[6] The phrase “stop the wheels of government” originated with “Peter Porcupine” (William Cobbett) and was on every tongue.
[7] Charles C. Pinckney, when ambassador to France, 1796.
[8] Jefferson to William Duane, March 28, 1811. Jefferson's Works, vol. v. p. 574.
[9] Jefferson was born in 1743, Madison in 1751, Gallatin in 1761.
CHAPTER VI[ToC]
SECRETARY OF THE TREASURY
Funding
The material comfort of every people depends more immediately upon the correct management of its finances than upon any other branch of government. Haute finance, to use a French expression for which there is no English equivalent, demands in its application the faculties of organization and administration in their highest degree. The relations of money to currency and credit, and their relations to industry and agriculture, or in modern phrase of capital to labor, fall within its scope. The history of France, the nation which has best understood and applied true principles of finance, supplies striking examples of the benefits a finance minister of the first order renders to his country, and the dangers of false theories. The marvelous restoration of its prosperity by the genius of Colbert, the ruin caused by the malign sciolism of Law, are familiar to all students of political economy. Nor has the United States been less favored. The names of Morris, Hamilton, Gallatin, and Chase shine with equal lustre.
Morris, the Financier of the Revolution, was called to the administration of the money department of the United States government when there was no money to administer. Before his appointment as “Financier” the expenses of the government, military and civil, had been met by expedients; by foreign loans, lotteries, and loan office certificates; finally by continental money, or, more properly speaking, bills of credit emitted by authority of Congress and made legal tender by joint action of Congress and the several States. The relation of coin to paper in this motley currency appears in the appendix to the “Journal of Congress” for the year 1778, when the government paid out in fourteen issues of paper currency, $62,154,842; in specie, $78,666; in French livres, $28,525.[10] The power of taxation was jealously withheld by the States, and Congress could not go beyond recommending to them to levy taxes for the withdrawal of the bills emitted by it for their quotas, pari passu with their issue. When the entire scheme of paper money failed, the necessary supplies for the army were levied in kind. In the spring of 1781 the affairs of the Treasury Department were investigated by a committee of Congress, and an attempt was made to ascertain the precise condition of the public debt. The amount of foreign debt was approximately reached, but the record of the domestic debt was inextricably involved, and never definitely discovered. Morris soon brought order out of this chaos. His plan was to liquidate the public indebtedness in specie, and fund it in interest-bearing bonds. The Bank of North America was established, the notes of which were soon preferred to specie as a medium of exchange. Silver, then in general use as the measure of value, was adopted as the single standard. The weight and pureness of the dollar were fixed by law. The dollar was made the unit of account and payment, and subdivisions were made in a decimal ratio. This was the dollar of our fathers. Gouverneur Morris, the assistant of the Financier, suggested the decimal computation, and Jefferson the dollar as the unit of account and payment. The board of treasury, which for five years had administered the finances in a bungling way, was dissolved by Congress in the fall of 1781, and Morris was left in sole control. Semi-annual statements of the public indebtedness were now begun. The expenses of the government were steadily and inflexibly cut down to meet the diminishing income. A loan was negotiated in Holland, and, with the aid of Franklin, the amount of indebtedness to France was established.