[dateline] Passy December the 7th. 1778
To His Excellency Count de Vergennes, Minister & Secretary of State for foreign Affairs:1
At the time the American War began there was very little real Money in that Country, the same having been constantly drawn out as
fast as it came in to pay for British Manufactures and Importations of foreign Goods by the British Merchants, with the Duties and other Expences occasioned by their Monopoly.
This Scarcity of Money, together with the Stoppage of Commerce by the War, would have made it difficult for the People to pay Taxes in support of it; And the new Governments were scarcely sufficiently settled at first to venture upon imposing them.
The Congress therefore issued Paper Bills in Lieu of Money, which during the first and most Part of the second Year, answered well the Purposes for which they were emitted, in Supporting a vigorous internal Defence, and furnishing a Marine Force which greatly annoyed the Enemy's Commerce.
But the too great Quantity of this Currency (which, tho' the War called for it and required it to be issued, was much more than the diminish'd Commerce could find Employment for) at length naturally occasioned a Depreciation of its Value, which being once begun, could not easily be stopt, or recovered; And it fell so low, as that seven or eight Dollars in Paper have been valued at not more than one of Silver.
The Treaty with France and the Naval Aid sent from thence having given a more general Confidence in the Stability of the new Government, and in the publick Ability to discharge and pay off the Bills; And Congress, in Proportion as they could supply the Treasury by Borrowing the old Bills of the Possessors upon Interest, having forborne to issue new Ones; they have now recover'd so much Credit, as that the Difference is not at Present more than three for one.2
But a principal Means of recovering and supporting so much of their Credit, has been a Promise made by the Congress, to pay the Annual Interest by real Money in France.3
This Promise was made for all the Bills that were borrowed before the Month of March 1778, which it is Said amount to near fourty two Millions of Livres Tournois, the Interest whereof at the Rate of six Per Cent, will be two Millions and an half.
The Congress hoped to fulfill this Promise by Means of Remittances to be made hither of American Produce; or by Loans of Money to be procured in Europe from private Persons, on the Credit of the States; or finally by a Subsidy or Loan from their great and good Friend and Ally his most Christian Majesty. Those Remittances have been mostly intercepted or prevented. The Wars in Europe, and the Demand for Loans of Money on the Credit of more settled States, have made it more difficult to borrow on Account of the Congress. Thus their only
remaining Hope at Present is in the Wisdom and Goodness of his most Christian Majesty.
The Bills of Exchange will probably begin to arrive in December being drawn in September by the Congress Treasurer on the Commissioners here for Payment of the Interest due. And they will continue to be drawn till the Month of March next, and to arrive till the May following. In America those Bills of Exchange will be purchased of the Proprietors who are not in Trade, by Merchants who are; and will be sent here to pay for the Manufactures and Produce of France which those Merchants would import into America.
The Commissioners will begin to accept, and will pay those Bills as far as the Money they now have, or which they can hereafter borrow, will enable them to go. But if they cannot compleat the whole; If they are obliged to protest any of them; it will be attended with the most mischievous Effects. As not only the Schemes of Commerce will be deranged, and the beginning Correspondence between the Merchants of the two Nations be nipt in the Bud; but the public Credit of American Paper will be ruined, and can no longer be made Use of as an Instrument to continue the War; which will give great Advantage to Britain, by disabling one of the Allies from co-operating against her.
On the Contrary, if the Bills of Exchange now coming are punctually paid here (which Some have doubted, and therefore the Promise of the Congress has not had the full Effect intended) the Paper Money will, with the Aid of the Taxes4
which are begun to be levied for calling in and diminishing the Quantity, recover its Value and Importance, and the Congress will be enabled to continue the Use of that Instrument for the Payment of their Forces and the Annoyance of the common Enemy.
Such is the Fertility of the Lands and Industry of the People in America, that being no longer impoverish'd by the British Monopoly, there is not the least Doubt to be made of their future Ability of repaying with Interest and Thankfulness such Aids of Money as his Majesty in his Goodness shall think fit to afford them.
The Commissioners therefore pray that his Majesty would graciously take the Premises into Consideration, and compleat the good Work of securing the Liberties of America which he has so magnanimously and successfully commenc'd, by giving Orders for furnishing such Sums from Time to Time as may be wanted for the Purpose abovementioned.5
[signed] B Franklin
[signed] Arthur Lee
[signed] John Adams