TO THE PRESIDENT OF CONGRESS.
Philadelphia, 12th October, 1778.
In a conference had with Mons. Gerard, in the month of January last, at Versailles, he observed that the thirteenth article[15] in the treaty proposed by Congress, which exempted the mola.s.ses purchased by the inhabitants of the United States in any of the islands belonging to, and subject to, his Most Christian Majesty, from any duties whatever, was an unequal article, as he termed it, that without some concession of equal importance on the part of the United States, it could not be agreed to, as it would carry the appearance of inequality, and as if Congress were taking the advantage and dictating the terms in their own favor, that therefore it was expected, either wholly to omit the article, or place an equivalent over against it on our part.
On my return to Paris, I laid M. Gerard"s proposals before my colleagues, who agreed generally to the justice and propriety of them, but we found it difficult to place any article or articles over against that of mola.s.ses, which would be of equal consequence, and in which the States of America were at the same time equally interested.
After long consideration had on the subject, Dr Franklin proposed the article nearly as it now stands; Mr Lee objected to it, as being too extensive, and more than equivalent for that of mola.s.ses only; to which I answered, that though the concession might appear great, it was in reality nothing more than giving up what we never could make use of but to our own prejudice, for nothing was more evident than the bad policy of laying duties on our own exports; that mola.s.ses, though apparently but an article of small value, was the basis on which a very great part of the American commerce rested; that the manufacture of it into rum, was every year increasing, especially in the middle and southern states, where it had been more lately introduced.
Doctor Franklin agreed with me, and argued on much the same ground, but neither of us insisted on the article at the time, but that the proposition should be made for the consideration of Mons. Gerard, reserving to ourselves the power of agreeing to it or not afterwards.
A few evenings after, and nearly as I can remember about five or six days before the actual signing of the treaty, we met Mons. Gerard at my house in Paris; he brought the proposed treaty with him, in which he had inserted the 11th and 12th articles as they now stand. The treaty was read, considered, and agreed to, article by article, except the 11th and 12th, respecting which M. Gerard observed at first, that he considered them as they then stood reciprocal and equal, but that he left it entirely with us to retain them both, or to reject them both, it being indifferent with his Majesty, but that one could not be retained without the other. On our having agreed to all the other articles, we told him we would confer together on the 11th and 12th, and write to him what our determination should be. As soon as he was gone, the subject was taken up; the arguments before used were again considered, and finally we unanimously agreed to retain both the articles; on which I desired Mr Lee to write a letter to Mons. Gerard, informing him of it, and that I would send it out to Versailles the next morning, from Pa.s.sy, that there might be no more delay in transcribing and executing the treaties. Mr Lee accordingly wrote, and Dr Franklin, he, and myself signed the letter, which I sent the next morning.[16]
A day or two after this, Mr A. Lee wrote a letter to Dr Franklin and me, in which he expressed great uneasiness about the 11th and 12th articles, and a desire to have them left out, on which we advised Mr Lee to go himself to Versailles on the subject, which he accordingly did, and we wrote to M. Gerard, by him, that we were content to have the two articles left out, if agreeable to his Majesty.[17] As we had just before unanimously agreed and written to have them retained, we could not, with any consistency, make a point of their being expunged.
Mr Lee discoursed on the subject with M. Gerald, who satisfied him as he thought at the time, and as we all then thought, of the impropriety of making any alteration in the treaty, after it had been so maturely considered; had been fully agreed upon by us all; had been approved of in form by his Majesty, and ordered to be transcribed and signed.
Neither Mr William Lee nor Mr Izard ever spoke one word to me on the subject, and I did not think myself authorised or at liberty to consult them, or any other person on the subject, but my colleagues.
SILAS DEANE.
FOOTNOTES:
[15] "ARTICLE XIII. It is agreed by and between the said parties, that no duties whatever shall ever hereafter be imposed on the exportation of mola.s.ses from any of the islands and dominions of the Most Christian King, in the West Indies, to any of these United States."
[16] The articles in question are as follows;
"ARTICLE XI. It is agreed and concluded, that there shall never be any duty imposed on the exportation of mola.s.ses, that may be taken by the subjects of any of the United States from the Islands of America, which belong, or may hereafter appertain, to his Most Christian Majesty.
"ARTICLE XII. In compensation of the exemption stipulated in the preceding article, it is agreed and concluded, that there shall never be any duties imposed on the exportation of any kind of merchandize, which the subjects of his Most Christian Majesty may take from the countries and possessions present or future of any of the thirteen United States, for the use of the islands which shall furnish mola.s.ses."
The treaty may be seen entire in the _Secret Journals of Congress_, Vol. II. p. 59.
[17] See these letters in Arthur Lee"s Correspondence, under the date of January 30th, 1778.
TO THE PRESIDENT OF CONGRESS.
Philadelphia, 1st November, 1778.
Sir,
I think it unnecessary to make an apology for sending you the enclosed estimates and reflections made on two of the most important and interesting subjects, and for desiring the same may be communicated to Congress. Should that honorable body approve of any or all of them, I shall be very happy, and if they should not they will excuse me for having given them this trouble, when they reflect, that the desire of throwing some light on these subjects has been my sole motive.
The providing for the redemption of our money, and the establishment of a marine, are objects, which in my view, far exceed in the magnitude and extent of their importance, any that are at present under public consideration; they greatly depend on each other, and permit me to say, all our future operations in a great degree depend on them. We cannot pay the interest of any considerable loan without commerce, which cannot be revived effectually without a marine force of our own, which may I am confident be formed on the enclosed plan, and be ready in a short s.p.a.ce of time to act with vigor. Great Britain has long had the empire of the ocean, and in consequence the whole world has been her tributary; her own bad policy and the present war will deprive her of that empire; at this important crisis it depends on the measures taken by the United States, whether they shall succeed Great Britain or not in this extensive dominion. Reason, observation, and experience authorise me to say, there is not in the world any power so capable of it, and as the United States can never aim at foreign conquests, but simply to guard their own coasts, and to protect the commerce of their subjects, their superiority at sea can never give just cause of jealousy or offence to any other nation. I am confident that a fleet of forty sail, to consist of twenty such large ships as I have described, and twenty frigates, will be more than equal to this purpose, and such a fleet may be got to sea in the course of the coming year, if the materials wanted from Europe can be procured, which, if immediately applied for, I have not the least doubt of.
I have the honor to remain, &c.
SILAS DEANE.
_P. S._ I am still without the honor of any answer to my letter of the 7th ult.
November 13th.
After writing the above, my apprehension, lest I should be thought any way out of the usual course in communicating my sentiments to Congress, made me omit sending it to you with the enclosed, but the alarming intelligence, which I received but a day or two since, of the sentiments of my countrymen in different parts on the present situation of the credit of our money, the state of our finances and resources, and of the temper and disposition prevailing in consequence, has made me waive every personal consideration, and communicate this with the enclosed to Congress, and I shall count it one of the happiest occurrences of my life, if anything in my power will help to prevent that total loss of public as well as private credit, which I am sorry to find begins to be almost universally apprehended, and I fear appearances at this time are in support of such apprehensions, which though at bottom they may be ill founded, yet, if once generally prevailing, will produce consequences easily foreseen. I beg leave to refer to Colonel Duer for the substance of the intelligence I refer to, having communicated the letters I have received to him, for as they contain many things merely personal, I could not lay them at large before Congress.
S. D.
PLAN _for sinking fiftythree millions of dollars of the Continental Currency, and to establish a Bank of one million, and a half sterling, or $6,666,666-2/3 in Europe for the use of the States of America, at the expense of forty millions of dollars in specie only, or of Bills upon Europe equivalent_.
1st. Let a loan be obtained of twentyfive millions of dollars on account of the United States; the interest and necessary charges will probably amount to, and will not exceed, six per cent per annum.
2dly. Let a fund be established of two millions and a half annually, clear of all charges of collecting and remittances, out of which let the interest of the loan be paid, and the surplus unalienably appropriated as a sinking fund to discharge the princ.i.p.al; the annual interest of twentyfive million dollars; at six per cent will be 1,500,000 dollars, the sinking fund one million.
3dly. The calculation which follows demonstrates, that this fund of two millions and a half of dollars will, in sixteen years, pay off the princ.i.p.al and interest of the twentyfive millions borrowed, and leave a surplus of $673,103 in the hands of the States, which may be supposed equivalent to the charge of managing the money, and paying the loan in Europe.
4thly. A fund of two millions and a half for sixteen years amounts to forty millions, but twentyfive millions at six per cent simple interest will in that time amount to fortynine millions, supposing the interest annually paid; hence it is evident, that a sinking fund of one million operating on such a loan of twentyfive millions, will make a saving of nine millions of dollars to the States out of what will otherwise be paid on the same capital, on the plan of borrowing practised in our, and indeed in most other loan offices; or in other words would reduce the interest from six to little more than three and a half per cent, which is demonstrated in the following calculations.
5thly. Twentyfive millions of dollars may be computed in value equal to 5,625,000 sterling. Of this, let one million and a half, or 1,620,000 sterling be applied to the payment of debts contracted in Europe, contracted by the commissioners, for the discharge of which no particular mode has been stipulated and agreed upon, and for the establishing a bank or fund for other uses and benefit of the United States.
6thly. As the sum of 125,000 sterling will be equal to the public debts already contracted in Europe, except those to the Farmers-General and the house of Rodrique Hortalez & Co. there will remain, agreeable to the plan, one million and a half sterling, or $6,666,666-2/3 in the Congress" Bank in Europe, and four millions sterling, or $17,777,777-2/3, for the purpose of sinking the sum of fiftythree millions proposed.
7thly. The present rate of exchange is from five to six for one; it must happen that as bills are brought to market to a greater amount they will fall, but if it be considered that the ordinary demand of these States on Europe for goods exceeded four millions sterling annually in times of peace, that the demand at present and for two or three years to come, even if peace should take place immediately, must exceed the former usual demand, that though the cancelling and sinking of fiftythree millions of dollars will tend to appreciate the remainder in circulation, yet as there will still remain in circulation a greater nominal sum than the commerce of these States call for, the appreciation will not be repaid; and if it be further considered, that the merchants in the United States are at present dest.i.tute of their usual means of remittance, having neither ships, specie, nor produce on hand,--I say under these considerations it is improbable, if not impossible, consistent with the interest of individuals, that bills drawn on Europe for the sum of four millions sterling should be under three for one on an average.
8thly. Four millions sterling, or $17,777,777-2/3, at three for one, will amount to $53,333,333 here. Allowing $333,333 for the charge of drawing the bills, for other expenses and deficiencies unforeseen, and there will be, agreeable to the proposals in the plan, fiftythree millions of dollars of the Continental currency paid off by the sales of those bills.
The benefits resulting from this plan, if realized, are numerous, indisputable, and obvious. As the sum proposed to be drawn for, does not exceed the ordinary amount of importation before the war, it cannot be presumed that this plan can produce any ill effects on commerce, especially if the Congress should think it wise and prudent to drop the merchants themselves, and depend on individuals for their supplies. The capital difficulty is to obtain the loan. On this, as well as on the preceding plan, I will make a few observations after the following calculations already referred to.
FIRST CALCULATION.
| Produce of the | Total of the | Years.| sinking fund at | Debts paid at | EXPLANATION.
| the end of | the end of | | every year. | every year. | ------+-----------------+----------------+------------------------ 1 | 1,000,000 | 1,000,000 | The first column marks | 60,000 | | the years; the second 2 | 1,060,000 | 2,060,000 | the produce or amount | 63,600 | | of the sinking fund at 3 | 1,123,600 | 3,103,600 | the end of each year, | 67,416 | | the third shows how 4 | 1,191,016 | 4,374,616 | large a part of the | 71,461 | | capital has been paid 5 | 1,262,477 | 5,637,093 | off at the end of each | 75,788 | | year. The sum in the 6 | 1,338,265 | 6,975,358 | second column is found | 80,296 | | by adding to it 7 | 1,418,561 | 8,393,919 | annually the interest | 85,113 | | of that part of the 8 | 1,503,674 | 9,897,593 | capital paid off the | 90,220 | | preceding year, and the 9 | 1,593,894 | 11,491,487 | sum in the third by | 95,633 | | adding yearly the 10 | 1,689,527 | 13,181,014 | payments.
| 101,372 | | 11 | 1,790,899 | 14,971,913 | | 107,454 | | 12 | 1,898,353 | 16,870,266 | | 113,901 | | 13 | 2,012,254 | 18,882,520 | | 120,735 | | 14 | 2,132,989 | 21,015,509 | | 127,979 | | 15 | 2,260,968 | 23,276,477 | | 135,658 | | 16 | 2,396,626 | 25,673,103 | | | | | Princ.i.p.al Loan | 25,000,000 | | Surplus | 673,103 |
SECOND CALCULATION.
$2,500,000 annually collected and paid for sixteen years, amount to (the whole sum paid) 40,000,000
But the surplus of $673,103 deducted, leaves $39,326,897, the net sum applied to sink a princ.i.p.al of $25,000,000, and the interest for sixteen years, 673,103 ---------- 39,326,897
The annual interest of $25,000,000 at six per cent is 1,500,000, which at simple interest in sixteen years is 24,000,000, 24,000,000 Add the princ.i.p.al, 25,000,000 ---------- 49,000,000 Bring down 39,326,897 ---------- Surplus, 9,673,103
By these calculations it is clearly demonstrated,
First, that a certain net annual revenue of two millions and a half of dollars is sufficient for sinking the loan proposed of 25,000,000 in sixteen years, and to leave a surplus of $673,103 after discharging both princ.i.p.al and interest. In the second place, that by this plan the public will save the sum of $9,673,103 more than if the same sum is borrowed in the usual way of simple interest; or in other words, the money on this plan will be borrowed at 3-1/2 per cent interest nearest, a sum well deserving the attention of the public at this, and at every other time, and it is for that purpose the foregoing plan and calculations are submitted.
The only difficulties, that can possibly occur in the carrying this plan and every part of it into execution, are in the establishing such a fund, as will be certain for raising the two millions and a half of dollars annually, and in the next place in procuring the loan. The first may be obviated with greater ease and certainty than the second.
It cannot in justice be concealed, that the loan cannot be obtained with the same ease now as it might have been six or seven months past, nor that the longer it is delayed, the greater the difficulty will be.