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treasury empty ; public credit exhausted, nay, the private credit of purchasing agents employed, I am told, as far as it will bear; congress complaining of the extortion of the people; the people of the improvidence of congress; and the army of both ; our affairs requiring the most mature and systematic measures,
and the urgency of occasions admitting only of temporizing expedienis, and these expedients generating new difficulties. Congress recommending plans to the several states for execution, and the states separately rejudging the expediency of such plans, whereby the same distrust of concurrent exertions that has damped the ardor of patriotic individuals must produce the same effect among the states themselves; an old system of finance discarded as incompetent to our necessities, an untried and precarious one substituted, and a total stagnation in prospect between the end of the former and the operation of the latter. These are the outlines of the picture of our public situation. I leave it to your own imagination to fill them up. Believe me, sir, as things now stand, if the states do not vigorously proceed in collecting the old money, and establishing funds for the credit of the new, that we are undone ; and let them be ever so expeditious in doing this, still the intermediate distress to our army, and hindrance to public affairs, are a subject of melancholy reflection. General Washington writes that a failure of bread has already commenced in the army; and that, for anything he sees, it must unavoidably increase. Meat they have only for a short season ; and as the whole dependence is on provisions now to be procured, without a shilling for the purpose, and without credit for a shilling, I look forward with the most pungent apprehensions. It will be attempted, I believe, to purchase a few supplies with loan-office certificates ; but whether they will be received is perhaps far from being certain ; and if received will certainly be a most expensive and ruinous expedient. It is not without some reluctance I trust this information to a conveyance by post, but I know of no better at present, and I conceive it to be absolutely necessary to be known to those who are most able and zealous to contribute to the public relief.”
The grand difficulty of modern statesmanship — finding money occupied of course much of the thoughts of the revolutionary statesmen. The following extract will be interesting.
“ As you are at present a legislator, I will take the liberty of hinting to you an idea that has occurred on this subject. I take it for granted that taxation alone is inadequate to our situation. You know as well as I do, how far we ought to rely on loans to supply the defect of it. Specific taxes, as far as they go, are a valuable fund, but from local and other difficulties will never be universally and sufficiently adopted : purchases with state money or certificates will be substituted. In order to prevent this evil, and to ensure the supplies, therefore, I would propose, that they be diffused and proportioned among the people as accurately as circumstances will admit; that they be impressed with vigor and impartiality; and paid for in certificates not transferable, and to be redeemable, at some period subsequent to the war, at specie value, and bearing an intermediate interest. The advantage of such a scheme is this, that it would anticipate during the war the future revenues of peace, as our enemies and all other modern nations do. It would be compelling the people to lend the public their commodities, as people elsewhere lend their money to purchase commodities. It would be a permanent resource by which the war might be supported as long as the earth should yield its increase. This plan differs from specific taxes in this, that as an equivalent is given for what is received, much less nicely would be requisite in apportioning the supplies among the people, and they would be taken in places where they are most wanted. It differs from the plan of paying for supplies in state emissions or common certificates, in this, that the latter produce all the evils of a redundant medium, whereas the former, not being transferable, cannot have that effect, and moreover do not require the same degree of taxes during the war."
Money is indeed the sinews of war; witness the following extract :
“Congress has just finished an estimate of supplies for the en
suing year, requiring of the states the value of six millions of dollars in specie. The principal part of the requisition consists of specific articles, the residue of specie or the new emissions, receivable as specie. If the states fulfil this plan punctually, there is no doubt that we shall go smoothly through another campaign; and if they would forbear recurring to state emissions and certifi. cates, in procuring the supplies, it may become a permanent and effectual mode of carrying on the war. But past experience will not permit our expectations to be very sanguine. The collection and transportation of specific supplies must necessarily be tedious and subject to casualties; and the proceedings of separate popular bodies must add greatly to the uncertainty and delay. The expense attending the mode is of itself a sufficient objection to it, if money could by any possible device be provided in due quantity. The want of this article is the source of all our public difficulties and misfortunes. One or two millions of guineas properly applied would diffuse vigor and satisfaction throughout the whole military departments, and would expel the enemy from every part of the United States. It would also have another good effect. It would reconcile the army and everybody else to our republican forms of government; the principal inconveniences which are imputed to them being really the fruit of defective revenues. What other states effect by money, we are obliged to pursue by dilatory and indigested expedients, which benumb all our operations, and expose our troops to numberless distresses. If these were well paid, well fed, and well clothed, they would be well satisfied, and would fight with more success. And this inight and would be as well effected by our governments as by any other, if they possessed money enough, as in our moneyless situation the same embarrassments would have been experienced by any govo ernment."
Mr. Madison seems to have well understood the difference between money and a credit currency
a difference which too many grand financiers are so slow to see, and the neglect of which is every day bringing so much misery upon our country.
“Dear Sir — I am glad to find you have at last got a house of delegates, and have made so auspicious a beginning, as an unani. mous vote to fill up our line for the war. This is a measure which all the states ought to have begun with. I wish there may not be some that will not be prevailed on even to end with it. It is much to be regretted, that you are not in a condition to discontinue another practice equally destructive with temporary enlistments. Unless an end can by some means or other be put to state emissions and certificates, they must prove the bane of every salutary regulation. The depreciation in this place has lately run up as high as one hundred for one, and it cannot be satisfactorily accounted for, on any other principle than the substitution of certificates in the payment of those taxes which were intended to reduce its quantity and keep up a demand for it. The immediate cause of this event is said to have been the sudden conversion of a large quantity of paper into specie, by some tories lately ordered into exile by this state. It is at present on the fall, and I am told the merchants have associated to bring it down and fix it at seventyfive. The fate of the new money is as yet suspended. There is but too much reason, however, to fear that it will follow the fate of the old. According to the arrangement now in force, it would seem impossible for it to rise above one for forty. The resolutions of congress which establish that relation between the two kinds of paper, must destroy the equality of the new with specie, unless the old can be kept down at forty for one. In New Jersey, I am told, the legislature has lately empowered the executive to regulate the exchange between the two papers, according to the exchange between the old and the new, in order to preserve the equality of the latter with specie. The issue of this experiment is of consequence, and may throw light perhaps on our paper finance. The only infallible remedy, whilst we cannot command specie, for the pecuniary embarrassments we labor under, will, after all, be found to be a punctual collection of the taxes required by congress.
Mr. Madison is understood to have been one of the champions of state rights. Hear what he says to Mr. Jefferson.
“ Dear Sir — The inclosed paper is a copy of a report, from a committee, now lying on the table of congress for consideration The delicacy and importance of the subject makes me wish for your judgment on it, before it undergoes the final decision of congress.
“ The necessity of arming congress with coercive powers arises from the shameful deficiency of some of the states which are most capable of yielding their apportioned supplies, and the military exactions to which others, already exhausted by the enemy and our own troops, are in consequence exposed. Without such powers, too, in the general government, the whole confederacy may be insulted, and the most salutary measures frustrated, by the most inconsiderable state in the union. At a time when all the other states were submitting to the loss and inconvenience of an embargo on their exports, Delaware absolutely declined coming into the measure, and not only defeated the general object of it, but enriched herself at the expense of those who did their duty.
" The expediency, however, of making the proposed application to the states, will depend on the probability of their complying with it. If they should refuse, congress will be in a worse situation than at present; for as the confederation now stands, and according to the nature even of alliances much less intimate, there is an implied right of coercion against the delinquent party, and the exercise of it by congress, whenever a palpable necessity occurs, will probably be acquiesced in.
“ It may be asked, perhaps, by what means congress could exercise such a power, if the states were to invest them with it. As long as there is a regular army on foot, a small detachment from it, acting under civil authority, would at any time render a voluntary contribution of supplies due from a state, an eligible alternative. But there is a still more easy and efficacious mode. The situation of most of the states is such, that two or three vessels of force employed against their trade will make it their interest to yield prompt obedience to all just requisitions on them. With respect to those states that have little or no foreign trade of their own, it is provided that all inland trade with such states as supply