To Edmund Pendleton
RC (LC: Madison Papers). Docketed by Pendleton, “James Madison, Esq. Jan. 8, 1782.”
Philada. Jany. 8th. 1782
I have before me your favor of the 31st. Ulto.1 I regret much the refusal of Mr. J. to become a member of the Virga. delegation, not only as it deprives his country of that particular service, but as I fear it proceeds from a fixed disinclination to all public employments.2
Yesterday was opened for the first time the bank instituted under the auspices of Congress. Its principal founder is Mr: R. M who has certain prerogatives wth. respect to it in his quality of superintendant of finance.3 It is pretty analagous in its principles to the bank of England. The stock subscribed is 400,000 dollars.4 When the scheme was originally proposed to Congress for their approbation & patronage, a promise was given that as soon as it was ripe for operation the company sd. be incorporated. a few days ago5 the fulfilment of the promise was claimed. The competency of Congress to such an act had been called in question in the first instance, but the subject not lying in so near & distinct a view, the objections did not prevail. On the last occasion, the general opinion though with some exceptions was that the Confederation gave no such power and that the exercise of it would not bear the test of a forensic disquisition6 & consequently would not avail the institution. The bank however supposing that such a sanction from Congress wd. at least give it a dignity & preeminence in the public opinion, urged the engagement of Congress; that on this engagement the subscriptions had been made; & that a disappointment would leave the subscribers free to withdraw their names. These considerations were reinforced by the Superintendt. of finance, who relyed on this institution as a great auxiliary to his department, and in particular expected aid from it in a payment he is exerting himself to make to the army. The immediate interposition of Congress was rendered the more essential too by the sudden adjournment of the Assembly of this State,7 to whom the bank might have been referred for the desired incorporation, which it was the opinion of many would have given them a sufficient legal existence in every state. You will conceive the dilemma in which these circumstances placed the members who felt on one side the importance of the institution, and on the other a want of power and an aversion to assume it. Something like a middle way finally produced an acquiessing rather than an affirmative vote. A charter of incorporation was granted, with a recommendation to the States to give it all the necessary validity within their respective jurisdictions.8 As this is a tacit admission of a defect of power I hope it will be an antidote against the poisonous tendency of precedents of usurpation.
In the ordinance lately passed for regulating captures, which I presume you have seen, a clause was inserted, exposing to capture all merchantizes produced in G.B. if coming into these States, & within three leagues of the coast, altho the property of a neutral nation. Congress have now recommended to the States to subject them to seizure during the war, if found on land within their respective limit[s.] These measures had become necessary to check an evil which was every day increasing, and which both enabled & encouraged G. Britain to persevere in the war, at the same time that it mortifyed our ally with daily seeing the fruits of his generosity to us remitted in payment to the rival of his nation & the enemy of both.9
The success of the Marquis de Bouilli agst St. Eustatius is sufficiently confirmed. about 700 prisoners were taken. As we have good reason to believe strong reinforcements are on the way from France to the W. I. this loss may be considered as a presage of much greater misfortunes.10
I am Dr Sir Yrs. sincerely
J. Madison Jr.
3. See Virginia Delegates to Harrison, 8 January 1782, n. 6. According to Articles XI and XII of the plan for the Bank of North America, Robert Morris as superintendent of finance was authorized “at all times, to examine into the affairs of the Bank, and for that purpose shall have access to all the books and papers.” On every day except Sundays he was to be provided with a statement “of the cash account and of the notes issued and received” (JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XX, 545–46 n.). In his extended comment on each of the seventeen articles of the plan, Morris justified these “prerogatives” as a way to prevent fraud and mismanagement, and as a substitute for frequent inspection by private citizens whereby “the National Enemies would be apprized of our resources & operations” (NA: PCC, No. 137, I, 25–27).
4. Article I of the plan provided that “a subscription be opened for four hundred thousand dollars, in shares of four hundred dollars each, to be paid in gold or silver” (JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XX, 545 n.).
5. Possibly on 29 December 1781 when the “Committee appointed to confer with the Bank” reported to Congress (JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXI, 1185). The preamble of the ordinance of incorporation of 31 December 1781, which closely followed a draft written by Edmund Randolph as a member of this committee, includes the words, “and, whereas, the subscription thereto [the bank stock] is now filled from an expectation of a charter of incorporation from Congress” (JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXI, 1188, 1189 n.).
6. Probably meaning a constitutional debate, with the victor chosen by an impartial judge or judges. If JM had in mind a test before a court, it would be interesting to know what tribunal, in his opinion, was competent to exercise jurisdiction.
7. On 28 December 1781, only one day before the ordinance of incorporation was given its first reading in Congress. The Pennsylvania General Assembly fixed 10 February 1782 as the opening date of its next session (Pennsylvania Gazette, and Weekly Advertiser, 2 January 1782).
9. Ibid., and nn. 4 and 5.
10. See Virginia Delegates to Harrison, 1 January 1782, n. 5. The “misfortunes” befell the French rather than the British. Early in December 1781 a formidable fleet, convoying transports loaded with troops, sailed from Brest and Bordeaux. Soon after losing nineteen ships as prizes captured by British men-of-war, this French armada was further weakened by a severe storm. Eventually, in March 1782, two war vessels and five transports reached the West Indies (W[illiam] M. James, The British Navy in Adversity: A Study of the War of American Independence [London, 1926], pp. 312–15, 331).