The Glorious Cause: The American Revolution, 1763-1789 (130 page)

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congressional requisitions. It sent loan officers into the states with instructions to provide local officials with indents. These officials were to pay interest on the debt with the indents, observing a careful schedule of payments of interest. The first expenditure was to meet past interest due through 1782. Under this plan Congress authorized the states to accept the indents for taxes and to return them with a certain percentage of specie in response to requests for requisitions.
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This thoughtful scheme collapsed almost immediately. The loan officers simply ignored their instructions and issued the indents not according to the congressional schedule but as they chose. The states proved as independent as the federal officials and followed their own policies of payment. They threw the schedule aside -- the clamorous creditors were their citizens after all -- and usually used the indents in advance for the next year's interest. They refused to receive indents, or pay them out, to any but their own citizens, and they declined to return specie as requisitions. This refusal was easy to understand and defend -- hard money was scarce and states were reluctant to give up what they had when there was no assurance that Congress would return it to their citizens.
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Congress acknowledged its failures in public finance in 1787 when it set aside all requirements in favor of permitting the states to pay on the debt in any way they chose. Now in full control, the states chose increasingly to resort to the old colonial practice of currency finance. And when the year opened at least seven of the states were issuing paper money.

A number of men had watched uneasily the shift of control from Congress to the states. They have been called the "nationalists," a designation intended by historians to suggest that the men to whom it is applied were not only strongly committed to the increase of the central authority of the government but also that they constituted a virtual party. This party, according to several historians, looked to the replacement of the Articles of Confederation by a constitution which shifted sovereignty from the thirteen states to a national government. The leader of the group when it began to take shape in 1780, it is said, was Robert Morris, the rich Philadelphia merchant who had left Congress two years before after giving it distinguished service for three years. Morris and a small number of friends and business associates did favor a powerful national government, but they never formed anything more than a loose faction. Leadership of this group seemed almost naturally to fall to Morris, a man of great wealth and business and administrative skill.
In 1781,

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he added to these informal qualifications by getting himself appointed Superintendent of Finance.
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The post carried all the authority Congress could vest it with. The superintendent could do almost anything Congress itself might have done in managing public finances, including firing anyone in the public service who handled public money. Morris had insisted on having this sort of muscle; he was not a modest man and his demands for power caused some in Congress to hesitate before approving his appointment. When Morris had sat in Congress he had shown that he had talents besides an appetite for power. He had taken the lead in the Secret Committee of Trade, demonstrating rather impressive gifts for managing its business. He had also shown, like virtually every other merchant who undertook the public's business, that he would not shrink from using his post to turn a profit. Merchants understood the difference between private and public interests as well as anyone and knew that standards of conduct did not condone the use of office for personal gain. Yet they commonly mixed their own business with the public's, and Morris sometimes used the government's money when his own was scarce. He was not a thief nor was he dishonest; yet he sometimes misused his post in Congress. He may have felt justified by the fact that he followed common practice and that in fact holders of public office believed that they had something approaching "private rights" in their offices. In many cases standards of conduct were not high. While Morris did not raise them, neither did he confine his efforts primarily to his own interests, for he wanted to serve his country. He probably never realized that his own conduct contributed to the demoralization of a public increasingly suspicious of those who ran public finance.
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It was public finance that Morris expected would provide the means of constitutional reform. The Articles had denied Congress the right to tax. The states of the Confederation recognized that this power implied sovereignty, and they intended that it remain with themselves. But with the finances of Congress a shambles by 1780, many men, most delegates to Congress, accepted the argument that Congress needed the power to tax to ensure a steady revenue. Without a revenue the various sorts of notes, expressing the obligation of Congress to its creditors, would continue to depreciate. And the problem of supplying the army and keeping the Revolution going until Britain acknowledged American independence would increase in severity.

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Thus for Morris and his friends, public finance should be made to incorporate what they took to be the central purposes of the Revolution -the protection' of property and the preservation of a political order run by men like themselves. The conduct of the war had taught them much, taught them that sovereignty divided into thirteen pieces made for disorder and an ineffective nation. The disparity between the exertions of the army and the petty squabbling of the states eager to look out after their own, and little more, offended Morris. The propensity of the states to turn to the old methods of public finance frightened him. The old ways were out of step with the new, and the new -- large-scale business, international finance, banking, and speculation -- could flourish only if political centralization succeeded.

From 1781 until just before Morris resigned in November 1784, he worked carefully and sometimes ruthlessly for a major accretion to congressional power. The impost provided the center of all his efforts. To push it toward approval by all the states as the Articles required, he, Hamilton, and others tried to manipulate the army officers at Newburgh into a body capable of coercing Congress and the states. He failed in this measure, but he succeeded in persuading Congress to assume some of the debt which might have been parceled out to the states. His intention was to ensure that at least a part of the debts from the war remained a national obligation so that a case could be made for assigning the taxing power to Congress. Much of what Morris did succeeded as financial policy but failed as political technique. He instituted a system of bids and contracts in order to supply the army; he rationalized much of federal finance; and he established a corps of officials responsible to Congress -- and himself. The end of the war robbed much of this system of its political meaning. Defeat at Yorktown would have served Morris's purposes far better than victory.
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With peace his disappointments piled up: the states refused his demands for specie; they corrupted his officials; and they took over the business of servicing the debt. Worst of all, though at one time or other the impost seemed on the verge of approval, in the end it failed of passage. By late 1783 Morris had played his best hand, and though he lingered in the superintendent's office until November 1, 1784, he was beaten. And his methods of attaining a strong national government had proved barren.
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The movement for constitutional revision did not die with Morris's resignation. Hope persisted in Congress for two years that the impost would gain the unanimous approval of the states. There were other ways of strengthening the central government in any case. Talk surfaced in these years of the possibility of holding a convention from the states which might add to congressional powers. Perhaps a favored means was to give Congress the authority to regulate commerce, especially commerce among the states. Not all delegates favored this means, and not all of course favored vesting Congress with the power to regulate trade. Jefferson and Madison both believed that Congress might legitimately claim authority to regulate commerce with foreign states under its power to make treaties. They never convinced Congress of this interpretation, and had they done so the struggles among the states amounting to a kind of war of retaliation would have continued.
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From the vantage of Congress, republican prospects may have looked bleaker than they actually were. Frustration and impotence often breed gloom, and Congress by 1785 was very nearly impotent, and it felt frustrated.

The vitality in America expressed itself locally, in the states, as it almost always had in the previous twenty years. In March 1785 commissioners from Maryland and Virginia met at Mount Vernon and settled long-standing differences over navigation of the Potomac River. The agreement reached at this meeting provided a model of enlightened self-interest working out a series of compromises. Thus Virginia conceded certain rights in the Chesapeake to Maryland in return for others in the Potomac.
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The success of this meeting convinced James Madison that a larger gathering of states in convention might seize the spirit of cooperation -where mutual interests were apparent -- and place the regulation of commerce with Congress. Madison evidently also believed that the moment was right to couple such a proposal to one giving Congress the authority to tax. In any case in the following November he boldly moved in the House of Delegates, the lower house of Virginia's legislature, that Virginia's delegation to Congress "be instructed to propose in Congress a recommendation to the States in Union, to authorize that Assembly to regulate their trade, and to collect a revenue therefrom. . . ."
Madison

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may have misjudged the disposition of his colleagues for change, or he may have offered this resolution with a sense that if he were going to be forced to settle for less, say a simple power to regulate trade but not to collect a revenue from it, asking for more was tactically advisable. He got very little in fact, though in January 1786 the House agreed on a motion that merely called for a convention of states "to consider how far a uniform system in their commercial regulations may be necessary to their common interest and their permanent harmony. . . ."
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