USA > Connecticut > Tercentenary pamphlet series, v. 1 Connecticut and the British Government > Part 22
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I Edward Channing, A History of the United States, III. 32.
15
Reason of the Poverty of those on whom they are laid."2 Without seeking to generalize regarding the financial his- tory of the American colonies taken as a whole, let us examine the nature of the burdens that the colony of Connecticut was obliged to carry in the 'sixties and 'seventies as the result of extraordinary efforts put forth in the course of the Seven Years' War. That struggle, as is well known, not only added enormously to the public debt of Great Britain but placed on the shoulders of Englishmen almost unprecedented burdens in providing funds for the equipment of their own naval and military forces, the subsidizing of the armies of Prussia and the colonial forces in America during the war, and in main- taining the public credit at the conclusion of hostilities.
The war had its immediate origin, so far as the English speaking people are concerned, in the Ohio Valley region and was begun by colonials. For over a century they had sought to be relieved of the pressure of the French and their Indian allies and the constant menace to the frontier settlements. Without doubt, they had more at stake than any other portion of the empire so far as the success or failure of the war in America was concerned. Neverthe- less, the government of Great Britain, first under the guidance of Newcastle and later under the masterful Pitt, determined, in the face of reverses, to whet the zeal of the plantations in this decisive struggle in North America by offering to furnish ammunition, tents, and subsistence to the troops raised by the colonies.3 Pitt later went so far as
2 Mr. Ingersoll's Letters relating to the Stamp-Act (New Haven, 1766), P. 44.
3 In 1746, during the preceding war, the General Assembly of Connecticut voted that the governor be desired with the advice of the Committee of War to take measures for obtaining from His Majesty's paymaster general wages due to the officers and soldiers raised for the Canadian expedition. In the following year the governor was directed to make proper drafts on this officer for the commissary's expenses for clothing and arms. Although Hollister, in
16
to agree not only to provide arms, in addition to the above, but to recommend strongly to Parliament appropriations for the clothing and pay of the colonial line.4 The colonies responded to this policy with the result that by 1759 New Hampshire had in the field 1000 men; Massachusetts, 6500; Rhode Island, 1000; Connecticut, 5000; New York, 2680; New Jersey, 1000; Pennsylvania, 3000; and Vir- ginia, 1200-according to information furnished by Gen- eral Amherst, upon the basis of which parliamentary grants were made for that year.5 In the eyes of the men of that period, the fitting out of these troops and their maintenance in the field was a matter of no slight ex- pense. According to a report of the Board of Trade made in 1765 the colonies during the war together spent £2,515,038, of which £760,435 remained unpaid at the time of the report. Of this sum, Connecticut is credited with having expended {259,000 sterling.6
From the year 1755, when military preparations were begun, to 1761, the year of the cessation of hostilities in America, Connecticut, in order to meet her extraordinary expenses, issued some £264,500 in bills of credit bearing interest at the rate of five per cent. and running for periods of from two to four years which, with interest
his History of Connecticut (I. 409), when referring to the colony's petition for reimbursement on account of the Cape Breton expedition says, "Her prayer was disregarded, and she submitted to the loss in silence," the money was after some delay paid to the colonial agent, Dr. Benjamin Avery, and was duly transmitted by bills of exchange as was the reimbursement for the ex- penses in the proposed expedition of 1746. Conn. Col. Rec., X. 493, 537, 546.
4 For these letters, see E. B. O'Callaghan, Documents relative to the Colonial History of the State of New York, VII. 216, 340, 351.
5 C. O. 323: 19. Other colonies, of course, rendered services and in . 1757 Parliament appropriated the sum of £50,000 as compensation to Virginia, North Carolina, and South Carolina for services.
6 C. O. 323: 19. Conn. Col. Rec., XI. 10. To keep her soldiers in the field, Connecticut paid them at the rate of £1 16s. per month, counting twenty- eight days to the month. Ibid., XI. 94.
I7
charges that amounted to {62,700, obligated the colony to the extent of £327,200; further, from 1761 to 1765 she issued £82,000 in bills of credit carrying interest charges of £18,650. Thus the sum total of these issues with inter- est amounted to £427,850.7 To arrange for the calling in of these bills of credit upon maturity the General Assembly up to March, 1764, provided for the raising of £400,000 in taxes. The amounts varied from a two penny tax granted in 1755, to be collected in August, 1756, for raising £5000, to two levies voted in March, 1760, amounting to £75,000, part of which was to be collected in December, 1761, and the remainder in December, 1764. The last levy connected with the war finances, a one and three-fourths penny tax to raise £8750, was voted in 1764, to be collected December, 1767.8
These figures, expressed in terms of "lawful money,"
7 The following are the issues with interest charges. These are in terms of lawful money, or in relation to sterling as six is to four and one-half:
Sum
Date of Issue
Date Payable
Interest
4
7,500
Jan., 1755
May, 1758
1,250
30,000
Aug., 1755
Aug., 1760
7,500
12,000
Oct., 1755
Apr., 1760
2,700
30,000
Mar., 1758
May, 1762
6,250
20,000
Feb., 1759
May, 1763
4,250
40,000
Mar., 1759
Mar., 1764
10,000
10,000
May, 1759
May, 1763
2,000
70,000
Mar., 1760
Mar., 1765
17,500
45,000
Mar., 1761
Mar., 1766
11,250
65,000
Mar., 1762
Mar., 1767
16,250
10,000
May, 1763
May, 1765
1,000
7,000
Mar., 1764
Mar., 1768
1,400
346,500
81,350
Connecticut Archives, MSS., Finance and Currency, 1764-1774, V. 5. Conn. Col. Rec., XII. 339.
8 The following statement of "Funds Appropriated" was drawn up by a committee appointed by the General Assembly in 1764.
Tax d.
Date for levying
Amount to be raised
2
Aug., 1757
5,000 £
18
indicate a formidable increase in the taxation of the people of Connecticut, for the ordinary annual expenses of the colonial establishment, according to Governor Trumbull in 1774, were only about £4000 sterling-ex- cluding the schools. A penny tax would produce £5000 in the 'sixties; in 1756 Governor Fitch gave the revenue of the colony by direct taxation, which was practically the only revenue the government had, to be £4000 ster- ling.9 In other words, the annual penny tax under ordinary circumstances sufficed to meet the needs of government,10 while for the year 1763 taxation amounting to fifteen pence "on the pound on polls and rateable estate" was provided for by the legislature in a levy of ten pence granted in March, 1760, and one of five pence in March, 1761. For the year 1764 three levies fell due, of nine pence, granted in March, 1760, six pence in March, 1762, and two pence in May, 1763.
Tax
Date for levying
Amount to be raised
d.
3 and 4
Aug., 1759 and Apr., 1760
35,000
3
Aug., 1759
15,000
8
Dec., 1761
40,000
5
Dec., 1762
25,000
IO
Dec., 1763
50,000
21/4
Dec., 1762
6,250
6 and 9
Dec., 1761 and Dec., 1764
75,000
5 and 7
Dec., 1763 and Dec., 1765
60,000
6 and 8
Dec., 1764 and Dec., 1766
70,000
2
Dec., 1764
10,000
1 3 /4
Dec., 1767
8,750
Conn. Arch., Finance and Currency, V. 5. The reader should bear in mind that these sums represent the amounts of the levies and not the amounts actually collected, as will be made clear in the course of this paper.
9 Conn. Col. Rec., X. 624, XIV. 500. For the distinction between sterling and lawful money, see note by C. M. Andrews, "Current Lawful Money of New England," Am. Hist. Rev., XXIV. 73-77; see also fared Ingersoll Papers, F. B. Dexter, ed., p. 223, note.
10 Ingersoll said that {4000 equaled the "penny rate." Ingersoll's Letters, P. 49, note .*
19
In the light of the necessities of the government and its consequent great demands upon the people it might be thought that the finances of the colony would have be- come demoralized as they were in the course of King George's War and later during the crisis of the Revolu- tion. It is, therefore, surprising to discover that Connecti- cut was able by the end of 1763, the year that witnessed the Peace of Paris, not only to discharge all but £82,000 of the total of £346,500 in bills of credit issued from 1755 to that date," but, in addition, to meet her other extra- ordinary war charges which, together with the above necessitated taxes amounting to £410,932 75. 21/2d. in terms of lawful money for this same period, according to the treasury records of the colony,12 and which by the end
HI C. O. 323: 19.
12 See the Account Book of Joseph Talcott, Treasurer, MS., Connecticut State Library. The following figures taken from this and compiled give con- cisely a view of Connecticut taxation from 1755 to 1765, which, of course, includes those rates laid for the purpose of calling in at maturity the bills of credit as well as those laid to meet the various other contingencies of the war-time government:
Date of Tax Levy Rate on the Pound
Amount Raised
d.
S.
d.
1755
4
22,325
4
I
1756
5
29,567
I7
91/4
1757
8
47,666
I5
71/4
1757
I
8,935
2
1/4
1758
I212
78,895
6
7
1759
I3
77,082
II
61/2
1760
IO
59,494
19
3
1761
IO
61,043
IO1/2
1762
5.3
35,92I
9
3
1763
6
38,244
9
II14
1764
8
50,895
5
I12
1765
I
6,40I
9
3
Total 516,473
9
712
"In these Services, from the Year 1755 to the Year 1762 inclusive, the Ex- pences of the Colony over and above the parliamentary Grants (which have been received with the most sensible and humble Gratitude) amounts to up-
20
of 1765 totaled £516,473 95. 712d. She also during these years placed her financial system upon a firm basis. For it should be made clear that at the beginning of the war her finances were still demoralized as the result of re- pudiating the face value of her currency when calling in her new tenor bills with a valuation of fourteen shillings and seven pence, and her old tenor bills with a valuation of fifty-one shillings, as the equivalent of the Spanish milled dollar instead of the proclamation or lawful valua- tion of six shillings to the dollar. In contrast to this, her bills of credit issued in the course of the French and Indian War were redeemed at face value. A committee of the General Assembly asserted in 1764 "that their value has remained invariable, permanent, and stable." Connecticut, in fact, had so buttressed her credit during these years that when at a later period it was determined to put forth further issues of paper bills she kept them on a lawful money basis although the issue of the year 1770 carried interest of only two and one-half per cent. in contrast to five per cent. on the issues from 1755 to 1764 inclusive-a rate of interest incidentally less than that paid on British consols, which, of course, are not to be confused with paper money,13 while the issues of 1771, 1773, and 1774, each running for a period of two years, were without interest. All this she did in the course of the war in spite of the fact that practically one-fifth of her man power between the ages of sixteen and forty-five years was under arms from the year 1757 onward, and
wards of four hundred thousand Pounds; the large Arrears of which Sum will remain a heavy distressing Burden upon the People for many Years to come." Thomas Fitch, Reasons why the British Colonies, in America, should not be charged with Internal Taxes, by Authority of Parliament (New Haven, 1764), PP. 31-32.
13 In 1751 the rate of interest on the consolidated debt was placed at three per cent.
2I
thus not only was out of productive activity but also exempt from taxes.14
The explanation of this extraordinary record on the part of Connecticut undoubtedly lies in certain unusual factors which profoundly affected the local situation. First among these, perhaps, was the fact that one of the war centers was along the borders of the neighboring province of New York and consequently Connecticut beef, pork, wheat, flour, and other commodities needed by the army contractors for the supply of the troops sold at greatly enhanced prices for specie.15 Further, a large proportion of the expenditures made by the colony itself during the war was in favor of her own people in the form not only of wages for military service which were, it was stated, fifty per cent. higher than the wages of regular troops in the British army,16 but also in the form of vari- ous military supplies that could be furnished locally, for which repayment was made by the British government. It should be appreciated, moreover, that, unlike the pay received during the Revolutionary War, compensation was not in depreciated paper currency but her soldiers, merchants, shippers, and farmers got their rewards either in specie or in that which ultimately could be exchanged for specie when the bills of credit which the colony issued were called in at the time of maturity. Connecticut un-
14 Conn. Col. Rec., X. 424; XII. 339, 667-668; XIII. 300; XIV. 499; Henry Bronson, "A Historical Account of Connecticut Currency," New Haven Colony Historical Society, Papers, vol. I., ch. IV.
15 The Board of Trade was informed in 1757 that Mr. Kilby, the army con- tractor in America, found the price of wheat when he began buying, advance fifty per cent., from three to four shillings and sixpence per bushel. William Snell and Co. to the Board of Trade, May 13, 1757, C.O. 323: 31. "Your in- formation of Flour being 8/6 a Phila. is fals. it has not been under 9/6 per C. is now 10/6 and rising there," wrote G. G. Beekman to Samuel Fowler, Jan. 10, 1757, from New York. Beekman Letter Book, 1752-1770, MS., New York Historical Society.
16 Conn. Col. Rec., X. 475, 600.
22
doubtedly during the war years floated on the crest of a wave of prosperity. There is a remarkable absence of complaint against unreasonable taxes, although the people, it would appear from the records, were paying during some years twenty-six times as much money in the form of taxes as was collected before the beginning of hostilities. Indeed, due to abatements in the rates for the years 1751 and 1752, only one penny on the pound in new tenor currency had been demanded, which equaled less than a halfpenny in lawful money and less than one- third of a penny in sterling.17 In short, from 1755 to 1764, money was plentiful and easy to find for taxes, especially since these could be paid in bills of credit large quantities of which had been placed in circulation during the later years of the war. These bills of credit with which taxes were paid were not a legal tender. One was not able to go, therefore, to the treasurer of the colony at any time and present them for redemption in specie, securing upon re- quest for six shillings a Spanish milled dollar, or for thirty-six shillings a moidore, or for forty-eight shillings a half johannes-this was the specie which at that period found its way into the colony. In other words, only upon maturity were both the interest and principal paid in hard money or the equivalent in bills of exchange, pro- vided funds were at hand for calling them in, which gen- erally was the case.18 It is important to keep this fact in
17 Ibid., X. 65, 128-129.
18 However, Robert Livingston, of Livingston Manor, New York, in pos- session of £13,112 16s. 6d. in Connecticut bills of credit tendered them to the treasurer of the colony who was unable to redeem them. As a result he petitioned the assembly, August 10, 1768, for their equivalent in specie. It was agreed by that body in January, 1769, that upon the return of the bills he would be allowed five per cent. interest until the treasurer notified him of his ability to make payment. This interest, of course, was in addition to the interest that he was entitled to receive for the legal period of the life of the bills. Conn. Arch., Finance and Currency, V. 21.
23
mind, for it is difficult to believe that any such quantity of paper as was issued by Connecticut could have circu- lated in the late 'fifties and early 'sixties, without having its relationship to sterling or to hard money affected in the course of business affairs. Indeed, the tendency to discount this paper in ordinary transactions, where specie or bills of exchange in terms of sterling were involved, was almost inevitable, if the bills of credit still had some years to run before the date of maturity, in spite of the fact that the issues of the war period carried interest at five per cent.19 In fact, by 1760, those of the colony were passing at a ratio of seven shillings to three of sterling or its equivalent, in place of the lawful money rate of six shillings to four shillings and sixpence. There was doubt- less a careful distinction made at this period in business transactions between "lawful money" and "current lawful money" and it was in the latter that taxes were paid.20 This may help to explain how it was that the tax- payers could be expected to pay into the Connecticut treasury during the later years of the war sums that
19 One need only bear in mind the decline in face value of the Liberty Bonds of the United States at the close of the World War to appreciate the likelihood of this depreciation. That the value of these bills became enhanced at times above the face value as the time approached for redeeming them with interest is quite consistent with the fact of their general depreciation. See Henry Bronson, "A Historical Account of Connecticut Currency," New Haven Col. Hist. Soc., Papers, I. 83.
20 The figures occur in the writer's notes drawn from some forgotten source. This would seem to offer an explanation of the rather puzzling comment made in 1760 by the eminent Connecticut lawyer, Jared Ingersoll, on the decision rendered in the case of Dering vs. Packer by the privy council when that august body decreed that the term "currency lawful money of New England" did not mean the bills of credit of any colony but was silver or its equivalent. "Perhaps they were mistaken in that matter," he declared, "not being acquainted with the Currency and Understanding of the people in N. England, and the Deft not well prepared to shew that matter." Fared Ingersoll Papers, p. 240, note .* For a discussion of this point, see C. M. Andrews, "Current Lawful Money of New England," Am. Hist. Rev., XXIV. 73-77.
24
were apparently ten times the amount of the ordinary levies in time of peace, as, for example, the sum of £78,895 in 1758; of £77,082 in 1759; of £59,494 in 1760; of £61,043 in 1761; of £35,921 in 1762; of £38,244 in 1763; of £50,895 in 1764, as against a sum equal to less than £7000 for the year 1773.
Without discrediting in the slightest degree the splen- did showing made by Connecticut in her war efforts to furnish men, money, food supplies, and other material, in comparison with that of some of the other colonies, it may be suggested that even when the public burdens of her people were greatest in the form of taxation during the years from 1758 to 1761 inclusive, they did not as- sume the proportion of those carried by the people of England even in time of peace.
There are, of course, certain problems which enter into estimations and comparisons of such burdens that must be taken into account by the student who desires to ar- rive at a satisfactory conclusion in these matters. There is the problem of determining income or wealth-producing capacity under given circumstances of one group as against another; the problem of placing on a basis adapt- ed to comparison the systems of rating and collection in matters of direct taxation, with full knowledge regarding the local application of general taxation principles and specific measures of taxation; the problem of comparing the onus of indirect taxation as between groups and, in connection with this, that especially elusive problem of the incidence of taxation in the course of international trade more particularly as it arises when commodities that have been exported from the country in question are submitted to custom duties and other levies abroad or when foreign produced commodities received in exchange for the former are, previous to their shipment, submitted
25
to various forms of public exaction. The colonials of wealth, at least, undoubtedly contributed generously to the British exchequer in the purchase of commodities from the mother country, the production of which had been by various processes submitted to taxation, al- though it is not to be suggested that in all cases this transfer of the tax to the consumer was possible.21 For it is well recognized by students of public finance that in the course of international trade which tends to assume the form of barter the law of supply and demand operates to govern the factor of the incidence of a tax on com- modities which under certain conditions will fall upon the consumer and under other conditions upon the producer or distributor. As it is not the province of this paper to examine this important but difficult aspect of British imperial finance, it will be necessary to keep in mind in the discussion to follow that no attempt has been made to esti- mate the extent of contribution that the Connecticut peo- ple undoubtedly made to the English exchequer by the indirect process, but only to analyze the nature of the con- tributions which they made to their own colonial treasury.
21 For example, it probably was difficult to transfer to the Connecticut con- sumer the tax on many lines of English hardware, such as nails, the most im- portant iron export from the mother country to her colonies. Connecticut was active in the production of this article and of other articles made from her iron; she even manufactured excellent steel during the period preceding the Revolution in spite of the restrictive act of 1750. Pennsylvania, Mary- land, and Virginia were still more active. English nails had, therefore, to compete apparently under disadvantages with those locally produced. The ironmaster, Joshua Gee, testified before a parliamentary committee in 1738 that the wood and ore for producing a ton of pig iron in England cost from thirty to forty shillings, while the same materials in most parts of America could be had for little or nothing. He also presented figures to prove that labor in America was two-thirds cheaper and that provisions were in general cheaper. Added to these items would be the cost of transportation of English iron across the Atlantic with other incidental charges. Testimony taken before a Committee of the House of Commons in 1738 regarding the Iron Trade. Historical Society of Pennsylvania, Penn. MSS., miscellaneous, Iron, doc. 45.
26
Various calculations as to the amount of taxes paid by Englishmen in the middle of the eighteenth century have come down to us. The statements of some writers place these at unbelievable heights.22 Others, however, at- tempted to approach the subject with caution and one, in his Calculations of Taxes for a Family of Each Rank, De- gree, or Class for one Year, to the Rt. Hon. William Pitt, published in 1756, sought to show that a laborer receiving five shillings a week, or thirteen pounds a year, would pay only fifteen shillings and tenpence in taxes or at the rate of fourteen pence on the pound in terms of sterling, al- though on the higher incomes with land taxed at four shillings on the pound, between one-third and one-fourth of the entire income would be taken when the various taxes were paid. More specifically, a gentleman with land which brought in an income of {1000 would pay a total of £336 13s. in taxes and one with land that brought in £100 would pay but £30 16s. Another writer, even more con- servative in his estimates, placed the tax rate of the husbandman or laborer in time of peace at fifteen pence on the pound sterling while that of the wealthy land- owner, with an income of £1000 from his land, at four shillings and ninepence on the pound.23
During the fiscal year 1749-1750, with taxation still at a war level although subsequent to the Peace of Aix-la- Chapelle, there was raised in Great Britain for public purposes the sum of £9,083,540, by various imposts di-
22 It was asserted by one writer at an earlier period "that three-fifths of every man's income who lives up to his Estate is actually paid in taxes to the support of government," and that manufacturers and laborers paid fourteen shillings in taxes out of every twenty shillings they gained by their industry. Joseph Massie, Calculations of Taxes for a Family of Each Rank, Degree, or Class for one Year to the Rt. Hon. William Pitt (London, 1756), p. 10.
23 Ibid., pp. 12-18. Cf. also The Proposal Commonly Called Sir Matthew Decker's Scheme for One General Tax upon Houses Laid Open (1757), pp.121- I22.
27
rect and indirect.24 This represents a per capita levy of twenty-one shillings, counting the total population of England, Wales, and Scotland at 8,500,000 people. In Connecticut the taxes raised at any period from 1750 to 1755 did not exceed a penny and a farthing lawful money or three and three-fourths farthings sterling, which did not bring in a total beyond £4000 sterling a year.25 In 1751, 1752, and 1754 the rate did not run higher than three farthings on the pound, bringing in, it appears, not more than £2400 sterling. This divided among a popula- tion in 1750 of probably not less than 100,000 white people26 would indicate a tax burden that averaged for each individual, excluding blacks and Indians, five and three-fourths pence.27 The comparison, moreover, does not take into account local rates which in some parts of England, owing to extensive poor relief, were fantastically high.28 When taxation reached its highest point in Con- necticut in 1758 during the war period, there was raised in the colony the sum of £78,895 6s. 7d. lawful money29 which, with a population estimated at 137,133, would give a per capita tax of eleven shillings and sixpence or in
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