Virginia Delegates to Edmund Randolph
New york November 3d. 1787
The Requisition for the present year has already been transmitted to the States by the Secretary of Congress; we, however, now do ourselves the honor to inclose it to your Excellency, together with a Report of the Treasury Board, and a Return of payments by the Several States to the 30th of June, all which we beg the favor of you to lay before the General Assembly, for their more full information upon the Federal Resources.1
The report of the Treasury Board was proposed for the adoption of Congress as a Requisition, and the Statements contained in it, form the foundation of the Act which has been agreed to; but it was thought best to reverse the appropriations Suggested by the Board, and by that means call for the amount required upon the new Requisition, in facilities instead of Specie, conceiving that the ability of the States to comply with the demand, would be encreased by the extension of the Latitude of Accommodation. Upon the same Consideration the restrictions which were imposed upon the issues and payment of Indents, in the former Requisitions, are, by a Clause in this, Repealed. The way is now open for evidences of Interest to be issued up to the end of 1786, and it is left to the States to obtain, and pay the balances now due upon their Respective quota’s in such ways as to them Shall seem expedient.
Virginia is greatly in arrear in the Indents which have been called for upon the Several Requisitions from September 1782 inclusive. For discharging these balances we beg leave to submit to the consideration of the Legislature, a mode different from that which has hitherto been pursued. Any observations upon the impolocy of the Systems by which Indents have been made Receiveable upon an equal footing with Specie, in Taxes, we conceive to be Unnecessary, as they must be evident to every one who has in any manner been connected with their Operation; they procure little or no Satisfaction to the public Creditor, while they enormously oppress the Laborious Taxpayer, and are productive of undue emolument to intermediate hands, who are not the objects of public provision, and who would be employed in more useful Occupations did not the public create this Scene of Speculation for them. This being the case, a change of System is necessarily called for, and it only remains to be decided what that change shall be. The first object that presents itself in considering this Subject is, justice to the public Creditors, who have a right to expect their interest in full Specie Value; and could Taxes be collected in specie, commensurate to this demand, it would in our Opinions, be the duty of the Public to collect the money and pay it to the Claimants; this measure is however impracticable, nor is it Material to a decision what other to adopt, to determine whether this impractibility arises from the poverty of the people, the situation of our Commerce, or any other Cause. It is reduced to a Certainty, that in any Operation the Creditor must find the public provision inadequate to his demand, and he must be satisfied to Negotiate his claim at a considerable Loss, or let it lay useless by him—it then behoves the public to make the best provision which the circumstances of the people will admit, and to open the best possible ground of Negotiation, which may be embraced or Neglected by the Creditor at his own option, but should he determine to Negotiate at a loss, it is highly proper that the loss he sustains, should rather be turned to the common relief, than the emolument of the Collectors and a few other Individuals. Upon these Considerations we beg leave to submit to the wisdom of the General Assembly, whether it would not be best to discard the mode of Collecting Indents in Taxes as has hitherto been done, and to lay as great a Tax as the people can reasonably pay in Specie, to be applied in the purchase of the Indents—upon the ground of Such a Tax the great Speculators would be ready to enter into Contracts for Supplying them at Certain prices. In addition to the prospect of Success in this Measure, which must now be evident, we have to observe that the Repeal of the restrictions upon the Issues of Indents will soon throw into the Market great sums of them, and as it is to be presumed that most of the States will Neglect to make proper provision for their Redemption, there must be a considerable fall in their Value.2
You will observe Sir, that for discharging our foreign demands, as well as the domestic expences of the Current year, Congress Rely upon a Surplusage in the former Requisitions, Occasioned by many of the Objects for which these Requisitions were made, being turned into the liquidated debt, and other Circumstances which appear in the Report of the Treasury Board; but as this surplusage exists altogether in the balances now remaining due from the States, and the purposes for which it is appropriated are indispensible, it becomes absolutely Necessary that these balances be fully paid. Our last payments in Europe have been effected by a New Loan of one Million of Guilders Negotiated by Mr Adams in Holland, but Congress from motives of Honor and Justice which must present themselves without further explanation have ordered that no farther Loans be Negotiated.3 It remains therefore with the States to determine whether the Credit and administration of the Union, are to be Supported for another year, or abandoned. The 109,391 64/90ths Dollars appropriated in the hands of the Commissioners of Loans in Holland, is the balance now remaining of the late Negotiation, but it amounts to but a Triffling part of the sum Necessary for foreign purposes.
We also have the Honor to enclose to your Excellency the Ordinance for establishing a Temporary Government in the Western Territory, and providing for its passage into State Governments.4 A part of this plan depends upon the Accession of Virginia, to which we beg leave to call the attention of the Legislature. The proposed arrangement of the Territory into three States we conceive to be much better than that which was formerly made in Conformity to the Act of Cession. A Division of the Country into many Small States would effectually disappoint the design of Virginia, that the inhabitants be admitted into the Federal Government, upon their becoming so numerous as to have reasonable pretentions to such admission, because it might, upon the whole, be very populous, and yet in no one of the described States, contain as many inhabitants as the smallest of the Original States; in this Situation it could not be expected, they would remain long contented, and the federal Government would be under the Necessity of suffering them to enter into other Alliances, or departing from the Stipulated terms of Admission. The proposed arrangement of the Territory into three States will avoid these difficulties, without any eventual inconvenience, from the Reduction of the Number—indeed, if it is thought Material to the interest of the Southern States, that their Scale be Strengthened by an Accession in this quarter, that object will be better secured by the New, than the old plan, because upon the former there may be an early admission of a State, but upon the latter such an event must be long, or perhaps forever, postponed.5
We are happy in being able to present to the View of your Excellency and the Legislature a prospect of an early and considerable reduction of the domestic debt by Sales of Western Territory. Seven Ranges of Townships have been surveyed agreeably to the Ordinance of the 20th of May 1785, containing upwards of one Million of Acres, about one hundred and Twenty thousand Whereof have been sold for some what more than the Average price of one dollar Pr. Acre in public securities. These Ranges extend west from the place of beginning directed in the Ordinance nearly down to Muskingum. But a mode of Sale has lately presented itself which promises a more Rapid progress, while it will exempt the United States from the greatest part of the expence that would attend a strict pursuance of the Ordinance, without Materially departing from it. Companies of Adventurers have come forward with propositions for large Tracts, and a Contract is actually made with Messrs. Sargent and Cutler, in behalf of a considerable Company from the Eastern States, for all the Country between the Seventh Range of Townships, and Sciota, from the Ohio North, as far as a due West line to be extended from the Northern boundary of the Tenth Township—the whole of this tract is supposed to contain about five Millions of Acres. The terms are, that the United States, shall at the public expence, Survey & mark the external boundaries, and ascertain the Contents of the Tract—the Company to lay it out, at their own expence, into Townships and Sections, agreeably to the Ordinance, subject to the reserves therein described, except that one of the Sections for future Sale shall be granted forever for the purposes of Religion, and that two Complete Townships shall be granted for ever for the purposes of an University. All other Lands within the Tract, to be paid for, without any abatement whatever for bad Land, at the price of two thirds of a dollar per Acre in public Securities, excluding interest—half a million of dollars to be paid upon closing the Contract, and possession taken so far as that payment will cover; and afterwards payment and Occupancy to go on, pari passu, at certain periods, under Certain Stipulations of reciprocal assureance. Army Rights for Military bounties are made Receivable in payment of the purchase money, in the proportion of one Seventh part, but as Lands are Set apart and to be Surveyed, for Satisfying these Bounties, more to the advantage of the Claimants, it is not likely that many of these Rights will be rendered in discharge of this debt.
Another offer is made by Judge Symmes and his Associates from New-Jersey, for about two and an half Millions between the little and great Miami’s, upon the same term[s]. Congress have Authorised the Treasury Board to close with this proposition, but it is not yet compleated; upon these two Contracts being carried into full effect they will take up, as may be seen by the Statement inclosed, upwards of three Millions and an half of dollars, even upon a supposition that the full proportion receiveable in Bounty Rights, be actually rendered.6 Two other propositions have been made, whereupon Congress have given the Treasury Board a general Authority to sell by Contract; provided that no tract so disposed of shall contain less than one Million of Acres, making the Terms of Sargent and Cutlers purchase the ground, with deviations as to the grants for Religion, and an University, unless the Contract be for an equal quantity. This mode of Sale is calculated to relieve the United States of much expence, and present Appearances are, that our people will soon feel the domestic debt considerably lightened, by it.
This great fund for the extinguishment of the National debt, has lately received a probable augmentation, by a Cession from South Carolina of a Tract that will, it is supposed, be eventually within the limits of that State, containing about half a Million of Acres on the Missisippi, upon running the lines lately stipulated in the adjustment of her disputes with Georgia.7
The Requisitions upon North Carolina and Georgia for liberal Cessions of Territory have Recently been repeated by Congress in terms so pressing that we hope these States will not persevere in withholding those Acts of Justice.8
In pursuance of our instructions we have called the attention of Congress to the Subject of the Barbary piracies, and a measure for forming a Confederacy with some of the European powers, who may be disposed to Act against them, has been contemplated; but the desperate prospect of the United States being enabled to comply with their Stipulations in such a Confederacy, has obliged Congress to decline any Overtures towards this desirable object. We cannot however forbear to express our Regret, that a measure which appears so practicable, which would be so honorable to the Union, and in which the States are so materially interested, should be Neglected because the Necessary Contributions for its Support cannot be relied upon.9
The Subject of the great accounts of the Union has this year received its accustomed Revision, and is considerably improved. We have the honor to inclose to your Excellency an Ordinance of the 7th of May last for the Completion of this Business, and beg the favor of you to lay it before the General Assembly.10 The reduced State of Congress in the latter part of the year has prevented the election of the three Superior Commissioners, but as the Subordinate parts of the plan is now in Operation in the districts, the elections may be made by the New Congress in time for every useful purpose.
We beg leave to call the attention of the Legislature to the Great Balance which stands against the State in the Treasury Books, on account of the old paper emissions; this Balance is nearly twenty six Millions of dollars. It is for the Legislature to determine upon the most eligible mode of discharging it, but could funds be provided for obtaining it by purchase we apprehend it could be got at a much lower rate, than that at which, upon a final settlement of the Accounts, it will be adjusted. Large sums of this money are in the hands of Individuals in the Eastern States, who would doubtless be disposed to sell; we, however have no principles on which to hazard an Opinion upon the demands that would be made, by the holders, for it.11
In pursuance of the enclosed Resolution of the 21st. of April last a Contract has been made for a Coinage of Copper, from which some aid will result to the resources of the United States—and we beg leave to call the attention of the Legislature to the Necessity of passing Laws for prevention of Counterfeits.12 We have the honor to be, with the greatest re[gard?] for your Excellency & the Legislature Your Excellencies Most Obt. Ser[vts.]
Js. Madison Junr.
RC and enclosures (Vi). In a clerk’s hand, except for the signatures, with corrections and interlineations in several hands, and the address and complimentary close in Carrington’s hand. For enclosures, see nn. 1, 4, 6, 10, and 12. Brackets enclose letters missing from the right margin of the Ms.
1. On the requisition of 11 Oct. 1787 and report of the Board of Treasury of 28 Sept. 1787, see JM to Randolph, 7 Oct. 1787 and n. 5. The third enclosure in this group was a “Schedule of Requisitions on the several States by the United States in Congress assembled,” dated 25 Sept. 1787 and signed by Joseph Nourse, register of the treasury. It listed the requisitions on each state from 10 Sept. 1782 through 2 Aug. 1786, the amount paid by each state on these requisitions, and the balances due.
2. See JM to Ambrose Madison, 11 Oct. 1787. The assembly followed this advice in its revenue act of 1787, appropriating money to “be applied by the executive to procure indents for discharging the … requisition” (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 , XII, 426).
3. See JCC description begins Worthington C. Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXXIII, 649; Rufus King to John Adams, 27 Oct. 1787, Burnett, Letters description begins Edmund C. Burnett, ed., Letters of Members of the Continental Congress (8 vols.; Washington, 1921–36). description ends , VIII, 688 and n. 3.
4. The Northwest Ordinance of 13 July 1787, printed in JCC description begins Worthington C. Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXXII, 334–43.
5. The Virginia act ceding the Northwest Territory had stipulated that the territory should be formed into states of “not less than one hundred, nor more than one hundred and fifty miles square” (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 , XI, 327, 572). The ordinance of 23 Apr. 1784 provided for boundaries of two degrees latitude and meridians of longitude passing through the falls of the Ohio and the mouth of the Great Kanawha (Boyd, Papers of Jefferson description begins Julian P. Boyd et al., eds., The Papers of Thomas Jefferson (19 vols. to date; Princeton, 1950——). description ends , VI, 613). In July 1786 Congress recommended that Virginia alter its act of cession so as to empower Congress to divide the territory into “not more than five nor less than three” states, but the legislature had not acted on the recommendation by the time the new ordinance was enacted a year later (JCC description begins Worthington C. Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXX, 390–91). The General Assembly finally ratified the Northwest Ordinance, repealing the contrary conditions of its act of cession, in December 1788 (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 , XII, 780–81). For a discussion of the political benefits the South expected from this ordinance, see Staughton Lynd, “The Compromise of 1787,”Political Science Quarterly, LXXXI (1966), 225–50.
6. The statement of the financial benefits expected from the two contracts, in Carrington’s hand, is printed in Burnett, Letters description begins Edmund C. Burnett, ed., Letters of Members of the Continental Congress (8 vols.; Washington, 1921–36). description ends , VIII, 674 n. 7.
8. See JCC description begins Worthington C. Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXXIII, 692–93; Secretary of Congress to Governors of North Carolina and Georgia, 25 Oct. 1787, Burnett, Letters description begins Edmund C. Burnett, ed., Letters of Members of the Continental Congress (8 vols.; Washington, 1921–36). description ends , VIII, 664–65.
9. William Grayson had offered a motion favoring such a confederacy on 27 July, which was referred to the secretary for foreign affairs. Citing the inadequacy of the public revenue, Secretary Jay in his report of 2 Aug. observed that the motion was “rendered unseasonable by the present State of our Affairs” (JCC description begins Worthington C. Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXXIII, 420–21, 451–52).
11. By an act of 5 Jan. 1788 the Virginia legislature repealed earlier laws permitting the payment of a part of the land tax in paper money funded according to the resolutions of Congress of 18 Mar. 1780. The new act required the treasurer to place one-tenth of the specie arising from the land tax under the direction of the General Assembly “in such manner as will conduce most to the public interest, and a compliance with the public engagements for the redemption of the said money” (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 , XII, 569).
12. The resolution is printed in JCC description begins Worthington C. Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXXII, 225. See PJM description begins William T. Hutchinson et al., eds., The Papers of James Madison (10 vols. to date; Chicago, 1962——). description ends , IX, 396 and n. 4.