Chapter 32

Another equally pleasing, is the arrival of the Count de Grasse in the Chesapeake Bay, on the 30th of August, with twentyeight sail of the line, viz. one of one hundred and ten guns, three of eightyfour guns, nineteen of seventyfour guns, four of sixtyfour guns, and one of fifty guns. The Count de Barras sailed from Rhode Island on the 24th, so that probably he has before this made a junction with the Count de Grasse, although he had not on the 31st of August. A detachment of about seven thousand men is on the way to Virginia, of which about two thousand and five hundred were at the head of the Elk. As many more must have arrived there this evening, and the remainder tomorrow. There are landed from the fleet, three thousand men, and we are told these will receive an addition of one thousand and five hundred marines, besides the army under the command of the Marquis de Lafayette, which was before in Virginia, and consists of about five thousand, including the militia. Lord Cornwallis was entrenched at York, in Virginia, with five thousand men. General Washington takes the command of the southern army in person. The fleet under the Count de Grasse took on its way a packet from Charleston to Great Britain, on board of which was Lord Rawdon. From this combination of circumstances, you will perceive, that we have reason to flatter ourselves with the expectation of pleasing occurrences.

With the greatest respect, &c.

ROBERT MORRIS.

* * * * *

TO THE PRESIDENT OF CONGRESS.

Office of Finance, August 28th, 1781.

Sir,

My circular letter to the Governors, of the 25th of July, a copy whereof was sent to Congress on the 6th of August, contains a solemn assurance, that all the accounts of the several States with the United States should be speedily liquidated, if I could possibly effect it, and that my efforts for that purpose should be unceasing. If after this declaration, I could possibly have forgotten it, the reference made to me, on the 23d instant, of two letters from the State of Massachusetts and a report on them of the 14th instant, would have called for an immediate attention.

I have thought much on this subject and feel very anxious about it. The settlement of those accounts is of the utmost importance, for, until it be completed, the States will persuade themselves into an opinion that their exertions are unequal. Each will believe in the superiority of its own efforts. Each claim the merit of having done more than others; and each continue desirous of relaxing to an equality of the supposed deficiencies of its neighbors. Hence it follows, that every day they become more and more negligent, a dangerous supineness pervades the continent, and recommendations of Congress, capable in the year 1775 of rousing all America to action, now lie neglected.

The settlement of former accounts being considered as a thing forgotten, men, naturally reasoning from them to those which are now present, conclude, that they also will drop into forgetfulness, and consider everything not furnished as so much saved. The Legislatures will not call forth the resources of their respective constituents. The public operations languish. The necessity of purchasing on credit enhances expense. The want of that credit compels to the use of force. That force offends. The country is daily more plunged in debt, and its revenues more deeply anticipated. A situation so dangerous calls for more accurate principles of administration, and these cannot too speedily be adopted. The settlement of accounts is the first step, but it is necessary not only that this settlement be speedy but that it be final; for, if it be not final, the disputes on that subject will have the same baleful influence with those now subsisting. Disunion among the States must follow in the event. Disgust must take place in the moment. The same opprobrious indolence will continue, and in the meantime it is to little purpose, that our country abounds in men and subsistence, if they cannot be called forth for her defence.

All the requisitions of Congress upon the several States contain a provision for future liquidation, when the quotas shall have been ascertained according to the article of confederation. The evil consequences which have followed from this are very evident, and the great advantages which would have resulted from rendering every appointment final and conclusive are equally evident. But those, who, on such ground, build a censure against Congress, ought to consider, that they could not act otherwise, before the confederation was completed.

The changes which have already happened in the affairs of the several States at the different periods of the war are so great, that any apportionment formerly made, however equitable then, would be inequitable now. To determine the quota, therefore, from the present situation, or from any particular moment of the past, must be equally improper. But the quotas must be determined at some period or other. If we suppose it already done, we shall clearly see how many inconveniences would have been avoided, and how many advantages gained. True it is, that let this final adjustment of the quota take place when it will, difficulties will arise by reason of those changes in the circumstances of the several States, which have been already mentioned. But those difficulties will be daily increased, and become at length insurmountable. If a final determination of past quotas were made now, it must be arbitrary in some degree; but if we carry our ideas forward to the end of several years, it must be still more arbitrary. To attempt a settlement of accounts subject to after revision, and after determination, is still worse; for it is liable to every objection, which lies against leaving them unsettled, to every difficulty, which could attend the final settlement, and has the additional evil, that by placing the several precise balances immediately before the eyes of Congress, they could take no step, which would not be charged with partiality. I will dwell no longer on this subject, for I trust the United States in Congress will agree with me in one leading position, that after taking a general view of the past, from the commencement of the war to the present moment, a certain rate or quota should be established for each State of the whole expense now incurred, excepting the public debt of the United States. I will presently assign the reasons for this exception; but that general position which I have advanced is the corner stone; without it nothing can be done, at least such is my conviction. Hence we have the irresistible conclusions,

1st. That while a demand of Congress is the mere request of a loan, instead of a complete appointment of ---- it will not be attended to.

2dly. That while from the unsettled state of public accounts, the individual States are led to suppose that there is a balance in their favor, by superior exertions for which they neither have, nor are like to have any credit, they will relax their efforts.

3dly. That the final settlement of these accounts cannot take place until the quotas be finally adjusted.

4thly. That a settlement of accounts, which is not final will [blank in the manuscript.]

I feel, therefore, a demonstration, that the past circumstances and situations of the several States should be candidly reviewed, that the apportionment of all the past expenses should be made now, and that it should be final. Thus, if the whole expense be stated at one hundred, each State would be declared chargeable with a certain number of parts of that hundred, and thus a standard will be established by which to determine the proportion, let the amount be what it may. I know it is not possible to do strict justice, but it is certain that less injustice will be done in this mode than any other, and that without adopting it nothing effectual can be done.

After the proportion is fixed the principles on which to admit the various charges will next come into consideration. I know it will be difficult to draw such a line as will apply to all cases, or which will be absolutely just even in those to which it does apply. Yet neither of these objections ought to prevent Congress from laying down these general rules, which shall on the whole appear to be most equitable. The various requisitions have been made payable at certain days. The value, therefore, of the demand ought to be estimated at the day of payment fixed by each, and the proper mode of doing this would be by the table of depreciation, formed the 29th day of July, 1780, in pursuance of the Act of Congress of the 28th day of June preceding. It is possible that this table is not perfect; but we must remember, that it has been fixed by the authority of the United States, and acted upon. It ought, therefore, to be adhered to; for there is always less of inconvenience and danger in pursuing an established rule, than in the frequent change of rules; because the former is at the worst only a partial, but the latter is a general evil. Assuming then this table as a standard, the account of the requisitions previous to the 18th of March, 1780, will stand thus; by the resolutions of the 22d of November, 1777, there is payable as follows.

dollars. ninetieths. January 1st, 1778, 1,250,000 dollars, equal to 857,222 20

April 1st, 1778, 1,250,000 dollars, equal to 621,423 55

July 1st, 1778, 1,250,000 412,864 52 4

October 1st, 1778, 1,250,000 268,472 2

By the resolutions of January 2d, 1779, and May 21st, 1779, there is payable by January 1st, 1780, 60,000,000 dollars, equal to 2,042,500

By the resolution of October 6th, 1779, payable by February 1st, 1780, 15,000,000, equal to 451,041 60

March 1st, 1780, 15,000,000, equal to 401,450 30 ---------- ---- 5,054,982 39 4

Thus the whole demand made on the States, from the beginning of the war to the 1st of March, 1780, is but little more than five millions of dollars. And yet this demand, moderate as it is, has not been complied with.

By the various resolutions of Congress on the subject of requisitions it is provided, that interest at six per cent shall be charged on the sums due, and allowed on the sums paid. The sums paid do, in no instances, amount to the value of the demand, but each State has an account against the Union for advances, by supplies furnished of various kinds, and by payments made to militia. As no taxes were laid by the States, the sums they expended were procured partly from the continental treasury and partly by the emission of State currency, which tended to depreciate the continental paper, and impede its circulation. A consideration of the mischiefs arising from this circumstance will much diminish the merit, which is assumed from those advances. If the State paper had not been issued, the same services might have been performed by an equal sum of continental money, and the general torrent of depreciation would then have swept away those expenditures, which now exist as State charges. From hence it might in strictness be inferred, that the continent should not be charged for the amount of State paper advanced, and that amount be estimated at its value when redeemed by the State, especially as Congress have not only urged the States not to emit money, but even to call in what they had already emitted. But this inference would perhaps be rather too strong. No such idea has been formerly advanced by Congress, and therefore the States, not having had due notice, might conceive the determination at this late period to be inequitable.

On the whole, therefore, it may be proper to estimate the sums paid by them according to the rule already noticed, especially as the method of redeeming the old continental money formerly adopted, will, if pursued, work some degree of equality. For it will create a demand for the old money in those States, which, by the amount of their own emissions, have expelled it from themselves and forced it upon their neighbors. There must, however, be a distinction made in the advances of the several States; much of them has been for the pay and support of the militia, and much of that for the private defence of particular States, and of that again a part has frequently been unnecessary. To go, at this late period, into a close investigation of the subject, is impracticable, and perhaps dangerous. Neither would it answer any valuable purpose. Some general rule, therefore, must be adopted, and propriety seems to require, that credit should be given only for those expenditures on militia, which were previously authorised and required by express resolutions of Congress. With respect to all other articles, there is also to be noted a distinction between those which were furnished by the several States previously to the 22d of November, 1777, when the first demand of money was made, and those made subsequently to that period. I would propose that the former, as also the militia expenses not expressly authorised as above mentioned, should be taken together into one account, and the specie value of the whole estimated. That the amount of both, throughout America, should be apportioned by the same standard with the other expenses. And that the several actual expenditures of each State should be settled and liquidated with its proportional part of the whole, and the several balances carried to their respective debits and credits in the general accounts. These balances should bear interest at six per cent to the 18th of March, 1780. Thus, suppose the whole of those expenses should amount to one million of dollars, and that the State A be held to pay nine, and the State B ten parts out of every hundred; the State A would be accountable for ninety thousand dollars, and the State B for one hundred thousand dollars. And if it should appear, that the former had paid one hundred thousand, and the latter only ninety thousand, the former would be credited, and the latter debited ten thousand dollars, with six per cent interest.

I would propose, that the advances made by the several States, subsequent to the 22d of November, and prior to the 18th of March, 1780, excepting those to militia not authorised, should be estimated as aforesaid, and carried to account regularly upon the advances of money made to each from the Continental treasury, and the apportionment of the several demands made by Congress, in like manner with the moneys paid to their order. And that interest, at six per cent, should be charged or credited upon the several balances, until the 18th of March, 1780.

I would further propose, that on this day these balances, and those before mentioned, should be liquidated together, and the final capitals be considered as principal sums, bearing interest at six per cent. Thus, supposing the State A, in one account, to be credited ten thousand dollars, amounting, with interest, to eleven thousand, and debited in the other account five thousand, amounting, with interest, to six; in that case, the final balance, on the 18th of March, would be a credit of five thousand dollars.

On the 18th of March, we come to a new and more enlightened era of public accounts. The appointment formerly mentioned as preliminary to a settlement, will determine the quota due by each State for the two hundred millions of old Continental money, valued at forty for one. These resolutions of the 18th of March, 1780, not having been fully complied with, there appears to be a propriety in the following plan.

1st. To charge the several States with their proportions of it at that rate.

2dly. To fix some future day for the full compliance with the resolution.

3dly. To receive old paper at the rate of forty for one, in discharge of those proportions, until that day; and,

4thly. To charge the balances then unpaid in specie, with a debit and credit of interest at six per cent in the manner before mentioned.

I am sensible, that many persons now condemn the resolutions of the 18th of March, and among these are found some of those who warmly advocated it previously to that period. It is not my business to enter into arguments on the subject. Be those resolutions wise or unwise, they are acts of the sovereign authority, which have been obeyed by some, if not by all, and therefore those who have obeyed ought not to suffer by their obedience. They are acts for the redemption of bills issued by that sovereign, and they have formed the standard of public opinion with respect to those bills. If, therefore, for argument's sake, it were admitted, that the measure was impolitic and unjust, yet, now that it has taken place, there would certainly be both injustice and bad policy in altering it. The respective States have either obeyed it in the whole, or in part, or have totally neglected it. The first have a right to insist upon a compliance with it. The second must have so far accommodated themselves to it, as that interior mischiefs would arise from changing the system. And the last, whatever may be their claim to superior wisdom, will at least acknowledge, that the precedent of disobedience once established, our Union must soon be at an end, and the authority of Congress reduced to a metaphysical idea. Besides, the claim of such States must ultimately rest on the foundation of their own neglect; and as this will always be in their own power, it will be sufficient to rear any argument for any purpose.

By the resolutions of the 18th of March, 1780, ten millions of dollars of new paper were to have been issued, whereof four millions were to be at the order of Congress. By the resolutions of the 26th of August, 1780, three millions more were demanded. By the resolutions of the 4th of November, 1780, besides the specific supplies, an additional demand was made of one million, six hundred and fortytwo thousand, nine hundred and eightyseven and two thirds dollars in money; and by the resolutions of the 16th of March, 1781, six millions more are required. These sums amount in the whole to fourteen millions, six hundred and fortytwo thousand, nine hundred and eightyseven dollars and two thirds. A very small part of this sum has yet been paid; but admitting that there may have been circulated by the United States two millions, six hundred and fortytwo thousand, nine hundred and eightyseven dollars and two thirds, twelve millions would still remain due. If from this we deduct the whole of the new emissions, it would leave a balance of two millions. I propose, therefore, the following plan.

1st. That no more of these new emissions be used on any pretence.

2dly. That as fast as the old Continental money is brought in, the several States be credited for the new emissions to have been issued as specie, agreeably to the several resolutions of Congress upon that subject; and,

3dly. That on all those requisitions last mentioned, the money of the new emissions of any particular State be received as specie.

It is true that these propositions are liable to exception, but they have the great advantage of being consistent with former resolutions of Congress, which should always be attended to as much as possible. I am sure that Congress must be convinced of this, for they are not to learn, that authority is weakened by the frequent change of measures and pursuits; that such changes injure the reputation of supreme power in public opinion, and that opinion is the source and support of the sovereign authority. It is further to be observed, that the motives for complying with the resolutions of the 18th of March, will, if the above plan is adopted, become very strong; for in that case, every forty dollars of old Continental, paid by a State, will produce to the credit side of its account three dollars in specie; because in the first place, the whole proportion of old Continental being changed at forty for one, and receivable until a certain day at the same rate, that payment will so far operate a discharge of one dollar; and in the second place, it will entitle the State to two dollars of the new emission, which not being issued, will also be carried to its credit upon its several requisitions.

It will be in the wisdom of the United States, in Congress assembled, to determine whether after the expiration of the day to be fixed for the above purpose, they will permit the possessors of the old Continental money to bring it in loan at the rate of forty for one. It is true, that this might operate against those States, who have not complied with the resolutions of the 18th of March, 1780, and who have not now the old Continental to comply with it; but it is entirely consistent with the former resolutions of Congress, and the States are themselves blamable for the neglect. Besides, those who now hold the Continental do it either from choice, because of their confidence in Congress, or from necessity, because it has been poured in upon them from those places where it was of inferior value, and this inferiority was owing to the neglect of those States in not passing the laws which Congress recommended. There is, therefore, a degree of justice and firmness in that measure, which will create confidence in the future acts of the United States.

Whatever principles may be established for settling these accounts, and however just they may be, many doubts will arise in the application of them. It must always be remembered, that the States are independent; and that while they are pressed to a compliance with their duty, they must have full evidence, that Congress act fairly. It might therefore be proper, that for the settlement of their accounts, Commissioners should be chosen as follows; one by the State, one by the United States, one by the other two, and the decision of the majority to be final.

Hitherto I have taken no notice of the specific supplies called for from the several States. Many of these have been furnished, and many remain to be provided. I would exclude them entirely from the other public accounts; but as the apportionment so often mentioned, will give a rule to go by, I shall continue to press for the supplies; or where they are not wanted, make such composition with the States in lieu of those which remain to be furnished, as the public service shall render most eligible.

I have observed, that the public debts ought to be excepted from the apportionment of past expenses. The reason is clear. Those debts, or at least a great part of them, may subsist until the relative wealth of the States has entirely changed. Those who are now most rich, may become poor, and those who are poor, may become rich. This is not all; these debts are hitherto unfunded. The creditors have indeed the general promise of government, and some of them have certificates as evidences of that promise; but until measures are taken to provide solid funds for the final payment, the public credit must languish. To an enlightened mind, it is needless to debate on the advantages resulting from national credit. Congress will doubtless pursue the steps necessary for its perfect establishment. And this cannot be otherwise accomplished, than by raising taxes in hard money from sources which must be productive and increasing. Those taxes must be so bound to the public creditors for the debts due to them, that the produce cannot be diverted. These taxes ought to be raised from the same articles, at the same rates, and in the same manner throughout the whole confederation; and consequently, a present apportionment of the public debts will be as unnecessary as it would be unjust.