little to affect the disease. Indeed, it remains CHAP. I. to this moment uncertain, whether the good, 1776. or the ill which would have been produced by an early attention to this subject, and a different conduct, would most have predominated: whether the advantages of checking depreciation, or the discontents it would have excited, would most have operated on the war.

Taxation, the unpleasant but only effectual mode of preventing as much as possible the rapid increase of the quantity of paper money in circulation, being rejected, as an experiment too dangerous to be made; artificial substitutes were resorted to. A loan was proposed to be opened for borrowing five million of continental dollars, on an interest of four per centum per annum, the principal to be repaid in three years. For the accommodation of lenders, an office was to be opened in each state, and the interest was to be paid annually, and the principal returned at the expiration of three years, in the state where the loan was made. No certificate of loan was to be granted for a less sum than three hundred dollars. A hope was entertained, that the loan would fill immediately; that it would diminish the quantity of money in circulation; and that the certificates, issued in lieu of the money received, would not be brought into ordinary use, so as to take the place of the money borrowed. In addition to the greater value of the certificates from their

CHAP. I. bearing interest, it was supposed that the 1776. largeness of the sums would unfit them for ordinary purposes.

The scheme of a lottery in four classes was also suggested, by which it was proposed to raise, at different periods, about one million five hundred thousand dollars; but the principal advantage contemplated was, to draw in a large sum of continental money by the sales of the tickets, to retain with the consent of the successful adventurers, the small prizes in each class, for tickets in the succeeding class, and the large prizes on loan.

These experiments were of small avail. The effects of a cause so certain and so powerful in its operations, the action of which was so perpetual, could not have been prevented by any means in the power of the United States; and could have been retarded only by measures infinitely more energetic than these, or perhaps any others that could safely have been used.

Notwithstanding the large emissions which were unavoidably made, and the absolute want of any other fund than the public faith to support their credit, no difference between paper money and specie was generally perceived, until the campaign of 1776 had far advanced.

The real depreciations early in 1777, became considerable; but it was still mistaken by many for a rise in the price of every article brought to market, and it was thought practicable to check it by the application of violent remedies.

1776.

In a resolution for the purpose of keeping up CHAP. I. the value of the bills of credit issued by congress, and of guarding against the pernicious artifices of the enemies of American liberty to impair their credit, it was declared that whoever, in any purchase, sale, or barter, whatever, shall rate gold or silver coin higher than the continental bills of credit, ought to be deemed an enemy to the liberties of the United States, and to forfeit the value of the money or other thing, in the purchase, sale, or barter, of which this difference of value was made; and it was recommended to the several states to pass laws to this effect.

It was also recommended to the respective legislatures to pass laws declaring these bills a tender in payment of all debts, and that a refusal of them when tendered, should amount to an abolition of the debt.

These attempts to regulate by law the value of an article depending solely on public opinion, were accompanied by other recommendations better calculated to produce the desired effect.

The public faith had indeed been plighted by congress for the redemption of their bills; but the substantial power to perform the engagement rested with the state sovereignties. In the first moments of the war, a suspicion that these sovereignties could have failed, or hesitated to comply with the recommendations made, or engagements entered into by congress

CHAP. I. for the common benefit, would have been 1776. deemed highly criminal, and might have subjected the person who harboured it, to the very serious charge of hostility to American liberty. But to engage the different states to pledge themselves for the redemption of these bills at the time fixed by congress, was now thought a prop to their credit, not to be disregarded; and it was recommended to them to pass resolutions to that effect.

It was also earnestly recommended to them to commence, at an earlier period than had been at first proposed, the only plan which could afford effectual aid, and immediately to impose such taxes, as the present actual situation of the people would enable them to pay. They were assured that for all monies thus raised, each state should receive a credit with the United States, in its quota of the public debt that had been apportioned on them. At the same time a further loan of two millions was voted.

On receiving these recommendations, laws were passed in the several states in conformity with the wishes of congress.

The commercial situation of the states from Maryland inclusive to the south, previous to the commencement of the war, rendered it indispensable to the objects of justice, that some provision should be made for cases not contemplated in the resolutions of congress.

1776.

The commerce of that extensive country had CHAP. I. been principally in the hands of British merchants, and almost exclusively carried on by British capital. In various parts of it, American citizens had established a credit with British mercantile houses to a greater or less extent, according to which, goods were shipped to them, which they retailed also on credit. Annual remittances were made to a considerable amount, but there remained always due to the wholesale merchant from the retailer of his goods, a large sum which was in the hands of the planters, who generally preserved a credit equal to their crops. In consequence of the valuable staples possessed by those colonies, this credit was extensive, and these debts amounted to a very considerable sum. The British merchants, to whom they were ultimately payable, were now in Europe, and their agents had left the country.

To compel the American merchant by force of penal laws to receive the debt relied on to enable him to discharge that contracted by the original purchase of the goods, in an article which might become worthless; while his responsibility remained, and his debt, unimpaired in value, was accumulating with interest; was deemed an injury to the American citizen, which justice ought to forbid any government to practise. At the same time, therefore, that laws were passed compelling the American to