The Diplomatic Correspondence of the American Revolution, Vol. 05

by Unknown

There are two other sources from which foreigners have made great profits. The difference between bills of exchange and silver. During the whole of our history, when a man could readily get twentyfive paper dollars for one in silver, he could not get more than twelve paper dollars for one, in a bill of exchange. Nearly this proportion was observed all along, as I have been informed. The Agent of a foreign merchant had only to sell his goods for paper, or buy paper with silver at twentyfive for one, and immediately go and buy bills at twelve for one. So that he doubled his money in a moment.

Another source was this; the paper money was not alike depreciated in all places at the same time. It was forty for one at Philadelphia, sometimes, when it was only twenty at Boston. The agent of a foreign merchant had only to sell his goods, or send silver to Philadelphia, and exchange it for paper, which he could lay out at Boston for twice what it cost him, and in this way again double his property.

This depreciating paper currency being, therefore, such a fruitful source for men of penetration to make large profits, it is not to be wondered that some have written alarming letters to their correspondents.

No man is more ready than I am to acknowledge the obligations we are under to France; but the flourishing state of her marine and commerce, and the decisive influence of her councils and negotiations in Europe, which all the world will allow to be owing in a great measure to the separation of America from her inveterate enemy, and to her new connexions with the United States, show that the obligations are mutual. And no foreign merchant ought to expect to be treated in America better than her native merchants, who have hazarded their property through the same perils of the seas and of enemies.

In the late Province of the Massachusetts Bay, from the years 1745 to 1750, we had full experience of the operation of paper money. The Province engaged in expensive expeditions against Louisburg and Canada, which occasioned a too plentiful emission of paper money, in consequence of which, it depreciated to seven and a half for one. In 1750, the British Parliament granted a sum of money to the Province to reimburse it, for what it had expended more than its proportion in the general expense of the empire. This sum was brought over to Boston in silver and gold, and the Legislature determined to redeem all their paper with it at the depreciated value. There was a similar alarm at first, and before the matter was understood, but after the people had time to think upon it, all were satisfied to receive silver at fifty shillings an ounce, although the face of the bills promised an ounce of silver for every six shillings and eight pence. At that time, the British merchants were more interested in our paper money, in proportion, than any Europeans now are; yet they did not charge the Province with a breach of faith, or stigmatise this as an act of bankruptcy. On the contrary, they were satisfied with it.

I beg leave to remind your Excellency, that at that time, the laws of Massachusetts were subject not only to the negative of the King's Governor, but to a revision by the King in Council, and were there liable to be affirmed or annulled. And from the partial preference, which your Excellency well knows, was uniformly given to the subjects of the King, within the realm, when they came in competition with those of the subjects of the Colonies, there is no reason to doubt, that if that measure, when thoroughly considered, had been unjust in itself, but the merchants in England would have taken an alarm, and procured the act to be disallowed by the King in Council. Yet the merchants in England, who well understood their own interests, were quite silent upon this occasion, and the law was confirmed in the Council; nor can it be supposed to have been confirmed there in a manner unnoticed. It had met with too much opposition among a certain set of interested speculators in the then Province, for that supposition to be made. And the case of the British merchants, at that time, differed in no respect from the present case of the French, or other foreign merchants, except that the credits of the former were vastly greater, and they must have, consequently, been more deeply interested in that measure of government, than the latter are in the present one. Their acquiescence in the measure, and the confirmation of that act, must have rested upon the full conviction of the British administration and of the merchants, of the justice of it. Your Excellency will agree, in the difficulty of making any distinction between the French merchant and the Spanish or Dutch merchant, by any general rule; for all these are interested in this business.

Your Excellency is pleased to ask, whether I think these proceedings of Congress proper to give credit to the United States; to inspire confidence in their promises, and to invite the European nations to partake of the same risks, to which the subjects of his Majesty have exposed themselves?

I have the honor to answer your Excellency, directly and candidly, that I do think them proper for these ends, and I do further think them to be the only measures that ever could acquire credit and confidence to the United States. I know of no other just foundation of confidence in men, or bodies of men, than their understanding and integrity; and Congress have manifested to all the world by this plan, that they understand the nature of their paper currency, that its fluctuation has been the grand obstacle to their credit; and that it was necessary to draw it to a conclusion, in order to introduce a more steady standard of commerce; that, to this end, the repeal of their laws, which made the paper a tender, and giving a free circulation to silver and gold, were necessary. They have further manifested by these resolutions, that they are fully possessed of the only principle there is in the nature of things for doing justice in this business, to the public and to individuals, to natives and foreigners, and that they are sufficiently possessed of the confidence of the people; and there is sufficient vigor in their government to carry it into execution.

Notwithstanding all, if any European merchant can show any good reason for excepting his particular case from the general rule, upon a representation of it to Congress, I have no doubt they will do him justice.

Moreover, if his Excellency the Chevalier de la Luzerne can show, that the sum of five millions of dollars is not the real worth of all the paper money that is abroad, and that ten millions of dollars is the true sum, I doubt not Congress would alter their rule, and redeem it at twenty for one. But I doubt very much whether this can be shown. But I cannot see that any distinction could be made between French merchants and those of other nations, but what would be very invidious and founded upon no principle. I cannot see that any distinction can be made between natives and foreigners, but what would have a most unhappy effect upon the minds of the people in America, and be a partiality quite unwarrantable; and, therefore, your Excellency will see, that it is impossible for me to take any steps to persuade Congress to retract, because it would be acting in direct repugnance to the clearest dictates of my understanding and judgment, of what is right and fit.