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But as it was foreseen that such repeated issues of bills of credit would encrease the quantity to too great a degree, and consequently occasion their depreciation, it was resolved on the third of October following to borrow five millions of dollars; and in November, a lottery was set on foot for raising a farther sum on loan.
As the governments of the several states were not yet sufficiently organized and in vigour, and as the expences of arraying and equipping the militia were great, and the resources from commerce cut off, it was not thought proper to proceed to taxation. And as neither loans nor the lottery were sufficiently productive, necessity compelled to farther emissions of bills of credit. By this means the paper currency being multiplied, began to depreciate. It was therefore resolved on the 10 September, 1777, to prepare an earnest recommendation to the states to proceed to taxation. The invasion of Pensylvania, and the removal of Congress from Philadelphia, prevented this from being done as soon as might have been wished; but on the 22 November, 1777, it was recommended to the states to raise by taxes, for the service of the year 1778, the sum of five million dollars, and to pay the same into the public treasury in four quarterly payments. Previous to this it had been resolved to borrow larger sums; and to encourage the money holders to lend, it was agreed to pay the interest by bills of exchange drawn on our Commissioners in France.
Unfortunately the tax failed, and the sums obtained from loans were greatly inadequate to the expenditure: consequently more money was emitted; and notwithstanding the favourable turn in our affairs in 1778, depreciation encreased with amazing rapidity.
At the close of the year, 1778, the sums emitted and borrowed amounted to about one hundred and eight millions. Congress, anxious to put a stop to any farther
emissions, and to provide a fund for redeeming what was issued, called upon the states on the 1 January, 1779, to pay into the continental treasury their respective quotas of fifteen million dollars for the service of that year, and of six millions annually, from and after the year 1779, as a fund for sinking the emissions and loans to the 31 December, 1778; and on the 21 May following, in addition to the above, on account of the great depreciation of the paper, the states were called on to furnish for the service of the year 1779, their respective quotas of forty-five millions—the whole to be paid into the continental treasury before the 1 January, 1780. A compliance with these requisitions would not only have answered the necessary exigencies of the year, but would have arrested depreciation in its progress. But as these were not complied with in due time, and as the demands of the public were pressing and constant, the prospect of future taxes served only as a stimulus to urge those who had in their possession the supplies and necessaries wanted, to enhance the price, in order to pay their taxes with greater ease: while at the same time the public treasury, receiving no recruit from taxes, was from time to time replenished with new emissions; and from these causes combined, depreciation, instead of receiving a check, proceeded with redoubled vigour.
As the failure of the states was attributed to their not having received the requisitions in due time, Congress resolved in future to remedy that defect; and therefore, early in the fall of 1779, took into consideration the means of providing for the ensuing year; and on the 6 October, accommodating themselves to the depreciation as it then stood, and still flattering themselves that the taxes already called for, if duly collected, would stop it where it was, and answer demands
on the public till February following, they called upon the states to pay into the public treasury on the first day of February, 1780, and on the first day of each succeeding month, to the first of October inclusive, their respective quotas of fifteen millions.
It should be observed that on the first of September, 1779, the sum emitted and in circulation amounted to 159,948,880 dollars; and as there was a general outcry on account of the depreciation and the floods of money emitted, Congress resolved that they would on no account whatever emit more bills of credit than to make the whole amount of such bills two hundred millions. And as 40,051,120 dollars remained to complete the two hundred millions, they on the 3d of the same month resolved that they would emit such part only of the said 40,051,120 as should be absolutely necessary for the public exigencies, before adequate supplies could be otherwise obtained, relying for such supplies on the exertions of the several states.
This was represented to the states in an address dated the 13 of September; and they were earnestly entreated not to leave Congress without supplies, nor to let in that flood of evils which would follow from such a neglect. Notwithstanding this earnest address and representation, Congress were compelled by necessity to issue the remainder of the two hundred millions; and the army was in such extremity for want of provisions, that the Commander in Chief was reduced to the sad alternative, either to suffer it to disband, or to collect supplies by military force. He preferred the latter, and the inhabitants of New York and New Jersey, though they felt the injury, saw the necessity, and patiently submitted.
To prevent the like evils in future, Congress, on the 25 of February, 1780, called on the states forthwith to procure their respective quotas of supplies in enumer
ated articles for the ensuing campaign. And as by the continual depreciation of the continental currency, the community was suffering great injustice, the public finances were deranged, and the necessary dispositions for the defence of the commonwealth much impeded and perplexed, they on the 18 of March, 1780, recommended that the fifteen million monthly tax should be continued from October to April, 1781, inclusive; and that thirteen of those monthly quotas, namely, from March, 1780, to April, 1781, both inclusive, should be applied solely to redeem or sink the old money, which was to be cancelled and burned as fast as brought in; and in lieu thereof, new money was to be emitted in the proportion of one of the new for twenty of the old; so that when the whole two hundred millions were drawn in and cancelled, ten millions new money would be thrown into circulation; of which four tenths were to have been subject to the order of Congress, and the other six tenths to belong to the several states. The effects of this resolution, if it had been punctually executed according to the intention of Congress, would have been-1. The cancelling the old money; 2. reducing the currency to a more fixed standard; 3. supplying the states with money to
purchase the supplies required from them by the act of the 25 of February; and 4, enabling Congress to pay the army, discharge the principal debts already contracted, and to provide for the exigencies of the ensuing campaign. But as this was not done, Congress was again driven into temporary expedients.
The enemy knew our situation, and were exerting their utmost efforts to take advantage of it. The southern states were invaded. A descent was threatened on New Jersey. The posts on Hudson's river were in danger.
In order to put the army in motion, Congress were obliged to raise money by drawing bills on their ministers abroad; although they had not sufficient assurances
that those bills would be honored. On the 19 May, Congress called upon the states, from New Hampshire to Virginia, both inclusive, to collect and pay into the public treasury, in thirty days, ten million continental currency, part of the sums required to be paid last year. The states, in order to comply with this, pressed the collection of taxes, which occasioned such a clamour from those who had furnished supplies on credit, that on the 27 of the same month Congress recommended to the legislatures of the several states to empower the collectors of continental taxes due before the 1 March, 1780, to receive in payment thereof the notes or certificates which had been given by the quartermaster and commissary of purchases for such supplies.
Until the opening of this campaign, the army had borne their sufferings with unparalleled patience and perse
What pay they had hitherto received had been chiefly in depreciated money. Congress had not been unmindful of their sufferings and faithful services. As early as September, 1776, they had resolved to make provision for granting lands in certain proportions to the officers and soldiers who would engage in the service, and continue therein to the close of the war, or until discharged by Congress, and to the representatives of such officers and soldiers as might be slain by the enemy. On the 15 of May, 1778, they resolved unanimously that all military officers commissioned by Congress, who then were, or thereafter might be, in the service of the United States, and continue therein during the war, should, after the conclusion thereof, receive annually for the term of seven years, if they lived so long, one half of the pay then established for such officers, with a proviso, that general officers should not receive more than the half
pay of a colonel; and it was also resolved, that noncommissioned officers and soldiers enlisted for the war