It was not possible but that the effect of the government notes should, during the whole period of their use, have been most mischievous. For the little time their credit was maintained, they relieved Government of a duty which should have been assumed at the very outset, of providing, in some adequate manner, for the expenses of the war. It would have been far easier to have done this in 1775, before the notes were issued, than in 1780, after they ceased to be available. It was inevitable that the time should come in which they would be no longer used, from the total discredit of the government, caused, in great measure, by their use. The testimony of contemporaneous writers, as to the baleful influence they exerted over the moral and material welfare of the people, is as emphatic as it is unanimous. Ramsay, in his "History of the War of the Revolution," in which he was actively engaged, says of it:

"The aged who had retired from the scenes of active business to enjoy the fruits of their industry found their substance melting away to a mere pittance, insufficient for their support. The widow who lived comfortably on the bequests of a deceased husband experienced a frustration of all his well-meant tenderness. The laws of the country interposed, and compelled her to receive a shilling where a pound was her due. The blooming virgin who had grown up with an unquestionable title to her patrimony was legally stripped of every thing but her personal charms and virtues. The hapless orphan, instead of receiving from the hands of an executor a competency to set out in business, was obliged to give a final discharge on the payment of 6d. on the pound. In many instances, the earnings of a long life of care and diligence were, in the space of a few years, reduced to a trifling sum. That the helpless part of the community were legislatively deprived of their property was among the lesser evils which resulted from the legal tender of the depreciated bills of credit: the iniquity of the laws estranged the minds of many of the citizens from the habits and love of justice. The nature of obligations was so far changed that he was reckoned the honest man who, from principle, delayed to pay his debts. The mounds which government had erected to secure the observance of honesty in the commercial intercourse of man with man were broken down. Truth, honor, and justice were swept away by the overflowing deluge of legal iniquity; nor have they yet assumed their ancient and accustomed seats.'

The testimony of another contemporaneous writer and accurate observer is equally to the point:

1 History of the American Revolution, vol. ii. p. 134 et seq.

"It has," said Pelatiah Webster, a most trustworthy authority, "polluted the equity of our laws, turned them into engines of oppression and wrong; corrupted the justice of our public administrations; destroyed the fortunes of thousands who had the most confidence in it; enervated the trade, husbandry, and manufactures of the country; and went far to destroy the morality of our people." "We have suffered more," says Webster, in another place, "from this cause than from any other cause or calamity. It has killed more men, pervaded and corrupted the choicest interests of our country more, and done more injustice, than even the arms and artifice of the "Old debts," says another, enemy." 66 were paid when paper money was more than seventy for one. Brothers defrauded brothers, children parents, and parents children. Widows, orphans, and others were paid for money lent in specie with depreciated paper, which they were compelled to receive. A person who had been supplied with specie in the jail of Philadelphia while the British were in possession of that city repaid it in paper at a tenth part of its value." 2 "That the army," said Josiah Quincy, in a letter to Washington, "has been grossly cheated; that creditors have been infamously defrauded; that the widow and the fatherless have been oppressively wronged and beggared; that the gray hairs of the aged and the innocent, for want of their just dues, have gone down with sorrow to their graves, in consequence of our disgraceful, depreciated paper currency-may now be affirmed without hazard of refutation; and I wish it could be said with truth that the war has not thereby been protracted. May it not, therefore, be safely concluded, that no kind of paper currency is adequate to the purpose of collecting and combining the forces of these United States for their common defence?" a

As no notes were issued after 1779, Congress thereafter had to sustain itself, as best it could, by loans, by purchases made in exchange for its certificates, by seizures by commissaries, and by aid of moneys and troops raised by the States. The war dragged along through 1780, without any decisive advantage on either side. Its prolongation, however, tended to exhaust the enemy more than the people of the States. Early in 1781, Louis XVI. presented Congress with 6,000,000 livres. A loan to the amount of 10,000,000 livres was also obtained from the French government. Before these could be made available, Congress was reduced to the greatest straits. Early in 1781, a very important step was taken toward reorganizing and systematizing the finances of the country, by the creation of the office of Financier-General, to which Robert Morris was

1 Webster's Essays, p. 174.

2 Breck.

3 Letters to Washington, vol. iii. p. 157.

appointed. He brought to his position great capacity, great industry, untiring devotion to the cause; and, as he was possessed of large means, he often raised upon his own credit considerable sums to meet pressing emergencies.

Had such an office been erected at the outset, and Mr. Morris, or some equally competent person, been appointed to it, the war might have been brought to a close in a comparatively short time, instead of dragging (as it did) through eight weary years. The government by which it was waged had neither an executive, nor departments, nor control over the revenues of the country. Perhaps no better one was possible at the time. So intense were the local jealousies, so different the institutions, pursuits, habits, and ideas of the various sections, and so firmly were they wedded to their local governments, that years of anarchy and suffering were still necessary to teach the necessity of, and reconcile them to, one of paramount authority, if they would escape the barbarism to which the nation was already rapidly tending.

Among the expedients devised in 1780 for the support of the war was a voluntary association of citizens of Philadelphia, formed on the 17th of June of that year, for the purpose of opening a "security subscription to the amount of £300,000, Pennsylvania currency, in real money," to be expended, or the greater portion of it, in sending three million of rations, and three hundred hogsheads of rum, to the army, then reduced to the greatest distress for the want of food and clothing. The organization was termed a "Bank." Congress warmly seconded the movement, and appointed a Committee to confer with those having it in charge. The Committee made their report on the 21st of June, and, on the same day, Congress resolved that:

"Whereas, a number of the patriotic citizens of Pennsylvania have communicated to Congress a liberal offer on their own credit, and by their own exertions, to supply and transport three millions of rations and three hundred hogsheads of rum, for the use of the army, and have established a Bank for the sole purpose of obtaining and transporting the said supplies with greater fidelity and dispatch; and whereas, on the one hand, the associators animated to this laudable exertion by a desire to relieve the public necessities mean not to derive from it the least pecuniary advantage, so, on the other, it is just and reasonable that they should be fully reimbursed and indemnified:

Resolved, That the Board of Treasury be directed to deposit in

the said Bank bills of exchange in favor of the directors thereof, on the ministers of these United States in Europe, or any of them, and in such sums as shall be thought convenient, but not to exceed, in the whole, £150,000 sterling; that the said bills are to be considered not only as a support of the credit of the said Bank, but as an indemnity to the subscribers for all deficiencies, losses, and expenses which they may sustain on account of their said engagements, and which shall not, within six months from the date thereof, be made good to them out of the public treasury."

So valuable was the aid furnished by the "Bank," that Mr. Morris determined to secure for it a legal organization, and applied to Congress therefor. The application was referred to a committee, consisting of Messrs. Clymer, Smith, Sullivan, and Witherspoon, who reported favorably thereon; and. Congress, on the 26th of May, 1781, resolved that:

"Congress do approve of the plan for establishing a National Bank, in these United States, submitted to their consideration by

1 "One of the first acts of the Superintendent of Finance was to propose the plan of a Bank, which was incorporated by Congress under the name of the Bank of North America. Mr. Gouverneur Morris says, in a letter to a friend, written not long before his death, 'The first Bank in this country was planned by your humble servant.' By this he probably meant that he drew up the plan of the Bank, and the observations accompanying it, which were presented to Congress, and not that he, individually, originated the scheme. This was doubtless matured in conjunction with the superintendent. A warm friendship had subsisted between them for some time, which, it may be presumed, was increased by a similarity in their turn of mind for financial pursuits. To Hamilton, also, may properly be ascribed a portion of the merit in forming this Bank. About two weeks before the plan was sent to Congress, Hamilton wrote a letter to Robert Morris, enclosing an elaborate project for a Bank. In a letter acknowledging the reception of this paper, the financier speaks of it with commendation. He says, 'I have read your performance with that attention which it justly deserves; and, finding many parts 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.' He then tells him that he shall communicate it to the Directors of the Bank, to aid them in their deliberation on certain points, which it was not thought expedient to embrace in the plan itself, particularly that of interweaving a security with the capital.

"This Bank had an extraordinary effect in restoring public and private credit in the country, and was of immense utility in aiding the future operations of the financier, although it was begun with the small capital of $400,000. Hamilton's project contemplated a vastly larger sum, in which Mr. Morris agreed with him: but its immediate success on so large a scale was doubtful, and, if it failed in the outset, it could not be revived; whereas, by beginning with a small capital, and establishing a credit with the public gradually, it would be easy afterwards to increase the amount, and, in the end, all needful advantages might be derived, to the utmost extent of banking facilities."- Sparks' Life of Gouverneur Morris, vol. i. p. 325.

R. Morris, on the 17th May, 1781; and that they will promote and support the same, by such ways and means from time to time as may appear necessary for the institution, and consistent with the public good.

"That the subscribers to the said Bank shall be incorporated, agreeably to the principles and terms of the plan, under the name of the President, Directors, and Company of the Bank of North America,' so soon as the subscription shall be filled, the Directors and President chosen, and application for that purpose made to Congress by the President and Directors elected."

The plan of organization having been matured, Congress, on the 31st of December, 1781, granted to the association an Act incorporating them under the name of the " Bank of North America." The Act conferred the usual and proper powers, and named the first Board of Directors and their President. It provided that the share capital might equal $10,000,000. The amount, however, with which the bank was to begin operations was fixed at $100,000. Of this sum, Congress agreed to subscribe $250,000. It, however, found itself able to pay in but $50,000. The citizens of Philadelphia subscribed $85,000. The balance, $265,000, was furnished from abroad,chiefly from Holland. The Bank opened its doors for business on the 7th of January, 1782. Accompanying the Act of Incorporation was a resolution of Congress recommending to the State Legislatures to pass such laws as might be necessary to give effect to its Act. Such recommendation, and its adoption by most, if not all the States, affords a striking illustration of the idea which prevailed as to the limited powers and functions of the Central Government. Its constituents were the States, not the people; and for every Act of the kind it was deemed necessary to ask their concurrence, in order to give it the force and validity of a law of the land.1

The Act incorporating the Bank was an event of first-rate importance in the history of the country. It was the first adequate attempt of the kind to symbolize its merchandise, so

1 Much valuable information for this account of the paper money of the Revolution has been obtained from Mr. Henry Phillips' "Historical Sketches of American Paper Money." In addition to this, he has published several sketches in relation to the paper currencies of the different States. They are all painstaking and creditable works, and contrast most favorably with the loose and slipshod manner in which books upon this and kindred subjects are usually made in this country.