To Robert Morris, with Draft of a Circular Letter to the States
Annapolis Mar. 30. 1784.1
Your very interesting Letter of the 17th Inst. with the Accounts Inclosed having been Committed to a grand Committee Consisting of a Member from each State on the floor of Congress, they have lost No time in deliberating on the Steps proper to be immediately taken by Congress for securing the Public Credit and preventing the fatal Effects that must necessarily arise from a protest for Nonpayment and return of your Bills from Holland especially should the United States be found without funds for the Immediate repayment of the Amount of such Bills and the Charges accruing.
The Committee being of opinion that the subject is of too great Moment to admit of delay Conceive it is their duty to suppose for the present that the Bills are actually protested for Nonpayment and may shortly be returned and on that presumption to see what means Can be made Use in this Country for satisfying the Holders on the arrival of the protests.
The first Sources that present themselves as likely to afford immediate Relief are the public Banks. That at Philadelphia having (As is understood here) very greatly increased its Subscriptions and others opening at Baltimore New York and Boston on very Considerable Capitals, The Committee Wish to know Your Opinion on the probability of obtaining a Loan from them or any of them.
The Grand Committee relying on your wisdom and zeal for the public good2 Wish as soon as possible to be furnished with Your thoughts at large On the Expediency of Attempting from the American Bank a loan of such sum3 as may be Necessary in Case of the Actual protest for Nonpayment of your Bills on Holland, On the premium to be offered for Obtaining such loan, And on the form and mode of issuing4 public Securities for the same.
To give you as Clear an Idea of the Views of the Committee as possible for your assistance in forming the plan, it may be proper to inform you that the grand Committee think for the present that the Securities should be in Notes payable at proper periods5 and bearing an Interest of Six pr. Ct. It may also be Necessary to give a premium to Induce the Loan, on the Quantum and Manner of Which we ask your advice. The Committee are of opinion that these Notes shall be paid out of the first Money Coming into the Treasury (unless a longer Credit can be gained.)6 In the Mean time they have it in Idea to advise Congress to press upon the States the Necessity of immediately taking the most Effectual Measures for supporting the Public Credit and averting threatened Evils that wou’d arise from a declared Bankruptcy. A copy of the letter written by the President to the several Executives is herewith transmitted you.7
I am Sir Your Most obedt Humbl Sert.
Chairman of the Grand Committee
The Subject of this address claims the attention of your Excellency on the principle of the most urgent necessity.
The state of our finances is such as to require the united efforts of Congress and of the several states for obtaining immediately a supply of money to prevent the loss of public credit.
When the army were furloughed they had the promise of three months’ pay and as there was not money in the treasury, the Superintendant of finance was under the necessity of issuing his notes to discharge this and other demands. The notes becoming due, part of them were redeemed with money supplied by the several states; but this being inadequate, the financier drew bills on Holland for the deficiency. A considerable proportion of these drafts have been paid by loans obtained there on the credit of the United States: But the letters from our bankers to the Superintendent of finance inform that they had been under the necessity for the want of funds to suffer so many of his bills to be protested for non-acceptance as with the damages on protest in case of non-payment will amount to the sum of 636,000 dollars.
We expect the return of these bills under a protest for non-payment, and should there not be money in the treasury of the United States to discharge them, your excellency may easily conceive the deplorable consequences.
Under such circumstances Congress think it their duty to communicate the matter confidentially to the Supreme executive of each State and to request in the most pressing terms their influence and exertion to furnish with all possible dispatch on requisitions unsatisfied their respective quotas of the sum mentioned according to the apportionment herewith transmitted.
I shall only add, Sir, that Congress rely on your wisdom for accomplishing their views with as much dispatch as possible, and that the estimates and requisitions for the year will be soon transmitted to your excellency.
I am, &c.
(to be signed by the President)
The apportionment of the 636,000. dollars is as follows:
|New York||54,375||South Carolina||40,782|
Dft (DNA: PCC, No. 137, iii, 869–72); in Jacob Read’s hand except for alterations by TJ noted below; endorsed by a clerk: “Grand Comtee. to Superint. Finance March 30–1784 Copy.” Though the letter sent was signed by TJ as chairman of the Grand Committee, the text was prepared by a subcommittee as the following lines at the head of Dft indicate: “The Sub-Committee Consisting of Mr. Jefferson Mr. Gerry and Mr. Read. submit [to the Grand Committee] the following Draft of a Letter to the Superintendant of Finance—.” It is not possible to determine whether the alterations noted below were made in the subcommittee or in the Grand Committee or even in Congress. See Morris’ reply of 8 Apr. 1784. The text of the enclosure as approved by Congress on 30 Mch. 1784 is in the Secret (Domestic) Journal of Congress and is printed here from JCC description begins Journals of the Continental Congress, 1774–1789, ed. W. C. Ford and others, Washington, 1904–1937 description ends , xxvi, 172–3; FC (DNA: PCC, No. 16, p. 297–9) is captioned “Annapolis April 4th 1784.”
Morris’ very interesting letter, to which the present letter is a reply, is printed in Wharton, Dipl. Corr. Amer. Rev., Vi, 787–9, where it is dated 17 Mch. (as it is in the present letter, though Committee Book PCC: No. 186 and the report of the Grand Committee both give its date as 19 Mch.; it is not to be confused with another letter from Morris of 19 Mch. 1784 and to be found in PCC: No. 137, iii, 483; JCC description begins Journals of the Continental Congress, 1774–1789, ed. W. C. Ford and others, Washington, 1904–1937 description ends , xxvi, 172, note). Morris agreed with the suggestion of the Dutch bankers that “for the present … by making a sacrifice of premium the funds for discharging these bills [amounting to $530,000 and protested for non-acceptance] may be obtained.” Even so, interest and other payments due, above the salaries of foreign ministers and their contingent expenses, would amount to some $400,000. Altogether Morris indicated that there would be outstanding demands after May 1 of more than $500,000 in addition to current expenses, and “if the bills noted for non-acceptance come back [protested for non-payment], a scene will then be opened which it is better for you to conceive than for me to describe‥‥ But … unless the States can be stimulated into exertion, and that speedily, everything must fall into confusion. I will not pretend to anticipate the evil consequences. Having stated the facts I have done my duty” (Wharton, Dipl. Corr. Amer. Rev., vi, 787–9). On 27 Mch. Morris’ letter was referred to the Grand Committee; at the same time they were “instructed to revise the institution of the treasury department and report such alterations as they may think necessary” and to “meet in Congress chamber on Monday next [29 Mch.] at 10 o clock” (Committee Book, PCC: No. 186; the other members of the Grand Committee were, at that time, Blanchard, Gerry, Howell, Sherman, DeWitt, Dick, Hand, Stone, Williamson, and Read). The Grand Committee, as indicated by the present documents, assumed the worst and acted at once in a way to suggest delicately that the Superintendent of Finance had not fully discharged his duty merely by stating the situation. On Tuesday, 30 Mch., the Grand Committee “reported the draft of a circular letter to the supreme executive of the several states, which was agreed to” (JCC description begins Journals of the Continental Congress, 1774–1789, ed. W. C. Ford and others, Washington, 1904–1937 description ends , xxvi, 172). Although the copy of this circular letter in the President’s Letter Book (PCC: No. 16, p. 297–9) bears the date “Annapolis April 4th 1784,” Gov. Harrison acknowledged it as being dated the “1st of this month” and declared that he was “so fully impressed with the urgency of the case and the consequences attendant on the loss of public credit that nothing within my power shall be wanting to forward the paiment of the quota apportioned to this state” (Harrison to Mifflin, 17 Apr. 1784, Executive Letter Book, Vi).
1. Place and date in TJ’s hand.
2. Preceding ten words interlined by TJ in substitution for the following: “As this Business must Necessarily be intrusted to your wisdom and Zeal for the public good both as to the plan as to the Execution of the Measure.”
3. Dft first read “Six hundred thousand Dollars or such part”; this was amended by TJ (probably in sub-committee and certainly after the text of the circular had been drafted), to read “six hundred and thirty six thousand Dollars”; and this, in turn was altered (perhaps in the Grand Committee) by TJ’s interlining the words “such sum.”
4. Preceding five words interlined by TJ and the words “to be issued” deleted after “Securities.”
5. Preceding two words interlined by TJ in substitution for “3, 6, & 9 Months.”
6. This sentence and part of the preceding were altered by deletions and interlineations in TJ’s hand from the following: “… Quantum and Manner of Which must necessarily be left to your Judgment), And that these Notes shall be paid out of the first Money Coming into the Treasury (unless so long a credit can be gained as to enable the states to provide other separate funds for the reimbursements).”
7. This sentence, which is in TJ’s hand, originally read: “A copy of the letter to the several Executives which they [the Grand Committee] have agreed to report is herewith transmitted you.” The alteration to the above form was thus made after Congress had confirmed the Grand Committee’s report on 30 Mch. and suggests that the circular letter was, therefore, “written by the President” on 30 Mch. It suggests also that TJ himself was probably the author of the circular.
Following this point there were two additional paragraphs that were deleted either in sub-committee, in the Grand Committee, or in Congress:
“There remains in the opinion of the Committee but one other probable Source from whence they can derive any hope of present aid or support to the public Credit. Tis the Western Territory. What facilities do you think Coud be given towards raising the Sum now wanted on a preference in Locating their Warrants for 1. 2. or 3 Months (as soon as the Indian Cession is declared) to the purchasers who woud now subscribe to the proposed loan. The prices on which Congress mean to sell or the Terms of payment cannot now be held forth, but it strikes the Committee that a preference in the Location must certainly be a valuable Advantage to Speculators in Land.
“For the Security of the Lenders the Committee also Mean to advise Congress to Mortgage the Amount [of] Sales of the Western Lands untill the full reimbursement of the loan shoud any be obtained for this project, and wish to be favoured with your thoughts on this Matter.”
TJ must certainly have opposed, if he did not delete in sub-committee, a proposal that would have given “a valuable Advantage to Speculators in Land.”