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THE COLONIAL MERCHANT MARINE.

the vessels were sloops or brigantines. It was not unusual for the port of New York or the port of Boston to have weekly clearances to the number of twenty or more. At this time the war of the Spanish succession was raging and French privateers were harassing American vessels trading to the West Indies and to England. Consequently, the merchantmen went back and forth under convoy of men of war, and from the accounts of these sailings we have some idea of the proportions to which the colonial marine had then attained. For example, in May, 1704, 35 vessels cleared together from Barbadoes for New York, Philadelphia, Rhode Island and Boston. On June 7 of the same year the Virginia fleet of 143 vessels sailed for English ports under convoy. In August, 1706, a fleet of 200 vessels sailed from Virginia to England under convoy of five men-of-war. In September, 1706, a fleet of 60 merchantment sailed on a single day from Barbadoes for England and various American ports. A colonial merchant fleet of from 100 to 200 vessels sailing under convoy to or from England was not unusual.*

A list of the vessels owned in New York City in 1684 showed 3 barks, 3 brigantines, 26 sloops and 46 open boats. In the same year, from March to November, there were 86 clearances up the Hudson River to Esopus

Lyman H. Weeks and Edwin M. Bacon, An Historical Digest of the Provincial Press, vol. i., passim.

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and Albany. In 1687 Governor Dongan reported that New Yorkers owned 9 or 10 vessels of from 80 to 100 tons each, 2 or 3 ketches and barks of about 40 tons each and some 20 sloops of from 20 to 25 tons each. Newport, R. I., rivalled Boston and distanced New York in its shipping. For the calendar year 1764 the custom house books of that port recorded 180 vessels there owned, engaged in foreign trade, and 352 in coasting from Newfoundland to Georgia. On these vessels 2,200 seamen were employed. In the West India trade alone 150 vessels were engaged and 14,000 hogsheads of molasses were annually brought

thither.

When the Revolution broke out, colonial built vessels to the aggregate of 398,000 tons were employed in the general commerce of Great Britain. In the carrying trade between Great Britain and the American colonies alone at this time, there were 662 vessels, having an aggregate tonnage of 86,744; of these, 497, with a tonnage of 65,058, belonged to British merchants, and 165, with a tonnage of 21,686, to merchants of the colonies. At the same time there were in the intercolonial merchant marine, including the West Indies, 136 British vessels, with a tonnage of 6,358, and 781 colonial vessels, of a tonnage of 37,032.* In number of vessels the colonies were far ahead

Report of the Lords of the Committee of Privy Council for Trades and Plantations, p. 74 and Appendix (London, 1791).

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BANKING AND CURRENCY.

of the mother country, but in tonnage they were behind. Their almost complete monopoly of the intercolonial and West India trade, where the vessels were of small size, instead of ocean-going ships, accounts for this.*

Banking and Currency.

The perfection of a financial system of any sort is one of the last steps in the governmental development of any new country. of nation-building the matters of banking and currency are apt to remain in a rather chaotic condition for some time, and this was preëminently the case with the American colonies during their early days. Public credit for all practical purposes was then non-existent, nor did banks, in the modern acceptance of the term, have any place in the colonial scheme of things. For this reason it was at that time impossible to secure any large loans in this country through influential or really reliable sources. A few of the local powers demanded excise duties on articles which were then deemed luxuries, and a property tax was gen

In the stern business

* Willis J. Abbot, American Ships and Sailors (New York, 1902); William W. Bates, The American Marine (Boston, 1903); E. L. Bogart, Economic History of the United States (New York, 1908); William W. Bates, American Navigation Its Rise and Ruin (Boston, 1902); Winthrop S. Marvin, The American Merchant Marine (New York, 1902); Weeks and Bacon, An Historical Digest of the Provincial Press (Boston, 1911); Adam Seybert, Statistical Annals (Philadelphia, 1818); U. S. Hill, History of American Shipping (New York, 1883).

erally levied by all the colonies, while almost as many imposed tariff duties on both exports and imports. The revenues collected in these ways, however, were for the most part insignificant. The oppression of taxation, forming as it did one of the most dominant causes in impelling the colonists to throw off the yoke of Great Britain, had embittered the whole country to such an extent that the people were suspicious even of taxation from within. Furthermore, the newly appointed Continental Congress had vested in it no power for the collection of revenue, and this fact, coupled with the lack of available loan agencies, left that body almost penniless when hostilities were finally opened with the mother country in 1775.

In an effort to overcome this embarrassing situation and raise the absolutely indispensable funds for carrying on the war, the Continental Congress decreed an issue of bills of credit. Altogether, forty emissions of notes occurred in the interval from June, 1775, to November, 1779, their aggregate face value amounting to $241,000,000, in addition to which the various States put out $209,000,000. All of these pledges had only the faith of Congress as security and, although that body called upon the individual States again and again to provide means for making good, the issues. were never redeemed. The logical result was that, from the beginning, a steady depreciation in the value of the

BANKING AND CURRENCY.

notes took place. In 1780 the government at length realized the futility of further attempting to make good its pledges, and accordingly arranged for the acceptance of paper currency in place of silver at the ratio of 40 to 1. Despite this fact, the depreciation continued so steadily that the notes were popularly considered as so much waste paper. Finally in 1790, when official estimates placed the total of the issue then outstanding at about $78,000,000, Congress passed the funding act which included the provision that all notes still outstanding could be retired at the rate of 100 to 1. Meanwhile Congress Congress was making desperate efforts to repair the national fortunes. Loans were sought both at home and from foreign powers; attempts to impose national taxation were made; and requisitions both in specie and specific supplies were levied. The latter method was a sorry failure. The demand for specie netted only a little more than $5,000,000, while that for supplies not only failed to work out to practical advantage, but resulted in actual

waste.

It was at this juncture, with the necessity of borrowing funds becoming more and more urgent, that the first really important step in the establishment of a national banking system was taken by the establishment of loan offices in many of the States. These sold indented certificates bearing interests which ranged from 4 per cent. to 6 per cent. In this way loans.

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totaling approximately $63,000,000 were made, the specie value of which became $7,600,000 in 1780, according to the scale of depreciation then decided upon by Congress. Two years later, when Congress found itself unable to meet the interest on these, indents were issued to the holders of certificates. These became current in the payment of State taxes, following which they could be turned back upon the national government when the latter demanded its requisitions from the several States. At the same time the government made no progress in its many attempts to impose national taxation.

The new government could undoubtedly have made better progress with its finances, had not the Articles. of Confederation (which became operative in 1781) so limited its scope as to leave it practically no financial powers. A common treasury, maintained by all the States proportionately to the value of land and improvements in each and administered by the States, was the original means of defraying expenses for the common defense or general welfare. When Congress tried to impose a 5 per cent. tariff on all imports in the same year that the Articles of Confederation took effect, it failed to receive the approval of the States. A similar attempt, made two years subsequently on a somewhat more elaborate scale, was likewise unsuccessful.

The general fear of the results of any centralized power, which at that

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BANKING AND CURRENCY.

time, not unnaturally, pervaded the country, retarded, perhaps, as much as anything else any fiscal systematization in this country. The administration of the nation's finances by the Continental Congress was directed in the beginning by two separate treasurers. These were followed by a committee of thirteen congressional delegates, who, in turn, were superseded by a treasury board which was empowered to manage all public moneys. It was not until 1781 that the financial system became centralized under one head. In that year Robert Morris, who may really be termed the pioneer American banker, was selected to act as superintendent of finance. From the time he came into office he labored zealously and efficiently to place the finance, banking, and currency of the country on a firmer basis; and although his efforts to secure national taxation proved of no avail, he did succeed in stimulating the government to a great extent by borrowing moneys on the strength of his own personal credit. It was at his advice, too, and very largely through his unremitting efforts, that the Bank of North America was instituted. Through the years of 1782 and 1783 this institution was of great service to the nation as a temporary loan agency.

The nation's foreign loans began as early as 1777, when comparatively small sums were borrowed from France. Later Spain and Holland also came to the aid of the colonists.

Altogether, from 1777 to 1783, $6,352,000 was secured in this way from France, $1,304,000 from Holland, and $174,000 from Spain. The country's first bankers' loans occurred in 1782, being placed with Holland and continuing, luckily for America, until after hostilities had been broken off and the new government of 1789 was fairly established.

In 1784 the national government was in debt to the extent of $39,000,000, with an annual interest charge of $1,875,000 and this not including the still outstanding bills of credit. Coupled with the unavoidable governmental expenses, this was far more than the slender resources of the nation could bear. When, in 1787, total bankruptcy appeared the certain fate of the country, a national convention was called for the purpose of drawing up a constitution by which the government might be vested with the larger financial powers then clearly seen to be imperatively needed

if disaster was to be averted. It was

through the Constitution, framed on that occasion, that the right to impose duties on exports and imports was withdrawn from the individual States, except in such cases where the enforcement of local inspection laws should make such action imperative, and that empowered Congress to fix the tariff and to both lay and collect taxes. This furnished the government with the two financial supports of which it was just then in most des

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