Thomas Jefferson Papers

Wilson Cary Nicholas to Thomas Jefferson, 8 November 1813

From Wilson Cary Nicholas

Warren Nov. 8. 1813

my Dear Sir

I am very much obliged to you for allowing me to read your letters to Mr Eppes. I have done it with great satisfaction and attention. Your letters contain the ablest system of finance that I believe cou’d be devised, if the U.S. were now to commence their financial operations, with all the powers of the State and Genl Governments and we were free from prejudices against paper money and the influence of a Bank capital of fifty millions of dollars. The great resource of supplying the circulating medium or substituting public paper for coin, cou’d then be used—To attempt it now, wou’d be to encounter such a host & to interfere with the interest of so great a proportion of the most active of our people that I fear its success wou’d be impracticable—particularly as you seem to admit, that the immense circulation of paper has had an influence upon the price of property and even upon the price of our produce. Circumstances grateful at least to the great body of agriculturists. I presume it will not be denied that Banks have to some degree increased the improvements & the manufactures of the U.S. It is probable few of the Bank Charters will expire during the present war and when they do, I suspect few of the States wou’d be willing to give up the power to renew them. In many of the States a considerable proportion of the stock is state property, in all it is an important source of revenue. Independent of local and personal considerations that wou’d operate in favour of the Banks, The jealousy of the State Govts for the preservation of their rights, wou’d have very great influence. The tendency of the government seems to be to lessen and not enlarge the powers of the Genl Govt. When some of the most essential rights of that Govt are denied to it, can it be expected that new & important powers will be granted? I think not, & shou’d therefore doubt very much, its being practicable ever to put down State Banks with the consent of the States. without that consent, I am sure you are one of the last men in America, that wou’d wish it to be attempted at any time, but particularly at this moment. To a very considerable extent I believe the Banks may be relied upon to aid the government with money either directly or indirectly. They have and will continue to make direct Loans, they lend to individuals who lend to the U.S. (a Bank in N.Y. lately lent Mr Parish a million of dollars for that purpose) & they will unquestionably hold treasury notes to a considerable amount. Perhaps in all these ways, as much money may be derived from the Banks as wou’d equal what you deem an adequate circulation. Your maxim that adequate funds shou’d be provided for the payment of interest and a proportion of the principal, whenever a loan is authorized, I think shoud be limitted by the ability of the people and the importance of the object. Our independence as a nation ought not be lost, let the means of defending it cost what they may. There are few wars that we can be engaged in that will not be as interesting to posterity as to us.1 If there is a limit to our right to bind them, it wou’d seem that the object of the expenditure, more than any other circumstance, ought to determine who shou’d be the paymaster. For a benefit that was exclusively ours it wou’d be unreasonable to charge the cost to others, but for a great national advantage that wou’d inure to posterity to the latest generations I cannot believe it is a violation of right or of justice to leave to those who are to participate in the benefit the payment of that part of the cost, that wou’d be inconvenient to us. If our power over posterity is limitted, their claims upon us must have some reasonable bounds. The sacrifice of blood, of money that can be conveniently paid & the produce of our lands during a war wou’d seem to be our full contingent, all beyond that shoud be paid by posterity. If this doctrine is admitted, the interest of those who are to succeed us will be better taken care of than it wou’d be if it shall be established that we exceed our rightful power, when we contract debts that cannot be paid within twenty years: we have had the experience of one war with G.B. It is now thirty eight years since its commencement. Perhaps2 half the debt contracted during that war was sunk by the depreciation of paper money. we had a long interval of peace & prosperity and after all our exertions there remains of that debt somewhere about $40,000000 unpaid. It cannot be unjust that the children of those who achieved the revolution shou’d pay what it wou’d have been not only inconvenient but impracticable for their fathers to have paid. I am sure you wou’d not have consented that our efforts shou’d have ceased, when our debt amounted to the sum we cou’d pay in twenty years. If the present war shou’d continue many years, wou’d it be possible to pay an additional tax every year of two millions? which we must do if we provide for the payment of interest annually and3 one tenth part of the principal. will the present generation bear this in addition to the other burthens of the war that they cannot escape? If they will not & cannot, is the interest of posterity consulted when the object for which we contend, must be abandoned rather any part of the cost of maintaining their rights shou’d devolve upon them? If as I believe the circulation of Bank paper cannot be arrested (at any rate during this war) the only resources remaining are taxes & loans. The sum we can pay in taxes is very limitted. I doubt if under present circumstances we can pay a greater sum in any year of the war, than that imposed during the last session of Congress, that you suppose will have rather more than 600,000 applicable to new loans, this will go but little way. what then is to be done? I see no resource but to borrow, to pay when we are able. If it requires a sum that we shou’d be fifty years in redeeming, I wou’d have it sooner than abandon the war with disgrace. I have little doubt we can obtain as much money as we shall want; our countrymen will take stock to an immense amount. Foreigners will take what may be over the home demand. If it is necessary or will make the premium less, Let the public lands, the4 taxes lately imposed & the present or any other rate of impost be pledged until the debt is paid. I wou’d impose no new taxes nor wou’d I have pledged those imposed during the last session, to be collected until peace. I shou’d doubt very much the success of alternate issues of paper that shou’d and shou’d not bear interest. I fear the solicitude to obtain the first wou’d destroy all appetite for the last. The issue of treasury notes, I think a very happy expedient, but that it has not been managed to the most advantage. The time of redemption is too short and the interest too high, as it is used, it is only a means of anticipating revenue for a short time. I think it might have been used so as to answer all the purposes of a war to be paid at a distant day. Notes of this description to a vast amount wou’d have been held by individuals. They wou’d be hoarded by all that description of people who will not trust their money out of their own hands & who by holding it lose the interest.5 Every man who was collecting a sum for a particular object, and a great proportion of those who now deposit large sums in the Banks not intended for immediate use wou’d gladly hold that sort of paper

FC or unsent RC (DLC: Nicholas Papers); entirely in Nicholas’s hand; consisting of one sheet folded to form four pages, with last page fully filled, suggesting that an additional page or pages may be missing; unaddressed, with internal evidence clearly pointing to TJ as the intended recipient. Not recorded in SJL and probably never sent.

Early in April 1813 David parish and Stephen Girard, of Philadelphia, jointly subscribed for just over $7 million of the $16 million war loan authorized by Congress on 8 Feb. of that year. John Jacob Astor, of New York, pledged $2 million at the same time (U.S. Statutes at Large description begins Richard Peters, ed., The Public Statutes at Large of the United States … 1789 to March 3, 1845, 1845–67, 8 vols. description ends , 2:798–9; ASP description begins American State Papers: Documents, Legislative and Executive, of the Congress of the United States, 1832–61, 38 vols. description ends , Finance, 2:647; New York Commercial Advertiser, 15 Apr. 1813; Philip G. Walters and Raymond Walters Jr., “The American Career of David Parish,” Journal of Economic History 4 [1944]: 149–66, esp. 159–61).

1Reworked from “that will be as interesting as to us.”

2Manuscript: “Perhapaps.”

3Nicholas here canceled “the principal in twenty years.”

4Nicholas here canceled “direct.”

5Reworked from “& who lose the interest by so doing.”

Index Entries

  • American Revolution; U.S. financing of search
  • Astor, John Jacob; subscribes to U.S. war loan search
  • banks; W. C. Nicholas on search
  • Congress, U.S.; wartime taxes passed by search
  • Eppes, John Wayles (TJ’s son-in-law); and TJ’s letters on finance search
  • Girard, Stephen; invests in federal bonds search
  • Jefferson, Thomas; Opinions on; government finance search
  • Nicholas, Wilson Cary (1761–1820); and TJ’s letters on finance search
  • Nicholas, Wilson Cary (1761–1820); letters from search
  • Nicholas, Wilson Cary (1761–1820); on banks search
  • Nicholas, Wilson Cary (1761–1820); on wartime finance search
  • Parish, David; subscribes to U.S. war loan search
  • War of1812; U.S. financing of search