2

relief darker.1 In April, 1783, soon after Morris declared that American credit was hopelessly at an end, Congress made another effort to procure a steady means of income "as indispensibly necessary to the restoration of public credit." The states were requested to alter the Articles of Confederation so as to invest Congress for twenty-five years with the power to levy for federal purposes a small duty on imported goods, with the express understanding that the income should be used only for the discharge of the principal and interest of the debt; they were also requested to establish for a term of twenty-five years and to appropriate to the discharge of the public debt some substantial and effectual revenue, according to such plans as they might deem convenient. Each was asked to pay in this manner its proper proportion of $1,500,000 annually. With these requests was a recommendation that the section of the Articles of Confederation providing that quotas of taxes for federal purposes be in proportion to the value of lands within their respective limits should be altered, so that in the future the taxes should be applied by the states in proportion to the whole number of free inhabitants and three-fifths of all other persons, except Indians not taxed.

In spite of all efforts and though the need was sore, the recommendations were not followed by

1 Franklin, Works (Sparks's ed.), IX., 459.

'Journals of Congress, April 18, 1783.

the states. Each watched the other warily, fearing that its neighbor might win some commercial advantage. Three years after the measure was laid before the states for adoption, seven states-New Hampshire, Massachusetts, Connecticut, New Jersey, Virginia, North Carolina, and South Carolina-had granted the impost in such a manner and under such restrictions that if the other states had made similar grants the plan of the impost might immediately have gone into operation. But Pennsylvania and Delaware had consented to the measure with the proviso that it should not go into effect until all of the states passed laws in conformity with the whole revenue system proposed. Only two of the states-Delaware and North Carolina-acceded to the system in all its parts; and four— Rhode Island, New York, Maryland, and Georgia— did not decide in favor of any part of the system. Assured that no money could otherwise be secured, Congress appealed again to the states as late as 1786, urging them to pass laws for the carrying out of the plan and pleading with them for authority to collect the impost.1

The financial condition of the Confederation was by this time deplorable. From requisitions $2,457,987.25 were received by Congress from November 1, 1781, to January 1, 1786; for the last fourteen months of this period the income was but $432,897.81, which was at the rate of $371,052 per year, a sum short of 1 Journals of Congress, February 15, 1786.

"1

what was necessary "for the bare maintenance of the federal government on the most economical establishment, and in time of profound peace.' Unless the country was to be rated as hopelessly bankrupt from sheer unwillingness to pay taxes, something had to be done, inasmuch as $577,000 was due for interest on foreign loans before June 1, 1787; from that time forward, for some years, interest and capital due on the foreign debt alone amounted to over $1,000,000 annually. The total debt, foreign and domestic, which amounted in 1784 to over $35,000,000, was growing by the addition of unpaid interest, which of course rolled up rapidly; the arrears of interest on the domestic debt increased from $3,109,000 in 1784 to $11,493,858 before the end of 1789, while the principal alone of the foreign debt increased from $7,830,517 to $10,098,707 in the same time. Conditions would have been even worse without the aid of the Dutch, who were of constant assistance, lending the struggling Congress in these five years $2,296,000, and thus in a measure supporting the public credit of America in Europe.

Meanwhile the income from taxation was scarcely sufficient to pay the running expenses of the government, while Congress was doing little more than performing the functions of a stately debating

1

Report of committee, Journals of Congress, February 15, 1786. 2 Bullock, The Finances of the U. S., 1775-1789, in University of Wisconsin, Bulletin, Hist. Series., I., 145, n, 181, 187.

society. Money was needed for everything-to pay the servants of the government at home and its representatives abroad, to secure immunity from attack from the Barbary pirates on the ocean and from the Indians on the frontier, to save the country from the shame of defaulting in interest. "The crisis has arrived," said a committee of Congress, in February, 1786, "when the people of these United States, by whose will, and for whose benefit the federal government was instituted, must decide whether they will support their rank as a nation, by maintaining the public faith at home and abroad; or whether, for want of a timely exertion in establishing a general revenue, and thereby giving strength to the confederacy, they will hazard not only the existence of the union, but of those great and invaluable privileges for which they have so arduously and so honorably contended." 1

The penury of the government was so patent that men listened to this eloquent appeal. "Oh! my country!" exclaimed Jeremiah Belknap, of New Hampshire. "To what an alarming situation are we reduced, that Congress must say to us, as Joshua did to Israel, 'Behold, I set before you life and death.'

We must be drove to our duty, and be taught by briars and thorns, as Gideon taught the men of Succoth." The states were at last moved by

2

1 Journals of Congress, February 15, 1786.

2 Belknap Papers, I. (Mass. Hist. Soc., Collections, 5th series, II.), 431, 432.

the appeal of Congress, and all but one of those that had not acted granted the impost before the end of 1786. Governor Clinton, of New York, however, politely refused to do anything, declaring that he did not have the power to summon the legislature except on extraordinary occasions.1

In New York, as in Virginia, there was a strong party opposed to growth of the national authority and exceedingly jealous for the power of the state. Clinton was the leader of this party, and opposed to him was Hamilton, who worked unceasingly for a broader appreciation of the duties and responsibilities of Congress. Hamilton prepared a petition, which was widely circulated, asking the adoption of the revenue scheme, and declaring that all the motives of public honor and reputation demanded that New York yield." The petition had no effect, and when the next year he took his place in the legislature of the state his eloquent speeches won him laurels but not converts; the opposition in the legislature, without replying to Hamilton's argument, simply voted against him, which led to the remark that the "impost was strangled by a band of mutes.' Much labor must yet be done by Hamilton, Schuyler, and Jay before New York could be brought to take a liberal view of continental politics, or indeed to do her plain duty.

1 Journals of Congress, August 23, 1786.

Hamilton, Works (Hamilton's ed.), II., 333, 334. 8 Hamilton, Hist. of the Rep., III., 228.