The object of principal concern is the state of our currency. In my opinion, all our speculations on this head have been founded in error. Most people think, that the depreciation might have been avoided, by provident arrangements in the beginning, without any aid from abroad: and a great many of our sanguine politicians, till very lately, imagined the money might still be restored by expedients within ourselves. Hence the delay in attempting to procure a foreign loan.
This idea proceeded from an ignorance of the real extent of our resources. The war, particularly in the first periods, required exertions beyond our strength, to which neither our population nor riches were equal. We have the fullest proof of this, in the constant thinness of our armies; the impossibility, at this time, of recruiting them otherwise than by compulsion; the scarcity of hands in husbandry, and other occupations; the decrease of our staple commodities; and the difficulty of every species of supply. I am aware that the badness of the money has its influence; but it was originally an effect, not a cause, though it now partakes of the nature of both. A part of those evils would appear, were our finances in a more flourishing condition. We experienced them before the money was materially depreciated; and they contributed to its depreciation. The want of men soon obliged the public to pay extravagant wages for them in every department. Agriculture languished from a defect of hands. The mechanic arts did the same. The price of every kind of labor increased: and the articles of foreign commerce, from the interruption it received, more than kept pace with other things.
The relative value of money being determined by the greater or less portion of labor and commodities which it will purchase; whatever these gained in price, that of course lost in value.
The public expenditures, from the dearness of every thing, necessarily became immense; greater in proportion than in other countries; and much beyond any revenues which the best concerted scheme of finance could have extracted from the natural funds of the State. No taxes, which the people were capable of bearing, on that quantity of money which is deemed a proper medium for this country (had it been gold instead of paper), would have been sufficient for the current exigencies of Government.
The most opulent States of Europe, in a war of any duration, are commonly obliged to have recourse to foreign loans or subsidies.[3] How, then, could we expect to do without them, and not augment the quantity of our artificial wealth beyond those bounds which were proper to preserve its credit? The idea was chimerical.
The quantity of money formerly in circulation among us, is estimated at about thirty millions of dollars. This was barely sufficient for our interior commerce. Our exterior commerce was chiefly carried on by barter. We sent our commodities abroad, and brought back others in return. The balance of the principal branch was against us; and the little specie derived from others, was transferred directly to the payment of that balance, without passing into home circulation. It would have been impracticable, by loans and taxes, to bring such a portion of the forementioned sum into the public coffers as would have answered the purposes of the war: nor could it have spared so considerable a part, without obstructing the operations of domestic commerce. Taxes are limited, not only by the quantity of wealth in a State, but by the temper, habits, and genius of the people; all which, in this country, conspired to render them moderate: and as to loans, men will not be prevailed upon to lend money to the public when there is a scarcity, and they can find a more profitable way of employing it otherwise, as was our case.
The ordinary revenues of the United Provinces amount to about twenty-five millions of guilders; or two millions two hundred and fifty thousand pounds sterling per annum. This is, in proportion to its territory and numbers, the richest country in the world; and the country where the people sustain the heaviest load of taxes. Its population is about equal to ours, two millions of souls. The burthens on the subject are so great, that it is by some held almost impracticable, even on extraordinary emergencies, to enlarge the revenues by new impositions. It is maintained, their dependence, in these cases, must be on the extraordinary contributions of wealthy individuals; with the aid of which, in some of their wars, they have raised four millions sterling a year. In a country possessed of so vast a stock of wealth, where taxes are carried to such a height; and where the means of paying them so infinitely exceed those in our power; if the national revenues only amount to the sum I have stated, how inadequate must have been the product of any taxes we could have levied, to the demands of the service! Loans, for the reason before hinted, would have been out of the question; at least, they would have been so trifling as to be an object of little importance. Suppose we should have been able to raise a million sterling, annually; a sum that probably would have exceeded our ability; how unequal would this have been to our wants![4] No economy could have made it bear any proportion, especially if we recur to the causes already enumerated, by which the currency depreciated in its first stages.
From these reasonings it results, that it was not in the power of Congress, when their emissions had arrived at the thirty millions of dollars, to put a stop to them.[5] They were obliged, in order to keep up the supplies, to go on creating artificial revenues by new emissions; and as these multiplied, their value declined. The progress of the depreciation might have been retarded, but it could not have been prevented. It was, in a great degree, necessary.
There was but one remedy; a foreign loan. All other expedients should rather have been considered as auxiliary. Could a loan have been obtained, and judiciously applied, assisted by a vigorous system of taxation, we might have avoided that excess of emissions which has ruined the paper. The credit of such a fund would have procured loans from the moneyed and trading men within ourselves; because it might have been so directed, as to have been beneficial to them in their commercial transactions abroad.[6]
The necessity for a foreign loan is now greater than ever. Nothing else will retrieve our affairs.