I thank you for the information of your letter of the 10th. It gives at length a fixed character to our prospects. The war undertaken, on both sides, to settle the questions of impressment & the Orders of Council, now that these are done away by events, is declared by Great Britain to have changed it’s object, and to have become a war of Conquest, to be waged until she conquers from us our fisheries, the province of Maine, the lakes, states & territories North of the Ohio, and the Navigation of the Missisipi; in other words, till she reduces us to unconditional submission. On our part then we ought to propose, as a counterchange of object, the establishment of the meridian of the mouth of Sorel Northwardly as the Western boundary of all her possessions. Two measures will enable us to effect it; and, without these, we cannot even defend ourselves. 1. to organize the militia into classes, as you have recommended in your message;1 abolishing by a Declaratory law the doubts which abstract scruples in some, and cowardice & treachery in others have conjured up about passing imaginary lines, & limiting, at the same time, their services to the contiguous provinces of the enemy. The 2d. is the Ways and Means. You have seen my ideas on this subject; and I shall add nothing but a rectification of what either I have ill expressed, or you have misapprehended. If I have used any expression restraining the emissions of Treasury notes to a sufficient medium, as your letter seems to imply, I have done it inadvertently, and under the impression then possessing me, that the war would be very short. A sufficient medium would not, on the principles of any writer, exceed 30. millions of Dollars, & on those of some not 10. millions. Our experience has proved it may be run up to 2. or 300.M. without more than doubling what would be the prices of things under a sufficient medium, or say a Metallic one, which would always keep itself at the sufficient point: and if the rise to this term, and descent from it, be gradual, it would not produce sensible revolutions in private fortunes. I shall be able to explain my views more definitely by the use of numbers. Suppose we require, to carry on the war, an annual loan of 20. M. Then I propose that in the 1st. year you shall lay a tax of 2. Millions, and emit 20.M. of Treasury notes, of a size proper for circulation, & bearing no interest, to the redemption of which the proceeds of that tax shall be inviolably pledged & applied by recalling annually their amount of the identical bills funded on them. The 2d. year lay another tax of 2.M. and emit 20.M. more. The 3d. year the same, and so on, until you reach the Maximum of taxes which ought to be imposed. Let me suppose this Maximum to be 1.D. a head, or 10.M. of Dollars, merely as an exemplification more familiar than would be the Algebraical symbols x. or y. You would reach this in 5. years. The 6th. year then, still emit 20.M. of treasury notes, and continue all the taxes 2. years longer. The 7th. year 20.M. more & continue the whole taxes another two years; and so on. Observe that altho’ you emit 20.M. a year, you call in 10.M. and consequently add but 10.M. annually to the circulation. It would be in 30. years then, primâ facie, that you would reach the present circulation of 300.M. or the ultimate term to which we might adventure. But observe also that in that time we shall have become 30.M. of people, to whom 300.M. of D. would be no more than 100.M. to us now, which sum would probably not have raised prices more than 50.p.c. upon what may be deemed the standard or Metallic prices. This increased population and consumption, while it would be increasing the proceeds of the redemption-tax, and lessening the balance annually thrown into circulation, would also absorb, without saturation, more of the surplus medium, and enable us to push the same process to a much higher term, to one which we might safely call indefinite, because extending so far beyond the limits, either in time or expence, of any supposable war. All we should have to do would be, when the war should be ended, to leave the gradual extinction of these notes to the operation of the taxes pledged for their redemption, not to suffer a dollar of paper to be emitted either by public or private authority, but let the metallic medium flow back into the channels of circulation, and occupy them until another war should oblige us to recur for it’s support, to the same resource, & the same process on the circulating medium.

The citizens of a country like ours, will never have unemployed capital. Too many enterprises are open, offering high profits, to permit them to lend their capitals on a regular and moderate interest. They are too enterprising and sanguine themselves not to believe they can do better with it. I never did believe you could have gone beyond a 1st. or at most a 2d loan: not from a want of confidence in the public faith, which is perfectly sound, but from a want of disposable funds in individuals. The circulating fund is the only one we can ever command with certainty. It is sufficient for all our wants; and the impossibility of even defending the country without it’s aid as a borrowing fund, renders indispensable that the nation should take and keep it in their own hands as their exclusive resource.

I have trespassed on your time so far for explanation only: I will do it no further than by adding the assurances of my affectionate & respectful attachment.

A tabular statement of the amount of emissions taxes, redemptions, and balances left in circulation, every year, on the plan above sketched.