"
"The Count de Vergennes informs me, sir, that the six millions are lent to
the United States in the same manner, and under the same conditions, with
the sum which was lent last year.
"The Count de Vergennes informs me, sir, that the six millions are lent to
the United States in the same manner, and under the same conditions, with
the sum which was lent last year.
Hamilton - 1834 - Life on Hamilton - v2
Fitzsimmons, aye.
The reasons
urged in favour of 1 for 40, were--first, an adherence to public faith; secondly,
that the depreciation of the certificates would reduce the rate sufficiently low,
they being now negotiated at the rate of 3 or 4 for 1. The reason for 1 for
75, was, that the bills passed at that rate when they were called in, in the
'eastern states ; for 1 for 100, that as popular ideas were opposed to the stipu-
lated rate, and as adopting the current rate might hurt the credit of other
securities, which derived their value from an opinion that they would be
strictly redeemed, it was best to take an arbitrary rate, leaning to the side
of liberality; for 1 for 150, that this was the medium depreciation when the
circulation ceased. The opposition to these several rates came from the south-
ern delegates, in some of whose states none, in others but little, had been re-
deemed, and in all of which the depreciation had been much greater. On
this side it was observed by Mr. Madison, that the states which had redeemed
a surplus, or even their quotas, had not done it within the period fixed by
congress, but in the last stages of depreciation, and, in a great degree, even
after the money had ceased to circulate; that since the supposed cessa-
tion, the money had generally changed hands at a value far below any rate
that had been named; that the principle established by the plan of the 18th
of March, 1780, with respect to the money in question, was, that the holder
of it should receive the value at which it was current, and at which it was
presumed he had received it; that a different rule adopted with regard to the
same money in different stages of its downfall, would give general dissatisfac-
tion. The committee adjourned without eoming to any decision. "
On the 18th March, 1780, congress resolved that the bills in circulation
should be redeemed at the rate of 40 for 1 Spanish milled dollar. To allow a
less equivalent, was a breach of the public faith. The object of the foregoing
statement is, to represent Hamilton as voting in favour of this breach of faith;
but the statement is incorrect in all its parts.
The transaction is represented. as having occurred on the 7th of December,
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vices were placed in a conspicuous light by his efforts to
render justice to his fellow-soldiers.
Near the close of the preceding autumn, the main army,
and not on the 7th of January, the actual date of the occurrence as appears
by the journals, vol. 4, page 141. To give colour to this alteration of the date,
it is represented as having taken place in grand committee, and not in the house.
That grand committee was elected by the preceding congress,* and was
composed of Duane, Dyer, Fitzsimmons, Gilman, Hanson, Howell, Jackson,
Lee, McKean, Telfair, Williamson, and Witherspoon. Hamilton was not a
member of it; consequently, he could not have given the vote imputed to
him by Madison, nor any other vote.
The report of this committee came before congress on the 7th January, the
amount in blank; a motion was made to postpone its consideration. Hamil-
ton and Madison both voted against the motion for a postponement, which
was lost. It was then moved that the several states should redeem on prin-
ciples "of the most substantial justice. " Hamilton and Madison both voted
against this motion. Hamilton then moved to nil up the report with 40 for
1--Madison voted against it; a motion was then made of 75 for 1--Hamil-
ton and Madison both against it. No vote is given of 100 or of 150 for 1,
as stated by Madison.
The purport of these several votes was this. In voting not to postpone,
Hamilton evinced his determination to fulfil a public engagement. In voting
not to refer the provision to the states, he voted from the same motive. In
proposing 40 for 1, he voted from the same motive. In voting against 75 for
1, he voted upon the consideration stated by him in his letter to Robert
Morris, previously referred to, vol. 1, page 360:--" I have chosen the reso-
lution of March, '80, as a standard; we ought not on any account to raise
the value of the old paper higher than 40 to 1, for this will give it about the
degree of value that is most salutary, at the same time that it would avoid
a second breach of faith, which would cause a violent death to all future
credit. " He also voted on the 21st December previous, to certify certain
pledges as " debts, at 1 dollar in specie for every 40 dollars of rach pledges,"
in which Madison concurred.
Madison voting in the negative throughout, voted not to redeem the conti.
nental paper at any rate; assigning as one reason," that the principle estab-
lished by the plan of the 18th March, 1780, was, that the holder should receive
the value at which it was current, and at which it was presumed he had re-
ceived it, and that the same principle ought to govern in the different stages
of its downfall. This was not the fact; 40 for 1, was the stipulated rate,
below which no depreciation was to take place.
? 4 J. C. 141.
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? HAMILTON.
37
which had previously been moved to Verplank's Point,
took up their winter-quarters among the woody hills in
the vicinity of Newburgh, a position in every relation the
most eligible that could have been selected. Their wants,
and the near approach of peace, increased their anxiety
for an adjustment of their accounts, and led the officers to
look with extreme solicitude to the establishment of sub-
stantial funds, adequate to the discharge of their half-pay
as it should become due.
Alarmed by information that there was a large party
hostile to their claims, combinations among them to resign
in a body, at stated periods, began to be formed. But
they were diverted from this purpose, and induced to pe-
tition congress.
In their petition they stated that shadows had been
offered to them, while the substance had been gleaned by
others; that they had borne all that they could bear; that
their property was expended, their private resources at
an end, and their friends wearied out and disgusted with
their incessant applications; that the soldiers had not re-
ceived more than one-fifth of their rations; that the ar-
rearages for their clothing in seventeen hundred and
seventy-seven, were paid in continental money, when the
dollar was worth only four pence, and that the accounts
for the subsequent years were unliquidated. After this
Not only is a reason that did not exist assigned for his own vote, but one
inconsistent with integrity is imputed to Hamilton for a vote he did not give.
Madison gave the vote Hamilton refused to give. The reason stated by
Madison to have been " urged in favour of" 40 for 1, the rate Hamilton
proposed, was, " an adherence to public faith. " The reason imputed to
Hamilton by Madijon for voting for 100 for 1, which Hamilton did not vote
for, was, that as popular ideas were opposed to the stipulated rate, and as
adopting the current rate might hurt the credit of other securities, which de-
rived their value from an opinion that they would be ttrietly redeemed, it
was best to take an arbitrary rate leaning to the side of popularity. " What
must be thought of such statements?
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THE LIFE OF
recapitulation of their wrongs, having asked for a supply
of money as soon as possible, they urged an immediate
adjustment of their dues; that a part should be paid, and
the remainder put on such a footing as would restore
cheerfulness to the army, revive confidence in the justice
and generosity of its constituents, and contribute to the
very desirable effect of re-establishing public credit. Ad-
verting, in fine, to the odious light in which the persons
entitled to half-pay were viewed, they proposed, in order
to prevent altercations and distinctions, to commute the
half-pay for full pay for a certain number of years, or for
a sum in gross.
To attain these objects, they appointed General McDou-
gal, Colonels Brooks and Ogden, a committee of corre-
spondence to repair to Philadelphia. The state of opinion
in congress was not such as to inspire confidence. The
jealous spirit which withheld from the confederation the
only means of restoring the public credit, and which, on
the return of peace, was not unwilling to abandon or to
dissolve the union, had been strongly evinced as to the
claims of the army.
Aware of the difficulties to be encountered, it has been
seen that Hamilton had been foremost to induce the refu-
sal of all partial favours to any particular body of officers,
had urged the necessity of avoiding discriminations be-
tween different classes of creditors, and had succeeded in
postponing various applications for relief, the grant of
which must have engendered discontent.
The army memorial was referred to a committee of
which he was chairman, and on the twenty-fifth of Janua-
ry a report was made by him.
It comprehended five articles:--Present pay--a settle-
ment of accounts of the arrearages of pay, and security
for what was due--a commutation of the half-pay for an
equivalent in gross--a settlement of the accounts of defi-
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? HAMILTON.
39
ciencies of rations and compensation, and a similar settle-
ment as to clothing and compensation.
As to the pay, this report directed the superintendent
of finance to make the payment requested, as soon as the
state of the finances would permit; as to the accounts,
that the states be called upon to complete the settlements
with their respective levies to the first of August, seven-
teen hundred and eighty,* and that settlement from that
period be made at the office of finance. As to security,
it declared that the troops of the United States, in com-
mon with all their creditors, have an undoubted right to
expect such security, and that congress will make every
effort in their power to obtain from the respective
states substantial funds, adequate to the object of
funding the whole debt of the United States, and will
enter upon an immediate and full consideration of the
nature of such funds, and the most likely mode of ob-
taining them.
The remaining articles were referred to a sub-committee
of which Hamilton was a member; and after the interval
* By resolution of 12th August, 1780, the states were recommended to
make compensation for the depreciation of their pay; and from the first of
that month it was declared that the army should receive it in the new emis-
sions. It was therefore an express stipulation. Yet Madison states, "a
compromise was proposed by Hamilton, by substituting the last day of De-
cember, 1780," for the first of August, in compliance with an objection of
the eastern states.
The same principle was involved with that in the pledge of $40 for 1,
of the old emission, as to which the charge has been disproved. It is seen
that Hamilton's report was in conformity with this stipulation. How the
change to December occurred, does not appear; but the journals show that
Hamilton voted to reinstate August. * As this statement rests solely upon
the evidence of Madison, and is neither in accordance with the report nor
with this vote, its probability is more than questionable. --1 Mad. 278-9,
280.
? 4 J. C. 152
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THE LIFE OF
of a day, that part of this report which promised substan-
tial and adequate funds, was considered.
The earliest known opinions of Hamilton indicate his
conviction that the command of the revenue should be
vested in congress, and that it should have the collection
of it. He had stated in "the Continentalist,"* as "the
great defect of the confederation, that it gives the United
States no property, or in other words, no revenue, nor the
means of acquiring it inherent in themselves, and inde-
pendent on the temporary pleasure of the different mem-
bers. "--" As power without revenue, in a political society,
was a name; while congress," he then said, "continue
altogether dependent on the occasional grants of the seve-
ral states, for the means of defraying the expenses of the
federal government, it can neither have dignity, vigour,
nor credit. Credit supposes specific and permanent funds
for the punctual payment of interest, with a moral cer-
tainty of the final redemption of the principal. This
credit being to be procured through congress, the funds
ought to be provided, declared, and vested in them. Had
we begun the practice of funding four years ago, we
should have avoided that depreciation of the currency,
which has been as pernicious to the morals as to the cre-
dit of the nation. " It has been seen that he at the same
time expressed the opinion, that congress should have the
appointment " of all officers of the customs, collectors of
taxes, and military officers of every rank, so as to create
in the interior of each state a mass of influence in favour
of the federal government. "
The period had now arrived when he was enabled, per-
sonally, to propose the adoption of a measure which he
had long contemplated--the establishment of a permanent
national revenue. Unfortunately, on the dayt when the
? August 4, 1781--No. 4.
t Jan. 27.
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? HAMILTON.
41
discussion of this subject commenced, the delegates from
Virginia laid before congress an act of their legislature,
repealing her grant of the power to raise an impost; a
repeal not dictated by temporary considerations, but mani-
festing a decided repugnance to the supremacy of the
national legislature over any part of the revenue.
It declared, "that the permitting any power other than
the general assembly of this commonwealth, to levy duties
or taxes upon the citizens of this state, within the same,
is injurious to its sovereignty, may prove destructive of the
rights and liberty of this people, and so far as congress
might exercise the same, is contravening the spirit of the
confederation. " Unpropitious as this procedure was, no
other resource existed, and the debate proceeded in a com-
mittee on " permanent funds. "
The first question to be decided was, whether if funds
were provided they were to be collected by the states, or,
as Hamilton had previo usly urged, should depend on " a
single will. " With a view to its decision, he offered the
following declaratory resolution:--" That it is the opinion
of congress that complete justice cannot be done to the
creditors of the United States, nor the restoration of pub-
lic credit be effected, nor the future exigencies of the war
be provided for, but by the establishment of permanent
and adequate funds, to operate generally throughout the
United States, to be collected by congress. "
The petition of the officers of the army had been heard
and answered; the memorial of the other public creditors
had not been replied to.
After the late act of Virginia repealing the impost, it
was particularly important that they should receive a
similar pledge of ultimate justice. Prompted by this con-
sideration, immediately after the introduction of this im-
portant resolution, Hamilton presented a report on the
memorial of Pennsylvania respecting the debts due to her
6
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THE LIFE OF
citizens. This report stated," that any attempts to pay any
of the past debts, would form so heavy a deduction from
the greatest revenue that could be raised as would totally
obstruct all present service, and that any present provision
should be confined to the interest of the public debts.
That such provision would offer eventual relief to the pub-
lic creditors, and enable them to support their share of the
public burdens without appropriating the whole revenue
which can be drawn from the people to a payment of debts,
and leaving thereby the public service unprovided for,
which would involve the ruin of all ranks, creditors and
others. That congress were and had long been deeply
impressed with the absolute necessity that speedy and
effectual measures should be taken, first to liquidate and
ascertain the public debts, and then to secure the payment
of the interest until the principal could be discharged.
Acts of congress were referred to as evidence of this
assertion. He added, that after a delay of two years,
Rhode Island had entirely refused its concurrence to the
impost, that Virginia had withdrawn its assent once given,
and that a third state had returned no answer.
The inability of congress to perform its engagements,
was stated to have resulted from the defective compliances
of the states during the war. Of the last requisition for
eight millions, only four hundred and twenty thousand dol-
lars had been collected. The proceeds of the foreign
loans* were stated, showing an available balance a little
* In vol. 1, page 273, of Madison's Debates, this passage is found:--
"In a late report, which had been drawn up by Mr. Hamilton, and made
to congress, in answer to a memorial from the legislature of Pennsylvania,
among other things showing the impossibility congress had been under of
paying their creditors, it was observed, that the aid afforded by the court of
France, had been appropriated by that court, at the time, to the immediate
use of the army. This clause was objected to as unnecessary, and as dis.
honourable to congress. The fact also was controverted. Mr. Hamilton
#
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? HAMILTON.
43
exceeding eight hundred thousand dollars; while to feed,
clothe, and pay the army, required nearly six millions.
The whole sum within the command of congress, was
and Mr. Fitzsimmons justified the expediency of retaining it, in order to
justify congress the more explicitly in failing to fulfil their engagements to
the public creditors. Mr. Wilson and Madison proposed to strike out the
words ' appropriated by France,' and substitute the words ' applied by con-
gress to the immediate and necessary support of the army. ' This proposi-
tion would have been readily approved, had it not appeared on examination,
that in one or two small instances, and particularly in the payment of the
balance due to Arthur Lee, Esq. , other applications had been made of the aid
in question. The report was finally recommitted. "
This is no less than a charge of stating an untruth, and justifying it on
the score of expediency, on the part of two gentlemen whose probity never
was suspected, and for the motive of justifying congress with the public
creditors. This minute is of the 24th of January. It speaks of a late report
made to congress. The journal of that date does not refer to this report, but
on the thirtieth of January it is given in full, as having been " agreed to as
follows. " A reason assigned by Madison why the clause thus objected to
was not stricken out, is, that there had been a diversion of the money in one
or two small instances. He adds, that it was recommitted. But if these
instances prevented this clause being expunged, if it had been originally in
the report, it must necessarily have been retained. On referring to this re-
port, " agreed to" by congress, no such clause can be found. Its language
is--" But according to the best accounts which can be obtained, the antici-
pations made in the funds for the year 1782 amounted, at the close of 1781,
to four millions of livres. For the service of that year, his most christian
majesty lent the United States 6,000,000 livres. "--4 J. C. 155.
But if it be assumed that the clause was there originally, and was
stricken out, the charge is unsupported. The journals, page 202, contain
the papers which Madison as chairman of a committee reported, and refer-
red to in an address of which he was the author. One of these papers, No.
IV. , is a letter from the French ambassador at Philadelphia, dated March
15, 1783. It commences thus--" Sir: I have the satisfaction to inform you,
that his majesty procures for the United States a loan of six millions, to be
employed in the war department during the course of the current year.
"
"The Count de Vergennes informs me, sir, that the six millions are lent to
the United States in the same manner, and under the same conditions, with
the sum which was lent last year. " "I have had the honour to inform you,
air, that this money is lent to the United States to enable them to carry on
the war. The wisdom of congress will determine according to circum-
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THE LIFE OF
little more than a million and a half of dollars; a sum insuf-
ficient to pay the interest then due on the public debts.
"Yet," Hamilton remarked, " notwithstanding the discour-
aging obstacles they have hitherto encountered, they
conceive it a duty to themselves and to their constituents,
to persevere in their intentions to renew and extend their
endeavours to procure the establishment of revenues equal
to the purpose of funding all the debts of the United States;
and they think it proper to inform the assembly of Penn-
sylvania, that this subject is now before them under so-
lemn deliberation, and that her ready and early compliance
with the recommendation of (an impost) assures congress
of the vigorous support of that state. "
Soon after this pledge was given, a report as to the
mode of valuing the lands was taken into consideration.
This report proposed that the states should pass laws
forming themselves into districts, and should appoint com-
missioners to estimate the value of their lands; which
estimate, if approved by congress, was to determine the
requisitions to be made.
Convinced that no efficient plan would be adopted from
the predominance of state jealousies, and regarding the
contemplated mode as involving inequalities and contro-
versy, Hamilton moved to postpone the valuation. He
assigned as reasons, " the great expense of it, to which the
finances were then inadequate, and that in a matter so
stances on the manner of effecting that important object, and of compelling
the enemy, by joint efforts, to conclude a solid and permanent peace. "
That such was the sole object of this loan made by France, then under
great pecuniary pressure, is obvious. Already a creditor for a large amount,
it cannot be supposed that France would have made an additional loan to
the United States to pay their domestic creditors. A declaration such as
that which Madison represents Wilson as concurring with him in endeavour-
ing to substitute, would have been to declare that congress had violated their
pledge to France in applying this loan to the immediate use of the army--
the express use for which the loan was granted.
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? HAMILTON.
45
fundamental in the confederation, it was essential to the
harmony and welfare of the United States, that it should
be carried into effect with great care, circumspection, and
impartiality, and that a short delay would be much less
pernicious than a defective execution. "
After thus urging that the attempt should be deferred,
he pledged congress to proceed to an accurate valuation
of the land by commissioners, appointed by them, and act-
ing under their authority, upon principles uniform through-
out the United States; that when this valuation is com-
plete, congress will finally adjust the accounts of the
United States with the states separately, agreeably to that
standard, making equitable abatements to such as have
been more immediate sufferers by the war: that in the
mean time they would adhere, in the temporary adjust-
ment of these accounts, to the proportions established by
the requisitions of congress; and with a view to an eventual
plan, he requested the states to transmit to them the valua-
tions they had made, with an explanation of the principles
on which they had been made.
This motion, though supported by a majority of mem-
bers, was lost in a vote by states, and the plan reported
was rejected.
The course of their proceedings gave small prospect
of any salutary results. The officers were urgently press-
ing their claims. The justice of those claims was not to
be questioned. The terms of commutation offered by the
army, could not be excepted to. The claimants were
suffering. They had received nothing but assurances, and
they had reason to believe that, on the part of many, those
assurances were deceptive. There was danger. Hamilton
felt it, and after due reflection, he unbosomed his appre-
hensions to the commander-in-chief.
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HAMILTON TO WASHINGTON.
Philadelphia, Feb. 7,1783.
SIR,
Flattering myself that your knowledge of me will in-
duce you to receive the observations I make as dictated
by a regard to the public good, I take the liberty to sug-
gest to you my ideas on some matters of delicacy and im-
portance. I view the present juncture as a very interest-
ing one. I need not observe how far the temper and
situation of the army make it so. The state of our finan-
ces was perhaps never more critical. I am under injunc-
tions which will not permit me to disclose some facts that
would at once demonstrate this position, but I think it
probable you will be possessed of them through another
channel. * It is however certain that there has scarcely
been a period of the revolution which called more for
wisdom and decision in congress. Unfortunately for us,
we are a body not governed by reason or foresight, but
by circumstances. It is probable we shall not take the
proper measures; and if we do not, a few months may
open an embarrassing scene. This will be the case, whether
we have peace or a continuance of the war.
If the war continues, it would seem that the army must
in June subsist itself to defend the country; if peace should
take place, it will subsist itself to procure justice to itself.
It appears to be a prevailing opinion in the army, that the
disposition to recompense their services will cease with
the necessity for them, and that if they once lay down
their arms, they part with the means of obtaining justice.
It is to be lamented that appearances afford too much
ground for their distrust.
* Probably from the superintendent of finance.
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? HAMILTON. 47
It becomes a serious inquiry, What is the true line of
policy? The claims of the army, urged with moderation,
but with firmness, may operate on those weak minds
which are influenced by their apprehensions more than
by their judgments, so as to produce a concurrence in the
measures which the exigencies of affairs demand. They
may add weight to the applications of congress to the
several states. So far a useful turn may be given to
them. But the difficulty will be to keep a complaining
and suffering army within the bounds of moderation.
This your excellency's influence must effect. In order
to it, it will be advisable not to discountenance their en-
deavours to procure redress, but rather, by the intervention
of confidential and prudent persons, to take the direction
of them. This, however, must not appear. It is of mo-
ment to the public tranquillity that your excellency should
preserve the confidence of the army, without losing that
of the people. This will enable you in case of extremity
to guide the torrent, and to bring order, perhaps even
good, out of confusion. 'Tis a part that requires address,
but 'tis one which your own situation as well as the welfare
of the community points out.
I will not conceal from your excellency a truth which it
is necessary you should know. An idea is propagated in
the army, that delicacy carried to an extreme prevents
your espousing its interests with sufficient warmth. The
falsehood of this opinion no one can be better acquainted
with than myself; but it is not the less mischievous for be-
ing false. Its tendency is to impair that influence which
you may exert with advantage, should any commotions
unhappily ensue, to moderate the pretensions of the army,
and make their conduct correspond with their duty.
The great desideratum at present is the establishment
of general funds, which alone can do justice to the credi-
tors of the United States, (of whom the army forms the
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THE LIFE OF
most meritorious class,) restore public credit, and supply
the future wants of government. This is the object of all
men of sense; in this the influence of the army, properly
directed, may co-operate.
The intimations I have thrown out, will suffice to give
your excellency a proper conception of my sentiments:
you will judge of their reasonableness or fallacy; but I
persuade myself you will do justice to my motives.
General Knox has the confidence of the army, and is a
man of sense; I think he may be safely made use of.
Situated as I am, your exellency will feel the confidential
nature of these observations.
A few days after writing this letter,* Hamilton proposed
a resolution, which was passed, that "the commander-in-
chief be informed that congress are always happy to receive
his sentiments on the political and military affairs of these
states, the utility of which they have on so many occasions
experienced. " It also stated "the probability of peace," and
directed the secretary of foreign affairs " to make a confi-
dential communication to him of the state of the negotia-
tions for peace when the last advices were received. "
The day after the date of this letter, the discussion of
the mode of ascertaining the quotas of the states was re-
sumed. Various propositions were made, at different
times, until the seventeenth of February, when a plan was
adopted, five members dissenting. f
By this plan, the legislature of each state was required
to take the most effectual measures to obtain a just and
accurate account of the quantity of its land granted or
surveyed, of the number of buildings, distinguishing dwell-
ings from others, and of the number of white and black
inhabitants. These returns were to be examined by a
? Feb. 20. t Hamilton, Madison, Carroll, Floyd, Leo.
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? II A M I I. T O N.
40
grand committee of congress, nine of whom concurring,
were to make an estimate of the value of the granted or
surveyed lands, and of the buildings or improvements, to
be approved or rejected by that body. This estimate was
to be the rule of apportioning among the states the quotas
to be paid into the continental treasury, and also of ad-
justing all accounts between the United States and the
individual states for previous supplies.
As this rule, if strictly adhered to, would charge the
states, which had been the theatres of war, for past sup-
plies according to their future ability, when in an entire
condition, and might operate very unequally upon New-
York, it has been seen that Hamilton embraced in his
resolution, for an eventual valuation, a recommendation
that the states should vest congress with a power of mak-
ing equitable abatements in favour of such as had been
more immediate sufferers by the war.
This motion was in accordance with a recommenda-
tion of the previous congress, that in a final settlement
of the expenses of the war to be borne by each state,
they should be authorized to assume and adopt such prin-
ciples, as from the particular circumstances of the several
states at different periods might appear just and equitable.
It was committed, but as Virginia had disagreed to that
recommendation, a committee reported against it. Ham-
ilton subsequently again brought forward this proposition
in a different form. It was a declaratory resolution by
congress that they would make such abatements.
Though admitted to be within the spirit of the con-
federation, a postponement was moved; but with a view
to defeat it, it was considered and rejected. *
* In vol. 1, page 362, Madison Papers, Madison represents himself as be-
ing in favour of " the abatements proposed by Hamilton"--and in page 418,
as offering an amendment to Hamilton's resolution, for which his reasons are
7
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The importance of this question to the interests of the
community he represented, and the course which he had
taken in reference to it, induced Hamilton to address a
letter* to the governor of New-York.
"I enclose," he said, " for the information of the legis-
lature, the proceedings upon it in different stages, by
which they will see the part I have acted. But as I was
ultimately left in a small minority, I think it my duty to
explain the motives upon which my opposition to the
general sense of the house was grounded. I am of opin-
ion, that the article of confederation itself was ill-judged.
In the first place, I do not believe there is any general
representative of the wealth of a nation, the criterion of
its ability to pay taxes. There are only two that can be
thought of--land and numbers. The revenues of the
United Provinces, general and particular, were computed
before the present war at more than half as much as those
of Great Britain. The extent of their territory is not one
fourth part as great; their population, less than a third.
. ' The comparison is still more striking between those
provinces and the Swiss cantons, in both of which, extent
of territory and population are nearly the same; and yet,
the revenues of the former are five times as large as those
of the latter; nor could any efforts of taxation bring them
to any thing like a level.
"In both cases, the advantages for agriculture are superior
in those countries which afford least revenue in proportion.
I have selected these examples because they are most famil-
iar; but whoever will extend the comparison between the
different nations of the world, will perceive that the position
I have laid down is supported by universal experience.
stated. On the 4th of March, he voted, in common with all the other Vir.
ginia members, first to postpone the consideration of this resolution, and
then to reject it. --i J. C. 170.
<< February 24, 1783.
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? HAMILTON.
51
"The truth is, the ability of a country to pay taxes, de-
pends on infinite combinations of physical and moral
causes, which can never be accommodated to any general
rule; climate, soil, productions, advantages for navigation,
government, genius of the people, progress of arts, and
industry, and an endless variety of circumstances. The
diversities are sufficiently great in these states to make an
infinite difference in their relative wealth, the proportion of
which can never be found by any common measure whatever.
"The only possible way, then, of making them contribute
to the general expense in an equal proportion to their means,
is by general taxes imposed under continental authority.
"In this mode, there would no doubt be inequalities, and
for a considerable time material ones; but experience,
and the constant operation of a general interest, which, by
the very collision of particular interests, must in the main
prevail in a continental deliberative body, would at length
correct those inequalities, and balance one tax that should
bear hard upon one state, by another that should have a
proportional weight in others. This idea, however, was
not at the period of framing the confederation, and is not
yet agreeable to the spirit of the times. To futurity we
must leave the discovery how far this spirit is wise or
foolish. One thing, only is now certain, that congress,
having the discretionary power of determining the quantum
of money to be paid into the general treasury towards de-
fraying the common expenses, have in effect the constitu-
tional power of general taxation. The restraints upon
the exercise of this power amount to the perpetuating a
rule for fixing the proportions, which must of necessity pro-
duce inequality, and by refusing the federal government a
power of specific taxation and of collection, without substitu-
ting any other adequate means of coercion, do in fact leave
the compliance with continental requisitions to the good-
will of the respective states. Inequality is inherent in the
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THE LIFE OP
theory of the confederation; and in the practice, that ine-
quality must increase in proportion to the honesty or dis-
honesty of the component parts. This vice will either in its
consequences reform the federal constitution, or dissolve it.
"If a general standard must be fixed, numbers were pre-
ferable to land. Modes might be devised to ascertain the
former with tolerable precision; but I am persuaded, the
experiment will prove that the value of all the land, in
each state, cannot be ascertained with any thing like ex-
actness. Both these measures have the common disad-
vantage of being no equal representative of the wealth
of the people; but one is much more simple, definite, and
certain than the other.
"I have indulged myself in these remarks, to show that
I have little expectation of success from any mode of car-
rying the article in question into execution upon equitable
principles. I owe it, however, to myself to declare, that
my opposition did not arise from this source. The con-
federation has pointed out this mode, and though I would
heartily join in a representation of the difficulties (of which
every man of sense must be sensible on examination) that
occur in the execution of the plan, to induce the states to
consent to a change; yet as this was not the disposition
of a majority of congress, I would have assented to any
mode of attempting it, which was not either obviously
mischievous or impracticable.
"The first plan proposed, as your excellency will see,
was an actual valuation of each state by itself. This was
evidently making the interested party judge in his own
cause. Those who have seen the operation of this prin-
ciple between the counties in the same state, and the dis-
tricts in the same county, cannot doubt a moment that the
valuations on this plan would have been altogether un-
equal and unjust. Without supposing more liberality in
one state than another, the degree of care, judgment, and
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? HAMILTON.
53
method, employed in the execution, would alone make
extreme differences in the results.
urged in favour of 1 for 40, were--first, an adherence to public faith; secondly,
that the depreciation of the certificates would reduce the rate sufficiently low,
they being now negotiated at the rate of 3 or 4 for 1. The reason for 1 for
75, was, that the bills passed at that rate when they were called in, in the
'eastern states ; for 1 for 100, that as popular ideas were opposed to the stipu-
lated rate, and as adopting the current rate might hurt the credit of other
securities, which derived their value from an opinion that they would be
strictly redeemed, it was best to take an arbitrary rate, leaning to the side
of liberality; for 1 for 150, that this was the medium depreciation when the
circulation ceased. The opposition to these several rates came from the south-
ern delegates, in some of whose states none, in others but little, had been re-
deemed, and in all of which the depreciation had been much greater. On
this side it was observed by Mr. Madison, that the states which had redeemed
a surplus, or even their quotas, had not done it within the period fixed by
congress, but in the last stages of depreciation, and, in a great degree, even
after the money had ceased to circulate; that since the supposed cessa-
tion, the money had generally changed hands at a value far below any rate
that had been named; that the principle established by the plan of the 18th
of March, 1780, with respect to the money in question, was, that the holder
of it should receive the value at which it was current, and at which it was
presumed he had received it; that a different rule adopted with regard to the
same money in different stages of its downfall, would give general dissatisfac-
tion. The committee adjourned without eoming to any decision. "
On the 18th March, 1780, congress resolved that the bills in circulation
should be redeemed at the rate of 40 for 1 Spanish milled dollar. To allow a
less equivalent, was a breach of the public faith. The object of the foregoing
statement is, to represent Hamilton as voting in favour of this breach of faith;
but the statement is incorrect in all its parts.
The transaction is represented. as having occurred on the 7th of December,
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vices were placed in a conspicuous light by his efforts to
render justice to his fellow-soldiers.
Near the close of the preceding autumn, the main army,
and not on the 7th of January, the actual date of the occurrence as appears
by the journals, vol. 4, page 141. To give colour to this alteration of the date,
it is represented as having taken place in grand committee, and not in the house.
That grand committee was elected by the preceding congress,* and was
composed of Duane, Dyer, Fitzsimmons, Gilman, Hanson, Howell, Jackson,
Lee, McKean, Telfair, Williamson, and Witherspoon. Hamilton was not a
member of it; consequently, he could not have given the vote imputed to
him by Madison, nor any other vote.
The report of this committee came before congress on the 7th January, the
amount in blank; a motion was made to postpone its consideration. Hamil-
ton and Madison both voted against the motion for a postponement, which
was lost. It was then moved that the several states should redeem on prin-
ciples "of the most substantial justice. " Hamilton and Madison both voted
against this motion. Hamilton then moved to nil up the report with 40 for
1--Madison voted against it; a motion was then made of 75 for 1--Hamil-
ton and Madison both against it. No vote is given of 100 or of 150 for 1,
as stated by Madison.
The purport of these several votes was this. In voting not to postpone,
Hamilton evinced his determination to fulfil a public engagement. In voting
not to refer the provision to the states, he voted from the same motive. In
proposing 40 for 1, he voted from the same motive. In voting against 75 for
1, he voted upon the consideration stated by him in his letter to Robert
Morris, previously referred to, vol. 1, page 360:--" I have chosen the reso-
lution of March, '80, as a standard; we ought not on any account to raise
the value of the old paper higher than 40 to 1, for this will give it about the
degree of value that is most salutary, at the same time that it would avoid
a second breach of faith, which would cause a violent death to all future
credit. " He also voted on the 21st December previous, to certify certain
pledges as " debts, at 1 dollar in specie for every 40 dollars of rach pledges,"
in which Madison concurred.
Madison voting in the negative throughout, voted not to redeem the conti.
nental paper at any rate; assigning as one reason," that the principle estab-
lished by the plan of the 18th March, 1780, was, that the holder should receive
the value at which it was current, and at which it was presumed he had re-
ceived it, and that the same principle ought to govern in the different stages
of its downfall. This was not the fact; 40 for 1, was the stipulated rate,
below which no depreciation was to take place.
? 4 J. C. 141.
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? HAMILTON.
37
which had previously been moved to Verplank's Point,
took up their winter-quarters among the woody hills in
the vicinity of Newburgh, a position in every relation the
most eligible that could have been selected. Their wants,
and the near approach of peace, increased their anxiety
for an adjustment of their accounts, and led the officers to
look with extreme solicitude to the establishment of sub-
stantial funds, adequate to the discharge of their half-pay
as it should become due.
Alarmed by information that there was a large party
hostile to their claims, combinations among them to resign
in a body, at stated periods, began to be formed. But
they were diverted from this purpose, and induced to pe-
tition congress.
In their petition they stated that shadows had been
offered to them, while the substance had been gleaned by
others; that they had borne all that they could bear; that
their property was expended, their private resources at
an end, and their friends wearied out and disgusted with
their incessant applications; that the soldiers had not re-
ceived more than one-fifth of their rations; that the ar-
rearages for their clothing in seventeen hundred and
seventy-seven, were paid in continental money, when the
dollar was worth only four pence, and that the accounts
for the subsequent years were unliquidated. After this
Not only is a reason that did not exist assigned for his own vote, but one
inconsistent with integrity is imputed to Hamilton for a vote he did not give.
Madison gave the vote Hamilton refused to give. The reason stated by
Madison to have been " urged in favour of" 40 for 1, the rate Hamilton
proposed, was, " an adherence to public faith. " The reason imputed to
Hamilton by Madijon for voting for 100 for 1, which Hamilton did not vote
for, was, that as popular ideas were opposed to the stipulated rate, and as
adopting the current rate might hurt the credit of other securities, which de-
rived their value from an opinion that they would be ttrietly redeemed, it
was best to take an arbitrary rate leaning to the side of popularity. " What
must be thought of such statements?
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? 38
THE LIFE OF
recapitulation of their wrongs, having asked for a supply
of money as soon as possible, they urged an immediate
adjustment of their dues; that a part should be paid, and
the remainder put on such a footing as would restore
cheerfulness to the army, revive confidence in the justice
and generosity of its constituents, and contribute to the
very desirable effect of re-establishing public credit. Ad-
verting, in fine, to the odious light in which the persons
entitled to half-pay were viewed, they proposed, in order
to prevent altercations and distinctions, to commute the
half-pay for full pay for a certain number of years, or for
a sum in gross.
To attain these objects, they appointed General McDou-
gal, Colonels Brooks and Ogden, a committee of corre-
spondence to repair to Philadelphia. The state of opinion
in congress was not such as to inspire confidence. The
jealous spirit which withheld from the confederation the
only means of restoring the public credit, and which, on
the return of peace, was not unwilling to abandon or to
dissolve the union, had been strongly evinced as to the
claims of the army.
Aware of the difficulties to be encountered, it has been
seen that Hamilton had been foremost to induce the refu-
sal of all partial favours to any particular body of officers,
had urged the necessity of avoiding discriminations be-
tween different classes of creditors, and had succeeded in
postponing various applications for relief, the grant of
which must have engendered discontent.
The army memorial was referred to a committee of
which he was chairman, and on the twenty-fifth of Janua-
ry a report was made by him.
It comprehended five articles:--Present pay--a settle-
ment of accounts of the arrearages of pay, and security
for what was due--a commutation of the half-pay for an
equivalent in gross--a settlement of the accounts of defi-
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? HAMILTON.
39
ciencies of rations and compensation, and a similar settle-
ment as to clothing and compensation.
As to the pay, this report directed the superintendent
of finance to make the payment requested, as soon as the
state of the finances would permit; as to the accounts,
that the states be called upon to complete the settlements
with their respective levies to the first of August, seven-
teen hundred and eighty,* and that settlement from that
period be made at the office of finance. As to security,
it declared that the troops of the United States, in com-
mon with all their creditors, have an undoubted right to
expect such security, and that congress will make every
effort in their power to obtain from the respective
states substantial funds, adequate to the object of
funding the whole debt of the United States, and will
enter upon an immediate and full consideration of the
nature of such funds, and the most likely mode of ob-
taining them.
The remaining articles were referred to a sub-committee
of which Hamilton was a member; and after the interval
* By resolution of 12th August, 1780, the states were recommended to
make compensation for the depreciation of their pay; and from the first of
that month it was declared that the army should receive it in the new emis-
sions. It was therefore an express stipulation. Yet Madison states, "a
compromise was proposed by Hamilton, by substituting the last day of De-
cember, 1780," for the first of August, in compliance with an objection of
the eastern states.
The same principle was involved with that in the pledge of $40 for 1,
of the old emission, as to which the charge has been disproved. It is seen
that Hamilton's report was in conformity with this stipulation. How the
change to December occurred, does not appear; but the journals show that
Hamilton voted to reinstate August. * As this statement rests solely upon
the evidence of Madison, and is neither in accordance with the report nor
with this vote, its probability is more than questionable. --1 Mad. 278-9,
280.
? 4 J. C. 152
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THE LIFE OF
of a day, that part of this report which promised substan-
tial and adequate funds, was considered.
The earliest known opinions of Hamilton indicate his
conviction that the command of the revenue should be
vested in congress, and that it should have the collection
of it. He had stated in "the Continentalist,"* as "the
great defect of the confederation, that it gives the United
States no property, or in other words, no revenue, nor the
means of acquiring it inherent in themselves, and inde-
pendent on the temporary pleasure of the different mem-
bers. "--" As power without revenue, in a political society,
was a name; while congress," he then said, "continue
altogether dependent on the occasional grants of the seve-
ral states, for the means of defraying the expenses of the
federal government, it can neither have dignity, vigour,
nor credit. Credit supposes specific and permanent funds
for the punctual payment of interest, with a moral cer-
tainty of the final redemption of the principal. This
credit being to be procured through congress, the funds
ought to be provided, declared, and vested in them. Had
we begun the practice of funding four years ago, we
should have avoided that depreciation of the currency,
which has been as pernicious to the morals as to the cre-
dit of the nation. " It has been seen that he at the same
time expressed the opinion, that congress should have the
appointment " of all officers of the customs, collectors of
taxes, and military officers of every rank, so as to create
in the interior of each state a mass of influence in favour
of the federal government. "
The period had now arrived when he was enabled, per-
sonally, to propose the adoption of a measure which he
had long contemplated--the establishment of a permanent
national revenue. Unfortunately, on the dayt when the
? August 4, 1781--No. 4.
t Jan. 27.
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? HAMILTON.
41
discussion of this subject commenced, the delegates from
Virginia laid before congress an act of their legislature,
repealing her grant of the power to raise an impost; a
repeal not dictated by temporary considerations, but mani-
festing a decided repugnance to the supremacy of the
national legislature over any part of the revenue.
It declared, "that the permitting any power other than
the general assembly of this commonwealth, to levy duties
or taxes upon the citizens of this state, within the same,
is injurious to its sovereignty, may prove destructive of the
rights and liberty of this people, and so far as congress
might exercise the same, is contravening the spirit of the
confederation. " Unpropitious as this procedure was, no
other resource existed, and the debate proceeded in a com-
mittee on " permanent funds. "
The first question to be decided was, whether if funds
were provided they were to be collected by the states, or,
as Hamilton had previo usly urged, should depend on " a
single will. " With a view to its decision, he offered the
following declaratory resolution:--" That it is the opinion
of congress that complete justice cannot be done to the
creditors of the United States, nor the restoration of pub-
lic credit be effected, nor the future exigencies of the war
be provided for, but by the establishment of permanent
and adequate funds, to operate generally throughout the
United States, to be collected by congress. "
The petition of the officers of the army had been heard
and answered; the memorial of the other public creditors
had not been replied to.
After the late act of Virginia repealing the impost, it
was particularly important that they should receive a
similar pledge of ultimate justice. Prompted by this con-
sideration, immediately after the introduction of this im-
portant resolution, Hamilton presented a report on the
memorial of Pennsylvania respecting the debts due to her
6
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THE LIFE OF
citizens. This report stated," that any attempts to pay any
of the past debts, would form so heavy a deduction from
the greatest revenue that could be raised as would totally
obstruct all present service, and that any present provision
should be confined to the interest of the public debts.
That such provision would offer eventual relief to the pub-
lic creditors, and enable them to support their share of the
public burdens without appropriating the whole revenue
which can be drawn from the people to a payment of debts,
and leaving thereby the public service unprovided for,
which would involve the ruin of all ranks, creditors and
others. That congress were and had long been deeply
impressed with the absolute necessity that speedy and
effectual measures should be taken, first to liquidate and
ascertain the public debts, and then to secure the payment
of the interest until the principal could be discharged.
Acts of congress were referred to as evidence of this
assertion. He added, that after a delay of two years,
Rhode Island had entirely refused its concurrence to the
impost, that Virginia had withdrawn its assent once given,
and that a third state had returned no answer.
The inability of congress to perform its engagements,
was stated to have resulted from the defective compliances
of the states during the war. Of the last requisition for
eight millions, only four hundred and twenty thousand dol-
lars had been collected. The proceeds of the foreign
loans* were stated, showing an available balance a little
* In vol. 1, page 273, of Madison's Debates, this passage is found:--
"In a late report, which had been drawn up by Mr. Hamilton, and made
to congress, in answer to a memorial from the legislature of Pennsylvania,
among other things showing the impossibility congress had been under of
paying their creditors, it was observed, that the aid afforded by the court of
France, had been appropriated by that court, at the time, to the immediate
use of the army. This clause was objected to as unnecessary, and as dis.
honourable to congress. The fact also was controverted. Mr. Hamilton
#
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? HAMILTON.
43
exceeding eight hundred thousand dollars; while to feed,
clothe, and pay the army, required nearly six millions.
The whole sum within the command of congress, was
and Mr. Fitzsimmons justified the expediency of retaining it, in order to
justify congress the more explicitly in failing to fulfil their engagements to
the public creditors. Mr. Wilson and Madison proposed to strike out the
words ' appropriated by France,' and substitute the words ' applied by con-
gress to the immediate and necessary support of the army. ' This proposi-
tion would have been readily approved, had it not appeared on examination,
that in one or two small instances, and particularly in the payment of the
balance due to Arthur Lee, Esq. , other applications had been made of the aid
in question. The report was finally recommitted. "
This is no less than a charge of stating an untruth, and justifying it on
the score of expediency, on the part of two gentlemen whose probity never
was suspected, and for the motive of justifying congress with the public
creditors. This minute is of the 24th of January. It speaks of a late report
made to congress. The journal of that date does not refer to this report, but
on the thirtieth of January it is given in full, as having been " agreed to as
follows. " A reason assigned by Madison why the clause thus objected to
was not stricken out, is, that there had been a diversion of the money in one
or two small instances. He adds, that it was recommitted. But if these
instances prevented this clause being expunged, if it had been originally in
the report, it must necessarily have been retained. On referring to this re-
port, " agreed to" by congress, no such clause can be found. Its language
is--" But according to the best accounts which can be obtained, the antici-
pations made in the funds for the year 1782 amounted, at the close of 1781,
to four millions of livres. For the service of that year, his most christian
majesty lent the United States 6,000,000 livres. "--4 J. C. 155.
But if it be assumed that the clause was there originally, and was
stricken out, the charge is unsupported. The journals, page 202, contain
the papers which Madison as chairman of a committee reported, and refer-
red to in an address of which he was the author. One of these papers, No.
IV. , is a letter from the French ambassador at Philadelphia, dated March
15, 1783. It commences thus--" Sir: I have the satisfaction to inform you,
that his majesty procures for the United States a loan of six millions, to be
employed in the war department during the course of the current year.
"
"The Count de Vergennes informs me, sir, that the six millions are lent to
the United States in the same manner, and under the same conditions, with
the sum which was lent last year. " "I have had the honour to inform you,
air, that this money is lent to the United States to enable them to carry on
the war. The wisdom of congress will determine according to circum-
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THE LIFE OF
little more than a million and a half of dollars; a sum insuf-
ficient to pay the interest then due on the public debts.
"Yet," Hamilton remarked, " notwithstanding the discour-
aging obstacles they have hitherto encountered, they
conceive it a duty to themselves and to their constituents,
to persevere in their intentions to renew and extend their
endeavours to procure the establishment of revenues equal
to the purpose of funding all the debts of the United States;
and they think it proper to inform the assembly of Penn-
sylvania, that this subject is now before them under so-
lemn deliberation, and that her ready and early compliance
with the recommendation of (an impost) assures congress
of the vigorous support of that state. "
Soon after this pledge was given, a report as to the
mode of valuing the lands was taken into consideration.
This report proposed that the states should pass laws
forming themselves into districts, and should appoint com-
missioners to estimate the value of their lands; which
estimate, if approved by congress, was to determine the
requisitions to be made.
Convinced that no efficient plan would be adopted from
the predominance of state jealousies, and regarding the
contemplated mode as involving inequalities and contro-
versy, Hamilton moved to postpone the valuation. He
assigned as reasons, " the great expense of it, to which the
finances were then inadequate, and that in a matter so
stances on the manner of effecting that important object, and of compelling
the enemy, by joint efforts, to conclude a solid and permanent peace. "
That such was the sole object of this loan made by France, then under
great pecuniary pressure, is obvious. Already a creditor for a large amount,
it cannot be supposed that France would have made an additional loan to
the United States to pay their domestic creditors. A declaration such as
that which Madison represents Wilson as concurring with him in endeavour-
ing to substitute, would have been to declare that congress had violated their
pledge to France in applying this loan to the immediate use of the army--
the express use for which the loan was granted.
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? HAMILTON.
45
fundamental in the confederation, it was essential to the
harmony and welfare of the United States, that it should
be carried into effect with great care, circumspection, and
impartiality, and that a short delay would be much less
pernicious than a defective execution. "
After thus urging that the attempt should be deferred,
he pledged congress to proceed to an accurate valuation
of the land by commissioners, appointed by them, and act-
ing under their authority, upon principles uniform through-
out the United States; that when this valuation is com-
plete, congress will finally adjust the accounts of the
United States with the states separately, agreeably to that
standard, making equitable abatements to such as have
been more immediate sufferers by the war: that in the
mean time they would adhere, in the temporary adjust-
ment of these accounts, to the proportions established by
the requisitions of congress; and with a view to an eventual
plan, he requested the states to transmit to them the valua-
tions they had made, with an explanation of the principles
on which they had been made.
This motion, though supported by a majority of mem-
bers, was lost in a vote by states, and the plan reported
was rejected.
The course of their proceedings gave small prospect
of any salutary results. The officers were urgently press-
ing their claims. The justice of those claims was not to
be questioned. The terms of commutation offered by the
army, could not be excepted to. The claimants were
suffering. They had received nothing but assurances, and
they had reason to believe that, on the part of many, those
assurances were deceptive. There was danger. Hamilton
felt it, and after due reflection, he unbosomed his appre-
hensions to the commander-in-chief.
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HAMILTON TO WASHINGTON.
Philadelphia, Feb. 7,1783.
SIR,
Flattering myself that your knowledge of me will in-
duce you to receive the observations I make as dictated
by a regard to the public good, I take the liberty to sug-
gest to you my ideas on some matters of delicacy and im-
portance. I view the present juncture as a very interest-
ing one. I need not observe how far the temper and
situation of the army make it so. The state of our finan-
ces was perhaps never more critical. I am under injunc-
tions which will not permit me to disclose some facts that
would at once demonstrate this position, but I think it
probable you will be possessed of them through another
channel. * It is however certain that there has scarcely
been a period of the revolution which called more for
wisdom and decision in congress. Unfortunately for us,
we are a body not governed by reason or foresight, but
by circumstances. It is probable we shall not take the
proper measures; and if we do not, a few months may
open an embarrassing scene. This will be the case, whether
we have peace or a continuance of the war.
If the war continues, it would seem that the army must
in June subsist itself to defend the country; if peace should
take place, it will subsist itself to procure justice to itself.
It appears to be a prevailing opinion in the army, that the
disposition to recompense their services will cease with
the necessity for them, and that if they once lay down
their arms, they part with the means of obtaining justice.
It is to be lamented that appearances afford too much
ground for their distrust.
* Probably from the superintendent of finance.
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? HAMILTON. 47
It becomes a serious inquiry, What is the true line of
policy? The claims of the army, urged with moderation,
but with firmness, may operate on those weak minds
which are influenced by their apprehensions more than
by their judgments, so as to produce a concurrence in the
measures which the exigencies of affairs demand. They
may add weight to the applications of congress to the
several states. So far a useful turn may be given to
them. But the difficulty will be to keep a complaining
and suffering army within the bounds of moderation.
This your excellency's influence must effect. In order
to it, it will be advisable not to discountenance their en-
deavours to procure redress, but rather, by the intervention
of confidential and prudent persons, to take the direction
of them. This, however, must not appear. It is of mo-
ment to the public tranquillity that your excellency should
preserve the confidence of the army, without losing that
of the people. This will enable you in case of extremity
to guide the torrent, and to bring order, perhaps even
good, out of confusion. 'Tis a part that requires address,
but 'tis one which your own situation as well as the welfare
of the community points out.
I will not conceal from your excellency a truth which it
is necessary you should know. An idea is propagated in
the army, that delicacy carried to an extreme prevents
your espousing its interests with sufficient warmth. The
falsehood of this opinion no one can be better acquainted
with than myself; but it is not the less mischievous for be-
ing false. Its tendency is to impair that influence which
you may exert with advantage, should any commotions
unhappily ensue, to moderate the pretensions of the army,
and make their conduct correspond with their duty.
The great desideratum at present is the establishment
of general funds, which alone can do justice to the credi-
tors of the United States, (of whom the army forms the
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THE LIFE OF
most meritorious class,) restore public credit, and supply
the future wants of government. This is the object of all
men of sense; in this the influence of the army, properly
directed, may co-operate.
The intimations I have thrown out, will suffice to give
your excellency a proper conception of my sentiments:
you will judge of their reasonableness or fallacy; but I
persuade myself you will do justice to my motives.
General Knox has the confidence of the army, and is a
man of sense; I think he may be safely made use of.
Situated as I am, your exellency will feel the confidential
nature of these observations.
A few days after writing this letter,* Hamilton proposed
a resolution, which was passed, that "the commander-in-
chief be informed that congress are always happy to receive
his sentiments on the political and military affairs of these
states, the utility of which they have on so many occasions
experienced. " It also stated "the probability of peace," and
directed the secretary of foreign affairs " to make a confi-
dential communication to him of the state of the negotia-
tions for peace when the last advices were received. "
The day after the date of this letter, the discussion of
the mode of ascertaining the quotas of the states was re-
sumed. Various propositions were made, at different
times, until the seventeenth of February, when a plan was
adopted, five members dissenting. f
By this plan, the legislature of each state was required
to take the most effectual measures to obtain a just and
accurate account of the quantity of its land granted or
surveyed, of the number of buildings, distinguishing dwell-
ings from others, and of the number of white and black
inhabitants. These returns were to be examined by a
? Feb. 20. t Hamilton, Madison, Carroll, Floyd, Leo.
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? II A M I I. T O N.
40
grand committee of congress, nine of whom concurring,
were to make an estimate of the value of the granted or
surveyed lands, and of the buildings or improvements, to
be approved or rejected by that body. This estimate was
to be the rule of apportioning among the states the quotas
to be paid into the continental treasury, and also of ad-
justing all accounts between the United States and the
individual states for previous supplies.
As this rule, if strictly adhered to, would charge the
states, which had been the theatres of war, for past sup-
plies according to their future ability, when in an entire
condition, and might operate very unequally upon New-
York, it has been seen that Hamilton embraced in his
resolution, for an eventual valuation, a recommendation
that the states should vest congress with a power of mak-
ing equitable abatements in favour of such as had been
more immediate sufferers by the war.
This motion was in accordance with a recommenda-
tion of the previous congress, that in a final settlement
of the expenses of the war to be borne by each state,
they should be authorized to assume and adopt such prin-
ciples, as from the particular circumstances of the several
states at different periods might appear just and equitable.
It was committed, but as Virginia had disagreed to that
recommendation, a committee reported against it. Ham-
ilton subsequently again brought forward this proposition
in a different form. It was a declaratory resolution by
congress that they would make such abatements.
Though admitted to be within the spirit of the con-
federation, a postponement was moved; but with a view
to defeat it, it was considered and rejected. *
* In vol. 1, page 362, Madison Papers, Madison represents himself as be-
ing in favour of " the abatements proposed by Hamilton"--and in page 418,
as offering an amendment to Hamilton's resolution, for which his reasons are
7
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THE LIFE OF
The importance of this question to the interests of the
community he represented, and the course which he had
taken in reference to it, induced Hamilton to address a
letter* to the governor of New-York.
"I enclose," he said, " for the information of the legis-
lature, the proceedings upon it in different stages, by
which they will see the part I have acted. But as I was
ultimately left in a small minority, I think it my duty to
explain the motives upon which my opposition to the
general sense of the house was grounded. I am of opin-
ion, that the article of confederation itself was ill-judged.
In the first place, I do not believe there is any general
representative of the wealth of a nation, the criterion of
its ability to pay taxes. There are only two that can be
thought of--land and numbers. The revenues of the
United Provinces, general and particular, were computed
before the present war at more than half as much as those
of Great Britain. The extent of their territory is not one
fourth part as great; their population, less than a third.
. ' The comparison is still more striking between those
provinces and the Swiss cantons, in both of which, extent
of territory and population are nearly the same; and yet,
the revenues of the former are five times as large as those
of the latter; nor could any efforts of taxation bring them
to any thing like a level.
"In both cases, the advantages for agriculture are superior
in those countries which afford least revenue in proportion.
I have selected these examples because they are most famil-
iar; but whoever will extend the comparison between the
different nations of the world, will perceive that the position
I have laid down is supported by universal experience.
stated. On the 4th of March, he voted, in common with all the other Vir.
ginia members, first to postpone the consideration of this resolution, and
then to reject it. --i J. C. 170.
<< February 24, 1783.
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? HAMILTON.
51
"The truth is, the ability of a country to pay taxes, de-
pends on infinite combinations of physical and moral
causes, which can never be accommodated to any general
rule; climate, soil, productions, advantages for navigation,
government, genius of the people, progress of arts, and
industry, and an endless variety of circumstances. The
diversities are sufficiently great in these states to make an
infinite difference in their relative wealth, the proportion of
which can never be found by any common measure whatever.
"The only possible way, then, of making them contribute
to the general expense in an equal proportion to their means,
is by general taxes imposed under continental authority.
"In this mode, there would no doubt be inequalities, and
for a considerable time material ones; but experience,
and the constant operation of a general interest, which, by
the very collision of particular interests, must in the main
prevail in a continental deliberative body, would at length
correct those inequalities, and balance one tax that should
bear hard upon one state, by another that should have a
proportional weight in others. This idea, however, was
not at the period of framing the confederation, and is not
yet agreeable to the spirit of the times. To futurity we
must leave the discovery how far this spirit is wise or
foolish. One thing, only is now certain, that congress,
having the discretionary power of determining the quantum
of money to be paid into the general treasury towards de-
fraying the common expenses, have in effect the constitu-
tional power of general taxation. The restraints upon
the exercise of this power amount to the perpetuating a
rule for fixing the proportions, which must of necessity pro-
duce inequality, and by refusing the federal government a
power of specific taxation and of collection, without substitu-
ting any other adequate means of coercion, do in fact leave
the compliance with continental requisitions to the good-
will of the respective states. Inequality is inherent in the
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THE LIFE OP
theory of the confederation; and in the practice, that ine-
quality must increase in proportion to the honesty or dis-
honesty of the component parts. This vice will either in its
consequences reform the federal constitution, or dissolve it.
"If a general standard must be fixed, numbers were pre-
ferable to land. Modes might be devised to ascertain the
former with tolerable precision; but I am persuaded, the
experiment will prove that the value of all the land, in
each state, cannot be ascertained with any thing like ex-
actness. Both these measures have the common disad-
vantage of being no equal representative of the wealth
of the people; but one is much more simple, definite, and
certain than the other.
"I have indulged myself in these remarks, to show that
I have little expectation of success from any mode of car-
rying the article in question into execution upon equitable
principles. I owe it, however, to myself to declare, that
my opposition did not arise from this source. The con-
federation has pointed out this mode, and though I would
heartily join in a representation of the difficulties (of which
every man of sense must be sensible on examination) that
occur in the execution of the plan, to induce the states to
consent to a change; yet as this was not the disposition
of a majority of congress, I would have assented to any
mode of attempting it, which was not either obviously
mischievous or impracticable.
"The first plan proposed, as your excellency will see,
was an actual valuation of each state by itself. This was
evidently making the interested party judge in his own
cause. Those who have seen the operation of this prin-
ciple between the counties in the same state, and the dis-
tricts in the same county, cannot doubt a moment that the
valuations on this plan would have been altogether un-
equal and unjust. Without supposing more liberality in
one state than another, the degree of care, judgment, and
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? HAMILTON.
53
method, employed in the execution, would alone make
extreme differences in the results.
