I this day acknowledged the Receipt of the Letter which you did 461me the honor to write me on the 21st. by mistake I dated my Letter on the twenty third.1

I have the Honor to agree with your Excellency in Opinion that it is the Intention of Congress to redeem all their paper Bills which are extant at an Exchange of Forty for one; by which means the two hundred Millions of Dollars which are out, will be reduced to about Five Millions.

I apprehend with your Excellency that it was necessary for the Congress to put themselves in a Condition to defray the public Expences, They found their Currency so depreciated, and so rapidly depreciating, that a further Emission sufficient to discharge the public Expences another Year; would have probably depreciated it to two hundred for one, perhaps would have so depreciated it that nobody would have taken it at any Rate, it was absolutely necessary then to stop emitting, yet it was necessary to have an Army to save their Citys from the Fire, and their Citizens from the Sword, that Army must he fed, cloathed, paid and armed, and other Expences must be defrayed. It was become necessary therefore at this time, to call in their paper, for there is no Nation that is able to carry on War by the Taxes which can be raised within the Year; but I am far from thinking that this Necessity was the Cause of their calling it in at a depreciated Value, because I am well convinced they would have called it in at a depreciated Value, if the British Fleet and Army had been withdrawn from the United States, and a general Peace had been concluded. My Reason for this Belief is the evident Injustice of calling it in at its nominal Value, a silver Dollar for a paper one. The Public has its Rights as well as Individuals theirs, and every Individual has his Share in the Rights of the public. Justice is due to the Body politic, as well as to the Possessor of the Bills, and to have paid off the Bills at their nominal Value would have wronged the Body politic of thirty nine Dollars in every Forty, as really as if Forty Dollars had been paid for one, at the first Emission in one thousand seven hundred and seventy five, when each Paper Dollar was worth and would fetch a silver one.

I beg Leave to ask your Excellency whether you judge that the Congress ought to pay Two hundred Millions of silver Dollars for the two hundred Millions of paper Dollars that are abroad? I presume your Excellency will not think that they ought, because I have never met with any Man in Europe or America that was of that Opinion. All agree that Congress ought to redeem it at a depreciated Value, the only Question then is, at what Depreciation. Shall it be at seventy 462five, Forty, Thirty, Twenty, Ten or five for One? After it is once admitted that it ought to be redeemed at a less Value than the nominal Value, the Question arises, at what Value? I answer there is no other Rule of Justice than the Current Value. The Value at which it generally passes from Man to Man. The Congress have set it at forty for one, and they are the best Judges of this, as they represent all parts of the Continent where the paper circulated.

I think there can be little need of Illustration, but two or three Examples may make my Meaning more obvious. A Farmer has now Four thousand Dollars for a pair of Oxen he sells to a Commissary to subsist the Army. When the money was issued in seventeen hundred and seventy five2 he would have been glad to have taken one hundred Dollars. A Labourer has now Twenty Dollars a day for his Work, five years ago he would have been rejoiced to have received half a Dollar, the same with the Artisan Merchant and all others, but those who have fixed Salaries and Money at Interest. Most of these Persons would be willing to take hard Money for his Work and his Produce, at the Rate he did six Years ago. Where is the Reason then, that Congress should pay them forty times as much as they take of their Neighbor in private Life?

The Amount of the ordinary Commerce external and internal of a Society may be computed at a fixed Sum, a certain Sum of Money is necessary to circulate among the Society, in order to carry on their Business. This precise Sum is discoverable by Calculation and reduceable to Certainty. You may emit paper or any other Currency for this purpose, until you reach this Rule, and it will not depreciate; after you exceed this Rule it will depreciate, and no power or Act of Legislation hitherto invented, can prevent it. In the Case of paper Money, if you go on emitting forever the whole Mass will be worth no more than that was which was emitted within the Rule. When the paper therefore comes to be redeemed, this is the only Rule of Justice for the Redemption of it. The Congress have fixed Five Millions for this Rule, wether this is mathematically exact, I am not able to say, whether it is a Million too little or too much, I know not, but they are the best Judges, and by the Account of the Money being seventy for one and Bills of Exchange fifty five for one, it looks as if Five Millions was too high a Sum rather than too small. It will be said that the Faith of Society ought to be sacred, and the Congress have pledged the public Faith for the Redemption of the Bills at the Value on the Face of them. I agree that the public Faith ought to be sacred, but who is it that hath violated this Faith? Is it not every Man who 463has demanded more paper Money for his Labour or Goods, than they were worth in Silver. The public Faith in the Sense these Words are here used, would require that Congress should make up to every Man who for five Years past has paid more in paper Money for any thing he purchased, than he would have had it for in Silver. The public Faith is no more pledged to the present possessor of the Bills, than it is to every Man thro' whose hands they have passed at a less Value than the nominal Value, so that according to this Doctrine, Congress would have two hundred Millions of Dollars to pay to the present possessors of the Bills, and to make up to every Man thro' whose hands they have passed, the Difference at which they passed between them and Silver.

It should be considered that every Man, whether a native or foreigner, that receives or pays this Money at a less Value than the nominal Value, breaks this Faith; for the social Compact being between the whole and every Individual, and between every Individual and the whole, every Individual, Native or Foreigner who uses this Paper, is as much bound by the public Faith to use it according to the Tenor of its Emission, as Congress are. And Congress has as good right to reproach every Individual who now demands more Paper for his Goods than Silver, with a breach of the public Faith, as he has to reproach the public or their Representatives.3 I must beg your Excellency's Excuse for calling your Attention a little longer to this head of public Faith, because I cannot rest easy while my Country is supposed to be guilty of a breach of their Faith, and in a Case where I am clear they have not been so, especially by your Excellency, whose good Opinion they and I value so much. This public Faith is in the Nature of a mutual Covenant, and he that would claim a Benefit under it, ought to be carefull in first fulfilling his part of it. When Congress issued their Bills declaring them in effect to be equal to Silver, they unquestionably intended they should be so consider'd, and that they should be received accordingly. The People, or Individuals, covenanted in effect to receive them at their nominal Value, and Congress in such Case agreed on their part to redeem them at the same Rate. This seems to be a fair and plain Construction of this Covenant, or public Faith, and none other I think can be made that will not degenerate into an unconscionable Contract, and so destroy itself. Can it be supposed that Congress ever intended, that if the time should come, when the Individuals refused to accept and receive their Bills at their nominal Value, and demanded and actually received them at a less Value, that in that Case the Individual should 464be entitled to demand and receive of the public, for those very Bills, Silver equal to their nominal Value? The Consideration is in Fact made by the public at the very Instant the Individual receives the Bills at a Discount, and there is a tacit and implied Agreement springing from the Principles of natural Justice or Equity, between the public and the Individual, that as the latter has not given to the former a Consideration equal to the nominal Value of the Bills, so in fact, the public shall not be held to pay the nominal Value in Silver to the Individual. Suppose it otherwise, and how will the Matter stand? The Public offers to an Individual a Bill whose nominal Value is for Example Forty Dollars, in lieu of Forty silver Dollars, the Individual says I esteem it of no more Value than one silver Dollar, and the public pays it him at that Value, yet he comes the next day when the Bill may be payable, and demands of the public Forty silver Dollars in Exchange for it, and why? because the Bill purports on the Face of it, to be equal to forty silver Dollars: The Answer is equally obvious with the Injustice of the demand. Upon the whole, as the Depreciation crept in gradually, and was unavoidable, all Reproaches of a breach of public Faith ought to be laid aside, and the only proper Enquiry now really is, What is the Paper honestly worth? What will it fetch at Market? And this is the only just Rule of Redemption.4

It becomes me to express myself with deference when I am obliged to differ in Opinion from your Excellency, but this being a Subject peculiar to America, no Example entirely similar to it, that I know of, having been in Europe, I may be excused therefore in explaining my Sentiments upon it.

I have the Misfortune to differ from your Excellency so far as to think, that no general Distinction can be made between Natives and Foreigners, for not to mention that this would open a Door to numberless Frauds, I think that Foreigners when they come to trade with a Nation, make themselves temporary Citizens, and tacitly consent to be bound by the same Laws. And it will be found that Foreigners have had quite as much to do in depreciating this Money, on proportion as Natives, and that they have been in proportion much less Sufferers by it. I might go further, and say that they have been in proportion greater Gainers by it, without suffering any considerable Share of the Loss.

The Paper Bills out of America are next to nothing, I have no Reason to think there are ten thousand Dollars in all Europe, indeed I don't know of one thousand.

The Agents in America of Merchants in Europe, laid out their paper 465Bills in Lands, or in Indigo, Rice, Tobacco, Wheat, Flour &c. in short in the produce of the Country, this produce they have shipped to Europe sold to the King's Ships, and received Bills of Exchange, or shipped to the West India Islands where they have procured them Cash or Bills of Exchange; the Surplus they have put into the Loan Offices from time to time, for Loan Offices have been open all along from seventeen hundred and seventy Six5 to this time. Whenever any Person lent paper Bills to the Public, and took Loan Office Certificates, he would have been glad to have taken Silver in Exchange for the Bills6 at their then depreciated Value. Why should he not be willing now? Those who lent Paper Dollars when Forty were worth but one, will have one for Forty, and those who lent when Paper was as good as Silver, will have Dollar for Dollar.

Your Excellency thinks it would be hard that those who escaped the perils of the Seas and of Enemies, should be spoiled by their Friends, but Congress have not spoiled any. They have only prevented themselves and the public from being spoiled. No Agent of any European Merchant in making his Calculations of profit and Loss ever estimated the depreciated Bills at the nominal Value. They all put a profit upon their Goods sufficient to defray all Expences of Insurance, Freight, and everything else, and had a great profit, besides, receiving the Bills at the current and not the nominal Value.

It may not be amiss to state a few prices current at Boston the last and present Year in Order to show the profits that have been made.

Bohea Tea Forty sols a pound at L'Orient and Nantes, Forty five Dollars.

Salt (which is very little in Europe) used to be sold for one shilling a Bushell Forty Dollars a Bushel and in some of the States two hundred Dollars at times.

Linnen (which cost two Livres a yard in France) Forty Dollars per yard.

Broad Cloth, a Louis d'or here, Two hundred Dollars per yard.

Ironmongery of all sorts One hundred and twenty for one.

Millinery of all sorts at an Advance far exceeding.7

These were the prices at Boston and at Philadelphia, and in all the other States they were much higher.

These prices I think must convince your Excellency that allowing one half or even two thirds of the Vessels to be taken, there is Room enough for a handsome profit deducting all Charges and computing the Value of the Bills at the Rate of Silver at the time.

There are two other Sources from whence Foreigners have made 466great profit, the difference between Bills of Exchange and Silver during the whole of our History, when a Man could readily get twenty five paper Dollars for one in silver, he could not get more than twelve paper Dollars for one in a Bill of Exchange. Nearly this proportion was observed all along as I have been informed. The Agent of a foreign Merchant had only to sell his Goods for paper, or buy paper with Silver at twenty five for one, and immediately go and buy Bills at twelve for one, so that he doubled the Value of his Money in a Moment. Another Source was this, the paper was not alike depreciated in all places at the same time, it was forty for one at Philadelphia sometimes when it was only Twenty at Boston. The Agent of a foreign Merchant had only to sell his Goods, or send Silver to Philadelphia, and exchange it for paper, which he could lay out at Boston for twice what it cost him, and in this way again double his property. This depreciating Currency being therefore a fruitfull Source for Men of penetration to make large profits, it is not to be wonder'd that some have written alarming Letters to their Correspondents.

No man is more ready than I am to acknowledge the Obligations we are under to France, but the flourishing State of her marine and Commerce, and the decisive Influence of her Councils and Negotiations in Europe, which all the World will allow to be owing in a great Measure to the Seperation of America from her inveterate Enemy, and to her new Connection with the United States, show that the Obligations are mutual; and no foreign Merchant ought to expect to be treated in America better8 than her native Merchants, who have hazarded their property thro' the same perils of the Seas and of Enemies.

In the late province of Massachusetts Bay from the Years seventeen hundred and forty five to seventeen hundred and fifty, we had full Experience of the Operations of paper Money. The province engaged in expensive Expeditions against Louisbourg and Canada which occasioned a too plentiful Emission of paper Money, in Consequence of which it depreciated to seven and half for one. In seventeen hundred and fifty the British Parliament granted a Sum of Money to the province to reimburse it, for what it had expended more than its proportion, in the general Expence of the Empire. This Sum was brought over to Boston in Silver and Gold, and the Legislature determin'd to redeem all their paper with it, at the depreciated Value.9 There was a similar Alarm at first, and before the Matter was understood, but after the People had time to think upon it, all were satisfied to receive Silver at Fifty shillings an Ounce, altho' the Face of the 467Bills promised an Ounce of Silver for every six shillings and Eight pence. At that time the British Merchants were more interested in our paper Money in proportion than any Europeans now are,10 yet they did not charge the province with a Breach of Faith, or stigmatize this as an Act of Bankruptcy, on the contrary, they were satisfied with it.11 In proof of this last Assertion I would beg Leave to remind your Excellency that at that time the Laws of Massachusetts were subject, not only to the Negative of the King's Governor, but to a Revision by the King in Council, and were there liable to be affirmed or annulled; and from the partial preference which your Excellency well knows was uniformly given to the Interest of the Subjects of the King within the Realm, when they came in Competition with those of the Subjects in the Colonies, there is no Reason to doubt that if that Measure when thoroughly considered had been unjust in itself, but the Merchants of England would have taken an Alarm and procured the Act to be disallowed by the King in Council, yet the Merchants of England who well understand their own Interest, were quite silent upon this Occasion, and the Law was confirmed in the Council, nor can it be supposed to have been confirmed there in a Manner unnoticed. It had met with too much Opposition among a certain Set of interested Speculators in the then province, for that Supposition to be made. And the Case of the British Merchants at that time differed in no Respect from the present Case of the French, or other foreign Merchants, except that the Credits of the former were vastly greater, and they must have consequently been more deeply interested in that Measure of Government, than the latter are in the present one, their Acquiescence in the Measure and the Confirmation of that Act must be rested upon the full Conviction of the British Administration and of the Merchants, of the Justice of it.

Your Excellency will agree in the Difficulty of making any Distinction between the French Merchant and the Spanish or Dutch Merchant, by any general Rule, for all these are interested in this Business.12

Your Excellency is pleased to ask whether I think these proceedings of Congress proper to give Credit to the United States, to inspire Confidence in their Promises, and to invite the European Nations to partake the same Risques to which the Subjects of his Majesty have exposed themselves.

I have the Honor to answer your Excellency, directly and candidly, that I do think them proper for these Ends, and I further think them the only Measures that ever could acquire Credit and Confidence to 468the United States. I know of no other just Foundation of Confidence in Men or Bodies of Men, than their Understanding and their Integrity, and Congress have manifested to all the World by this plan, that they understand the Nature of their paper Currency, that its Fluctuation has been the grand Obstacle to their Credit, and that it was necessary to draw it to a Conclusion in Order to introduce a more steady Standard of Commerce, that to this End the Repeal of their Laws which made paper a Tender and giving a free Circulation to Silver and Gold was necessary. They have further manifested by these Resolutions, that they are fully possessed of the only principle there is in the Nature of things, for doing Justice in this Business to the public and to Individuals, to Natives and to Foreigners, and that they are sufficiently possessed of the Confidence of the People, and there is sufficient Vigour in their Government to carry it into Execution.

Notwithstanding all, if any European Merchant13 can show any good Reason for excepting his particular Case from the general Rule, upon a Representation of it to Congress, I have no doubt they will do him Justice.

Moreover if his Excellency the Chevalier de la Luzerne can show that the Sum of Five Millions of Dollars is not the real worth of all the paper Money that is abroad and that ten Millions of Dollars is the true Sum, I doubt not Congress would alter their Rule, and redeem it at Twenty for One, But I doubt very much wether this can be shown.14

But I cannot see that any Distinction could be made between French Merchants and those of other Nations, but what would be very invidious and founded upon no principles. I cannot see that any Distinction can be made between Natives and Foreigners, but what would have a most unhappy Effect upon the Minds of the People in America, and be a partiality quite unwarrantable, and therefore your Excellency will see, that it is impossible for me to take any Steps to persuade the Congress to retract, because it would be acting in direct Repugnance to the clearest Dictates of my Understanding and Judgement of what is right and fit.15 I cannot excuse myself from adding that most of the Arms, Ammunition and Cloathing for the Army have been contracted for here by the Ministers of Congress and paid for or agreed to be paid for here in Silver and Gold. Very little of these Articles have been shipped by private Adventurers. They have much more commonly shipped16 Articles of Luxury of which the Country did not stand in need, and upon which they must have made vast profits.

Thus have I communicated to your Excellency my Sentiments, with that Freedom which becomes a Citizen of the United States intrusted by the Public with some of its Interests. I entreat your Excellency to consider them as springing from no other Motives than a strong Attachment to the Union of the States, and a desire to prevent all unnecessary Causes of Parties and Disputes, and from a desire not only to preserve the Alliance in all its Vigor, but to prevent everything, which may unnecessarily oppose itself to the Affection and Confidence between the two Nations, which I wish to see encreased every day, as every day convinces me more and more of the Necessity that France and America will be under, of cherishing their mutual Connections.

I have the Honor to be with the greatest Respect Your Excellencys Most Obedient and most humble Servant.