The Diplomatic Correspondence of the American Revolution, Vol. 05

by Unknown

The amount of an ordinary commerce, external and internal, of a society, may be computed at a fixed sum. A certain sum of money is necessary to circulate among the society, in order to carry on their business. This precise sum is discoverable by calculation, and reducible to certainty. You may emit paper, or any other currency for this purpose, until you reach this rule, and it will not depreciate. After you exceed this rule, it will depreciate; and no power, or act of legislation hitherto invented, will prevent it. In the case of paper, if you go on emitting forever, the whole mass will be worth no more than that was, which was emitted within the rule. When the paper, therefore, comes to be redeemed, this is the only rule of justice for the redemption of it. The Congress have fixed five millions for this rule. Whether this is mathematically exact, I am not able to say; whether it is a million too little, or too much, I know not. But they are the best judges; and by the accounts of the money being at seventy for one, and bills of exchange at fiftyfive for one, it looks as if five millions was too high a sum, rather than too small.

It will be said, that the faith of society ought to be sacred, and that the Congress have pledged the public faith for the redemption of the bills, at the value on the face of them. I agree that the public faith ought to be sacred. But who is it that has violated this faith? Is it not every man, who has demanded more paper money for his labor or his goods than they were worth in silver? The public faith, in the sense these words are here used, would require that Congress should make up to every man, who for five years past has paid more in paper money for anything he has purchased, than he could have had it for in silver. The public faith is no more pledged to the present possessor of the bills, than it is to every man, through whose hands they may have passed, at a less value than the nominal value. So that according to this doctrine, Congress would have two hundred millions of dollars to pay to the present possessors of the bills, and to make up to every man, through whose hands they may have passed, the difference at which they passed between them and silver.

It should be considered, that every man, whether native or foreigner, who receives or pays this money at a less value than the nominal value, breaks this faith. For the social compact being between the whole and every individual, and between every individual and the whole, every individual, native or foreigner, who uses this paper, is as much bound by the public faith to use it according to the terms of its emission as the Congress is. And Congress have as good a right to reproach every individual, who now demands more paper for his goods than silver, with a breach of the public faith, as he has to reproach the public or their representatives.

I must beg your Excellency's excuse for calling your attention a little longer to this head of public faith, because I cannot rest easy, while my country is supposed to be guilty of a breach of their faith, and in a case where I am clear they have not been so, especially by your Excellency, whose good opinion they and I value so much. This public faith is in the nature of a mutual covenant, and he who would claim a benefit under it, ought to be careful in first fulfilling his part of it. When Congress issued their bills, declaring them, in effect, to be equal to silver, they unquestionably intended that they should be so considered, and that they should be received accordingly. The people, or individuals covenanted, in effect, to receive them at their nominal value; and Congress, in such case, agreed on their part to redeem them at the same rate. This seems to be a fair and plain construction of this covenant, or public faith; and none other I think can be made, that will not degenerate into an unconscionable contract, and so destroy itself.

Can it be supposed, that Congress ever intended, that if the time should come when the individual refused to accept and receive their bills at their nominal value, and demanded, and actually received them at a less value, that, in that case, the individual should be entitled to demand, and receive of the public, for those very bills, silver equal to their nominal value? The consideration is, in fact, made by the public at the very instant the individual receives the bills at a discount; and there is a tacit and implied agreement springing from the principles of natural justice or equity, between the public and the individual; that as the latter has not given to the former a consideration equal to the nominal value of the bills, so in fact, the public shall not be held to pay the nominal value in silver to the individual. Suppose it otherwise, and how will the matter stand? The public offers to an individual a bill, whose nominal value is, for example, forty dollars, in lieu of forty silver dollars; the individual says, I esteem it of no more value than one silver dollar, and the public pays it to him at that value; yet he comes the next day, when the bill may be payable, and demands of the public forty silver dollars in exchange for it. And why? Because the bill purports on the face of it, to be equal to forty silver dollars. The answer is equally obvious with the injustice of the demand. Upon the whole, as the depreciation crept in gradually, and was unavoidable, all reproaches of a breach of public faith ought to be laid aside; and the only proper inquiry now really is, what is paper honestly worth? What will it fetch at market? And this is the only just rule of redemption.

It becomes me to express myself with deference, when I am obliged to differ in opinion from your Excellency; but this being a subject peculiar to America, no example entirely similar to it, that I know of, having been in Europe, I may be excused, therefore, in explaining my sentiments upon it.

I have the misfortune to differ from your Excellency, so far as to think, that no general distinction can be made between natives and foreigners. For, not to mention that this would open a door to numberless frauds, I think, that foreigners when they come to trade with a nation, make themselves temporary citizens, and tacitly consent to be bound by the same laws. And it will be found, that foreigners have had quite as much to do, in depreciating this money, in proportion, as natives, and that they have been in proportion much less sufferers by it. I might go further and say, that they have been in proportion greater gainers by it, without suffering any considerable share of the loss.

The paper bills out of America, are next to nothing. I have no reason to think, that there are ten thousand dollars in all Europe; indeed, I do not know of one thousand. The agents in America of merchants in Europe, have laid out their paper bills in lands, or in indigo, rice, tobacco, wheat, flour, &c.; in short, in the produce of the country. This produce they have shipped to Europe, sold to the King's ships, and received bills of exchange, or shipped to the West India Islands, where they have procured cash, or bills of exchange. The surplus they have put into the loan offices from time to time, for loan offices have been open all along, from 1776, I believe, to this time. Whenever any person lent paper bills to the public, and took loan office certificates, he would have been glad to have taken silver in exchange for the bills, at their then depreciated value. Why should he not be willing now? Those who lent paper, when two paper dollars were worth one in silver, will have one for two; those who lent, when forty were worth one, will have one for forty; and those who lent, when paper was as good as silver, will have dollar for dollar.

Your Excellency thinks it would be hard, that those who have escaped the perils of the seas and of enemies, should be spoiled by their friends. But Congress have not spoiled any; they have only prevented themselves and the public from being spoiled. No agent of any European merchant, in making his calculations of profit and loss, ever estimated the depreciated bills at the nominal value; they all put a profit upon their goods sufficient to defray all expenses of insurance, freight, and everything else, and had a great profit besides, receiving the bills at the current, not the nominal value.

It may not be amiss to state a few prices current at Boston the last and the present year, in order to show the profits which have been made. Bohea tea, forty sous a pound at L'Orient and Nantes, fortyfive dollars; salt, which costs very little in Europe, and used to be sold for a shilling a bushel, forty dollars a bushel, and in some of the other States, two hundred dollars, at times; linens, which cost two livres a yard in France, forty dollars a yard; broadcloths, a louis d'or a yard here, two hundred dollars a yard; ironmongery of all sorts, one hundred and twenty for one; millinary of all sorts, at an advance far exceeding. These were the prices at Boston. At Philadelphia, and in all the other States, they were much higher. These prices, I think, must convince your Excellency that allowing one half, or even two thirds of the vessels to be taken, there is room enough for a handsome profit, deducting all charges, and computing the value of bills at the rate of silver at the time.