CHAPTER IV. ORIGIN OF THE FIRST BANK IN THE UNITED STATES. THE Bank of North America, the first institution of the kind in the United States, originated in the efforts of the patriotic merchants and other citizens of Pennsylvania, to supply the wants of the army in 1780. The history of it is briefly this: By means of the depreciation of the bills of credit issued by Congress, the want of funds to redeem them, and the want of power in Congress to levy taxes, the finances of the United States in 1780 were reduced to the most miserable and alarming condition. Confidence in the government was lost; the contractors for the army were without funds, and the troops without pay, provision, or clothing. In this situation of affairs, Mr. Pelatiah Webster, an old, intelligent merchant of Philadelphia, whose practical knowledge of money concerns gave him great influence, and whose opinions were often consulted by the gentlemen in Congress, wrote and published a number of essays on free trade and finance, with a view to point out the defects of the systems which had been pursued, and the evils of deluging the country with paper, without possessing the means of redeeming it. His fifth essay, published in March, 1780, was intended to urge and enforce the necessity of taxing the people, to an amount that should meet the annual expenditures. These essays, by unfolding the nature of credit, and the natural operations of money and commerce, prepared the mind of our citizens, who were not generally versed in these interesting subjects, for an essential change in the system of public credit. But his principles were addressed to the patriotism of the legislatures of the several states-a virtue which had been often exercised, and was nearly exhausted. Congress, by a public act, fixed the depreciated value of the bills of credit at a fortieth of their nominal value, and struck new bills to the amount of ten millions of dollars, which were to be issued on the funds of the several states, bearing an interest of five per cent. and redeemable in gold and silver. But the circumstances of the army were pressing, and admitted of no delay. During the session of the Assembly of Pennsylvania, in May, 1780, a letter was received by the Executive Council from Gen. Washington, and transmitted to the House. In this letter the General stated, that although he had confidence in the attachment of the army to the public cause, yet their distresses were such, from a want of every thing necessary or convenient, that he was apprehensive of a mutiny. The reading of the letter was followed by silence; marks of despondence were visible on the countenances of many of the members, and one of them at length ventured to utter the language of despair. Another attempted to dissipate the gloom, but a motion of adjournment suspended a consideration of the contents of the letter. 164 ORIGIN OF THE FIRST BANK IN THE UNITED STATES. The substance of the contents of Gen. Washington's letter, was communicated to some patriotic citizens of Philadelphia, who immediately opened a subscription for the purpose of raising money to pay bounties to recruits. A considerable sum in specie and bills of credit was subscribed. While this subscription was on foot, advices were received of the surrender of Charleston to the British commander. This misfortune increased the public distress, and the necessity for more powerful exertion to recruit and supply the army. On the 17th of June, therefore, a meeting was held at the City Tavern, and a resolution passed to open a security subscription to the amount of three hundred thousand pounds, Pennsylvania currency, in specie; the subscribers to execute bonds to the amount of their subscriptions, and to form a bank for supplying the army. This was executed, and the former subscription discontinued. By means of this fund, which was called the Bank of Pennsylvania, the necessities of the army were relieved, during that campaign. In the spring following, Mr. Robert Morris was appointed superintendent of finances: the eminent abilities and influence of that gentleman, were greatly useful to the United States, in rescuing their moneyed concerns from disorder, and restoring public credit; and to him is due the honor of projecting that useful institution, the "Bank of North America," which was intended to be, and for a time actually was, a national bank. On the 17th of May, 1781, the plan of a national bank was submitted to the consideration of Congress; and on the 26th of the month, Congress resolved, "That they do approve of the plan of establishing a national bank in the United States, submitted to their consideration by Mr. Robert Morris, and that they will promote and support the same, by such ways and means, from time to time, as may appear necessary for the institution, and consistent with the public good." They further resolved, that the company should be incorporated, as soon as the subscription should be filled, recommended to the states to permit no other banks to be established during the war, and to pass laws making it felony to counterfeit the notes; and they made the notes receivable in payment of all taxes, duties, and debts, payable to the United States. These resolutions were published, and to these were subjoined some remarks of the projector, on the advantages of the proposed bank. The original subscription, amounting to four hundred thousand dollars, in shares of four hundred dollars each, was filled; and the subscribers were incorporated by an ordinance of Congress, dated Dec. 21, 1781; and by an act of the legislature of Pennsylvania, dated April 1, 1782. To this institution, most of the subscribers to the private bank before mentioned, transferred their subscriptions; or invested the specie value of their subscriptions in the purchase of shares. Those who declined, were repaid their money by the superintendent of finance.* The immense advantages of this institution to the credit and money operations of the United States, as well as to the merchants, could not Manuscript statement, by Robert Morris, Esq. Dissertations on Government and the affairs of the Bank, &c. by Thomas Paine, Philadelphia, February, 1756. Original plan of the Bank of North America, by Robert Morris, superintendent of finance, 1781. ORIGIN OF THE FIRST BANK IN THE UNITED STATES. 165 screen it from popular jealousy. In 1785, petitions from a number of the inhabitants of Chester County were presented to the legislature, praying for a repeal of the act of incorporation, and the act for preventing and punishing the counterfeiting of the notes of the bank. Their objections to the bank were the most ill founded imaginable. The committee on these petitions reported, as their opinion, that the bank was incompatible with the public safety-that it had a direct tendency to banish specie from the country, and to collect it all into the hands of the stockholders !—that the great profits of the bank would tempt foreigners to vest money in its stocks, and thus draw away large sums for interest-that it would become an enormous engine of power, subject to foreign influence, and tend to reduce America back to a state of subordination and dependence on European powers-that it would destroy the equality which ought to prevail in a republic-that our government had nothing in it to counterbalance the influence it must create-in short, that the directors might in time govern Pennsylvania.* Such were the absurd, weak, contradictory, and chimerical notions of the people respecting the bank. * Minutes of the Assembly, March 21, 1785. CHAPTER V. LETTER FROM GENERAL WASHINGTON. Ir has been controverted whether the capture of Gen. Cornwallis in 1781, was the result of a plan preconcerted between Gen. Washington and Count de Grasse; or rather whether the arrival of the Count in the Chesapeak was predetermined and expected by Gen. Washington, and consequently all the preparations to attack New York a mere finess to deceive the enemy; or whether the real intention was against New York, and the siege of Yorktown planned upon the unexpected arrival of the French fleet in the bay. The following letter will set the matter in its true light. Mount Vernon, July 31, 1788. SIR-I duly received your letter of the 14th inst., and can only answer you briefly and generally from memory; that a combined operation of the land and naval forces of France in America, for the year 1781, was preconcerted the year before; that the point of attack was not absolutely agreed upon, because it could not be foreknown where the enemy would be most susceptible of impression; and because we (having the command of the water with sufficient means of conveyance) could transport ourselves to any spot with the greatest celerity; that it was determined by me, nearly twelve months beforehand, at all hazards, to give out and cause it to be believed by the highest military as well as civil officers, that New York was the destined place of attack, for the important purpose of inducing the eastern and middle states to make greater exertions in furnishing specific supplies, than they otherwise would have done, as well as for the interesting purpose of rendering the enemy less prepared elsewhere; that by these means, and these alone, artillery, boats, stores, and provisions, were in seasonable preparation to move with the utmost rapidity to any part of the continent; for the difficulty consisted more in providing, than knowing how to apply the military apparatus; that before the arrival of the Count de Grasse, it was the fixed determination to strike the enemy in the most vulnerable quarter, so as to ensure success with moral certainty, as our affairs were then in the most ruinous train imaginable; that New York was thought to be beyond our effort, and consequently that the only hesitation that remained, was between an attack upon the British army in Virginia and that in Charleston: and finally, that by the intervention of several communications, and some incidents which can not be detailed in a letter, the hostile post in Virginia, from being a provisional and strongly expected, became the definitive and certain object of the campaign. Because it would be easy for the Count de Grasse, in good time before his departure from the West Indies, to give notice, by express, at what place he could most conveniently first touch to receive advice. I only add, that it never was in contemplation to attack New York, unless the garrison should first have been so far degarnished to carry on the southern operations, as to render our success in the siege of that place, as infallible as any future military event can ever be made. For repeat it, and dwell upon it again, some splendid advantage (whether upon a larger or smaller scale was almost immaterial) was so essentially necessary, to revive the expiring hopes and languid exertions of the country, at the crisis in question, that I never would have consented to embark in any enterprise, wherein, from the most rational plan and accurate calculations, the favorable issue should not have appeared as clear to my view as a ray of light. The failure of an attempt against the posts of the enemy, could, in no other possible situation during the war, have been so fatal to our cause. That much trouble was taken and finess used to misguide and bewilder Sir Henry Clinton, in regard to the real object, by fictitious communications, as well as by making a deceptive provision of ovens, forage, and boats, in his neighborhood, is certain. Nor were less pains taken to deceive our own army; for I had always conceived, where the imposition did not completely take place at home, it could never sufficiently succeed abroad. Your desire of obtaining truth, is very laudable; I wish I had more leisure to gratify it, as I am equally solicitous the undisguised verity should be known. Many circumstances will unavoidably be misconceiv ed and misrepresented. Notwithstanding most of the papers, which may properly be deemed official, are preserved; yet the knowledge of innumerable things, of a more delicate and secret nature, is confined to the perishable remembrance of some few of the present generation. With esteem, I am sir, Your most obedient humble servant, To N. Webster, Esq. |