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PREFATORY NOTE In the history of the Continental Congress the year 1781 is of great importance, because it shows the development of the idea that a stronger Federal Government than that which had existed up to that time was necessary.
On March 1 the Maryland delegates signed the Articles of Confederation, thus completing that instrument and making it effective, and at length the United States had a constitution; but, on March 6, Varnum, of Rhode Island, offered a resolution, “that a committee be appointed to digest such additional articles to the Act of Confederation to be exercised during the war as shall be deemed necessary to be proposed to the respective States for their ratification,” and, on the same day, Varnum, Duane, and Madison were appointed a committee “to prepare a plan to invest the United States in Congress assembled with full and explicit powers for effectually carrying into execution in the several States all acts or resolutions passed agreeably to the Articles of Confederation.” The committee's report was considered on May 2. It proposed that the States be asked for an additional article to the Articles of Confederation, which should confer upon Congress the right to employ the forces of the United States, by land or sea, to compel any delinquent State to fulfil its Federal engagements. The additional article was to be binding when enacted by all the States not in the possession of the enemy. The recommendation was referred to a grand committee, consisting of a member from each State.
On the same day John Mathews, of South Carolina, offered a motion, declaring that, during the war, the Congress ought to have authority to make and execute such laws and ordinances as it should deem necessary for prosecuting the war efficiently, but the motion was postponed. On July 20 the grand committee reported a recommendation that the States be asked to grant the power of laying an embargo in time of war, and to give Congress control of quotas of money, as well as authority to collect the money through its own agents. Randolph, Ellsworth, and Varnum were appointed a committee to consider this motion, and, on August 22, they made numerous recommendations concerning the manner of executing the Articles of Confederation. Among other things, they urged that a general council be provided for; that the power to lay embargoes in time of war be granted; that Federal collectors be empowered to collect Federal requisitions; that Congress be given power to issue letters of marque, coin money, emit bills of credit, and borrow money. On November 2 Congress recommended that each State lay a tax, entirely separate from the levies for State expenses, for the purpose of raising its share of the $8,000,000 required for Federal expenses, and that it be paid to agents of the Superintendent of Finance. In other words, it was to be a Federal levy, paid to Federal officers.
On January 24, 1781, before the Articles of Confederation had been ratified, acting in Committee of the Whole, Congress took the most important action that had been attempted up to that time, in the direction of obtaining Federal funds, when it asked the States to levy an impost duty of 5 per cent on the value of all foreign merchandise imported, and to allow the funds thus collected to be paid into the hands of the agents of Congress. On February 3 it asked the States to vest the power to levy the tax in Congress itself.
On February 7 a plan for executive departments was agreed to—a Superintendent of Finance, Secretary at War, and Secretary of Marine. Already, on January 10, the Department of Foreign Affairs had been established, and, on February 16, the committee to whom the papers of the convention at Hartford had been referred reported that there ought to be an Attorney General of the United States and a court of judicature for trial of all causes relating to offences against the United States. On April 5 the ordinance establishing the Federal courts for trial of piracies was agreed to, the court of appeals in cases of capture being established by the ordinance of July 18. Here, then, were serious efforts to provide executive machinery, to increase the direct power of Congress, and to erect a Federal judiciary.
The great cause of these efforts was the manifest impossibility, under the existing system, of obtaining the money with which to support the military and civil establishments. The circular letter to the States, of January 15, called attention to the failure of previous requisitions and the immediate necessities of the Army, its pay being far in arrears. On February 19 a full statement was made of the debts of the United States, and an estimate of the funds necessary to carry on the Government for a year. On April 18 a further statement of the money borrowed was laid before Congress. The country, it said, had drawn an Army before any currency was provided for maintaining it. Congress had no resources whence to derive funds, except by emitting bills of credit redeemable at a future day. Accordingly, bills of credit had been emitted time after time; then loans and a lottery were resorted to. Recommendations to the States to resort to taxation failed. Money was raised by drafts on our ministers abroad. The Treasurer was ordered to draw upon the treasurers of the States, at 30 days' sight, for their quotas. The request for the 5 per cent impost, to obtain