Chapter IX: Part 9

Permettez moi, Monsieur, de vous adresser une lettre pour le Marquis de Lafayette, ne sachant où il est. Je ne veux point importuner son Excellence dans un moment où tant d’affaires l’accablent. M. de Closen, Aide-de-Camp de M. le Comte de Rochambeau, lui porte des dépêches importantes; M. le Marquis de Laval paraît destiné à commander un détachement de Grenadiers, et chasseurs de l’Armée Française. Je vous supplie de vouloir bien rappeler au Général, que de quelque maniere qu’il me juge utile, je me trouverai heureux d’être employé, et qu’il veuille bien témoigner à M. de Rochambeau que ce choix ne lui sera pas désagréable.

Recevez les excuses de mon Importunité, et les assurances de tous les sentiments d’estime et de considération, avec lesquels j’ai l’honneur d’être, Monsieur, votre très humble et très obéissant serviteur.

De Lauzun.

HARRISON TO HAMILTON.

New Windsor, March 26, 1781.

I came here, my dear Hamilton, on Friday night, to bid adieu to the General, to you, and to my other friends, as a military man, and regret much that I have not had the happiness of seeing you. To-morrow I am obliged to depart; and it is possible our separation may be for ever. But be this as it may, it can only be with respect to our persons; for as to affection, mine for you will continue to my latest breath. This event will probably surprise you; but from your knowledge of me, I rely you will conclude, at the instant, that no light considerations would have taken me from the army; and I think I might safely have rested the matter here. However, as the friendship between us gives you a claim to something more, and as I am not indifferent about character, and shall be anxious to have the esteem of all who are good, and virtuously great, I shall detail to you, my friend, the more substantial reasons which have led to my present conduct. I go from the army, then, because I have found, on examination, that my little fortune, earned by an honest and hard industry, was becoming embarrassed--to attend to the education of my children--to provide, if possible, for the payment of a considerable sum of sterling money and interest, with which I stand charged, on account of the land I lately received from my honored father, for equality of partition between myself and two brothers--to save a house which he had begun, and which, without instant attention, would be ruined, or at least greatly injured--to provide, if possible, for the payment of goods, which far exceed any profits I can make from my estate--and because the State of Maryland, in a flattering manner, have been pleased to appoint me to a place, very respectable in its nature, corresponding with my former, and very interesting to my whole future life and support. They have appointed me to the Chair of their Supreme Court. These, my friend, are the motives to my present resolution. My own feelings are satisfied on the occasion, though I cannot but regret parting with the most valuable acquaintances I have; and I hope they will justify me most fully to you, my Hamilton, especially when you consider, besides, the time I have been in service, and the compensation I have received. I wish, seriously, I had been sooner apprised of the good intentions of the State towards me, for reasons which will occur to you. They were but very lately known, and I was no sooner possessed of them, than I communicated the matter (that I should leave the army) to the General--having found, on inquiry, it was only in my power to accept the offer of the Chair, or decline it for ever, as the filling it had become a measure of immediate necessity; and there were other gentlemen, both of ability and merit, who had been mentioned for it, and who would probably have willingly accepted it. You are now to pardon me for this long relation, so very personal. You must do it, as what I owed to your friendship produced it, and as it is my hope and wish to stand fair in your opinion and esteem.

I proceed to tell you that I live in Charles County, Maryland, where I should be peculiarly happy to see you: but as I can have but little hopes of being gratified in this, let me have the next pleasure to it, the favor of a letter now and then; in which, write of matters personally interesting to yourself, as they will be so to me. Present me most respectfully to your lady, to General and Mrs. Schuyler. My best wishes attend you all. Adieu.

Yours in haste, most affectionately,
Robt. H. Harrison.

Colonel Hamilton.

LA FAYETTE TO HAMILTON.

Elk, April 10, 1781.

Where is, for the present, my dear Hamilton? This question is not a mere affair of curiosity. It is not even wholly owing to the tender sentiments of my friendship. But motives both of a public and private nature conspire in making me wish that your woe be not accomplished. Perhaps you are at head quarters--perhaps at Albany; at all events, I’ll tell you my history. Had the French fleet come in, Arnold was ours. The more certain it was, the greater my disappointment has been; at last it has become necessary for them to return to Rhode Island. I think they have exerted themselves for the common good, and this has been a comfort in our misfortune.

Having luckily arrived at Elk by water, which at first I had no right to expect, I have received the General’s letters. If you are at head quarters, you will have seen my correspondence with the General; if not, I tell you that I am ordered to the southern army, and the General thinks that the army under his immediate command will remain inactive. After a march of forty days, we will arrive at a time when the heat of the season will put an end to operations. This detachment is so circumstanced as to make it very inconvenient for officers and men to proceed. Before we arrive, we shall perhaps be reduced to five or six hundred men. There will be no light infantry formed--no attack against New-York--none of those things which had flattered my mind. If a corps is sent to the southward by land, it ought to have been the Jersey line, because if we weaken ourselves, New-York will be out of the question.

Monsieur Destouches will, I think, propose to the General to send to Philadelphia l’Eveillé and all the frigates; these, with the frigates now at Philadelphia, would carry fifteen hundred men to whatever part of the continent the General would think proper. We could then go to Morristown, there to form a new corps of light infantry upon the principles at first intended, and embarking in the first days of May, we could be at Wilmington, Georgetown, or any where else, sooner than we can now be by land. I would have the battalions composed of six companies; Colonels employed--Webb, Sprout, Huntington, Olney, Hill, Barber, Gimat, _Laurens_; Majors Willet, Fish, Gibbes, Inspector Smith, and another; Brigadier Generals Huntington and Scamell, and a good corps of artillerists under * * * * * *. My good friend, you would be more important at head quarters; but if you don’t stay there, you know what you have promised to me. Adieu. Write often and long letters. It is probable I will be in the southern wilderness until the end of the war, far from head quarters, from the French army, from my correspondence with France; but the whole good I could have operated, in this last instance, must have taken place by this time. My best respects and affectionate compliments wait on Mrs. Hamilton.

Most friendly yours,
La Fayette.

LA FAYETTE TO HAMILTON.

April 15, 1781. Susquehanna.

Dear Hamilton:

You are so sensible a fellow, that you certainly can explain to me what is the matter that New-York is given up; that our letters to France go for nothing; that while the French are coming, I am going. This last matter gives great uneasiness to the Minister of France. All this is not comprehensible to me, who, having been long from head quarters, have lost the course of intelligence.

Have you left the family, my dear sir? I suppose so; but from love to the General, for whom you know my affection, I ardently wish it was not the case; many, many reasons conspire to this desire of mine. But if you do leave it, and if I go to exile, come and partake it with me.

Yours,
L. F.

COL. TILGHMAN TO HAMILTON.

Head Quarters, 27th April, 1781.

My Dear Hamilton:

Between me and thee there is a gulf, or I should not have been thus long without seeing you. My faith is strong, but not strong enough to attempt walking upon the waters. You must not suppose from my dealing so much in Scripture phrases, that I am either drunk with religion or with wine, though had I been inclined to the latter, I might have found a jolly companion in my Lord, who came here yesterday.

We have not a word of news. Whenever any arrives worth communicating, and good, you shall have it instantly--if bad, I will not promise so much dispatch.

I must go over and see you soon, for I am not yet weaned from you, nor do I desire to be. I will not present so cold words as compliments to Mrs. Hamilton. She has an equal share of the best wishes of

Your most affectionate,
Tilghman.

HAMILTON TO WASHINGTON.

De Peyster’s Point, April 27, 1781.

Sir:

I imagine your Excellency has been informed, that in consequence of the resolution of Congress for granting commissions to Aid-de-Camps appointed under the former establishment, I have obtained one of Lieutenant Colonel in the army of the United States, bearing rank since the 1st of March, 1777.

It is become necessary to me to apply to your Excellency, to know in what manner you foresee you will be able to employ me in the ensuing campaign. I am ready to enter into activity whenever you think proper, though I am not anxious to do it till the army takes the field, as before that period I perceive no object.

Unconnected as I am with any regiment, I can have no other command than in a light corps; and I flatter myself my pretensions to this are good.

Your Excellency knows, I have been in actual service since the beginning of ’76. I began in the line, and had I continued there, I ought, in justice, to have been more advanced in rank than I now am. I believe my conduct, in the different capacities in which I have acted, has appeared to the officers of the army, in general, such as to merit their confidence and esteem; and I cannot suppose them to be so ungenerous as not to see me with pleasure put into a situation still to exercise the disposition I have always had of being useful to the United States. I mention these things, only to show that I do not apprehend the same difficulties can exist in my case (which is peculiar), that have opposed the appointments to commands of some other officers, not belonging to what is called the line. Though the light infantry is chiefly formed, yet being detached to the southward, I take it for granted there will be a vanguard by detachment formed for this army.

I have the honor to be,
Very respectfully,
Your Excellency’s most ob’t serv’t,
A. Hamilton.

To General Washington.

WASHINGTON TO HAMILTON.

New Windsor, April 27, 1781.

Dear Sir:

Your letter of this date has not a little embarrassed me. You must remember the ferment in the Pennsylvania line last campaign, occasioned by the appointment of Major M’Pherson; and you know the uneasiness which at this moment exists among the eastern officers, on account of the commands conferred upon Colonel Gimat and Major Galvan, although it was the result of absolute necessity.

Should circumstances admit of the formation of another advanced corps, of which I see very little prospect, from present appearances, it can be but small, and must be composed almost entirely of eastern troops: and to add to the discontents of the officers of those lines, by the further appointment of an officer of your rank to the command of it, or in it, would, I am certain, involve me in a difficulty of a very disagreeable and delicate nature; and might, perhaps, lead to consequences more serious than it is easy to imagine. While I adhere firmly to the right of making such appointments as you request, I am at the same time obliged to reflect, that it will not do to push that right too far; more especially in a service like ours, and at a time so critical as the present.

I am convinced that no officer can, with justice, dispute your merit and abilities. The opposition heretofore made, has not been for the want of those qualifications in the gentlemen who are, and have been, the objects of discontent. The officers of the line contend, without having reference to particular persons, that it is a hardship and reflection upon them, to introduce brevet officers into commands (of some permanency), in which there are more opportunities of distinguishing themselves than in the line of the army at large, and with the men they have had the trouble to discipline and to prepare for the field.

My principal concern arises from an apprehension, that you will impute my refusal of your request to other motives than those I have expressed; but I beg you to be assured, I am only influenced by the reasons which I have mentioned.

I am, dear Sir,
Your obedient, humble servant,
G. Washington.

Lieutenant-Colonel Hamilton.

SCHUYLER TO HAMILTON.

Saratoga, April 29, 1781.

My Dear Sir:

* * * * *

The troops here are destitute of meat, and I fear will abandon the post; the inhabitants in consternation, and preparing to fly, since they have heard of the arrival of some of the enemy’s shipping at Crown Point. Flour we can procure for the present, I having, on my own account, purchased one hundred barrels about twelve miles from this. If beef is sent up so as to enable the troops to remain, an engineer will be absolutely necessary to construct two or three small fortifications.

* * * * *

I am, dear Sir,
Most affectionately and sincerely,
Yours, etc., etc.,
Ph. Schuyler.

Col. Hamilton.

HAMILTON TO ROBERT MORRIS.

April 30, 1781.

Sir:

I was among the first who were convinced that an administration, by single men, was essential to the proper management of the affairs of this country. I am persuaded, now, it is the only resource we have, to extricate ourselves from the distresses which threaten the subversion of our cause. It is palpable, that the people have lost all confidence in our public councils; and it is a fact, of which I dare say you are as well apprised as myself, that our friends in Europe are in the same disposition. I have been in a situation that has enabled me to obtain a better idea of this than most others; and I venture to assert, that the Court of France will never give half the succors to this country, while Congress hold the reins of administration in their own hands, which they would grant, if these were intrusted to individuals of established reputation, and conspicuous for probity, abilities, and fortune.

With respect to ourselves, there is so universal and rooted a diffidence of the government, that, if we could be assured the future measures of Congress would be dictated by the most perfect wisdom and public spirit, there would be still a necessity for a change in the forms of our administration, to give a new spring and current to the passions and hopes of the people. To me it appears evident, that an executive ministry, composed of men with the qualifications I have described, would speedily restore the credit of government abroad and at home--would induce our allies to greater exertions in our behalf--would inspire confidence in moneyed men in Europe, as well as in America, to lend us those sums of which it may be demonstrated we stand in need, from the disproportion of our national wealth to the expenses of the war.

I hope, sir, you will not consider it as a compliment, when I assure you that I heard, with the greatest satisfaction, of your nomination to the department of finance. In a letter of mine, last summer, to Mr. Duane, urging, among other things, the plan of an executive ministry, I mentioned you as the person who ought to fill that department. I know of no other in America, who unites so many advantages; and of course every impediment to your acceptance, is to me a subject of chagrin. I flatter myself Congress will not preclude the public from your services by an obstinate refusal of reasonable conditions; and, as one deeply interested in the event, I am happy in believing you will not easily be discouraged from undertaking an office, by which you may render America, and the world, no less a service than the establishment of American independence! ’Tis by introducing order into our finances--by restoring public credit--not by gaining battles, that we are finally to gain our object. ’Tis by putting ourselves in a condition to continue the war--not by temporary, violent, and unnatural efforts to bring it to a decisive issue, that we shall, in reality, bring it to a speedy and successful one. In the frankness of truth I believe, sir, you are the man best capable of performing this great work.

In expectation that all difficulties will be removed, and that you will ultimately act on terms you approve, I take the liberty to submit to you some ideas, relative to the objects of your department. I pretend not to be an able financier: it is a part of administration which has been least in my way, and, of course, has least occupied my inquiries and reflections. Neither have I had leisure or materials to make accurate calculations. I have been obliged to depend on memory for important facts, for want of the authorities from which they are drawn. With all these disadvantages, my plan must necessarily be crude and defective; but if it may be a basis for something more perfect, or if it contains any hints that may be of use to you, the trouble I have taken myself, or may give you, will not be misapplied. At any rate, the confidence I have in your judgment, assures me that you will receive, with pleasure, communications of this sort: if they contain any thing useful, they will promote your views and the public benefit; if not, the only evil is the trouble of reading them; and the best informed will frequently derive lights, even from reveries of projectors and quacks. There is scarcely any plan so bad as not to have something good in it. I trust mine to your candor without further apology; you will at least do justice to my intention.

The first step towards determining what ought to be done in the finances of this country, is to estimate, in the best manner we can, its capacity for revenue; and the proportion between what it is able to afford, and what it stands in need of, for the expenses of its civil and military establishments. There occur to me two ways of doing this: 1st. By examining what proportion the revenues of other countries have borne to their stock of wealth, and applying the rule to ourselves, with proper allowance for the difference of circumstances. 2d. By comparing the result of this rule with the product of taxes in those States which have been the most in earnest in taxation. The reason for having recourse to the first method is, that our own experience of our faculties in this respect, has not been sufficiently clear, or uniform, to admit of a certain conclusion: so that it will be more satisfactory to judge of them by a general principle, drawn by the example of other nations, compared with what we have effected ourselves, than to rely entirely upon the latter.

The nations with whose wealth and revenues we are best acquainted, are France, Great Britain, and the United Provinces. The real wealth of a nation, consisting in its labor and commodities, is to be estimated by the sign of that wealth--its circulating cash. There may be times when, from particular accidents, the quantity of this may exceed or fall short of a just representative; but it will turn again to a proper level, and, in the general course of things, maintain itself in that state.

The circulation of France is almost wholly carried on in the precious metals; and its current cash is estimated at from fifteen to sixteen hundred millions of livres. The net revenue of the kingdom, the sum which actually passes into the public coffers, is somewhere between three hundred and sixty and four hundred millions, about one fourth of the whole of its currency. An estimate of the wealth of this nation is liable to less fallacy than of that of the other two, as it makes little use of paper credit, which may be artificially increased, and even supported, a long time beyond its natural bounds.

It is supposed that the gross sum extracted from the people by the collectors of the revenue, may be one-third more than that which goes into the treasury: but as their exactions are excessive, and fall too heavy on particular orders, who are by that means reduced to indigence and misery, it is to be inferred, that, with moderate and reasonable expenses of collection, the present revenue is as great as the kingdom can well afford, from its present quantity of wealth.

The circulating cash of Great Britain, in paper and specie, may be stated at about forty millions of pounds sterling. Mr. Hume supposes it to have been, at the time he wrote his Essay on the Balance of Trade, about thirty millions. Other writers have carried it to fifty, and it is probably in a medium that we shall find the truth. I do not include in this, the whole amount of Bank notes, Exchequer bills, India bonds, etc. etc.; but only such part as is really employed in common circulation, and performs the offices of current cash. In ’75, by Dr. Price’s statement, the net revenue of Great Britain was ten millions--that is, about one-fourth of its current cash, as in France.

I have never met with any calculation that might be depended upon, of the current cash of the Seven Provinces. Almost the whole of their coin, as well as large quantities of plate and bullion, are shut up in the Bank of Amsterdam. The real wealth of the Bank is believed to be about fifteen millions sterling; though, upon the strength of this fund, it has a credit almost unlimited, that answers all the purposes of cash in trade. As the Dutch, by their prudent maxims, have commonly the rate of exchange throughout Europe in their favor, and a considerable balance of trade, the use of paper credit (which, in part, also depends upon the particular nature of their Banks) has not the same tendency with them, as in England, to banish the precious metals. We may therefore suppose these to be here, as in France, the true sign of the wealth of the nation. If to the fifteen millions in Bank, we add two millions of specie for the retail circulation and various transactions of business, we shall, I imagine, have nearly the true stock of wealth of the United Provinces. Their revenues amount to something more than four millions, and bear the same proportion to the stock from which they are drawn, as those of France and England. I confess, however, the data, in their case, are not sufficiently ascertained to permit us to rely equally on the result. From these three examples we may venture to deduce this general rule,--that the proportion of revenue which a nation is capable of affording, is about one-fourth of its circulating cash, so far as this is a just representative of its labor and commodities.

This is only applicable to commercial countries, because, in those which are not so, the circulating cash is not an adequate sign. A great part of domestic commerce is carried on by barter; and the State must receive a part of its dues in the labor and commodities themselves. The proportion, however, of the revenues of such a State to the aggregate of its labor and commodities, ought to be the same as in the case of trading nations to their circulating cash; with this difference, that the difficulty of collection and transportation, the waste and embezzlement inseparable from this mode of revenue, would make the real advantage and ultimate gain to the State, infinitely less than when the public dues are paid in cash.

When I say that one-fourth part of its stock of wealth is the revenue which a nation is capable of affording to the government, I must be understood in a qualified, not in an absolute sense. It would be presumptuous to fix a precise boundary to the ingenuity of financiers, or to the patience of the people: but this we may safely say, that taxation is already carried, in the nations we have been speaking of; to an extent which does not admit of a very considerable increase without a proportionable increase of industry. This suffices for a standard to us; and we may proceed to the application.

From a comparison of the several estimates I have seen, of the quantity of current cash in this country previous to the war (specie and paper), I have settled my opinion of the amount at thirty millions of dollars, of which about eight might have been in specie: one-fourth of this, by analogy, was at that time the proper revenue of these States; that is, seven and a half millions of dollars.

As taxation, however, has, by slow gradations, been carried to an extreme in those countries which I have chosen as examples, that would not be, but in a course of time, practicable in this, where the people have been so little accustomed to taxes, it may be doubted whether it would be possible to raise the same proportion of revenue here. The object of the war, I imagine, would supply the want of habit, and reconcile the minds of the people to paying to the utmost of their abilities, provided the taxes were judiciously imposed, and the revenues wisely administered. Besides this, there is a circumstance in our favor, which puts it in the power of government to raise an equal proportion of revenue without burthening the lower classes of the people in the same degree as in Europe. This circumstance is the much greater equality of fortunes, by which means men, in this country, may be made to contribute to the public exigencies in a much juster proportion to their property; and this is in fact the case. In France the rich have gained so entire an ascendant, that there is a constant sacrifice of the ease and happiness of the people to their avarice and luxury: their burthens are in no proportion to those of the middle order, and still less to those of the poor. In England and Holland the case, though not altogether, is in a great measure the same. There are also men of very large moneyed capitals, which were either formerly exempt from taxes by being in the public funds, or, having no visible representative for taxation to operate upon, enjoy virtually the same advantages. But if, at the commencement of the war, the ability of these States for revenue may be rated at seven and a half millions of dollars, when the amount of its circulating cash was thirty millions, now that it is reduced more than one-half in real value, to what revenue are they to be supposed equal at this time? I should judge about one-fifth less, and not more.

The diminution of our circulating cash is principally artificial. It is true, our foreign commerce has declined by the war, but our domestic commerce has increased. I know of no good reason to believe, that the quantity of labor and commodities have been materially diminished. Our exports have lessened, but our internal consumption has augmented. The men employed in the army, and in the departments connected with it, consume and waste three times as much as the same number of men in civil life. A number of husbandmen have been taken from their ploughs into military service; but the progress of our natural population has, in part, supplied their place; and the demands of the war have increased individual industry. The great influx of money, at first operated upon the avarice of the people, and, for a long time, served also as a stimulus to industry, which taxation has since kept up on the principle of necessity. Notwithstanding the demands and competitions of two armies for supplies, we see that corn, which is the staple of these middle States, is cheaper than for some years before the war; a strong argument of plenty.

We may infer from all this, that we stand in need now of nearly the same quantity of medium for our circulation as before the war. The depreciation of the money below the standard, is to be attributed to a want of confidence rather than to a decay of resources. We find the people, in some of the States, distressed to pay their taxes, for want of money, with ample means otherwise; which is a proof, that our current cash is not a competent representative of the labor and commodities of the country. Another proof of the same nature is, that particular States who have found no small difficulty in collecting their pecuniary taxes, have been successful in raising contributions to a large amount in kind. This country never having been a country of manufactures, the productions of the soil ever were, as they still are, the principal source of revenue. The inhabitants have abridged their wants of foreign articles, from the scarcity of them, and have, in part, supplied their place by home manufactures; which, being chiefly conducted by the women, take nothing from the labor appropriated to agriculture, while it enables the farmer to spare a larger portion of his income to the public.

Whatever diminution our means of revenue may have suffered, must be accounted for on the decay of foreign trade, and on the loss of territory. The imposts on trade in Great Britain amounted to about a fourth of its total revenue. The proportion must be less in America. But suppose it to be the same; suppose our external commerce to be reduced one-half, which I believe is an ample allowance, then, one-eighth should be deducted from our revenue on this account; which would bring it down to six millions, five hundred and sixty-two thousand, five hundred dollars. Allow for the loss of Georgia and South Carolina one-eighth of this sum: this would reduce the income of the remaining States to five millions, seven hundred and forty-two thousand, one hundred and eighty-eight, and four-eighths, dollars. But as the allowance, in both cases, is large, the diminution I have already supposed, of one-fifth of the whole, appears to be nearest the truth; which leaves these States with a net revenue of six millions of dollars.

We will now examine how far this rule agrees with experience, and with what has already been effected in these States. Massachusetts may serve as a criterion. This is one of the States where taxation has been carried furthest. Taxes were so heavy last year, that I am informed there were real marks of distress among some classes of the people. The Legislature, in their late Address, tell us that they amounted to six hundred thousand pounds lawful: and they appear to have thought the pressure of them too great, by reducing them at a time when they are obliged to have recourse to a large loan, to answer the exigencies of the current year.

The taxes they specify which seem to belong to those of the present year, with the addition of the bounties for raising men, and the beef supply, may be estimated at near five hundred thousand pounds.

This State is in a different situation from any other. Its position has made it impossible for the enemy to intercept its trade; while that of all the others has been greatly injured or totally obstructed. It has become, in consequence, the mart of the States northward of Pennsylvania; and its commerce has enlarged itself much beyond its former limits. A great part of the money expended for the support of the war, has been disbursed there. Congress, in their requisitions for money, have rated the quota of Massachusetts at of the whole; but I believe its ability, at this time, is in the proportion of one-fifth. I found this estimation on an impartial comparison of the circumstances of the several States.

Admitting the proportion to be just, and taking the taxes of the present year as a standard, the gross amount of our collective revenues would be two millions, five hundred thousand pounds lawful; or eight millions, three hundred and thirty-three thousand, three hundred and thirty-three, and one-third, dollars. The expense of collection, in England, is about the ninth of the gross amount; and considering that our revenue is to be raised in eleven different governments, each having a complete set of collectors of its own, the expense of collection, with us, will in all probability be not much less than it is in England. Supposing it to be the same, and that the taxes were to prove as productive as their nominal amount, our net revenue would then be seven millions, four hundred and seven thousand, four hundred and eight, and one-half, dollars; which considerably exceeds what it ought to be by my first calculation.

But there are considerations which may induce us to make large deductions from this sum. When the Legislature tells us, that the taxes of last year amounted to six hundred thousand pounds, it also tells us that there was _a part_ of them still to be levied; which, among other things, had occasioned them to postpone the next tax to a future session. Whatever is due on the last year, may be considered, in effect, as an anticipation on the taxes of the present; for it takes off so much from the ability of the people to pay them. The chances are, that the additional impositions projected for the current year will not be raised in their full extent. Taxes are seldom or never so productive as their estimated value; and in a case like this, must be expected to be more than commonly deficient.

It is to be observed, also, that the last year was a year of peculiar exertion. There was a general expectation of some attempt, in conjunction with our allies, decisive of the war. This made the people strain their efforts beyond their natural abilities: and yet they did not comply with the demands of the Legislature.

The money for the bounties this year, which I have calculated at sixty thousand pounds,[12] may, in like manner, be regarded as an extraordinary and special contribution, which the people may be willing to submit to, over and above what they could probably afford to pay, to get rid of the insupportable inconvenience of temporary enlistments.

Reasonable deductions on these accounts being made, will bring the two calculations to a pretty exact agreement, and make them confirm each other. But were not this the case, I should be inclined, in preference, to trust the first, as being founded on a basis better known and better ascertained by experience. I believe, however, we may safely conclude, from both, that between six and seven millions of dollars is the proper revenue of these States, after the dismemberment of South Carolina and Georgia.

Having formed an estimate of our ability for revenue, the next thing to be ascertained is, the annual expense of our civil and military establishments. With tolerable economy, I should suppose two millions and a half of dollars would amply suffice for the first, including the particular administration of each State. For the second, judiciously managed, eight millions of dollars would be adequate, calculating for an army of twenty thousand men, which are as many as we shall stand in need of, or be able[13] to raise. Eleven millions of dollars will be then the amount of the annual expenses of these States. I speak on a supposition that a system were embraced, well adapted to rescuing our affairs from the chaos in which they are now involved; and which, while it continues, must baffle all calculation.

The difference between our revenues and expenses, on the preceding scale, will be from four to four and a half millions of dollars; which deficiency must of course be supplied by credit, foreign or domestic, or both.

With regard to credit abroad, I think we have little chance of obtaining a sufficiency, nearly to answer our purpose. France, by all the reforms she can make in her interior economy, by all the means she can procure in loans and lotteries, in addition to her revenue, can do little more than satisfy her own wants. The death of the Empress Queen, and the notorious hostility of the Emperor, will add to the number of these. She will, in all probability, be obliged to pay greater attention to her army, which has been neglected, for several years past, to apply all the resources of the kingdom to the improvement of the navy. Though Russia and Prussia, by the last advices, seemed disposed to control the ill-humor of the Emperor, France will hardly think it prudent to leave herself in a defenceless condition, relying on the precarious friendship and momentary interests of other powers. The increase of her army will necessarily increase her expenses, as she cannot, in the present state of things, retrench any thing from the navy; and of course she will have less money to spare to allies. It has been observed, that France has hitherto imposed none of the additional taxes usual in time of war; by doing which, it is imagined she would have it in her power, not only to supply her own wants better, but to contribute largely to ours. To this it has been answered, with great appearance of reason, that the credit of the financier very much depends on his having such a resource in reserve, which, being considered as a mean he may command, when necessary, to fulfil his engagements, disposes moneyed men to lend to him with the greater freedom and confidence. The breaking in upon that resource, therefore (it is said), would injure credit, and obstruct loans in a degree that could not be compensated by the direct value of the revenue it would furnish.

Upon the whole, however, from a variety of siftings and inquiries, I should be mistaken if France did not lend this country eight or ten millions of livres annually, during the war; provided its finances were once put upon a reasonable footing: but this is not above a third of our wants.

I find no reason to flatter ourselves that we have much to expect either from the ability or inclination of Spain. Her government is far from being so rich as is vulgarly imagined. The mines of South America, of late years, have been less liberal of their profits; and, for fear of accidents, but a small part of their product, since the war, has been imported into Europe. The extreme indolence of the Spaniards, and their neglect of agriculture, manufactures, and trade, make them tributary to their more industrious neighbors, who drain them of their precious metals as fast as they arrive.

But if they were heartily disposed to do it, they might still afford us some assistance. Their conduct, hitherto, has manifested no such disposition: it has been as cold and reserved as it could well be. The bills drawn upon them have not been rejected, but they have not been paid. Their permitting the residence of a British emissary among them, and the countenance they give him, unprecedented in a state of war, afford just room for a distrust of their intentions, though it may be nothing more than a stroke of policy, to play him off against our negotiations, and make us bid higher for their friendship. Their method of prosecuting the war is passive, to a degree that can scarcely be resolved even into Spanish supineness; but seems to have a more corrupt original. A bigoted prince, governed by a greedy confessor, is a character on which little dependence can be placed.

’Tis not on Spain, then, that we are to build our hopes of any considerable succors in money.

The Dutch government has of long standing mortgaged all its revenues. Taxation has been carried to a length that admits of little extension. ’Tis from its credit with its own citizens, that it must derive the means of making war. It has every thing to do. Its fleet is to be in a manner created anew; and its land forces to be recruited, having been, for some time past, suffered to decline very much. It will, therefore, stand in need of all its credit for its own uses. Of course we have nothing to expect from the government of that country.

The individuals will not have confidence enough in our public councils, to embark any considerable part of their fortunes with us, on the ordinary principles of a loan. Stronger inducements, the prospect of commercial advantages, securities different from the mere faith of the United States, must be held out, to tempt them to engage far with us. The plan I am going to propose, endeavors to conciliate these objects.

As to internal loans, on which, after all, we must chiefly depend, there are two things that operate against them, to any large amount; the want of a sufficient number of men, with sufficient moneyed capitals to lend the sums required, and the want of confidence in those who are able to lend, to make them willing to part with their money. It may be added, that they can employ it to greater advantage in traffic, than by merely lending it on interest.

To surmount these obstacles, and give individuals ability and inclination to lend, in any proportion to the wants of government, a plan must be devised, which, by incorporating their means together, and uniting them with those of the public, will, on the foundation of that incorporation and union, erect a mass of credit that will supply the defect of moneyed capital, and answer all the purposes of cash; a plan which will offer adventurers immediate advantages, analogous to those they receive by employing their money in trade, and, eventually, greater advantages; a plan which will give them the greatest security the nature of the case will admit for what they lend; and which will not only advance their own interest, and secure the independence of their country, but, in its progress, have the most beneficial influence upon its future commerce, and be a source of national strength and wealth.

I mean the institution of a NATIONAL BANK. This I regard, in some shape or other, as an expedient essential to our safety and success; unless, by a happy turn of European affairs, the war should speedily terminate in a manner upon which it would be unwise to reckon. There is no other that can give to government that extensive and systematic credit, which the defect of our revenues makes indispensably necessary to its operations.

The longer it is delayed, the more difficult it becomes. Our affairs grow every day more relaxed and more involved; public credit hastens to a more irretrievable catastrophe; the means for executing the plan are exhausted in partial and temporary efforts. The loan now making in Massachusetts would have gone a great way in establishing the funds on which the Bank must stand.

I am aware of all the objections that have been made to public Banks; and that they are not without enlightened and respectable opponents. But all that has been said against them, only tends to prove that, like all other good things, they are subject to abuse, and, when abused, become pernicious. The precious metals, by similar arguments, may be proven to be injurious. It is certain that the mines of South America have had great influence in banishing industry from Spain, and sinking it in real wealth and importance. Great power, commerce, and riches, or, in other words, great national prosperity, may, in like manner, be denominated evils; for they lead to insolence, an inordinate ambition, a vicious luxury, licentiousness of morals, and all those vices which corrupt government, enslave the people, and precipitate the ruin of a nation. But no wise statesman will reject the good, from an apprehension of the ill. The truth is, in human affairs there is no good, pure and unmixed: every advantage has two sides: and wisdom consists in availing ourselves of the good, and guarding as much as possible against the bad.

The tendency of a National Bank is to increase public and private credit. The former gives power to the State, for the protection of its rights and interests: and the latter facilitates and extends the operations of commerce among individuals. Industry is increased, commodities are multiplied, agriculture and manufactures flourish: and herein consists the true wealth and prosperity of a State.

Most commercial nations have found it necessary to institute Banks: and they have proved to be the happiest engines that ever were invented for advancing trade. Venice, Genoa, Hamburgh, Holland, and England, are examples of their utility. They owe their riches, commerce, and the figure they have made at different periods, in a great degree to this source. Great Britain is indebted for the immense efforts she has been able to make, in so many illustrious and successful wars, essentially to that vast fabric of credit raised on this foundation. ’Tis by this alone she now menaces our independence.

She has, indeed, abused the advantage, and now stands on a precipice. Her example should both persuade and warn us. ’Tis in republics where Banks are most easily established and supported, and where they are least liable to abuse. Our situation will not expose us to frequent wars; and the public will have no temptation to overstrain its credit. In my opinion, we ought not to hesitate, because we have no other resource. The long and expensive wars of King William, had drained England of its specie: its commerce began to droop for want of a proper medium: its taxes were unproductive, and its revenues declined. The administration wisely had recourse to the institution of a Bank; and it relieved the national difficulties. We are in the same, and still greater, want of a sufficient medium. We have little specie: the paper we have is of small value, and rapidly descending to less: we are immersed in a war for our existence as a nation, for our liberty and happiness as a people: we have no revenues nor no credit. A Bank, if practicable, is the only thing that can give us either the one or the other.

Besides these great and cardinal motives to such an institution, and the advantages we should enjoy from it, in common with other nations, our situation, relatively to Europe and to the West Indies, would give us some peculiar advantages.

Nothing is more common than for men to pass from the abuse of a good thing, to the disuse of it. Some persons, disgusted by the depreciation of the money, are chimerical enough to imagine it would be beneficial to abolish all paper credit, annihilate the whole of what is now in circulation, and depend altogether upon our specie, both for commerce and finance. The scheme is altogether visionary, and in the attempt would be fatal. We have not a competent stock of specie in this country, either to answer the purposes of circulation in trade, or to serve as a basis for revenue. The whole amount of what we have, I am persuaded, does not exceed six millions of dollars, one-fifth of the circulating medium before the war. To suppose this would be sufficient for the operations of commerce, would be to suppose that our domestic and foreign commerce were both reduced four-fifths: a supposition that carries absurdity in the face of it. It follows that if our paper money were destroyed, a great part of the transactions of traffic must be carried on by barter; a mode inconvenient, partial, confined, destructive both of commerce and industry. With the addition of the paper we now have, this evil exists in too great a degree. With respect to revenue, could the whole of our specie be drawn into the public treasury annually, we have seen that it would be little more than one half of our annual expense. But this would be impracticable; it has never been effected in any country. Where the numerary of a country is a sufficient representative, there is only a certain proportion of it that can be drawn out of daily circulation; because, without the necessary quantity of cash, a stagnation of business would ensue. How small, then, would be the proportion of the six millions (in itself so unequal a representative) which the public would be able to extract in revenue. It must either have little or no revenue, or it must receive its dues in kind; on the inefficacy and inconveniences of which mode, I have already remarked. The necessity for it, in part, unhappily now has place, for the cause assigned, a deficiency of current cash: but were we to establish it as our principal dependence, it would be impossible to contrive a mode less productive to the public, more contrary to the habits and inclinations of the people, or more baneful to industry.

But waiving the objections on this head, there would still remain a balance of four millions of dollars more than these States can furnish in revenue, which must be provided for the yearly expense of the war. How is this to be procured without a paper credit, to supply the deficiency of specie, and enable the moneyed men to lend? This question, I apprehend, will be of no easy solution.

In the present system of things, the health of a State, particularly a commercial one, depends on a due quantity and regular circulation of cash, as much as the health of an animal body depends upon the due quantity and regular circulation of the blood. There are indisputable indications that we have not a sufficient medium; and what we have is in continual fluctuation. The only cure to our public disorders, is to fix the value of the currency we now have, and increase it to a proper standard, in a species that will have the requisite stability.

The error of those who would explode paper money altogether, originates in not making proper distinctions. Our paper was, in its nature, liable to depreciation, because it had no funds for its support, and was not upheld by private credit. The emissions under the resolution of March, ’80, have partly the former advantage, but are destitute of the latter, which is equally essential. No paper credit can be substantial, or durable, which has not funds, and which does not unite, immediately, the interest and influence of the moneyed men, in its establishment and preservation. A credit begun on this basis, will, in process of time, greatly exceed its funds: but this requires time, and a well settled opinion in its favor. ’Tis in a National Bank, alone, that we can find the ingredients to constitute a wholesome, solid, and beneficial paper credit.

I am aware that, in the present temper of men’s minds, it will be no easy task to inspire a relish for a project of this kind: but much will depend on the address and personal credit of the proposer. In your hands I should not despair: and I should have the greater hopes for what I am informed appeared to be the disposition, at the promulgation of the plan for a loan in Massachusetts. The men of property in America, are enlightened about their own interest, and would easily be brought to see the advantages of a good plan. They ought not to be discouraged at what has happened heretofore, when they behold the administration of our finances put into a better channel. The violations of public engagements, hitherto, have proceeded more from a necessity produced by ignorance and mismanagement, than from levity or a disregard to the obligations of good faith.

Should the success, in the first instance, not be as complete as the extent of the plan requires, this should not hinder its being undertaken. It is of the nature of a Bank, wisely instituted, and wisely administered, to extend itself, and, from small beginnings, grow to a magnitude that could not have been foreseen.