The independence of the United States had not been achieved except at very heavy cost. Not to dwell on the manifold calamities of the war—towns burned, the country ravaged, the frontiers attacked by the Indians, property plundered by the enemy or imprest for the public service, citizens called out to serve in the militia or drafted into the regular army, nakedness, disease, and sometimes hunger in the camp, the miseries of the hospitals, the horrors of the British prison ships—worse than all, the remorseless fury and rancorous vindictiveness of civil hatred; besides all this, the mere pecuniary cost of the war had imposed a very heavy burden, amounting to not much less than a hundred and seventy millions of dollars—a greater outlay, in proportion to the wealth of the country, than ten times as much would be at the present moment. Of this sum two-thirds had been expended by Congress, and the balance by the individual States. It had been raised in four ways: by taxes under the disguise of a depreciating currency; by taxes directly imposed; by borrowing; and by running in debt.

Of the two hundred millions issued by Congress in Continental bills of credit, eighty-eight millions, received into the State treasuries in payment of taxes at the rate of forty for one, had been replaced by bills of the "new tenor," to the amount of four millions four hundred thousand dollars, bearing interest at six per cent. Massachusetts, New Hampshire, and Rhode Island had thus taken up and redeemed their entire quota of the old paper. Connecticut, Delaware, the Carolinas, and Georgia had taken up none; the remaining States but a part of their quota. Besides the bills thus redeemed, near forty millions were in the Federal treasury. As to the outstanding seventy millions, there was no thought of redeeming or funding them at any higher rate than seventy-five or a hundred for one. Many of these bills were in the State treasuries, into which they had come in payment of taxes; but a large amount remained also in the hands of individuals.

The depreciation and subsequent repudiation of this paper had imposed a tax upon the country to the amount of perhaps seventy millions of specie dollars—a tax very unequal and unfair in its distribution, falling heaviest on the ignorant and helpless; the source in private business of numberless frauds, sanctioned, in fact, by the laws of the States, which had continued to make the bills a legal tender after they had fallen to a tenth, a twentieth, and even a fortieth part of their nominal value. But in what other way could Congress have realized anything like the same sum of money? How else could the war have been carried on at all?

Besides the Continental paper issued by Congress, all the States had put out bills of their own. In some States, as Massachusetts and Pennsylvania, these bills had been called in and funded at their nominal value. In others, especially at the South, they had been partially redeemed by the issue of land warrants. The remainder had shared the fate of the Continental money, being either suffered to fall dead in the hands of the holders, or being funded at an immense depreciation. No State had made such profuse issues as Virginia, and such of her bills as were not paid in for land warrants were finally funded at the rate of a thousand for one.

Besides the taxes thus indirectly imposed, very heavy direct taxes had been levied, especially toward the conclusion of the war. The amount raised by the States, whether through the medium of repudiated paper or taxes, it is impossible to ascertain with precision, but it probably did not exceed thirty millions of dollars. The remaining seventy millions of the expenses of the war still hung over the Confederacy in the shape of debt.

Congress had begun to borrow while the issue of paper was still going on; and after that issue stopt, to borrow and to run in debt became the chief Federal resources. A Federal debt had been thus contracted to the amount of some forty-four millions of dollars, of which about ten millions were due in Europe, principally to the French court. Franklin had signed contracts for the repayment of moneys advanced by France to the amount of thirty-four million livres, about seven million dollars. All the back interest was remitted; the reimbursement of the principal was to be made by instalments, to commence three years after peace. To this sum was to be added the small loan from Spain, the larger one from the French farmers-general, and so much of the Dutch loan as Adams had succeeded in getting subscribed. It was the produce of the subscription to this loan, amounting to about $700,000, which formed the resource of Morris for meeting the treasury notes in which the three months' pay had been advanced to the furloughed soldiers. That fund, however, was soon exhausted, and a considerable number of the bills drawn upon it were likely to come back protested; but, by paying an enormous premium, Adams succeeded in borrowing an additional amount of about $800,000, out of which the bills of Morris were met. The loan in Holland, formerly yielded to the solicitations of Laurens, formed a part of the French debt. It had been lent, in fact, to France for the benefit of the United States. The Federal debt, besides this amount due abroad, included eleven millions and a half, specie value, borrowed on loan-office certificates at home; six millions due to the army for deficiencies and depreciation of pay; five millions due to the officers for the commutation of their half pay for life; and about twelve millions more on unliquidated accounts, including, also, arrears of interest on the loan-office debt, of which but little had been paid since 1781, at which period the French Government had refused to advance any more money for that purpose. These unliquidated accounts included, also, certificates for supplies imprest for the army, and a mass of unsettled claims in the old currency, in all the departments, civil and military, which the officers appointed for that purpose were busy in reducing to specie value. Besides this Federal debt, each State was burdened with a particular debt of its own; the whole together amounting to some twenty-five or six millions of dollars, thus raising the total indebtedness of the country, State and Federal, to the beforementioned sum of seventy millions.

One large portion of the wealthy men of colonial times had been expatriated, and another part had been impoverished by the Revolution. In their place a new moneyed class had sprung up, especially in the Eastern States, men who had grown rich in the course of the war as sutlers, by privateering, by speculations in the fluctuating paper money, and by other operations not always of the most honorable kind. Large claims against their less fortunate neighbors had accumulated in the hands of these men, many of whom were disposed to press their legal rights to the utmost.

The fisheries, formerly a chief -resource of New England, broken up by the war, had not yet been reestablished. The farmers no longer found that market for their produce which the French, American, and British armies had furnished. There was an abundance of discontented persons more or less connected with the late army, deprived by the peace of their accustomed means of support, and without opportunity to engage in productive industry. The community, from these various causes, was fast becoming divided into two embittered factions of creditors and debtors.


1 From Hildreth's "History of the United States." Edition of 1852. Published by Harper & Brothers.
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Volumne IV
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© 2002, 2003 by Lynn Waterman