Part 17

I must entreat of you, Sir, that all the stores may be forwarded from Brest as soon as possible, and I shall hope that the Court will take measures to afford you the necessary transports, so that they may come under proper convoy. As to the cargo of the ship Marquis de Lafayette, it is true, that some of it has arrived here from neutral ports, but it is equally true that money was necessary to purchase it, and that money is quite as scarce as any other article. If, however, all the cargo of that ship was like some which I procured, the taking of her has been no great loss, for the clothing was too small to go on men's backs. The goods from Holland we still most anxiously expect. Would to God that they never had been purchased. Mr Gillon, however, is at length arrived, and I hope we shall have those matters, in which he was concerned, brought to some kind of settlement.

I have the honor to be, &c.

ROBERT MORRIS.

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TO ALEXANDER HAMILTON.

Office of Finance, July 2d, 1782.

Sir,

I yesterday received your letter of the 17th of June, and am very happy to find that you have determined to accept the office I had the pleasure of offering to you.[8] I enclose the commission, instructions, &c. together with a bond for performance of the duties, which I must request you to fill up and execute, with some sufficient surety, and transmit.

[8] Receiver of the Continental taxes for the State of New York.

The complaint you make of the system of taxation in New York, might, I believe, very justly be extended; for though it may be more defective in some than in others, it is, I fear, very far from perfect in any. I had already heard, that no part of the taxes were appropriated to Continental purposes, but I expect that the Legislature will, when they meet, make such appropriation, as well as lay new, and I hope productive taxes, for the purposes of paying what may remain of their quota.

It gives me a singular pleasure to find, that you have yourself pointed out one of the principal objects of your appointment. You will find that it is specified in the enclosure of the 15th of April. I do not conceive that any interview will be necessary, though I shall always be happy to see you, when your leisure and convenience will admit. In the meantime, I must request you to exert your talents in forwarding with your Legislature the views of Congress. Your former situation in the army, the present situation of that very army, your connexions in the State, your perfect knowledge of men and measures, and the abilities which Heaven has blest you with, will give you a fine opportunity to forward the public service, by convincing all who have claims on the justice of Congress, that those claims exist only by that hard necessity, which arises from the negligence of the States. When to this you shall superadd the conviction, that what remains of the war, being only a war of finance, solid arrangements of finance must necessarily terminate favorably, not only to our hopes but even to our wishes, then, Sir, the government will be disposed to lay, and the people to bear these burdens, which are necessary, and then the utility of your office and of the officer will be as manifest to others as at present to me.

I am, with respect, &c.

ROBERT MORRIS.

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TO M. JOLIE DE FLEURY.

Office of Finance, July 6th, 1782.

Sir,

I have received the letter which you did me the honor to write in February last. It gives me very particular pleasure to find that my operations are approved by a gentleman whose talents and situation conspire together in giving the means and the power of forming a proper judgment. I receive, Sir, with so much greater satisfaction your promise to concur in promoting the success of my measures, as I persuade myself that a true Frenchman must deeply interest himself in the present American Revolution.

The indissoluble bands which unite our sovereigns, have connected the success of that revolution with the glory of the King, and the interests of his subjects. Being therefore alike prompted by that animated zeal and attachment to your prince which forms a beautiful trait in the French character, and by your own benevolence, you cannot but pursue the road which leads to the establishment of our independence. It is by these motives, Sir, that you are assured of my confidence. I shall take the liberty to lay before you my arrangements, as soon as they can be completed, in order that you may possess the views of my administration.

I have the honor to be, with perfect esteem and respect, ROBERT MORRIS.

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TO MR GRAND.

Office of Finance, July 5th, 1782.

Sir,

I have received your several favors of the 2d of February and 4th of March last, together with the accounts accompanying the latter. I am sorry to find the funds we have in Europe are so deeply anticipated. This circumstance introduces a degree of hesitancy and doubtfulness into my measures, which is alike disagreeable and pernicious. I hope, therefore, that all the old accounts will soon be wound up and finally closed; and then in future I shall possess a full view of what is in my power. With respect to any arrangements with the Court of Spain, I incline to think that they will be necessary, for I persuade myself that money negotiations through Havana might be performed to equal, if not greater advantage, by private channels.

I am, Sir, with respect and esteem, &c.

ROBERT MORRIS.

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TO THE GOVERNOR OF MARYLAND.

Office of Finance, July 9th, 1782.

Sir,

I have not been until this moment favored with your letter in Council of the 5th. I pray that you will accept and present to the Council my sincere thanks for your attention to the public service. Your offer to pay for the transportation of clothing to the southern army, gives me an additional reason to believe that a sense of the public distresses will always operate a desire to relieve them. To go into detail of those distresses, is at all times dangerous, and indeed it would be impracticable, for they are so numerous that all my time would be insufficient for the purpose. The publications made by the receivers in the several States, will however carry a conviction of them, to every man of sense end reflection.

It is my constant endeavor to administer the little aid which is afforded to the best advantage; and I am in hourly apprehensions from the dilatoriness which has been shown by almost all the States, in granting the supplies required by Congress. No proposition can be clearer than this, that the salvation of our country must depend upon such grants; and it will be a matter of wonder for future generations, how a people who once showed such enthusiastic ardor, should at the moment when it is within their grasp, put everything to the hazard, by omitting to make the little exertion that remains. Yet such is the fact.

I shall rely on receiving considerable supplies of money from Maryland in the course of the present month; and shall, in consequence, make engagements for transporting the clothing and stores to the southern army, and for other services equally pressing and essential. That you will be obliged to sell the property of the State, at less than you suppose it to be worth, I had long foreseen, and am thoroughly convinced of. That is one among the very many objections against raising specific taxes; but you may depend that the longer they are kept on hand, the greater will be the loss. The people must be undeceived, and the sales of such property will have a tendency to produce that effect. They will at length, I hope, open their eyes, and be convinced of a truth which all history and experience bear witness to, namely, that the true art of governing is to simplify the operations of government.

Permit me, Sir, before I close this letter, to press upon your consideration the state of public affairs. Every operation is, at present, supported by credit, and that credit has long hung but by a thread. Unless the States give speedy and effectual aid, that thread must break. It would long since have broken, and scenes of military pillage, waste, murmuring, extravagance and confusion would again have been opened, if I had not for some time declined all expenditure, except what was necessary merely to feed the army. If, under such circumstances, the enemy has made offensive operations, you may easily guess the consequences. Your State will, I hope, contribute amply to provide against them. Should anything happen, the fault will not lie at the door of Congress or of their servants.

With perfect esteem and respect, &c.

ROBERT MORRIS.

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TO JAMES LOVELL OF MASSACHUSETTS.

Office of Finance, July 10th, 1782.

Sir,

I have received your favors of the 24th and 27th of June. The conduct of the States is very alarming, and has given me much serious apprehension. A want of knowledge or of zeal among those who compose the several Legislatures, produces misfortunes which their constituents must feel, although they do not themselves appear to be aware of them. Had permanent funds been established on which to borrow money, in all human probability our credit would have been such, as that a considerable part of every year's expenditure might have been obtained in that way. The advantages of such a measure are self evident. If we suppose the states at war possessed of equal force and resources, the one of them enjoying credit, which the other wants, the efforts would be so unequal, that the nation in credit might compel her antagonist to ask peace in a very short period.

In America we have disdained to profit by experience, and therefore are reduced to the sad necessity of bearing the whole burden of the war at the present moment, when least able to bear it. Still, however, I had hoped, by making anticipations on the taxes, to lay a foundation for more extensive credit; and at length to recover that useful confidence, which has been too carelessly squandered away. But in fixing the first stone of this useful edifice, I am disappointed by finding that after taxes are laid, and in the moment when I expect to feel the benefits, the collection is postponed unto a future day. I shall not dwell longer on this disagreeable topic. I deeply feel and sincerely lament the consequences, which you may rely on it are far more pernicious even in the article of expense than any person is aware of; besides other things which are of equal, and may perhaps, be of greater importance.

I find by examining the sums I have drawn on you for, that you can find no great difficulty in making the payments by sales of the bills. I would advise you, immediately on the receipt of this, to employ a good broker to sell all the bills you have, at a price to be fixed between you, leaving it optional in the party, to pay either specie, bank notes, or my notes, and give from a week to a fortnight credit to good hands. The price will, I suppose, be high if sold in this manner, and you will doubtless obtain a preference in the sales over others. When you open this business it must be transacted speedily by letting your broker make the sales, and take the promisory notes from the parties. The effects of this plan will be as follows; people knowing that the notes are at a discount, will readily, I suppose, make purchases on such conditions; and if they do, you will thereby raise them to par, and command a considerable sum in specie, for I know there are very few now in your country, and therefore when they come to be bought up and looked for, their value will rise; and I presume that taxation will then come in to aid their farther circulation.

I am, Sir, with great respect, &c.

ROBERT MORRIS.

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TO THE GOVERNOR OF MARYLAND.

Office of Finance, July 29th, 1782.

Sir,

I have now before me your two favors of the 12th instant. You will find my answers as well in a former letter, as in the enclosed circular. For what remains I must only declare to you my regret at finding your prospects so gloomy. The idea that taxes cannot be raised because of the want of specie, is very general, indeed it is almost universal, and yet nothing can be more ill-founded. If the people be put in the necessity of procuring specie, they will procure it. They can if they will. Tobacco may not sell at one moment, grain at another, or cattle at a third; but there are some articles such as horses, which will sell at all times. The mischief is, that when a purchaser offers, the party not being under a necessity of selling, insists on a higher price than the other can afford to give. Thus the commerce is turned away to another quarter. Nothing but the necessity of getting money will bring men in general to lower their prices. When this is done purchasers will offer in abundance, and thus it will be found, that the tax instead of lessening will increase the quantity of specie. But so long as the want of it can be pleaded successfully against taxes, so long that want will continue. And then all that remains to consider is, whether the army can be maintained by such a plea. The States, Sir, must give money, or the army must disband.

I have the honor to be, &c.

ROBERT MORRIS.

* * * * *

TO THE PRESIDENT OF CONGRESS.

Office of Finance, July 29th, 1782.

Sir,

The reference which Congress were pleased to make of a remonstrance and petition from Blair Mc Clenaghan and others, has induced me to pray their indulgence while I go somewhat at large into the subject of that remonstrance.

The propriety and utility of public loans have been subjects of much controversy. Those who find themselves saddled with the debts of a preceding generation, naturally exclaim against loans; and it must be confessed, that when such debts are accumulated by negligence, folly or profusion, the complaint is well founded. But it would be equally so against taxes, when wasted in the same way. The difference is, that the weight of taxes being more sensible, the waste occasions greater clamor, and is therefore more speedily remedied. But it will appear, that the eventual evils, which posterity must sustain from heavy taxes are greater than from loans. Hence may be deduced this conclusion, that in governments liable to a vicious administration, it would be better to raise the current expense by taxes; but where an honest and wise appropriation of money prevails, it is highly advantageous to take the benefit of loans. Taxation to a certain point, is not only proper but useful, because by stimulating the industry of individuals, it increases the wealth of the community. But when taxes go so far as to entrench on the subsistence of the people, they have become burdensome and oppressive. The expenditure of money ought in such case to be, if possible, avoided; if unavoidable, it will be most wise to have recourse to loans.

Loans may be of two kinds, either domestic or foreign. The relative advantages and disadvantages of each, as well as those which are common to both, will deserve attention. Reasonings of this kind, as they depend on rules of arithmetic, are best understood by numerical positions. For the purposes of elucidation, therefore, it may be supposed that the annual tax of any particular husbandman were fifteen pounds, so that (the whole being regularly consumed in payment of taxes) he would be no richer at the end of the war, than he was at the beginning. It is at the same time notorious, that the profits made by husbandmen, on funds which they borrowed were very considerable. In many instances their plantations, as well as the cattle and family utensils, have been purchased on credit, and the bonds given for both have shortly been paid by sales of produce. It is, therefore, no exaggeration to state the profits at twelve per cent. The enormous usury, which people in trade have been induced to pay, and which will presently be noticed, demonstrates that the profits made by the other professions, are equal to those of the husbandman.

The instance, therefore, taken from that which is the most numerous class of citizens, will form no improper standard for the whole. Let it then be farther supposed in the case already stated, that the party should annually borrow the sum of ten pounds at six per cent, to pay part of the tax of fifteen pounds. On this sum then he would make a profit of twentyfour shillings, and have to pay an interest of twelve shillings. The enclosed calculation will show, that in ten years he would be indebted one hundred pounds, but his additional improvements would be worth near one hundred and fifty, and his net revenue be increased near twelve, after deducting the interest of his debt. Whereas if he had not borrowed, his revenue, as has been already observed, would have continued the same. This mode of reasoning might be pursued farther, but what has been said is sufficient to show, that he would have made a considerable advantage from the yearly loan. If it be supposed, that every person in the community made such a loan, a similar advantage would arise to the community. And lastly, if it be supposed, that the government were to make a loan and ask so much less in taxes, the same advantage would be derived. Hence, also, may be deduced this position, that in a society where the average profits of stock are double the interest at which money can be obtained, every public loan for necessary expenditures, provides a fund in the aggregate of national wealth equal to the discharge of its own interest.

Were it possible that a society should exist, in which every member would of his own accord industriously pursue the increase of national property, without waste or extravagance, the public wealth would be impaired by every species of taxation. But there never was, and unless human nature should change, there never will be such a society. In any given number of men, there always will be some who are idle, and some who are extravagant. In every society also there must be some taxes, because the necessity of supporting government and defending the State always exists. To do these on the cheapest terms is wise, and when it is considered how much men are disposed to indolence and profusion it will appear, that even if those demands did not require the whole of what could be raised, still it would be wise to carry taxation to a certain amount, and expend what should remain after providing for the support of government and the national defence, in works of public utility, such as the opening of roads and navigation. For taxes operate two ways towards the increase of national wealth. First, they stimulate industry to provide the means of payment. Secondly, they encourage economy, so far as to avoid the purchase of unnecessary things, and keep money in readiness for the tax gatherers. Experience shows, that those exertions of industry and economy grow by degrees into habit. But in order that taxation may have these good effects, the sum which every man is to pay and the period of payment, should be certain and unavoidable.

This digression opens the way to a comparison between foreign and domestic loans. If the loan be domestic, money must be diverted from those channels in which it would otherwise have flowed; and, therefore, either the public must give better terms than individuals, or there must be money enough to supply the wants of both. In the latter case, if the public did not borrow, the quantity of money would exceed the demand, and the interest would be lowered; borrowing by the public, therefore, would keep up the rate of interest; which brings the latter case within the reason of the former. If the public out bid individuals, those individuals are deprived of the means of extending their industry; so that no case of a domestic loan can well be supposed where some public loss will not arise to counterbalance the public gain, except where the creditor spares from his consumption to lend to the government, which operates a national economy. It is, however, an advantage peculiar to domestic loans, that they give stability to government, by combining together the interests of the monied men for its support; and, consequently, in this country a domestic debt would greatly contribute to that union, which seems not to have been sufficiently attended to or provided for in forming the national compact. Domestic loans are also useful, from the farther consideration, that as taxes fall heavy on the lower orders of the community, the relief obtained for them by such loans more than counterbalances the loss sustained by those who would have borrowed money to extend their commerce or tillage. Neither is it a refinement to observe, that since a plenty of money and consequent ease of obtaining it, induce men to engage in speculations, which are often unprofitable, the check which these receive is not injurious, while the relief obtained by the poor is highly beneficial.

By making foreign loans, the community, as such, receive the same extensive benefits, which one individual does in borrowing of another. This country was always in the practice of making such loans. The merchants in Europe trusted those in America. The American merchants trusted the country store-keepers, and they the people at large. This advance of credit may be stated at not less than twenty millions of dollars. And the want of that credit now is one principal reason of those usurious contracts mentioned above. These have been checked by the institution of the bank, but the funds of that corporation not permitting those extensive advances, which the views of different people require, the price given for particular accommodations of money continues to be enormous; and that again shows, that to make domestic loans would be difficult, if not impracticable. The merchants not having now that extensive credit in Europe, which they formerly had, the obtaining such credit by government becomes in some sort necessary.

But there remains an objection with many against foreign loans, which (though it arises from a superficial view of the subject) has no little influence. This is, that the interest will form a balance of trade against us, and drain the country of specie; which is only saying in other words, that it would be more convenient to receive money as a present, than as a loan; for the advantages derived by the loan exist, notwithstanding the payment of interest. To show this more clearly, a case may be stated, which in this city is very familiar. An Island in the Delaware overflowed at high water has for a given sum, suppose a thousand pounds, been banked in, drained, and made to produce, by the hay sold from it at Philadelphia, a considerable sum annually; for instance, two hundred pounds. If the owner of such an Island had borrowed in Philadelphia the thousand pounds to improve it, and given six per cent interest, he would have gained a net revenue of one hundred and forty pounds. This certainly would not be a balance of trade against his Island, nor the draining it of specie. He would gain considerably, and the city of Philadelphia also would gain, by bringing to market an increased quantity of a necessary article.

In like manner money lent by the city of Amsterdam to clear the forests of America would be beneficial to both. Draining marshes and bringing forests under culture, are beneficial to the whole human race, but most to the proprietor. But at any rate, in a country and in a situation like ours, to lighten the weight of present burdens must be good policy by loans. For as the governments acquire more stability, and the people more wealth, the former will be able to raise, and the latter to pay, much greater sums than can at present be expected.