Chapter X: Part 10

The plan I propose, requires a stock of three millions of pounds, lawful money; but if one-half the sum could be obtained, I should entertain no doubt of its full success. It now remains to submit my plan, which I rather offer as an outline, than as a finished plan. It contains, however, the general principles. To each article, in an opposite column, I shall affix an explanatory remark.

Art I. A Bank to be Remark 1. By the second Article, erected with a stock of three a part of the stock is to be in landed millions of pounds, lawful security: by this, the whole is to be money, at the rate of six exempted from taxes. Here will be a shillings to a dollar, divided considerable saving to the proprietor, into thirty thousand shares. which is to be estimated among the clear This stock to be exempted profits of the Bank. This will indeed from all public taxes and be a small reduction of the public impositions whatsoever. revenue; but the loss will be of little consequence, compared with the advantages to be derived from the Bank.

Art II. A subscription Remark 2. By admitting landed to be opened for the amount security as a part of the Bank stock, of the stock. A subscriber of while we establish solid funds for the from one share to five, to money emitted, we at the same time advance the whole in specie. supply the defect of specie, and we give A subscriber of six shares to a strong inducement to moneyed men to fifteen to advance one-half in advance their money; because, not only specie, the other half in good the money actually deposited is to be landed security. A subscriber employed for their benefit, but, on the of sixteen shares, and upwards, credit of their landed security, by the to advance two-sixths in seventh Article, may be raised an equal specie, one-sixth in bills or amount in cash, to be also employed for securities on good European their benefit: by which artifice they funds, and three-sixths in good have the use of their land (exempted, landed security. In either case too, from taxes), and the use of the of specie, plate or bullion, value of it in a representative cash. In at a given value, proportioned this consists a capital advantage of the to its quality, may be Bank to the proprietors. A, for instance, substituted; and in either case advances six hundred pounds in specie, of landed security, specie, and as much more in landed security. By good bills, or securities the establishment he may draw bank notes on European funds, to be for the whole of his stock, that is, admissible in their stead.[14] for twelve hundred pounds, when he only advances half the sum in money. These bank notes operating as cash, his land (continuing, as we observed above, in his own use, with the privilege besides of an exemption from taxes) is converted into cash; which he may employ in loans, in profitable contracts, in beneficial purchases, in discounting bills of exchange, and in the other methods permitted in the subsequent Articles. Besides all this, when the bank notes have once acquired a fixed credit, he is not obliged to keep his six hundred pounds, deposited in specie, idle: he may lend, or otherwise improve, a part of that also. These advantages will not exist in their full extent at first, but they will soon succeed each other.

Art. III. The Bank Remark 3. This Article needs no to be erected into a legal illustration. corporation; to have all the powers and immunities requisite to its security, to the recovery of its debts, and to the disposal of its property.

Art. IV. The stock Remark 4. The first part of of the Bank not to be liable this regulation is necessary to engage to any attachment or seizure foreigners to trust their property in the whatsoever; but, on refusal of Bank; the latter part to give an idea of payment, the holders of bank security to the holders of bank notes. notes, or bonds, may enter suit against any member, or members, of the corporation; and, as far as their respective shares in the Bank extend, recover the debt, with cost and damages, out of their private property.

Art. V. The United Remark 5. This will link the
States, or any particular interests of the public more intimately
States, or foreigners, may with the Bank, and be an easy method
become subscribers to the Bank, of acquiring revenue. It will also
and participate its profits, facilitate the making up its stock by the
for any sums not exceeding the loans which Congress may obtain abroad;
whole half the stock. without which it would be more difficult
to raise so large a sum. It is essential
the stock should be large, because, in
proportion to it, will be the credit of
the Bank, and of course its ability to
lend and enlarge its paper emissions.
The admission of foreigners will also
assist the completing the stock; and it
is probable many may be induced to enter
into the plan, especially after it has
made some progress among ourselves, and
obtained a degree of consistency.

The sum is limited to one half the stock,
because it is of primary importance the
moneyed men among ourselves should be
deeply interested in the plan.

Art. VI. The United Remark 6. This mode of pledging States, collectively and the public faith, makes it as difficult particularly, to become to be infringed as could possibly responsible for all the be devised. In our situation it is transactions of the Bank, expedient to offer every appearance of conjointly with the private security. Foreigners are more firmly proprietors. persuaded of the establishment of our independence than of the continuance of our union; and will therefore have more confidence in the States bound separately than collectively. Individuals among ourselves will be influenced by similar considerations.

Art VII. The Bank to Remark 7. The reason of having issue notes payable at sight, them payable at sight, is to inspire in pounds, shillings, and the greater confidence and give them a pence, lawful: all of twenty readier currency: nor do I apprehend shillings, and under, to bear there would be any danger from it. In no interest: all above, to the beginning some may be carried to the bear an interest not exceeding Bank for payment, but finding they are four per cent. The notes to be punctually discharged, the applications of so many denominations as will cease. The notes are payable in may be judged convenient for pounds, shillings, and pence, rather circulation, and of two kinds; than in dollars, to produce an illusion one payable only in America, in the minds of the people favorable the other payable either in to the new paper; or rather to prevent American or in an part of their transferring to that their Europe where the Bank may have prejudices against the old. Paper credit funds. The aggregate of these depends much on opinion, and opinion is notes never to exceed the Bank often guided by outside appearances. A stock. circumstance trivial as this may seem, might have no small influence on the popular imagination. And if 20s., and under, are without interest, because such small sums will be diffused in the lesser transactions of daily circulation, there will be less probability of their being carried to the Bank for payment.

The interest on the larger notes is
calculated to give them a preference to
specie, and prevent a run upon the Bank.
The notes, however, must be introduced by
degrees, so as not to inundate the public
at once. Those bearing no interest ought
not to be multiplied too much at first;
but as the interest is an abridgment of
the profits of the Bank, after the notes
have gained an unequivocal credit, it
will be advantageous to issue a large
proportion of the smaller ones. At first,
the interest had best be at four per
cent., to operate the more effectually as
a motive: afterwards, on the new notes,
it may be gradually diminished: but it
will always be expedient to let them bear
an interest not less than two per cent.

The making some of the notes payable
in Europe as well as in America, is
necessary to enable the Bank to avail
itself of its funds there: it will also
serve to raise the demand for Bank notes,
by rendering them useful in foreign
commerce, the promoting which is a
further inducement.

The limiting the aggregate of the notes
to the amount of the stock, is necessary
to obviate a suspicion of their being
multiplied beyond the means of redemption.

Art. VIII. The Bank to Remark 8. In the beginning it
lend money to the public, or to will be for the advantage of the Bank to
individuals, at an interest not require high interest, because money is
exceeding eight per cent. in great demand, and the Bank itself will
want the principal part of its cash for
the loans stipulated in Article XIII, and
for performing the contracts authorized
by Article XII: so that the profits will
not, for some time, turn materially on
the principle of loans, except that
to the public. But when the contracts
cease, the Bank will find its advantage
in lending, at a moderate interest, to
secure a preference from borrowers, which
will, at the same time, promote commerce;
and by a kind of mutual reaction, the
Bank will assist commerce, and commerce
will assist the Bank.

Art. IX. The Bank to Remark 9. This is a precaution have liberty of borrowing, on against a sudden run. It may borrow the best terms it can, to the in proportion to what it pays. It amount of one half of its stock. has another advantage: at particular conjunctures the Bank may borrow at a low interest, and lend, at others, at a higher.

Art. X. The Bank to Remark 10. This privilege
have liberty of purchasing of purchasing estates will be a very
estates by principal, or by valuable one. By watching favorable
annuities; the power of coining opportunities, with so large a capital,
to the amount of half its vast property may be acquired in this
stock, the quantity of alloy, way. There will be a fine opening at
etc., being determined by the conclusion of the war. Many persons
Congress; also the power of disaffected to our independence, who
discounting bills of exchange. have rendered themselves odious without
becoming obnoxious to the laws, will
be disposed to sell their estates
here, either for their whole value, or
for annuities in Europe. The power of
coining[15] is necessary, as plate, or
bullion, is admitted instead of specie;
and it may be, on particular occasions,
expedient to coin them; this will be a
small resource to the Bank. The power
of discounting bills of exchange will
be a considerable one. Its advantages
will consist in purchasing, or taking up
for the honor of the drawer, when the
security is good, bills of exchange at so
much per cent. discount. A large profit
might be now made in this way on the
bills drawn on France; and hereafter, in
times of peace, when commerce comes to
flourish, this practice will promote the
transactions of the several States with
each other, and with Europe, and will be
very profitable to the Bank.

Art. XI. The Bank Remark 11. This is in imitation
to receive from individuals, of the Bank of Amsterdam. If individuals
deposits of any sums of money, once get into the practice of depositing
to be repaid when called for, their money in Bank, it will give credit
or passed, by order, to the to the Bank, and assist trade. In time,
credit of others; or deposits a premium may be required at repayment
of plate, paying a certain as in Holland. A small profit may be
annual rate for safe keeping. immediately gained on plate, as the
Whatever is deposited in the States begin to tax this article; and
Bank, to be exempt from taxes. many persons will dispense at this time
with the use of their plate, if they can
deposit it in a place of safety, and
pay less for keeping it than the tax.
Whatever serves to increase the apparent
wealth of the Bank, will enhance its
credit! It may even be useful to let the
owners of the plate have credit in Bank
for the value of the plate, estimated
on a scale that would make it for the
advantage of the Bank to purchase.

Art. XII. The Bank to Remark 12. It will be of
have a right to contract with great importance to the success of the
the French government for the subscriptions, that a previous assurance
supply of its fleets and armies of these contracts should take place:
in _America_, and to contract the profits of them would be no trifling
with Congress for the supply of inducement to adventurers; it would have
their armies. the air of employing the money subscribed
in trade. As soon, therefore, as the plan
should be resolved upon, negotiations
should be begun for the purpose. It is
so clearly the interest of the French
government to enter into these contracts,
that they must be blind not to do it,
especially when it is proposed under the
aspect of a method of re-establishing
our finances. The present loss on their
bills is enormous. The Bank may engage
to receive them at a moderate discount,
and to supply on better terms than they
now make. Their business is at this time
trusted to a variety of hands, some
of which are neither very skilful nor
very honest: competitions, frauds, and
additional expense, are the consequences.

Congress could not hesitate on their
parts, as the amount of the contracts
would be a part of the loan required in
Article XIII.

Art. XIII. The Bank Remark 13. This loan will to lend Congress one million, enable Congress to get through the two hundred thousand pounds, expenses of the year. There may be a lawful, at eight per cent. small deficiency, but this will be easily interest; for the payment of supplied. The credit of the Bank once which, with its interest, a established, it may increase its stock, certain unalienable fund of one and lend an equal sum every year during hundred and ten thousand, four the war. This loan may be advanced, hundred pounds per annum, to be partly in a contract for provisions, established for twenty years. clothing, etc., and partly in cash, at The States, generally and periodical payments, to avoid a too quick severally, to pledge themselves multiplication of Bank notes. for this sum, and for the due appropriation of the fund. Congress to have a right, at any intermediate period, to pay off the debt, with the interest to the time of payment. The same rule to govern in all future loans.

Art. XIV. The Bank Remark 14. It is of the greatest
to become responsible for the importance that the old currency should
redemption of all the paper be fixed at a certain value, or there
now emitted; the old, at forty will be danger of its infecting the
for one in thirty years, the future paper: besides, we want to raise
new at par, with gold and it to a point that will make it approach
silver, according to the terms nearer to an adequate medium. I have
promised by Congress in their chosen the resolution of March, ’80, as a
resolution of March, ’80. standard. We ought not, on any account,
One-third of the first to be to raise the value of the old paper
redeemed at the end of every higher than forty to one, for this will
ten years; and the whole of give it about the degree of value that
the last to be redeemed at the is most salutary; at the same time that
expiration of the six years it will avoid a second breach of faith,
specified by Congress, with the which would cause a violent death to
interest of five per cent. The all future credit. A stable currency is
United States, in compensation an idea fundamental to all practicable
for this responsibility, to schemes of finance. It is the duty and
establish certain funds for an interest of the public to give stability
annuity, payable to the Bank, to that which now exists; and it will be
equal to the discharge of the the interest of the Bank, which alone
whole amount of the paper can effect it, to co-operate. I have
currency in thirty years, with not mentioned the amount of the annuity
an interest of two per cent. to be paid by Congress, because I have
per annum. not materials to judge what quantity
of paper money now exists; since it
will be necessary to take all the State
emissions into the calculation. I suppose
(including State emissions) there may be
about four hundred millions of dollars of
the old standard, and about four millions
of the new.[16] This will give us, in
specie-value, about fourteen millions
of dollars. This is what the Bank is
to become answerable for, and what the
public is to pay, by an annuity of thirty
years, with two per cent. interest. This
annuity would amount to six hundred
and eleven thousand, three hundred and
thirty-three, and one-third, dollars,
for which funds are to be provided. By
a rough calculation, I find that the
Bank would gain, in the thirty years,
about three millions of dollars, on the
simple footing of interest; and that it
will, at different periods, have more
public money in its possession, than it
will be in advance at others: so that,
upon the whole, the sum it will gain in
interest, will be for the loan of its
credit to the public, not of any specific
sum of cash. Besides, the interest of
the Bank may gain a very considerable
sum by the purchases it may make of the
old paper at its current value, before
the influence of this plan has time to
bring it back to the point at which it
is intended to be fixed.[17] It is the
obvious interest of the United States to
concur in this plan, because, by paying
three millions of dollars in interest
to the Bank, more than it would have
to pay to the money-holders, agreeably
to its present engagements, it would
avoid a new breach of faith, fix its
circulating medium increased in value
more than one-half, render the taxes more
productive, and introduce order into its
finances, without which our independence
is lost. It will also have only about
two-thirds of the funds to establish for
this plan that are required by the Act of
March, ’80, to discharge the new bills:
it will, of course, reserve a large
balance towards the current expenses,
which is no insignificant consideration.
Perhaps it may be imagined, that the same
funds established for the redemption
of the money in the same time, without
passing through the Bank, would have an
equal effect upon its credit, and then
we should save the interest of two per
cent. Experience proves the contrary. We
find the new notes depreciating in the
States which have provided good funds.
The truth is, there is not confidence
enough in any funds merely public. The
responsibility of the Bank would beget
a much stronger persuasion of the paper
being redeemed, and have incomparably
more efficacy in raising and confirming
its credit. Besides, the Bank might
immediately reduce the quantity by
purchase, which the public could not do.
It will be observed, that of the six
millions of dollars which constitute our
annual revenue, I require nine hundred
and seventy-nine thousand, three hundred
and thirty-three, and one-third, dollars,
in funds, to reimburse the loan for the
first year, and pay off the annuity for
the redemption of the old paper. It may
be asked, where these funds are to be
procured in the present impotence of
our federal government. I answer, there
are ample means for them, and they must
be had. Congress must deal plainly with
their constituents. They must tell them,
that power without revenue is a bubble;
that unless they give them substantial
resources of the latter, they will not
have enough of the former, either to
prosecute the war, or to maintain the
Union in peace; that, in short, they
must, in justice to the public and to
their own honor, renounce the vain
attempt of carrying on the war without
either; a perseverance in which, can only
deceive the people, and betray their
safety. They must demand an instant,
positive, and perpetual investiture of
an impost on trade; a land tax, and a
poll tax, to be collected by their own
agents. This Act to become a part of the
Confederation.

It has ever been my opinion that Congress
ought to have complete sovereignty in
all but the mere municipal law of each
State; and I 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.

The taxes specified, may be made to
amount to three millions of dollars; the
other three millions to be raised by
requisition, as heretofore.

Art. XV. The Bank Remark 15. It is essential that
notes to be received in payment all taxes should be raised, throughout
of all public customs and the United States, in specie, or
taxes, at an equivalent with Bank notes at par, or the old paper
gold and silver. at its current value at the time of
payment. This will serve to increase
the circulation and credit of the Bank
notes; but no person should be obliged to
receive them in private dealings. Their
credit must depend on opinion; and this
opinion would be injured by legislative
interposition.

Art. XVI. The Bank to Remark 16. This permission dissolve itself whenever it to dissolve or sell at pleasure, will thinks proper, making effectual encourage men to adventure; and, when provision for the payment of once engaged, the profits will make them its debts; and a proprietor willing to continue. of Bank stock to have the privilege of selling out whenever he pleases.

Art. XVII. The Bank to Remark 17. This is chiefly
be established for thirty years to prevent some speculative men being
by way of experiment. alarmed, who, upon the whole, may think a
paper credit detrimental and dangerous,
though they would be willing, from
necessity, to encourage it for a limited
time. Experience, too, may show the
defects of this plan, and give rise to
alterations for the better.

Art. XVIII. No other Remark 18. Other Banks might Bank, public or private, to be excite a competition prejudicial to the permitted during that period. interests of this, and multiply and diversify paper credit too much.

Art. XIX. Three Banks Remark 19. These Banks ought to be erected in Massachusetts, to be in the interior of the country, Pennsylvania, and Virginia, to remote from danger, with every precaution facilitate the circulation and for their security in every way. Their payment of the Bank notes. distance from the capital trading points, will be an advantage, as it will make applications for the payment of Bank notes less convenient.

Art. XX. The affairs Remark 20. It is necessary, for of the Bank to be managed by reciprocal security of the public, the twelve general Directors, men proprietors, and the people, that the of reputation and fortune; affairs of the Bank should be conducted eight of them to be chosen under a joint direction. by the private proprietors, and four by Congress. The Minister of Finance to have the privilege of inspecting all their proceedings.

These, as has been already observed, are only intended as outlines; the form of administration for the Bank, and all other matters, may be easily determined, if the leading principles are once approved. We shall find good models in the different European Banks, which we can accommodate to our circumstances. Great care, in particular, should be employed to guard against counterfeits; and I think methods may be devised that would be effectual.

I see nothing to prevent the practicability of a plan of this kind, but a distrust of the final success of the war, which may make men afraid to risk any considerable part of their fortunes in the public funds; but, without being an enthusiast, I will venture to assert, that, with such a resource as is here proposed, the loss of our independence is impossible. All we have to fear is, that the want of money may disband the army, or so perplex and enfeeble our operations, as to create in the people a general disgust and alarm, which may make them clamor for peace on any terms. But if a judicious administration of our finances, assisted by a Bank, takes place, and the ancient security of property is restored, no convulsion is to be apprehended. Our opposition will soon assume an aspect of system and vigor, that will relieve and encourage the people, and put an end to the hopes of the enemy. ’Tis evident they have it not in their power to subdue us by force of arms. In all these States they have not more than fifteen thousand effective troops, nor is it possible for them much to augment this number. The East and West Indies demand reinforcements. In all the Islands, they have not, at this time, above five thousand men; a force not more than equal to the proper garrisoning of Jamaica alone; and which, the moment they lose a maritime superiority in those seas, will leave them much cause to fear for their possessions. They will probably send out fifteen hundred or two thousand men, to recruit their regiments already here; but this is the utmost they can do.

Our allies have five thousand men at Rhode Island, which, in the worst event that can happen, will be recruited to eight, to co-operate with us on a defensive plan. Should our army amount to no more than fifteen thousand men, the combined forces, though not equal to the expulsion of the enemy, will be equal to the purpose of compelling them to renounce their offensive, and content themselves with maintaining one or two capital points. This is on the supposition that the public have the means of putting their troops in activity. By stopping the progress of their conquests, and reducing them to an unmeaning and disgraceful defensive, we destroy the national expectation of success, from which the ministry draw their resources. It is not a vague conjecture, but a fact founded on the best information, that, had it not been for the capture of Charleston, and the victory of Camden, the ministry would have been in the utmost embarrassment for the supplies of this year. On the credit of those events, they procured a loan of five and twenty millions. They are in a situation where a want of splendid successes is ruin. They have carried taxation nearly to its extreme boundary; they have mortgaged all their funds; they have a large unfunded debt, besides the enormous mass which is funded. This must necessarily create apprehensions in their most sanguine partisans: and if these are not counteracted by flattering events, from time to time, they cannot much longer continue the delusion. Indeed, in this case, I suppose they must themselves despair.

The game we play is a sure game, if we play it with skill. I have calculated, in the preceding observations, on the most disadvantageous side. Many events may turn up, in the course of the summer, to make even the present campaign decisive.

If we compare the real ability of France, for revenue, with that of Great Britain; the economy and sagacity in the conduct of the finances of the former; the extravagance and dissipation which are overwhelming those of the latter; there will be found every reason to believe, that the resources of France will outlast those of her adversary. Her fleet is not much inferior, independent of that of Spain and Holland. Combined with that of Spain, it is greatly superior. If the Dutch enter into the war in earnest, and add their fleet, the superiority will be irresistible. Notwithstanding the injury they may sustain in the first instance, the Dutch will be still formidable: they are rich in credit, and have extensive means for maritime power.

Except the Emperor, who is hostile, and the Dane, who is neutral, all the rest of Europe are either friends to France or to our independence. Never did a nation unite more circumstances in its favor than we do: we have nothing against us but our own misconduct.

There are two classes of men among us, equally mistaken: one who, in spite of daily experience, of accumulated distress, persist in a narrow line of policy, and, amidst the most threatening dangers, fancy every thing in perfect security. Another, who, judging too much from the outside, alarmed by partial misfortunes, and the disordered state of our finances, without estimating the real faculties of the parties, give themselves up to an ignorant and ill-founded despondency. We want to learn to appreciate our true situation and that of the enemy. This would preserve us from a stupid insensibility to danger on the one hand, and inspire us with a reasonable and enlightened confidence on the other.

But let us suppose the worst, that we shall, after all, fail in our independence; our return to Great Britain, whenever it should happen, would be by compact. The war would terminate by a mediation. It cannot be supposed that the mediator would be so devoted to Great Britain, or would have so little consideration for France, as to oblige us to revert to our former subjection by an unconditional surrender. While they might confirm his dominion over us, they would endeavor to save appearances for the honor of France, and stipulate terms as favorable to us as would be compatible with a state of dependence. A general amnesty, and the security of private property (of course the payment of public debts), would be among the most simple and most indispensable. This would comprehend the concerns of the Bank; and if, unfortunately for our virtue, such a circumstance could operate as an inducement, it might be added, that our enemies would be glad to find, and to encourage such an institution among us for their own benefit.

A question may arise concerning the abilities of these States to pay their debts after the establishment of their independence; and though any doubt on this head must originate in gross ignorance, it may be necessary to oppose it with more than general argument, as has been done heretofore. A very summary and obvious calculation will show that there is nothing to be dreaded on this head.

The funds of nine hundred and seventy-nine thousand, three hundred and thirty-three, and one-third, dollars, proposed to be established for paying off the loan of the first year, and for redeeming the present paper, will, in thirty years, wipe off all the debts of the States, except those contracted to foreigners, which, I imagine, do not amount to four millions of dollars. Suppose we should be obliged, for two years besides the present, to borrow an equal sum each year from the Bank; the fund requisite to discharge these loans, on the same terms with the first, will amount to seven hundred and thirty-six thousand dollars, to be deducted from the five million, and twenty thousand, six hundred and sixty-six, and two-thirds, dollars, remaining on the annual revenue; which will reduce it to four millions, two hundred and eighty-four thousand, six hundred and sixty-six, and two-thirds, dollars: then the debt unfunded will be,

To foreigners already contracted by supposition, $4,000,000

Deficiency of Revenue to the expense to be obtained on credit, the first year, besides the loan from the Bank, 1,479,333⅓

Deficiency of Revenue for the second year deducting the fund for discharging the loan of this year, 1,847,333⅓

Deficiency of Revenue for the third year, making the
same deduction, 2,215,333⅓
----------
$9,542,000

Should, then, the war last three years longer, which must probably be the utmost term of its duration, we shall find ourselves with an unfunded debt of nine million, five hundred and forty-two thousand dollars, and an unappropriated revenue of four million, two hundred and eighty-four thousand, six hundred and sixty-six, and two-thirds, dollars.

The surplus of four millions, which is two hundred and eighty-four thousand, six hundred and sixty-six, and two-thirds, dollars, and the funds appropriated to the payment of the other debts which will revert to the public at the end of thirty years, will be a sufficient fund for the redemption of this debt in about thirty-five years: so that, according to my plan, at the end of thirty-five years these States have paid off the whole debt contracted on account of the war; and, in the mean time, will have a clear revenue of four millions of dollars, for defraying the expenses of their civil and military establishments.

This calculation supposes the ability of these States for revenue to continue the same as they now are, which is a supposition both false and unfavorable. Speaking within moderate bounds, our population will be doubled in thirty years; there will be a confluence of emigrants from all parts of the world; our commerce will have a proportionable progress; and of course our wealth and capacity for revenue. It will be a matter of choice if we are not out of debt in twenty years, without at all encumbering the people.

A national debt, if it is not excessive, will be to us a national blessing. It will be a powerful cement of our Union. It will also create a necessity for keeping up taxation to a degree which, without being oppressive, will be a spur to industry, remote as we are from Europe, and shall be from danger. It were otherwise to be feared our popular maxims would incline us to too great parsimony and indulgence. We labor less now than any civilized nation of Europe; and a habit of labor in the people, is as essential to the health and vigor of their minds and bodies, as it is conducive to the welfare of the State. We ought not to suffer our self-love to deceive us in a comparison upon these points.

I have spun out this letter to a much greater length than I intended. To develope the whole connection of my ideas on the subject, and place my plan in the clearest light, I have indulged myself in many observations which might have been omitted. I shall not longer intrude upon your patience than to assure you of the sincere sentiments of esteem with which I have the honor to be,

Sir, your most obedient and humble servant,
A. Hamilton.

[12] It is to be feared, too, that this sum is rated too high. Hitherto we have not four hundred men from that State, nor very promising accounts of those which may be expected.

[13] The proportion of the European armies, in general, to the national population, is calculated at one to a hundred. By this rule, supposing our population to be two and a half millions, our armies ought to consist of twenty-five thousand men; but the proportion will naturally be less in this country. Our population is more diffused; there is a greater facility of procuring subsistence, fewer poor (and consequently fewer of that class of men whose habits, tempers, and circumstances lead them to embrace the military life) than in any other country in the world. Hence it is, I say, twenty thousand men are as many as we shall be able to raise. Experience justifies this opinion. In the first paroxysms of enthusiasm our armies were larger. I believe, at particular periods, we have had more than thirty thousand men in the field: but our force has every year diminished, and has been for two years past below the standard I have assigned. Immense efforts have been made to procure men, but they have not been able to produce more. This shows that our military system is still susceptible of great reforms in favor of economy; but we dare not make them, because we cannot pay the army. I also said, twenty thousand men would be as many as we should stand in need of. The enemy have now less than this number within the States; and cannot, in the future progress of the war, have more.

An equal force, with the occasional aid of the militia, will confine them within one or two capital points; and this will be their defeat. But we have a further resource in the troops of our allies. We must not dream of decisive enterprises, unless our allies will assist us with twelve or fifteen thousand land troops, and an undisputed maritime superiority. Then, with the aid of the militia, drawn out for a few months, we may undertake and succeed. Our true policy, in the meantime, is, to endeavor to form a solid compact force, proportioned to our necessities.

[14] The possibility of making up so large a proportion of specie will depend on foreign assistance. It could hardly be hoped to effect it within ourselves, if, as I suppose, there are not more than six millions of dollars in these States. It is true, plate is admitted; but it is uncertain how far this may prove a resource. It were to be wished the proportion of specie might be as large as possible: but, perhaps, for fear of a failure, it may be advisable to alter the above proportions, so as to have, upon the whole, about one-third in specie, and two thirds in European funds and landed security.

[15] It may, perhaps, not be impossible to make some profitable speculations on the bullion which the Spaniards are afraid to transport from South America to Europe.

[16] It is impossible too soon to make some arrangement that will enable Congress to put a stop to the further emission.

[17] There is another immense consideration. The proprietors of the Bank will be the holders of a great part of this paper. They have it in their power to double the value of it by this plan: which is, in other words, to gain a hundred per cent.

HAMILTON TO WASHINGTON.

De Peyster’s Point, May 2, 1781.

Sir:

I am extremely sorry to have embarrassed you by my late application, and that you should think there are insuperable obstacles to a compliance with it. Having renounced my expectations, I have no other inducement for troubling your Excellency with a second letter, than to obviate the appearance of having desired a thing inconsistent with the good of the service, while I was acquainted with the circumstances that made it so.

I was too interested a spectator of what happened in the case of Major M’Pherson, not to have remarked, and not to recollect all the circumstances. The opposition turned ostensibly on his being a brevet officer, yet having a command in a corps formed entirely from one line: the propriety of his being employed in a detachment from the army at large, so far as I remember, was not disputed. In delicacy to Major M’Pherson, no personal objections were formally made: but in reality they existed, and contributed to the discontent. It was thought a peculiar hardship, that a gentleman who had, for a long time, fought against us, and had not taken part with us till a late period, and when our affairs had assumed a more prosperous aspect, should be preferred in one of the most honorary commands of the service. Your Excellency must be convinced, that I mention this in no other view than to show the sentiments of the officers at the time, and the whole grounds for the opposition. My esteem for Major M’Pherson, and other reasons, make it impossible I can have a different intention.

I know less of the motives of dissatisfaction in the case of Colonel Gimat and Major Galvan; but I have understood that it is founded on their being appointed in the light corps for two successive campaigns.

It would be uncandid in me, not to acknowledge that I believe a disposition to exclude brevet officers in general from command, has a great share in the opposition in every instance; and that so far it affects my case. But, at the same time, it appears to me, this principle alone can never be productive of more than momentary murmurs, where it is not seconded by some plausible pretext. I also am convinced that the Pennsylvania officers, for their own sakes, repented the rash steps they had taken; and, on cool reflection, were happy in an opportunity to relinquish their menaces of quitting a service to which they were attached by habit, inclination, and interest, as well as by patriotism. I believe, too, we shall never have a similar instance in the army, unless the practice should be carried to excess. Major Galvan, I am told, will probably be relieved. Colonel Gimat will be then the only brevet officer remaining in command. Your Excellency is the best judge of the proper limits; and there can be no doubt, that the rights of particular officers ought to give place to the general good and tranquillity of the service.

I cannot forbear repeating, that my case is peculiar, and dissimilar to all the former. It is distinguished by the circumstances I have before intimated; my early entrance into the service; my having made the campaign of ’76, the most disagreeable of the war, at the head of a company of artillery, and having been entitled, in that corps, to a rank, equal in degree, more ancient in date, than I now possess; my having made all the subsequent campaigns in the family of the Commander-in-Chief, in a constant course of important and laborious service. These are my pretensions, at this advanced period of the war, to being employed in the only way which my situation admits; and I imagine they would have their weight in the minds of the officers in general. I only urge them a second time, as reasons which will not suffer me to view the matter in the same light with your Excellency, or to regard, as impracticable, my appointment in a light corps, should there be one formed. I entreat they may be understood in this sense only. I am incapable of wishing to obtain any object by importunity. I assure your Excellency, that I am too well persuaded of your candor, to attribute your refusal to any other cause than an apprehension of inconveniences that may attend the appointment.

I have the honor to be, with perfect respect,
Sir, your most obed’t servant,
A. Hamilton.

General Washington. P. S. I have used the term brevet in the sense your Excellency appears to have understood it in, as signifying, in general, all officers not attached to any established corps. Congress seem, however, to have made a distinction: they only give a kind of warrant to those whom they designate as brevet officers. Mine is a regular commission.

LE VICOMTE DE NOAILLES A HAMILTON.

Newport, 10 May, 1781.

Je suis certain, mon cher Colonel, de vous faire plaisir en vous apprenant que votre ami Laurens est arrivé à Paris en bonne santé, après une traversée favorable. Au départ de la frégate La Concorde arrivée à Boston avec M. de Barras amiral, qui vient prendre le commandement de notre flotte, et M. le Vicomte de Rochambau, Mr. Laurens avait déjà eu plusieurs conférences avec nos ministres; il aura été bien écouté et bien entendu de celui qui est chargé du departement de la marine, ainsi que de notre contrôleur général. Ces deux hommes paraissent influer infiniment dans ce moment sur l’opinion du Roi de France et celle du peuple; qui finit en France, comme dans tous les pays du monde par être entendue. Vous saurez certainement quels sont les préparatifs pour cette campagne; je désire que nous puissions délivrer l’Amérique des souffrances qu’elle éprouve: quoique je ne sois point né dans un pays libre mon cher Colonel, je verrai avec plaisir les fondemens que vous allez établir pour le bonheur et la tranquillité d’un peuple chez lequel toutes les nations de l’Europe auront les mêmes droits. Une fois cette époque arrivée, l’Humanité jettera avec plaisir ses yeux sur l’autre monde, et verra sans envie un peuple qui ne devra son bonheur qu’à son propre courage. S’il m’est possible de placer une petite pierre dans ce vaste edifice, je me trouverai parfaitement heureux.

Le Ministre chargé de gouverner les finances de notre puissance vient d’obtenir du roi de France la permission de lui rendre un compte public de son administration depuis cinq ans qu’il en a la direction: cet exemple, le premier de ce genre a frappé l’Europe d’étonnement et d’amiration pour la conduite de ce grand homme; il prouve qu’au commencement de son ministère les dépenses de l’État excédait les recettes de 24 millions. Les différentes économies qu’il a pu établir, malgré la guerre et les frais énormes qu’elle exige, a rétabli non seulement l’équilibre mais même un bénéfice de dix millions de rente excédante et dix sept millions cinq-cent mille livres, employé annuellement à des remboursements de rentes perpetuelles. Ce qui produit maintenant 27 millions de rente de plus que de dépense. La manière énergique, raisonnée et claire rend son ouvrage persuasif aux yeux mêmes de ses ennemis. Je compte vous envoyer ce livre par la première occasion et par celle-ci même, si l’homme qui vous remettra ma lettre veut s’en charger.

Je vous demanderais pardon de mon importunité, mon cher Colonel, si je n’avais pas été assez heureux pour vous donner de nouvelles de notre ami. Je vous prie de ne pas douter de l’extrême plaisir que j’aurai dans tous les temps de ma vie à vous prouver combien mon attachement pour vous est tendre et sincère.

Le Vicomte de Noailles.

Je vous prie de présenter mon respectueux hommage à Son Excellence le Général Washington; il force ses ennemis mêmes à l’estimer, et lorsqu’on l’a vu deux fois il laisse l’impression du respect le plus tendre.

Col. Hamilton.

CARTER TO HAMILTON.

Newport, May 18, 1781.

My Dear Sir:

* * * * *

M. de Barras arrived a few days since, with the General’s son, in a frigate from France. He has taken the command of the fleet. Seven hundred land forces are now embarking, the wind is fair, and they sail this day to meet the convoy expected from France, with provisions and recruits for the regiments here. I fear they will have a very trifling augmentation of force, and that this campaign will prove as inactive as the last. I imagine you will be with General Washington at the conference. You will have the pleasure to see General Chastellux, who will give you this letter. At his return, I expect it will be decided whether the army marches or not: at present it seems a matter of great doubt, notwithstanding the preparations which are making. I am astonished we hear nothing from the southward. I fear, if the detachment, embarked at New-York, is destined for that quarter, that the enemy will make a considerable progress.

* * * * *

Your friend and servant,
John Carter.

Colonel Hamilton.

LA FAYETTE TO HAMILTON.

Richmond, May 23, 1781.

My Dear Hamilton:

I have been long complaining that I had nothing to do; and want of employment was an objection I had to my going to the southward. But for the present, my dear friend, my complaint is quite of an opposite nature; and I have so many arrangements to make, so many difficulties to combat, so many enemies to deal with, that I am just that much of a general, as will make me a historian of misfortunes, and nail my name upon the ruins of what good folks are pleased to call the army in Virginia.

There is an age past since I heard from you. I acknowledge that, on my part, I have not written so often as I ought to have done; but you will excuse this silence in favor of my very embarrassing circumstances. However remote you may be from your former post of aid-de-camp to the Commander-in-Chief, I am sure you are nevertheless acquainted with every transaction at head quarters. My letters have served to your information, and I shall consequently abstain from repetitions.

Our forced march saved Richmond; Phillips was going down; and thus far I was very happy. Phillips’s return, his landing at Brandon, south side of James River, and the unmolested journey of Lord Cornwallis through North Carolina, made me apprehensive of the storm that was gathering. I advanced towards Petersburg, and intended to have established a communication upon James and Appamatox Rivers. Had Phillips marched to Halifax, I was determined to follow him; and should have risked every thing rather than to omit making a diversion in favor of Greene. But that army took possession of Petersburg, and obliged me to stick to this side of the river, from whence reinforcements are expected. Both armies have formed their junction, and must consist of between four and five thousand men. We have nine hundred continentals. Their infantry is near five to one; their cavalry ten to one. Our militia are not numerous, come without arms, and are not used to war. Government wants energy; and there is nothing to enforce the laws. General Greene has directed me to take command in this State; and I must tell, by the way, that his letter is very polite and affectionate. It then became my duty to arrange the departments, which I found in the greatest confusion and relaxation. Nothing can be obtained, and yet expenses were enormous.

The Baron, and the few new levies he could collect, are ordered to South Carolina. I am glad he goes, as the hatred of the Virginians to him was truly hurtful to the service. Is it not strange that General Wayne’s detachment cannot be heard of? They are to go to Carolina; but should I want them for a few days, I am at liberty to keep them. This permission I will improve, so far as to receive one blow, that, being beat, I may at least be beat with some decency. There are accounts that make Lord Cornwallis very strong: others make him very weak. In this country there is no getting good intelligence.

I request you will write me, if you approve of my conduct. The command of the waters, the superiority in cavalry, and the great disproportion of forces, gave the enemy such advantages, that I durst not venture out, and listen to my fondness for enterprise. To speak truth, I was afraid of myself as much as of the enemy. Independence has rendered me the more cautious, as I know my own warmth. But if the Pennsylvanians come, Lord Cornwallis shall pay something for his victory.

I wish a reinforcement of _light infantry_, to recruit the battalions, or a detachment under General Huntington was sent to me. I wish Laurens or Sheldon were immediately dispatched with their horse.

Come here, my dear friend, and command our artillery in Virginia. I want your advice and your exertions. If you grant my request, you will vastly oblige,

Your friend,
La Fayette.

Colonel Hamilton.

MORRIS TO HAMILTON.

Philadelphia, May 26, 1781.

Sir:

It is some time since I received your performance dated the 30th of April last. I have read it with that attention which it justly deserves, and finding many points of it to coincide with my own opinions on the subject, it naturally strengthened that confidence which every man ought to possess, to a certain degree, in his own judgment. You will very soon see the plan of a Bank published, and subscriptions opened for its establishment, having already met with the approbation of Congress. It only remains for individuals to do their part, and a foundation will be laid for the anticipation of taxes and funds, by a paper credit that cannot depreciate.