Chapter 28

Philadelphia, July 17th, 1781.

Sir,

The favorable attention shown to me by your Excellency in my private character, has excited those sentiments of esteem and respect, which now impel me to ask your assistance for my country.

The United States of North America, are at the present moment, possessed of more strength in men, arms, and ammunition, than when they first ventured to wage war with Great Britain. The means of subsistence are abundantly equal to our own wants, and will essentially contribute to the relief of our friends. A variety of causes, too numerous to be detailed, in the compass of a letter, have combined to destroy the credit of that paper money, which has enabled us hitherto to support the war. It has therefore become necessary to provide the means for paying the expenses to be incurred hereafter. Our people are not yet inured to taxation, neither has the revenue, which this country is capable of affording, been drawn fairly or fully into use. The derangement of our credit and finances, consequent upon the loss of faith in our paper, rendered it necessary for Congress to create a Superintendent of the Finances of the United States, in order, that he might regulate and settle the present debts, point out new funds, with the best means of collecting them, and superintend the public expenditures, so as to prevent as much as possible all excess or abuse. This arduous task is assigned to me, by a unanimous choice of that honorable body; and nothing could have induced me to undertake it, but my perfect conviction, that it is necessary that some person should undertake the work of reformation and economy. I have engaged in this business with the sole view of saving my country, and therefore think myself entitled to seek support from all who are really friends to her independency, and particularly from those nations, which have become parties in the war.

I have commenced my administration with a proposal to establish a National Bank; the plan of which I take the liberty to enclose. The subscriptions to it are going on, and I expect the very moderate sum therein proposed will soon be completed. When that is done, the directors will be chosen, incorporated, and proceed on their business. As the bank notes are intended to be made use of by government in anticipation of the revenues of this country, you will easily perceive, that the sum proposed is far short of the object, which it is intended to accomplish. My present pursuit, therefore, is to obtain such additional sums as will, when deposited in the bank, not only facilitate the anticipations above mentioned, but induce further subscriptions among our own countrymen. For when they see and feel the use of an institution, which they are yet unacquainted with, they will cheerfully and liberally support it.

It is to your Excellency that I apply for foreign aid. The vicinity of your situation, the frequent intercourse between your port and this, and your ability to comply with what I shall request, all point out the propriety of that application. Your friendly disposition towards these United States, and above all your strong attachment to the interests of your own country, will dispose you to yield me every assistance in your power. The United States have already received very considerable aid from the Court of Madrid. Much more, however is expected,[35] and in time to come these services will be repaid with honor, as they now are acknowledged with gratitude.

Our distresses induced Congress to order certain bills of exchange to be drawn on their Ministers at the Courts of Versailles and Madrid. The former have been all negotiated and paid off by the assistance of that Court. Many of the latter have also been negotiated, and those that have appeared for payment have been discharged. There is every reason to believe, that this would still happen; but we learn that the advance of money in Europe is rendered inconvenient during the war, by the impediments, which it occasions to the usual course of remittances from his Majesty's American territories. We have desisted, therefore, from the further sale of those bills, especially as we have reason to expect, that in consequence of measures adopted here, Mr Jay will obtain from your country a much larger sum than we had before asked for; and that the greater part, if not the whole of it, will be paid to us at your port. However this may be, my present view is to obtain from Havana, as expeditiously as possible, four hundred thousand Mexican dollars, in order to deposit them in the bank, and thereby doubling the capital, give its operations such force as will draw the attention of our own citizens, and induce them to afford it such assistance as will reduce our necessities, and place us in a situation to be less troublesome to our allies and friends in the common cause.

His Excellency the Chevalier de la Luzerne, Minister of France at this place, in consequence of orders from his Court, has authorised me to draw bills of exchange on Paris to a very considerable amount; and being sensible of the propriety of my proceedings, he will give you assurances, that they shall be punctually paid. I transmit a bill for five hundred thousand livres to Robert Smith, now appointed agent for these United States at your port, in order that he may negotiate it, and ship the money back to my address. Should it in any manner promote the interest of your Court he will certainly give your Excellency a preference in the purchase; and I am confident, that if this should not be convenient to you, you will countenance and promote his negotiations with private persons. I have also transmitted to Mr Smith certain bills, drawn some time past by order of Congress, on his Excellency John Jay, to the amount of one hundred and twenty thousand, three hundred and eightyone dollars. I am to request, and have strong hopes, that when Mr Smith shall have deposited these bills with you, your Excellency will advance that sum, so that he may immediately ship it to my address.

We are convinced that these bills, if sent forward, would have been paid by your Court; but as such a negotiation would bring no money into the treasury, I propose that you keep them in your possession until the pleasure of the Court shall be known. I will write very fully to Mr Jay on this subject, and obtain the earliest information. But lest the Court should not choose that these bills be finally accepted by you in discharge of the moneys advanced on them, I have empowered Mr Smith for your perfect security to enter into conditional stipulations to repay your Excellency that money by a delivery of flour to the amount, at such price as you and he may agree for; the payment to commence as soon after the pleasure of the Court shall be known as circumstances will admit.

I hope, Sir, you will find it agreeable to your inclinations, and perfectly consistent with the duties of your station to gratify my desires. They are very moderate considering the necessities of this country, and your ability to minister to its relief. Besides, your Excellency's good sense will readily perceive, that money granted to invigorate the operations of America will weaken and distress the common enemy much more than the same sums expended in Europe, because the enemy must prosecute the war here at more than four times the expense at which it must be carried on there.

Assuring myself of assistance from your Excellency I have ordered one of the continental frigates to proceed with these despatches for Havana. She will take with her some flour, which I have ordered returns for in dollars.

There are two most cogent reasons why this frigate should be despatched instantly from your port with the money. The first is, because we are much in want of it; and the second is, to prevent our enemies from the possibility of receiving any advice of her. We have so contrived things here, that everybody believes she is going to join the French fleet at Rhode Island, and to carry the flour for their use.

On the whole, I most earnestly entreat your Excellency, that if it be at all convenient and consistent with your duty, you will advance the whole of the four hundred thousand dollars in question to Mr Smith, so that the frigate may immediately return.

I am sensible that there are certain duties payable to his Majesty on the exportation of money from your port; but as this which I apply for, is to be expended in carrying on the war against his Majesty's enemies, I hope it may be dispensed with; if not, our Minister at Madrid will be directed to make application to the Court on that subject, so that the duty being charged to us in the first instance, may, if not remitted, be added to the general sum. The same observations will apply to the flour on board this frigate, which is also public property.

I hope it is not necessary to add anything more to induce a full compliance with my requests. But his Excellency the Chevalier de la Luzerne, Minister of France, and Don Francisco Rendon, your own Agent here, will also write you on the subject of this application.

I have the honor to remain, with sentiments of the highest esteem and respect, &c.[36]

ROBERT MORRIS.

FOOTNOTES:

[35] This anticipation was never realized, as the whole amount of the Spanish loan to the United States during the war, was no more than one hundred and fifty thousand dollars.

[36] For several letters from Mr Morris to Mr Jay, on the subject of loans in Spain, and the National Bank, see _John Jay's Correspondence_, Vol. VII. pp. 421-449.

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TO ROBERT SMITH, AGENT FOR THE UNITED STATES IN CUBA.

Philadelphia, July 17th, 1781.

Sir,

Upon a proper representation of your character, situation, and attachments to your country and its cause, the Congress of the United States of America have thought proper to appoint you their Agent at the port, of Havana and Island of Cuba. I take much pleasure in transmitting your commission, which you will find enclosed herein; because my knowledge of you leads me to expert every exertion, which your situation and the circumstances attending it will admit of, in favor of your country.

You will not find any salary annexed to your appointment for this plain reason, that we cannot afford any. It is our present business to reduce salaries heretofore given, and not to create new ones. This appointment, however, may be attended with pecuniary advantages, because a public character may, and no doubt will, point you out to American merchants as the proper person to intrust with their commercial affairs. Continental prizes and other objects may occasionally turn up, which will leave a reasonable commission behind; and you will have the pleasure of serving Congress when necessary, and the citizens and commerce of your country, as often as opportunities for so doing may occur.

I shall now put your talents to the proof. You will find enclosed a letter I have written for his Excellency Governor Navarro (or should he be gone, for his successor) which will unfold to you very fully my intentions. You will find enclosed in it for him, as in this letter for you, the plan of a National Bank, which I have proposed to establish for many valuable purposes. You will observe that the sum proposed as a capital is far short of what it ought to be; but I was afraid of attempting too much at first, and must now endeavor to increase it by other means. If any of your acquaintances in the Havana have a mind to speculate in the American funds, I think they cannot place their money on a more secure or profitable establishment. This Bank will, I believe, exist for ages to come; and I am persuaded the annual dividends will not be less than from eight to ten per cent. They may also have the honor and pleasure of seeing their names enrolled among the first promoters of this useful institution, on which the salvation of our country in some measure depends. Should any of them incline to subscribe, they must send hither money at their own risk; consigning it to whomsoever they please, with power to act for them. I hope you will promote this business, and in order that you may be able to show the profits arising from it, I am to observe, that when once, by punctual payment, the notes of the bank have obtained full credit, the sum in specie, which will be deposited, will be such, that the bank will have the interest of a stock two or three times larger than that which it really possesses. Should M. Miralles, or any of the family be so inclined, I will put any part of their money into the bank, which they may think proper.

By captain James Nicholson, commanding the frigate Trumbull, I send a bill of lading and invoice of five hundred barrels of flour, which is all fresh and good, and a considerable part of it superfine. This flour I have caused to be shipped to your address, on account and risk of the United States of North America. Be pleased to receive it as quickly as may be from the ship, make the most advantageous sale of it, which you can, and remit the net proceeds in Mexican dollars, consigned to my order, for account and at the risk of the United States. I expect you will not charge more than five per cent for transacting the business, that is, two and a half per cent on the sales, and the same on the returns.

I have also enclosed a bill of exchange, drawn by myself on Messrs Le Couteulx & Co. bankers in Paris, to the amount of five hundred thousand livres tournois; this bill is at sixty days' sight, and you may depend it will be punctually paid, for I have the authority of the Court of Versailles to draw it, and every assurance I could wish. You will observe, by my letter to the Governor, that he is to have the refusal of this bill; you will therefore offer it to him in the first instance. When I consider the risk, which must attend sending money from Havana to Cadiz, and the remittances, as well private as public, which are to be made from one place to the other, I cannot but persuade myself, that unless the government and the people are alike blind to their interests, good bills must sell at a very considerable advance. Should the Governor decline taking the bill on Paris, as it is not probable that any one private person would purchase it, you may either remit it to the House of Le Couteulx & Co. in Paris, or to the House of Messrs. J. L. & L. Le Couteulx & Co. at Cadiz, as may be most convenient for your operations. You will then draw on the House to whom you remit the bill, and sell your bills to the same amount. Should you remit to the House in Cadiz, let me know it, that I may write and apprize them of it; but this I shall do provisionally, beforehand, so that they may be prepared for you.

I have also, as you will perceive, written to his Excellency on the subject of certain other bills of exchange, drawn on Mr Jay. You will endeavor to get the money for these, if possible; and in case it is required, you will enter the stipulations there mentioned, as to the shipment of flour. In this last case, get the flour fixed at as high a rate as possible, and let me have due notice, so that I may punctually cause to be fulfilled, whatever contracts you shall, on the part of the public, have entered into.

Should his Excellency be inclined to make those advances of money, which I have so earnestly pressed upon him, you will be able the sooner to despatch the frigate, which I hope will be done without delay. But as there is a risk in placing large sums on board of any one vessel, I am to observe, that if there should be any fast sailing vessels about to leave the Havana at the same time, and if in consideration of convoy, they will take the public money freight free, you will then prudently distribute it among them, and direct Captain Nicholson to give them signals, and to take them under his convoy. But I must caution you, that on no consideration is any private property to be covered as belonging to the public, either to save the duties or for any other purpose. You will, therefore, use all proper vigilance to prevent everything of this sort, should it be attempted. If there are not such vessels as Captain Nicholson and you shall approve of ready to sail, then ship the whole money in the frigate; for the risk of being waylaid by the enemy in consequence of any unnecessary delay, is greater than that of being otherwise intercepted.

It is unnecessary for me to mention to you, that we want money exceedingly. This very measure must convince you of it. Exert yourself therefore to get it, and you will merit much at the hands of your country. Should you not succeed in getting the whole sum I have asked for, get as much as you possibly can; and if the Governor should decline advancing any money on the bills drawn by order of Congress on Mr Jay, perhaps the Intendant may accept your contract for flour, and take these bills in security, or you may possibly borrow on their credit from individuals, to be repaid when I shall send you shipments of flour, which I will cause to be done so soon as I shall hear from you to this effect.

I have forbidden Captain Nicholson to cruise, but should fortune enable him to bring a good prize into Havana, the Continent has one half, and you must send that half to me in dollars. Whatever supplies the frigate is absolutely in need of, you must let her have; but I entreat, that the expenses may be as moderate as possible, and the best way to secure this is to despatch her quickly, for the moment they get clear of the salt water air, and feel, their land tacks on board, every soul of them will try to get his hands into your pockets; but take care.

I have desired Captain Nicholson to consult with and obey you whilst in Havana, and to push off whenever you say the word. I shall send you flour by private vessels, for the sake of getting money back, and write you further, as occasion may require.

I am, Dear Sir, &c.

ROBERT MORRIS.

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TO B. FRANKLIN.

Philadelphia, July 19th, 1781.

Sir,

The foregoing are duplicates of my letters of the several dates there mentioned, by Major Franks, who has sailed for Cadiz. I now enclose to you duplicate copies of the letters and resolutions, referred to in mine of the thirteenth.

I do not write to Colonel Laurens, because I know not whether he is still in France, and because I am confident you will make to him all necessary communications. I pray you, if he is still with you, to present my compliments to him, and inform him of the reasons of my silence. Colonel Laurens's letter of the 9th of April last, from Versailles, has been received, and I am induced to hope, that the ten millions of livres mentioned in it, to be borrowed in Holland, will be, as he says he shall request, advanced from the treasury of France.

He mentions also a promise of the Marquis de Castries to make immediate arrangements for the safe transportation, of the pecuniary and other succors destined hither. It would be well that the money, or as much of it as possible, were in heavy half Johannes. Whether this letter may arrive in time I know not, but if it should, you will, I hope, be able to effect my views.

If the fifteen millions of livres I mentioned in my letter of the 13th, can be obtained, it will be best that they should be retained in France, provided the ten millions be sent to America; for in that case, the exchange may, I believe, be put upon such a footing as to answer every valuable purpose. Of consequence the risk will be saved to America, and France will not suffer by the exportation of so much coin. To this it may be added, that a loan will probably be more easily obtained, if the days of payment of the money by the subscribers to it be somewhat distant, which will answer very well for bills of exchange, though not quite so well for the exportation of money.

I have the honor to be, &c.

ROBERT MORRIS.

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TO B. FRANKLIN.

Philadelphia, July 21st, 1781.

Sir,

I have now to inform you, that the State of Pennsylvania had emitted five hundred thousand pounds in bills of credit, funded in such manner, that there could be no reasonable doubt of their redemption. But the public confidence had been so impaired, that these bills, soon after they came out, rapidly depreciated, notwithstanding the solidity of the funds by which they had been secured. The executive authority of Government, therefore, declined issuing more of them than were then in circulation (being one hundred and thirty thousand pounds), and called together the Legislature. The Assembly, at their late meeting, took measures for the collection of a very considerable tax, sufficient to absorb all the paper then in circulation, and which was receivable in taxes, as also a considerable balance in specie. It is therefore evident, that if the tax has time to operate before any more of the paper be issued, it must necessarily rise in value.

The Assembly did me the honor to commit this sum of five hundred thousand pounds to my care, for the purpose of paying to Congress a balance due on the resolutions of that honorable body, of the 18th of March, 1780, and of procuring the specific supplies which had been called for, the greater part of which had been unpaid. In this situation, it has been my study to effect both these objects, without making any new issues of the paper money. I cannot easily describe to you the good consequences which would follow from the appreciation of it. You will partly conceive them, when I inform you, that it is now at five for one, and that my expectation of specific supplies, or rather of furnishing rations to the amount of them, is very much founded upon the rise of its value.

Finding, however, that the balance of money due to the United States has been already drawn for by them, and that the holders of those drafts are very clamorous for payment, I must put money into the hands of the proper officer immediately. To accomplish this, I have fallen upon an expedient, which, while it answers that purpose, will be productive of another very considerable advantage. To explain which, I must previously inform you, that I have lately refused to draw bills on Messrs Le Couteulx & Co. for any other than specie; so that the paper will no longer answer the purpose of procuring a remittance to Europe. I shall, at the same time, borrow such of it as I can discover to have been hoarded, and by paying it to the holders of the drafts drawn by Congress, throw it again into circulation. I shall then draw bills on you for four hundred thousand livres, payable at six months' sight or more, for which I expect to get four hundred thousand paper dollars; a sum sufficient to satisfy the demand. I shall draw on Messrs Le Couteulx & Co. in your favor, to this amount, payable at sixty days' sight, which will probably leave four months for my operations; but at any rate, it will leave three months, which will be amply sufficient; and, therefore, in three months after I shall have drawn on you, I shall remit you my drafts on Messrs Le Couteulx & Co. If in that period this money can be appreciated, it will be a gain to the United States of the difference, which you will clearly see to be very considerable. By this means, also, I shall so economise the funds placed in my hands, that I can make them productive of the supplies from this State.