robert morris finances the American revolution -- 4/19/21
Today's selection -- The Founders and Finance by Thomas K. McCraw. Robert Morris is thought by most to have been instrumental in solving the desperate, never-ending struggle to find the funds to pay for the American Revolution. After the war, he returned to his financial speculations, which went awry and led him to debtors' prison and a death in poverty:
"If Morris had valued his personal fortune more than American independence, as many of his critics charged, he could easily have cashed out in 1775, returned to his native England, and lived a life of monied ease. Many wealthy 'Loyalists' did decamp for Canada or England. Morris, by contrast, risked his life, threw himself into the effort of financing the war -- the most arduous nonmilitary assignment of the entire Revolution -- and discharged it with energy, patience, and distinction.
"In the mass of surviving records from his years as superintendent, 1781-1784, the impossibility of total success becomes clear. The major barrier turned out to be the failure of Congress to gain control over import duties. The government came tantalizingly close to achieving this aim, which would have solved many of its financial problems at one stroke. But under the Articles of Confederation a single state could block such a move, and Rhode Island chose to do so. Had that not occurred, the subsequent history of the 1780s, and even of the United States in the long term, could have turned out differently. If Congress had possessed this taxing power, then the Constitutional Convention of 1787 conceivably might never have taken place at all.
"Without that authority, Congress and its chosen executive officer, Robert Morris, stood no chance of success. In the fall of 1781, for example, Congress asked the states for a total of $8 million to be paid during 1782. By early 1783, only $420,000 had been remitted, or a little more than 5 percent. Morris's diary during his time as superintendent, and the collected letters to and from his office, fill nine volumes of about 500 pages each. Most of these documents pertain to the thousands of individual transactions necessary to raise money for the war. But they are also full of Morris's own revealing remarks about the difficulty of his task, and of how much worse it became year by year. By 1783 Morris had almost given up altogether, as the makeup of Congress itself had changed and there was no likelihood at all of gaining control over import duties. The evolving situation becomes vivid in the tone of his comments, read in sequence:
December 19, 1781, letter to the governors of North Carolina, South Carolina, and Georgia: 'I have no System of Finance except that which results from the plain self-evident dictates of Moral Honesty ... I expect that your State will immediately pass Laws to collect by the days named, the Sums called for from them for the year 1782.'
February 2, 1782, diary entry: 'The greatest part of my time since in office has been consumed in hearing the Tales of Woe ... which I cannot prevent in any other way than by declining personal interviews.'
August 29, 1782, letter to George Washington about the refusal of the states to contribute enough money to support the army: 'I pray that Heavan [sic] may direct your mind to some mode by which we may be yet saved. I have done all that I could and given repeated Warnings [in messages to state governors and legislatures] but it is like preaching to the dead.'
October 21, 1782, letter to the governors of all thirteen states: 'How long is a Nation who will do nothing for itself to rely on the Aid of others [i.e., gifts from France and loans from Dutch banks]? How long will one Part of a Community bear the Burdens of the whole? [A few states contributed sums approaching their fair share; most did not come close.] How long will an Army undergo Want in the Midst of Plenty? How long will they endure Misery without Complaint, Injustice without Reproach, and Wrongs without Redress?'
March 14, 1783, letter to General Nathanael Greene on Morris's decision to resign from office: 'I had no alternative. I saw clearly that while it was asserted on all Hands our Debts ought to be paid, no efficient Measures would be adopted for the Purpose.'
"After much persuasion by Congress and the army, Morris withdrew his resignation shortly afterward and agreed to stay. He did resign in November 1784, frustrated by his ceaseless attempts to raise money. In his final 'Statement of Accounts,' issued in March 1785 and printed in 500 copies he sent to Congress, Morris reflected on the larger meaning of the nation's fiscal irresponsibility:
No treason has operated, or can operate, so great an injury to America, as must follow from a loss of reputation. The payment of debts may indeed be expensive, but it is infinitely more expensive to withhold payment. The former is an expense of money, when money may be commanded to defray it; but the latter involves the destruction of that source from which money can be derived when all other sources fail. That source, abundant, nay almost inexhaustible, is public credit [i.e., the nation's ability to borrow] ...
The inhabitant of a little hamlet, may feel pride in the sense of separate independence. But if there be not one government which can draw forth and direct the combined forces of united America, our independence is but a name, our freedom a shadow, our dignity a dream.'
"Coming from such an affable and mild-mannered person as Morris, this language paints a picture of stark national irresponsibility toward financial affairs."
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