Motion on Currency
MS (NA: PCC, No. 26, fol. 299). The first half of this motion is written by JM, and the rest by John Mathews, who presented it in Congress. Although the person who seconded the motion is not mentioned, he probably was JM.
[30 May 1781]
Whereas the period assigned by the Act of the 18th. of March 1780 for calling in & cancelling the bills of Credit emitted by Congress prior to that date, hath long since elapsed,1 and a great proportion of the said bills is notwithstanding through the remissness of the States in sinking their respective quotas, still left in circulation whereby the public is deprived of the use of the 4/10 of the new bills2 issuable pursuant to the Act aforesaid in place thereof to the great prejudice of the public service, Ordered that Warrts. be drawn on the Comrs. of the several loan offices3 for the full amount of the said fourtenths. And that the Commissioners of the said loan Offices cause new bills to the amount of the said 4/10 to be perfected with all possible expedition in order to answer the draughts made upon them, and that they deliver no more of the 6/10 to their respective States untill the 4/10 are paid, & thereafter not untill the states shall have delivered & cancelled old bills to the amount of twenty times the nominal sum of the sd. 4/10 after which they are to deliver to the respective States what remains of the new bills as fast & no faster than old continental bills are by them respectively brought in & cancelled at the rate of 20 of the latter for one of the former.4
1. The act of 18 March 1780 is summarized in Papers of Madison description begins William T. Hutchinson, William M. E. Rachal, et al., eds., The Papers of James Madison (2 vols. to date; Chicago, 1962——). description ends , II, 49, n. 2. By the terms of this act the old issues of continental currency were all to be called in and canceled by 30 April 1781 (Virginia Delegates to Jefferson, 5 May 1781, n. 6). In the manuscript “long since” is underlined; hence it is italicized here. Perhaps Mathews underlined the words as a reminder to emphasize them when he read the motion in Congress.
2. For the relevance of four-tenths and its six-tenths counterpart, see JM’s motion of 10 May 1781. This motion, whereby he sought to provide the continental troops in the South with their long overdue pay, may explain his particular interest in the currency problem late in May. Although the problem had been before Congress many times since February 1781, JM had not served on any of the principal committees which had reported a “Scheme of Finance,” “further ways and means to defray the expences of the ensuing campaign,” the quantity of the old emissions which had been turned in to the loan offices and destroyed, or a “Plan for establishing a national bank.” See, for example, JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XIX, 135, 207, 234–35, 376–81; XX, 500–504, 545–48. On the other hand, the availability of money to pay and provision the troops “to the southward” had been of major concern to JM for many weeks. Since the amount of the new emissions of currency by any state was dependent upon the amount of the old currency called in by that state, the yield of four-tenths of the new currency, which was wholly at the disposal of Congress, would increase at the same ratio as the old paper issues were canceled. Therefore, if the cancellation process was accelerated, Congress presumably would provide the troops of Lafayette and Greene with greatly needed clothing, food, and equipment.
3. The portion written by JM ends here.
4. The act of 18 March 1780, mentioned in n. 1, above, stipulated that the new currency should be issued to a total number of dollars equal to one-twentieth of the face value of the canceled “continentals.” Immediately after Mathews introduced the present motion, it was referred for consideration to William Churchill Houston (N.J.), John Sullivan, Theodorick Bland, and John Mathews. On 1 June this committee informed Congress that, having consulted the superintendent of finance, it concurred with his opinion that the motion recommended a procedure which was “absolutely improper” because, if adopted, it could not achieve its purpose and would be “an unjustifiable breach of public faith.” Bland, who penned this report, added the further comment of the superintendent of finance that “no reliance could be had on paper money, on its present footing, for the purpose of effectually carrying on the war.” In accord with his advice, the committee recommended that the loan officers of the states be instructed to stop issuing any more paper currency, and that Congress levy on each state its appropriate quota of “one million of Dollars in specie,” to be paid into the continental treasury by 1 January 1782. This report was apparently tabled and never taken up for debate. Houston, the chairman of the committee, was also a member of the Board of Treasury, while Bland usually opposed whatever JM recommended. On the other hand, there is no evidence that Mathews, who had introduced the motion, dissented from the adverse report drafted by the committee of which he was a member (NA: PCC, No. 26, fols. 297, 300; No. 31, fol. 371; JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XX, 588–89). On 2 June Houston moved, and the delegates, including JM, unanimously agreed, “That the several states suspend, as far as possible, the issuing of such part of their respective quotas of the said bills [new currency] as remain to be issued” (JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XX, 592). For conformance with this resolution by the Virginia General Assembly, see Virginia Delegates to Jefferson, 27 April 1781, n. 6.