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Yaper

government, congress, national, loans, proved and financial

YAPER.

Congress also sought fiscal aid by making requisitions on ,the different States, by borrow ing both at home and abroad and by attempts to secure national taxation. Requisitions were made both in specie and in specific supplies; the yield of the former was less than $6,000,000, and the demand for specific supplies in the form of corn, beef, hay, etc., proved not only wasteful but ineffective. In order to borrow money, loan offices were established in the sev eral States, at which indented certificates were sold, bearing interest varying from 4 to 6 per cent. In all $63,000,000 was thus borrowed, having a specie value of $7,600,000, according to the scale of depreciation adopted by Con gress in 1780. After 1782 Congress was unable to pay the interest and, therefore, issued to the holders of certificates indents which became current in the payment of State taxes and were receivable by Congress in the payment of requisitions made upon the States. Foreign loans, 1777-83, were obtained as follows: France $6,352,000, Spain $174,000, Holland $1,304,000. Small loans were obtained in France as early as 1777 and these proved of great service in the purchase of military supplies and in the payment of the interest of the domestic loans. Beginning with 1782 bankers' loans were placed in Holland, and fortunately these were continued after peace was restored until the new government was established in 1789. During the years 1784-89, the Dutch loans amounted to $2,296,000. The efforts to secure a national tax were unsuccessful. The Articles of Confederation, which went into effect in 1781, practically granted no financial power to the new government. It was pro vided that all expenses for the common de fense or general welfare should be deferred out of a common treasury supplied by the several States in proportion to the value of land and improvements; and the taxes were to be levied under the direction of the State au thorities. In 1781 Congress recommended a duty of 5 per cent on imports, but unanimous consent could not be obtained from the States; in 1783 a more elaborate tariff was proposed.

but again the approval of the States could not be secured.

The administrative management of the finances by the Continental Congress well illus trates the jealous attitude of a democracy de sirous of maintaining its liberties and fearing all forms of centralized authority. At first there were two treasurers, then a committee of 13 Congressional delegates, followed by a treasury board which handled all public moneys. Finally in 1781 the fiscal machinery was con centrated, and Robert Morris was chosen super intendent of finance. By the use of his per sonal credit in borrowing funds, he introduced new vigor into the government, but his efforts to create a national system of revenue were fruitless. Through his advice the Bank of North America was established and during the years 1782-83 this proved of aid in making temporary loans to the government.

In 1784 the indebtedness of the national government, apart from the outstanding bills of credit, was $39,000,000, bearing an annual inter est charge of $1,815,000. This burden together with the ordinary expenses of government proved too much, and the national treasury rapidly drifted toward complete bankruptcy. In 1787 a national convention was held to frame a constitution which should endow the govern ment with larger financial powers. The new Constitution gave to Congress the power to lay and collect taxes, and denied to the States the right to lay duties on imports or exports except what might be absolutely necessary for execut ing its inspection laws. This gave to the gov ernment the power it had so sadly needed, and proved to be a firm support when the new goy, ernment went into operation in 1789. See UNITED STATES FINANCES (1789-1816).

Bolles, A. S., 'Financial History of the United States from 1774 to 1885' (4th ed., New York 1894-96) ; Bullock, C. J., 'Finances of the United States from 1775 to (Madison, Wis., 1895) ; Dewey, D. R., 'Financial History of the United States' (5th ed., New York 1915).