes the most daring wretch, and makes him shrink from his purpose. This appears by the conduct of a large party of the rebels before the magazine at Springfield; where General Shepard with a small guard, was stationed to protect the continental stores. The insurgents appeared upon the plain, with a vast superiority of numbers, but a few shot from the artillery made the multitude retreat in disorder, with the loss of four men. This spirited conduct of General Shepard, with the industry, perseverance and prudent firmness of General Lincoln, dispersed the rebels, drove the leaders from the State, and restored tranquillity. An act of indemnity was passed in the Legislature for all the insurgents, except a few leaders, on condition they should become peaceable subjects, and take the oath of allegiance. The leaders afterwards petitioned for pardon, which, from motivs of policy, was granted by the Legislature.

But the loss of public credit, popular disturbances, and insurrections, were not the only evils which were generated by the peculiar circumstances of the times. The emissions of bills of credit and tender laws, were added to the black catalogue of political disorders.

The expedient of supplying the deficiencies of specie, by emissions of paper bills, was adopted very early in the colonies. The expedient was obvious and produced good effects. In a new country, where population is rapid, and the value of lands increasing, the farmer finds an advantage in paying legal interest for money; for if he can pay the interest by his profits, the increasing value of his lands will, in a few years, discharge the principal.

In no colony was this advantage more sensibly experienced than in Pensylvania. The emigrants to that province were numerous; the natural population rapid; and these circumstances combined, advanced the value of real property to an astonishing degree. As the first settlers there, as well as in other provinces, were poor, the purchase of a few foreign articles drained them of specie. Indeed for many years, the balance of trade must have necessarily been greatly against the colonies.

But bills of credit, emitted by the State and loaned to the industrious inhabitants, supplied the want of specie, and enabled the farmer to purchase stock. These bills were generally a legal tender in all colonial or private contracts, and the sums issued did not generally exceed the quantity requisit for a medium of trade; they retained their full nominal value in the purchase of commodities. But as they were not received by the British merchants, in payment for goods, there was a great demand for specie and bills, which occasioned the latter at various times to appreciate. Thus was introduced a difference between the English sterling money and the currencies of the colonies which remains to this day.47

The advantages the colonies had derived from bills of credit, under the British government, suggested to Congress, in 1775, the idea of issuing bills for the purpose of carrying on the war. And this was perhaps their only expedient. Money could not be raised by taxation; it could not be borrowed. The first emissions had no other effect upon the medium of commerce, than to drive the specie from circulation. But when the paper substituted for specie, had, by repeated millions, augmented the sum in circulation, much beyond the usual sum of specie, the bills began to lose their value. The depreciation continued in proportion to the sums emitted, until seventy, and even one hundred and fifty nominal paper dollars, were hardly an equivalent for one Spanish milled dollar. Still from the year 1775 to 1781, this depreciating paper currency was almost the only medium of trade. It supplied the place of specie, and enabled Congress to support a numerous army; until the sum in circulation amounted to two hundred millions of dollars. But about the year 1780, specie began to be plentiful, being introduced by the French army, a private trade with the Spanish islands, and an illicit intercourse with the British garrison at New York. This circumstance accelerated the depreciation of the paper bills, until their value had sunk almost to nothing. In 1781, the merchants and brokers in the southern States, apprehensiv of the approaching fate of the currency, pushed immense quantities of it suddenly into New England, made vast purchases of goods in Boston, and instantly the bills vanished from circulation.

The whole history of this continental paper is a history of public and private frauds. Old specie debts were often paid in a depreciated currency, and even new contracts for a few weeks or days were often discharged with a small part of the value received. From this plenty and fluctuating state of the medium, sprung hosts of speculators and itinerant traders, who left their honest occupations for the prospect of immense gains, in a fraudulent business, that depended on no fixed principles, and the profits of which could be reduced to no certain calculations.

To increase these evils, a project was formed to fix the prices of articles, and restrain persons from giving or receiving more for any commodity than the price stated by authority. These regulating acts were reprobated by every man acquainted with commerce and finance; as they were intended to prevent an effect without removing the cause. To attempt to fix the value of money, while streams of bills were incessantly flowing from the treasury of the United States, was as ridiculous as an attempt to restrain the rising of water in rivers amidst showers of rain.

Notwithstanding all opposition, some States framed and attempted to enforce these regulating acts. The effect was, a momentary apparent stand in the price of articles; innumerable acts of collusion and evasion among the dishonest; numberless injuries done to the honest; and finally a total disregard of all such regulations, and the consequential contempt of laws and the authority of the magistrate.

During these fluctuations of business, occasioned by the variable value of money, people lost sight, in some measure, of the steady principles which had before governed their intercourse with each other. Speculations followed and relaxed the rigor of commercial obligations.

Industry likewise had suffered by the flood of money which had deluged the States. The prices of produce had risen in proportion to the quantity of money in circulation, and the demand for the commodities of the country. This made the acquisition of money easy, and indolence and luxury, with their train of desolating consequences, spread themselves among all descriptions of people.

But as soon as hostilities between Great Britain and America were suspended, the scene was changed. The bills emitted by Congress had long before ceased to circulate; and the specie of the country was soon drained off to pay for foreign goods, the importations of which exceeded all calculation. Within two years from the close of the war, a scarcity of money was the general cry. The merchants found it impossible to collect their debts, and make punctual remittances to their creditors in Great Britain; and the consumers were driven to the necessity of retrenching their superfluities in living and of returning to their ancient habits of industry and economy.

This change was however progressiv and slow. In many of the States which suffered by the numerous debts they had contracted, and by the distresses of war, the people called aloud for emissions of paper bills to supply the deficiency of a medium. The depreciation of the continental bills, was a recent example of the ill effects of such an expedient, and the impossibility of supporting the credit of paper, was urged by the opposers of the measure as a substantial argument against adopting it. But nothing would silence the popular clamor; and many men of the first talents and eminence, united their voices with that of the populace. Paper money had formerly maintained its credit, and been of singular utility; and past experience, notwithstanding a change of circumstances, was an argument in its favor that bore down all opposition.

Pensylvania, although one of the richest States in the union, was the first to emit bills of credit, as a substitute for specie. But the revolution had removed the necessity of it, at the same time that it had destroyed the means by which its former credit had been supported. Lands, at the close of the war, were not rising in value; bills on London could not so readily be purchased, as while the province was dependent on Great Britain; the State was split into parties, one of which attempted to defeat the measures most popular with the other; and the depreciation of continental bills, with the injuries which it had done to individuals, inspired a general distrust of all public promises.

Notwithstanding a part of the money was loaned on good landed security, and the faith of that wealthy State pledged for the redemption of the whole at its nominal value, yet the advantages of specie as a medium of commerce, especially as an article of remittance to London, soon made a difference of ten per cent. between the bills of credit and specie. This difference may be considered rather as an appreciation of gold and silver, than a depreciation of paper; but its effects, in a commercial State, must be highly prejudicial. It opens the door to frauds of all kinds, and frauds are usually practised on the honest and unsuspecting, especially upon all classes of laborers.

This currency of Pensylvania is receivable in all payments at the custom house, and for certain taxes, at its nominal value; yet it has sunk to two thirds of this value, in the few commercial transactions where it is received.

North Carolina, South Carolina, and Georgia, had recourse to the same wretched expedient to supply themselves with money; not reflecting that industry, frugality, and good commercial laws are the only means of turning the balance of trade in favor of a country, and that this balance is the only permanent source of solid wealth and ready money. But the bills they emitted shared a worse fate than those of Pensylvania; they expelled almost all the circulating cash from the States; they lost a great part of their nominal value; they impoverished the merchants, and embarrassed the planters.

The State of Virginia had too much wisdom to emit bills; but tolerated a practice among the inhabitants of cutting dollars and smaller pieces of silver, in order to prevent it from leaving the State. This pernicious practice prevailed also in Georgia.48

Maryland escaped the calamity of a paper currency. The house of delegates brought forward a bill for the emission of bills of credit to a large amount; but the senate firmly and successfully resisted the pernicious scheme. The opposition between the two houses was violent and tumultuous; it threatened the State with anarchy; but the question was carried to the people, and the good sense of the senate finally prevailed.

New Jersey is situated between two or the largest commercial towns in America, and consequently drained of specie. This State also emitted a large sum in bills of credit, which served to pay the interest of the public debt; but the currency depreciated, as in other States.

Rhode Island exhibits a melancholy proof of that licentiousness and anarchy which always follows a relaxation of the moral principles. In a rage for supplying the State with money, and filling every man's pocket without obliging him to earn it by his diligence, the Legislature passed an act for making one hundred thousand pounds in bills; a sum much more than sufficient for a medium of trade in that State, even without any specie. The merchants in Newport and Providence opposed the act with firmness; their opposition added fresh vigour to the resolution of the assembly, and induced them to inforce the scheme by a legal lender of a most extraordinary nature. They passed an act, ordaining that if any creditor should refuse to take their bills, for any debt whatever, the debtor might lodge the sum due, with a justice of the peace, who should giv notice of it in the public papers; and if the creditor did not appear and receive the money within six months from the first notice, his debt should be forfeited. This act astonished all honest men, and even the promoters of paper money making in other States, and on other principles, reprobated this act of Rhode Island, as wicked and oppressiv. But the State was governed by faction. During the cry for paper money, a number of boisterous ignorant men, were elected into the Legislature, from the smaller towns in the State. Finding themselves united with a majority in opinion, they formed and executed any plan their inclination suggested; they opposed every measure that was agreeable to the mercantile interest; they not only made bad laws to suit their own wicked purposes, but appointed their own corrupt creatures to fill the judicial and executiv departments. Their money depreciated sufficiently to answer all their vile purposes in the discharge of debts; business almost totally ceased; all confidence was lost; the State was thrown into confusion at home, and was execrated abroad.

Massachusetts Bay had the good fortune, amidst her political calamities, to prevent an emission of bills of credit. New Hampshire made no paper; but in the distresses which followed her loss of business after the war, the Legislature made horses, lumber, and most articles of produce a legal tender in the fulfilment of contracts. It is doubtless unjust to oblige a creditor to receive any thing for his debt, which he had not in contemplation at the time of the contract. But as the commodities which were to be a tender by the law of New Hampshire, were of an intrinsic value, bearing some proportion to the amount of the debt, the injustice of the law was less flagrant, than that which enforced the tender of paper in Rhode Island. Indeed a similar law prevailed for some time in Massachusetts; and in Connecticut it is optional with the creditor, either to imprison the debtor, or take land on an execution, at a price to be fixed by three indifferent freeholders; provided no other means of payment shall appear to satisfy the demand. It must not however be omitted, that while the most flourishing commercial States introduced a paper medium, to the great injury of honest men, a bill for an emission of paper in Connecticut, where there is very little specie, could never command more than one eighth of the votes of the Legislature. The movers of the bill have hardly escaped ridicule; so generally is the measure reprobated as a source of fraud and public mischief.

The Legislature of New York, a State that had the least necessity and apology for making paper money, as her commercial advantages always furnish her with specie sufficient for a medium, issued a large sum in bills of credit, which support their value better than the currency of any other State. Still the paper has raised the value of specie, which is always in demand for exportation, and this difference of exchange between paper and specie, exposes commerce to most of the inconveniencies resulting from a depreciated medium.

Such is the history of paper money thus far; a miserable substitute for real coin, in a country where the reins of government are too weak to compel the fulfilment of public engagements; and where all confidence in public faith is totally destroyed.

While the States were thus endeavoring to repair the loss of specie, by empty promises, and to support their business by shadows, rather than by reality, the British ministry formed some commercial regulations that deprived them of the profits of their trade to the West Indies and to Great Britain. Heavy duties were laid upon such articles as were remitted to the London merchants for their goods, and such were the duties upon American bottoms, that the States were almost wholly deprived of the carrying trade. A prohibition was laid upon the produce of the United States, shipped to the English West India Islands in American built vessels, and in those manned by American seamen. These restrictions fell heavy upon the eastern States, which depended much upon ship building for the support of their trade; and they materially injured the business of the other States.

Without a union that was able to form and execute a general system of commercial regulations, some of the States attempted to impose restraints upon the British trade that should indemnify the merchant for the losses he had suffered, or induce the British ministry to enter into a commercial treaty, and relax the rigor of their navigation laws. These measures however produced nothing but mischief. The States did not act in concert, and the restraints laid on the trade of one State operated to throw the business into the hands of its neighbor. Massachusetts, in her zeal to counteract the effect of the English navigation laws, laid enormous duties upon British goods imported into that State; but the other States did not adopt a similar measure; and the loss of business soon obliged that State to repeal or suspend the law. Thus when Pensylvania laid heavy duties on British goods, Delaware and New Jersey made a number of free ports to encourage the landing of goods within the limits of those States; and the duties in Pensylvania served no purpose, but to create smuggling.

Thus divided, the States began to feel their weakness. Most of the Legislatures had neglected to comply with the requisitions of Congress for furnishing the federal treasury; the resolves of Congress were disregarded; the proposition for a general import to be laid and collected by Congress was negatived first by Rhode Island, and afterwards by New York. The British troops continued, under pretence of a breach of treaty on the part of America, to hold possession of the forts on the frontiers of the States, and thus commanded the fur trade. Many of the States individually were infested with popular commotions or iniquitous tender laws, while they were oppressed with public debts; the certificates or public notes had lost most of their value, and circulated merely as the objects of speculation; Congress lost their respectability, and the United States their credit and importance.