The annual consumption of foreign manufactures in the United States, is only from two to three dollars a head: and does not appear, in any series of years, to have exceeded four or five dollars. A nation with which the necessaries and comforts of life are as abundant as they are with the Americans, and which yet procures from abroad so small an amount of manufactures in proportion to population, cannot be considered as very backward in this branch of industry. Manufactures are, indeed, of less relative importance to us than to some nations of Europe: but which of those nations can be mentioned, which would not be willing to exchange part of its facilities for manufacturing, for such facilities for agricultural production as we possess? To suppose the Americans to make all the manufactures they need, is to suppose our trade with several countries of Europe to cease: for those countries have little to supply us with but manu. factures. This involves another supposition, that of finding a new employment for the labour and capital employed in raising agricultural products for exportation: and, consequently, a diminution of agricultural employment equal to the increase of some other branch of industry. It is probable that the time is remote, in which the raw produce of America will cease to be exchanged for the manufactures of Europe: but the existence of this trade will not prevent the increase of other branches of industry, since, from the very nature of things, the greater part of the articles the Americans use must be made by themselves. The rail roads and canals, recently made, and now making, will, by reducing the cost of transportation, greatly facilitate manufacturing production, and, together with steam navigation, give us many of the advantages which in former times were supposed to be within the reach of only a very dense population. Distance being, in a manner, annihilated by these improved modes of communication, we shall, in a few years, be able to carry the division of labour to an extent which will greatly improve the quality and increase the quantity of our manufactures. By another cause will manufacturing industry be advanced. The improvements daily making in scientific and practical agriculture, will make a less amount of labour necessary for raising that quantity of agricultural products which is required for homeconsumption and for exportation. The labour thus set free will naturally take the direction of manufactures: and its amount will be increased, by the labour set free, by the use of canals and rail-ways in transporting agricultural produce to market. The early period at which manufactures were established in America, the extent to which they were carried before the revolutionary war, and their advance since that time, are so many assurances (if the protection orderly government gives to persons and property were not in itself sufficient assurance) that this branch of industry must flourish in America. Its positive advancement will be great; and its relative advancement will probably be greater than that of either commerce or agriculture. The nature and extent of our natural VOL. XVIII.-PART II. resources are such, that it is difficult, if not impossible, even to imagine a system of policy under which the wealth and population of the country would not increase. From the impossibility of finding profitable employment for all this labour and capital in commerce and agriculture, a great proportion of the annual increase will necessarily take the direction of manufactures. It is true, indeed, that several hundred years of costly experiments have been required to bring the manufactures of Europe to their present state of perfection. But religious persecutions and political troubles may give a country exempt from such evils, all the advantages arising from a century of experiments, without that country's paying any part of the cost. In this way, the countries which embraced Protestantism at the period of the Reformation, got, in addition to their own useful arts, many other useful arts which till then were confined to their rival nations. The rise of some of the most important manufactures of Holland, is attributed to Flemings who fled thither from religious and political tyranny. The Huguenots of France, whom the revocation of the edict of Nantz obliged to forsake their native land, introduced many new branches of manufacture into England, Holland, and Germany. The time for religious persecution has gone by: but political troubles will long continue in Europe. The many advantages, natural and political, which the United States hold out to the emigrant, must make it the favourite refuge of those who fly from war and revolution, and those men will bring with them the arts in which their own countries excel. We shall thus have the arts in perfection, without paying the expense of centuries. of experiments. Within a half century, England has, through newly invented machinery and various scientific appliances, taken the lead of the nations in manufactures. But her patent right to the new machinery is near expiring. We ourselves have already adopted it to a considerable extent, and have, in some respects, improved it. Secrets in the arts cannot, in this age of the world, be long preserved. Science. reveals them to every nation that is in a condition to profit by them. England must be content that other nations shall share the benefits of her dis coveries. If any think that we are, in any useful or ornamental art adapted to our present state, in a disreputable degree behind the mother country, they may, perhaps, derive consolation from the reflection that dyeing was so much a mystery to the English previous to the year 1608, that they used to send their cloths white to Holland, which were there dyed, and afterwards returned to England for sale: that though their island abounds in copper ore, they derived their principal supply of copper, both wrought and unwrought, from Germany, till the year 1700, and continued to import copper teakettles and other vessels from that country, till the year 1750: and that, though their mines have furnished supplies of tin from the earliest ages of our era, they did not acquire the art of making tin plates till the year 1730. 3 Q 388 FINANCES. "The English colonists," says Adam Smith, "have never yet contributed any thing towards the defence of the mother country, or towards the support of its civil government. They themselves, on the contrary, have hitherto been defended almost entirely at the expense of the mother country. The expense of their own civil government has always been very moderate. It has generally been confined to what was necessary for paying the competent salaries to the governor, to the judges, and to some. other officers of police, and for maintaining a few of the most useful public works, The expense of the civil establishment of Massachusetts Bay, before the commencement of the present disturbances, used to be but about £18,000 a year. That of New That Hampshire and Rhode Island £3500 each. of Connecticut £4000. That of New York and Pennsylvania £4500 each. That of New Jersey £1200. That of Virginia and South Carolina £8000 each. The civil establishments of Nova Scotia and Georgia are partly supported by an annual grant of parliament. But Nova Scotia pays, besides, about £7000 a year towards the public expenses of the colony: and Georgia about £2500 All the different civil establishments in a year. North America, in short, exclusive of those of Maryland and North Carolina, of which no exact account has been got, did not, before the commencement of the present disturbances, cost the inhabitants above £64,700 a year; an ever memorable example at how small an expense three millions of people may not only be governed, but well go verned." It is, indeed, an ever memorable example at how small an expense three millions of people may be governed, for the total is less than is now annually levied in Philadelphia for merely municipal purposes. Lord Sheffield says, "The customs from the 5th of January 1768, when the Board was established, to 1775, when the troubles began, amounted to about £290,000, in a little more than seven years; out of which the expense of collecting is to be deducted. The only other revenue was the ground rents, which were never tolerably paid, and hardly defrayed the expense of collecting. Before the war of 1755, the expense of our establishment was £70,000. From the peace of 1763 to the time of the stamp act, it was £370,000." If to the amount the Americans paid for the support of the civil establishment of the different colonies, be added the amount they paid for duties on goods imported, the total will not in any year exceed 500,000 dollars. Sir William Keith, in his history of Virginia, gives the following account of the revenue of that colony, as it stood in 1738, and as it was established by acts of assembly, viz. First, The annual receipts of quit-rents, at two shillings sterling per one hundred acres, being the revenue of the crown, paid into the receipt of the king's private exchequer, is an increasing fund, amounting at present to about "Secondly, The two shillings sterling per hogshead on tobacco exported, at a medium of thirty-two thousand hogsheads per annum, is "Out of which, also increasing tax, is paid the governor's salary of two thousand pounds per annum. "Thirdly, One shilling per ton on two thousand tons of shipping yearly, is "Fourthly, The established fees for marriage licenses, probates of wills, and entering and clearing of ships: together with other legal perquisites belonging to the governor residing there, is, per annum, £3,500 3,200 500 600 £7,800 Massachusetts imposed a tax of eight-pence a hogshead on molasses imported into her territories in ships belonging to other colonies: and South Carolina a tax of five pence a gallon on the same commodity when imported from the northern colonies. But the principal revenue of the colonies was derived from direct taxes on property: and herein is to be found the cause of the economy of the American governments previous to the Revolution. When revenue is raised by direct taxation, every man knows what he pays, and even the most stupid need not be told that he has an interest in keeping down the expenses of government. It is by various ingenious modes of indirect taxation, through which the exact amount any one pays is concealed both from himself and others, that governments are able to raise and to expend annually their tens and even their hundreds of millions. But, besides this just and equitable way of raising a revenue, the colonial governments had another, the most pernicious that could possibly be devised." It was in issuing paper money, which in some cases was made a legal tender, and in others had an artificial value imparted to it by political regulations of a different character. This expedient was first resorted to by Massachusetts. In the year 1690, when her troops returned from an unsuccessful attack on Quebec, they were on the point of mutinying for their wages. An act was passed for levying the sum, but the men would not stay till it could be brought into the treasury. The debt was therefore paid by paper notes of from ten shillings to ten pounds' denomination, which the soldiers could not pass except at a discount of thirty or forty per cent. But, by certain political contrivances the notes were, after a time, raised to par value; and the public authorities, encouraged by the restoration of the credit of their bills, afterwards issued others for defraying the ordinary expenses of government. "This was," says Governor Hutchinson, "an easy way of paying public charges, which, no doubt, they wondered that in so many ages the wisdom of other governments had never discovered." : The example set by Massachusetts was quickly imitated by the other colonies. Pennsylvania contrived to keep her paper nearly on a level with silver in value but the notes of the other colonies depreciated greatly, and in 1747 Massachusetts paid the greater part of her public debts with the one tenth part of the money for which her paper bills had been granted. It was quite natural that this easy way of supplying the colonial governments with such funds as they wanted, should afterwards be resorted to as a means of making money plenty in every man's pocket. Whenever a cry arose of scarcity of mo ney, all the governments had to do, was to issue more paper. Our limits will not permit us to describe the pernicious effects this system had on the morals of the community, and, through their morals, on their industry and wealth. It opened to many individuals another way of growing rich, besides the old fashioned way of hard work and close economy. It substituted speculation for industry: and produced infinitely more evil in the colonies than was occasioned by any of the restrictions imposed by the British government on their commerce and manufactures. It was nevertheless persisted in, because the speculating part of society, who are always the most active, and generally the most powerful, found their interest promoted by it. During the revolutionary war, this mode of raising a revenue was resorted to, because it was the easiest. The advances made at the Treasury of the United States in continental money, in old and new emissions, are estimated as follows: Till the issues of paper exceeded $9,000,000, there was not, according to the concurrent testimony of Mr. Jefferson and Mr. Paine, any sensible depreciation. But, in January 1777, one year and five months after the first emission, the depreciation was, as is stated by Pelatiah Webster, about twenty-five per cent, one dollar and a quarter of continental money being equal to one dollar of hard money. In March of that year, the exchange of continental for hard money, was as 2 to 1. In July 3 to 1. In December 4 to 1. In the year 1778, it fluctuated from 4 to 1 to 6 for 1. In January 1779, it rose to 7, 8, and 9 to 1. By April it became 22, by December 45. At the close of the year 1780, it was 100 to 1. In the latter end of February 1781, it rose to 120; in March, to 135; in April, to 200. In May it rose from 200 to 500, and on the 31st of that month ceased to circulate as money: but was afterwards bought on speculation, at from 400 to 1, to 1000 to 1. This continental money was, in its true charac ter, simple evidences of debt due by the government: and may, as such, in the first stage of its operation, be compared to the forced loans which the potentates of Europe have at times extracted from their subjects. As a forced currency, it may be compared to the base coin which the same potentates have issued in other seasons of difficulty. It can be justified (if it can be justified at all) only on the plea of state necessity-a plea never to be admitted without close examination. It is difficult to believe that a people, so devoted as the Americans of that day were to the cause of liberty, would have scrupled about paying the necessary expenses of the war. But they were taught by some of their leading men that taxation was quite unnecessary, and that paper money would sup. ply every financial want. It is reported that when a proposition was made in congress, to establish a regular revenue system, one member exclaimed, "Do you think, gentlemen, that I will consent to load my constituents with taxes, when we can send to our printer, and get a wagon load of money, one quire of which will pay for the whole!" The best, if not the only excuse, for the policy which was pursued, is, perhaps, to be found in the opinion then prevalent, that money was something which derived its value from the authority of government. In no other way can we apologise for the acts which imposed severe penalties on those who refused to exchange their merchandise for paper, and which in some instances even outlawed the supposed offender. Our ancestors were lavish of their blood in defence of their rights. If it was from any wish to save their treasure, that they preferred defraying the expenses of the war through the means of paper money, rather than by regular taxation, they did not succeed in their object. As a mode of raising revenue, the paper money might be compared to a tax, the expenses of collecting which were ten times as great as the sums brought into the treasury. The benefit the government derived from it was in no way commensurate with the burdens it imposed on the people. The tories having, from the beginning of the contest, little confidence in continental money, the principal loss fell on the friends of independence. "The generous patriotic spirits," says an eye witness, "suffered the injury: the avaricious and idle derived benefit from the confusion." "We have suffered more from this," says the same eye witness, "than from every other cause of calamity: it has killed more men, pervaded and corrupted the choicest interests of our country more, and done more injustice than even the arms and artifices of our enemies." The first recommendation of congress to the states, to raise money by a tax, appears to have been made on the 14th of January 1777: but this was in so indefinite a manner, without any sums being mentioned, or quota specified, that it had little or no effect. On the 22d of November in the same year, congress recommended to the states to raise five million dollars in the course of the year 1778, and to pay the same in quarterly instalments. In this recommendation, the quota of each state was specified, and in consequence thereof, some small sums were raised and paid by some of the states within the year 1778: others made some remittances, long afterwards, when continental money was as 20 to 1: but great part of the sum was never paid at all. At different times in 1779, calls were made on the states for 60 millions to be paid in that year: and 135 millions to be paid in 1780, and six millions annually for 18 years, to commence with 1780, as a fund for sinking loans, and emissions, and paying interest. The dependence was still on continental money, and the system of taxation was merely to support the credit of the paper, by reducing the quantity in circulation. None of these requisitions had the effect intended: nor was it till after continental money had ceased to circulate, that the states would, to any extent, draw directly on the real resources of the country. When it was found impossible to depend any longer on paper issues, very strong exertions were made to obtain money from the states, by a tax levied on polls and estates in the old and usual way, and such conviction of the necessity of public supplies generally took place, that considerable sums were obtained in this way." The loans which were negotiated in Europe, were of essential service. The following is an account of those negotiated in France, omitting fractions of dollars, and reckoning five livres eight sols to the dollar. 66 Besides a loan to the amount of 1,851,851 dollars, negotiated in Holland in 1781: some other loans from Holland: and a small loan from Spain. Some assistance was derived from the Bank of North America. This institution went into opera tion on the 7th of January 1782, on a capital of 250,000 dollars in specie, supplied by government, The accounts and 70,000 subscribed by individuals. of the government and the bank, from that time to the end of the war, stood as follows, agreeably to a statement made by Mr. Morris, in the Pennsylvania legislature, in 1785. In this estimate the issues of paper for each year are valued at the average rate of the exchange for hard money in that year. It is exclusive of certain debts of the United States, which were incurred at various periods for the support of the war, and which, the Register of the Treasury said, should be taken into a general view of the expense thereof, viz. Army debt, upon commissioners' certificates, For supplies furnished by the citizens For supplies furnished in the quar- The foreign expenditures, civil, military, naval, and contingencies, amount, by computation, to the sum of The expenditures of the several states, from the commencement of the war to the establishment of peace, cannot be stated with any degree of certainty. But the United States have granted certain sums for the relief of the several states, to be funded by the general government, therefore, estimate the amount of said assumption, $11,080,576 01 3,723,625 20 1,159,170 05 744,638 49 5,000,000 00 21,000,000 00 146,606 Estimated expense of the war, specie, $135,193,703 00 46,606 common Bohea tea, per lb. 6 do 24 do 3 do do 2 do 1 do 1 do 1 do pepper loaf sugar other sugars cocoa and other coffee In April 1783, the debt of the United States (exclusive of the state debts) was estimated at $42,000,375, and the annual interest at $2,415,916. As the war had been brought to a close, it became necessary for congress to provide permanent funds for paying the interest. It had been foreseen by many, as Mr. Pitkin remarks, that this could not be done, unless congress had the power to regulate the commerce of the country, or at least, were vested with a power to levy duties on imports. By the articles of confederation, this power was not delegated to them, but remained in the respective states, which had the right of laying and collecting such duties on imports as they judged proper for their own benefit. Congress could only recommend to the states the propriety and necessity of delegating to them this power for the benefit of all. Accordingly, as early as the 3d day of July 1781, they had passed a resolution, recommending it to the several states, "as indispensably necessary, that they vest a power in congress, to levy, for the use of the United States, a duty of five per cent ad valorem, upon all goods, wares, and merchandize of foreign growth and manufacture, which may be imported into any of the said states, from any foreign port, island, or plantation, after the first of May 1781," with the exception of certain articles. They also resolved, at the same time, that the moneys arising from the said duties, be appropriated to the discharge of the principal and interest of the debts already contracted, or which may be contracted, on the faith of the United States, for supporting the war, and that the said duties be continued until the said debts be fully and finally discharged." The journals of the old congress show, that this resolution, in the opinion of some members of that body, was not sufficiently extensive. A substitute was, therefore, proposed, couched in more general terms, declaring it to be "indispensably necessary, that the United States in congress assembled, should be vested with a right of super-peated: but, though it could not be denied, that in assembled, should be vested with a right of superintending the commercial regulations of every state, that none may take place, which may be partial or contrary to the common interest; and that they should be vested with the exclusive right of levying duties upon all imported articles." This substitute was negatived, and the resolution which passed, was not accepted by the states. and upon all other goods a duty of five per cent ad valorem, at time and place of importation: with a proviso that none of the said duties should be applied to any other purpose, than the discharge of the interest and principal of the debts contracted on the faith of the United States for the support of the war, agreeably to the resolution of the 16th of December last, nor be continued for a longer term than 25 years." It was calculated that the proposed duties would raise an annual sum of 915,956 dollars, which would fall short of paying the interest of the debt, about one million and a half of dollars. Congress, therefore, at the same time, recommended to the states "to establish for a time limited to 25 years, and to appropriate to the discharge of the interest and principal of the debt, substantial and effectual revenues of such nature as they may judge convenient, for supplying their respective portions of 1,500,000 dollars annually, exclusive of 66 On the 18th of April 1783, congress again urged the several states to establish some permanent funds for the payment of the debts of the United States. For this purpose, by a resolution of that date, they recommended to the states, "as indispensably necessary to the restoration of public credit, and to the punctual discharge of the public debts, to invest the United States in congress assembled, with a power to levy for the use of the United States, the following duties upon goods imported into the said states, from any foreign port, island, or plantation. Upon all rum of Jamaica proof, per gall. 4-90ths of a dollar. the aforementioned duties." This system was not to take effect, until acceded to by all the states, but when adopted by all, was to be a mutual compact, irrevocable by one or more, without the concurrence of the whole, or a majority of the United States in congress assembled. Το induce its adoption, an appeal was made to the states by congress, in an an able address, in which they urged the propriety and justice of making some provision, for the payment of the interest, at least, of a debt which was the price of their independence. From year to year this appeal was re justice some provision should be made to satisfy. the claims of the public creditors, these propositions were not agreed to by all the states in such a manner as to take effect. The opposition to them did not originate exclusively in a solicitude to preserve the prerogatives of the states. It was in part owing to what Judge Marshall calls "an unreasonable suspicion, which grew out of an opinion, that on commercial subjects, the interests of the different parts of the union conflicted with each other." From the first of November 1784 to the first of January 1786, there was paid into the public treasury only 482,897 dollars 90 cents. Happily, a loan tion of the war, out of which the interest of the had been negotiated in Holland, after the termina, foreign debt was partly paid. Treasury, dated September 20th, 1787, it is stated In a report made to Congress by the Board of that the requisitions upon the states, for the payment of the interest of the domestic debt, in the years 1782, 1784, 5 and 6, amounted to the sum of $6,279,376 27, and the Board says, "It is with regret we are constrained to observe, that to the 31st of March last, the aggregate payments on account |