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10 Finances 1775-1789

notes, duties, colonies and congress

10. FINANCES (1775-1789). The fiscal systems of the American colonies were of a sim ple character; expenditures were small and taxes correspondingly light. Some of the local governments levied excise duties upon articles of luxury; nearly all placed tariff duties upon imports or exports; and the property tax was generally imposed. Illustrations of tariffs are found in tonnage duties, export duties on tobacco, import duties on slaves, and in a few colonies in more extensive tariff schedules on a considerable number of articles of merchandise. Public credit was almost unknown; there were no banks in the modern sense, and conse quently no influential agencies for making loans. When emergencies arose, necessitating extraordinary expenditures, the colonies gen erally resorted to emissions of bills of credit, or promissory treasury notes. In some instances these issues were so large that the notes depreciated in values, resulting in partial repudiation. When hostilities actually broke out in 1775, the Continental Congress found itself without resources and without power to collect reveune; funds, how ever, were needed at once, and there seemed to be no other recourse than to issue bills of credit. The agitation for separation from the mother-country was in a large meas ure inspired by the suspicion that England in tended to impose a system of taxation with out the consent of local bodies; and this suspicion of external taxation extended even to the collection of revenue by the colonies in common. Each commonwealth wished to

maintain its revenue powers without abatement even if the object was the good of the whole. Between June 1775 and November 1779 there were 40 emissions of notes with a total issue of In addition the States put out ,I)00,000. These issues rested upon the faith of Congress which repeatedly called upon the several States to provide means for redemption, but these pledges were not made good. The notes consequently depreciated in value, until in 1780 Congress recognized that its efforts were in vain, and made provision for the accept ance of paper in place of silver at the rate of 40 to I. Depreciation continued until the notes were regarded as worthless. The Fund ing Act of 1790 provided for the retirement of notes, still in circulation, at a rate of 100 to 1; at this date is was estimated that about 78,000,000 was still outstanding. Sec MONEY,