CHAPTER II. THE STRUGGLE FOR REVENUE. 1781, 1782.
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| Schuyler had been led by his
own experience to perceive the necessity for the states to surrender some part of their
sovereignty, and "adopt another system of government." In the senate of New
York, he moved to request the eastern states to join in an early convention, which should
form a perpetual league of incorporation, subservient, however, to the common interest of
all the states; invite others to accede to it; erect Vermont into a state; devise a fund
for the redemption of the common debts; substitute a permanent and uniform system for
temporary expedients; and invest the confederacy with powers of coercion. [1] "We stand ready on our part to confer adequate powers on congress," was the message of both houses to that body in a letter of the fifth of February, |
Chap. II.
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1. Philip Schuyler to Washington, 21 Jan., 1781. Letters to Washington, iii. 213. |
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written in the name of the state by their joint committee, on which were Schuyler and Benson. [1] Washington had been taught by his earliest observation as general, and had often declared the indispensable necessity of more responsibility and permanency in the executive bodies. [2] The convention at Boston of August, 1780, had recommended "a permanent system for the several departments." [3] Hamilton "was among the first who were convinced that their administration by single men was essential to the proper management of affairs." [4] On the tenth of January, 1781, congress initiated a reform by establishing a department of foreign affairs; [5] but more than eight months elapsed before it was filled by Robert R. Livingston. There was the most pressing need of a minister of war. After tedious rivalries and delays, Benjamin Lincoln was elected; [6] but he did not enter upon the office till near the end of November, when the attempt of Great Britain to subjugate America had ceased. For the treasury, John Sullivan suggested to Washington the name of Hamilton. [7] How far Hamilton had made a study of finance, Washington did not know; but he said: "Few of his age have a more |
Jan. |
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1. Letter from the state of New York to congress, 5 Feb., 1781. Papers of Old Congress, lxvii. 344. MS. A copy of the letter was sent to Washington by Clinton, 14 Feb., 1781. Letters to Washington, xlvi. 172. MS. 2. Washington to Duane, 26 Dec., 1780. MS. |
3. Hough's edition of Convention at Boston, 3-9 Aug., 1780, 51. 4. Hamilton to Robert Morris, 30 April, 1781. Hamilton, i. 223. Hamilton to Duane, 3 Sept., 1780. Ibid., i. 154. 5. Journals of Congress, iii. 564. 6. Ibid., 683. 7. Sullivan to Washington, 29 Jan., 1781. MS. |
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general knowledge, and no one is more firmly engaged in the cause, or exceeds him in probity and sterling virtue." [1] In February, the choice fell on Robert Morris, and unanimously, except that Massachusetts abstained from the ballot, [2] Samuel Adams preferring the old system of committees. [3] While Morris delayed his acceptance, Hamilton, who had been the first to present his name for the place, opened a correspondence with him. "A national debt," he wrote, "if it is not excessive, will be a national blessing, a powerful cement of union, a necessity for keeping up taxation, and a spur to industry." [4] He recommended a national bank, with a capital of ten or fifteen millions of dollars, [5] to be paid one third in hard money and the other two thirds in European funds or landed security. [6] It was to be erected into a legal corporation for thirty years, during which no other bank, public or private, was to be permitted. [7] Its capital and deposits were to be exempt from taxation, [8] and the United States, collectively and particularly, were to become conjointly responsible for all its transactions. [9] Its sources of profit were to be the sole right of issuing a currency for the United States equal in amount to the whole capital of the bank; [10] loans at a rate not exceeding eight per cent; [11] discount of bills of exchange; [12] con- |
Chap. II. 1781.
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1. Washington to Sullivan, 4 Feb., 1781. Sparks, vii. 399. 2. Journals of Congress, iii. 580. 3. Luzerne to Vergennes, 25 March, 1781. MS. Partly printed in Sparks, vii. 400. 4. Hamilton, i. 257. 5. Arts. i., ix. Ibid., 241, 245. |
6. Art. ii. Ibid., 241. 7. Arts. iii., xvii., xviii. Ibid., 242, 252. 8. Arts. i., xi. Ibid., 241, 246. 9. Art. vi. Ibid., 241, 246. 10. Art. vii. Ibid., 243, 244. 11. Arts. viii., xiii. Ibid., 245, 247. 12. Art. x. Ibid., 245. |
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tracts with the French government for the supply of its fleets and armies in America, with the United States for the supply of their army; [1] dealings in real estates, especially, [2] with its large capital, buying at favorable opportunities the real estates of men who, having rendered themselves odious, would be obliged to leave the country. [3] Another source of immense gain, contingently even of one hundred per cent, was to be a contract with the United States for taking up all their paper emissions. [4] Incidentally, Hamilton expressed his "wish to see a convention of all the states, with full power to alter and amend, finally and irrevocably, the present futile and senseless confederation." This communication led to the closest relations between Hamilton and Robert Morris; but, vehement as was the character of the older man, his schemes fell far short of the daring suggestions of his young counsellor. On the fourteenth of May, Morris was installed as the superintendent of finance, and three days later he laid before congress his plan for a national bank. [5] Its capital was to be four hundred thousand dollars in gold and silver, with power of increase at discretion; its notes were to form the currency of the country, and be receivable as specie for duties and taxes by every state and by the United States. Authority to constitute the company a legal body not being granted by the articles of confederation, Morris submitted that congress should apply to |
Chap. II. 1781.
May |
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1. Art. xii. Ibid., 247. 2. Art. x. Ibid., 245. 3. Ibid., 245. 4. Art. xiv. Ibid., 248. |
5. Journals of Congress, iii. 624; Diplomatic Correspondence, vii. 444-449. |
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the states for the power of incorporating a bank and prohibiting all other banks. [1] On the twenty-sixth, congress, without waiting to hear the voices of the states, resolved that the bank should be incorporated so soon as the subscription should be filled and officers chosen. This vote was carried by New Hampshire, New Jersey, and the five southernmost states, Massachusetts being in the negative, Pennsylvania divided, and Madison alone of the four members from Virginia opposing it as not within the powers of the confederation. From the want of a valuation of private lands and buildings, congress had not even the right to apportion requisitions. The five states which met at Hartford had suggested for the United States an impost as a source of revenue. New Jersey and North Carolina suffered from the legislation of the neighboring states, which were the natural channels of a part of their foreign trade; and now, on the third of February, Witherspoon and Burke, their representatives in congress, reviving an amendment to the articles of confederation proposed by New Jersey in 1778, [2] moved to vest in the United States the power of regulating commerce according to "the common interest," and, under restrictions calculated to soothe state jealousies, the exclusive right of laying duties upon imported articles. This motion, which was a memorable step toward union, failed of success; [3] and on the same day congress contented itself with |
Chap. II. 1781. May 26.
Feb. |
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1. Robert Morris to congress, May, 1781. Dip. Cor., xi. 364. 2. Journals of Congress, ii. 604. |
3. Ibid., iii. 573. The yeas and nays do not appear in the Journal. |
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asking of the states, as an "indispensable necessity," the power to levy a duty of five per cent ad valorem on all imports, with no permanent exemptions except of wool cards and cotton cards, and wire for making them. This first scheme of duties on foreign commerce sought to foster American industry by the free admission of materials necessary to the manufacturer. The letter of the fifth of February from the state of New York was met on its way by the vote of congress of the third. In March, New York granted the duties, to "be collected in such manner and by such officers as congress should direct." [1] Connecticut had acted a month earlier at a special session called by Governor Trumbull, but had limited its grant to the end of the third year after the war. [2] New Hampshire followed in the first week of April. [3] Massachusetts delayed its consent till the next year, and then reserved to itself the appointment of the collectors. Outside of the five states which met at Hartford, the first to agree to the new demand were Pennsylvania and New Jersey. [4] The general assembly of Virginia, which was to have met in Richmond on the seventh of May, was chased by the enemy to Charlottesville, where it elected Benjamin Harrison its speaker, and where John Taylor of Caroline, [5] accord- |
Chap. II. 1781. |
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1. Papers of Old Congress, lxxv. MS.. 2. Journals of Congress, iii. 594, 600. Papers of Old Congress, lxxv. MS. 3. Papers of Old Congress, lxxiv. 9. MS. 4. Dallas' Laws of Pennsylvania, |
i. 800. The act was of 5 April, 1781. Journals of Congress, iii. 682. The act of New Jersey was passed 2 June, 1781. Wilson's Acts of New Jersey, 191. 5. Journal of House of Delegates, 30 May, 1781. |
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ing to order, presented a bill to enable the United States to levy the needed duty. Fleeing beyond the mountains, the completed the act at Staunton. The grant, of which Harrison had been the great promoter, [1] was restricted neither as to time nor as to form. [2] Early in September, North Carolina adopted the measure; [3] Delaware in November; [4] South Carolina in February, 1782; [5] and Maryland in its following April session. [6] The consent of Georgia was confidently expected. After the surrender of Cornwallis, the legislature of New York once more declared the readiness of their state to comply with any measures to render the union of the United States more intimate, and to contribute their proportion of well-established funds. [7] This alacrity Clinton, on the twenty-fourth of November, reported to congress as the highest "evidence of a sincere disposition in the state to promote the common interest." [8] Meantime the subscriptions to the bank languished, and Morris thought fit to apply to John Jay for money from the court of Madrid for its benefit, saying: "I am determined that the bank shall be well supported until it can support itself, and then it will support us." [9] But there was no ray of hope from that quarter. Though so late as October, 1781, the |
Chap. II. 1781. May 26.
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1. Harrison to Washington, 31 March, 1783. MS. 2. Papers of Old Congress, lxxv. 359. MS. Hening's Statutes at Large, x. 409. 3. Papers of Old Congress, lxxvi. 91. MS. Journals of Congress, iii. 674. 4. Laws of Delaware, ii. 762. |
5. Statutes at Large of South Carolina, iv. 512. 6. Laws of Maryland, chapter lxviii. 7. Papers of Old Congress, lxvii. 438. MS. 8. Ibid., 443. 9. Morris to Jay, 13 July, 1781. Dip. Cor., vii. 440. |
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subscription amounted to no more than seventy thousand dollars, [1] he was yet able to prevail with congress, on the thirty-first day of December, to incorporate the bank "forever" by the name of the Bank of North America; but it was not to exercise powers in any one of the United States repugnant to the laws or constitution of that state. [2] Madison saw in the ordinance "a precedent of usurpation." [3] The bank still wanted capital. During the autumn of 1781, a remittance in specie of nearly five hundred thousand dollars had been received from the king of France, and brought to Philadelphia. In January, 1782, Morris, with no clear warrant, subscribed all of this sum that remained in the treasury, being about two hundred and fifty-four thousand dollars, to the stock of the bank, [4] which was thus nursed into life by the public moneys. In return, it did very little, and could do very little, for the United States. Its legal establishment was supported by a charter from the state of Massachusetts, in March, 1782; by an act of recognition from Pennsylvania in march, and a charter on the first of April; and ten days later by a charter from New York. The final proviso of the New York charter was, "that nothing in this act contained shall be construed to imply any right or power in the United States in congress assembled to create bodies politic, or grant letters of incorporation in any case whatsoever." [5] The acts of Pennsylvania were |
Chap. II. 1781. Dec. 31.
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1. Life of Morris, 81. 2. Ordinance to incorporate, etc. Journals of Congress, iii. 706, 707. 3. Gilpin, 105. |
4. From the narrative of Robert Morris in Life of Morris, 90. 5. Jones & Varick's edition of Laws of New York, 1789, 77. |
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repealed in September, 1785. Delaware gave a charter in 1786. Yet the confederacy promised itself a solid foundation for a system of finance from a duty on imports. Through the press, Hamilton now pleads for vesting congress with full power of regulating trade; and he contrasts the "prospect of a number of petty states, jarring, jealous, and perverse, fluctuating and unhappy at home, weak by their dissensions in the eyes of other nations," with the "noble and magnificent perspective of a great federal republic." It is the glory of New York that its legislature was the first to impart the sanction of a state to the great conception of a federal convention to frame a constitution for the United States. On the report of a committee of which Madison was the head, congress in may, 1782, took into consideration the desperate condition of the finances of the country, and divided between four of its members the office of explaining the common danger to every state. [1] At the request of the delegation which repaired to the north, Clinton convened an extra session of the senate and assembly of New York at Poughkeepsie, where, in July, they received from the committee of congress a full communication [2] "on the necessity of providing for a vigorous prosecution of the war." The legislature had been in session for a week when Hamilton, who for a few months filled the office of United States receiver of revenue for his state, repaired to Poughkeepsie "to second the |
Chap. II. 1782.
July 4. |
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1. Journals of Congress for 22 May and 15 and 18 July, 1782. |
2. Governor Clinton's message of 11 July, 1782. |
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views" of his superior. In obedience to instructions, he strongly represented "the necessity of solid arrangements of finance;" but he went to the work "without very sanguine expectations," for he believed that, "whatever momentary effort the legislature might make, very little would be done till the entire change of the present system;" and, before this could be effected, "mountains of prejudice and particular interest were to be levelled." [1] On the nineteenth, three days after his arrival, on the motion of Schuyler, his father-in-law, who was ever constant in support of a national system, the senate resolved itself into "a committee of the whole on the state of the nation." From its deliberations on two successive days a series of resolutions proceeded, which Hamilton probably drafted, and which, after they had been considered by paragraphs, were unanimously adopted by the senate. The house concurred in them without amendment and with equal unanimity. These resolutions as they went forth from the legislature find in the public experience "the strongest reason to apprehend from a continuance of the present constitution of the continental government a subversion of public credit," and a danger "to the safety and independence of the states." They repeat the words of the Hartford convention and of Clinton, that the radical source of the public embarrassments had been the want of sufficient power in congress, particularly the power of providing for itself a revenue, which could not be obtained by partial deliberations of the |
Chap. II. 1782. July. |
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states separately. For these reasons the legislature of New York invite congress for the common welfare "to recommend and each state to adopt the measure of assembling a general convention of the states specially authorized to revise and amend the confederation, reserving a right to the respective legislatures to ratify their determinations." [1] These resolutions the governor of New York was requested to transmit to congress and to the executive of every state. The legislature held a conference with Hamilton, as the receiver of revenue, but without permanent results; and it included him "pretty unanimously" in its appointment of delegates to congress for the ensuing year. The resolutions for a federal convention were communicated by Clinton [2] without a word of remark to the congress then in session. There on the fifteenth of August, they were referred to a grand committee; but there is no evidence that that congress proceeded to its election. In his distress for money, Morris solicited a new French loan of twenty millions of livres. The demand was excessive: the king, however, consented to a loan of six millions for the year 1783, and Franklin immediately received one fourth part of it. "You will take care," so Vergennes wrote to Luzerne, "not to leave them any hope that the king can make |
Chap. II. 1782. July. |
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1. MS. copy of the Journals of the Senate and Assembly of New York for the session of July, 1782. The grounds for believing Hamilton to have been the draughtsman of the resolutions are solely the |
circumstances above related, and that the language bears his impress. 2. Clinton to president of congress, 4 Aug., 1782. MS. |
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them further advances or guarantee for them new loans from others;" and he complained that the United States did not give sufficient proofs of their readiness to create the means for meeting their debts. [1] In December all of the French auxiliary forces in the United States, except one regiment which soon followed, embarked at Boston for the West Indies. The affections, the gratitude, the sympathy, the hopes of America followed the French officers as they left her shores. What boundless services they had rendered in the establishment of her independence! What creative ideas they were to carry home! How did they in later wars defy death in all climes, from San Domingo to Moscow and to the Nile, always ready to bleed for their beautiful land, often yielding up their lives for liberty! Rochambeau, who was received with special honor by Louis XVI., through a happy accident escaped the perils of the revolution, and lived to be more than fourscore years of age. Viomenil, his second in command, was mortally wounded while defending his king in the palace of the Tuiteries. De Grasse died before a new war broke out. For more than fifty years, Lafayette, -- in the states general, in convention, in legislative assemblies, at the head of armies, in exile, in cruel and illegal imprisonment, in retirement, in his renewed public life, the emancipator of slaves, the apostle of free labor, the dearest guest of America, -- remained to his latest hour the true and ever hopeful representative of loyalty to the cause of liberty. The Viscount de Noailles, who so gladly assisted to build in America the home of human freedom for comers from all nations, was destined to make the motion which in one night swept from his own country feudal privilege and personal servitude. The young Count Henri de Saint-Simon, [1] who during his four |
Chap. II. 1782.
Dec. |
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America the home of human freedom for comers from all nations, was destined to make the motion which in one night swept from his own country feudal privilege and personal servitude. The young Count Henri de Saint-Simon, [1] who during his four campaigns in America mused on the never ending succession of sorrows for the many, devoted himself to the reform of society, government, and industry. Dumas survived long enough to take part in the revolution of July, 1830. Charles Lameth, in the states general and constituent assembly, proved one of the wisest and ablest of the popular party, truly loving liberty and hating all excesses in its name. Alexander Lameth, acting with the third estate in the states general, proposed the abolition of all privileges, the enfranchisement of every slave, and freedom of press; he shared the captivity of Lafayette in Olmütz, and to the end of his life was a defender of constitutional rights. Custine of Metz, whose brilliant services in the United States had won for him very high promotion, represented in the states general the nobility of Lorraine, and insisted on a declaration of the rights of man. Of the Marquis de Chastellux Washington said: "I could not have bid a brother farewell with more regret; never have I parted with a man to whom my soul clave more sincerely." [2] His philanthropic zeal for "the greatest good of the greatest number" [3] was interrupted only by an early death. |
Chap. II. 1782. |
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1. Lettres de H. Saint-Simon à un Américain, in "L'industrie, ou discussions politiques, morales, etc.," par H. Simon. Paris, 1817. Tome ii., pp. 23-26, 33-35. 2. Sparks, viii. 367. |
3. Cette unique fin de tout gouvernement; le plus grand bonheur du plus grand nombre d'individus. Chastellux, de la Félicité publique, tome ii., chap. iii., p. 70. Edition of 1822. |
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Let it not be forgotten that Sécondat, a grandson [1] of the great Montesquieu, obtained promotion for good service in America. Nor may an American fail to name the young Prince de Broglie, though he arrived too late to take part in any battle. In the midday of life, just before he was wantonly sent to the guillotine, he said to his child, then nine years old, afterward the self-sacrificing minister, [2] who kept faith with the United States at the cost of popularity and place: "My son, they may strive to draw you away from the side of liberty, by saying to you that it took the life of your father; never believe them, and remain true to its noble cause." At the time when the strength which came from the presence of a wealthy and generous ally was departing, the ground was shaking beneath the feet of congress. Pennsylvania, the great central state, in two memorials offered to congress the dilemma, either to satisfy its creditors in that state, or to suffer them to be paid by the state itself out of its contributions to the general revenue. The first was impossible; the second would dissolve the union. Yet it was with extreme difficulty [3] that Rutledge, Madison, and Hamilton, a committee from congress, prevailed upon the assembly of Pennsylvania to desist for the time from appropriating funds raised for the confederation. [4] The system for revenue by duties on importations |
Chap. II. 1782.
Dec. |
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1. Gilpin, 488. 2. Saint-Simon. Les trois époques, in L'industrie, etc., tome ii., p. 291. 3. I owe to him the opportunity of copying his father's journal while in America, in which is a beautiful tribute to Washington. |
4. Ibid., 199, 216, 224, 488; Journals of Congress, 4 Dec., 1782; Minutes of Assembly of Pennsylvania for 1782, pp. 663, 675, 733, where the memorials appear at large. |
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seemed now to await only the assent of Rhode Island. That commonwealth in 1781 gave a wavering answer; [1] and then instructed its delegates in congress to uphold state sovereignty and independence. [2] On the first [3] of November, 1782, its assembly unanimously rejected the measure for three reasons: the impost would bear hardest on the most commercial states, particularly upon Rhode Island; officers unknown to the constitution would be introduced; a revenue for the expenditure of which congress is not to be accountable to the states would render that body independent of its constituents, and would be repugnant to the liberty of the United States. [4] The necessity of the consent of every one of the thirteen states to any amendment of the confederacy gave to Rhode Island a terrible control over the destinies of America. Against its obstinacy the confederation was helpless. The reply to its communication, drafted by Hamilton, declared, first: that the duty would prove a charge not on the importing state, but on the consumer; -- next, that no government can exist without a right of appointing officers for those purposes which proceed from and centre in itself, though the power may not be expressly known to the constitution; -- lastly, the import is a measure of necessity, "and if not within the letter, is within the spirit of the confederation." [5] |
Chap. II. 1782. Nov. 1.
Dec. |
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1. Governor William Greene to Robert Morris, Oct., 1781, in Records of Rhode Island, ix. 487. 2. Records of Rhode Island, ix. 612. 3. Howell to the State of Rhode |
Island. Records of Rhode Island, ix. 682. 4. Bradford, the speaker, to the president of congress, 30 Nov., 1782. Records of Rhode Island, ix. 683, 684. 5. Journals of Congress, iv. 200. |
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The growing discontent of the army, the clamor of public creditors, the enormous deficit in the revenue, were invincible arguments for a plan which promised relief. Congress having no resource except persuasion, three of its members would have borne its letter to Rhode Island but for intelligence from Virginia. [1] In the legislature of that state, Richard Henry Lee, waiting till the business of the session was nearly over and the house very thin, [2] proposed to the assembly to withdraw its assent to the federal impost; and the repeal was carried in the house on the sixth, in the senate on the seventh of December, [3] without a negative. The reasons for the act, as recited in its preamble, were: "The permitting any power other than the general assembly of this commonwealth to levy duties or taxes upon the citizens of this state within the same is injurious to its sovereignty, may prove destructive of the rights and liberty of the people, and, so far as congress may exercise the same, is contravening the spirit of the confederation." [4] Far-sighted members of congress prognosticated the most pernicious effects on the character, interests, and duration of the confederacy. The broad line of party division was clearly drawn. The contest was between the existing league of states and a republic of united states; between "state sovereignty" [5] and a "consolidated union;" [6] between "state |
Chap. II. 1782.
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1. Gilpin, 488, 238; Elliot, 17. 2. Governor B. Harrison to Washington, 31 March, 1783. MS. 3. In the Papers of Old Congress, vol. lxv. MS. Journals of House of Delegates, 55-58. |
4. Hening, xi. 171. 5. William Gordon to A. Lee. Lee's Life of Arthur Lee, ii. 291. 6. Lafayette in Dip. Cor., x. 41. |
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politics and continental politics;" [1] between the fear of "the centripetal" and the fear of "the centrifugal force" in the system. [2] Virginia made itself the battle-ground on which for the next six years the warring opinions were to meet. During all that time Washington and Madison led the striving for a more perfect union; Richard Henry Lee, at present sustained by the legislature of Virginia, was the persistent champion of separatism and the sovereignty of each state. How beneficent was the authority of the union appeared at this time from a shining example. To quell the wild strife which had grown out of the claim of Connecticut to lands within the charter boundary of Pennsylvania, five commissioners appointed by congress opened their court at Trenton. "The case was well argued by learned counsel on both sides," and, after a session of more than six weeks, the court pronounced [3] their unanimous opinion, that the jurisdiction and pre-emption of the lands in controversy did of right belong to the state of Pennsylvania. The judgment was approved by congress; and the parties in the litigation gave the example of submission to this first settlement of a controversy between states by the decree of a court established by the United States. |
Chap. II. 1782.
Dec. |
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1. Hamilton, i. 356. 2. Speech of Wilson, 28 Jan., 1783, in Gilpin, 290; Elliot, 34. The same figure was used by |
Hamilton, 24 March, 1783. Hamilton, i. 384. 3. Journals of Congress, iv. 140, 30 Dec., 1782. |
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