Chapter 27

_P. S._ Remember, that I put absolute dependence on you for this one thousand barrels of flour, and it must be sent to the army directly.

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TO THE PRESIDENT OF CONGRESS.

Philadelphia, June 4th, 1781.

Sir,

Having been informed by several members of Congress, as also by his Excellency, the Chevalier de la Luzerne, that it was determined to put the management of the moneys lately granted by his Most Christian Majesty under my direction, in order that they might be punctually applied to the purposes for which the grant was made, viz. a vigorous prosecution of the present campaign; I had, in conjunction with the Minister of France, formed some arrangements for drawing part of this money into immediate use; but, on applying to the Secretary of Congress, I do not find that any act has been passed giving me authority over the moneys so granted; consequently, all proceedings must stop until the previous steps are taken by Congress.

I have the honor to be, &c.

ROBERT MORRIS.

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TO B. FRANKLIN.

Philadelphia, June 8th, 1781.

Dear Sir,

In a private letter, which I did myself the honor to write you on the 6th instant, I announced the appointment I have received from the honorable Congress, to the office of Superintendent of the Finances of the United States of North America; and I now beg leave to address you in my official character.

Congress have thought proper to commit to me the disposition and management of the money granted to the United States by his Most Christian Majesty, in aid of our operations for the present campaign, in order that the same may be solely applied to that use; and for this reason, I have found it necessary to keep the whole sum of this grant separate and distinct from any other, so that its application may at any time be clearly seen. Instead, therefore, of drawing upon your Excellency, who have many other bills running upon you, I have judged it expedient to name Messrs Le Couteulx & Co., bankers in Paris, to receive the money from his Majesty's Ministers, so that they may be able to honor my bills with acceptance whenever they appear, and punctually to acquit them as they fall due. I have written to Messrs Le Couteulx, that you would join and support them in any application that may become needful to his Majesty or his Ministers, which I hope you will readily do.

And, on the other hand, your attention to the interest of this country will lead you to inform yourself whether the house of Le Couteulx and Company, are as perfectly safe and rich as they ought to be, to entitle them to this trust. They are represented to me as one of the safest and most prudent banking houses in Europe; and his Excellency, the Minister of France at this place, now writes to have five hundred thousand livres tournois deposited with them, on account of the United States, subject to my drafts or orders. Should their credit not entitle them to this trust, you will please to interfere, and consult with M. Necker what banker to employ in such case, directing those you do employ, to accept and pay my drafts. However, I imagine these gentlemen will be found sufficiently safe.

Should it be more agreeable to M. Necker that any other banker be made use of, give me the name and write me the propriety of such alteration, and I shall acquiesce in such change immediately on the receipt of your letter, for I have no partiality in public business. All I wish is to act with security, and to the best advantage.

If you think it proper to inquire into the terms on which the bankers will receive and pay this money, and settle their commissions on the most reasonable footing, I shall be happy in your doing so. I do not, however, wish to give you any trouble that is not proper and necessary; being, with the highest respect, your Excellency's most obedient, humble servant,

ROBERT MORRIS.

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TO MESSRS LE COUTEULX & CO., BANKERS IN PARIS.

Philadelphia, June 8th, 1781.

Gentlemen,

In a private letter, I have already informed you of my appointment, by the honorable Congress, to the office of Superintendent of the Finances of the United States of North America; and in that character I now address you.

His Most Christian Majesty, having been graciously pleased to grant an aid of money for the purpose of invigorating our operations during the present campaign, I find it convenient to make use of your house as bankers to receive from his Majesty's Ministers such sums as they may have occasion to deposit, in order that you may accept and pay my drafts on you as fast as they shall appear. His Excellency, the Minister Plenipotentiary of France at this place, now writes to his Court, at my request, desiring that five hundred thousand livres tournois may be placed in your hands thirty days after the receipt of his letter, the said sum to be subject to my drafts or orders, and I shall proceed to draw upon you as fast as purchasers offer for the bills; therefore, I beg you will be prepared to honor my bills, drawn as Superintendent of Finance, whenever they offer; for I would not, on any account, that there should be the least demur; and I am confident, that his Most Christian Majesty's Minister of Finance will enable you punctually to make payment as they fall due. I shall communicate this matter to his Excellency, Benjamin Franklin, Minister Plenipotentiary from these States to the Court of Versailles, who will join you in any application that may become necessary in this business; which, however, I expect will be conducted much to your satisfaction. And as it may become important, I hope your attention to it can be relied on, and that you will render the charges as moderate as possible.

I have the honor to be, &c.

ROBERT MORRIS.

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TO M. DE LA LUZERNE, MINISTER OF FRANCE.

Philadelphia, June 8th, 1781.

Sir,

The honorable Congress having thought proper to invest me with the power, disposition, and management of the moneys granted by his Most Christian Majesty to the United States, for the purpose of assisting them to carry on the present campaign with vigor, I have, with your concurrence, taken some arrangements for drawing it into the uses for which the grant has been made; and in conformity with your promise, I pray you to write immediately to his Majesty's Ministers, that they cause the sum of five hundred thousand livres tournois to be deposited with Messrs Le Couteulx & Co., bankers in Paris, for account of the United States of North America, and subject to my drafts or orders as Superintendent of Finance of the said United States.

This deposit I hope may, without inconvenience, be made in thirty days after the receipt of your letter; and I shall proceed to draw on Messrs Le Couteulx & Co. in full confidence thereof, until my bills on them shall amount to the said sum of five hundred thousand livres tournois, when I will give you timely notice, that another deposit may be made for the like purpose, and by this means I hope we shall occasion as little trouble to his Majesty's Minister of Finance as the nature of this transaction will admit of.

With great respect and esteem, &c.

ROBERT MORRIS.

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CIRCULAR RESPECTING THE NATIONAL BANK.

Philadelphia, June 11th, 1781.

Sir,

No doubt you have seen in the public papers, the plan for establishing a National Bank, the necessity of which everybody sees, that allows himself the least time for reflection on the present state of public credit. All the public bodies in America have, more or less, lost the confidence of the world as to money matters, by trying projects and applying expedients to stop a course of depreciation, which original errors had fixed too deeply to admit of any radical cure.

It is vain to think of carrying on war any longer by means of such a depreciating medium, and at the same time an efficient circulation of paper that cannot depreciate, is absolutely necessary to anticipate the revenues of America. A National Bank is not only the most certain, but will prove the most useful and economical mode of doing so. It is, therefore, of the utmost importance that this first essay, confined as it is in point of capital, should be brought into action with the greatest expedition. I am sensible that plans of public utility, however promising and pleasing they may be on their first appearance, soon grow languid, unless it be the particular business of some man, or set of men, to urge them forward; this may be said to be my duty in the present instance. But as I cannot be everywhere, I must apply for support to gentlemen of your character and zeal for the service of their country, requesting in the most earnest manner, that you will urge your friends and fellow citizens to became proprietors of this bank stock.

Every subscriber will find his own interest benefited in proportion to the capital he deposits, and I dare say few will find the other parts of their fortunes to yield them so large or so certain an income as the stock they may have in the bank; and at the same time they will have the satisfaction to be considered forever as the promoters of an institution that has been found beneficial to other countries, and inevitably must be so in the highest degree to this; an institution, that most probably will continue as long as the United States, and that will become as useful to commerce and agriculture in the days of peace, as it must be to government during the war.

The capital proposed is but small, when the extent and riches of the United States are considered; but when put in motion, the benefits flowing from it will be so perceptible, that all difficulty about increasing the capital or securing its credit, will vanish, and we shall only have to appeal to the interest of mankind, which, in most cases, will do more than their patriotism; but there have been, and will continue to be, many instances, where interest is sacrificed to patriotism; and in that belief, I ask you to devote some of your time to this infant plan, which, as it gathers strength, may in the end prove the means of saving the liberties, lives, and property of the virtuous part of America. My good opinion of you is an excuse for giving you this interruption.

I am, Sir, yours, &c.

ROBERT MORRIS.

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TO THE PRESIDENT OF CONGRESS.

Philadelphia, June 21st, 1781.

Sir,

I find that the new payment of the moneys due to the subscribers to the Pennsylvania Bank materially injures and impedes the subscription to the National Bank. At the same time, I am informed, that Congress are unwilling to dispose of the bills lodged as a security, lest the Minister of the United States at Madrid should be incommoded by it. I have the honor to observe to your Excellency, that if these bills shall be submitted to my disposal, I think I can pay the debts, above mentioned, and cause the greater part of the money to be subscribed to the National Bank, thereby rescuing, in some measure, the public credit and forwarding the service, while, at the same time, I shall put the bills in such a train of negotiation, that at least a very considerable time must elapse before they can be presented, and probably they may not be presented at all.

I have the honor to be, &c.

ROBERT MORRIS.[33]

FOOTNOTES:

[33] _July 4th._ I met the Directors of the Pennsylvania Bank, and a number of the subscribers to that bank called, at my desire; and I proposed that they should transfer their subscriptions from the Pennsylvania to the National Bank, and deliver up to me the bills of exchange deposited by Congress with the Directors as security; and I undertook to place the amount of what remained due to them from Congress, in the hands of Messrs Clymer & Nixon, in payment of such transferred subscriptions to the National Bank; which all that were present agreed to. _Diary._

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TO B. FRANKLIN.

Philadelphia, July 13th, 1781.

Sir,

The unanimous appointment to the Superintendency of our Finances, with which Congress have honored me, and my conviction of the necessity that some _one_ person should endeavor to introduce method and economy into the administration of affairs, have induced me, though with reluctance, to accept that office. Mr Jay will receive by this conveyance, and forward to you, copies of those resolutions and letters which may be necessary to explain my appointment and powers.

I wish I could as readily effect, as I most ardently desire, the accomplishment of all proper arrangements. Thoroughly convinced that no country is truly independent, until, with her own credit and resources, she is able to defend herself and correct her enemies, it shall be my constant endeavor to establish our credit and draw out our resources in such manner, that we may be little burdensome, and essentially useful to our friends.

I am sure I need not mention to _you_ the importance of collecting a revenue with ease, and expending it with economy. As little need I detail the time, the authority, the ability, the favorable circumstances, that must combine for these purposes. But I think that I may assert, that the situation of a country just emerging from dependence and struggling for existence, is peculiarly unfavorable; and I may add, that this country, by relying too much on paper, is in a condition of peculiar disorder and debility. To rescue and restore her, is an object equal to my warmest wishes, though probably beyond the stretch of my abilities.

Success will greatly depend on the pecuniary aid we may obtain from abroad; because money is necessary to introduce economy, while, at the same time, economy is necessary to obtain money; besides that a greater plenty of solid circulating medium is required to support those operations, which must give stability to our credit, fruitfulness to our revenue, and activity to our operations. Among those things, which, after the experience and example of other ages and nations, I have been induced to adopt, is that of a national bank, the plan of which I enclose. I mean to render this a principal pillar of American credit, so as to obtain the money of individuals for the benefit of the Union, and thereby bind those individuals more strongly to the general cause by the ties of private interest. To the efficacy of this plan, as well as to the establishment of a Mint, which would also be of use, a considerable sum of money is necessary, and, indeed, it is indispensably so for many other purposes.

Be not alarmed, Sir, from what I have said, with the apprehension that I am about to direct solicitations to the Court of Versailles; which, after the repeated favors they have conferred, must be peculiarly disagreeable. On the contrary, as I am convinced that the moneys of France will all be usefully employed in the vigorous prosecution of the war, by her own fleets and armies, I lament every sum which is diverted from them. Our necessities have indeed called for her aid, and perhaps they may continue to do so. Those calls have hitherto been favorably attended to, and the pressure of our necessities has been generously alleviated; nor do I at all doubt that future exigencies will excite the same dispositions in our favor, and that those dispositions will be followed with correspondent effects. But I again repeat my wish, at once to render America independent of, and useful to her friends.

With these views, I have directed Mr Jay to ask a considerable sum from the Court of Madrid, to be advanced us at the Havana, and brought thence by us, if it cannot conveniently be landed here from Spanish men-of-war.[34] I say _a considerable sum_, because, as I have declared to him, I do not wish to labor under the weight of obligation without deriving from it any real benefit; and because I consider the advance of small sums rather as a temporary palliation than a radical remedy. Our disorders are such, that the former can be of no use, and it would be better to desist in a desultory defence, than to put on the delusive appearances of a vigor we do not feel; for this lulls the people into a dangerous security, and softens those hopes of the enemy, which give duration and extent to the war. It is the disorder of our finances, which have prevented us from a powerful co-operation with our allies, and which have enabled the enemy to linger on our coasts with the dregs of a force once formidable; and it is from this cause that they have been permitted to extend the theatre, and multiply the victims of their ambition.

America alone will not derive benefit from the advances which Spain may make to her. All the associates in the war will feel the _consequential_ advantages. The expense of the American war now hangs a heavy weight about the neck of Britain, and enfeebles her on that element, which she called her own. An increase of that expense, or the loss of her posts here, must necessarily follow from additional efforts on our part, and either of these must be a consequential benefit to those who are opposed to her. France will derive a small _immediate_ benefit from it, as she will thereby get more money here for her bills of exchange, than she can at present procure. But it is not so much from any advantage, which may be expected to that kingdom, or from any motives of _interest_, as from the generosity and magnanimity of the Prince, that we hope for support. I will not doubt a moment, that at your instance, his Majesty will make pressing representations in support of Mr Jay's application, and I hope that the authority of so great a Sovereign, and the arguments of his able Ministry, will shed auspicious influence on our negotiations at Madrid.

From the best returns I have been able to collect, and which are in some measure imperfect, from the confusions and disasters of the Southern States, I find that there are about seven millions two hundred thousand dollars due on certificates, which bear an interest of six per cent, payable in France, at the rate of five livres for every dollar. Many causes have conspired to depreciate the certificates, notwithstanding the interest is so well secured, and has been punctually paid. This depreciation is so great, that they are daily offered for sale at a very considerable discount, which is attended with two pernicious consequences; one, that a considerable expense is unnecessarily incurred, and the other, that the public credit is unnecessarily impaired. If I had the means, therefore, I would remove this evil by purchasing in the certificates; and to procure the means, I am to pray that you would state this matter fully to the Ministers of his Most Christian Majesty. The interest being guarantied by the Court of France, they now pay for this purpose, two millions one hundred and sixty thousand livres annually; a sum, which in less than ten years, would pay a debt of fifteen millions of livres at five per cent interest. With fifteen millions of livres, however, prudently managed, the whole of these certificates might be paid. I am sure it is unnecessary to dwell on the advantages, which would result from making such a loan for this purpose, and, I trust, that if this matter is stated to M. Necker, that enlightened Minister will co-operate in the plan, to the utmost of his ability. I again repeat, that I do not wish to lay any burdens on France; but this proposal is calculated to relieve us both; and, in any case, the expense to France will be the same. Should it be adopted, I must request the earliest notice, that my operations may commence; and, in any case, I hope that secrecy will be observed, for the most evident reasons.

I am sorry to inform you, that we have as yet no satisfactory news of the ship Lafayette; but, on the contrary, her long delay occasions the most alarming apprehensions. If, as but too probable, that ship is lost, you will more easily conceive than I can describe what will be the situation of our troops next winter.

I could wish, as soon as possible, to have a state of all the public accounts transmitted, to the end that moneys due to the United States may be paid, and measures taken to provide for such sums as they stand indebted in to others. Your Excellency will, I dare say, send them as soon as may be convenient; and I hope the public affairs will hereafter be conducted in such a manner as to give you much less of that unnecessary trouble, which you have hitherto experienced, and which could not but have harassed you exceedingly, and, perhaps, taken up time, which would otherwise have been devoted to more important objects.

I shall, probably, have frequent occasion to address you, and shall always be happy to hear from you; but the mischiefs, which arise from having letters intercepted, are great and alarming. I have, therefore, enclosed you a cypher, and in the duplicate of my letters, I shall enclose another. If both arrive, you will use one, and, in case of your absence, leave the other with such person as may supply your place. Let me know, however, which cypher you use.

The bearer of this letter, Major Franks, formerly an Aid-de-camp to General Arnold, and honorably acquitted of all connexion with him, after a full and impartial inquiry, will be able to give you our public news more particularly than I could relate them. He sails hence for Cadiz, and on his arrival will proceed to Madrid, where having delivered my letters to Mr Jay, he will take his orders for you. He will then wait your orders, and I hope, will soon after meet a safe opportunity of coming to America.

With the most perfect esteem and regard, I have the honor to be, &c.

ROBERT MORRIS.

FOOTNOTES:

[34] See a letter from Mr Morris, in _John Jay's Correspondence_, Vol. VII. p. 421.

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TO B. FRANKLIN.

Philadelphia, July 14th, 1781.

Dear Sir,

If Major Franks had departed yesterday, as was expected, he would have left the enclosed cypher behind. It was supposed to have been with the plans of the intended bank, but was left out by accident. I wish you would, when leisure and opportunity will permit, converse with some of the eminent bankers in Paris on this plan, and ask whether a correspondence and connexion with the directors will be agreeable, and whether they would establish a credit for this bank, and to what amount, to be replaced again by remittances in other bills within such time as they may limit. Or, if they decline giving such credit, then the terms on which they will receive remittances and pay drafts of the bank.

An American bank must deal largely in bills of exchange. It will thereby rule the price of bills so as to keep it pretty steady, by passing most of the bills drawn on the continent through their channel, so as to leave a certain moderate profit. And the use of a credit in Europe will be, to have paid for their honor such bills as may be protested on account of the drawers; by which means the bank will secure the damages of twenty per cent, and pay only interest for advance and commission for negotiating. Occasion may also offer, when the bank, by drawing on Europe, shall get a high price for bills, and in a few months replace them much cheaper.

I do not wish to give you trouble on this occasion; but, if opportunities offer, you can mention the subject, and if any of the bankers will write me proposals, I will lay them before the directors. You will tell them, that although the very moderate sum of four hundred thousand dollars is proposed as the first capital, I intend to increase it gradually to ten times that sum. The only difficulty is to get it into action now that people have but little money and less confidence. I should be glad to see your name in the list of subscribers to an institution, that I believe will be permanent.

I ever am, Dear Sir, yours, &c.

ROBERT MORRIS.

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TO THE GOVERNOR OF HAVANA.