The Glorious Cause: The American Revolution, 1763-1789 (129 page)

To the north, New England made slower going of recovery. The cod, whale oil, and the ships which Yankees had carried or sailed for English markets, especially in the West Indies, were also adversely affected by the war. And, of course, gaining entrance into British West Indies ports could not be done. By 1786 the cod fishers had brought their sales to about 80 percent of prewar quantities. They did so by pushing their ships into the French West Indies and into Spanish and Portuguese harbors.
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In the southern states recovery proceeded with difficulty. The rice country lost the old British bounty when America declared independence. Indigo production fell after the war -- and Carolina planters generally

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struggled. Tobacco in the Chesapeake now could be shipped directly to the European continent -- and was. Less Virginia tobacco was shipped to Europe in the 1780s than in the years just before the war, but full recovery was not far off. And the effort to grow wheat, corn, and flaxseed that began a generation or more before the Revolution continued.
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On the whole, overseas trade regained life with remarkable ease. To be sure, the exclusion from the British West Indies inhibited commerce, but elsewhere American ships found themselves welcome. Though the British excluded the Americans from the West Indies, they dealt with them on the same basis in home ports as they did those from the colonies. American shippers paid the same duties and received the same drawbacks as colonials, for example.

In this climate, prices obtained for American commodities remained high in the 1780s with tobacco and wheat doing especially well. Those American states exporting these products profited, of course, but New England and South Carolina which had to import grains found paying for it at world levels to be difficult.

Prices fell in most of the country, responding to the unfavorable balance of trade and to European levels. Public debt remained high as both Congress and the states struggled to deal with it. The debt and the flow of specie outside the country to meet the trade deficit helped to depress trade and to slow recovery.
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To an objective observer, economic recovery in the 1780s might have seemed promising, even impressive. At the time, however, the economic condition of the nation looked bleak, with prices depressed, public and private indebtedness heavy, and trade regulation chaotic. Americans understandably judged their prospects by short-term conditions, the circumstances that could be felt at the moment. Long-term comparisons were not available to them -- and had they been, probably would not have lessened the uneasiness they felt.

Whether all Americans felt unease about the economy in the 1780s cannot be known. Nor is there any way to determine just how widespread the mood was that something had gone wrong with the Revolution. That there was anxiety about public policy is clear, and the expression of this mood did not confine itself to Congress or state legislatures.
Newspapers throughout the United States published letters and essays

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virtually every week about grim conditions and the dangers they brought to virtue and republicanism. Ministers took up these themes on the Sabbath, and public-spirited citizen-writers produced pamphlets and poems on the American condition. And private correspondence suggests that the condition of the republic preoccupied many men who did not resort to the public prints to declare their opinions about it.
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This anxiety, which was perhaps fairly widespread, focused on Congress. Indeed dissatisfaction with Congress and its works -- or lack of works -- shaped a movement for constitutional reform in the 1780s.

The decline of Congress, a development which saw it gradually lose authority and public confidence, actually began well before the end of the war. As soon as the war started Congress found itself searching for ways to raise an army and keep it in being. Within a year the problem took on a form familiar to virtually all governments engaged in war-how money was to be raised. Congress of course resorted to currency finance, a technique much practiced in the long period before the Revolution. Before the Revolution, governments had printed money as they needed it and used it to meet their expenses. They had not proceeded without plan, however, or heedless of the obvious consequences of unrestrained printing presses. Rather they had retained their people's support by assigning taxes for the redemption of the currency at the time it was issued. This relationship of paper money and taxes specified for its redemption gave everyone confidence in the money, and it was ordinarily made legal tender not only for the payment of taxes but also for private debts. If the people of a colony lost confidence that their government would, or could, collect the taxes, the currency depreciated.
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The people of America lost confidence in Congress's ability to collect taxes fairly early in the Revolution. Congress issued six million dollars in paper money in 1775, a total which rose to $25 million by the end of the next year. Altogether, Congress put out around $200 million during the Revolution. Since it lacked the power to tax, it had to depend upon the states to retire the money. The states did collect the currency as payment for taxes, but they did not take it out of circulation. They needed it too badly for that, and consequently as fast as they collected it they spent it themselves.
To make matters worse, they issued their own currency.
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Not surprisingly, depreciation began fairly early in 1776 -- in part because so much money had been emitted. Intangibles -- most importantly the public's faith that the war could be won -- also affected the value of money. When, in November, Howe seemed about ready to push Washington out of Pennsylvania as well as New Jersey, the public found it difficult to believe that any American government would be able to' redeem the debt. Nor did Congress'encourage belief in itself when in 1778 it declared some $41 million it had emitted counterfeit -- and offered holders the opportunity to exchange notes of this issue by purchasing loan certificates. This stratagem was really a means of compelling people to lend money to their government. People who held the "counterfeit" notes evaded this requirement, however, at considerable cost to their regard for Congress.
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Congress struck the worst blow against itself in late 1779 when it attempted to act responsibly. In September of that year it decided that when the total currency in circulation reached $200 million, it would stop all further emissions. At the time of this decision about $160 million bad been issued; with the need for money almost desperate, the cutoff of emissions was only a few weeks in the future.
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The exhaustion of Congress evoked the demands on the states that followed -- for specific supplies late in 1779 and larger requisitions of commodities early in the next year. Soon after, Congress added to state burdens the pay of Continental soldiers, with each state expected to pay its troops in regular service. The problem of the money supply remained, and Congress turned to a brutal resort to solve it. In March 1780 it virtually repudiated all its currency in circulation by revaluing it at one-fortieth of its face value. It tied repudiation to an emission of new currency and placed on the states the actual work of collecting the old and issuing the new. Public finance -- and considerable power -had thus shifted to the states.
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As harsh as some of these measures appeared, they had a chance of working, and they might have forestalled much of further inflation and the decline in public morale. They did not work as they were intended to work, however. Not all these measures were compatible with one another, and in fact the way Congress and the states obtained the supplies to feed and otherwise sustain the army ruined the plan to retire the $200 million in old currency.
From 1779 on both the state officials

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and Continental commissaries impressed food and clothing for the army. When they took supplies they gave certificates promising payment. Since the certificates bore no interest their holders looked for ways of ridding themselves of them in the states where they were received in payment of taxes. Meanwhile the old currency remained in circulation and was only slowly withdrawn. By June 1781 a little more than $30 million had been collected by the states.
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Congress lost power to the states in still another fashion: through servicing its debts. When Rhode Island's rejection of the impost in 1781 destroyed hope that national obligations might be met through a uniform duty on imports, Congress resolved to try again. It did two years later with a more complicated proposal that it collect the impost and certain other duties as well. Several states approved at once but the necessary unanimity eluded Congress once more. While it waited, Congress urged the states to come forward with requisitions. Some did, though rarely with all that was requested and never with the amount in specie that Congress rashly thought it might collect.

Requisitions failed, and between October 1782 and September 1785 Congress made no new requests but waited -- usually vainly -- for the states to honor old ones. After 1785 it stopped paying interest on' its debt to France, and in 1787 it proved unable to make all the payments on the principal. American creditors could not be paid by Congress either; nor could they be put off. They clamored for the interest owed them, and sometimes for the principal. They did not content themselves with appeals to Congress but pleaded their case to the state legislatures. As early as 1782 the states had responded with payments of interest and principal. Pennsylvania set the pattern in that year by issuing certificates of interest which were receivable for taxes. Others soon followed. And all took action to reduce their own debts. Virginia, for example, applied over $3 million collected between 1782 and 1785 toward its debt.
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If any possibility existed that Congress might reclaim control of public finance, it lay with the impost. By 1786 nine states had approved; several with severe conditions. Unwilling to sit on its hands while the states played with the impost and assumed real power in America, Congress tried a fresh expedient. In 1784 it had authorized the issue of indents, as certificates of interest were called, which states might use to pay