It’s been a while since we’ve discussed the Continental Congress specifically. Many of the more memorable delegates had moved on to other duties. Benjamin Franklin and John Adams were in France. Thomas Jefferson was serving as Governor of Virginia. Former President Henry Laurens had left for a diplomatic assignment in the Netherlands, but had been captured by the British. His successor, John Jay left to become the delegate to Spain. John Hancock had become the Governor of Massachusetts.
|Articles of Confederation (from Const. Amer.)|
Samuel Huntington had become the President of Congress in 1779, after Jay left for Spain. Huntington was a lawyer from Connecticut. He had served in the colonial legislatures and the Governor’s council before the war and had arrived in Congress in 1776, in time to sign the Declaration of Independence.
As President, Huntington spent his time corresponding with General Washington, who was constantly asking for more men and supplies. He also corresponded with all of the state governors, asking them to supply more men and supplies, and usually being turned down.
Congress had always struggled with running a government. The government lacked any sort of civilian bureaucracy or an executive branch to execute the laws that it passed. Delegates found it impossible to run the government while also trying to legislate.
On January 10, 1781, Congress voted to create a department of Foreign Affairs. A month later on February 7, it voted to create Departments of Finance, War, and Marine. Congress would appoint secretaries to run each department, and would provide each secretary with a staff. The actual appointments would not take place until many months later. In fact, Congress never got around to making an appointment from someone to run the Marine Committee, which was supposed to be in charge of the Navy. But then, they didn’t have much of a navy anyway.
Congress would appoint Robert Livingston as Secretary of Foreign Affairs, Robert Morris as Secretary of Finance, and General Benjamin Lincoln as Secretary of War. Livingston had left Congress in 1780 to serve as the chancellor of New York, a job he kept while still serving as Secretary of Foreign Affairs. Morris had left Congress in 1778. He had been serving in the Pennsylvania Assembly as head of the Republican faction.
General Benjamin Lincoln had been captured at the Siege of Charleston in the spring of 1780. He had been paroled and returned to Philadelphia, but could not serve again until exchanged. In November, 1780, he was exchanged for Major General William Phillips, who had been captured at Saratoga three years earlier. So by 1781, he was able to serve as secretary. Lincoln, however, was also still an active-duty officer who sometimes left on military campaigns.
None of these new departments were the first attempts to run the country. The Foreign Affairs Department drew from the Secret Committee, which had been established to correspond with foreign powers and with commissioners serving abroad. The committee changed its name to the Committee for Foreign Affairs in 1777. It also turned over most of its powers to the new Executive Department in 1781.
The Board of War under Horatio Gates had been an effort to organize some better civilian control over the Army. But with Gates’ reputation in disrepute after Camden, Congress finally decided to shut down the Board of War in February, 1781.
Finances had always been a mess in Congress. Morris had taken primary responsibility for financial affairs, but after Congress questioned where he was mixing his work too much with his private business, Morris departed from Congress in 1778 and left the job to others. Congress reorganized its financial committees three times over the next three years, before finally creating the Department of Finance, and calling back Morris to run it.
For all of the new departments, there were no fixed terms. Although Congress had the power to remove a secretary, the delegates never did. Each of the secretaries served until they resigned.
Articles of Confederation
One of the big accomplishments in 1781 was the final ratification of the Articles of Confederation. Congress had sent the Articles to the states for approval back in 1777. Within a few months, a majority of states had ratified them. But the Articles could not take effect until all thirteen states had ratified them.
Keep in mind that the Continental Congress really had no governing document until the Articles were ratified. The delegates only really had any authority to do anything because the states allowed it. Congress could not force the states to do anything. Any rules that Congress had in place to run itself were established by the delegates themselves and could be changed at any time. They were literally making it up as they went along.
By the end of 1778, all of the states but two had ratified the articles. Delaware waited until February of 1779 to ratify.
That left Maryland as the final hold-out. Officials in Maryland did not have any specific objection to the articles themselves. They wanted a decision on western land claims before they would approve the Articles.
|Virginia Land Claims|
Maryland did not have any western claims of its own. Its concern was primarily its neighbor, Virginia. At the time, Virginia claimed what is today West Virginia, Kentucky, Ohio, Indiana, Illinois, Michigan, Wisconsin, and parts of Minnesota and even Canada. There were other states that held conflicting claims to some of this land, but Virginia’s claims, if recognized, would probably have given it a larger land mass than all the other states combined.
Maryland felt threatened by this massive empire to its south and west. It wanted Congress to take control of most of these western lands and ensure that they would be broken up into other states. Congress could use these lands to raise funds, and make good on the land grant promises to veterans. It would also prevent the states from going to war with one another to enforce their land claims.
Virginia, understandably, resisted giving up all of its claims to western lands. Congress passed several resolutions calling on all states to give up their claims to western lands and turn them over to Congress. Finally, in January, 1781, Virginia agreed to cede most of its western land to Congress. Among its conditions for doing so is that the lands be held by Congress, not claimed by any other existing state, and that the land eventually be developed into new independent states that would join the union. Virginia shrunk its borders to what is today Virginia, West Virginia, and Kentucky.
With that issue finally resolved, Maryland became the thirteenth state to ratify the Articles in February, 1781, finally allowing them to take effect after three and a half years.
Congress celebrated the adoption of the Articles on March 1. Even as they celebrated, many delegates were already commenting that the Articles were inadequate to running an effective government.
Much of the articles were also rather vague. For example, it did not specify what constituted a quorum. Initially, the delegates set this at nine states, but later dropped it to seven for ordinary business.
There was also a question about terms of service. The Articles imposed term limits. A president could only serve for one year. Delegates could only serve for three of every six years. But it was unclear if that was retroactive. President Huntington had already been in office for more than a year, and many delegates had been in Congress for over three years. Congress decided that the clock on term limits only started on March 1, and would not apply retroactively to prior service.
|Articles, printed (from Northwestern)|
The Articles also required that each state have two delegates. Some states only had one delegate present, meaning they could not vote until their states sent a second delegate.
Debate on these issues often got heated. In March, French Minister Luzern reported to officials Minister Vergennes back in France that two delegates attacked each other on the floor of the state house with canes. Samuel Adams became a leading opponent of giving any new powers to Congress.
Other members, however, continued to argue for new powers. A new freshmen delegate from Virginia, James Madison, first came to Congress in 1780 at the age of 29. He began fighting for increased powers for Congress, including the ability to coerce states into doing things involuntarily, and the ability of Congress to collect tariffs without the states in order to help fund the war effort.
Bank of North America
Finances, of course, were the largest problem. In January, Congress received word that large segments of the Continental Army were in mutiny, in part over Congress’ failure to keep its promises of pay to the soldiers. Inflation had reached crazy proportions. Some reports of it taking 500 Continental dollars to exchange for one dollar of hard money.
|Bank of North America|
Given the financial crisis, Congress prioritized getting Robert Morris into his new position as Secretary of Finance, finalizing his appointment in March. By May, Morris took office and within days presented his plan for a national bank.
It’s important to remember that there were no banks in America up until this time. All financial transactions were performed by private merchants.
Even Morris’ proposed Bank of North America would not be for private depositors. Britain had the Bank of England, which had become critical to the government’s ability to borrow and maintain credit. America needed something similar.
It would take nearly a year to get the bank off the ground and running. At least plans were beginning to form that would put some institutional controls over the nation’s finances. Even the bank’s organization did not take the place of actually having money. Congress was still pinning all its hopes on loans or grants from Europe. At some point, Congress was going to have to pay back that debt. Creating a bank showed potential creditors that Congress was building some infrastructure to handle that problem.
Congress would charter the bank in 1781 based on Morris’ proposal. That bank would not open until 1782. Of course, a bank at this time needed to have specie, gold or silver, in order to get people to trust its bank notes. To fund the bank, Morris redirected a silver shipment from France to Congress. Morris then used that sliver to issue loans to Congress to back additional currency. Private investors were also offered shares in the bank, provided they could buy them with gold or silver.
The basic idea of the bank is that it would offer a stable form of currency. Unlike Congress, which just printed more money whenever it needed it, the bank would use standards of the day to issue a limited amount of bank notes based on the amount of gold and silver that it had in reserve. As long as the public retained confidence in the bank’s practices, the currency should retain its value.
The proposal was controversial from the beginning. James Madison led the opposition to the bank in Congress, arguing that Congress did not have authority under the Articles of Confederation to create such a bank. In the end, Congress approved the bank with only seven states voting in favor of it. Several, including Morris’ home state of Pennsylvania, were divided and could not cast a vote either way.
Through the remainder of the war Morris and the bank would do their best to stabilize the currency and finance the war. But the overwhelming debt and lack of any income from taxes, made this job more damage control than effective policy-making.
Silas Deane Defeatist Letters
Congress’ lack of money and inability to implement a stable financial system was nothing new. Conditions had only worsened steadily since the war began. Congress’ inability to repay debts had some pretty drastic consequences. The last few months of 1780 had seen the defection of General Arnold, based primarily on Congress’ refusal to pay him for the campaigns he had funded out of his own pocket. The new year opened with a large portion of the Continental Army mutinying because Congress could not live up to its agreements to provide pay bounties to soldiers, or even to provide basic food, clothing and shelter.
The entire government seemed to be on the verge of collapse. Congress could not agree on any effective solution to prevent it, other than continue to deny the reality of things and hope for the best.
One man who seemed to have lost hope was Silas Deane. As an original delegate from Connecticut, Deane had been a committed patriot and knew well how Congress operated. Congress had sent him to France very early in the war, long before Franklin and Adams made the trip. Deane had managed to pull off some amazing loans and assistance in France, thanks to officials who were amenable to supporting the effort.
In doing so, Deane had spent a great deal of his own money to support himself and what amounted to the American diplomatic mission in Europe. However, thanks to lies from Arthur Lee, Congress turned against Deane. It ended up refusing to repay Deane for his debts and even recalled him to America to answer questions about whether he had profited from his financial transactions in France.
When Deane returned to America in 1778 to settle the matter with Congress, he found that Congress was unwilling to do anything but stretch out the hearings and bury Deane in unsupported innuendo. Deane’s understandable frustration only got him into more trouble for bad-mouthing Congress.
Eventually, Deane got approval to return to Europe, at his own expense, in order to get more accurate records of his financial transactions. But since these transactions were with the French government, and French leaders did not want to release the records, they kept Deane on ice as well, unwilling to give him the information that he needed. Congress had promised to send an auditor to France to look into his finances, but never got around to sending anyone.
On the verge of bankruptcy, heavily in debt, and no longer even having the promise of pay from Congress, Deane was forced to leave Paris, and take up residence in Ghent, where living was cheaper.
During this time, Deane continued his correspondence with friendly members of Congress, French officials, as well as friends and family in America. Understandably, many of these letters were critical of Congress and its treatment of him. He was also critical of France, which by this time seemed unwilling to help him and had ended much of its financial aid to the Continentals since it was fighting its own war by this time.
In May, Deane wrote to his friend and former Pennsylvania Delegate to Congress, James Wilson. Deane vented his frustration, and was particularly critical of France, who he believed would throw American independence under the bus if it suited its interests. He wrote to others, including General Samuel Parsons, that Britain seemed more powerful and united than ever, and that the British Navy was dominating France and Spain.
Over the course of the summer, Deane wrote a stream of candid and pessimistic letters to those back home. To delegate William Duer, Deane wrote:
I know and confess the difficult situation of Congress ; and I know also (what I am sure that they will not confess) that they have brought themselves into it by their cabals, their ignorance, and their mismanagement.
He goes on to suggest that perhaps Congress should give up on the idea of independence:
let them weigh fairly the probable chances for their succeeding to establish independent sovereignty, and if they find the probability against it, let them honestly confess it, and put an end to the calamities of our country by a peace on honourable terms.
Deane wrote numerous letters the themes of which were that Congress was incompetent and corrupt. It had bankrupted the economy and put the country on the verge of anarchy. Britain was winning the war militarily, and would continue to drive America into the ground. France was going to ditch America as soon as it decided it was in its own best interests. France had always been, and remained, a monarchy that does not respect the liberties of its people. Britain might have its faults, but at least it had a history of respecting certain individual rights, unlike the rest of Europe. Perhaps it was time to consider peace negotiations with Britain that would give up on independence if America could get certain other assurances.
It’s certainly understandable why Deane felt as he did. Congress had screwed him over multiple times. He saw the incompetence, willful injustice, and factionalization of Congress first-hand. He was not only being shut out of most courts of Europe, but saw that other active American diplomats were as well. He was reading British newspapers that reported on the capture of Charleston, the British victory at Camden, and announcements that a British victory was close at hand.
Sadly for Deane these letters fell into British hands and were soon published in newspapers. Dean’s view that the American cause was lost and that it should give up on the dream of independence became public at the worst time, shortly after the victory at Yorktown in the fall of 1781.
The result was that Deane was seen as a defeatist and someone who was spouting the Tory line. Some even accused him of becoming a British spy. While there is no evidence that Deane had changed sides, or even had communications with British officials, his own words showed that he had given up on the cause of a free and independent America. The result was that Deane’s reputation plummeted even further, and would never recover.
Congress, despite its reputation among a growing number of critics, continued to do whatever it could to further the war effort.
Next week: The war continues in Virginia as General Lafayette leads an army against Benedict Arnold.
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Articles of Confederation: https://2001-2009.state.gov/r/pa/ho/time/ar/91719.htm
Ratification of the Articles of Confederation: https://archive.csac.history.wisc.edu/706.htm
Young, Rowland L. “The Articles of Confederation and Perpetual Union.” American Bar Association Journal, vol. 63, no. 11, 1977, pp. 1572–75. JSTOR, http://www.jstor.org/stable/20745080.
Bank of North America: https://philadelphiaencyclopedia.org/essays/bank-of-north-america
James, F. Cyril. “The Bank of North America and the Financial History of Philadelphia.” The Pennsylvania Magazine of History and Biography, vol. 64, no. 1, 1940, pp. 56–87. JSTOR, http://www.jstor.org/stable/20087258.
Rappaport, George David. “The First Description of the Bank of North America.” The William and Mary Quarterly, vol. 33, no. 4, 1976, pp. 661–67. JSTOR, https://doi.org/10.2307/1921720.
Nuxoll, Elizabeth M. “The Bank of North America and Robert Morris’s Management of the Nation’s First Fiscal Crisis.” Business and Economic History, vol. 13, 1984, pp. 159–70. JSTOR, http://www.jstor.org/stable/23702711.
Silas Deane’s intercepted letters: https://quod.lib.umich.edu/cgi/t/text/text-idx?c=evans;idno=N13851.0001.001
(from archive.org unless noted)
Journals of the Continental Congress, Vol. 19, Jan. 1 - April 23, 1781. Washington: Government Printing Office, 1912.
Clark, George L. Silas Deane, New York: G. P. Putnam's sons, 1913.
Deane, Silas The Deane Papers, Vol. 4 (1779-1781) New York Historical Society, 1887.
Books Worth Buying
(links to Amazon.com unless otherwise noted)*
Burnett, Edmund Cody, The Continental Congress, Macmillan Co. 1941
Feinberg, Barbara Silberdick The Articles of Confederation, Twenty-First Century Books, 2002.
Jensen, Merrill The Articles of Confederation: An Interpretation of the Social-Constitutional History of the American Revolution, 1774-1781, Univ. of Wisconsin, 1948.
Rappleye, Charles Robert Morris: Financier of the American Revolution, Simon & Schuster, 2010.
* As an Amazon Associate I earn from qualifying purchases.