Part 1061

From May, 1781, until April, 1785, the burden of the financial management of the revolutionary struggle rested upon Robert Morris, of Philadelphia, who held the office which Congress had created and entitled "the Superintendent of Finances." Morris's detractors argued that he deserved no great credit for his management of the finances as compared with his predecessors, because in his time everything turned in his favour. It is true that if things had remained as before, he could not have restored the finances; for the miracle of carrying on a war without means has never yet been performed by anybody. The events which gave him an opportunity to restore the finances, by intelligent and energetic action, were as follows. The first was the collapse of the paper currency and its absolute removal from circulation, in May, 1781, just before he took office. As soon as it was out of the way, specie came in. He was able to throw aside all the trammels in which the treasury operations had been entangled by the paper system. It is true that he did not succeed in his attempt to relieve himself entirely from these anticipations, which, inasmuch as they were anticipations, would have used up the revenues of his time; but it was a great gain for him to be able to conduct his current operations at least in terms of specie. The second thing in his favour was the great help granted by France in 1781, and especially the importation of a part of this in specie. This enabled him to found the bank, from which he borrowed six times what he put into it. The chief use of the bank to him, however, was to discount the notes which he took for bills of exchange. Then also it was possible for him to reduce the expenses in a way which his predecessors had not had the courage or the opportunity to accomplish, because in their time the abuses of the old method had not gone far enough to force acquiescence in the reforms. In Morris's time, and chiefly, as it appears, by his exertions and merit, the expenditures were greatly reduced for an army of a given size. When the war came to an end, it was possible for him to reduce the entire establishment to a very low scale. Next we notice that the efforts to introduce taxation bore fruit which, although it was trivial in one point of view, was large enough to be very important to him in his desperate circumstances. Finally, when his need was the greatest, and these advantages and opportunities proved inadequate, the rise of American credit made the loan in Holland possible, and this carried him through to the result. … By the Report of 1790 the total amount of expenditures and advances at the treasury of the United States, during the war, in specie value, was estimated as follows; 1775 and 1776, $20,064,666. 1777, $24,986,646. 1778, $24,289,438. 1779, $10,794,620. 1780, $3,000,000. 1781, $1,942,465. 1782, $3,632,745. 1783, $3,226,583. 1784, $548,525 to November 1. Total $92,485,693.

This table shows how the country lapsed into dependence on France after the alliance was formed. The round number opposite 1780 is very eloquent. It means anarchy and guesswork. … According to the best records we possess, the cost of the war to the United States, reduced to specie value year by year at the official scale of depreciation, which, being always below the truth, makes these figures too high, was, as above stated, $92,485,693, at the treasury. There were also certificates of indebtedness out for $16,708,009. There had been expended in Europe, which never went through the treasury, $5,000,000. The States were estimated to have expended $21,000,000. Total, $135,000,000. Jefferson calculated it at $140,000,000, by adding the debts incurred and the continental currency. The debt contracted by England during the war was £115,000,000, for which £91,000,000 were realized. The Comptroller of the Treasury of France said that it cost 60,000,000 livres a year to support the army in America. Vergennes told Lafayette, in November, 1782, that France had expended 250,000,000 livres in the war. There is an often-repeated statement that the war cost France 1,200,000,000 livres, or 1,280,000,000, or 1,500,000,000. Arthur Young put it at £50,000,000, sterling. Probably if 60,000,000 a year for five years, or $60,000,000, was taken as the amount directly expended for and in America by France, it would be as fair a computation as could be made of her contribution to American independence. She had large expenditures elsewhere in the prosecution of her war against Great Britain, and her incidental losses of ships, etc., were great. When England abandoned the effort to subdue the colonies, she was in a far better position for continuing it than either of her adversaries. George III. was by no means stupid in his comments and suggestions about the war. No Englishman of the period said things which now seem wiser in the retrospect. As early as September, 1780, he said: 'America is distressed to the greatest degree. The finances of France, as well as Spain, are in no good situation: This war, like the last, will prove one of credit.' This opinion was fully justified in 1782. French finances were then hastening toward bankruptcy, so that France could not continue the war expenses or the loans and subsidies to America. English credit was high. October 2, 1782, Vergennes wrote to Montmorin, that the English fleet was stronger than at the beginning of the war, while the fleets of France and Spain were weaker; that French finances were greatly weakened, while English credit was high; that England had recovered influence in Russia, and through Russia on Prussia and Austria. He wanted peace and reconciliation with England in order to act with her in eastern Europe. If England had chosen to persevere in the war, the matter of credit would have been the most important element in her chances of success, aside from the natural difficulties of the enterprise."

_W. G. Sumner, The Financier and the Finances of the American Revolution, chapter 23 (volume 2)._

UNITED STATES OF AMERICA: A. D. 1784-1788. Disputes with England over the execution of the Treaty of Peace. Difficulties with Spain. The question of the Navigation of the Mississippi. Eastern jealousy and Western excitement.

{3294}

"Serious disputes soon arose, concerning the execution of the treaty of peace; and each nation complained of infractions by the other. On the part of the United States, it was alleged that negroes had been carried away, contrary to the treaty; and as early as May, 1783, congress instructed their ministers for negotiating peace to remonstrate to the British court against this conduct of their commander in America, and to take measures to obtain reparation. The United States, also, complained that the western posts had not been sur·rendered, agreeably to treaty stipulations. Great Britain, on her part, alleged that legal impediments had been interposed to prevent the collection of British debts in America; and that the 5th and 6th articles, relating to the property of the loyalists, had not been complied with. In June, 1784, the legislature of Virginia not only declared that there had been an infraction on the part of Great Britain of the 7th article, in detaining the slaves and other property of the citizens of the United States, but instructed their delegates in congress to request that a remonstrance be presented to the British court against such infraction and to require reparation. They also directed them to inform congress that the state of Virginia conceived a just regard to the national honor and interest obliged her assembly to withhold their co-operation in the complete fulfilment of the treaty until the success of such remonstrance was known, or they should have further directions from congress. They at the same time declared, that as soon as reparation for such infraction should be made, or congress should judge it indispensably necessary, such acts as inhibited the recovery of British debts should be repealed, and payment made, in such time and manner as should consist with the exhausted situation of the state. In consequence of these difficulties and disputes, congress, early in the year 1785, determined to send a minister plenipotentiary to Great Britain; and on the 24th of February John Adams was appointed to represent the United States at the court of London. He was instructed 'in a respectful but firm manner to insist that the United States be put, without further delay, into possession of all the posts and territories within their limits which are now held by British garrisons.' … Mr. Jefferson was soon after appointed to represent the United States at the court of Versailles, in the room of Dr. Franklin, who had leave to return home, after an absence of nine years. Mr. Livingston having resigned the office of secretary of foreign affairs, Mr. Jay, in March, 1784, and before his return from Europe, was appointed in his place. Mr. Adams repaired to the British court, and was received as the first minister from the United States since their independence was acknowledged. … In December, 1785, Mr. Adams presented a memorial to the British secretary of state, in which, after stating the detention of the western posts contrary to the stipulations in the treaty of peace, he in the name and in behalf of the United States required 'that all his majesty's armies and garrisons be forthwith withdrawn from the said United States, from all and every of the posts and fortresses before enumerated, and from every port, place and harbor, within the territory of the said United States, according to the true intention of the treaties.' To this memorial the British secretary, lord Carmarthen, returned an answer, on the 28th of February, 1786, in which he acknowledges the detention of the posts, but alleges a breach of the 4th article of the treaty of peace on the part of the United States, by interposing impediments to the recovery of British debts in America. … This answer was accompanied with a statement of the various instances in which the 4th article had been violated by acts of the states. The complaints of Great Britain also extended to breaches of the 5th and 6th articles of the treaty, relating to the recovery of certain property and to confiscations. The answer of the British secretary was submitted to congress; and in order to remove the difficulties complained of, that body, in March, 1787, unanimously declared that all the acts, or parts of acts, existing in any of the states, repugnant to the treaty of peace, ought to be repealed; and they recommended to the states to make such repeal by a general law. … A circular letter to the states accompanied these declarations, in which congress say, 'we have deliberately and dispassionately examined and considered the several facts and matters urged by Great Britain, as infractions of the treaty of peace, on the part of America, and we regret that, in some of the states, too little attention has been paid to the public faith pledged by that treaty.' In consequence of this letter, the states of New Hampshire, Massachusetts, Rhode Island, Connecticut, Delaware, Maryland, Virginia, and North Carolina, passed acts complying with the recommendations contained in it. The operation of the act of Virginia, however, which repealed all acts preventing the recovery of debts due to British subjects, was suspended until the governor of that state should issue a proclamation, giving notice that Great Britain had delivered up the western posts, and was also taking measures for the further fulfilment of the treaty of peace by delivering up the negroes belonging to the citizens of that state, carried away contrary to the 7th article of the treaty, or by making compensation for the same. … The British court was not yet disposed to enter into any commercial treaty with the United States. The ministers were, no doubt, satisfied that the advantages they enjoyed under their own regulations were greater than could be obtained by any treaty they could make with America. And this was, probably, one of the principal reasons of their refusal to enter into any such treaty. As the British court declined sending a minister to the United States, Mr. Adams, in October, 1787, at his request, had leave to return home. … The United States had also at this period to encounter difficulties with Spain as well as Great Britain. The two Floridas having been ceded to his catholic majesty, serious disputes soon arose, not only on the old subject of the navigation of the Mississippi, but with respect to the boundaries of Louisiana and the ceded territory. The Spanish court still persisted in its determination to exclude the Americans from the navigation of the Mississippi. … In December, 1784, congress declared it necessary to send a minister to Spain, for the purpose of adjusting the interfering claims of the two nations respecting the navigation of the Mississippi, and other matters highly interesting to the peace and good understanding which ought to subsist between them. This was prevented by the appointment of Don Diego Gardoqui, a minister from Spain, who arrived in the United States and was acknowledged by congress in the summer of 1785. {3295} Soon after his arrival, Mr. Jay, then secretary of foreign affairs, was appointed to treat with the Spanish minister on the part of the United States. … As Mr. Jay, by his instructions, was not to conclude a treaty until the same was communicated to congress and approved by them, and was also specially directed to obtain a stipulation acknowledging the right of the United States to their territorial claims and the free navigation of the Mississippi, as established in their treaty with Great Britain, he, on the 3d of August, 1786, submitted to congress the … plan of a commercial treaty, and stated the difficulties in obtaining the stipulation required. … 'Circumstanced as we are [said Mr. Jay] I think it would be expedient to agree that the treaty should be limited to twenty five or thirty years, and that one of the articles should stipulate that the United States would forbear to use the navigation of that river below their territories to the ocean. Thus the duration of the treaty and of the forbearance in question should be limited to the same period.' … Among other reasons, Mr. Jay stated that the navigation of the Mississippi was not at that time very important, and would not probably become so in less than twenty five or thirty years, and that a forbearance to use it, while it was not wanted, was no great sacrifice—that Spain then excluded the people of the United States from that navigation; and that it could only be acquired by war, for which the United States were not then prepared; and that in case of war France would no doubt join Spain. Congress were much divided on this interesting subject. The seven states at the north, including Pennsylvania, were disposed, in case a treaty could not otherwise be made, to forbear the use of the navigation of the Mississippi below the southern boundary of the United States, for a limited time, and a resolution was submitted to congress repealing Mr. Jay's instructions of the 25th of August, 1785, and which was carried, seven states against five. … This, however, was to be on the express condition that a stipulation of forbearance should not be construed to extinguish the right of the United States, independent of such stipulation, to use and navigate said river from its source to the ocean; and that such stipulation was not to be made unless it should be agreed in the same treaty that the navigation and use of the said river above such intersection to its source should be common to both nations—and Mr. Jay was to make no treaty unless the territorial limits of the United States were acknowledged and secured according to the terms agreed between the United States and Great Britain. … As by the confederation the assent of nine states was necessary in making a treaty the same number was considered requisite in giving specific instructions in relation to it; … and it was questioned whether the previous instructions given to Mr. Jay could be rescinded without the assent of nine states. These proceedings in congress, though with closed doors, soon became partly known, and excited great alarm in Virginia and in the western settlements. … While these negociations were pending, the fertile country at the west was settling with a rapidity beyond the most sanguine calculations; and it is not surprising that the news of an actual or intended abandonment of the navigation of the Mississippi, the only outlet for their productions, should have excited great alarm among its inhabitants. They were much exasperated by the seizure and confiscation of American property by the Spaniards, on its way down the river, which took place about the same time. The proposition made in congress was magnified into an actual treaty, and called from the western people most bitter complaints and reproaches. … To quiet the apprehensions of the western inhabitants, the delegates from North Carolina, in September, 1788, submitted to congress a resolution declaring that 'whereas many citizens of the United States, who possess lands on the western waters, have expressed much uneasiness from a report that congress are disposed to treat with Spain for the surrender of their claim to the navigation of the river Mississippi; in order therefore to quiet the minds of our fellow citizens by removing such ill founded apprehensions, resolved, that the United States have a clear, absolute, and unalienable claim to the free navigation of the river Mississippi, which claim is not only supported by the express stipulations of treaties, but by the great law of nature.' The secretary of foreign affairs, to whom this resolution was referred, reported, that as the rumor mentioned in the resolution was not warranted by the negociations between the United States and Spain, the members be permitted to contradict it, in the most explicit terms. Mr. Jay also stated, there could be no objection to declaring the right of the United States to the navigation of the river clear and absolute—that this had always been his opinion; and that the only question had been whether a modification of that right for equivalent advantages was advisable; and though he formerly thought such a modification might be proper, yet that circumstances and discontents had since interposed to render it questionable. He also advised that further negociations with Spain be transferred to the new general government. On this report, congress, on the 16th of September, 1788, in order to remove the apprehensions of the western settlers, declared that the members be permitted to contradict the report referred to by the delegates from North Carolina; and at the same time resolved 'that the free navigation of the river Mississippi is a clear and essential right of the United States, and that the same ought to be considered and supported as such.' All further negociations with Spain were also referred to the new federal government."

_T. Pitkin, Political and Civil History of the United States, chapter 17 (volume 2)._