TO THE PRESIDENT OF CONGRESS.
Philadelphia, 1st November, 1778.
Sir,
I think it unnecessary to make an apology for sending you the enclosed estimates and reflections made on two of the most important and interesting subjects, and for desiring the same may be communicated to Congress. Should that honorable body approve of any or all of them, I shall be very happy, and if they should not they will excuse me for having given them this trouble, when they reflect, that the desire of throwing some light on these subjects has been my sole motive.
The providing for the redemption of our money, and the establishment of a marine, are objects, which in my view, far exceed in the magnitude and extent of their importance, any that are at present under public consideration; they greatly depend on each other, and permit me to say, all our future operations in a great degree depend on them. We cannot pay the interest of any considerable loan without commerce, which cannot be revived effectually without a marine force of our own, which may I am confident be formed on the enclosed plan, and be ready in a short space of time to act with vigor. Great Britain has long had the empire of the ocean, and in consequence the whole world has been her tributary; her own bad policy and the present war will deprive her of that empire; at this important crisis it depends on the measures taken by the United States, whether they shall succeed Great Britain or not in this extensive dominion. Reason, observation, and experience authorise me to say, there is not in the world any power so capable of it, and as the United States can never aim at foreign conquests, but simply to guard their own coasts, and to protect the commerce of their subjects, their superiority at sea can never give just cause of jealousy or offence to any other nation. I am confident that a fleet of forty sail, to consist of twenty such large ships as I have described, and twenty frigates, will be more than equal to this purpose, and such a fleet may be got to sea in the course of the coming year, if the materials wanted from Europe can be procured, which, if immediately applied for, I have not the least doubt of.
I have the honor to remain, &c.
SILAS DEANE.
P. S. I am still without the honor of any answer to my letter of the 7th ult.
November 13th.
After writing the above, my apprehension, lest I should be thought any way out of the usual course in communicating my sentiments to Congress, made me omit sending it to you with the enclosed, but the alarming intelligence, which I received but a day or two since, of the sentiments of my countrymen in different parts on the present situation of the credit of our money, the state of our finances and resources, and of the temper and disposition prevailing in consequence, has made me waive every personal consideration, and communicate this with the enclosed to Congress, and I shall count it one of the happiest occurrences of my life, if anything in my power will help to prevent that total loss of public as well as private credit, which I am sorry to find begins to be almost universally apprehended, and I fear appearances at this time are in support of such apprehensions, which though at bottom they may be ill founded, yet, if once generally prevailing, will produce consequences easily foreseen. I beg leave to refer to Colonel Duer for the substance of the intelligence I refer to, having communicated the letters I have received to him, for as they contain many things merely personal, I could not lay them at large before Congress.
S. D.
Plan for sinking fiftythree millions of dollars of the Continental Currency, and to establish a Bank of one million, and a half sterling, or $6,666,6662/3 in Europe for the use of the States of America, at the expense of forty millions of dollars in specie only, or of Bills upon Europe equivalent.
1st. Let a loan be obtained of twentyfive millions of dollars on account of the United States; the interest and necessary charges will probably amount to, and will not exceed, six per cent per annum.
2dly. Let a fund be established of two millions and a half annually, clear of all charges of collecting and remittances, out of which let the interest of the loan be paid, and the surplus unalienably appropriated as a sinking fund to discharge the principal; the annual interest of twentyfive million dollars; at six per cent will be 1,500,000 dollars, the sinking fund one million.
3dly. The calculation which follows demonstrates, that this fund of two millions and a half of dollars will, in sixteen years, pay off the principal and interest of the twentyfive millions borrowed, and leave a surplus of $673,103 in the hands of the States, which may be supposed equivalent to the charge of managing the money, and paying the loan in Europe.
4thly. A fund of two millions and a half for sixteen years amounts to forty millions, but twentyfive millions at six per cent simple interest will in that time amount to fortynine millions, supposing the interest annually paid; hence it is evident, that a sinking fund of one million operating on such a loan of twentyfive millions, will make a saving of nine millions of dollars to the States out of what will otherwise be paid on the same capital, on the plan of borrowing practised in our, and indeed in most other loan offices; or in other words would reduce the interest from six to little more than three and a half per cent, which is demonstrated in the following calculations.
5thly. Twentyfive millions of dollars may be computed in value equal to £5,625,000 sterling. Of this, let one million and a half, or £1,620,000 sterling be applied to the payment of debts contracted in Europe, contracted by the commissioners, for the discharge of which no particular mode has been stipulated and agreed upon, and for the establishing a bank or fund for other uses and benefit of the United States.
6thly. As the sum of £125,000 sterling will be equal to the public debts already contracted in Europe, except those to the Farmers-General and the house of Rodrique Hortalez & Co. there will remain, agreeable to the plan, one million and a half sterling, or $6,666,6662/3 in the Congress' Bank in Europe, and four millions sterling, or $17,777,7772/3, for the purpose of sinking the sum of fiftythree millions proposed.
7thly. The present rate of exchange is from five to six for one; it must happen that as bills are brought to market to a greater amount they will fall, but if it be considered that the ordinary demand of these States on Europe for goods exceeded four millions sterling annually in times of peace, that the demand at present and for two or three years to come, even if peace should take place immediately, must exceed the former usual demand, that though the cancelling and sinking of fiftythree millions of dollars will tend to appreciate the remainder in circulation, yet as there will still remain in circulation a greater nominal sum than the commerce of these States call for, the appreciation will not be repaid; and if it be further considered, that the merchants in the United States are at present destitute of their usual means of remittance, having neither ships, specie, nor produce on hand,—I say under these considerations it is improbable, if not impossible, consistent with the interest of individuals, that bills drawn on Europe for the sum of four millions sterling should be under three for one on an average.
8thly. Four millions sterling, or $17,777,7772/3, at three for one, will amount to $53,333,333 here. Allowing $333,333 for the charge of drawing the bills, for other expenses and deficiencies unforeseen, and there will be, agreeable to the proposals in the plan, fiftythree millions of dollars of the Continental currency paid off by the sales of those bills.
The benefits resulting from this plan, if realized, are numerous, indisputable, and obvious. As the sum proposed to be drawn for, does not exceed the ordinary amount of importation before the war, it cannot be presumed that this plan can produce any ill effects on commerce, especially if the Congress should think it wise and prudent to drop the merchants themselves, and depend on individuals for their supplies. The capital difficulty is to obtain the loan. On this, as well as on the preceding plan, I will make a few observations after the following calculations already referred to.
FIRST CALCULATION.
| Years. | Produce of the sinking fund at the end of every year. | Total of the Debts paid at the end of every year. | EXPLANATION. |
|---|---|---|---|
| 1 | 1,000,000 | 1,000,000 | The first column marks the years; the second the produce or amount of the sinking fund at the end ofeach year, the third shows how large a part of the capital has been paid off at the end of each year.The sum in the second column is found by adding to it annually the interest of that part of the capital paid off thepreceding year, and the sum in the third by adding yearly the payments. |
| 60,000 | |||
| 2 | 1,060,000 | 2,060,000 | |
| 63,600 | |||
| 3 | 1,123,600 | 3,103,600 | |
| 67,416 | |||
| 4 | 1,191,016 | 4,374,616 | |
| 71,461 | |||
| 5 | 1,262,477 | 5,637,093 | |
| 75,788 | |||
| 6 | 1,338,265 | 6,975,358 | |
| 80,296 | |||
| 7 | 1,418,561 | 8,393,919 | |
| 85,113 | |||
| 8 | 1,503,674 | 9,897,593 | |
| 90,220 | |||
| 9 | 1,593,894 | 11,491,487 | |
| 95,633 | |||
| 10 | 1,689,527 | 13,181,014 | |
| 101,372 | |||
| 11 | 1,790,899 | 14,971,913 | |
| 107,454 | |||
| 12 | 1,898,353 | 16,870,266 | |
| 113,901 | |||
| 13 | 2,012,254 | 18,882,520 | |
| 120,735 | |||
| 14 | 2,132,989 | 21,015,509 | |
| 127,979 | |||
| 15 | 2,260,968 | 23,276,477 | |
| 135,658 | |||
| 16 | 2,396,626 | 25,673,103 | |
| Principal Loan | 25,000,000 | ||
| Surplus | 673,103 |
SECOND CALCULATION.
| $2,500,000 annually collected and paid for sixteen years, amount to (the whole sum paid) | 40,000,000 |
| But the surplus of $673,103 deducted, leaves $39,326,897, the net sum applied to sink a principal of $25,000,000, and the interest for sixteen years, | 673,103 |
| 39,326,897 | |
| The annual interest of $25,000,000 at six per cent is 1,500,000, which at simple interest in sixteen years is 24,000,000, | 24,000,000 |
| Add the principal, | 25,000,000 |
| 49,000,000 | |
| Bring down | 39,326,897 |
| Surplus, | 9,673,103 |
By these calculations it is clearly demonstrated,
First, that a certain net annual revenue of two millions and a half of dollars is sufficient for sinking the loan proposed of 25,000,000 in sixteen years, and to leave a surplus of $673,103 after discharging both principal and interest. In the second place, that by this plan the public will save the sum of $9,673,103 more than if the same sum is borrowed in the usual way of simple interest; or in other words, the money on this plan will be borrowed at 31/2 per cent interest nearest, a sum well deserving the attention of the public at this, and at every other time, and it is for that purpose the foregoing plan and calculations are submitted.
The only difficulties, that can possibly occur in the carrying this plan and every part of it into execution, are in the establishing such a fund, as will be certain for raising the two millions and a half of dollars annually, and in the next place in procuring the loan. The first may be obviated with greater ease and certainty than the second. It cannot in justice be concealed, that the loan cannot be obtained with the same ease now as it might have been six or seven months past, nor that the longer it is delayed, the greater the difficulty will be. It is however attainable if applied for in season, and in a proper manner. It is but too probable, that if delayed many months longer, it will not be obtained on any terms whatever. The war now kindling in Europe will probably in the course of another year become general, the consequence of which will be, that the emperor of Germany, the empress of Russia, and some other powers, the two former in particular, who have improved the late peace to regulate their finances, and to reduce and pay off their foreign debts, will on this change of affairs become borrowers afresh; in a word, there will be in Europe seven or eight, or more powers under the necessity of borrowing, and not more than two or three at the most in a situation to lend, and when so many demands are made for money, it will be very difficult to have ours preferred. To obtain it, therefore, requires immediate application, interest, and address; which thoughts, with the above plan, are respectfully submitted to the wisdom of Congress.
SILAS DEANE.
Proposals for equipping such a fleet, as will be sufficient to defend the coasts and commerce of the United States against any force, which Great Britain will be able to send to America.
It is necessary to premise, that the obtaining a loan, and setting on foot a naval force, are so connected with, and dependent on each other, and so many important consequences depend on both, that I have preferred placing one directly after the other, that my ideas on these great subjects may be perceived at one view, rather than the placing them in any manner separate or disjointed from each other. Without a naval force sufficient to protect in some degree our commerce as it revives, it will be very difficult, if not impossible, to pay either the principal or interest of the money we may borrow, and without some probably certain prospect of doing this, it would hardly be honest to borrow at all. I have only to add, that the following calculations are not founded on light and uncertain estimates, but on the most certain knowledge of the quantity of each of those articles necessary for the purpose. The prices are fixed at what they were last season in Sweden, and in the north of Europe; what I have ventured to say respecting ships of a new construction carrying fortytwo to fortyeight cannon, being equal to sixtyfour and even seventyfour line of battle ships, I am convinced of the truth of, not merely from my own observation and reasoning on the subject, but from the opportunities I have had of conversing with some of the most able and experienced constructors and commanders of ships in Europe, as well as in America. France, as well as England, has already several ships of such a plan on the stocks, which is a full proof in what light they view this plan of building; but fortunately for these States, their old prejudices, as well as the opposition of commanders of large ships, and a great number of men, to the changing them for ships of a less rate and fewer men, as well as of less pomp and appearance, will in a great measure prevent either of those nations from much immediate success in this plan for an improvement or reform.
1st. A fleet consisting of twenty such ships as mentioned above, joined by twenty frigates from twentyfour to thirtysix guns, will be sufficient to guard this coast against any naval force, which Great Britain, or any other maritime power can spare, to send against us. An American fleet, opposing a foreign one on this coast, will always have many very decisive circumstances in their favor, which are obvious at first view, particularly that of clean ships and healthy men against foul ships and sickly men, or fatigued by a long voyage, and that of being able with ships of the proposed construction to enter harbors in case of storm or other accident, which larger ships cannot.
2dly. The twenty large ships, and ten or a less number of the frigates may be put on the stocks and built in America, and though the present price of labor is dear, yet were the undertakers to be paid in sterling bills, or in specie, the hulls or bodies of the ships may perhaps be had nearly at the same price as before the war; but suppose they cost more, yet if every other article be procured from Europe at the first cost and common charges, the ships complete will not amount to much more than such ships usually cost before the war in America, probably not so much.
3dly. Suppose also that eight of the frigates be built in America, and twelve purchased in Europe, to transport the materials from thence for the rest. In the first place, let a calculation be made what all these materials, allowing a large proportion, will amount to, and also for the purchase of the twelve frigates, or ships for frigates, which are to transport those materials over to America.
CALCULATION.
| Livres. | |
|---|---|
| 160,000 aulms of sailcloth, | 240,000 |
| 500,000 cwt of anchors, | 125,000 |
| 3,200,000 cwt of cordage, | 1,280,000 |
| 6,000,000 cwt of cannon, | 960,000 |
| 10,000 fuzees, fit for marine service, | 200,000 |
| 200 tons of powder, | 400,000 |
| N. B. As iron is scarce and dear in America, especially in the east and northward states, I suppose 300 tons of iron, | 160,000 |
| 12 ships fit for sea, capable of being armed as frigates of 24 to 36 guns, will unarmed cost 250,000 livres each, nearly | 3,000,000 |
| I suppose for shells, shot, cutlasses, spears, hand-grenadoes, and a variety of small articles, too many to be enumerated in such a general calculation, the sum of | 1,000,000 |
| Total amount, | 7,365,000 |
Equal to one million six hundred and seventytwo thousand dollars,[18] for which sum twelve of the ships will be purchased, and all the capital materials for the others. One million of livres, or two hundred thousand dollars, is a large allowance for the small articles, and I know, from offers made me from Sweden, that the ships and other articles referred to, may be purchased there at the above rates, if they have not risen since the month of March last.
4thly. Of the proposed loan by the plan preceding, there will remain, after sinking the fiftythree millions and the payment of the present debts, the sum of one million and a half sterling, or 6,666,6662/3 dollars, out of which deduct the above sum of 1,672,000, and there remains the sum of 4,994,6662/3 dollars, or twentyfive millions of livres nearest, for other purposes; a sum sufficient for many great purposes. The commissioners, to the time of my leaving France, had not in the whole ever received four millions of livres, to enable them to procure all the supplies, which they engaged and sent over.
5thly. These stores, and ships to transport them, may be procured on the best terms in Sweden. Swedish ships are not so durable as those built in England, or of cedar and live oak, but I am well assured they greatly exceed those built of the common American oak. Sweden is ever so under the influence of France, that there is no doubt but with proper management these ships and stores may be obtained, and a convoy for them, which, by sailing in June next and coming north about, might arrive at Boston in season, and with very little or no risk; but the fear of being too tedious prevents my being more particular.
6thly. If it be agreeable to make the purchase of the materials enumerated, but not of the ships, as ships may be had to freight them over, it will amount to much the same.
7thly. I will only add, that in time of peace should any of these ships proposed, be to be disposed of out of the continental, they will not be too large for many branches of the merchant service. If these proposals should appear just and practicable, many less matters connected with them will require consideration, and as in the first, so in this plan, every thing depends on immediate despatch.
It has been objected, that such a number of ships could not be manned, but if it is considered that there are now employed in privateering a greater number of men, than are sufficient to man this proposed fleet, it is easy to obviate this difficulty by offering such inducements, as will infallibly lead both officers and men to prefer the public to any private service whatever. The United States have not in view private or partial, but public and extensive objects, the humbling our enemies, the defence of our coasts, and the laying the foundation of a great and flourishing marine. If the whole of the prize money be divided among the seamen and officers, or suppose threefourths actually shared, and the remainder appropriated for the building and support of a hospital for sick, wounded, and disabled seamen, such a resolution will be a generous one, and cannot fail of answering the end. His Most Christian Majesty has generously done this for his officers and seamen serving in his marine, by his ordinance of April last.
Philadelphia, 13th November, 1778.
P. S. Apprehensive of being tedious when I wrote the above, I said nothing on the methods for paying the interest for the first two or three years, until a certain revenue can be established, for considering the present depreciated state of our currency, and the scarcity of specie, it cannot be instantly expected. I take therefore the liberty of suggesting two methods, one of which will most certainly answer the purpose. The first is to borrow of France or Spain, the interest money for the first three years, by which, the interest punctually paid, a credit will become established, and future loans may be made if wanted, and our commerce will be so far restored, that it will not be difficult to raise specie equal to the payment. But should this method fail, there still remains a certain resource, for even if the plan for equipping a navy be adopted, yet there will still remain in bank, as will be seen by the calculation and estimate, a sum sufficient for more than three years interest.
SILAS DEANE.
FOOTNOTES:
[18] There seems to be a mistake here, if the author's mode of reckoning five livres to the dollar be adopted. The sum would then be one million four hundred and seventy three thousand dollars.