Morris, as we have seen, declared in 1782 that the people were quite able to pay taxes, but had persuaded themselves of their poverty. All through the critical years after the peace, this outcry against taxes and this lament over poverty continued, and yet there seems to have been little excuse for it. Some tribulation there was, but that the country was forlorn, destitute, and poverty-stricken is far from the truth.
When the Revolution began, it brought at the outset a necessity for industrial and chiefly for commercial readjustment. The trade of New England was, of course, badly deranged. Men were thrown out of employment, and property was destroyed. The New England merchants and sailors, however, did not stand about in idleness waiting for the skies to clear. Some of those whose living had been made from the sea moved off into the forest to begin life anew on the frontier; the capital and labor of the people "flowed back from the coasts towards the interior of the country, which has profited rapidly by the reflux." But the fishermen and sailors were not altogether driven from the sea, for hostilities had scarcely commenced when it was seen that war had its chances for gain no less than peace. Privateering was an exciting and lucrative calling, full of interest for the seaman and of fascination for the vessel-owner. Fast-sailing ships were fitted out in the New England ports, and the Yankee skippers soon showed aptitude for the new trade. In the year 1776, it is said, three hundred and forty-two English merchantmen were captured by American privateers; in the course of the war, Boston alone commissioned three hundred and sixty-five vessels,' and to Salem came as many as four hundred and forty-five prizes. Thus, many of the New England seamen and vessel-owners found new, interesting, and lucrative employment which brought money and supplies into the country. An illustrative experience is that of Elias Hasket Derby, who at the outbreak of hostilities owned a small fleet with which he had been carrying on a profitable trade. Seeing his business broken up and ruin staring him in the face, he did not spend much time in repining, but fitted out his ships as privateers. The end of the war found him rich and prosperous.'
But after the war was over, what were the privateersmen to do? How were the owners to use their ships or employ their capital? Evidently, it was necessary to pause and take breath, and there was doubtless a short time when the trade of New England was dull if not stagnant. The whale-fisheries were ruined by the war, and it would take years to build them up to their old place; the cod-fisheries, too, were in bad condition. The whole situation was now altered, for the tradesmen could not at once fall back into the normal methods of peace, and, moreover, the conditions prevailing before the war no longer existed. England was no longer the guardian of American commerce; her old acts of navigation and her old commercial policy, under which, however loud the complaint, American trade had in one manner or another grown tremendously, were now the acts and the policy of a rival nation.
In former years the New-Englanders had carried rum and some other commodities to the British possessions at the north, but by an act passed in 1784, the commerce with Newfoundland was almost entirely prohibited. They had also sent large quantities of oil to London, had sold their ships, built of New England lumber, to pay the debts of their merchants, and had carried on a trade with the West Indies. Soon after the war, the king was authorized by Parliament to issue orders for the regulation of the American trade; and at different times orders in council were issued, which were on the whole fairly liberal and did not by any means apply the old navigation laws in their full vigor. The trade in American ships with the British West Indies was, however, practically prohibited, and England, desirous of encouraging her own whale-fishery, did not permit the importation of American oil. As a result of these regulations, the American shipping interests suffered much.
The Americans, with all their adaptability, insisted on following, when possible, the old lines of trade, and especially the old direct trade with England, just as they had done before the war in accordance with the navigation laws about which there had been so much complaint. They insisted on buying in British markets, and they did not properly develop their trade with the other countries of Europe. But even the direct trade with England was naturally less than before the war, and the balance was, of course, much in England's favor. Because of the retention of the frontier posts in British hands — for these were not given up at the close of the war — a large portion of the fur-trade, which had brought in considerable profit, was confined to the British companies and merchants.
All this affected chiefly the New England carrying trade, and points to a derangement of the old conditions and a need for adjustment. But the South, too, was suffering in a measure; it had recently been in the hands of the enemy and was much torn by civil strife; many thousands of slaves had been carried away by the British. The life of the plantation was therefore considerably disturbed, and the conditions necessitated or seemed to necessitate the introduction of more slaves; time was needed to get new supplies, "to rebuild their houses, fences, barns, etc., . . . and to repair the other ravages of the war." The exportation, therefore, of southern products diminished in amount and value in the first few years after the war. The decrease in shipbuilding was a discouraging sign of the general situation. throughout the country.
Of course, it took time for commerce to find new outlets and for business to adapt itself to the close competition and careful bargaining of ordinary times after the excitement and risk of war. Some things the merchants of the north soon proceeded to do; they once again adjusted themselves to facts, not without loud outcries and not without ultimate profit. Ere long, the hardy privateersman entered lustily into foreign trade; for the privateering, after all, was but an interlude, a passing stage, between the great negro and rum trade of the earlier days and the European and Oriental traffic that rapidly grew in importance in the first decade after the war. In February 1784, the Empress of China sailed from New York for the Far East, and the next year, the enterprising Derby sent out The Grand Turk for the Isle of France and Canton. With continental Europe, a profitable trade was springing up. Sixty American vessels entered the port of Lisbon in 1785 from American and foreign ports, and only seventy-seven European vessels from the same ports; and with France and some of the other continental countries, the traffic was considerable. In this way and in others, the people were finding new industrial organization, making good such losses as they had suffered in the war, and reaching out for a new prosperity, which could only come in its fullness, however, when the political system gave assurance of protection and opportunity.
At the end of the war, in some portions of the country, if not in all, there was no dearth of money. Probably never throughout the course of colonial history had there been so much specie as circulated in the country immediately after the withdrawal of the English troops. For it must be remembered that during eight years and more the English exchequer had been sending its sovereigns to America, that France had freely lent her gold, that the American farmer and merchant had received the bright guineas and louts d'or of the foreign armies without even the appearance of hesitation. When we remember the merry winter that Howe spent at British expense in the "rebel capital," we know how some specie got into circulation in the states. Some of this money left the country soon after the peace, for there was an enormous influx of European goods; markets were glutted and merchants cried aloud for buyers. It has been estimated that in the three years succeeding the war, at least £1,260,000 in coin went to England. But despite the rising fear of paper money, which of course tied knots in the purse-strings of those who had good money, and notwithstanding all sorts of obnoxious laws that threatened the creditor with loss, commerce and industry were by no means lifeless.
To know, therefore, just what the situation was in 1785 or 1786 is difficult; but probably we are justified in saying that commerce had grown in vigor and was ready to enter upon a course of great activity, if it could be reasonably safe from the harassing perils of paper money and the annoyance of tender-laws, and could rely on the protection of a good government that could pass proper regulations for trade and form respectable treaties with foreign goverrments. Though the trade, especially of New England, was badly deranged, the commerce and industry of the country were by no means in a hopeless condition. Everywhere were indications of improvement, even if in some places the ravages of war had not been overcome. The main danger to commerce, and the cause of possible disaster, was the paper-money craze, of which we shall speak in another chapter. Trouble, confusion, and lament there were, and for complaint there was some reason; but, if we believe the testimony of many persons of insight, there was not poverty or destitution.
"Population is increasing," Charles Thompson reported to Jefferson, "new houses building, new lands clearing, new settlements forming, and new manufactures establishing with a rapidity beyond conception, and what is more, the people are well clad, well fed, and well housed. Yet I will not say that all are contented. The merchants are complaining that trade is dull, the farmers that wheat and other produce are falling, the landlords that rent is lowering, the speculists and extravagant that they are compelled to pay their debts, and the idle and the vain that they cannot live at others' cost and gratify their pride with articles of luxury."
To expect to borrow money abroad without making any effort, even to provide means of paying interest, was absurd, and the failure of the five-percent impost scheme, of course, made the prospect of relief darker. In April 1783, soon after Morris declared that American credit was hopelessly at an end, Congress made another effort to procure a steady means of income "as indispensibly necessary to the restoration of public credit." The states were requested to alter the Articles of Confederation so as to invest Congress for twenty-five years with the power to levy for federal purposes a small duty on imported goods, with the express understanding that the income should be used only for the discharge of the principal and interest of the debt; they were also requested to establish for a term of twenty-five years and to appropriate to the discharge of the ptiblic debt some substantial and effectual revenue, according to such plans as they might deem convenient. Each was asked to pay in this manner its proper proportion of $1,500,000 annually. With these requests was a recommendation that the section of the Articles of Confederation providing that quotas of taxes for federal purposes be in proportion to the value of lands within their respective limits should be altered, so that in the future the taxes should be applied by the states in proportion to the whole number of free inhabitants and three-fifths of all other persons, except Indians not taxed.
Despite all efforts and though the need was sore, the recommendations were not followed by the states. Each watched the other warily, fearing that its neighbor might win some commercial advantage. Three years after the measure was laid before the states for adoption, seven states — New Hampshire, Massachusetts, Connecticut, New Jersey, Virginia, North Carolina, and South Carolina — had granted the impost in such a manner and under such restrictions that if the other states had made similar grants, the plan of the impost might immediately have gone into operation. But Pennsylvania and Delaware had consented to the measure with the proviso that it should not go into effect until all of the states passed laws in conformity with the whole revenue system proposed. Only two of the states — Delaware and North Carolina — acceded to the system in all its parts; and four — Rhode Island, New York, Maryland, and Georgia — did not decide in favor of any part of the system. Assured that no money could otherwise be secured, Congress appealed again to the states as late as 1786, urging them to pass laws for the carrying out of the plan and pleading with them for authority to collect the impost.
The financial condition of the Confederation was, by this time, deplorable. From requisitions $2,457,-987.25 were received by Congress from November i, 1781, to January 1, 1786; for the last fourteen months of this period the income was but $432,897.81, which was at the rate of $371,052 per year, a sum short of what was necessary "for the bare maintenance of the federal government on the most economical establishment, and in time of profound peace." Unless the country was to be rated as hopelessly bankrupt from sheer unwillingness to pay taxes, something had to be done, inasmuch as $577,000 was due for interest on foreign loans before June 1, 1787; from that time forward, for some years, interest and capital due on the foreign debt alone amounted to over $1,000,000 annually. The total debt, foreign and domestic, which amounted in 1784 to over $35,000,000, was growing by the addition of unpaid interest, which of course rolled up rapidly; the arrears of interest on the domestic debt increased from $3,109,000 in 1784 to $11,493,858 before the end of 1789, while the principal alone of the foreign debt increased from $7,830,517 to $10,098,707 in the same time. Conditions would have been even worse without the aid of the Dutch, who were of constant assistance, lending the struggling Congress in these five years $2,296,000, and thus in a measure supporting the public credit of America in Europe.
Meanwhile, the income from taxation was scarcely sufficient to pay the running expenses of the government, while Congress was doing little more than performing the functions of a stately debating society. Money was needed for everything — to pay the servants of the government at home and its representatives abroad, to secure immunity from attack from the Barbary pirates on the ocean and from the Indians on the frontier, to save the country from the shame of defaulting on interest. "The crisis has arrived," said a committee of Congress, in February, 1786, "when the people of these United States, by whose will, and for whose benefit the federal government was instituted, must decide whether they will support their rank as a nation, by maintaining the public faith at home and abroad; or whether, for want of a timely exertion in establishing a general revenue, and thereby giving strength to the confederacy, they will hazard not only the existence of the union, but of those great and invaluable privileges for which they have so arduously and so honorably contended."
The penury of the government was so patent that men listened to this eloquent appeal. "Oh! My country!" exclaimed Jeremiah Belknap, of New Hampshire. "To what an alarming situation are we reduced, that Congress must say to us, as Joshua did to Israel, Behold, I set before you life and death." We must be drove to our duty, and be taught by briars and thorns, as Gideon taught the men of Succoth." The states were at last moved by the appeal of Congress, and all but one of those that had not acted granted the impost before the end of 1786. Governor Clinton, of New York, however, politely refused to do anything, declaring that he did not have the power to summon the legislature except on extraordinary occasions.
In New York, as in Virginia, there was a strong party opposed to the growth of the national authority and exceedingly jealous for the power of the state. Clinton was the leader of this party, and opposed to him was Hamilton, who worked unceasingly for a broader appreciation of the duties and responsibilities of Congress. Hamilton prepared a petition, which was widely circulated, asking for the adoption of the revenue scheme and declaring that all the motives of public honor and reputation demanded that New York yield. The petition had no effect, and when the next year he took his place in the legislature of the state, his eloquent speeches won him laurels but not converts; the opposition in the legislature, without replying to Hamilton's argument, simply voted against him, which led to the remark that the "impost was strangled by a hand of mutes." Much labor must yet be done by Hamilton, Schuyler, and Jay before New York could be brought to take a liberal view of continental politics, or indeed to do her plain duty.
The commerce of the country, though by no means insignificant, was, in the meantime, as we have already seen, in considerable confusion because of the heavy importations of foreign goods. Men were now feeling the pressure of debt, and the restraints put on American trade by the British Orders in Council were irksome in the extreme. The merchants and vessel-owners of the north chafed at England's restrictions, which limited the market for American oils and cut off our communication with the West Indies. As early as April 30, 1784, Congress passed resolutions declaring it advisable to meet the restrictions of England with similar restrictions, and requesting the right for fifteen years to pass a navigation act, and thus prohibit the importation or exportation of any goods in ships belonging to or navigated by subjects of any power with whom the United States should not have a treaty of commerce. Authority was also asked to prohibit, during the same time, the subjects of any foreign state, unless authorized by treaty, from bringing into the United States merchandise which was not the produce or manufacture of the dominions of their sovereign.
There was considerable excitement and interest in this matter, especially in the north. The merchants of Boston, much wrought up over the subject and naturally resorting to pre-Revolutionary methods, entered into an agreement not to import English goods. The Boston men felt strongly that something must be done to invest Congress with powers of retaliation, for it was plain enough that a navigation law passed by Massachusetts alone would simply drive commerce to other ports. So strongly did Massachusetts feel the need for some general regulation that the general court in July 1785 passed resolutions favoring a convention to revise the Articles of Confederation.
But, on the whole, the request of Congress for power to pass a navigation act met with a cold reception in the states. They acted with great deliberation, as if some foreign power rather than their own representatives were asking for authority. Two and a half years after Congress had asked for the power, all of the states had, in one form or another, acted in the matter, but some of them had burdened their grants with so many qualifications and conditions that Congress was compelled once again to issue an appeal (October 26, 1786). On the whole, the middle states favored the measure, the eastern states were anxious to have it adopted, while in the southern states, there was much difference of opinion. The planters feared that the authority would be used by Congress for the benefit of northern commerce and to the injury of southern interests.
Refusing to grant power to Congress, the states could not themselves act in unison. Some of them had passed their own acts in regulation of commerce, but such independent measures were ineffectual. "The States are every day giving proofs," said Madison, "that separate regulations are more likely to set them by the ears, than to attain the common object. In fact, their laws were confusing and conflicting. There seemed at times to be little desire to reach a common basis for the regulation of commerce or the levying of imposts. Too often, legislation was shaped rather by jealousy and the hope to win trade away from a neighboring state than by principles of wise policy or foresight.
In the meantime, Congress could do little or nothing. A good part of the time, not enough states were represented to allow action of any kind. On only three days between October 1785 and the following April, there were nine states on the floor. Resolutions and letters sent to the state governments were quite ineffective. The next year (1786-1787), there was not a quorum for months. "The civil list begins to clamour," said King, in April, 1786,' — there is no money to pay them. . . . The handful of troops over the Ohio are mutinous and desert because they are unpaid. The money borrowed in Europe is exhausted, and this very day our Foreign Ministers have it not in their power to receive their salaries for their support."
Evidently, not much longer could the futile Confederation hang together. The ablest men, looking about them and seeing the danger, realized that the crisis was near. "Even respectable characters" were talking "without horror" of the monarchy. Jay, much disturbed by the spirit of faction, the greed for money, and the disregard of public duty, was uneasy and apprehensive, more so than during the war. Even those who complained of industrial derangement were willing to say that the trouble was largely with the people, whose habits of thrift and economy had been disturbed by the war, and with the incompetent Congress which had ''scarcely the... appearance of a Government." But the times were teaching their lessons. "Experience has taught us," said Washington, "that men will not adopt and carry into execution measures the best calculated for their own good, without the intervention of a coercive power. I do not conceive we can exist long as a nation without having lodged somewhere a power, which will pervade the whole Union in as energetic a manner as the authority of the State governments extends over the several States."