From William Jones
March 9. 1814
Thoughts on the present state of affairs
Although the duties of my proper Depmt engross my attention almost to the exclusion of every other thought yet in the peculiar situation in which we stand and our absolute dependence upon the monied resources of the country which appear to be in a great degree under the malignant controul of a faction whose deadly hostility to the administration of the government would prostrate the country at the feet of our enemy and even sacrifice their avarice and self interest at the shrine of their Guilty ambition, I cannot divest myself of reflections the most imposing nor refrain from communicating to you and to you alone the inquietude they have produced in my mind.
The crisis is at hand and we ought to view it in its worst aspect. The Loan may fail entirely, or such terms be offered as cannot be accepted without prostrating the credit of the country, or if accepted the net product would be inadequate to the demands of the government. In this event the Treasury notes would probably follow the fate of the Loan for it is impossible to suppose that public credit could sustain a shock so severe and still maintain its intrinsic value with the monied interest, so as to enable the government to put in circulation an amount of Treasury notes equal to the amount authorized by law added to the deficiency of the Loan.1 Admit the worst, and what is to be done? There is no country on earth in which money is so essential to every military and naval operation as in this. The British army in Spain it is said has been eight months without pay and as to the navy it is paid in dribblets at the pleasure of the government. Stop the pay of our army & navy but three months under the supposed inability of the government to provide the means, heightened by the traitorous language of the faction, and we come at once to a dead halt nay perhaps to the right about, leaving each section or state of the union to maintain its own defensive attitude against the common enemy until a common interest, sentiment and danger, shall combine those who may feel the necessity of union. Will the government then make a dishonorable peace? NO! How then is it to prevent the deprecated catastrophe and maintain its credit. England was on the brink of this precipice when she stopped the issuing of specie from the Bank and the exportation under the severest penalties.2 From that moment it was predicted by the most enlightened politicians of other countries that her credit was annihilated and that she must soon fall. Yet she has sustained her credit and her vigour unimpaired—nay it evidently gave her fresh vigour.
Our situation is not sufficently analagous to benefit by the example in a case of extremity, though had we an Engine allied to the Government as is the Bank of England it could be done.*3 Such an one cannot however be created and organized to meet the contingency.
Hence we are dependent not on the solid credit of the country and its superabundant resources, but upon the Gold and silver in the Banks and upon those who by a wicked conspiracy and the advantages of an illicit and criminal traffic possess the means of monopolizing it.
Will the repeal of the Embargo and nonimportation or either, remedy the evil?4
These measures cannot be taken distinctly, but in connection with each other and with the military and naval plans of operation.
The repeal of the Embargo without the benefit of importation would benefit the agricultural interest of the country and the carrying trade of Britain under neutral flags, but though the Farmer and Planter would get paid, the mercantile or Banking capital of the country would be remitted to England from whence it could not be drawn in specie but much of it would find its way home in smuggled goods. You would also then feed your enemy and enable him to send reinforcements to Canada without limitation—victual his fleets from the plunder of your trade in your own waters, and your seamen instead of manning your cruising vessels public and private for the annoyance of his trade and for the defence of your harbours would be transferred to neutral vessels from whence the enemy would impress them with impunity. And all this would bring very little money into the Treasury for it is absurd to suppose that the enemy would admit importations from friendly countries whilst his manufactures were prohibited. Indeed the nature of the Blockade he has sustained is sufficient to prove that he would limit your exportation to his own wants.
The repeal of the nonimportation act without the Embargo would effectually banish all the specie from the country for there would be no other means of paying for the importations and that could not continue long.
Those two measures then are inseperable and must stand or fall together.
If you repeal them both you will get revenue and your trade will comparatively prosper but you will feed your enemy cherish his trade, banish your seamen and from inevitable necessity render the war merely defensive (except your cruisers on the ocean) for nothing appears to me more absurd and even wanton than the idea of carrying on the invasion of Canada under such a state of things.
A defensive war by land and a vigourous offensive war by sea as far as it is practicable by giving bounty to private cruisers (& public also) for the destruction of the trade of the enemy would probably carry us through with reputation until reasonable terms of pacification can be obtained.
Can we do better? Is there not great danger of doing worse? I tremble at our military expenditure, it is impossible to sustain it!
The repeal of the Embargo and nonimportation laws together with a reasonable circulation of Treasury notes would give us revenue & resources sufficient to maintain an effective defensive war by land and a vigourous offensive war by sea.
I repeat it—can we do better? I fear, sore⟨ly⟩ fear the Loan will fail. I would abandon those restrictive laws with the greatest reluctance and only from absolute necessity. Could we get money with certainty I would adhere to them.
These hasty and free sentiments I have felt it a duty to offer to your consideration confident that you will receive them in the spirit with which they were written. I am most sincerely and respectfully your Obdent Servt
RC (DNA: RG 59, ML); FC (PHi: William Jones Papers). FC is a letterpress copy.
1. For the loan legislation, see Thomas Jefferson to JM, 16 Feb. 1814, and n. 3. On 4 Mar. 1814 JM signed an act authorizing the government to issue up to $10 million in Treasury notes but requiring that if more than $5 million was issued, the additional amount would be considered a part of any other loan authorized during the current session of Congress (U.S. Statutes at Large, description begins The Public Statutes at Large of the United States of America … (17 vols.; Boston, 1848–73). description ends 3:100).
2. Jones referred to the Bank of England’s suspension of cash payments on 26 Feb. 1797 in accord with an order in council of that date, confirmed by an act of Parliament in May of that year. Designed as a temporary measure to control demands on the Bank’s specie reserves, caused by the war with France, the suspension was not completely lifted until 1821 (Peter Newman et al., eds., The New Palgrave Dictionary of Money & Finance [3 vols.; London, 1992], 1:255–56).
3. Jones placed an asterisk here and wrote at the end of the letter: “*These remarks on this subject are only made to show that an absolute goverment with the commerce of the world in its hands and until that period the uncontrouled regulation of the credit and exchanges of Europe could not withstand the excessive drain of specie which its vast expenditure created. The power to stop the issues of specie from the Banks necessarily implies the staying of executions for debts unless satisfied with Bank notes as is the case in Great Britain. This though not a legal tender has by the indefinite stay of execution nearly the same effect yet it certainly had a tendency to interest every one in the support of the credit of the Bank paper which is the only circulating medium. The same effect however could only be produced by a Consoladated Government or by the complete cooperation of all the states in which Banks are established, which is not to be expected.”
4. On 2 Mar. 1814 in the House of Representatives, Robert Wright of Maryland proposed that a committee be appointed to consider the suspension of the embargo during the peace negotiations with Great Britain. Brought immediately to a vote, the proposal was rejected. Twelve days later, William Gaston of North Carolina introduced a resolution appointing a committee to draft a bill repealing not only the embargo but also the nonimportation law, which the House also declined to consider (Annals of Congress, description begins Debates and Proceedings in the Congress of the United States … (42 vols.; Washington, 1834–56). description ends 13th Cong., 2d sess., 1771–72, 1865–68).