and that the amounts so taken in were to be cancelled, except those issued the preceding January and February, which would be necessary for the operations of government. In lieu, however, of the payment of notes, gold and silver were receivable in payment of such requisitions, at the rate of $1 for $40 of paper. As fast as the notes were brought in and cancelled, new notes were to be issued, at the rate of $1 to $20 taken in, redeemable in specie in six years; and to bear interest at the rate of 5 per cent per annum, also payable in specie at the redemption of the notes, or annually, at the election of the holder the notes to be issued on the funds or security of the several States; for the payment of which, however, the faith of the United States was to be pledged. Of such notes, six-tenths were to go to the States, and four-tenths to the United States, to be credited to the States on whose funds or security they were issued; the new notes to be receivable in payment of the monthly quotas, at the same rate as specie. These notes, however, were no better received than the old ones; nor does it appear that any considerable amounts of them ever got into circulation. The public had so often been deceived and imposed upon that it turned a deaf ear to all propositions of the kind. The days of the Continental paper money, in whatever form issued, were numbered. Congress did not attempt to press the circulation of its new notes. While the

1 "Our new paper money," says Josiah Quincy in a letter to Washington, "issued by recommendation of Congress, no sooner began to circulate than two dollars of it were given for one hard one (that is the rate of the old). To restore the credit of the paper by making it a legal tender, by regulating acts or by taxes, are political manoeuvres that have already proved abortive; and for this obvious reason, that, in the same proportion as ideal money is forced into currency, it must, from the nature of every thing fraudulent, be forced out of credit. I am firmly of the opinion, and think it entirely defensible, that there never was a paper pound, a paper dollar, or a paper promise of any kind, that ever yet obtained a general currency but by force or fraud, generally by both." Letters to Washington, vol. iii. p. 157.

"The people of the States at that time had been so worried and fretted, disappointed and put out of humor, by so many tender-acts, limitations of prices, and other compulsory methods to force value into paper money, and compel the circulation of it; and by so many vain funding schemes, declarations, and promises, all of which issued from Congress, but died under the most zealous efforts to put them into operation and effect, that their patience was all exhausted. I say, these irritations and disappointments had so destroyed the courage and confidence of these people, that they appeared heartless and almost stupid when their attention was called to any new proposition."-Webster's Essays, p. 116.

old steadily declined in value, they were actively dealt in, till their price fell so low that even their holders had no interest in seeking to dispose of them. Their activity, even when they fell as low as 500 to 1, excited the wonder of writers at the time. There always appeared to be a plenty of parties ready to take them, till they fell below this rate, against the chance that some provision might be made for their ultimate redemption.

The cessation of issue was a practical demonetization of the Continental paper, although, for some time thereafter, it remained on the statute books, not only of Congress but of the several States, as lawful money. Early in 1781, however, the former recommended the total repeal of all laws making its notes money. The States, one after another, adopted the recommendation. No sooner, however, had it been seen that the notes, from their worthlessness, were to go out of circulation, than the people began to take measures to provide themselves with a currency of coin. The process was so noiseless and natural as to attract no attention whatever. Metallic money seemed to be improvised by the necessity for its use. All that was wanting was to leave the people free to act solely with a view to their own welfare. It is with money as with every other help by which the operations of society are carried on. It may be that the best cannot be immediately had; but it will always be sought until it is secured. Its realization will be free from disturbance in ratio as the people are emancipated from the control of government. No sooner had the occasion or necessity arisen for it, than coin appeared. Large amounts were brought into the country from the subsistence and payment of the British troops. The foreign loans were paid in coin. Considerable amounts of silver were, during the war, constantly received from Spain and Mexico, through Havana. From the beginning of 1780, hard money, as it was termed, began to show itself in large amounts. Indeed, from that time there appears to have been no lack of specie in the country. "Gold and silver," says Paine, "that for a while seemed to have retreated again into the bowels of the earth, have once more risen into circulation, and every day adds a new strength to trade, commerce, and agriculture."

1 The Crisis, p. 209.

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 citi zens 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."

51

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." 1 "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 enemy." "Old debts," says another, "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?" 8

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