Virginia Delegates to Thomas Jefferson
RC (Historical Society of Pennsylvania). Written and signed by JM, “By order of the delegation.” Docketed, “Jas Madisons Letter Recd May 81.”
Philadelphia May 5th. 1781
The Executive of New Jersey in consequence of authority vested in them by the Legislature for that purpose, by an Act of the 27th. Ulto. established the rate of exchange between the old continental currency and the bills issued pursuant to the Act of Congress of the 18th. of March 1780,1 to be 150 for 1. The Speculation arising from this measure to the prejudice of this State2 with the other reasons stated in the inclosed publication by the Executive Council led to their Act of the 2d instant therein referred to declaring the rate between the two kinds of money abovementioned to be 175 for 1.3 The effect of this declaration has been a confusion among the people of this City approaching nearly to tumult, a total stop to the circulation of the old money, and a considerable stagnation and increased depreciation of the new. The difference between the latter and hard money is at present vibrating from 4 to 1 downwards. Should the circulation of the former therefore revive, its value cannot exceed 1/700 of that of hard money.4 The opportunity which this circumstance gives and which we have reason to believe many are already taking measures to improve, of fraudulent speculation not only on the Citizens of Virginia, but on the State itself,5 is so obvious & alarming that we thought it our duty to set an Express in immediate motion to put you on your guard against the mischief.6
The inclosed list of prisoners taken by Capt: Tilly has been communicated to us by the Minister of France in consequence of our application. We shall select such of the names as have already been mentioned by your Excellency as obnoxious & dangerous to the State, and put them into the hands of the Minister, who as well as the French Commander is entirely disposed to secure the State from all further apprehension from their malice. If there are any other names which you would wish to add to your former list we beg to be informed7 of them by the first opportunity. If there are any of the Prisoners who are not considered as objects of much dread,8 particularly of those who hold commissions we believe our Allies would chuse not to be deprived of the use of them as subjects of exchange.9
We have the honor to be with the highest respect & esteem Yr. Excellency’s obt. & humble servts., (By order of the Delegation)
J. Madison Jnr.
2. With New Jersey setting the rate at 150 to 1, when the legal rate in Pennsylvania was still 75 to 1, “the inhabitants of that state [New Jersey] were pouring the old continental money into this [Pennsylvania], receiving our state money in lieu thereof, at the rate of seventy-five for one state dollar.… The palpable gain on this speculation, was doubling the money by crossing the Delaware, and the loss to this state was exactly” in the same proportion (Pennsylvania Packet, 5 and 8 May 1781; Boyd, Papers of Jefferson description begins Julian P. Boyd et al., eds., The Papers of Thomas Jefferson (16 vols. to date; Princeton, N.J., 1950——). description ends , V, 609 n.).
3. In other words, the president and Executive Council, by the resolution of 2 May, sought to stop the drain of Pennsylvania currency across the Delaware River and turn the tables against New Jersey by authorizing a higher exchange rate than that of its eastern neighbor. Persons holding the old continental money were the more eager to be rid of it on the best terms possible, because the Assembly of Pennsylvania had declared that this money would not be receivable for taxes after 1 June 1781 (Pennsylvania Packet, 8 May 1781; JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XX, 473). The “inclosed publication” was no doubt either a Philadelphia newspaper containing the above-mentioned resolution of 2 May or a broadside of the resolution.
4. On 5 May 1781 Daniel Carroll in Philadelphia wrote to Governor Thomas Sim Lee of Maryland that “If the old mony passes for any thing after this Bustle [is] over it is probable it will be considerably more” than 450 to 1 (Burnett, Letters description begins Edmund C. Burnett, ed., Letters of Members of the Continental Congress (8 vols.; Washington, 1921–36). description ends , VI, 78).
5. That is, measures similar to those of New Jersey citizens, mentioned in n. 2, above.
6. Although there is no evidence that speculators from northern states rushed old continental currency to Virginia to exchange for specie, Virginia currency, or commodities before the news of the “collapse of the continentals” became generally known in that state, there is abundant testimony that the continental paper, as in Philadelphia two weeks earlier, depreciated with explosive suddenness in Virginia, beginning about the middle of May. For example, the wagoners who had transported “Le Comité” muskets from Philadelphia (JM to Jefferson, 3 April 1781, n. 10) reached Charlottesville on 17 May and refused to go farther because the freight charge, agreed upon early in April, had declined 400 or 500 per cent in real value. By 20 May “depreciation [in Virginia] increases so fast, and public credit is reduced so low, that it is a matter of doubt … whether the present currency in the State will pass much longer” (Calendar of Virginia State Papers description begins William P. Palmer et al., eds., Calendar of Virginia State Papers and Other Manuscripts (11 vols.; Richmond, 1875–93). description ends , II, 107, 110). Probably the severe emergency in May and June caused by the British invasion, and marked by the flight of the legislature to Charlottesville and then Staunton, and by the expiration of Jefferson’s term as governor before his successor was elected, explains why the government did not follow the example of New Jersey and Pennsylvania by setting a legal exchange rate. Likely with unwarranted optimism, David Ross suggested on 22 July that the rate should be 350 to 1 as compared with 150 or 180 to 1 at the close of April (ibid., II, 236–37). On 23 June the Virginia General Assembly enacted a law declaring that, except for payment of taxes and other public debts, the old continental currency would cease to be a legal tender in Virginia after 30 June 1781 (Journal of the House of Delegates description begins Journal of the House of Delegates of Virginia, March 1781 Session in Bulletin of the Virginia State Library, XVII, No. 1 (January 1928). description ends , May 1781, p. 32; Hening, Statutes description begins William Waller Hening, ed., The Statutes at Large; Being a Collection of All the Laws of Virginia, from the First Session of the Legislature, in the Year 1619 (13 vols.; Richmond and Philadelphia, 1819–23). description ends , X, 412–13). See also Virginia Delegates to Jefferson, 27 April 1781, n. 6.
7. JM first wrote “acquainted” and then crossed it out.
8. Following “dread,” JM deleted two or three words so completely that they cannot be read.