From this time, the officers passed into the whole mass of the creditors of the United States; and although they continued to constitute a distinct class among those creditors, the history of their claims is to be pursued in connection with that of the other public debts of the country. The value of the votes which fixed their compensation, and paid them in public securities, depended, of course, upon the ability of the government to redeem the obligations which it issued. The general financial powers of the Union, therefore, under the Confederation, must now be considered.
CHAPTER II.
1781-1783.
Financial Difficulties of the Confederation.—Revolutionary Debt.—Revenue System of 1783.
It is not easy to ascertain the amount of the public debt of the United States, at the time when the Confederation went into operation. But on the 1st of January, 1783, it amounted to about forty-two millions of dollars. About eight millions were due on loans obtained in France and Holland, and the residue was due to citizens of the United States. The annual interest of the debt was a little more than two million four hundred thousand dollars.[177]
The Confederation had no sooner gone into operation, than it was perceived by many of the principal statesmen of the country, that its financial powers were so entirely defective, that Congress would never be able, under them, to pay even the interest on the public debt. Indeed, before the Confederation was finally ratified, so as to become obligatory upon all the States, on the 3d of February, 1781, Congress passed a resolve, recommending to the several States, as indispensably necessary, to vest a power in Congress to levy for the use of the United States a duty of five per cent. ad valorem, at the time and place of importation, upon all foreign goods and merchandise imported into any of the States; and that the money arising from such duties should be appropriated to the discharge of the principal and interest of the debts already then contracted, or which might be contracted, on the faith of the United States, for the support of the war; the duties to be continued until the debts should be fully and finally discharged.