Whether the financiering of the American Revolution is to be looked upon in a pathetic or in a comical light must depend upon the mood of the observer. The spectacle of a young people, with no accumulated capital, engaged in supporting the charge of a mortal struggle against all the vast resources of Britain, has in it something of pathos. But the methods to which this people resorted to raise funds were certainly of amusing simplicity. It was not until the appointment of Robert Morris, in 1781, that a treasury department came into existence and some slight pretense of system was introduced into the financial affairs of the confederation. During the years prior to that time Congress managed the business matters. But Congress neither had funds nor the power to obtain any. It had an unlimited power for contracting debts: absolutely no power for collecting money. It used the former power freely. When creditors wanted payment, requisitions were made upon the States for their respective quotas. But the States were found to be sadly irresponsive; probably the citizens really had not much ready money; certainly they had not enough to pay in taxes the cost of the war; no civilized state has been able to conduct a war, even a small one, in modern times without using the national credit. But the United States had absolutely no credit at all. It was well enough to exclaim "Millions for defense; but not one cent for tribute!" This was rhetoric, not business; and Congress soon found that the driblets which trickled tardily to them in response to their demands on the several States would hardly moisten the bottom of the great exchequer tank, which needed to be filled to the brim.

Two methods of relief were then adopted, crude, simple, but likely for a time to be efficient; and provided only that within that time the war could be finished, all might go well. One of these methods was to issue irredeemable paper "money;" the other was to borrow real money abroad. The droll part was that both these transactions were audaciously entered upon by a body which had absolutely no revenues at all to pledge as security, which had not a dollar of property, nor authority to compel any living man to pay it a dollar. A more utterly irresponsible debtor than Congress never asked for a loan or offered a promissory note. For the security of a creditor there was only the moral probability that in case of success the people would be honest enough to pay their debts; and there was much danger that the jealousies between the States as to their proportionate quotas might stimulate reluctance and furnish excuses which might easily become serious in so unpleasant a matter as paying out hard cash. At home Congress could manage to make its paper money percolate among the people, and could pay a good many American creditors with it; but there were some who would not be thus satisfied, and few European creditors, of course, would meddle with such currency. So to pay these people who would have real money Congress solicited loans from other nations. It was like the financiering of a schoolboy, who issues his IOU's among his mates, and refers the exacting and business-like tradesman to his father. France was cast for the rÔle of father to the congressional schoolboy for many wearisome years.

The arrangement bore hard upon the American representatives, who, at European courts and upon European exchanges, had the embarrassing task of raising money. It was all very well to talk about negotiating a loan; the phrase had a Micawber-like sound as of real business; but in point of plain fact the thing to be done was to beg. Congress had a comparatively easy time of it; such burden and anxiety as lay upon that body were shared among many; and after all, the whole scope of its duty was little else than to vote requisitions upon the States, to order the printing of a fresh batch of bills, and to "resolve that the Treasury Board be directed to prepare bills of exchange of suitable denominations upon the Honorable Benjamin Franklin [or sometimes Jay, or Adams, or another], minister plenipotentiary at the court of Versailles, for—— thousand dollars in specie." Having done this, Congress had fulfilled its simple part, and serenely waited for something to turn up.

The plan which seemed most effective was to send a representative accredited to some foreign government, and instructed to raise money at once. Without wasting time by waiting to see whether he arrived safely, or was received, or was successful in his negotiations, the next ship which followed him brought drafts and bills which he was expected to accept, and at maturity to pay. Having thus skillfully shifted the laboring oar into his hands Congress bestirred itself no further. Poor Jay, in Spain, had a terrible time of it in this way, and if ever a man was placed by his country in a painful and humiliating position, it was he. He faced it gallantly, but had to be carried through by Franklin. From first to last it was upon Franklin that the brunt fell; he had to keep the country from financial failure as Washington had to save it from military failure; he was the real financier of the Revolution; without him Robert Morris would have been helpless. Spain yielded but trifling sums in response to Jay's solicitations; Holland, which was tried by Adams, was even more tardy and unwilling, though towards the end some money was got there. Franklin alone, at Paris, could tap the rock and make the waters flow. So upon him Congress sent in an endless procession of drafts, and compelled him to pay all their foreign bills and indebtedness; he gathered and he disbursed; to him were referred all the drafts upon Jay and others, which they themselves could not pay, and he discharged them one and all. A heavier task never fell upon any man, nor one bringing less recognition; for money matters usually seem so dry and unintelligible that every one shirks informing himself about them. We read about the horrors of the winter camp at Valley Forge, and we shudder at all the details of the vivid picture. The anxiety, the toil, the humiliation, which Franklin endured for many winters and many summers in Paris, in sustaining the national credit, do not make a picture, do not furnish material for a readable chapter in history. Yet many a man would far rather have faced Washington's lot than Franklin's.

I do not intend to tell this tale at length or minutely, for I could trust no reader to follow me in so tedious an enterprise; yet I must try to convey some notion of what this financiering really meant for Franklin, of how ably he performed it, of what it cost him in wear and tear of mind, of what toil it put upon him, and of what measure of gratitude was due to him for it. It may be worth mentioning by the way that he not only spent himself in efforts to induce others to lend, but he himself lent. Before he embarked for Philadelphia on his French mission, he gathered together all that he could raise in money, some £3000 to £4000, and paid it over as an unsecured loan for an indefinite period to the Continental Congress.

It is not probable that from any records now existing the most patient accountant could elicit any statement, even approximating to accuracy, of the sums which Franklin received and paid out. But if such an account could be drawn up, it would only indicate some results in figures which would have little meaning for persons not familiar with the national debts, revenues, and outlays of those times, and certainly would not at all answer the purpose of showing what he really did. The only satisfactory method of giving any passably clear idea on the subject seems to be to furnish some extracts from his papers.

The ship which brought Franklin also brought indigo to the value of £3000, which was to serve as long as it could for the expenses of the commissioners. For keeping them supplied with money later on, it was the intention of Congress to purchase cargoes of American products, such as tobacco, rice, indigo, etc., etc., and consign these to the commissioners, who, besides paying their personal bills, were sure to have abundant other means for using the proceeds. Unfortunately, however, it so happened that the resources presented by this scheme were already exhausted. In January, 1777, a loan of one million livres had been advanced on a pledge of fifty-six thousand hogsheads of tobacco to the Farmers General of the French revenue; and the rice and indigo had been in like manner mortgaged to Beaumarchais. Congressional jugglery could not quite compass the payment of different creditors with the same money, even supposing that the money came to hand. But it did not; for a long while no cargoes arrived; of those that were dispatched, some were run away with by dishonest ship-masters, some were lost at sea, others were captured by the English, so that Franklin sadly remarked that the chief result was that the enemy had been supplied with these articles for nothing. But he preserved his resolute cheerfulness. "The destroying of our ships by the English," he said, "is only like shaving our beards, that will grow again. Their loss of provinces is like the loss of a limb, which can never again be united to their body." When at last a cargo did arrive, Beaumarchais demanded it as his own, and Franklin at last yielded to his importunities and tears, though having no really sufficient knowledge of his right to it. Later a second vessel arrived, and Beaumarchais endeavored to pounce upon it by process of law. That one also Franklin let him have. Then no more came, and this promising resource seems never to have yielded one dollar for Franklin's use.

Already so early as January 26, 1777, it was necessary to appeal to Thomas Morris, from whom remittances had been expected on account of sales made at Nantes: "You must be sensible how very unbecoming it is of the situation we are in to be dependent on the credit of others. We therefore desire that you will remit with all possible expedition the sum allotted by the Congress for our expenses." But the commissioners appealed in vain to this worthless drunkard.

Strange to say, the instructions given by Congress to the commissioners at the time of Franklin's appointment said nothing about borrowing money. In view of what he had to do in this way it was a singular omission; but it was soon repaired by letters. In March, 1777, Franklin writes to Lee: "We are ordered to borrow £2,000,000 on interest;" also to "build six ships of war," presumably on credit. In this same month Franklin wrote a paper, which was widely circulated in Europe, in which he endeavored to show that the honesty, the industry, the resources, and the prospects of the United States were so excellent that it would really be safer to lend to them than to England. It was a skillful piece of work, and its arguments had evidently persuaded the writer himself; but they did not induce the money-lenders of the old countries to accept moral qualities and probabilities as collateral security.

Fair success, however, was soon met with at the court of France, so that the commissioners had the pleasure of assuring Congress that they could safely be depended upon to meet the interest on a loan of $5,000,000, which by this aid Congress probably would be able to contract for. But that body had no idea of being content with this! March 17, 1778, Franklin writes to Lee that they have been drawn upon for 180,000 livres, to pay old indebtedness of the army in Canada; also that other bills have been drawn. The number and gross amount of these were not stated in the advices; but the commissioners were ordered to "accept them when they should appear." "I cannot conceive," said Franklin, "what encouragement the Congress could have had from any of us to draw on us for anything but that interest. I suppose their difficulties have compelled them to it. I see we shall be distressed here by these proceedings," etc., etc. Congress was composed of men far too shrewd to await "encouragement" to draw for money!

July 22, 1778, he wrote to Lovell: "When we engaged to Congress to pay their bills for the interest of the sums they could borrow, we did not dream of their drawing on us for other occasions. We have already paid of Congress's drafts, to returned officers, 82,211 livres; and we know not how much more of that kind we have to pay, because the committee have never let us know the amount of those drafts, or their account of them never reached us, and they still continue coming in. And we are now surprised with drafts from Mr. B. for 100,000 more. If you reduce us to bankruptcy here by a non-payment of your drafts, consider the consequences. In my humble opinion no drafts should be made on us without first learning from us that we shall be able to answer them."

Congress could not fairly exact great accuracy from the drawees of its bills, when it never took pains to give notice of the facts of the drawing, of the number of bills drawn, of dates, or amounts; in a word, really gave no basis for account-keeping or identification. No more helter-skelter way of conducting business has ever been seen since modern business methods were invented. The system, if system it may be called, would have been aggravating and confusing enough under any condition of attendant circumstances; but it so happened that all attendant circumstances tended to increase rather than to mitigate the difficulties created by the carelessness of Congress. One naturally fancies that a nation deals in few and large transactions, that these drafts may have been for inconveniently large sums, but that at least they probably were not numerous. The precise contrary was the case. The drafts were countless, and often were for very petty amounts, much as if a prosperous merchant were drawing cheques to pay his ordinary expenses. Further, the uncertainty of the passage across the Atlantic led to these bills appearing at all sorts of irregular times; seconds often came to hand before firsts, and thirds before either; the bills were often very old when presented. Knaves took advantage of these facts fraudulently to alter seconds and thirds into firsts, so that extreme care had to be taken to prevent constant duplication and even triplication of payments. It would have taken much of the time of an experienced banker's clerk to keep the bill and draft department in correct shape. It is not improbable that Congress lost a good deal of money by undetected rascalities, but if so the fault lay with that body itself, not with Franklin.

Amid the harassments of these demands, Franklin was much vexed by the conduct of Arthur Lee and Izard in drawing money for their own expenses. In February, 1778, each insisted that he should be allowed a credit with the banker, M. Grand, to an amount of £2000, as each then expected to depart on a mission. Franklin reluctantly assented, and was then astonished and indignant to find that each at once drew out the full sum from the national account; yet neither went upon his journey. In January, 1779, Izard applied for more. Franklin's anger was stirred; Izard was a man of handsome private property, and was rendering no service in Paris; and his requirements seemed to Franklin eminently unpatriotic and exorbitant. He therefore refused the request, writing to Izard a letter which is worth quoting, both from the tone of its patriotic appeal and as a vivid sketch of the situation:—

At this same time Franklin wrote to Congress to explain how it had happened that so large a sum as £4000 had been allowed to these gentlemen; for he feared that this liberality might "subject the commissioners to censure." The explanation was so discreditable to Lee and Izard that it is charitable to think that there was some misunderstanding between the parties.[68] The matter naturally rankled, and in May Franklin wrote that there was much anger against him, that he was charged with "disobeying an order of Congress, and with cruelly attempting to distress gentlemen who were in the service of their country."

Burgoyne's surrender had a market value; it was worth ready money in France and Spain. Upon the strength of it the former lent the States 3,000,000 livres; and the like amount was engaged for by Spain. But, says Bancroft, "when Arthur Lee, who was equally disesteemed in Versailles and Madrid, heard of the money expected of Spain, he talked and wrote so much about it that the Spanish government, who wished to avoid a rupture with England, took alarm, and receded from its intention."[69]

In February and March, 1779, came demands from the officers of the frigate Alliance for their pay; but Franklin was "neither furnished with money nor authority for such purposes." It seemed, however, too hard to tell these gallant fellows, whose perilous and useful service was in European waters, that they could not have a dollar until they should get safely back to the States; so Franklin agreed to pay for one suit of clothes for each of them. But he begged them to be as "frugal as possible," and not make themselves "expensively fine" from a notion that it was for the honor of the State, which could be better promoted in more sensible ways.

May 26, 1779, he complains to the committee of foreign affairs that, whereas the commissioners had agreed to find in Paris means of paying interest on a loan of $5,000,000, that loan had been doubled, while, on the other hand, they had been "drained by a number of unforeseen expenses," including "orders and drafts" of Congress. "And now," he says, "the drafts of the treasurer of the loans coming very fast upon me, the anxiety I have suffered and the distress of mind lest I should not be able to pay them, have for a long time been very great indeed. To apply again to this court for money for a particular purpose, which they had already over and over again provided for and furnished us, was extremely awkward." One would think so, indeed! So he fell back on a "general application" made some time before, and received naturally the general answer that France herself was being put to enormous expenses, which were aiding the States as efficiently as a direct loan of money could do. The most he could extort was the king's guaranty for the payment of the interest on $3,000,000, provided that sum could be raised in Holland. The embarrassing fact was that the plea of poverty advanced by the French government was perfectly valid. Turgot said so, and no man knew better than Turgot. He had lately told the king that even on a peace footing the annual expenditures exceeded the annual receipts of the exchequer by 20,000,000 livres; and he even talked seriously of an avowal of national bankruptcy. The events preceding the French Revolution soon proved that this great statesman did not exaggerate the ill condition of affairs. Yet instead of practicing rigid prudence and economy, France had actually gone into a costly war for the benefit of America. It was peculiarly disagreeable to be ceaselessly appealing for money to an impoverished friend.

Another vexation was found in the way in which the agents of the various individual States soon began to scour Europe in quest of money. First they applied to Franklin, and "seemed to think it his duty as minister for the United States to support and enforce their particular demands." But the foreigners, probably not understanding these separate autonomies, did not relish these requisitions, and Franklin found that he could do nothing. On the contrary, he was hampered in effecting loans on the national credit; for these state agents, hurrying clamorously hither and thither, gave an impression of poverty and injured the reputation of the country, which, indeed, was already low enough upon the exchanges without any such gratuitous impairment.

February 19, 1780, there was an application from John Paul Jones for money for repairs on his ships. Franklin approved keeping the vessels in serviceable condition, but added: "Let me repeat, for God's sake be sparing, unless you mean to make me a bankrupt, or have your drafts dishonored for want of money in my hands to pay them."

May 31, 1780, he complains that he has been reproached by one of the congressional agents whose unauthorized drafts he had refused. He has been drawn upon by Congress, he says, for much more than the interest, which only he had agreed to furnish, and he has answered every demand, and supported their credit in Europe. "But if every agent of Congress in different parts of the world is permitted to run in debt, and draw upon me at pleasure to support his credit, under the idea of its being necessary to do so for the honor of Congress, the difficulty upon me will be too great, and I may in fine be obliged to protest the interest bills. I therefore beg that a stop may be put to such irregular proceedings." It was a reasonable prayer, but had no effect. Franklin continued to be regarded as paymaster-general for the States in Europe.

We next hear of his troubles in paying the bills which Congress, according to its usual custom, was drawing upon Jay. They sent Jay to Spain, and told him to borrow money there; and as soon as they had got him fairly at sea, they began drawing drafts upon him. He soon found himself, as he said, in a "cruel situation," and the torture of mind which he endured and the responsibility which he assumed are well known. He courageously accepted the bills, trusting to Providence and to Franklin, who seemed the agent of Providence, to arrange for their payment. Franklin did not fail him. One of Jay's earliest letters to Franklin said: "I have no reason as yet to think a loan here will be practicable. Bills on me arrive daily. Be pleased to send me a credit for the residue of our salaries." Five days later: "Bills to the amount of $100,000 have arrived. A loan cannot be effected here." And so on. In April, 1781, his appeal became pathetic: "Our situation here is daily becoming more disagreeable from the want of our salaries; to be obliged to contract debts and live on credit is terrible. I have not to this day received a shilling from America, and we should indeed have been greatly distressed, had it not been for your good offices." An American minister without resources to pay his butcher and his grocer, his servant and his tailor, presented a spectacle which moved Franklin to great efforts! In plain truth, Jay and his secretary, Carmichael, were dependent upon Franklin for everything; they not only drew on him for their salaries to pay daily household expenses, but they sent him lists of the bills accepted by them for the "honor of Congress," and which they had no means of paying. It was fortunate that these two men were willing to incur such peril and anxiety in behalf of this same "honor of Congress," which otherwise would soon have been basely discredited; for that body itself was superbly indifferent on the subject, and did not pretend to keep faith even with its own agents.

Thus matters continued to the end. Congress pledged itself not to draw bills, and immediately drew them in batches. Jay could report to Franklin only scant and reluctant promises won from the Spanish court; and small as these engagements were, they were ill kept. Perhaps they could not be kept; for, as Jay wrote, there was "little coin in Egypt," the country was really poor. So the end of it always was that Franklin remained as the only resource for payments, to be made week after week, of all sorts of sums ranging from little bills upon vessels up to great totals of $150,000 or $230,000 upon bankers' demands. Such was the burden of a song which had many more woeful stanzas than can be repeated here.

By way of affording some sort of encouragement to the French court, Franklin now proposed that the United States government should furnish the French fleet and forces in the States with provisions, of which the cost could be offset, to the small extent that it would go, against French loans. It seemed a satisfactory arrangement, and France assented to it.

At the same time he wrote to Adams that he had "long been humiliated with the idea of our running about from court to court begging for money and friendship, which are the more withheld the more eagerly they are solicited, and would perhaps have been offered if they had not been asked. The proverb says, God helps them that help themselves; and the world too, in this sense, is very godly." This was an idea to which he more than once recurred. In March, 1782, in the course of a long letter to Livingston, he said: "A small increase of industry in every American, male and female, with a small diminution of luxury, would produce a sum far superior to all we can hope to beg or borrow from all our friends in Europe." He reiterated the same views again in March, and again in December, and doubtless much oftener.[70] No man was more earnest in the doctrine that every individual American owed his strenuous and unremitting personal assistance to the cause. It was a practical as well as a noble patriotism which he felt, preached, and exemplified; and it was thoroughly characteristic of the man.

What was then the real financial capacity of the people, and whether they did their utmost in the way of raising money to support the Revolution, is a question about which it is easy to express an opinion, but difficult to prove its accuracy by convincing evidence. On the one hand, it is true that the strain was extreme and that much was done to meet it; on the other hand, it is no less true that even beneath this stress the national prosperity actually made a considerable advance during the war. The people as a whole gathered money rather than impoverished themselves. In the country at large the commercial instinct fully held its own in competition with the spirit of independence. There was not much forswearing of little luxuries. Franklin said that he learned by inquiry that of the interest money which was disbursed in Paris most was laid out for "superfluities, and more than half of it for tea." He computed that £500,000 were annually expended in the States for tea alone. This sum, "annually laid out in defending ourselves or annoying our enemies, would have great effect. With what face can we ask aids and subsidies from our friends, while we are wasting our own wealth in such prodigality?"

Henry Laurens, dispatched as minister to the Hague in 1780, was captured on the voyage and carried into England. But this little incident mattered not at all to the Congress, which for a long while cheerfully drew a great number of bills upon the poor gentleman, who, held in the Tower of London as a traitor, was hardly in a position to negotiate large loans for his fellow "rebels." In October, 1780, these bills began to flutter down upon Franklin's desk, drawn by a sort of natural gravitation. He felt "obliged to accept them," and said that he should "with some difficulty be able to pay them, though these extra demands often embarrass me exceedingly."

November 19, 1780, he wrote to de Vergennes announcing that Congress had notified him of drafts to the amount of about 1,400,000 livres (about $280,000). The reply was: "You can easily imagine my astonishment at your request of the necessary funds to meet these drafts, since you perfectly well know the extraordinary efforts which I have made thus far to assist you and support your credit, and especially since you cannot have forgotten the demands you lately made upon me. Nevertheless, sir, I am very desirous of assisting you out of the embarrassed situation in which these repeated drafts of Congress have placed you; and for this purpose I shall endeavor to procure for you, for the next year, the same aid that I have been able to furnish in the course of the present. I cannot but believe, sir, that Congress will faithfully abide by what it now promises you, that in future no drafts shall be made upon you unless the necessary funds are sent to meet them."

Such a letter, though only gratitude could be felt for it, must have stung the sensitiveness of Franklin, who had already a great national pride. Nor was the pain likely to be assuaged by the conduct of Congress; for that body had not the slightest idea of keeping the promises upon which de Vergennes expressed a reliance perhaps greater than he really felt. It is not without annoyance, even now, that one reads that only two days after the French minister wrote this letter, Congress instructed Franklin to do some more begging for clothes, and for the aid of a fleet, and said: "With respect to the loan, we foresee that the sum which we ask will be greatly inadequate to our wants."

December 2, 1780, Franklin acknowledges "favors," a conventional phrase which seems sarcastic. These tell him that Congress has resolved to draw on him "bills extraordinary, to the amount of near $300,000." These were doubtless what led to the foregoing correspondence with de Vergennes. In reply he says that he has already engaged himself for the bills drawn on Mr. Laurens, and adds: "You cannot conceive how much these things perplex and distress me; for the practice of this government being yearly to apportion the revenue to the several expected services, any after demands made, which the treasury is not furnished to supply, meet with great difficulty, and are very disagreeable to the ministers."

A short fragment of a diary kept in 1781 gives a painful vision of the swarm of bills:—

"Jan. 6. Accepted a number of loan office bills this day, and every day of the past week.

"Sunday, Jan. 7. Accepted a vast number of loan office bills. Some of the new drafts begin to appear.

"Jan. 8. Accepted many bills.

"Jan. 10th. Informed that my recall is to be moved for in Congress.

"Jan. 12th. Sign acceptation [qu. "of"? mutilated] many bills. They come thick.

"Jan. 15th. Accepted above 200 bills, some of the new.

"Jan. 17th. Accepted many bills.

"Jan. 22d. M. Grand informs me that Mr. Williams has drawn on me for 25,000 livres; ... I order payment of his drafts.

"Jan. 24th. A great number of bills.

"Jan. 26th. Accept bills."