The total omission to provide means for supplying occasional deficiencies from the surplus resources of any particular state, was an error of still greater magnitude. It was obvious that the demand in any state which should become the theatre of war, would be much greater than its quota; and experience had shown that the carriage of specific articles from distant places was always difficult and expensive, and sometimes impracticable. Yet no means were adopted to supply such extraordinary demand, whatever might be the resources of the country. A still more radical objection to the system was the principle, enabling any state which should take means to comply with the requisition, and should notify those means to the government of the United States, to prohibit the continental agents from making any purchases within its territory. Among the states which adopted the proposition of congress was New Jersey, in which the largest division of the army was stationed. Its legislature passed an act prohibiting the purchase of provisions within its jurisdiction by the staff of the continental line, under severe penalties; and refused to authorize its own agents to provide for any emergency however pressing. It was an additional objection to these requisitions, that they specified no periods of the year within which certain portions of the articles demanded should be raised, and consequently might be complied with, although the army should be left destitute of every necessary for a considerable part of the campaign.
These suggestions, however, with others less material to the military operations, did not receive the attention which was due to their importance. A disposition in the members of congress, growing inevitably out of the organization of the government, to consult the will of their respective states, and to prefer that will to any other object, had discovered itself at an early period, and had gained strength with time. The state of the national treasury was calculated to promote this disposition. It was empty, and could be replenished only by taxes, which congress had not the power to impose; or by new emissions of bills of credit, which the government had pledged the public faith not to make, and which would rest for their redemption only on that faith, which would be violated in the very act of their emission. Under these circumstances, it required a degree of energy seldom found, to struggle with surrounding difficulties for the preservation of a general system, and to resist the temptation to throw the nation at the feet of the states, in whom the vital principle of power, the right to levy taxes, was exclusively vested. While the continental currency preserved its value, this essential defect of the constitution was, in some measure, concealed. The facility with which money was obtained from the press, was a temporary substitute for the command of the resources of the country. But when this expedient failed, it was scarcely possible to advance a single step, but under the guidance of the respective states.
Whatever might be the future effect of this system, it was impracticable to bring it into immediate operation. The legislatures of the several states, by whom it was to be adopted, and carried into execution, were, many of them, not then in session; and were to meet at different times through the ensuing spring. It was consequently to be expected that great part of the summer would pass away before the supplies to be raised by the measure, could be brought into use. In the mean time, and until a new scheme of finance, which accompanied the requisition of specific articles, should be tried, there was no regular provision for the army. Financial regulations.Bills to the amount of £100,000 sterling, payable at six months' sight, were drawn on Mr. Jay, and others to the same amount, on Mr. Laurens, who were empowered to negotiate loans in Europe. These bills were sold in small sums on pressing occasions; and the loan offices remained open for the purpose of borrowing from individuals.
This new scheme of finance was a second essay to substitute credit unsupported by solid funds, and resting solely on the public faith, for money.
The vast quantity of bills unavoidably emitted before the establishment of regular governments possessing sufficient energy to enforce the collection of taxes, or to provide for their redemption, and before the governments of Europe were sufficiently confident of their stability to afford them aid or credit, was assigned by congress as the principal cause of that depreciation which had taken place in the continental currency. The United States were now, they said, under different circumstances. Their independence was secure; their civil governments were established and vigorous; and the spirit of their citizens ardent for exertion. The government being thus rendered competent to the object, it was necessary to reduce the quantity of paper in circulation, and to appropriate funds that should ensure the punctual redemption of the bills.
For these purposes, the several states were required to continue to bring into the continental treasury, monthly, from February to April inclusive, their full quotas of fifteen millions of dollars. In complying with this requisition, one Spanish milled dollar was to be received in lieu of forty dollars of the paper currency.
The bills so brought in were not to be reissued, but destroyed; and other bills, not to exceed one dollar for every twenty received in discharge of taxes, were to be emitted.
These bills were to be redeemable within six years, and were to bear an interest of five per centum per annum, to be paid at the time of their redemption in specie, or, at the election of the holder, annually, in bills of exchange drawn by the United States on their commissioners in Europe, at four shillings and six pence sterling for each dollar. They were to be issued in ascertained proportions on the funds of the several states, with a collateral security on the part of the government, to pay the quota of any particular state, which the events of the war might render incapable of complying with its own engagements. The bills were to be deposited in the continental loan-offices of the several states, and were to be signed only as the money then in circulation should be brought in by taxes or otherwise. After being signed, six-tenths of them were to be delivered to the states on whose funds they were to be issued, and the remaining four-tenths to be retained for the use of the continent.
The operation of this scheme of finance was necessarily suspended by the same causes which suspended that for requiring specific articles. It depended on the sanction and co-operation of the several state legislatures, many of which were yet to convene.
As it would be impracticable to maintain the value of the money about to be emitted, should the states continue to issue bills of credit, they were earnestly requested to suspend future emissions, and to call the current paper out of circulation. But the time for this measure was not yet arrived, and many of the states continued the use of the press till late in the following year.