'ful and threatening declarations, in penal laws, with dreadful and ruinous punishments, and in every other way that could be devised, and all executed with a relentless severity by the highest authority then in being, viz. by Congress, by assemblies, and by conventions of States, whose powers in those days were I nearly sovereign, and even by military force.'

6

In 1779 these notes were made a legal tender, but this, as will be seen, did not augment their value. On March 17, 1780, the amount had increased so much that Congress, in order to lessen the volume of currency,' called in the emissions of 1777 and 1778 ($93,391,60236) at 40 for 1, or only 2 per cent. for fresh issues, and accordingly there was cancelled of that sum $82,819,432, by other bills of credit amounting to $891,236,80 in 1780, and $1,176,249 in 1781. This made matters worse. Specie or barter then began to be used in settlement of transactions, although laws had been passed regulating the price of goods for paper-money, and by May 7, 1781, continental notes ceased to be of any value. So worthless had this currency become at that date, and so great the discontent consequent upon its depreciation, that manifestations of impatience and disaffection became frequent. In Philadelphia a large body of the inhabitants paraded the streets, with paper dollars in their hats by way of cockades, displaying colours, with a dog tarred, and, instead of the usual ornament of feathers, his back was covered with continental money. This procession, immediately under the eyes of the rulers of the revolted provinces, in solemn session at the State House assembled, was directly followed by the jailer, who refused accepting the bills in purchase of a glass of rum, and afterwards by the traders of the city, who shut up their shops, declining to sell any more goods but for gold or silver. It was declared also by the popular voice, that if the opposition to Great Britain was not in future carried on by solid money instead of paper bills, all further resistance were in vain, and must be given up. A letter dated August 19, 1780, thus alludes to the state of financial affairs:-Ten thousand pounds Pennsylvania currency was worth 6,000l. sterling; 10,000l. continental ' money is worth 100l. The difference makes a loss of 5,900l. 'sterling, being as sixty to one. This was the exchange at

Philadelphia in June last, and, as they had not then heard of 'Gates' defeat, it must be now lower. Actions commenced for 'considerable sums by creditors have been obliged to be with'drawn, or a non-suit suffered; a lawyer of eminence not 'opening his mouth in a trial of consequence under a fee of '1,000l., though the legal fee is about forty; and the debt, if ' recovered, being paid in continental money, dollar for dollar, 'worth now but a penny, the difference between a penny and 48. '6d. sterling is lost to the receiver. The Congress having called in the former emissions, $40 for one, and giving that one in 'paper, cuts off every hope of redemption. The freight of a 'hogshead of tobacco is 300l., or one hogshead for the carriage of another. Instead of the creditor pursuing the debtor with 'an arrest, the debtor pursues the creditor with a tender of 'continental money, and forces the bond out of his hand. 'Hence it appears what the best fortunes are reduced to; an 'unpleasing reflection it must be; for time, which lightens all 'other losses, aggravates the loss of fortune. Every day we 'feel it more, because we stand more in want of the conveni" ences we have been used to. On the other hand, new fortunes 6 are made on the ruin of old ones. War, which keeps the 'spirits in motion, has diffused a taste for gaiety and dissipation. The French resident minister at Philadelphia gives a rout 'twice a week to the ladies of that city, amongst whom French hairdressers, milliners, and dancers are all the ton. The Vir'ginia jig has given place to the cotillion and Minuet de la 'Cour. Congress has fallen into general contempt, for its want of credit and power; the army is absolute, and has declared it will not submit to a peace made by Congress; the people grumble, but are obliged to surrender one piece of furniture ' after another to pay their State taxes.' So long as the continental notes retained a market quotation, they changed hands frequently, and at 200 for 1 speculators became large purchasers; they were finally sold at 1,000 to 1. Some compulsory measures upon the people being put in force in regard to them, as well as to State bills, by the Executive Council of Pennsylvania, caused their complete overthrow.

6

None of these continental notes have ever been redeemed, with the exception of $151,740,5, paid by the State of Penn

sylvania to the General Government, on March 3, 1792, in settlement for the purchase of about 200,000 acres of land, north of the line of 42° N. on Lake Erie, which forms the peculiar north-west corner of that State as seen in the map.

The several States during the war also emitted bills of credit, in accordance with their respective currencies. They had merely a local circulation. The second bank established in America was the 'Bank of Pennsylvania,' opened at Philadelphia July 17, 1780, with a capital of 300,000l. Its special object was to supply the American army with provisions; but it was of little use, and lingered in its operations until its stock was merged into that of the Bank of North America, which institution commenced business the following year. Specie became very plentiful in 1781, in consequence of the large expenditure of the British and French forces finding their way into the interior, as well as a profitable commerce that was conducted with the Havannah.

6

Within a year after the Articles of Confederation had been adopted-1782-the attention of Congress was called to the subject of the currency, great inconvenience being felt by reason of the measures of value' being so unlike in the several States. The matter was considered under the authority of Article IX., which reads: The United States in Congress assembled shall also have the sole and exclusive right and power of regulating the alloy and value of coin struck by their own authority, or by that of the respective 'States, fixing the standard of weights and measures throughout the United States.' Mr. Morris, of New Jersey, proposed a money unit of 1·1,440 of a dollar, which was the worth of the penny of every State. Mr. Jefferson objected to Mr. Morris's plan-suggested the dollar as a unit, and the other coins so regulated in relation to it as to be conformable to the decimal arithmetic. After much discussion this latter method was adopted. In 1785 the comparative value of gold to silver was estimated at 15 to 1; the change from the weight of the original Spanish dollar to the Federal dollar made the pound sterling worth four dollars and eighty cents, or 8 per cent. premium on the par of four dollars, forty-four cents, forty-four mills. No mint, however, was established until shortly after the

adoption of the Constitution.* In 1834 gold was debased, in order, as the politicians vainly supposed, to keep it from being exported, when the premium rose to 9 per cent., or $4 84 cents and eighty-four mills to the average sovereign. The act of Congress of March 3, 1853, reduced the weight, but not the fineness of the silver coins; this was done in consequence of their being worth more as bullion on account of the large quantity of gold received from California and Australia, causing silver to appreciate in value. At the beginning of the present century the production was in the proportion of about one ounce of gold to forty-six ounces of silver. When the mines of California were opened, it had probably changed to one ounce of gold to less than four ounces of silver. The alterations, therefore, in the standard weight of the silver coins were rendered absolutely necessary. Previous to 1853, American silver was issued from the Mint at $1,16 4-11 cents per ounce; the half dollar is now fourteen and a quarter grains lighter, and the smaller coins in proportion.

Mr. Chase's greenbacks' resemble bank bills, and 'promise,' on their face, to pay gold and silver on demand. Yet, on their back, in colours typifying the verdancy of the holders, they nullify that obligation. The Confederate issues, unlike those of the Federal Government, have never been made a legal tender; they are payable 'six months after the treaty of 'peace with the United States.'

The Confederate States would find much convenience in an assimilation of the values of their currency to British coinage, which can readily be done, without abandoning the decimal system. Let their principal gold piece be a 'Sun'-Eagles should be dispensed with, as well as Stars and Stripes-and the dollar might be one-fifth its value; the smaller pieces, the subdivisions of the dollar. Specie is an article of merchandise in America at the present time, and the change can, therefore, be readily made without confusion or interfering with the business of the people. An international clearing house' might be established for the precious metals, which would save the frequent loss by recoinage, on the occasion of exports and imports; and

6

* See Report of Alexander Hamilton, Secretary of the Treasury, January 28, 1791, 'on the establishment of a Mint.'

168

COMMERCE OF THE CONFEDERATION.

the 'shaves' to which travellers have always been subjected in selling foreign money, would be altogether avoided. The Na'poleon' might be equivalent to four American dollars, or onefifth less than a British sovereign. The ancient habit of calculating exchange on London at $4 44 cents and forty mills to the pound sterling, or 48. 6d. to the dollar, should be discontinued. A sovereign being worth $4,85 in American gold, 9 per cent. premium becomes actual par.

100

COMMERCE OF THE AMERICAN STATES DURING THE ARTICLES OF CONFEDERATION.

The foreign commerce of the States was of necessity almost entirely suspended during the Revolution. The subjoined table, made up from the records of the British Custom House, will show the extent of the trade between that period and the first year of the Union under the Constitution.

The exports in these seven years, which were chiefly of Southern produce, amounted to not much more than one-third the imports. The trade to the Continent was limited, but assisted, with the specie that had accumulated during the revolution, to settle the balances due to England. The importing States took advantage of their situation, and levied duties on foreign goods for their own benefit, at the expense of the other States. The loss of the West Indian trade was severely felt by New England, New York, and Pennsylvania; it divested them of an outlet for their surplus produce which was unsuited for the European markets. Pitt made an unsuccessful effort, in 1783, to open the colonial ports to the Americans. Mr.