CHAPTER II. THE STRUGGLE FOR REVENUE. 1781-1782. SCHUYLER had been led by his own experience to perceive the necessity for the states to surrender some part of their sovereignty, and "adopt another system of government." On the twenty-first of January 1781 he moved in the senate of New York to request the eastern states to join in an early convention, which should form a perpetual league of incorporation, subservient, however, to the common interest of all the states; invite others to accede to it; erect Vermont into a state; devise a fund for the redemption of the common debts; substitute a permanent and uniform system for temporary expedients; and invest the confederacy with powers of coercion.* "We stand ready on our part to confer adequate powers on congress," was the message of both houses to that body in a letter of the fifth of February, written in the name of the state by their joint committee, on which were Schuyler and Benson. † Washington had been taught by his earliest observation as general, and had often declared the indispensable necessity of more responsibility and permanency in the executive bodies. + The convention at Boston of August 1780 had recommended * Schuyler to Washington, 21 January 1781. Letters to Washington, iii., 213. + Letter from the state of New York to congress, 5 February 1781. Papers of Old Congress, lxvii., 344. MS. A copy of the letter was sent to Washington by Clinton, 14 February 1781. Letters to Washington, xlvi., 172. MS. Washington to Duane, 26 December 1780. Hamil "a permanent system for the several departments."* ton "was among the first who were convinced that their administration by single men was essential to the proper management of affairs." On the tenth of January 1781, congress initiated a reform by establishing a department of foreign affairs; but more than eight months elapsed before it was filled by Robert R. Livingston. There was the most pressing need of a minister of war. After tedious rivalries and delays, Benjamin Lincoln was elected; but he did not enter upon the office till near the end of November, when the attempt of Great Britain to subjugate America had ceased. For the treasury, John Sullivan suggested to Washington the name of Hamilton. # How far Hamilton had made a study of finance, Washington did not know; but he said: "Few of his age have a more general knowledge, and no one is more firmly engaged in the cause, or exceeds him in probity and sterling virtue." In February the choice fell on Robert Morris, and unanimously, except that Massachusetts abstained from the ballot, A Samuel Adams preferring the old system of committees.◊ While Morris delayed his acceptance, Hamilton, who had been the first to present his name for the place, opened a correspondence with him. "A national debt," he wrote, “if it is not excessive, will be a national blessing, a powerful cement of union, a necessity for keeping up taxation, and a spur to industry." He recommended a national bank, with a capital of ten or fifteen millions of dollars, to be paid two sixths in specie, one sixth in bills or securities on good European funds, and three sixths in good landed security. It was to be erected into a legal corporation for thirty years, during which no * Hough's edition of Convention at Boston, 3-9 August 1780, 51. Hamilton to Robert Morris, 30 April 1781; Hamilton, i., 223; to Duane, 3 September 1780. Ibid., i., 154. Journals of Congress, iii., 564. * Sullivan to Washington, 29 January 1781. MS. | Washington to Sullivan, 4 February 1781. Sparks, vii., 399. A Journals of Congress, iii., 580. ◊ Luzerne to Vergennes, 25 March 1781. Partly printed in Sparks, vii., 400. Hamilton, i., 257. other bank, public or private, was to be permitted. Its capital and deposits were to be exempt from taxation, and the. United States, collectively and particularly, and conjointly with the private proprietors, were to become responsible for all its transactions. Its sources of profit were to be the sole right of issuing a currency for the United States equal in amount to the whole capital of the bank; loans at a rate not exceeding eight per cent; discount of bills of exchange; contracts with the French government for the supply of its fleets and armies in America, with the United States for the supply of their army; dealings in real estates, especially, with its large capital, buying at favorable opportunities the real estates of men who, having rendered themselves odious, would be obliged to leave the country. Another source of immense gain, contingently even of one hundred per cent, was to be a contract with the United States for taking up all their paper emissions. Incidentally, Hamilton expressed his "wish to see a convention of all the states, with full power to alter and amend, finally and irrevocably, the present futile and senseless confederation." * This communication led to the closest relations between Hamilton and Robert Morris; but, vehement as was the character of the older man, his schemes fell far short of the daring suggestions of his young counsellor. On the fourteenth of May, Morris was installed as the superintendent of finance, and three days later he laid before congress his plan for a national bank. Its capital was to be four hundred thousand dollars in gold and silver, with power of increase at discretion; its notes were to form the currency of the country, and be receivable as specie for duties and taxes by every state and by the United States. Authority to constitute the company a legal body not being granted by the articles of confederation, Morris submitted that congress should apply to the states for the power of incorporating a bank and prohibiting all other banks. On the twenty-sixth, congress, without waiting to hear the *Hamilton, i., 223–257. Journals of Congress, iii., 624; Diplomatic Correspondence, vii., 444–449. voices of the states, resolved that the bank should be incorporated so soon as the subscription should be filled and officers chosen. This vote was carried by New Hampshire, New Jersey, and the five southernmost states, Massachusetts being in the negative, Pennsylvania divided, and Madison alone of the four members from Virginia opposing it as not within the powers of the confederation. From the want of a valuation of private lands and buildings, congress had not even the right to apportion requisitions. The five states which met at Hartford had suggested for the United States an impost as a source of revenue. New Jersey and North Carolina suffered from the legislation of the neighboring states, which were the natural channels of a part of their foreign trade: on the third of February 1781, Witherspoon and Burke, their representatives in congress, reviving an amendment to the articles of confederation proposed by New Jersey in 1778,* moved to vest in the United States the power of regulating commerce according to "the common interest," and, under restrictions calculated to soothe state jealousies, the exclusive right of laying duties upon imported articles. This motion, which was a memorable step toward union, failed of success; † and on the same day congress contented itself with asking of the states, as an "indispensable necessity," the power to levy a duty of five per cent ad valorem on all imports, with no permanent exemptions except of wool cards and cotton cards, and wire for making them. This first scheme of duties on foreign commerce sought to foster American industry by the free admission of materials necessary to the manufacturer. The letter of the fifth of February from the state of New York was met on its way by the vote of congress of the third. In March, New York granted the duties, to "be collected in such manner and by such officers as congress should direct." + Connecticut had acted a month earlier at a special session called by Governor Trumbull, but had limited its grant to the end of the third year after the war.# New Hampshire fol Journals of Congress, ii., 604. + Ibid., iii., 573. # Journals of Congress, iii., 594, 600. Papers of Old Congress, lxxv. MS. lowed in the first week of April.* Massachusetts delayed its consent till the next year, and then reserved to itself the арpointment of the collectors. Outside of the five states which met at Hartford, the first to agree to the new demand were Pennsylvania and New Jersey. The general assembly of Virginia, which was to have met in Richmond on the seventh of May, was chased by the enemy to Charlottesville, where it elected Benjamin Harrison its speaker, and where John Taylor of Caroline,+ according to order, presented a bill to enable the United States to levy the needed duty. Fleeing beyond the mountains, they completed the act at Staunton. The grant, of which Harrison had been the great promoter,# was restricted neither as to time nor as to form. Early in September, North Carolina adopted the measure; Delaware in November; South Carolina in February 1782; and Maryland in its following April session. The consent of Georgia was confidently expected. After the surrender of Cornwallis, the legislature of New York once more declared the readiness of their state to comply with any measures to render the union of the United States more intimate, and to contribute their proportion of well-established funds.◊ This alacrity Clinton, on the twenty-fourth of November, reported to congress as the highest "evidence of a sincere disposition in the state to promote the common interest."t Meantime the subscriptions to the bank languished, and Morris thought fit to apply to John Jay for money from the court of Madrid for its benefit, saying: "I am determined that the bank shall be well supported until it can support itself, and then it will support us." But there was no ray of hope *Papers of Old Congress, lxxiv., 9. MS. Dallas's Laws of Pennsylvania, i., 890. The act was of 5 April 1781. Journals of Congress, iii., 632. The act of New Jersey was passed 2 June 1781. Wilson's Acts of New Jersey, 191. Journal of House of Delegates, 30 May 1781. # Harrison to Washington 31 March 1783. Papers of Old Congress, lxxv., 359. A Papers of Old Congress, lxxvi., 91. ◊ Papers of Old Congress, lxvii., 438. Ibid., 443. Hening's Statutes at Large, x., 409. Morris to Jay, 13 July 1781. Dip. Cor., vii., 440. |