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Resolution by the Continental Congress concerning public finance, including circular letter from Charles Thomson to the state governors
United States. Continental Congress
February 15, 1786
Volume 18, Pages 527-534

HON. CHAS. THOMSON TO GOV. CASWELL.
[From Executive Letter Book.]


Office of Secretary of Congress, February 15, 1786.

(Circular.)

Sir:

I have the honor of forwarding to your Excellency herewith enclosed an Act of the United States in Congress Assembled, respecting the system of a general revenue recommended in the Act of the 18th of April, 1783, and a Schedule of the French and Dutch loans shewing the periods of their redemption with annual Interest payable thereon, until their final extinction, for which provision is yet to be made. I also, enclose a Copy of an Act of the 18th of April, 1783.

As the United States in Congress assembled are exceedingly anxious that the several States should come to a decision on this subject as soon as possible, Your Excellency I hope will take the earliest opportunity

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of laying the enclosed papers before the Legislature of your State.

With the greatest respect I have the honor to be
Your Excellency's most obedient and
Most humble servant,
CHAS. THOMSON.

RESOLVES OF CONGRESS ON SYSTEM OF GENERAL REVENUE.
[From Executive Letter Book.]

United States in Congress Assembled,
February 15, 1786.

The Committee consisting of Messrs. King, Pinckney, Kean, Monroe and Pettit to whom were referred several reports and documents concerning the system of general Revenue, recommended by Congress on the 18th of April, 1783,

Report, That in pursuance of the above reference they have carefully examined the acts of the several States, relative to the general system of revenue recommended by Congress on the 18th of April, 1783, and find that the States of Delaware and North Carolina have passed acts in full conformity with the several parts thereof; the former of which States has inserted a provision in their act restraining the operation thereof until each of the other States shall have made a like and equally extensive grant; that the States of New Hampshire, Massachusetts, Connecticut, New Jersey, Virginia and South Carolina, have each passed acts complying with that part of the system, which recommends a general impost, but have come to no decision on the other part, which proposes the establishment of funds, supplementary to, and in aid of the general impost; that the State of Pennsylvania has passed an Act complying with the recommendation of the general impost, and in the same Act has declared that their proportion or quota of the supplementary funds shall be raised and levied, on the persons and estates of the Inhabitants of that State in such manner as the Legislature thereof shall from time to time direct, with this proviso: That if any of the annual proportion of the supplementary funds shall be otherwise raised and paid to the United States, then such annual levy or tax shall be

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discontinued; the committee conceive that this Clause is rather an engagement that Pennsylvania will provide adequate supplementary funds than an Actual establishment thereof, nevertheless, the Act contains a proviso restraining its operation, until each of the other States shall have passed laws in full conformity with the whole of the revenue system aforesaid; the committee farther find that the State of Rhode Island has passed an Act on this subject, but so different from the plan recommended, and so wholly insufficient, that it cannot be considered as a compliance with any part of the system submitted for their adoption; that the State of Maryland passed on Act in 1782, and a supplement thereto in 1784, complying with the recommendation of Congress of the 3d February, 1781, which recommendation is not compatible with, and was relinquished by the resolves of Congress of the 18th of April, 1783; but that neither the State of Maryland, New York nor Georgia, has passed any Act in pursuance of the system of the 18th of April, 1783.

From this statement it appears that seven States, viz: New Hampshire, Massachusetts, Connecticut, New Jersey, Virginia, North Carolina and South Carolina have granted the impost in such manner, that if the other six States had made similar grants the plan of the general impost might immediately begin to operate; that two other States, viz: Pennsylvania and Delaware, have also granted the impost, but have connected their grants with provisos, which will suspend their operation until all the other States shall have passed laws in full conformity with the whole of the Revenue system aforesaid; that two only of these nine States, viz: Delaware and North Carolina have fully acceded to that system in all its parts; and that the four other States, viz: Rhode Island, New York, Maryland and Georgia have not decided in favor of any part of the system of revenue aforesaid, so long since, and so repeatedly presented by Congress for their adoption. The Committee have thought it their duty candidly to examine the principles of this system, and to discover if possible the reasons which have prevented its adoption; they cannot learn that any Member of the Confederacy has stated or brought forward any objections against it, and the result of their impartial enquiries into the nature & operation of the plan, has been a clear and decided opinion, that the system itself is more free from well founded exceptions, and is better calculated to receive the

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approbation of the several States than any other that the wisdom of Congress can desire.

In the course of this enquiry it most clearly appeared, that the requisitions of Congress for eight years past have been so irregular in their operation, so uncertain in their collection, and so evidently unproductive that a reliance on them in future as a source from whence monies are to be drawn to discharge the engagements of the confederacy, definite as they are in time and amount would not be less dishonorable to the understanding of those, who entertain such confidence, than it would be dangerous to the welfare and peace of the union; the Committee are therefore seriously impressed with the indispensable obligation that Congress are under of representing to the immediate and impartial consideration of the several States, the utter impossibility of maintaining and preserving the faith of the federal government by temporary requisitions on the States, and the consequent necessity of an early and complete accession of all the States to the revenue system of the 18th of April, 1783.

Although in a business of this magnitude and importance to the respective States, it was natural to expect a due degree of caution, and a thorough investigation of the system recommended, yet the committee cannot forbear to remark, that this plan has been under reference for nearly three years; that during that period numerous changes have taken place in the delegation of every State, but that this system has received the repeated approbation of each successive Congress, and that the urgency of the public engagements at this time, renders it the unquestionable duty of several States to adopt without further delay those measures, which alone in the judgment of the Committee, can preserve the sacred faith of this Confederacy.

The following state of facts must convince the States of the propriety of urging this system with unusual anxiety at this period.

Dol. 9ths.
That the sum necessary to discharge the Interest on loans of the King of France to 1st Jany., 1787
240,740.60
For Interest on Certificates to Foreign Officers made payable to France to 1st Jany., 1787
22,370.00
For interest on the Spanish loan to 21st March, 1787
48,596.55
For interest on the Dutch loans to 1st Jan., 1787
265,600.00
577,307.25
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That although some of the objects of disbursement are in the year 1787, the periods at which they become due, will shew the absolute necessity of an immediate provision for them.

That notwithstanding some of the above sums do not fall due until 1787, yet, exclusive of the same there will be due on the French and Dutch loans in that year 1,252,938 dollars and 57-90ths and during the nine succeeding years, that is until the year 1797, including the payment of the interest and the partial reimbursements of the Capitals of the French and Dutch loans, the average sum of near one Million of Dollars annually; for the certain obtaining of which, at fixed periods, effectual measures can no longer be delayed; more fully to illustrate this subject, the committee annex a Schedule of the French and Dutch loans, shewing the periods of their redemption, with the annual interest payable thereon until their final extinction; in addition to the above foreign demands, the Interest on the Spanish loans and on the debts due to foreign officers, must be provided for and annually paid; the amount of these annual demands will be greatly increased by adding the annual interest on the domestic debt, the whole of which is not yet liquidated, and the aggregate whereof will Consequently be enlarged beyond its last estimate.

The Committee contemplate with great satisfaction, the prospect of extinguishing a part of the domestic debt by the sales of the western territory of the United States; but a considerable time must elapse before that country can be surveyed and disposed of; and the domestic creditors, until that event, must depend for support on the Justice of their Country; the revenue system if adopted would afford this support, and enable Congress to fulfil the public engagements with their foreign creditors, the whole product of this system is appropriated for the payment of the principal and interest of the national debt, and no part thereof can be diverted to other purposes.

That it has been the earnest wish of Congress to prevent the accumulation of foreign Interest that now exist, appears from their estimates and requisitions of the 27th April, 1784, and the 27th Sept. 1785, and the following abstract taken from the books of the treasury, of the amount of monies brought into the federal treasury in the course of the four last years, viz: Between the 1st of November, 1781, and the 1st January, 1786, will shew the little success of

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requisitions, and demonstrate the inadequacy of their products to maintain the federal government and at the same time to discharge the annual public engagements.

dol. 90ths.
The receipts of taxes from the first of November, 1781, to the 1st November, 1784, amount to
2,025,089.34
From the 1st November, 1784 to the 1st of January, 1786
432,897.81
Total
2,457,987.25

Thus it is evident that the sum of 2,457,987 dollars and 25-90ths only was received in a space of more than four years, when the requisitions in the most forcible manner pressed on the States the payment of much larger sums, and for purposes of the highest national importance. It should be here observed that the receipts of the last fourteen months of the above period amounts only to 432,897 dollars and 81-90ths which is at the rate of 371,052 per annum, a sum short of what is essentially necessary for the bare maintenance of the federal government on the most economical establishment, and in time of profound peace.

The Committee observe with great concern, that the security of the navigation and commerce of the Citizens of these States from the Barbary powers, the protection of the frontier inhabitants from the savages, the immediate establishment of Military magazines in different parts of the Union, rendered indispensable by the principles of public safety, the maintenance of the federal government at home, and the support of the public servants abroad, each and all, depend upon the contribution of the States under the annual requisitions of Congress. The monies essentially necessary for these important objects, will so far exceed the sums formerly collected from the States by taxes, that no hope can be indulged of being able, from that source, to make any remittances for the discharge of foreign engagements.

Thus circumstanced, after the most solemn deliberation, and under the fullest conviction that the public embarrassments are such as above represented, and that they are daily increasing, the committee are of opinion, that it has become the duty of Congress to declare most explicitly, that the Crisis has arrived when the people of these United States, by whose will, and for whose benefit the federal government was instituted, must decide whether they will support their

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rank as a nation, by maintaining the public faith at home and abroad; or whether for want of a timely exertion in establishing a general revenue and thereby giving strength to the Confederacy, they will hazard not only the existence of the Union, but of those great and invaluable privileges, for which they have so arduously and so honorably contended.

Resolved, That Congress agree to the report.

And to the end that Congress may remain wholly acquitted from every imputation of a want of attention to the interest and welfare of those whom they represent;

Resolved, That the requisitions of Congress of the 27th April, 1784, and the 27th of September, 1785, cannot be considered as the establishment of a system of general revenue, in opposition to that recommended to the several States by the resolves of Congress of the 18th of April, 1783.

Resolved, That the resolves of Congress of the 18th of April, 1783, recommending a system of general revenue, be again presented to the consideration of the legislatures of the several States, which have not fully complied with the same; that it be earnestly recommended to the legislatures of New Hampshire, Massachusetts, Connecticut, New Jersey, Pennsylvania, Virginia and South Carolina which have complied only in part with the said system, completely to adopt the same; and to the legislatures of the States of Rhode Island, New York, Maryland & Georgia which have not adopted the said system, either in whole or in part, to pass laws without further delay, in full conformity with the same. But as it is highly necessary that every possible means should in the most expeditious manner be obtained to the revenue of the United States, it is therefore recommended to the several States, that in adopting the said system they enable the United States in Congress assembled, to carry into effect that part which relates to the impost so soon as it shall be acceded to.

Resolved, That whilst Congress are denied the means of satisfying those engagements, which they have constitutionally entered into for the common benefit of the Union, they hold it their duty to warn their constituents that the most fatal evils will inevitably flow from a breach of public faith, pledged by solemn contract, and

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a violation of those principles of Justice which are the only solid basis of the honor and prosperity of the nation.

CHAS. THOMSON, Secy.