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



nearly 4,000 men were returned as unfit for 

 duty from want of clothes. In January, 1780, 

 the army had been nearly three months on a 

 short allowance of bread. It was determined 

 to attempt to negotiate a loan in Holland. 

 Applications for loans in that country had 

 hitherto been unsuccessful. The Hollanders 

 either distrusted the security, or were unwill- 

 ing to incur the resentment of Great Britain 

 by lending the Americans money to enable 

 them to carry on the war. The King of 

 France had, through his minister at the Hague, 

 offered his assistance to the Americans in pro- 

 curing loans in that country, but without 

 effect. He now engaged to become, himself, 

 responsible for the sums which might be fur- 

 nished. In consequence of this, and the exer- 

 tions of Mr. Adams, a loan of 10,000,000 livres 

 was obtained in Holland. Although intended 

 solely for the United States, this money having 

 been obtained on the credit of France, became 

 a debt due to that country. 



The loan of 10,000,000 livres obtained from 

 France in 1781 was soon exhausted ; very little 

 of it in cash ever reached the United States; 

 one half of it was immediately paid into the 

 French Treasury for supplies previously fur- 

 nished. So utterly exhausted was the Ameri- 

 can Treasury that in 1782, when, peace having 

 become a certainty, it was determined to re- 

 duce the army, the utmost difficulty was expe- 

 rienced in obtaining a small sum to pay the 

 discharged soldiers enough to take them to the 

 places of their enlistment. Congress therefore 

 resolved to make new efforts for a loan, both 

 in France and Holland. As a result, the King 

 of France determined, "notwithstanding the 

 pressing necessities of his own service, to grant 

 to Congress a new pecuniary assistance, which 

 he fixed at the sum of 6,000,000 livres Tour- 

 nais ($1,089,000). This was in February, 

 1783, and the money was advanced in twelve 

 monthly payments. 



THE AID OF FRANCE. On the settlement of 

 the account with France, it appeared that the 

 amount received from her during the war ot 

 the Revolution, in the way of loans and sub- 

 sidies, was 45,000,000 livres, equivalent to 

 $8,167,500. 



"If the gold of France aided the United 

 States through the war in which independence 

 was obtained, it was from Holland that the 

 money came which assisted the Government 

 through the difficult years of peace that fol- 

 lowed."* 



An attempt to negotiate a loan in Holland 

 was commenced in 1780, but continued unsuc- 

 cessful until the result of the war was apparent, 

 and the independence of the country had been 

 acknowledged in Europe, when 5,000,000 guil- 

 ders ($2,000,000) were obtained in 1782. 



Another loan, of 1784, was rendered neces- 

 sary by the slow progress made in realizing on 

 the previous loan. A "bonus and gratifica- 



* " National Loans of the United States from July 4, 1776, to 

 June 80, 1880." By Kafael A. Bayley, Treasury Department. 



tions" were given in this instance, by which 

 the United States agreed, for a principal of 

 2,000,000 guilders received, to return 2,891,- 

 800. Although Mr. Adams, the American 

 agent, thought the contract " involved an enor- 

 mous sacrifice," yet it amounted to less than 

 6f per cent annual interest. He had been 

 authorized by Congress to pay 6 per cent. 



EFFECTS OF THE FINANCIAL CONDITION ON THE 

 GOVERNMENT. The next loan, that of 1787, ap- 

 pears to have been contracted in order to raise 

 money with which to pay the interest on the 

 previous loans in Holland made in 1782 and 

 1784. The interest which had before fallen 

 due had been paid, partly by remittances from 

 America, and partly by some portions of the 

 amount received on the original loans. Al- 

 though the vast amounts of paper money which 

 had been issued had become greatly depreciated, 

 yet a new emission had been made, which, on 

 its face, was redeemable by the different States 

 individually, but indorsed by the United States, 

 and was by act of March 18, 1780, to be issued 

 at a not greater rate than one dollar of the new 

 for each twenty of the old. Such imposts and 

 duties as the Continental Congress was able to 

 command or persuade from the States, were 

 mostly paid in this new currency, which, being 

 worthless abroad, rendered the payment of debts 

 due in foreign countries by Congress a diffi- 

 cult matter. " It was the financial difficulties 

 experienced under the old system of government 

 that, more than anything else, brought about 

 the calling of the convention which, in 1787, 

 framed the present Constitution of the United 

 States. The Continental Congress possessed 

 sufficient authority to carry on war, to make 

 peace, to conclude treaties, and to carry on 

 most of the functions of government ; but to 

 do all this required a revenue, and for this 

 they were dependent on the will of the States. 

 It was evident that such a system could not 

 last. At the time Mr. Adams began the nego- 

 tiations for the loan, delegates to the Consti- 

 tutional Convention had been chosen in most 

 of the States, and the convention was in ses- 

 sion before the loan was completed." * This 

 loan was for 1,000,000 florins for ten years at 

 5 per cent. The United States received ninety- 

 two guilders for each hundred of obligation. 



THE NEW CONSTITUTION. The next loan, of 



1788, was to meet the expenses in Europe, and 

 to afford a financial basis on which to start the 

 new government at home. It was known in 

 Europe, early in 1788, that the new Constitu- 

 tion would be ratified, and as the Continental 

 Congress was entirely without funds to turn 

 over to its successors, money must be provided 

 in some way. This loan was for one thousand 

 guilders for ten years, at 5 per cent. 



At this period, the Government of the Unit- 

 ed States was reorganized under the present 

 form, and went into operation on April 30, 



1789. The 4th of March is the constitutional 



* "National Loans of the United States from July 4, 177f>. to 

 June 80, I860." By Kafael A. Bayley, Treasury Department. 



