Benjamin Franklin

by Jr. John T. Morse

FINANCIERING

Whether the financiering of the American Revolution is to be looked upon in a pathetic or in a comical light must depend upon the mood of the observer. The spectacle of a young people, with no accumulated capital, engaged in supporting the charge of a mortal struggle against all the vast resources of Britain, has in it something of pathos. But the methods to which this people resorted to raise funds were certainly of amusing simplicity. It was not until the appointment of Robert Morris, in 1781, that a treasury department came into existence and some slight pretense of system was introduced into the financial affairs of the confederation. During the years prior to that time Congress managed the business matters. But Congress neither had funds nor the power to obtain any. It had an unlimited power for contracting debts: absolutely no power for collecting money. It used the former power freely. When creditors wanted payment, requisitions were made upon the States for their respective quotas. But the States were found to be sadly irresponsive; probably the citizens really had not much ready money; certainly they had not enough to pay in taxes the cost of the war; no civilized state has been able to conduct a war, even a small one, in modern times without using the national credit. But the United States had absolutely no credit at all. It was well enough to exclaim "Millions for defense; but not one cent for tribute!" This was rhetoric, not business; and Congress soon found that the driblets which trickled tardily to them in response to their demands on the several States would hardly moisten the bottom of the great exchequer tank, which needed to be filled to the brim.

Two methods of relief were then adopted, crude, simple, but likely for a time to be efficient; and provided only that within that time the war could be finished, all might go well. One of these methods was to issue irredeemable paper "money;" the other was to borrow real money abroad. The droll part was that both these transactions were audaciously entered upon by a body which had absolutely no revenues at all to pledge as security, which had not a dollar of property, nor authority to compel any living man to pay it a dollar. A more utterly irresponsible debtor than Congress never asked for a loan or offered a promissory note. For the security of a creditor there was only the moral probability that in case of success the people would be honest enough to pay their debts; and there was much danger that the jealousies between the States as to their proportionate quotas might stimulate reluctance and furnish excuses which might easily become serious in so unpleasant a matter as paying out hard cash. At home Congress could manage to make its paper money percolate among the people, and could pay a good many American creditors with it; but there were some who would not be thus satisfied, and few European creditors, of course, would meddle with such currency. So to pay these people who would have real money Congress solicited loans from other nations. It was like the financiering of a schoolboy, who issues his IOU's among his mates, and refers the exacting and business-like tradesman to his father. France was cast for the rôle of father to the congressional schoolboy for many wearisome years.

The arrangement bore hard upon the American representatives, who, at European courts and upon European exchanges, had the embarrassing task of raising money. It was all very well to talk about negotiating a loan; the phrase had a Micawber-like sound as of real business; but in point of plain fact the thing to be done was to beg. Congress had a comparatively easy time of it; such burden and anxiety as lay upon that body were shared among many; and after all, the whole scope of its duty was little else than to vote requisitions upon the States, to order the printing of a fresh batch of bills, and to "resolve that the Treasury Board be directed to prepare bills of exchange of suitable denominations upon the Honorable Benjamin Franklin [or sometimes Jay, or Adams, or another], minister plenipotentiary at the court of Versailles, for—— thousand dollars in specie." Having done this, Congress had fulfilled its simple part, and serenely waited for something to turn up.

The plan which seemed most effective was to send a representative accredited to some foreign government, and instructed to raise money at once. Without wasting time by waiting to see whether he arrived safely, or was received, or was successful in his negotiations, the next ship which followed him brought drafts and bills which he was expected to accept, and at maturity to pay. Having thus skillfully shifted the laboring oar into his hands Congress bestirred itself no further. Poor Jay, in Spain, had a terrible time of it in this way, and if ever a man was placed by his country in a painful and humiliating position, it was he. He faced it gallantly, but had to be carried through by Franklin. From first to last it was upon Franklin that the brunt fell; he had to keep the country from financial failure as Washington had to save it from military failure; he was the real financier of the Revolution; without him Robert Morris would have been helpless. Spain yielded but trifling sums in response to Jay's solicitations; Holland, which was tried by Adams, was even more tardy and unwilling, though towards the end some money was got there. Franklin alone, at Paris, could tap the rock and make the waters flow. So upon him Congress sent in an endless procession of drafts, and compelled him to pay all their foreign bills and indebtedness; he gathered and he disbursed; to him were referred all the drafts upon Jay and others, which they themselves could not pay, and he discharged them one and all. A heavier task never fell upon any man, nor one bringing less recognition; for money matters usually seem so dry and unintelligible that every one shirks informing himself about them. We read about the horrors of the winter camp at Valley Forge, and we shudder at all the details of the vivid picture. The anxiety, the toil, the humiliation, which Franklin endured for many winters and many summers in Paris, in sustaining the national credit, do not make a picture, do not furnish material for a readable chapter in history. Yet many a man would far rather have faced Washington's lot than Franklin's.

I do not intend to tell this tale at length or minutely, for I could trust no reader to follow me in so tedious an enterprise; yet I must try to convey some notion of what this financiering really meant for Franklin, of how ably he performed it, of what it cost him in wear and tear of mind, of what toil it put upon him, and of what measure of gratitude was due to him for it. It may be worth mentioning by the way that he not only spent himself in efforts to induce others to lend, but he himself lent. Before he embarked for Philadelphia on his French mission, he gathered together all that he could raise in money, some £3000 to £4000, and paid it over as an unsecured loan for an indefinite period to the Continental Congress.

It is not probable that from any records now existing the most patient accountant could elicit any statement, even approximating to accuracy, of the sums which Franklin received and paid out. But if such an account could be drawn up, it would only indicate some results in figures which would have little meaning for persons not familiar with the national debts, revenues, and outlays of those times, and certainly would not at all answer the purpose of showing what he really did. The only satisfactory method of giving any passably clear idea on the subject seems to be to furnish some extracts from his papers.

The ship which brought Franklin also brought indigo to the value of £3000, which was to serve as long as it could for the expenses of the commissioners. For keeping them supplied with money later on, it was the intention of Congress to purchase cargoes of American products, such as tobacco, rice, indigo, etc., etc., and consign these to the commissioners, who, besides paying their personal bills, were sure to have abundant other means for using the proceeds. Unfortunately, however, it so happened that the resources presented by this scheme were already exhausted. In January, 1777, a loan of one million livres had been advanced on a pledge of fifty-six thousand hogsheads of tobacco to the Farmers General of the French revenue; and the rice and indigo had been in like manner mortgaged to Beaumarchais. Congressional jugglery could not quite compass the payment of different creditors with the same money, even supposing that the money came to hand. But it did not; for a long while no cargoes arrived; of those that were dispatched, some were run away with by dishonest ship-masters, some were lost at sea, others were captured by the English, so that Franklin sadly remarked that the chief result was that the enemy had been supplied with these articles for nothing. But he preserved his resolute cheerfulness. "The destroying of our ships by the English," he said, "is only like shaving our beards, that will grow again. Their loss of provinces is like the loss of a limb, which can never again be united to their body." When at last a cargo did arrive, Beaumarchais demanded it as his own, and Franklin at last yielded to his importunities and tears, though having no really sufficient knowledge of his right to it. Later a second vessel arrived, and Beaumarchais endeavored to pounce upon it by process of law. That one also Franklin let him have. Then no more came, and this promising resource seems never to have yielded one dollar for Franklin's use.

Already so early as January 26, 1777, it was necessary to appeal to Thomas Morris, from whom remittances had been expected on account of sales made at Nantes: "You must be sensible how very unbecoming it is of the situation we are in to be dependent on the credit of others. We therefore desire that you will remit with all possible expedition the sum allotted by the Congress for our expenses." But the commissioners appealed in vain to this worthless drunkard.

Strange to say, the instructions given by Congress to the commissioners at the time of Franklin's appointment said nothing about borrowing money. In view of what he had to do in this way it was a singular omission; but it was soon repaired by letters. In March, 1777, Franklin writes to Lee: "We are ordered to borrow £2,000,000 on interest;" also to "build six ships of war," presumably on credit. In this same month Franklin wrote a paper, which was widely circulated in Europe, in which he endeavored to show that the honesty, the industry, the resources, and the prospects of the United States were so excellent that it would really be safer to lend to them than to England. It was a skillful piece of work, and its arguments had evidently persuaded the writer himself; but they did not induce the money-lenders of the old countries to accept moral qualities and probabilities as collateral security.