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History of the United States by Charles A. Beard and Mary R. Beard

«·Military Affairs · The Diplomacy of the Revolution·»

The Finances of the Revolution

When the Revolution opened, there were thirteen little treasuries in America but no common treasury, and from first to last the Congress was in the position of a beggar rather than a sovereign. Having no authority to lay and collect taxes directly and knowing the hatred of the provincials for taxation, it resorted mainly to loans and paper money to finance the war. “Do you think,” boldly inquired one of the delegates, “that I will consent to load my constituents with taxes when we can send to the printer and get a wagon load of money, one quire of which will pay for the whole?”

Paper Money and Loans.—Acting on this curious but appealing political economy, Congress issued in June, 1776, two million dollars in bills of credit to be redeemed by the states on the basis of their respective populations. Other issues followed in quick succession. In all about $241,000,000 of continental paper was printed, to which the several states added nearly $210,000,000 of their own notes. Then came interest-bearing bonds in ever increasing quantities. Several millions were also borrowed from France and small sums from Holland and Spain. In desperation a national lottery was held, producing meager results. The property of Tories was confiscated and sold, bringing in about $16,000,000. Begging letters were sent to the states asking them to raise revenues for the continental treasury, but the states, burdened with their own affairs, gave little heed.

Inflation and Depreciation.—As paper money flowed from the press, it rapidly declined in purchasing power until in 1779 a dollar was worth only two or three cents in gold or silver. Attempts were made by Congress and the states to compel people to accept the notes at face value; but these were like attempts to make water flow uphill. Speculators collected at once to fatten on the calamities of the republic. Fortunes were made and lost gambling on the prices of public securities while the patriot army, half clothed, was freezing at Valley Forge. “Speculation, peculation, engrossing, forestalling,” exclaimed Washington, “afford too many melancholy proofs of the decay of public virtue. Nothing, I am convinced, but the depreciation of our currency … aided by stock jobbing and party dissensions has fed the hopes of the enemy.”

Robert Morris
Robert Morris

The Patriot Financiers.—To the efforts of Congress in financing the war were added the labors of private citizens. Hayn Solomon, a merchant of Philadelphia, supplied members of Congress, including Madison, Jefferson, and Monroe, and army officers, like Lee and Steuben, with money for their daily needs. All together he contributed the huge sum of half a million dollars to the American cause and died broken in purse, if not in spirit, a British prisoner of war. Another Philadelphia merchant, Robert Morris, won for himself the name of the “patriot financier” because he labored night and day to find the money to meet the bills which poured in upon the bankrupt government. When his own funds were exhausted, he borrowed from his friends. Experienced in the handling of merchandise, he created agencies at important points to distribute supplies to the troops, thus displaying administrative as well as financial talents.

Women organized “drives” for money, contributed their plate and their jewels, and collected from door to door. Farmers took worthless paper in return for their produce, and soldiers saw many a pay day pass without yielding them a penny. Thus by the labors and sacrifices of citizens, the issuance of paper money, lotteries, the floating of loans, borrowings in Europe, and the impressment of supplies, the Congress staggered through the Revolution like a pauper who knows not how his next meal is to be secured but is continuously relieved at a crisis by a kindly fate.

«·Military Affairs · The Diplomacy of the Revolution·»