directors and their accomplices. In the war of 1755, our State availed itself of this fund by issuing a paper money, bottomed on a specific tax for its redemption, and, to insure its credit, bearing an interest of five per cent. Within a very short time, not a bill of this emission was to be found in circulation. It was locked up in the chests of executors, guardians, widows, farmers, &c. We then issued bills bottomed on a redeeming tax, but bearing no interest. These were readily received, and never depreciated a single farthing. In the revolutionary war, the old Congress and the States issued bills without interest, and without tax. They occupied the channels of circulation very freely, till those channels were overflowed by an excess beyond all the calls of circulation. But although we have so improvidently suffered the field of circulating medium to be filched from us by private individuals, yet I think we may recover it in part, and even in the whole, if the States will co-operate with us. If treasury bills are emitted on a tax appropriated for their redemption in fifteen years, and (to insure preference in the first moments of competition) bearing an interest of six per cent. there is no one who would not take them in preference to the bank paper now afloat, on a principle of patriotism as well as interest; and they would be withdrawn from circulation into private hoards to a considerable amount. Their credit once established, others might be emitted, bottomed also on a tax, but not bearing interest; and if ever their credit faltered, open public loans, on which these bills alone should be received as specie. These, operating as a sinking fund, would reduce the quantity in circulation, so as to maintain that in an equilibrium with specie. It is not easy to estimate the obstacles which, in the beginning, we should encounter in ousting the banks from their possession of the circulation; but a steady and judicious alternation of emissions and loans, would reduce them in time. But while this is going on, another measure should be pressed, to recover ultimately our right to the circulation. The States should be applied to, to transfer the right of issuing circulating paper to Congress exclusively, in perpetuum, if possible, but during the war at least, with a saving of charter rights. I believe that every State west and South of Connecticut river, except Delaware, would immediately do it; and the others would follow in time. Congress would, of course, begin by obliging unchartered banks to wind up their affairs within a short time, and the others as their charters expired, forbidding the subsequent circulation of their paper. This they would supply with their own, bottomed, every emission, on an adequate tax, and bearing or not bearing interest, as the state of the public pulse should indicate. Even in the non-complying States, these bills would make their way, and supplant the unfunded paper of their banks, by their solidity, by the universality of their currency, and by their receivability for customs and taxes. It would be in their power, too, to curtail those banks to the amount of their actual specie, by gathering up their paper, and running it constantly on them. The national paper might thus take place even in the non-complying States. In this way, I am not without a hope, that this great, this sole resource for loans in an agricultural country, might yet be recovered for the use of the nation during war; and, if obtained in perpetuum, it would always be sufficient to carry us through any war; provided, that in the interval between war and war, all the outstanding paper should be called in, coin be permitted to flow in again, and to hold the field of circulation until another war should require its yielding place again to the national medium.
But it will be asked, are we to have no banks? Are merchants and others to be deprived of the resource of short accommodations, found so convenient? I answer, let us have banks; but let them be such as are alone to be found in any country on earth, except Great Britain. There is not a bank of discount on the continent of Europe, (at least there was not one when I was there,) which offers anything but cash in exchange for discounted bills. No one has a natural right to the trade of a money lender, but he who has the money to lend. Let those then among us, who have a monied capital, and who prefer employing it in loans rather than otherwise, set up banks, and give cash or national bills for the notes they discount. Perhaps, to encourage them, a larger interest than is legal in the other cases might be allowed them, on the condition of their lending for short periods only. It is from Great Britain we copy the idea of giving paper in exchange for discounted bills; and while we have derived from that country some good principles of government and legislation, we unfortunately run into the most servile imitation of all her practices, ruinous as they prove to her, and with the gulph yawning before us into which these very practices are precipitating her. The unlimited emission of bank paper has banished all her specie, and is now, by a depreciation acknowledged by her own statesmen, carrying her rapidly to bankruptcy, as it did France, as it did us, and will do us again, and every country permitting paper to be circulated, other than that by public authority, rigorously limited to the just measure for circulation. Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us. He who lent his money to the public or to an individual, before the institution of the United States Bank, twenty years ago, when wheat was well sold at a dollar the bushel, and receives now his nominal sum when it sells at two dollars, is cheated of half his fortune; and by whom? By the banks, which, since that, have thrown into circulation ten dollars of their nominal money where was one at that time.
Reflect, if you please, on these ideas, and use them or not as they appear to merit. They comfort me in the belief, that they point out a resource ample enough, without overwhelming war taxes, for the expense of the war, and possibly still recoverable; and that they hold up to all future time a resource within ourselves, ever at the command of government, and competent to any wars into which we may be forced. Nor is it a slight object to equalize taxes through peace and war.
Ever affectionately yours
TO JOHN ADAMS
Ιδαν ες πολυδενδρον ανηρ ὑλητομος ελθων
Παπταινει, παρεοντος αδην, ποθεν αρξεται εργου
Τι πρατον καταλεξω; επει παρα μυρια ειπην.
And I too, my dear Sir, like the wood-cutter of Ida, should doubt where to begin, were I to enter the forest of opinions, discussions, and contentions which have occurred in our day. I should say with Theocritus, Τι πρατον καταλεξω; επει παρα μυρια ειπην. But I shall not do it. The summum bonum with me is now truly epicurian, ease of body and tranquillity of mind; and to these I wish to consign my remaining days. Men have differed in opinion, and been divided into parties by these opinions, from the first origin of societies, and in all governments where they have been permitted freely to think and to speak. The same political parties which now agitate the United States, have existed through all time. Whether the power of the people or that of the αριστοι should prevail, were questions which kept the States of Greece and Rome in eternal convulsions, as they now schismatize every people whose minds and mouths are not shut up by the gag of a despot. And in fact, the terms of whig and tory belong to natural as well as to civil history. They denote the temper and constitution of mind of different individuals. To come to our own country, and to the times when you and I became first acquainted, we well remember the violent parties which agitated the old Congress, and their bitter contests. There you and I were together, and the Jays, and the Dickinsons, and other anti-independents, were arrayed against us. They cherished the monarchy of England, and we the rights of our countrymen. When our present government was in the mew, passing from Confederation to Union, how bitter was the schism between the Feds and Antis. Here you and I were together again. For although, for a moment, separated by the Atlantic from the scene of action, I favored the opinion that nine States should confirm the constitution, in order to secure it, and the others hold off until certain amendments, deemed favorable to freedom, should be made. I rallied in the first instant to the wiser proposition of Massachusetts, that all should confirm, and then all instruct their delegates to urge those amendments. The amendments were made, and all were reconciled to the government. But as soon as it was put into motion, the line of division was again drawn. We broke into two parties, each wishing to give the government a different direction; the one to strengthen the most popular branch, the other the more permanent branches, and to extend their permanence.