crime which merited the severest punish- CHAP. I.

ment.

Aware, however, that it must in time be betrayed by its effects, the utmost exertions of congress were used to procrastinate, as much as possible, an event, the arrival of which, should the war be of long continuance, was foreseen to be inevitable; and which must be attended with difficulties, there were no apparent means of surmounting. The emissions therefore, were as small as possible; and the disbursements of money were so parsimonious, as almost to produce the mischief dreaded from that absolute want of pecuniary resource, which would be experienced when the public credit should fail.

But it was not in the power of congress to regulate the amount of paper bills, which should come into circulation. The right to emit them was possessed by every local government, as well as by that of the union; and this right was very liberally exercised.

The consequences of thus augmenting the quantity of bills put into circulation, were foreseen with trembling apprehensions; while the means for counteracting the mischief could only be recommended.

To economize disbursements, and to call in by taxes a part of the sums disbursed, thereby diminishing the quantity, and increasing the demand, were the only possible means

1776.

CHAP. I. of preventing such an accumulation of paper 1776. money, as infallibly to continue its depreciation, until it should entirely cease to be a circulating medium. The disbursements were placed in too many hands to be economized, and the power of taxation was not in congress. That body could only recommend the imposition of taxes, and their recommendations were, perhaps, the less attended to, because, whatever might be the public exigencies, the measure, was at all times unpopular, and could only be effectual by being universal. It was most earnestly recommended, first, to the several colonies, and then to the states, to adopt measures to redeem their quotas of the bills of credit emitted by congress; but such was the danger apprehended from immediate taxation, that the payment of the first instalment of the first emission was to be postponed until 1779, by which time, it was certain, the depreciation must be considerable. This can be accounted for only by the difficulty of collecting taxes before the declaration of independence; the difficulty of paying them without commerce; and the fear that their burden might detach many from a war avowedly undertaken to oppose taxation.

In consequence of these, or other causes, taxation was not commenced until depreciation had made considerable progress; and then the remedy was so sparingly applied, as very

little to affect the disease. Indeed, it remains to this moment uncertain, whether the good, or the ill which would have been produced by an early attention to this subject, and a different conduct, would most have predominated: whether the advantages of checking depreciation, or the discontents it would have excited, would most have operated on the war.

Taxation, the unpleasant but only effectual mode of preventing as much as possible the rapid increase of the quantity of paper money in circulation, being rejected, as an experiment too dangerous to be made; artificial substitutes were resorted to. A loan was proposed to be opened for borrowing five million of continental dollars, on an interest of four per centum per annum, the principal to be repaid in three years. For the accommodation of lenders, an office was to be opened in each state, and the interest was to be paid annually, and the principal returned at the expiration of three years, in the state where the loan was made. No certificate of loan was to be granted for a less sum than three hundred dollars. A hope was entertained, that the loan would fill immediately; that it would diminish the quantity of money in circulation; and that the certificates, issued in lieu of the money received, would not be brought into ordinary use, so as to take the place of the money borrowed. In addition to the greater value of the certificates from their

CHAP. I.

1776.

CHAP. I. bearing interest, it was supposed that the 1776. largeness of the sums would unfit them for ordinary purposes.

The scheme of a lottery in four classes was also suggested, by which it was proposed to raise, at different periods, about one million five hundred thousand dollars; but the principal advantage contemplated was, to draw in a large sum of continental money by the sales of the tickets, to retain with the consent of the successful adventurers, the small prizes in each class, for tickets in the succeeding class, and the large prizes on loan.

These experiments were of small avail. The effects of a cause so certain and so powerful in its operations, the action of which was so perpetual, could not have been prevented by any means in the power of the United States; and could have been retarded only by measures infinitely more energetic than these, or perhaps any others that could safely have been used.

Notwithstanding the large emissions which were unavoidably made, and the absolute want of any other fund than the public faith to support their credit, no difference between paper money and specie was generally perceived, until the campaign of 1776 had far advanced.

The real depreciations early in 1777, became considerable; but it was still mistaken by many for a rise in the price of every article brought to market, and it was thought practicable to check it by the application of violent remedies.

1776.

In a resolution for the purpose of keeping up CHAP. I. the value of the bills of credit issued by congress, and of guarding against the pernicious artifices of the enemies of American liberty to impair their credit, it was declared that whoever, in any purchase, sale, or barter, whatever, shall rate gold or silver coin higher than the continental bills of credit, ought to be deemed an enemy to the liberties of the United States, and to forfeit the value of the money or other thing, in the purchase, sale, or barter, of which this difference of value was made; and it was recommended to the several states to pass laws to this effect.

It was also recommended to the respective legislatures to pass laws declaring these bills a tender in payment of all debts, and that a refusal of them when tendered, should amount to an abolition of the debt.

These attempts to regulate by law the value of an article depending solely on public opinion, were accompanied by other recommendations better calculated to produce the desired effect.

The public faith had indeed been plighted by congress for the redemption of their bills; but the substantial power to perform the engagement rested with the state sovereignties. In the first moments of the war, a suspicion that these sovereignties could have failed, or hesitated to comply with the recommendations made, or engagements entered into by congress