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Samuel Osgood and Arthur Lee Signed 1787 Board of Treasury Outraged by Massachusetts Decision to Withhold Funds
Samuel Osgood and Arthur Lee Signed 1787 Board of Treasury Outraged by Massachusetts Decision to Withhold Funds
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Description:

Revolutionary War
Philadelphia, PA, December 8, 1787
Samuel Osgood and Arthur Lee Signed 1787 Board of Treasury Outraged by Massachusetts Decision to Withhold Funds
LS
[REVOLUTIONARY WAR.] Samuel Osgood and Arthur Lee, Manuscript Letter Signed, to Nathaniel Appleton Jr., December 8, 1787, Philadelphia, Pennsylvania. 2 pp., 7.75" x 10". Expected folds; small loss to integral leaf from original opening; cellophane tape repair to two edge tears, not affecting text; general toning; light staining.

"This appears to us to be the first Instance of a Loan being made without the Consent of the Lender. If the Necessity of the State Government was (as the Act states) the Plea on the Part of the Borrower; the still greater Necessity of the General Government would have prevented the Lender from consenting to this Act...."

In this letter, Commissioners of the Board of Treasury Samuel Osgood and Arthur Lee protest to the Commissioner of the Continental Loan Office for Massachusetts Nathaniel Appleton Jr. the state's decision to "borrow" from the United States a portion of the money intended for the support of the federal government.

On November 19, 1787, the Massachusetts legislature passed a resolve that stated in part, "Whereas the exigencies of this Government are such as renders it necessary to borrow part of the specie Tax, granted to Congress, in the year 1786: Be it therefore Resolved, that a sum sufficient for the purposes hereafter Expressed, be borrowed & retained from said Appropriation accordingly." The resolution went on to explain that the funds were necessary to pay the Governor, the Council, the Senate, the House of Representatives, members of the General Court, the justices of the Supreme Judicial Court, the members of the recent Constitutional Convention, the members of the Confederation Congress, the secretary of Massachusetts, and the president of Harvard College.

Two months later, Massachusetts became the sixth state to ratify the proposed Constitution of the United States by a margin of 187 to 168.

Complete Transcript
Board of Treasury Decr 8th 1787
Sir,
We are favord with your Letters of the 25th and 28th of Novr last,-: the latter Enclosing a Copy of a Resolve of the Legislature of the State, for borrowing of the United States, Part of the Specie which had been appropriated to the Discharge of the General Requisitions. This appears to us to be the first Instance of a Loan being made without the Consent of the Lender. If the Necessity of the State Government was (as the Act states) the Plea on the Part of the Borrower; the still greater Necessity of the General Government would have prevented the Lender from consenting to this Act, if their Consent had been required for this Negotiation. It is of so Extraordinary a Nature and a Precedent so dangerous to the Union, that we cannot but persuade ourselves that the Legislature will at their next meeting adopt measures for the Immediate Reimbursement of the Sums which have been diverted from the Purposes of the Union, at a most Critical Period. If the other States follow this Example (which there is every Reason to fear) the Advisors of this measure, must be responsible for all those Evils which must Inevitably Ensue, from the Dissolution of the present Form of Government, before a more Efficacious System is adopted for the Preservation, and Support of the Union.
We are, Sir, Your most Obet Humble Servts
Samuel Osgood
Arthur Lee
PS: The Act of the 11th Octr last (which we have transmitted) authorizes you to receive whatever Indents the State may offer, in discharge of the Existing Requisitions

To Nathl Appleton Esqr
Commr of the Loan Office for the State of Massachusetts.

Historical Background
To raise money for the Revolutionary War effort, the Second Continental Congress, in October 1776, authorized the establishment of a Continental loan office in each of the thirteen states to receive loan subscriptions and to handle other financial matters for the national Treasury. Each state government appointed its own commissioner of loans, although these officials remained agents of the Congress. Massachusetts appointed Nathaniel Appleton as its first commissioner of loans, and he held the position for more than twenty years.

Because the Articles of Confederation did not give Congress the power of direct taxation, it had to request funds from individual states on a quota system. Because of high inflation, Congress in 1780 withdrew paper money from circulation, exchanging it through loan offices at a rate of $40 to $1. The new emission bills quickly became highly inflated and were withdrawn in the spring of 1781.

When Robert Morris resigned as Superintendent of Finance in 1784, the Continental Congress created a Board of Treasury to fulfill those functions. Samuel Osgood, Walter Livingston, and Arthur Lee served as Commissioners of the Board of Treasury from 1785 to 1789.

The Board's duties included overseeing the public debt, public expenditures, and public revenue; establishing order and economy in the expenditure of public money; executing the directives of Congress regarding revenue and expenditure; obtaining accounts for all supplies furnished by the states; and compelling payment of money due to the United States. Funds for paying the bills of the United States government came from foreign loans, the requisitions of Congress upon the States, and debts due to the public.

In 1784, loan officers started issuing "indents" or certificates of interest due on loan office certificates, and the states began to accept these "indents" in partial payment of taxes, thus to an extent assuming a part of the federal debt. Robert Morris strongly opposed this practice, but a committee of Congress led by Thomas Jefferson recognized and legitimatized the practice by permitting each state to pay one-fourth of its requisition with such certificates.

With the establishment of the new federal government in 1789, Secretary of the Treasury Alexander Hamilton proposed an economic program of redemption and assumption by which the federal government would assume the outstanding Revolutionary War debts of the states.

Samuel Osgood (1747-1813) was born in Massachusetts and graduated from Harvard College in 1770. He became a merchant in Andover, represented the town in the colonial assembly, and was elected to the provincial congress in 1775. He served on the Massachusetts Board of War from 1776 to 1780, in the Massachusetts Senate from 1780 to 1781, and in the Continental Congress from 1782 to 1784. In 1785, the Continental Congress appointed him a commissioner of the Treasury, and he moved to New York City, where he held the office until 1789. President George Washington appointed Osgood as his first Postmaster General, a position he held from 1789 to 1791. Osgood also offered his home to President Washington and his wife as the first executive mansion. He served in the New York Assembly in 1800-01 and in 1802. President Thomas Jefferson appointed him as Naval Officer of the Port of New York in 1803, and he held that position until his death.

Arthur Lee (1740-1792) was born in Virginia, the youngest son of Thomas Lee (1690-1750), and studied medicine at the University of Edinburgh, from which he graduated in 1764. He studied law in London, gained admission to the bar, and practiced there from 1770 to 1776. He served as an envoy of the Continental Congress to Spain and Prussia in the early part of the American Revolution but was then recalled. In 1782, Virginia sent him as a delegate to the Continental Congress, where he served with Samuel Osgood and Walter Livingston as commissioners of the Treasury.

Nathaniel Appleton Jr. (1731-1798) was born in Massachusetts to Rev. Nathaniel Appleton and Margaret Gibbs Appleton. He graduated from Harvard College in 1749 and became a merchant. He gradually shifted into the manufacture of candles. In 1764, he was active in the Society for Encouraging Trade and Commerce and was elected a town warden. In 1767, he published Considerations on Slavery, a series of two letters written to a friend in opposition to slavery and the slave trade. He became a leader in the Sons of Liberty and a member of the Committee of Correspondence in the 1770s and fled Boston to Salem and then Andover while the British occupied the town. When the British left, he returned to Boston and was elected to the Board of Selectmen, the Committee of Correspondence, and the House of Representatives. When drafted into the Continental Army, he paid £50 to avoid service. Appleton served as Commissioner of Loans for Massachusetts from 1777 to 1798. His personal finances prospered during and after the war, and he became quite wealthy. He served in the Massachusetts Constitutional Convention of 1779 and was again elected to the House of Representatives in 1783.

This item comes with a Certificate from John Reznikoff, a premier authenticator for both major 3rd party authentication services, PSA and JSA (James Spence Authentications), as well as numerous auction houses.

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