Governmental Reorganization

Organization of executive departments.—The failure of the congressional committee system to perform executive functions had grown more apparent as the war progressed, and in the closing days of the Second Continental Congress measures were taken to concentrate the executive departmental work under individual heads. During January and February, 1781, the Continental Congress created four new offices: superintendent of finance, secretary at war, secretary of marine, and secretary of

foreign affairs, a foreshadowing of the later cabinet. The policy thus inaugurated was continued under the new Congress which held its first sitting on March 2, 1781.

The work of Robert Morris.—The failure of the bills of credit, the insufficiency of state support, and the weakness of foreign credit had made it evident that the financial system must be reorganized; accordingly the treasury commission was abolished and finances were placed in the hands of Robert Morris, a successful merchant of Philadelphia who had rendered valuable assistance as a member of the Pennsylvania assembly and of Congress. Morris realized that retrenchment and economy must be his watchwords. In the words of Dewey, he endeavored "to collect the requisitions from the States, to create a national revenue and impost, and place the revenue on a specie basis...." He also sought to establish foreign credit and to found a United States bank. At every turn he was handicapped by local prejudice, petty bickerings over taxation, and the lack of power of the central government.

Foreign loans and requisitions upon states.—The adoption of the Articles of Confederation immediately strengthened foreign credit, for during 1781-1783 loans of $4,719,000 were obtained from France, $174,017 from Spain, and $1,304,000 from the bankers of Holland. The loans from Spain and Holland, however, probably would not have been obtained had it not been for the entry of those powers into the war. Requisitions upon states during the same period yielded $3,058,000 in specie value, but the proposals of Morris to institute a land tax, poll tax, excise, and tariff came to naught.

The Bank of North America.—In 1780 Congress had tried to establish a financial institution called the Bank of Pennsylvania, but it had been of little service. Morris planned a sounder institution to be known as the Bank of North America with a capitalization of not over $10,000,000. Only $70,000 was raised by private subscription and the government set aside $200,000 in specie which had recently arrived from France. From this bank during 1782-1783 the government borrowed on short term loans $1,272,842. As Congress repaid the bank before other creditors, a small working balance was maintained on which the government could draw for immediate needs.

War and navy departments.—Owing to factional quarrels, it was not until January, 1782, that General Benjamin Lincoln was made secretary at war. No one was appointed for the department of marine, and the work was turned over to the already overburdened superintendent of finance. The office of agent of marine was created, and this Morris held from September, 1781, until November, 1784.

Department of foreign affairs.—The first secretary of foreign affairs was Robert R. Livingston of New York, a former member of the committee which formulated the Declaration of Independence and famous later as minister to France at the time of the Louisiana purchase. He held office from August, 1781, to June, 1783, being succeeded in 1784 by John Jay. The department as conducted under Livingston consisted of the secretary, two assistant secretaries, and a clerk.

Conclusion.—Thus during the stress of war national and state governments had come into existence. Necessity had forced the people to act and though the leaders at times groped blindly and took many a false step, the political capacity of the American people had asserted itself and triumphed. They profited by their experiences and showed themselves ready to cast aside useless institutions and try new ones which gave fair promise of success. A government of the people, for the people, and by the people had come into existence which challenged the doctrine that the sovereign ruled by right divine.