INDEBTEDNESS OF THE UNITED STATES, OF THE STATES, ETC. 393 



sura of indebtedness is to be raised by taxation 

 of the inhabitants of the indebted countries, 

 and paid out through the national treasuries. 



Of this vast sum, the total net indebtedness 

 of the United States is $2,997,000,000, of which 

 $1,942,000,000 is public debt, and $1,055,000,- 

 000 belongs to the States, counties, townships, 

 school districts, and municipalities. 



A want of space will only permit here some 

 brief notes of the origin, progress, and present 

 condition of these classes of indebtedness of 

 the United States, and of the indebtedness of 

 the other countries of the world. The full de- 

 tails belong to the census of 1880, and have 

 been very carefully compiled by Rafael A. Bay- 

 ley and others, under the direction of Robert 

 P. Porter. 



FIRST LOANS. The indebtedness of the 

 United States began with the war of the Rev- 

 olution. The sympathy of France with the 

 American cause led both the Government 

 and people to contribute to its success. As 

 early as September, 1775, Caron de Beau- 

 marchais, an ardent patron of the cause, ad- 

 dressed a memorial to the King on the sub- 

 ject. This was followed by others, in which 

 he urged that it would be impossible for 

 Great Britain to subdue the colonies, if they 

 were assisted in their struggle; that if not 

 assisted, they might succumb, join the English, 

 and turn their arms against France. He says : 

 " We are not in a fit state for making war. 

 We must prepare ourselves, keep up the 

 contest, and, with that view, send secret as- 

 sistance in a prudent manner to the Ameri- 

 cans." These memorials led the Government 

 to determine to give the assistance, and to em- 

 ploy their author as its agent. In the spring 

 of 1776 he was sent to London to make the 

 arrangements, as there was no American agent 

 in France. In London he was introduced to 

 Arthur Lee, a law-student in the Temple, who 

 bore some kind of commission from the se- 

 cret committee of Congress. Beaumarchais 

 informed him that the French Government 

 wished to send 200,000 louis-d'or (equal to 

 $816,750) in arms, ammunition, and specie, for 

 the assistance of the Americans, but in a secret 

 manner, and that all they wanted was to know 

 through what source it was best to make the 

 remittances. Beaumarchais then returned to 

 Paris, and about July 1, 1776, Silas Deane ar- 

 rived there, with full powers as a political 

 and commercial agent for the United States 

 in France. His instructions were to obtain, if 

 possible, one hundred cannon, with ammuni- 

 tion; also arms and uniforms for 25,000 men. 

 These Beaumarchais contracted to furnish from 

 the arsenals of France, in addition to a large 

 amount of other articles thought needful for 

 the supply of the colonies. Deane, on his part, 

 agreed that the United Colonies should pay for 

 them by remittances of American produce, the 

 business to be transacted by Beaumarchais, 

 under the name of the Spanish firm of Rode- 

 rigue, Hortales & Co. This contract, with its 



accompanying letters, appears on its face to be 

 perfectly regular ; an ordinary commercial con- 

 tract, by which the United Colonies were to 

 receive 'the supplies they needed, and to pay 

 for the same within one year by shipments of 

 produce to the imaginary firm of Roderigue, 

 Hortales & Co. Had it been what it appears 

 to be, the United Colonies would have been 

 bound in common honesty not only to pay in 

 full for the stores, but to pay dearly for the 

 risks to which the contractor would be ex- 

 posed. But there is evidence that both parties 

 knew the contract as it stood to be but a sham, 

 drawn up to mask the fact that it was the Gov- 

 ernment of France which was to supply Eng- 

 land's rebellious colonies. The first million of 

 livres was then advanced from the French treas- 

 ury, and a few days afterward another million 

 was received from the Spanish treasury, as 

 both countries were united in their foreign 

 policy. As shipments went on, and remit- 

 tances came slowly from America, a third mill- 

 ion was contributed by the King of France. 

 Subsequently two million livres more were 

 granted by France in 1777, and in 1781 six 

 millions, making a total of ten millions, of 

 which Beaumarchais received two, and the rest 

 was paid through Benjamin Franklin. Thus 

 the French and Spanish subsidy amounted to 

 eleven million livres, equal to $1,996,500. As 

 this money was a free gift, it has not been re- 

 paid, unless the sums paid to Beaumarchais be 

 taken as a partial reimbursement. 



The first loan negotiated by the Continental 

 Congress was obtained in the year 1777 

 from the " Farmers-General of France." It 

 amounted to 1,000,000 livres, and was partly 

 repaid with tobacco, and finally settled 

 with the French Government. The next loan 

 was 18,000,000 livres from the French Govern- 

 ment. It is probable that it was, in its incep- 

 tion, not so much a loan as a subsidy, a pay- 

 ment of 750,000 livres every three months to 

 the American commissioners in France, to 

 enable the colonies to keep up the unequal 

 struggle with Great Britain. The money was 

 advanced without an expectation of repay- 

 ment, though with a stipulation that it should 

 be repaid. 



A loan from Spain in 1781 is mentioned, 

 but little is known of it. In making up a 

 statement of the foreign debt after the adop- 

 tion of the Constitution, it appeared that a 

 small sum was due Spain for advances of 

 money, which amounted to $174,011. 



FINANCIAL SITUATION. The financial situa- 

 tion of the Continental Congress was at its 

 worst in 1779 and 1780. Over $200,000,000 in 

 Continental currency had been issued, and this 

 currency, at first circulating readily at its face 

 value, had depreciated as the amount issued 

 increased, until it only passed at forty to one. 

 Even at this discount it soon ceased to circu- 

 late at all, and in the year 1780 "it quietly 

 expired in the hands of its possessors." The 

 army was reduced to extremity. In 1778 



