BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF Denrg W. Sage 1891 .^ .2-z- Y- -f- f. ^.ijjh j Cornell University Library HJ3352 .R59 The financial history of Virginia 1609-1 olin 3 1924 032 503 520 Wr0t Cornell University VB Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924032503520 STUDIES IN HISTORY, ECONOMICS AND PUBLIC LAW EDITED BY THE UNIVERSITY FACULTY OF POLITICAL SCIENCE OF COLUMBIA COLLEGE Volume IV] [Number 1 THE FINANCIAL HISTORY OF VIRGINIA 1609-1776 BY William Zebina Ripley, Ph.D. University Fellow in Economics COLUMBIA COLLEGE New York 1893 POLITICAL SCIENCE QUARTERLY. A review devoted to the historical^ statistical and comparative study of politics, economics and public law. Plan.— The field of the Q,uarterly is indicated by its title; its object is to give the results •f scientific investigation in this field. The Qruarterly follows the most important movements of foreign politics, but dovotes chief attention to questions of present interest in the United States. On such questions its attitude is non-partisan. Every article is signed ; and every arti cle» including those of the editors, expresses simply the personal view of the writer. Eldltorg.— The Q,uarterly- is under the editorial management of theUniversityFaculty oi Political^ Science, Columbia College. Contributors. — The list includes university and college teachers, politicians, lawyers, journalists and business men in all parts of the United States, and English and Continental pro- fessors and publicists. Among the contributors of the past seven years have been, in addition to the members of the faculty : Prof. H. C. Adams (Mich. U.), Statistician of the Interstate Commerce Commission ; Pres. Andrews (Brown U.); H. O. Amold-Forster; Prof. Ashley (Toronto U.); H.H. Asquith, M,P., Sir Geo. Baden-Powell ; Frederic Bancroft, Librarian State Dept. U. S. A.; Prof. Bemis (Van- derbiltU.); E. G. Bourne (Western Reserve U.); J. E. Bowen, The Independent ; J. G. Brooks (Harvard U.); E. P Chtyney (Penn. U.): Prof. J. B. Clark (Smith Coll.); Prof. Cohn (Gottin- gen U.); Clarence Dcming, New Haven Neivs : Rev. S. W. Dike; Hon. J. F. Dillon; J. P. Dunn, Jr., State Librarian (Ind.): Prof. Elliott (Minn. U.); R- P. Falkner (Penn. U.); Prof Farnam (Yale U.): W. C. Ford, (formerly of the) State Dept. U.S. A.; Kuno Francke (Har- vard V.Y A. Gauvain, Le Temps (Paris); Prof. CJiddings (Bryn Mawr Coll.); Prof. Gide (Mont- e'XWet.YxAixce), Rivue d'Economie Polittgue: George Gunton; Prof. Hadley (Yale U.); Prof, art (Harvard U.); Geo. K. Holmes, Census Bureau, U.S.A.; Prof. Howard (Neb. U.); Prof. Hudson (Mich. U.); Prof. Huff (Vermont U.); Hon. Wm. M. Ivins; Prof. Jamis (Penn. U.); Hon, John A. Jameson ; Prof. Jenks (Ind. U.); Rev. Wm, C. Langdon ; Prof. Laughlin (Cor- nell \J.)\ Hon. Alfred E. Lee; Prof. Levermore (Mass. Tech. Inst.); Pres. Low (Columbia Coll.); Prof. Mairland (Cambridge U.): Brander Matthews : J. B. Moore, State Dept. U. S. A.. Prof, Morse (Amherst Coll.); Prof. G. B. Newcomb (N. Y. City ColU; Prof. Patten (Penn.U.)- T. B. Perkins; Fred. Perry Powers, Chicago Times: E. I. Renick, Treasury Dept., U. S A.; lion. Theodore Roosevelt; Hon. Irving B. Richman; Hod. Eugene Schuyler; Hon. W. L Scruggs : Prof. Shaw (Cornell U.); Freeman Snow (Harvard U J; C. B. Spahr, N.Y. Commer- eial Advertiser : F. J. Stimson ; Prof. Taussig (Harvard U.); Prof. Trent (Sewanee U.); Pres. Walker (Mass. Tech. Inst.); Prof. Warner (Neb. U.); Prof. Woodrow Wilson (Coli. of N. J.); Horace White, N. Y. Evening Post. Reviews. — Each number contains careful reviews by specialists of recent publications. Record.— The Record of Political Events, published twice a year, gives a r6sum£ of politi- cal and social movements throughout the world. Communications in reference to articles, reviews and exchanges, should be addressed to Prof. W. A, DUNNING, Columbia College, N. Y. City. Subscriptions should be forwarded, and all business communications addressed, to GINN &• COMPA NY, 70 Fifth Ave., N. Y. City ; 180 Wabash Ave., Chicago ; g and 13 Tremont Place, Boston. Tearlj Subscription, Tiu-ee Dollars. Baclt Numbers and bonnd Yol- umes can be obtained from the publishers. I THE FINANCIAL HISTORY OF VIRGINIA STUDIES IN HISTORY, ECONOMICS AND PUBLIC LAW EDITED BY THE UNIVERSITY FACULTY OF POLITICAL SCIENCE OF COLUMBIA COLLEGE Volume IV] [Number! THE FINANCIAL HISTORY OF VIRGINIA 1609-1776 BY William Zebina Ripley, Ph.D, University Fellcfw in Economics COLUMBIA COLLEGE New York 1893 1^, TABLE OF CONTENTS. PAGE Introduction 9 Chapter I. Direct Taxation. The rise of private property ii The decline of the Company 14 The genesis of public revenue and expenditures .... 17 The poll tax versus the land tax 24 The decrease in direct taxation after 1 700 32 The French and Indian War of 1756 38 The situation in 1770 43 Chapter II. The Quit-rents. Origin and development 46 Administration and fiscal importance 50 Decline and disappearance 52 Chapter III. Customs Duties. History of the export tax upon tobacco 57 Its fiscal importance - 62 The import duties upon liquors 67 The tax upon slaves imported 73 Minor export duties : the tax- upon hides 78 The tonnage duties 80 (v) vi CONTENTS. PACE Chapter IV. Local Taxes. The powers, functions, and fiscal importance of local bodies 82 The church tithes 87 Chapter V. The Budget. The constitutional separation of powers 93 Fiscal development and analysis 100 Public domain, lotteries, etc 106 Chapter V. Hard Money. Early systems 108 The mint project of 1642 ....'. in Regulation of the value of silver money by law 114 Causes of the dearth of hard mbney 119 The monetary policy during the 1 8th century 124 The value of the Virginia shilling 135 Chapter VI. Paper Money. The tobacco notes 145 Treasury notes 153 Conclusion 163 Bibliography 167 INTRODUCTION. A financial history is generally accounted a dull and life- less work. Taxes, it is said, are .hateful things in the eyes of mankind ; they are not an enlivening subject for contem- plation. But the same objection may be made to the study of any' social evil. Such things are incidental to a state of civilization, and we study them in order to discover the most practical way of mitigating their abuses. The very existence of society organized in the state renders the study of finan- cial history necessary, — " the maintaining of the publick in all estates being of no less importance, even for the benefit of the private, than the root and body of a tree are to the particular branches;" — to quote the words of Sir Edwin Sandys, the moving spirit of the Virginia Company. Thus there is ample justification for the task herein undertaken. So much for the subject matter : now as to the method which has been pursued. To trace the gradual development of systems and theories is the main object to be attained. One does not look to a primitive society and its institutions for well rounded prin- ciples and technical details ; for to construct a science of finance, where there was none in fact, would be to pervert the course of history. Theories do not arise until exper- ience has taught man the abuses attendant upon social life. Consequently the financial history of this oldest American Commonwealth for many years is merely the story of the simple methods adopted by a people, too fully occupied in conquering a wilderness to spin fiscal theories, who wanted to support their incipient government in the easiest possible (9) lO FINANCIAL HISTORY [lo way. All details which do not bear upon this evolutionary- process, or which do not illustrate the origins of existing so- cial institutions in some way will be omitted. " We must dis- criminate between history and antiquarianism ;" — writes the historian Ingram — " what from the first had no significance, it is mere pedantry to study now." Nevertheless in a work of this kind much detail and many statistics appear to be unavoidable. I can only plead for these the eloquent excuse of Governor Dudley, of Massachusetts in a similar case; — " If any tax me for wasting paper with recording these small matters, such may consider that small things in the begin- ning of natural or political bodies are as remarkable as greater in bodies full grown." To those gentlemen, in Virginia as well as in New York, who have been so unfailing in their courtesy to me, during the collection of the material for this sketch, I would acknowledge my sincere sense of obligation. The endeavor has been to justify, so far as possible, the assistance which they have so cordially rendered upon every occasion. CHAPTER I. DIRECT TAXATION. The Rise of Private Property. The right of taxation vested in a state, as well as the obligation upon the citizen to contribute to the support of it, is based upon the institution of private property. It is necessary, therefore, in order to understand the early fiscal history of Virginia, to know how its lands were granted in first instance ; what relation existed between the Virginia Company and the colonists ; and finally how the institution of private property was evolved from the early communistic system. The colony was at first essen- tially a part of a private corporation, organized to develop a new territory in such manner as to secure the greatest profit to the stockholders. In pursuance of this idea, the royal instructions issued under the charter of 1606 "do establish and ordaine that the said several colonies and plantations and every person and persons of the same, Severally and re- spectively, shall within every of their several precincts for the Space of five years, trade together all in one stocke or divide- ably, but in two or three stocks at the most, and bring, not only all the fruits of the labours there ; but alsoe all other goods and commodities, into several magazines or store- houses : and that there shall be chosen there, elected yearely by the president and councell, one person to be treasurer or cape merchant to' take the charge and manageinge of all such goods which shall be brought into or taken out of the severall magazines."' This institution must not be con- ^ Hening's Statutes at Large, 1,71. 12 FINANCIAL HISTORY \\2 founded with the Virginia Company itself; it was a subor- dinate part of it, the Company merely holding a controlling interest in its stock. It proved to. be so fruitful of abuses, that it was abolished in 1620, after which date, trade was opened to every private individual in the colony.' The first modification of this system was introduced in 161 3 under Governor Dale, after the expiration of the five years of compulsory communism. Three acres of cleared ground was allowed to each settler, together with one month's labor in each year ; the other eleven months were to be at the disposal of the Company for the cultivation of the " public garden." At the same time each settler was granted two bushels of seed corn yearly from the common store.^ Beside this, every adventurer who came to Virginia, or who sent a representative, received a hundred acres of forest land, together with a share in the Company. The price of a share to mere " adventurers of the purse " was twelve pounds, ten shillings.^ This proved so attractive that the land premium was reduced to fifty acres in 161 6; but even then the devel- opment of the private estates had much weakened the Com- pany's resources. The obligation of these settlers was " to maintaine your Ma'ties right and title against all foreigne and domestique enemies. To watch and ward in the townes where they are resident. To do thirty- one day's service for the colony, when they shall be called thereunto — yet not at all times but when their ov/ne busines can best spare them — to pay yearlie unto the magazine for himself and every man servant two barrells and a half a piece of their beste Indian wheate. No farmer or other, who must maintain themselves shall plant any tobacco unless he shall yearly set and maintayne for himself and every man servant two acres of ground with corne by which meanes the magazine shall yearely be sure to receave their rent of corn."* ^Stith, 171. '^lUd., 131. ^ Purchas's Pilgrims, iv, 1 776. 'Neill, Vir^nia Company, 107. 13] OF VIRGINIA. 13 Another method of tenure which was proposed as an in- ducement to the city of London to apprentice poor chijdren to the Company was similar to the Metayer system of Italy.' This was to place "tenants upon the publick lands with best conditions where they shall have houses with stock of corn and cattle to begin with, and afterwards the moiety of all in- crease and profit whatsoever.'" After seven years of this holding it was to be replaced by a grant of twenty-five acres " in fee simple by socage tenure for the rent of 6d. for every five and twenty acres, in lieu of all seiVices in regard of the tenure."^ One hundred children were sent over under this contract. But since the charter of the Company was recalled before the expiration of their apprenticeship, they became subject to the same quit-rent tenure as the other colonists.* Finally, a third system of large proprietary grants was adopted, not unlike the feudal tenures of England. In this case, the tenants were subject not to the Company, but to the proprietaries who owned the lands, each making his own terms with tenants. Yet as land was so plentiful and cheap, the rents imposed were somewhat less onerous than those exacted by the Company itself, on account of the competi- tion among the different proprietors. The first of these grants was made to Governor Dale, and was known as the t5 ^ Doyle, 187. ^ Virginia Historical Collections, vii, 25. ^ Ibid., 45. ' The system is described in a curious rhyme called "Kewes from Virginia : " " And when that they shall hither come Each man shall have his share, Day wages for the laborer And for his more content A house and garden plot shall have; Besides 'tis further ment That every man shall have a part, And not thereof denied Of general profit, as if that he Twelve pounds ten shillings paid." Alex. Brown, Genesis of the United Stcttes, 422. 14 FINANCIAL HISTORY [14 Bermuda Hundreds. On this plantation the tenants were required to render but one month's service in the year, " in neither seed time nor harvest," the other eleven being for their own private crops. This is in marked contrast to the Company's tenants who were obliged to labor eleven months for the use of the land, having but one month in the year for their own profit. In the Bermuda Hundreds, however, there was an additional tribute of two and a half bushels of corn yearly to be paid to the proprietor.' This system of tenure was rapidly extended^, so that in 1620 there are records of eleven of these proprietary grants.' Their special importance here is that the rents to these freeholders were at first the only contributions which tenants had to pay. They were distinctly feudal in character, but from them were developed the public dues and services of a later time. The Decline of the Vii'ginia Company. These grants were at once a result, as well as a cause, of the rapid decline of the Company, especially under the pernicious administration of Governor Argall. The treasurer reported at a " great and general quarter court" of May 17th, 1620, that — "The colony being thus weak and the treasury utterly exhaust, it pleased divers lords, knights, gentlemen and citizens td take the matter anew in hand, arid at their private charge (joining themselves into societies) to set up divers particular plantations. But as the private plantations began thus to increase, so contrarywise the estate of the public for the setting up whereof about ;£'7S0o had been spent, grew unto utter consumption ; for whereas the Deputy Gov- ernor, about May 1617, hath left and delivered to him by his pre- decessor a portion of public land called the Company's garden, which yielded to them in one year about ;£2,oo profit ; — tenants eighty-one yielded a yearly rent of corn and service, which rent- corn, together with the tribute-corn from the barbarians, amounted to above twelve hundred of our bushels by the year ; kine, eighty ; ' Virginia Historical Collections, vii, 22. '^ Purchas's Pilgrims, iv, 1776. 15 J OF VIRGINIA. 15 goats, eighty-eight. About two years after — viz., Easter 16 19 — his whole estate of the pubUc was gone and consumed, there being not left at that time to the Company either the land aforesaid, or any tenant, servant, rent or tribute-corn, cow or salt work, and but six goats only.'" Thus it appears that the revenues of the Company, vi^hich was the government, were rapidly decreasing because of the changes in these various systems of land tenure. A second- ary result was that the seeds of future discord were being sown, which caused much trouble when the questions of ac- tual taxation arose. There were three distinct classes in this primitive society. The first was composed of the great proprietaries, who leased a part of their lands, cultivated another part themselves, but who also held extensive tracts of uncultivated forest land. These men were the most influ- ential in the government for a long time. Secondly, there were the small farmers on the fifty and one hundred acre tracts, who cultivated their possessions directly, being sub- ject however to certain rents to the Company. These men seem at first have been quite numerous. Lastly, there was a third class, composed of .tenants, indentured servants, and a few petty traders, whose interests were allied with those of the small farmers. The development of these classes is important, since with the institution of negro slavery they finally came to have divergent interests which profoundly afifected the forms of taxation during the colonial period. The general discontent with the Company's communis- tic system soon became widespread. It was fruitful of so great abuses that many complaints are preserved in the old records.^ And it was for this reason that the old arrange- 1 Virginia Historical Collections, vii, 65. "A letter to Lord De Lawar recites for instance that the Governor "takes the ancient colonymen, which should now be free, and our men from the common 1 6 FINANCIAL HISTORY [i6 ment generally fell into disuse. At the same time two dis- tinct causes cooperated to bring about a change. These were the convening of the Assembly of Burgesses for the first time by Governor Yeardley in 1619; and secondly the growing extent of the colony which made a new institution, — the parish — necessary for the purposes of local govern- ment. These soon led to a sharp distinction between the Company as a corporate body, and the community as a body politic. The Company declined in importance before the developing state, and its revenues gradually languished into nothingness. The treasurer reported in 1621, that "the plantation founded and prosecuted with the charge of about one hundred thousand pounds, without any profit as yet, hath in these latter days been chiefly supported by his Majesty's most gracious grant of the use of lotteries."' Heretofore the various payments to the company, whether in land or in services, had been virtually taxes for the support of a public body, so far as the colonists were concerned. To be sure, they were levied by a private company to pay inter- est, upon invested capital ; but in return this body performed all of the services for the colonists which were necessary to satisfy their common needs. The real expenses incurred by it however were insignificant ; they were regarded as part of the necessary outlay in a purely business venture. It was a question of dollars and cents with them. With the state, on garden to set them about his own employments, and with the colony's store of corn feeds his men." — Virginia Ilisioncal Collections, viii, 34. Also, " The heavy taxations that are laid upon us freemen for building of castles, paying of publique debts, for the not gathering of sasafras, etc., so that it will come to my share with that that is paid and that that is to pay in corne and tobacco to at least twenty, or five and twenty pound sterling this yeere (161 7-8) ; so that when I have paid this and paid my faithlesse servants their wages, I shal scarce have good tobacco enough left to,buy my selfe for the nexte yeer a pint of Aqua vitae." — FttrcAas's Pilgrims, iv, 1806. ' Virginia Historical Collections, vii, 130. I 7] OF VIRGINIA. I J the other hand, many considerations of a totally different stamp apply. After 1620, these new governmental expendi- tures began to increase in importance ; and a study of their evolution reveals the fundamental purposes for which gov- ernment exists. It shows' the reason why the Virginia Com- pany was totally inadequate to serve as a substitute for civil government in a developed society. But of course after its abolition in 1625, the community became a true body poli- tic, and the real history of taxation begins. T/ie Beginnings of Taxation, and Public ExpendiHires. One of the principal charges on a primitive com^munity like Virginia was the provision for the Governor's support and salary. At first this had been paid by the Company as an ordinary charge upon their budget ; but with the appoint- ment of Governor Yeardley, a new arrangement was made, whereby three thousand acres of land were " to be set out, so as to ease the Company henceforward of all charge in main- taining him." At the same time fifty tenants were trans- ported by the company to cultivate this domain.^ It was expected that this permanent establishment would suffice at least to pay his salary of ;£^iooo. ;' yet the number of tenants was soon increased to one hundred, with the stipulation that the Governor should leave as many at the " expiration of his government as he findeth or went with there on his entrance." Governor Yeardley's additional offer to admin- ister the twelve thousand acres of public land " gratis, the Company hold it not requisite to accept, but rather to dis- pose some part of his lifaerality another ways."' It was, per- haps, well that they did so, for Stith tells us* that despitejiis liberality, Yeardley left but forty-six of the hundred original tenants, and moreover, flatly refused to make up the deficit.'^ ' Virginia Historical Collections, yii, 22. ''Stith, 165. s Virginia Historical Collections, vii, 54. * Stith, 204. ^ It seems to have been the custom to allow the Governors extra compensation 1 8 FINANCIAL HI ST OR Y [ i 8 The only other officer whose support was likely to be con- siderable — the Secretary — endeavored to impose fees for var- ious sources upon the people ; but the Council in England dis- continued them, and as in the Governor's case favored a public domain for his use and profit, instead of fees. In conformity with this idea five hundred acres with twenty tenants was granted to him in 1620, and all the existing fees were abol- ished.' With the meeting of the first assembly, in 1619, a new corps of officers became necessary. And the first real tax levied in Virginia, amounting to one pound of tobacco per poll, was imposed on August 4th, 1619, for the support of the speaker, clerk and sargent for their services during this session." After providing in this way fbr the salaries of civil officers, it became necessary to take measures for the defence of the colony against the Indians. In this matter the colonists took the initiative at once. They wrote to the Company's officers that they were " very desirous to have engineers sent unto them for the raising of fortifications, for which they are content among themselves to bear the charge thereof." For this purpose it was ordered that " the fifte part of their hundred be employed in this work till it be p'fected."'' Then, the fort having been built, it became necessary to gar- rison it, and this gave rise to the custom of commuting mil- itai-y services into payments in kind, exactly as had been done in England three hundred years earlier. In 1623 it ■was enacted that " every man that hath not contributed to the finding a man at the castell shall pay for himself and servants at times, for the Treasurer of the Company moved at a meeting on March 3rd, 1619, that " for his better encouragement the Company would please to send him a present, it being no new thing, but much used by them heretofore." This custom is important, as it is the source of some of the extravagant claims of the later Governors to perquisites, which proved to be very vexatious to the colonists. — Virginia Historical Collections, viii, 47. ' Stith, 174. ^ Acts, 1619. ' Virginia Historical Collections, vii, 44. 19] OF VIRGINIA. . 19 five pounds of tobacco a head ;"' " and that for defraying of such publique debts our troubles have brought upon us there shall be levied ten pounds of tobacco upon every male head above sixteen years of adge now living."' It being also necessary to defend the colony against the exactions of the Royal farmers of the customs, still another poll tax of four pounds of tobacco was levied by the same Assembly to defray the expense of sending John Pountis as a commis- sioner to England. In 1 62 1 the county courts began to develop, and the parish first became a local body. This introduced a third charge upon the colonists, and in 1623 it was enacted "that there shall be in every parish a publick granary unto which there shall be contributed for every planter a bushell of corne, the which shall be disposed by the major part of the freemen, the remainder yearly to be taken out by the owners at St. Tho's his day, and the new bushell to be putt in the roome."'^ It was only in this matter of local finance that there was as yet any freedom of action ; the legislature was still subject to the London Company, in whose quarter courts various acts of the Assembly were much discussed."* Freedom in the domain of taxation was one of the fi/st powers claimed by the infant state. But even as late as 1622, the Governor was instructed by the Company in the matter of these fort duties that " this tax w© haue here made, not to giue you authority (wch needed not), but to giue a good example by taking more of the burden than can be proporcionable can be due unto us — this diposition of mynds we assure o"^ selves you shall find, if not you must make it, and compell them to theire onne good, that will not other- wise understand it."" The colonists opposed this principle from the beginning, and one of the first acts of the next as- 'Hening i, 127. ■ ''■ Ibid., 12%. ' Ibid., I2,e,. * Ibid., 122. ^Neill, Virginia Company, J,'-^'^, 20 FINANCIAL HISTORY [20 sembly was especially directed against the exercise of this paternal power. It declared " that the governor shall not lay any taxes or ympositions upon the colony, their lands or comodities other way than by the authority of the general Assembly to be levyed and ymployed as the said Assembly shall appoyrit." ' And this power it held firmly through all the struggles with the ambition and avarice of its executives, reaffirming it from time to time as the occasion offered. During the period to 1629 there are no records of legisla- tion, and the Governor and Council apparently executed the laws then in force.'^ The needs of government were satisfied mainly by the personal services of the colonists, although a poll tax was doubtless levied from time to time, as the re- cords mention payments of tobacco which could be met in no other way.' The contributions, however, must have been largely voluntary, or at all events .could not have been con- tested, for there is the greatest indefiniteness in the legisla- tion on the subject. The first tax of 1623 was levied upon all " planters" over eighteen years of age ; the second was laid upon every "male head" over sixteen, and in 1629 and 1633 the tax was merely " per pole," leaving the question of age or se5f entirely undefined. As yet there were no local officials, as the Burgesses received the lists of their several planta- tions, which were made out by the masters of families and the freemen.' Unless there had been a general recognition of the justice and necessity of such public contributions, and unless the burden had been moderate in amount, so primi- tive an arrangement would never have sufficed ; that it was effective shows that the freemen generally acknowledged the claims of their incipient state, and did not attempt to evade their liability. In the period from 1730 to 1740 it became necessary to develop the system of collection, and the local ^ Hening i, 124. ''■ Ibid., \x<). '^ Ibid., 1^2. * Ibid., 196. ^ Ibid., 143. 2 I ] OJ^ VIRGINIA. 21 government being modelled after the English pattern, this work of collection was assigned to the sheriffs of the coun- ties.^ They were made personally responsible for the taxes assessed in their districts ; but at times this proved insuffi- cient. As in 1644, when from crop failure, collection be- came difficult, the responsibility was transferred to the mas- ters of plantations, who were given power to hold the crops of all the freemen in their households until the levies were paid.^ This was the beginning of that complicated system of distress and forfeiture which developed later, as a result of the lax and improvident habits of the planters in colonial times. Personal responsibility was thus the basis of taxation at first, but as the burden of taxation became heavier this liability was partly transferred to the real estate. A poll tax of considerable amount being necessary to build a fort in 163 1, the law added,'' " that for such persons as have departed out of this county since the contract of the ffort and for such as have since deceased leavinge sufficient estates, it is ordered that they shall be lyable to pay this' tax." This contained the germ of a property tax, but its development was very slow ; and practically it was not till after the Revolution that this merely contingent liability of real estate, except for ex- traordinary taxes, became anything like the general property tax which was the rule in the New England Colonies from the earliest times. There was, however, a general tendency manifested in favor of the property tax during the period fol- lowing 1630. This, as we shall see, led to the temporary im- position of such a tax during an Indian war ; but it soon dis- appeared in favor of other taxes. The idea that possessions were an indication of faculty appears ten years later, when the ideal system was " an assessment proportioning in some ' Hening i, 279. ''■ Ibid., o&d. ^/foV., 150, 157 and 196. 22 FINANCIAL HISTORY ■ [22 measure payments according to men's abilities and estates augmented unto the wealthier [sort by the number of milk kind, and by that relief afforded to the poorer sort, which course through the strangeness thereof could not but require much time of controverting and debating.'" Even here no mention of real estate was made, for land was too plentiful and cheap ; or perhaps the Assembly was so far controlled by the landed interests that it was more agreeable to con- sider property as measured by the number of cattle, rather than by the acres of land. It is interesting to note that there was a general recogni- tion of the justice of exemption for the minimum of subsis- tence though there was no legal provision ever made for it, and our quotation shows how great the opposition would have been to any attempt to introduce it. In .fact the only exemptions at this time were at the opposite end of the scale. The Governor, his Council, and ten servants each, were re- lieved in i639Mrom all public charges in accordance with the Royal instructions which Governor Berkeley brought with him. This was reduced to mere personal exemption in 1642,' which remained the rule until 1676. There had been from the first some other exemptions but there was no es- tablished rule. The earlier Assemblies exempted all new comers from taxes and military services for a year, but in 1629 they were again made liable with the older colonists.' This custom was reversed at a later time when all the old settlers were allowed special privileges. The system was more equitably adjusted in 1630, when new comers were ex- empted from the " marches " but were made liable to the payment of the public levies. None of these exemptions ap- plied to the tithes, which were very considerable in amount ; ^Remonstrance of the Assembly against the charter of a new Company, 1642; Burk ii, 68. ^ Hening i, 228. ^Ibid.,Tp-j. * Hid., 141. 23] OF VIRGINIA. 23 and the general principle appears to have been to levy upon everybody and collect where they could. After 1639 the Governor appears to have received a regu- lar salary allowed by the king from the tax upon tobacco exported, in place of the revenue from the lands formerly granted for his support, which had reverted to the king with the dissolution of the Company.' On the establishment of the Commonwealth this revenue ceased. To provide for his support an act was passed in 1 643 levying a poll tax of the value of two shillings, to be paid in commodities at fixed rates." There were two reasons for -this departure from the custom of levying all taxes in tobacco ; first, that it was a year of Indian troubles and short crops ; and secondly, because the taxes in kind could be made so various that they would serve for the Governor's " accommodation for the present year." Thus he would not be subjected to the delay and risk of realizing upon his tobacco by shipping it to England in the disturbed state of affairs then existing. This view is supported by the further provision which ordered seven counties to pay in corn, while three were permitted to con- tribute general supplies. The sheriffs were empowered to hire boats and bring these provisions directly to the Gover- nor's " palace." This, with the grant of a house and lot,^ completely provided for his support. It is a good example of the primitive method of taxation then existing under a sys- tem of barter, and before there was anything like a treasury or ' Burk ii, App. v; also p. 34. - " Indian come at 10 sh. per barrell, 2 ban. of ears to one of come. Wheat at 4s. per bushell. Malt at 4s. per bushell. Beife at 3d. i-2d. per pound. Pork at 4d. per pound. Good henns at I2d. Capons at is. 6d. Calves at 6 weeks old, 25s. Butter at 8d. per pound. Good weather goats at 20s. Piggs to roast at 3 weeks old, at 3s. per pigg. Cheese at 6d. per lb. Geese, Turkeys and Kidds at 5s. per peece." — Hening, i, 280. 'Neill, Virginia Carolorum, 171. 24 FINANCIAL HISTORY [24 a civil list. This lasted all through the seventeenth century, for as late as 1679 we find on the occasion of an Indian war " that every forty tythables (are) assessed and obliged to fitt and set forth one able and sufifitient man and horse with fur- niture well and compleatly armed.'" There was no inter- vention of the public body to provide supplies or ammuni- tion, but the settlers cooperated to perform certain duties which were common to them all. The Poll Tax versus the Land Tax. The year 1644 was filled with misfortune. There were disputes between the partisans of the Puritans and Cavaliers ; and then it was deemed necessary to send Governor Berkeley to England to negotiate terms of peace. For this purpose an extraordi- nary tax of eighteen pounds of tobacco per poll was levied, of which the sheriffs " converted a great part to their private benefit."^ We have already seen that all of the expense of providing for the support of the government had been cast upon the colony after 1625. The tobacco trade was greatly disturbed, and there was a shortage in thS crop. There had been an outbreak of Indian hostilities, by which over three hundred lives were lost, and it became necessary to levy an extra poll tax for this purpose. Many settlers were im- pressed, and many others abandoned their plantations for fear of the Indians, so that the crops were still further cur- tailed.' It became necessary to erect three forts, for which service many artisans were impressed. To meet all of these expenses the number of tithables was increased by including all negroes, men and women, and every fifteen who remained at home were held liable for the equipment and maintenance of one soldier in the field. The distress became so threat that poor debtor acts were passed, and finally the planters ' were so hard pressed that they could not even pay their ' Ilening ii, 435. ^ Hening i, 286-297. ' /i^zV., 287-291. t 25] OF VIRGINIA. 25 "wine debts;" and payment of two-thirds of these was ex- tended until after the collection of the next crop. The result of this accumulation of disasters was a great un- easiness among the people under the heavy burdens imposed upon them. In 1645, -it became necessary to satisfy this popular demand by a levy of extraordinary taxes upon pro- perty, although all public charges had been met heretofore by means of a simple tax by the poll. This act ' recited that "whereas the ancient and usual taxing of all people of this colony by the pole equally, hath been found inconvenient, and is become insupportable for the poorer sorte to beare, that (hereafter) all publique levies and county levies be raised by equall proportions out of the visible estates in the colony. The conformity of the proportions to be as follow- eth, vizt One hundred aces of land One cow 3 years old Horses, mares and geldings * A breeding sheep A breeding goate A tithable person This act did not abolish the poll as a basis of taxation, as some historians have asserted. The capitation tax was con- tinued at about the usual rate, while the other property taxes were merely supplementary, " being onely intended for the better support of the warr, and no longer to con- tinue."" Consequently they were repealed in 1648, leaving the customary poll tax once more as the basis of all the levies. The preamble of the act, which is quoted above, was "apparently nothing more than a sop to quiet the popu- lar demand for a more equitable distribution of public bur- dens, extorted from the wealthy planters who held control of the assembly. This in fact marks the beginning of that struggle between the great and the small land owners, the 'Hening i, 305. ^ Ibid., ■^(,6. at 04 lbs. tobacco. at 04 at 32 a peece. at 04 at 02 at 20" 26 FINANCIAL HISTORY 1 26 cause of which lay deep rooted' in the origin of private pro- perty under the old Virginia Company. This in time crys- tallized into a sectional as well as a class antagonism ; and it lasted until Virginia was finally subdivided into two states. Already the wealthy planters on the tide-water belt were united in opposing a tax upon their uncultivated lands, while the tenants and small farmers favored the abolition of the poll tax.' This temporary property tax does not indicate the acceptance of any new principle ; it was merely an ex- pedient to meet a sudden emergency. The real change was long delayed ; in the meantime a redistribution of power was necessary, through the increase in the number of small farmers by the settlement of the upland country. The old struggle for political supremacy between the men of the mountain and of the plain had to be definitely settled before there could be any permanent change in the systems of tax- ation. The imposition of this land tax seems to- have been indi- rectly the cause of a great many abuses in the following years, which were marked in other respects as well as by an unusual laxity in public morale.'' In a community so scat- tered as was Virginia, where there were no towns and where each plantation was a completely self-sufficient organism, it was very easy to conceal the exact number of slaves, horses and cattle. In 1646 the first complaint on record was pre- sented of " greate defect in the titheable persons, lands, horses, mares, etc., to the prejudice of many who have duly and according to law presented their lists.'"* Three years later the Assembly discovered that " notwithstandinge the yearly importation of people, the number of titheables is rather diminished than augmented."* The youth of the colony under sixteen were exempted from the poll tax, yet •Burkii, 249. ^Dcyle, 237. ' Hening i, 329. * Ibid., ^61. 2-] OF VIRGIXIA. 2- it appeared ' that once pacing under that age they are sel- dom or never acknowledged to exceed the same."' Female slaves being exempted, the custom of emplo3nng them as field hands instead of men became so general that an act was passed to cover the case. Even when taxes were paid they were often rendered in worthless tobacco, raised bj- "bad men" for that purpose.* It must not be thought that all the abuses laj- upon the side of the tax payers. The corruption and venality of the sheriffs was a constant cause of complaint. In the year of scarcity, 1644, we have seen that the sheriffs received " great private benefit " from a tax levied to send Governor Berkeley to England. Other abuses arose from the "• vast extent" of the counties, or from the " multitude of other em- ployments " of the sheritts.' The laws themselves were also \'ery indefinite. Sheriffs were thus enabled to demand pay- ment at disadvantageous seasons, often widi the intention of compelling distress or forfeiture in order to increase the fees of their offices.' Even the Burgesses declared in 166 1 that ■■ the fraud of sheriffs hath verj- much augmented the taxes." Lord Culpepper wrcte that the le\ies were " commonlj" man- aged by sh' cheating fellows that combine to cheat the pub- lic :" he affirmed that it cost i\vent\" per cent of the taxes to collect them.* The sheriffs often conniv^ed with the planters, so than an act was passed to punish all who took tobacco for tithables, whose names were not on the lists.' Even this last expedient of posting all tithables on the court house doors was not enough, and a registry" of births was instituted ' Bt ^ law of 1661, all males were made liable to the poll tax. This was moderated in 16S0, when it was declared " too hard and s-evere that children shall be liable to taxes before they are cipaile of woAing.'' — Hening S, 4S0. - Hening i, 170, ii, 186; also McDonald MSS., vii, 9. 'Hening i, 542. * Hening i, 358 ind 3S9. * Oi. Campbdl's Hisnry. « Hening ii, 4 1 :; . 28 FINANCIAL HISTORY [28 in 1672.' Penalties were made very severe, even to the ex- tent of forfeiture of any slave concealed. And yet in spite of all these regulations the Burgesses were obliged to confess that evasion of taxes was very general.^ A curious but natural state of affairs resulted ; the Gover- nor and Council, as well as the Assembly and the people at large, were all agreed in condemning the poll tax. The diffi- culty was that their remedies and substitutes for it differed as widely as the underlying motives. In 1658 the Burgesses, representing the landed interests, considered " the burthen- some and unequall waie of layinge taxes by the pole, and how just and proportionable it will be to impose the same on our comoditie made;"'' and ordered an export tax upon to- bacco. Three years later they repeated that " the prudence of all nations hath provided for the defraying the publique neces- sary charges rather by laying an imposition upon the adven- turer for the staple comoditie than by taxing the persons of the inhabitants." * The motive behind this was doubtless their desire to abolish all direct taxes which bore upon them as planters and slave owners. Opposed to this advocacy of indirect taxes, the Governor and Council unanimously rep- resented to the House in 1663 "that the most equal way of paying taxes is by laying a lev)' upon land, and not upon heads."" The intention of this, party was to take advantage of the sentiment in favor of the Royal prerogatives, which followed the Restoration, and by imposing a property quali- ' Vagrants were common in the year 1696, which was another source of trouble. The Assembly declared that " Whereas Loose & vagrant persons, That have-not any settled residence do too commonly enter themselves singly and not in any housekeeper's list of Tithables, and when the time comes that the Sheriff goes about to collect the publique dues, they abscond 'and remove from place to place on purpose to defraud the County of their Levies by reason whereof ye Taxes grow the more burdensome and grievous to the settled p'sons of the Inhabitants of the C.ciM.wt'j"— -Calendar Virginia State i'afers, i, 52, and Hening iv, 208. '■' Hening ii, 187. ' Jbid, i, 491. * Ibid, ii, 133. ^ Ibid., 204. 29] OF riKGIX/A. -O fication upon the voters, to disfranchise the class which was most inimical to the Crown and its interests. ' This latter ob- ject, indeed, was accomplished hy a dinerent expedient, but its eifect was rather unexpected. The ■' little folk," the ten- ants and small farmers, now appear to have welcomed this proposed land ta.x, although they had not yet come to re- gard it as other than a resource for extraordinar\" occa- sions, as we have seen it was in 164;. NaturaJly the\- de- sired to make the gre.iter land owners pay the public charges, and so " lessen the levy by the pole." ' It was a question of great importance, for this was a time of " extraordinarj" taxes," and the poll tax far exceeded all the other public charges, including, .~.s it did, the local t.ixes. These were ver\- hea\y, so that the total le\\" was often in excess of one hundred lbs. of tobacco a head.' The Assem- bly now by an appeal to the people, on the plea of restrain- ing the political power of the Governor, gained their support in the rejection of his propos-^Js. And any lingering distrust on the part of the would-be land t.ixcrs. was allayed by the unctuousl\ flattering declaration that "the lives and industrx of the citizens were more v.>>.:able ih.^.n lands and houses."" The consequence was that th>e Governor yielded to the people; the people g.^ve W3>' to the Assembly; and the poii t.5x w.^s continued, although it was gr..dually reduced by castom duties upon liquors and slaves imponed. and the export of tobacco. I: remained, nevenheless, the only direct t.^x which was leveled, the quit-rents being merely nominal and being paid to the King. On all extraordina.y occasions ;: was the main support of the gcvernment. as in 166- when nity pounds of tobacco was je\"ied to build James »BintH.i5-. -lHd,2^zi. * JV-yrtM A':.t-~'-;>_--' jr:"i-:,iV-, ijjc-; rfr-l::'. .-fa '.ft-.-.r of Got. 5r:3-.vcN>d. * Rirk n, 1 57, iri Hezir;^; ^ 4SC. 30 FiyANCIAL fllSTORY [30 City. In 1674, again, fifty pounds with cask was imposed or two years, to pay the expenses of sending Commission- ers to England to remonstrate against the patents granted to Lord Culpepper and others.' This extra tax of five shillings more or less, which was nore than double the ordinary levy, was coupled with "court ees of seventy pounds for suits in the general, and fifty pounds for suits in the county courts." It seems indeed to have been one of the causes which led to the popular out- break in 1676, known as Bacon's Rebellion. The abuses which we have seen were so common in administration, had become unbearable ; malfeasance in office," and misapplica- tion of the colonial revenues, added to the discontent in- duced by the languishing state of the tobacco trade* and the war with the Dutch ; the restriction of the suffrage by various acts of Assembly ; all combined to produce a great popular discontent," and the old question of the poll versus the land tax came to the front once more. The duty of a shilling a hogshead on tobacco exported, did not suffice to pay the expenses of government, and the popular demand was that it should be supplemented by a land tax. This it was urged would be " the most equal imposition, and will generally take off the complaints of the people, although some of the richer sort will not like it, who hold a greater proportion of land than they actually plant ; who may then by an expedient, very beneficial to the country, lay down 'Hening ii, 174, and 313. ' Ibid., 506, and Eleventh Census, History of Tobacco, by R. A. Brock. ' Hening ii, 353. * Doyle, 235. " Our trade is now in a more declining condition than bath ever been known,'' largely by reason_of the "low value or rather no value of our comodity tobacco." —McDonald MSS. V. 'Oldmixon, 250. 3l] OF VIRGINIA. 31 part of their lands to be taken up by such as will employ it."' Here again .appears a demonstration against the class leg- islation which was so often the rule in Virginia politics, and which we shall see recurring upon every possible occasion. The whole control of the Assembly and of the county courts was, in this period after the Restoration, more than ever in the hands of the landed gentry-; and they insisted upon a continuance of the poll tax, in spite of the wishes of the Governor and of the small planters and tenants. The so- called Virginia Long Parliament, elected after the Restora- tion, sat until 1676,''' and capped the climax of abuses by levying this extraordinary charge for sending Commissioners to England entirely upon the devoted polls of the " poorer sort." New forts were built by laying more taxes of the same kind ; and great abuses had crept into the method of granting land patents, which likewise bore with peculiar force upon the yoemanry, the tenants, the artisans, and the poor whites. These "little folk," with the voters disqualified by that act of 1670'' which restricted the suffrage to freeholders and housekeepers, were the followers of Nathaniel Bacon in the notorious rebellion of 1676. The brutal suppression of the revolt and the subsequent pernicious rule of Culpepper, strengthened as he was by the most liberal grant of power from the King, put- an end to all hopes of a reform in the methods of taxation. Complaints were sent to the Board of Trade and Plantations in England from time to time ; but this august body contented itself with recommending naively to those who complained of un- just taxes that they find a more easy way of raising money.* ' Letter from Mr. Bland, collector of customs; reprinted in Burk ii, 249. ^ Doyle, 237. ° Hening ii, 280. ■* Minutes, Sainsbury MSS., viii, 220. 32 FINAXCIAL HISTORY [32 This Council, however, after a while began to take note of these complaints and in a letter of September 20th, 1683, recommended that the poll tax be abolished and a duty upon tobacco be substituted for it.' On the appointment of Lord Effingham as Governor he was commanded by the King to discover a way of raising revenue " more equal and accept- able " than the customary poll tax.* There was as yet no tax upon land, and this poll tax, though now secondary to the indirect taxes, was often considerable in amount. Still it tended gradually to become lighter toward the close of the century.'' The Decline of Direct Taxation after ijoo. The general theory of taxation in vogue about the beginning of the eigh- teenth century was that the land paid its just proportion of public burden through the quit-rents ; that foreign trade was charged with the customs duties; while "stock" was of little account,"* Since the quit-rents had largely fallen into disuse previous to Governor Spotswood's advent, the first part of this theory was not true ; the customs duties did indeed pro- duce a very considerable revenue, but a large part of them were as yet accounted for by the Auditor and Receiver Gen- eral, who were royal ofificers ; they were devoted to the pay- ment of their salaries, and the support of the Governor and Council, and thus were not available for general expenses. The general, county, and parish levies were in ordinary ^ McDonald MSS., iii, 31. To this communication the Governor made reply, that " all these instructions are extremely good and necessary, but I have not as yet had occasion to put them in practice." '^ lbid.,0<±. 24th, 1683. 'The poll tax was ii^ 1674, 12 lbs. of tobacco; 1682,89 'bs.; 1684,47 lt)s. ; to 1686, 104 lbs.; to 1691, iX'^. lbs.; to 1692, \-]% lbs.; for 1692, 13% lbs.; to 1694, 21 lbs.; 1695, 22% lbs.; 1696, 16 lbs.; 1697, 16 lbs.; to 1699, 19 lbs.; to 1700, 9 lbs.; 1705, 3>^ lbs.; 1 7 10, 9J4 lbs. — Hening,vol. iii. ^ An account of the present state and government of Virginia,'S^&\i and Chilton, 1697; Massachusetts Historical Collections, Series i, vol. v. 33] OF VIRGINI4. 33 times the only direct .taxes which could be depended upon ; and they alone were paid into the hands of the treasurer, who was responsible to the Assembly, and who was ap- pointed by it' In a time of peace the principal expenditures were for these official salaries ; consequently the poll taxes became less and less important. There is in fact no record of a levy of tobacco for nearly twenty years after 1710.'' The Bur- gesses, secure in a source of revenue which allowed the ex- emption of their lands from taxation, condemned the poll tax henceforth " as grievious and burthensome ;'" and indi- rect duties were declared to be the " most easy expedient for raising a fund to answer the exigencies of government with- out subjecting the people to a poll tax.'" So opposed was the Assembly to the capitation tax that, when there was a threatened Tuscarora uprising in 1 711, and in the sudden emergency it became necessary to increase the revenue, they refused to resort to their old expedient at all. Instead of this they passed a 'law to impose a ten per cent, duty upon all imports from Great Britain, which even when reduced to six per cent., was of course promptly vetoed by the Governor.* He proposed, as Governor Berkeley had done fifty years be- fore, a tax of a half a penny an acre upon lands ; but the Assembly — " men of narrow fortunes and mean understand- ings" — simply ignored the proposition, and sat seven weeks without as much as referring to this proposal.* The con- ^ Burk ii Appendix xix. 'The levy of 1710, gj^ lbs., and then of 1727, 10}^ lbs.. ' Hening iv, 143, 1726. ''Ibid, v, 26, 1738. ' Governor Spotswood wrote, " I'm persuaded they would propose taxing the Import of goods from Great Britain as one of their chief Funds, — that they might throw the expence as much as possible off themselves." — Spotswood Letters, i, 130. ^ Spotswood Letters, i, 133. 34 FINANCIAL HISTORY [34 sequence of course was that neither a land tax nor a duty upon imports was levied. The next few years (171 3-14) were marked by some em- barrassment in the tobacco trade; so that the duty upon imported tobacco did not even suffice to pay the Governor's salary, and the public revenues were considerably curtailed. The deficit in the budget was also increased by a systematic evasion of the quit-rents. The Governor declared that the Burgesses "were persons of the meanest Capacities and most Indifferent circumstances, and whose chief recommendation to that Post is their declared resolution to raise no Taxes upon the People for any occasion whatever.'" This worthy official was doubtless prejudiced to some extent ; yet it is true that considerable obstinacy was manifested by the As- sembly. They had, however, a special object in view, which was political rather than fiscal in its significance. They were trying to force the Governor to devote the quit-rents to the ordinary expenses of government instead of remitting them to the king. The Assembly exhibited a marked tendency, nevertheless, toward the abolition of all direct taxes, which was characteristic of the eighteenth century. After 1715 there succeeded a period of peace and pros- perity, during which matters settled down into a regular course, which was not interrupted until the war with the French in 1756. The genAal expenses of government, ex- clusive of the fixed salaries, were still met by a poll tax: it was small, however, varying from three to five pounds of tobacco a head.' In 171 8 the Governor declared that, ^ Sputswood LeUefs, Aug. 9th, 1715. '^The general levy by the Assembly was: 1727 to 1730, lojo lbs.; 1732, 9 lbs.; 1733, 8 lbs.; 1734, 8)0 lbs.; 1734-6, 7,1 X lbs.; 1736-8, 11 Ihs.; 1738-40, 6 lbs.; 1740-2, 4I.;' lbs.; 1742-4, 6 lbs.; 1744,5 lbs.; 1748-52, 12/^ lbs.; 1752,510' lbs.; 1753-5, 6>i' lbs.; 1759, 6 lbs.; 1761, 6 lbs.; 1762, 7 lbs.; 1768, 2 sh.; 1766. 8 lbs.; 1769, 9 lbs.; 1772, 6 lbs. The county levy in 1732 was 4lbs. — Hening, iv, 370. Burk gives the* average levy for county expenses as 3J»o lbs., iii, 403. 35 J OF VIRGINIA. 35 "Neighboring provinces must envy Virginia's ease from Public levies when they shall know that 8o lbs. of tobacco per poll is the total sum that has been levied on her people for eleven years past." Thus the development appears to have been analogous to that of the mother country during the eighteenth century. There, as in Virginia, indirect taxes and especially excises, became more and more popular. It is but natural that the influence of such statemen as Walpole, and the economic writers like Petty and North, should have been felt in this colony. At last the distaste for all direct taxes became so strong that the attention was directed to them rather than to persons or property, even for extraordinary occasions and sudden emergencies.' In 1748 a proposition was made to move the capital of the Colony from Williamsburg to a site on the Pamunkey river, and the question of compensation to the first named city was raised. The only expedients that could be devised to obtain ^6000 for this purpose, were an increase of the regular export tax upon tobacco, despite the great embarrassments in this trade, and the imposition of a tax of ten shillings upon all coaches and chariots. The Assembly rejected absolutely a resolution to raise the money by a poll tax.'' Although the entire project came -to naught, it is a clear indication' that the ancient direct tax by the poll was in great disfavor. Nevertheless, it was still levied from time to tihie, as we have said, and was a- considerable source of revenue. It was the only elastic tax ; the others were 'An act of 1753, for the encouragement of settlers on the Mississippi, for in- stance, imposed an ad valorem tax of 5 Jc on all slaves imported, 20 shillings on all four-wheeled carriages, and 10 shillings on every 2- wheeled chair, 20 shillings on every ordinary vehicle, 2 sh. 6d. on every suit in the general court, and i sh. 3d. on suits in county courts. — Hening vi, 41 7. It was voted " with great solicitat'n and all the possible Int's I c'd rnalse." — Sfotswood Letters, 1753. ^Journal, Nov. nth and iSth, 1748. • 36 FINANCIAL HISTORY [36 limited by the conditions of trade ; the tobacco tax was not disposable by the Burgesses, being granted to the king's offi- cers ; and the liquor duties could not be screwed to a higher notch for fear of prohibiting the, traffic. The main point to be noticed is that the real property of the colony was not re- garded in any sense as a basis for public contributions. The owners of carriages, even, were taxed because they could afford them as luxuries, while their houses and lands were exempted, as being necessary to their comfort and support. Why did the sentiment in Virginia turn in this way from the early poll tax in favor of a system of indirect taxes on exports and imports, if there was so complete a domination of the landlords' interests in the legislature ? If the early system was allowed, why had it now become their interest to change the general basis of taxation ? Two answers may be found ; first, the change in the system of land tenure ; and secondly, the growth of the institution of negro slavery. Under the Company the policy of small peasant proprietor- ships was fostered ; but this gave way in a few decades to an extensive monopoly of the soil by a few proprietors. The soil was cultivated at first by white servants who were im- ported under indenture,' to work for a master a few years, and then become independent proprietors. Under such a system the poll tax did not bear with especial weight on the wealthier planters, who were absorbing the land in the first half of the 17th century. The indented servants becoming free in a short time, at once assumed their due share of the burden of taxation. After 1640 a considerable change in the character of the immigrant population took place.'^ The earlier indented servants were succeeded by an ignorant and vicious class of transported paupers and convicts, children [" kids"] were ' Heningi, 257. ''■Life of Thos. Jefferson, by Geo. Tucjter; Doyle, 383. 37] OF VIRGINIA. 37- kidnapped in great numbers, and a considerable trade in white slaves was established.^ As the cultivated territory- became more extensive the evils of this old system became more apparent; and the planters turned to the growing slave trade of Africa for their supply of labor. Conse- quently the negro slave rapidly took the place of the white servant toward the close of the century, largely owing to the influence of the Royal Africa Company.'' There were three times as many white servants in 1671 as there were negroes. In 1724 it was said, "that these servants are but an insignificant number when compared with the vast shoals of negroes." By- 1756 the negro titbables numbered over 60,000, while all of the white tithables, masters and servants, amounted to only 43,000.^ The negro was better suited to the climate, was contented in a state of servitude, and would never hope to emerge from it. On the other hand, the in- dented servants were a restless, discontented lot. ■ There was no place for them on the expiration of their apprentice- ships ; no towns and no manufactures existed ; the land was all owned by the great planters ; and there was no possible chance for competition with slaves in agricultural labor. The new slave system was therefore economically justifiable ; but it was ill adapted to recommend the poll tax to the great slave-holders. This tax had been a partial relief to the pro- prietors in earlier days. With the new system it became peculiarly onerous to the planter, who was responsible for the tithes of all his laborers ; and this great change in the charac- ter of the laboring classes offers an adequate explanation for the decided change in public sentiment which took place. ' Hugh Jones' Present State of Virginia, 1 724. ^ For an excellent description of the pernicious in€uence of this great monopoly on the economic development of the South, see the Life of R. B. Taney, by Sam uel Tyler, Appendix 580. ' Hening ii, 515; Hugh Jones; Dinwiddie Letters. 38 1. * AIcDonald MSS, October 24th, 1683. ^ Hening iii, 23. JO FINANCIAL HISTORY . [70 special purpose of building a new Court House for the sit- ting of the General Assembly. This act was to continue in force for three years ; collectors were appointed to be re- sponsible to the Assembly, and the extreme penalty of for- feiture of the vessel and furniture was imposed for neglect to report to the collectors before breaking bulk. All vessels built in Virginia, however, were to have a free entry for their cargoes. This act was continued till 1691, and raised about ;£^6oo a year on the average.' At that time the rates were changed somewhat, 4d. a gallon being levied upon all liquors imported by foreigners in foreign-built ships, while but 2d. was charged for such ships as were owned in Virginia, in which the importer had an interest. Virginia-built ships were to be exempted from the operation of the law.^ Four years later when the act was continued, the home government' as- sented to it only on condition that all liquors coming directly from England, Wales, or the town of Berwick upon Tweed, should be exempted from the duty, the intention being to draw all the revenue from the trade with the Spanish West Indies. At the same time the rate was made uniform at four pence a gallon. In 1699, ale and beer were taxed for the first time at one penny a gallon." The revenue from this source was now quite an item in the budgets, since it produced ^600 a year, nearly a quarter of the product of the duty upon tobacco exported.' The Burgesses in 1705 declared its operation to have been " very usefull and advantageous, and that no better expedient can be found to defray the charge of any publick design than impositions of that nature." Rum, brandy, and spirits were rated at six pence the gallon, except from the West Indies, for which the rate was fixed at four pence ; wines were taxed four pence a ' Burk ii. Appendix, xxi. ^ Ilening iii, 88. " Ibid., 129-188. * Oldmixon, 298, and Calendar Virginia State Papers, i, 124. 71 J OF VIRGINIA. yi gallon in all cases, and cider, beer, and ale paid one penny a gallon. All liquors from England Avere to come in free of duty. This act expired by limitation in 1 707, and there is no further record of a reimposition of any duties upon liquors or slaves for nearly twenty years. Nevertheless Ave have proof that the acts continued in force, for Governor Spotswood reported in 1718 "the greatest Bank of money known, — arisen by duties laid by Foreign Importation."' He affirmed that the duty upon liquors and slaves together ■ had, during eight years, built a house for the Governor, as- sisted North Carolina in an Indian war, fortified the frontier, built magazines, and helped to build a church, there being still .^17872 left in the bank." Much of this undoubtedly came from the duty upon slaves, but it is probable also that the imports of liquor were very considerable in amount. The influence of the Royal African Company in 1705 caused a veto of the slave duty by the Crown, but Governor Drysdale informed the Assembly at that time that " a duty on liquors being expressly recommended in my instructions, if you think fit to enact it by itself I am persuaded it will meet with approbation at home.'" In pursuance of this recom- mendation the BurgesSes imposed a duty of three pence a gallon upon rum, brandy, wine, and spirits; and one penny a gallon on ale and beer to constitute a general fund for ap- propriation by the assembly. At the same time an addi- tional duty of one penny a gallon was levied for twenty-one years, from the proceeds of which iJ"200 annually were appro- priated to the use of the College of William and Mary, which had previously been supported by occasional grants of money from the quit-rent fund. These duties were continued from time to time* at the rate of three pence a gallon, for twenty ' Letters, April 23d, 1718. ^ Spotswood Letfers, May 26th, 1719. s Yirginia Historical Register, 1 850, vol. iv. * Hening iv, 142, 276, 310, 394, 470; v, 26, 162, 236. ■J 2 FINANCIAL HISTORY [72 years without change, except that in 1736 it became neces- sary to extend the provisions of the act to cover imports by land, as a lucrative trade had sprung up by importing liquors from the colonies. The rates were reduced somewhat in 1745, being fixed at two pence a gallon for spirits, and one penny a gallon for ale and beer; but in the following year the old rate was restored,' in order to provide a fund for re- building the capitol, which had been destroyed by fire. This rate of three pence a gallon was continued down to the time of the Revolution, when it was doubled, and all distillers were made liable to the payment of it as well as those who imported the liquors. The duty of one penny a gallon on beer and ale however was abolished in 1768.'^ The only other duty on liquors which was at any time levied by the Assembly was a tax of four pence a gallon upon the product of the French colonies, which were carrying on a pros- perous trade by exchanging rum for provisions ;'' this was in force but eight years, and was imposed for political rather than fiscal reasons. There are no direct statements of the productiveness of this duty ; as we have seen, it yielded about i^6oo a year in the latter half of the seventeenth century ; and it is improb- able that it ever amounted to more than ;^i,000 a year prev- ious to the Revolution.* The principal reason for this was, that, although a great quantity of liquor was consumed in the colony, the facilities for smuggling were very great, owing to the great extent of the sea-coast, and the number of bays and inlets. The rate was fixed as high as it was deemed expedient to do so; but the administrative details of the statutes, and the severity of the penalties for evasion of the duty, show plainly that it was difficult to prevent fraud. The liquor duties were a source of revenue which were incapable ' Heningv, 31 1; vi, 194. ^ Ibid., ix, 350; viii, 335. ■'' Ibid., vi, 471 ; vii, 274. * jfournal. May 24th, 1763. 73] OF VIRGINIA. 73 of expansion above a certain maximum. Three pence a gallon was the highest rate which was practicable. And the further productiveness of the tax depended solely upon the amount of the domestic consumption. Tke Duty upon Slaves Imported. The laborers upon the plantations in Virginia during the first half of the seventeenth century were almost exclusively indentured white servants. In 1649 there were but three hundred negroes in the colony.' As a consequence there could be little revenue obtained from a tax upon slaves, for the institution of negro slavery was not developed until a later time. The only duties that were imposed at all were nominal fees required from all immi- grants. In 1633 a duty of 64 lbs. of tobacco was laid upon all new comers who planted tobacco within a year of their arrival.^ But it was a part of the customary policy of re- stricting the amount of the tobacco crop rather than as a fiscal measure. Too great need was there for laborers and colonists to allow any extension of this restrictive system, and it lasted but a year. In ifact there was virtually a bounty rather than a tax upon immigrants then in existence, by rea- son of a law which allowed a minimum rate of duty upon tobacco expoi'ted, which had been exchanged for slaves brought to the colony.'' Governor Berkeley affirmed that a certain duty upon slaves produced ;^6oo a year in 1671, but there is no re- corded statute of such a nature until 1699. At that time it became necessary to rebuild the Capitol, destroyed by fire, and the Assembly took occasion to levy a special tax upon all new comers. The old system of indentured white labor was being gradually superseded by negro slavery, owing to the fostering care of the Royal African Colony." That the ' Supra, page 37. '^ Hening i, 222. ^ Chas. Campbell, History of Virginia; Hening i, 535. * Doyle, 385. 74 FINANCIAL HISTORY ■ [74 system then in vogue was a mixed one is manifested by the provisions of the act, which imposed a duty of fifteen shill- ings upon every white servant not coming out of England, while a tax of twenty shillings was levied upon every negro imported.' This proved to be highly successful, as slaves were being imported in great- numbers, so that in 1705 the duty upon negro slaves was continued.'' The tax upon in- dentured white servants apparently fell into disuse with the decay of the system. Yet in this same year a duty of six pence a poll was laid upon all passengers in merchant ves- sels. This remained in force until the Revolution, although it was not stringently enforced, .and produced but little revenue.'* The slave trade began to assume alarming proportions at the beginning of the eighteenth century. The governors of all the American colonies were instructed to watch over the interests of the Royal African Company, and the British gov- ernment entered into several treaties with foreign powers to insure its proper encouragement." But now the Burgesses ' Hening iii, 192. ^ Ibid., ii, 229. ' Ibid., jii, 346; Dinwiddie Papers. * In the last two decades of the 17th century there was a very great demand for negro slaves in the Spanish colonies of America, and contracts Were made by Spain with the Guinea Company, as well as \\ ith many private individuals to supply the demand by imports, which were known as " el assiento de negres." The British Royal African Company being very desirous of participating in the benefits of this traffic, in 1688 addressed a memorial to the king on the subject, and nego- tiations to that end were instituted. Spain, however, demanded reciprocal rights, that is to say, permission to import negroes into the English colonies; but the Crown lawyers held that such an act would be a violation of the Navigation Acts, which prohibited all imports of " goods or commodities," except in British ships. The opinion was held that " negroes are merchandise, and can no more be ex- ported by the Act than any other goods " (Chalmers, Vpinioiis of Imminent Law- yers, ii, 263). Consequently the proposition failed; but in the reign of Queen Anne a more determined attitude was taken toward Spain, and the Treaty of Utrecht authorized a joint contract for the importation of 144,000 negroes in 30 years into the Spanish colonies. — Life of K. B. I'aney, by Samuel Tyler, LL. D., Appendix, p. 580, et seq.; Sainsbiiry jMSS., Doyle, 386. 75] OF VIRGINIA. 75 su'ddenly awakened to a sense of the impending danger, as Massachusetts had done five years before.^ They raised the duty upon all slaves imported by water from twenty shillings to ;^5, applying it to Indians as well as negroes, despite the Governor's protest. The Royal officials including the Coun- cil were desirous of continuing the traffic, as they derived a considerable profit from it. They urged the repeal of the duty, although they were obliged to confess "it is really true — that the country is already ruined by the great numbers of slaves imported of late years."'' The colonial policy of Great Britain during the next few decades became more and more unbearable. There is no blacker crime in the history of England than the persistency with which she forced the negro slave upon her American colonies. It was a deliberate prostitution of the national honor and the acknowledged interests of the colonies, for the sake of the immediate profit which accrued to the Crown. The colonial records are filled with instances of brutal at- tempts to override the remonstrances of the provincial legis- latures against the extension of this trade. To be sure these protests were not based on moral grounds ; but they repre- sented nevertheless the real view of the colonists as to the effect of slavery upon the material welfare of their social body. And the earnestness of their opinions is evidenced by the fact that the Assemblies in urging the restriction of this traffic, did so at the risk of sacrificing a considerable revenue. This prohibitive duty expired by limitation in 171 8, but it was reimposed in 1724 at a slightly lower rate. By this time the British government decided to take a firm stand on the question, and the act was disallowed. Their veto was based upon a report of the Privy Council, which recited that this 'Douglas, 87. ''■ Spotswood Letters, October 24th, 1710. jS FINAXCIAL HISTORY \je "duty (;^5) continued from 1710 to 1718, and tho' no Con- siderable objections were made at that time, yet it appears that by the price the negroes then bore, and by the small- ness of the number that were imported in three years, in proportion to what have been imported since those acts ex- pired, and the numbers that are necessarily wanted annually in ye Colony, This duty must have been a great hindrance to the Negroe Trade, as well as a Burthen upon the Poore Planters. And it further appears That this Act lays the Duty on the Importer, whereby the Trade of Great Britain will be affected." The Burgesses renewed the attempt to reimpose the tax two years later, but with the same result.' The Governor reported on March 12th, 1626: "You laid a duty on liquors and slaves imported, as had been done by former Assemblies with very good efifect ; But the Interfering interest of the Af- rican Company has deprived us of that advantage, and has obtained a repeal of that law." ''■ The other colonies seem to have offered so much opposition to the repeal of similar duties that the Crown was finally induced to consider their rights in the matter. A circular letter of October 14th, 1729, was addressed to the Governors of all the colonies in Amer- ica, instructing them to use their influence, though not their authority, to procure substitute acts for those imposing im- port duties upon negroes. The reasons assigned were that such acts raise the price of labor and put England at a dis- advantage in compction with her rivals, in foreign trade.' The Assembly of Virginia refused to yield to this " influence " completely, and in 1732 they imposed a new duty of five per cent., which was probably somewhat lower than the former rate of £i^. Another concession was also made by requiring ' Calendar of Virginia State Papers, i, 206. ' Virginia Historical Register, 1 850. ° Sainsbury MSS., Package ii, 117. 'J'j'\ OF VIRGINIA. •j-j henceforth that the duty should be paid by the purchaser instead of the importer, as had been customary.' This effect- ually disposed of the primary objections of the African Com- pany, and no further solicitude on behalf of the " Poore planter" was manifested by the Privy Council. This rate of five per cent, remained in force until 1 740, when it was doubled, to provide funds for aiding the Crown in the prosecution of the Spanish war. After four years it was re- duced once more to the customary rate." During the French and Indian war it was raised to twenty-five per cent., to be continued at that rate until 1765. But this proved to be too high, for two reasons.'' In the first place it did not produce the maximum revenue, and secondly its prohibitive effect was not adapted to the later developments of the colony's re- sources. There had come to be a large demand for slaves, and many Virginians had become interested in the traffic after it had been opened to all British subjects by a law of the 23rd George III. The act which removed the extra duty in 1760 recited that it " hath been found very burthensome to the fair purchaser, a great disadvantage to the settlement and improvement of the lands in this colony, introductive of many frauds, and not to answer the end thereby intended, in- asmuch as the same prevents the importation of slaves, and thereby lessens the fund arising from the duties upon slaves." Henceforth the rate continued at five per cent, until 1766, when the revenue was found inadequate to balance the bud- get, and an additional ten per cent, was added for seven years. Three years later still, another rate of ten per cent, was added, making a total of twenty-five per cent.* These various duties were in force until the Revolution, but we may believe that 'Hening iv, 318. ^ Hening v, 92; vi, 218. 3 Hening vi, 419, 465; vji, 81, 281, 363, 386. * Hening vm^ 190, 237, 337, 344. 78 FINANCIAL HISTORY [78 after 1770, with the growth of the spirit of independence and the poHtical theories which led to it, the institution of slavery became more and more unpopular.' If this view be ac- cepted, the later impositions of the duty may be regarded as prohibitions or discouragements of the slave traffic. These culminated in 1778, in an act prohibiting all further imports under penalties of ;^iOO for each ofifense.'' Thus ended all direct participation of the Commonwealth in the profits of this nefarious traffic ; for the Constitution of the United States soon efifectually prevented its revival by forbidding all importation of slaves after 1809. That this prohibition was loyally enforced is shown by various acts which were passed from time to time to secure this result.'' The Export Tax upon Hides. — Besides the import duties upon slaves and liquors, the export tax upon tobacco, and the tonnage and port duties, which we have noticed, there were no regular indirect taxes levied in Virginia. There were a few other sporadic attempts to tax foreign trade ; but th^y were either for prohibitive purposes, as in 1660, when five shillings a barrel was imposed upon all meats exported;' or they were part of a protective policy for the encouragement of certain industries. The prohibition of all exports of hides was customary from the earliest days of the colony," in order that the country should be supplied with leather at reason- able prices. But in 1691, the college became the object of much solicitude, and various acts were passed to provide a revenue for it. It was conceived that these two objects might be combined, thereby encouraging learning, and at the same time restricting the export of hides and skins. An ' South Carolina forbade all further importations of slaves in 1760, as the num- ber were becoming too great; but the Governor was reprimanded for assenting to it, and the act was disallowed. "^ Hening ix, 471. ' Statutes, 1809, 61, 6. *Hening ii, 21. 'Hening i, 174, 488; ii, 179, 185, 216. 79] OF VIRGINIA. 79 export duty was therefore laid at the rate of one shiUing per raw hide, two shilHngs for each tanned hide, buckskins eight pence, doeskins five pence, each pound of wool six pence, and of iron one penny. The proceeds of these duties were then to be devoted to the uses of William and Mary Col- lege.' This duty was found to be too high, and was reduced to three pence per raw hide, and six pence per side of leather, while fox, mink, raccoon, and other skins were taxed from three farthings to a penny each.'' These rates were con- tinued from time to time ; and they were often increased for special purposes, as in 1755 for rebuilding warehouses de- stroyed by fire;' but were of little importance. In 1744 they were greatly increased, (to 2 sh. 6 d. and 5 sh. for raw and tanned hides respectively) being thought to be " dispro- portionate to the real value of hides. The Burgesses soon discovered, however, that this was a virtual prohibition ; and the old rates were reinstated. It was found that " 6 d. on a raw hide, increases the college revenue, (and) is easily born by the commodity." The principal export consisted of the raw hides, so that now the rates were made equal upon both raw and tanned hides, and shortly afterward all other skins were taxed at a uniform rate of two pence a dozen.'. It will be remembered that the Assembly had also imposed an extra duty of one penny a pound on tobacco exported during most of the eighteenth century. Yet the revenue from both these sources together was not very considerable ; and was devoted exclusively to the support of the college. Its importance in this connection lies in the fact that these duties upon hides were the only customs duties which were imposed at any time, except those which we have mentioned previously. There ' Hening iii, 63. ''■Ibid., 123. ^lieningvi, 487; v, 37. *Hening v, 437; vi, 91. 8o FIXANCIAL HISTORY [gO was no power to tax imports ; it • was contrary to the colonial policy of Great Britain ; and we have seen that when- ever the Assembly trieei, as in 171 1, to impose a general im- port duty, it was disallowed by the Governor. There was no resource for indirect taxes except the duties upon exports, and Virginia exported nothing but tobacco to any consider- able amount. Tonnage Duties. An act of 163 1 ordered that " every ves- sell or shipp comminge out of the ocean (which) shall — un- til further order be taken in, shall pay after the rate — of gun powder and ten iron shott for every hundred tunns, and so to be accounted proportionably bigger or lesser.'" This law was imposed in order to provide ammunition for the fort at Point Comfort. Soon after this, the rate of contribution was fixed at one hundred pounds of powder and ten shot for every hundred tons. Then it was changed again to a quarter pound of powder for each ton, as the vessels were all less than a hundred tons burden. In 1639, this fee was estab- lished at a proportionable amount of "match and paper Roial," but three years later the old proportion of powder and shot was enacted in addition. It was soon increased to a half pound of powder and three pounds of shot, or in money three pence a ton instead." Tliis became the customary rate, and it was continued from time to time. Still it was merely incidental to the other customs regulations, and was rather an inspection and entry fee than a tax. Vessels were obliged to pay it at each voyage, whether they were laden or not. But as late as 1 67 1, it is reported that only eighty ships a year traded with Virginia, so that the revenue could not have been of any value. It was generally included under the head of im- port duties.' A slight addition was made to this fee during ' Hening i, 176. " Hening i, 218, 247; ii, 446. 'Blair and Chilton; Spotswood Letters, May 17th, 1717; Dinwiddie Letters, October 25th, 1754. 8lj OF VIRGhVIA. 8 1 the administration of Governor Culpepper. He secured a grant from the Assembly of the right to demand a port duty from incoming vessels, in return for his indemnity to the participants in Bacon's Rebellion.' This was merely a con- tinuation of an old custom in accordance with which masters of ships had made presents of wine, fruits and provisions to the chief executive. It soon died out, however, and al- though Sir William Keith declared that the port duty pro- duced ;£^SOO in \T^s no further mention of it occurs in the colonial records. ' It probably fell into disuse with the grow- ing opposition to the exactions of the Royal officials. Not unlike the right of prisage in Great Britain it did not sur- vive the semi-feudal relations which gave it birth. ' Burk ii, 225. ' Burk ii, Appendix, xxii. CHAPTER IV. LOCAL TAXES. The Powers, Functions and Fiscal Importance of Local Bodies. New England is the classical home of local self- government in America, while in the southern colonies no towns existed at all until the close of the colonial period. The directions in which administrative power and control were exerted were diametrically opposite. In Massachu- setts the colony was but an aggregation of largely independ- ent local units ; in the South the whole colony was the unit, of which the local bodies were subsidiary parts. Here there was no nucleus about which local governmental powers could be collected, and everything Conspired to restrict the growth of any local autonomy. Each plantation, like the ancient household, was isolated, independent and completely self-sufficient. The General Assembly was the sole repre- sentative of sovereignty, and such local bodies as existed were mere agents to execute its will. The only local insti- tutions were the county courts and the parish vestries, and they were but creatures of the central government. This body granted or removed powers with no limitation in theory or practice. It was an extreme example of the American system of specific delegation and limitation of the powers of local units, and was marked by constant interference of the central government in the affairs of local communities. This relation existing between the general and the local governments is reflected in the fiscal history of the Com- monwealth. The local units were almost as old as the (82) 83] OF VIRGINIA. 83 colony, but their functions were so limited that the local taxes, with the exception of the church tithes, weie unimport- ant. As early as 1623 provision was made for a fund for local expenses, as we have seen, by requiring a yearly de- posit of commodities in a parish granary, to be disposed by the majority of the freemen.' It was a fair beginning but the development which ensued was very slow. The county courts entailed but little expense, since the justices were for- bidden to levy taxes for their support . during the sitting of that body," and their service at other times was gratuitous. For many years there were no county buildings, the court sitting in the open air, beneath a spreading tree by the four corners, if perchance good fortune had bestowed any roads upon the neighborhood. As a rule few of these existed, the water^vays being numerous and more convenient. A few bridges were needed, but ferries were generally preferred in the tide-water region. Even these were no charge upon the tax payers, for the privilege of carrying passengers for a fee fixed by the legislature was gladly assumed by private indi- viduals. There was no public education, the only institution of learning, William and Mary college, being supported by indirect faxes laid by the Assembly. About the only ex- penses were those incurred for the erection of tobacco ware- houses, the maintenance of a few bridges, and the care of the poor. And the Assembly often assumed the cost of the first of these," while the care of the poor was delegated to the parish vestry. For many years however, there was a peculiar charge im- posed upon the localities, for the payment of bounties author- ized by the assembly for the " encouragement of manufac- tures." The inauguration of this policy occurred in 1661, with the vigorous administration succeeding the Restoration ; ' Hening i, 128. ^ Hening ii, 315. ^yoKr«a/, May 31st, 1740; Hening, iv, 208; vi, 477. 84 FIXAXCIAL HISTORY [84 it provided for bounties on wool and flax, to be paid by the Assembly from the general levy/ Before long this charge was shifted upon the county courts entirely, each being liable for the bounties in its own district. The advent of Governor Nicholson brought a repeal of these provisions in 1684, on account of the "charge and inconvenience.^ But they were revived Seven years later, and remained in force for some time. They must have been considerable at times, for the bounties were as high as 800, 600, and 400 lbs. of flax respectively for the three grades of linen made ; and some counties produced as much as 40,000 yards of cloth in a year.^ Moreover they were particularly onerous, as the peo pie seldom turned to this industry, except when there was a d'epression in the tobacco trade. At such times the commu- nity was always distressed ; but fortunately, tobacco was usu- ally cheap and plentiful, when there was no foreign demand for it, so these levies were generally collectible. During the first half of the eighteenth century the colonial policy of Great Britain effectually prevented any extension of this system. It was revived in 1759,* but the government had become so cen- tralized that all of the expenses were borne by the Assem- bly. A similar charge upon the county courts was the pay- ment of bounties for wolves, crows and the like, but they were so small as to be of no fiscal importance.* The only local expenditure which was large enough to occasion com- plaint was that occasioned by the erection of county build- ings. The notice of such an event usually caused so general an exodus of slaves and tithables into the adjoining counties that special legislation was required to prevent it.° The local expenditures were invariably met by means of ' Hening i. 469. 'Ibid., ii, 120, 236, 287, 493, 503; iii, 16. " Spolswood Letters, March 20th, 1710. ' Hening vii, 288. '•Ibid., ii, 236; V, 80. " Ibid., v, 35, 8s J OF VIRGINIA. 85 a poll tax levied upon the male inhabitants of the county. They were usually rated by the justices of the county courts, although this seems to have been productive of abuses, es- pecially in the payment of bounties. In 1676, for instance, it is asserted that the local levy amounted to forty pounds of tobacco per poll,' while the average of the eighteenth cen- tury was only about four pounds.'^ The Reform Assembly which met in June of that year dealt with this matter by or- dering that henceforth a number of the " discreetest and ablest" freeholders of the county equal to the number of justices, should join with them in assessing the levy, since " it hath been suspected that sums have been raised in divers counties for the interest of particular persons, to the prejudice of the said counties."' This was too cumbersome, and the power to levy taxes was conferred once more upon the justices alone, or upon the court-martial if the district were unorganized.* As these bodies had been previously prohibited from levying any taxes for their own " accommo- d-ation," and as the bounty system was abolished after a time, the old abuses did not recur. The assessment of these taxes was made upon the basis of the lists of tithables made out by the Assembly. In the col- lection of the general levy, any surplus above the allotted quota went to the -county, while the local taxes were held by the sheriff for the use of the Assembly if there had been an over-estimate in the allotment of that county. Thus it ap- pears that while the sherifif was held liable for the amount of the general and local levies in his district, so also the county, as a fiscal entity, was responsible for the payment of its apportioned quota of the general levy, even at the ex- pense of its local taxes." In all respects this general levy 1 " Virginians Defloured Condition " reprinted in the Massachusetts Historical Society Collections. 2 Hening iv, 370. ^ /i5«V., ii, 357. '/iJzV., v, 175, 188. ^ Ibid.,\y, yjo. 86 FINANCIAL HISTORY [86 assessed by the Assembly, took precedence over the reve- nues needed for local expenses. In 1742, the county courts, were empowered to contract debts for permanent improve- ments but they were held to a strict accountability.' A con- stant tendency was manifested by the legislature to encroach upon the sphere of local self-government. Many functions, at first purely local, were absorbed by it, and with this ten- dency the fiscal powers of localities were curtailed. The control of the inspection of tobacco, the cost of erecting warehouses, the regulation of the rents and salaries which should be paid, as well as all damages incurred by flood or fire, were assumed by the legislature. The wages of the Burgesses, at first paid by the county courts, were trans- ferred to the Assembly. And this movement went on until by the close of the eighteenth century the rural communi- ties were stripped of most of their functions, except the building of bridges.'^ The rise of towns and municipalities did not occur until after 1750, and the legislature at once manifested a jealous disposition to limit their activities. Such few powers as were granted were for specific purposes and a limited time. The city of Williamsburg, in 1744, needing a prison, was permitted to impose a poll tax " for the time being;" but not till 1762 did it receive authority to levy taxes to keep its streets in repair." Two years later this plenitude of powers was deemed liable to " prove of dangerous consequence to the liberties and properties of the said citizens."' Conse- quently, all of its fiscal powers were reenumerated and specifically limited. Even the power to contract loans, which the counties enjoyed, was expressly withheld. The result was that as late as 1799 the town taxes were only ' Hening V, 175. ^ La Rochefoucauld's Travels. " Hening v, 263. ' Ibid., vii, 469. 8;] OF VIRGINIA. 87 about fifty cents per poll, and the only expenditures were for the care of the poor.' Until 1 763 Norfolk Borough was not empowered to assess taxes for a night watch, a ferry, or street lamps; and in 1772 it was obliged to petition for au- thority to raise money for building a powder magazine.^ The first instance of a grant of any considerable power of taxation occurs in 1782, when the city of Richmond was in- corporated f and yet, nearly twenty years later, the municipal charges and the revenue were very small. The poor rate was the main tax, being levied upon carriages, the renting of houses and free negroes.* But this belongs to the history of a later time. We may conclude that during the colonial period the fiscal importance of local bodies was very slight. The few powers exercised by the early towns in the days of the Virginia Company were dissipated with the development of the counties which supplanted them as local units. And these rural communities were too scattered and indefinite to exercise any considerable functions of government. Towns were growing, to be sure, but their activities were not devel- oped until a later date. The Church Tithes. A local tax of a peculiar character was found in Virginia in addition to the county levy. This was known as the minister's tithe, and was imposed to pro- vide for the support of the established church. At first there had been no distinction between the parish and the county;" but by degrees the parish became differentiated from the larger body, and the tithes developed into a special and peculiar charge upon all who lived within its limits. It was a local tax from which there were no exemptions ; and was so universal in its application that it was regulated by the ' La Rochefoucauld's Travels. '^Hening vii, 152, 6li, 652. ^ Ibid., xi, n"] . * La Rochefoucauld's Travels. 6 Virginia Local Institutions, Johns Hopkins Uniyersity Series, ii. 88 FINAXCIAL HISTORY [gg assembly, and not by the parish vestry.' All other local rates were fixed by the county courts, but in this case the vestries merely collected the tithe assessed by the assembly for the minister. They were, however, permitted to levy an addi- tional amount for the other parish expenses. Thus the tithe was essentially a local tax, since the proceeds of it were al- ways expended in the particular district in which they were collected. The earliest expedient for providing for the support of the clergy was similar to that adopted by the Virginia Company for the compensation of its regular officials. One hundred acres were set apart in each parish as a glebe, and six tenants were settled upon it who should provide for its proper cul- tivation. On the downfall of the Company the tithe was substituted for the tenants, although the glebe lands were still set apart as a private domain.' No planter was permit- ted to sell his tobacco until his tithes had been paid, for the collection of which one man was chosen in each hundred. In 1629 a curious act was passed to continue this tax, enact- ing " that all those that worke in the ground of what quali- tie or condition soever shall pay tithes to the minister" ■' And these contributions were to be taken from the " first and best" tobacco and corn in every case. Being intended to quicken the moral sense of the community, they were often combined so as to act as sumptuary laws. One of the first of these enacted " against excesse in apparell, that every man be cessed in the churche for all publique contribu- tions ; if be he unmarried, according to his owne apparell ; if he be married according to his owne and his wives or either of their apparell."* 'Neill, Virginia Carolorum, 168. "^Virginia Historical Collections, i, II, 45; Stith, 319. 'Hening i, 124, 144, 242. * Journal, August 2nd, 1619. 89 J OF VIRGINIA. 89 At first the yearly allowance for each minister was regu- lated according to the price of tobacco for each particular year, so that its real value might be kept as nearly constant . as possible. In 163 1 the tithe, therefore, was equal to the average value of a bushel of corn and ten pounds of tobacco, together with the twentieth calf, kid or pig. Fifty years later this was commuted into sixteen pounds of tobacco in lieu of other provisions. The average allowance for each minister was supposed to be equal to £%o a year, although in good times it was sometimes as much as ilioo.^ The flflctuations in the price of tobacco could never be predicted, and a movement was set on foot toward the close of the 17th century to define these salaries more exactly. In 1696, they were fixed at 16,000 pounds of tobacco (net), beside the use of a glebe of 200 acres and a "mansion house." Five per cent, was allowed for collection, but this proved to be so inadequate that it was increased to ten per cent, in 1727- Moreover, the tobacco was to be delivered at a con- venient landing on some navigable stream.' The ancient custom of varying the amount of the tobacco according to its price was thus abolished. By the new sys- tem the minister was supposed to be compensated for his -losses in bad years by the surplus which accrued to him in prosperous seasons. This was oftentimes no small hardship to the clergy, and their salaries are said to have been reduced during peculiarly hard years as low as £2<^ in money. Gov- ernor Spotswood tried to reform the system by levying forty pounds of tobacco on each tithable, and converting the proceeds into cash, from which ;^8o in money should be paid to each minister, but the project was condemned by the Bur- gesses.' And this allowance of 16,000 lbs. of tobacco re- 'Hening i, 159, 220, 226; Foote's Sketches; Perry's Historical Collections; Force's Tracts, \\. ''■Ibid.; Hening iv, 205. ^ Spotswood Letters, November nth, 171 1. go FINANCIAL HISTORY [90 mained constant during the colonial period, until a change in public sentiment toward the English Church led to its dis- estabHshment during the Revolutionary period. The first manifestation of this opposition, which was due to the character of the population which settled the Western District, and later to the strained relations with the mother country, occurred in 1755. The crop of tobacco for that year was especially poor, and the price was proportionally enhanced. This made the tithes especially obnoxious, and the Burgesses bethought themselves of easing the burden a bit by permitting a payment of it in money at two pence a pound. Since the price of tobacco was considerably above this figure, the result of this act was to curtail the salaries of all the clergy. It was, however, wisely limited to ten months, a period too short to enable the Crown to disallow it, and yet long enough to bridge over the season of scarcity. So far as the clergy were concerned, this law was undoubtedly unjust and dishonest, and as such has been severely condemned by all historians. And yet in all other respects it was a salutary provision against the extortions which were often practised by avaricious sheriffs upon those who for any reason could not obtain tobacco with which to pay their debts, and who were obliged to commute them into money. The clergy submitted to this obvious injustice ; but when the Burgesses tried to reenact it three years later, they pro- ceeded to contest it in the courts.' The regular allowance for the year would have been £ipo, which was reduced to ^133 by the operation of this second law. The case has been immortalized as the " Parson's Cause" in the history of the struggle for American Independence. But we shall in this place merely refer to it, leaving its dramatic features to the writers on political history. Suffice it to say that the "^Life 0/ Patrick Henry, by W. W. Henry, as well as M. C. Tyler. 91 ] OF VIRGINIA. gi act was disallowed by the Crown, although the courts all re- fused to award any damages, probably because of the grow- ing antagonism toward Great Britain. The tithes were tem- porarily suspended from year to year after 1776, although the vestries were all permitted to levy a poor rate.' In 1779 the whole system was abolished. With the formal disestab- lishment of the church, the glebe lands were confiscated, and the complete separation of church and state was accom- plished. Henceforth the local taxes were purely political or administrative in character, and the ecclesiastical parish dis- appeared as a governmental agent. .iHening ix, 312, 579; x, 197. CHAPTER Y. THE BUDGET. The budget is an institution which is peculiar to a devel- oped state where definite governmental policies are devised, maintained or modified to suit the ends for which the state exists. It implies the establishment of a stable government, with an organic administrative machinery, a certain regular- ity in public expenditures, and the authority to enforce con- tributions to meet such demands. In the days of martial law, or of purely speculative venture, which prevailed for some time in Virginia, there was no such regularity in either revenues or expenditure. And even when the public body began to take form, it is impossible to distinguish the pri- vate from the public functions of the nascenj; state. No budget existed, therefore, for many years. When it finally developed it was formed through a combination of the various parts, each of which we have already studied in de- tail. We have seen what was the nature of the revenue, and the expenses of the government; what external factors de- termined or limited their practical application ; and in how far the popular representatives utilized the possibilities of them. The next step is to gather these various parts to- gether, and to discover what influence they exerted upon each other. First, however, it will be necessary to consider the political or constitutional questions which arose in regard to the relations of the Crown to the Colony in fiscal affairs ; and then the results of the preceding studies will be grouped under a single head, that we may see what finally determined the fiscal policy of the Commonwealth. 92 [92 93j OF VIRGINIA. 93 The Constitutional Separation of Powers. Various provis- ions in the early charter of the Virginia Company granted to the colonists exemption from all taxation, with the exception of certain duties upon imports ; but these were all abrogated with the withdrawal of its charter in 1625. At this time all of the piowers granted to this corporation reverted to the Crown, and of course this immunity from taxation was removed at the same time. Flad James the First lived until Virginia became more than a mere speck upon the map of America, it is impossible to say what might have been the result. It chanced, however, that other affairs occupied the minds of Englishmen, until the colony had quietly grown to such a size that it was able to assert its rights. Charles I was a broader-minded sovereign in- many respects than his father, and he seems to have recognized the position which the Assembly assumed as the basis for its future constitution. The Assembly met regularly with the sanction of the King, during the period from 1625 to 1639, at which latter date its legal powers were defined for the first time. Then it was that the Burgesses asserted the exclusive right of leg- islation in all matters of taxation.' Governor Harvey had arbitrarily increased his perquisites of office by the imposi- tion of heavy fines and amercements, and had claimed abso- lute supremacy in all legislative affairs. It became highly important, therefore, for the Assembly to curb the executive authority by a distinct assertion of rights. To be sure much of this tyranny on the Governor's part was probably due to the failure to make due provision for his support after the dissolution of the Company. But in 1639 the Burgesses remedied this evil, receiving the assent of the executive to their novel assumption of power in return for this grant of revenue. The King was too deeply involved in his own affairs to take note of this, even if he had deemed it of suffi- ' Hening i, 171. 94 FINANCIAL HISTORY [94 cient importance to do so. In this manner the Burgesses established a precedent, which served as a basis for their claims, until Governor Berkeley's charter granted them the right of government " according to the laws of England." Thus the right of absolute control in all matters of taxation was firmly fixed in the colonial legislature. The future dis- putes and struggles with the executive were mainly attempts to re-assert powers which had inadvertently fallen into disuse through careless or indefinite legislation. For many years all public contributions were made in kind ; they were paid directly to the person for whose use they were intended and each want was satisfied as it arose. Generally there was no treasury balance of any kind ; in fact there was no place in which it could have been deposited — no officer who was empowered to care for it. In a few in- stances, when disbursements were delayed unexpectedly, the collected tobacco was left in the care of the Commissioners of the County Courts ; ' but usually no provision for the future was made. This was in part a result of the simple system of the time. It was also due to another principle firmly fixed in the policy of the Assembly, which was that no independent or permanent source of supplies should ever be allowed to the executive. The Burgesses had gained control of the purse ; but the power of appointment was still vested in the Crown. And their precious privilege was of no avail unless with it was coupled a certain coercive power over the representative of the King. When Governor Berkeley first came to the colony, bring- ing the welcome charter of 1639-, the burgesses, as a m.ark of gratitude, granted him a yearly poll tax of four pounds of tobacco^ during his term of ofifice. This was a dangerous precedent, as they soon realized, and when the overthrow of the Stuarts ended the Governor's authority, they hastened to ' Hening i, 286. ' Burk ii, 65. 95] OF VIRGINIA. 55 make a new contract with him. The supplies which were granted therefore in 1642 were distinctly stated to be merely- temporary in their character — not to be repeated, except in case of necessity.^ Of course the Governor had nothing else to do but accept these terms ; and the assembly once more made good its claim to supremacy in fiscal afifairs. An ap- parent exception to this established policy was a grant of power to the Governor and Council, in 1 661, to raise a levy for county expenses for three years, not to exceed twenty pounds of tobacco. This liberality was tempered, however, by a saving clause which reserved power to change it if an Assembly should be convened before the expiration of that time. The general reaction in favor of the royal prerogative after the Restoration did not affect the supremacy of the As- sembly in matters of finance. The Governor now attempted to strengthen his power by means of an alliance with the Council, which in 1631 had been active in its resistance to his authority.^ Since that time this advisory body had become closely allied with hini in material as well as political interests. The Councillors for instance were first exempted from taxa- tion by the charter of 1639, which Governor Berkeley had brought with him ; the patronage of the colony had become very extensive, being largely at the disposition of the Gov- ^ " This Grand A9sembly, haveing alsoe entered into a deep sense and consid- eration of the duty and trust which the publique votes and suffrages have cast upon them, under which is comprehended as the most speciall and binding obli- gation, the preservation of the rights and properties of the people, to which this course may seem to threaten violence ; yet as well for the silenceing of pretences as for answering of arguments of weight, it is thought fit hereby to declare that as from the infancy of the coUony, there was never the like concurrence and pres- sure of affairs, so they have recorded to their posteritie with this ensueing presi- dent of accommodation for the Governor, that the aforesaid instance and motives removed, they will never yield or consent to receive (renew) the same. — Henin^ i, 280. '■^ Burk ii, 28 ; Blair and Chilton. g6 FLVANCIAL HISTORY [96 ernor; and this power was used to create a compact body of devoted adherents who upheld the executive against the legislature. The council was not affected by tax laws, and had no motive for opposing any schemes for increasing the Governor's prerogative. Yet too much importance must not be ascribed to the influence of this body ; nor to the mere fact that its members were not liable to taxation.' For the financial system then in vogue made a mere personal ex- emption from levies of little value so long as the poll tax was still imposed upon the slaves and family servants. Nev- ertheless the position of these officials was a highly favored one in many ways, since they held nearly all of the offices of honor or profit in the colony. They were of no slight im- portance therefore as allies of the Governor in settling the final balance of power. After his reappointment in 1 661, Governor Berkeley be- thought himself of making use of this body, which had now become fully dependent upon his favor. The Assembly had allowed the Council to hold an advisory power in the con- sideration in committee of matters of fiscal importance. And the Governor preferred the modest yet insidious request in 1667, that the Burgesses should allow two of these Coun- cillors to join with them in granting or confirming the public levies,' — which was indeed to induce a crafty confusion of the customary functions of the legislature and the executive. This was instantly perceived by the Assembly, which hum- bly answered, " That they conceive it their privilege to lay the levy in the house ; and they will admit nothing in refer- ence from the honorable governor and council, unless it be before adjudged and confirmed by act or order, and after 'This immunity from taxation was regarded even by the Reform Assembly of 1676, as a com]icnsation for their services. It does not seem to have been strenu- ously opposed by the Burgesses. — Heniiig ii, 359. ^Burk ii, 145. 97] OF VIRGINIA. 97 passing in the house, shall be presented to their honors for their approbation or consent." But one course was open to the Governor, so he returned answer that " This is wilHngly assented to and desired to remain _on record for a rule to walk by for the future which will be satisfactory to all." Thus did Governor Berkeley learn his lesson in the science of finance. The next incident in the history of the balance of power, occurred when Governor Culpepper returned to Virginia in 1679, bringing complete indemnity for all the offences com- mitted during the late rebellion. The Burgesses were so overcome by this generosity that when they granted the usual duties for the Governor's support, they made them perpetual, and subject to none save His Majesty's sole direc- tion and control.' They moreover changed the customary presents of wine and dainties made by the masters of incom- ing ships to the Governor into a regular due, which was rig- orously exacted for some time. This seemed so auspicious that Lord Culpepper's successor tried to force matters a lit- tle further. He was instructed by the Board of Trade and Plantations, in 1680,'' to obtain a revival of that former grant of power to levy a small tax independently of the Assembly, which Governor Berkeley had previously enjoyed. This the Governor attempted to do in 1683, in vain; for the Assem- bly proved to be " peevishly refractory to the least proposi- tion,"'' answering that they could " in no waies concede to it." Disappointed in this direction, he endeavored to in- crease the perquisites of his ofifice by imposing a tax of twenty shillings a year upon schoolmasters, ^^5 upon lawyers in the general court, and fifty shillings on those practising in the county courts, together with a tax of two hundred pounds of tobacco upon the probate of wills.* These last were, however, 'Burk ii, 22. '^ McDonald MSS., December 3d, 1680. ^ Ibid., vii, 223. * Beverley; and Burk ii, 301, 308. 98 FINANCIAL HISTORY [gg promptly removed during the next year through the earnest representations of Col. Thomas Ludwell, the agent of the Assembly in England. The Revolution of 1688 exerted little influence upon the relations of the various parties in Virginia. The policy of the Governors seems to have been to prevent agitation by promptly proroguing the Assemblies whenever they showed a disposition to be refractory. As for their own per- sonal support, we may believe that the unlucky step of grant- them a regular duty upon tobacco exported removed the par- tial dependence which had formerly existed. The exclusive right of the Assembl}' to lay taxes was not contested, but so long as no extraordinary supplies were needed the Gover- nors could afford to wait.' The effect of this policy was that no supplies were granted, and a gradual accumulation of in- debtedness ensued. In 171 2 Governor Spotswood reported that the revenue had been defective for twenty-two years, and that ^^7000 had been taken from the king's private estate.' All this naturall}- favored the popular party, which held the grip upon the purse-strings. At last the Governor was obliged to abandon the customary policy of coercion, and conciliation was adopted instead. The Assembly was " such a Whimsical Multitude, that it requires a great deal of Management to gain their consent to anything that's new, especially where money is required.'" This attitude was a sore trial to Governor Spotswood, for he was a progressive man. He wanted to reform the system of tithes, to reorganize the quit-rents, and to increase the revenue from the export duties. But the Burgesses not only asserted their authority; they became aggressive at last, and demanded that these quit-rents should no longer be drawn ' In 1695 Governor Andros tried to obtain a grant of £<^oo to aid New York but was refused. — Sainsbury MSS., iv, 231. ''Letters, Introduction. ^ Ibid., November nth, 1711. 99j OF VIRGINIA. gg away to England but should be devoted to reducing the burden of taxation. As we have seen, this right was denied by the Crown, but the matter was compromised by dona- tions from time to time at the request of the Assembly. Years of plenty and prosperity succeeded and the treasury was abundantly supplied by the customary methods, so that all discussions upon the subject of authority were silenced for a time. Yet prosperity did not tempt the Assembly into a repetition of its former indiscretions in dealing with the exe- cutive. Sir William Keith truly described their policy a half century later when he affirmed that "the public there is gen- erally in debt, because they are extremely jealous of at- tempts upon their liberties, and apprehensive that if at any time the public treasury was rich, it might prove too great a temptation for an artful governor.'" The Burgesses by carefully adhering to this policy ap- parently regained all of their rights which had been curtailed during the closing decades of the seventeenth century. The Governors tried to cajole, to higgle or to threaten whenever extra supplies were needed, but the legislatures could not be moved. At last they became so exceedingly independent that they compelled a strong executive like Governor Din- widdle to assent to an act " clogg'd with unreasonable regu- lat's and Encroachm'ts on the Prerogative." ^ The necessity of extraordinary taxes for the prosecution of the war with the French still further emboldened the popular representa- tives, until the Governor in despair wrote to the Council in England that " there appears to me an Infatuation in all the Assemblies in this part of the world." One final struggle was made by Governor Dinwiddle to secure an independent revenue of his own. He attempted ^A short discourse on the present state of the colonies in America with respect to Great Britain. ''■Letters, November I2th, 1754. 100 I'lXANCIAL HISTORY [iqo to revive the fee of a pistole for the use of the Royal seal which was necessary to the validity of every land patent. A similar exaction had been made by Lord Howard in 1685 ; but it was declared " uneasy and burdensome" to the people, and was finally discontinued by the King's orders.' At this attempt of the Governor's, the Assembly at once became " so violently warm thereon " that he was obliged to prorogue them. The Burgesses petitioned the King, and the matter was discussed for over a year. Finally the Council decided to reject their address ; even Horace Walpole seems to have upheld the Governor's conduct in the matter. It was deemed best, however, not to be too exacting, and the fee was dis- continued, although the right to impose it was still claimed.' From this time the active opposition to the representatives of the Crown became more and more pronounced. And the Governor dared not be too aggressive, apparently having a premonition of the result.' The people opposing the embargo in 1757, Governor Dinwiddle wrote to the Lords of Trade that he " thought it more eligible to take [it] ofif than to admit of any Dispute of Y'r Power in ordering it." Despite this warning, the fatal policy of adopting more stringent measures was pursued. Lord Dunmore was even forbidden to assent to any revenue bills which were not permanent, unless they were intended to defray temporary expenses.' This arbitrary conduct was met by an equal determination on the part of the people not to yield. The crisis was thus hastened by the conduct of both parties, until the final sepa- ration ensued in 1776 when the Burgesses became the sole representatives of sovereignty in the colony. DevclopDicnt and Analysis of the Budget. It has appeared '^Letters of Governor Dinwiddie, November 28th, 1753; March 24th, April ' 26th, May loth, July 24th, and October 25th, 1754; yOT(r«a/, November 28th, 1753. '' Winnowings in American History, Virginia Tracts, § i, by W. C. Ford. ' Massachusetts Historical Society Collections, x, 635. lOlJ OF VIRGINIA. lOI from the previous study of Virginian institutions that the earliest expenses of the incipient state were those required for the support of the various officials who were appointed by the Company or the King. Yet after the reversion of the domains which had at first been set apart for this purpose, no particular provision was made for these salaries, which were apparently paid from the Royal Exchequer. For many years therefore the principal expenditures which were de- manded directly of the Assembly were for the defence of the colony from the Indians. In 1629, nearly the whole appro- priation of 8,000 lbs. of tobacco was made for the, purchase of ordnance, powder, shot and military supplies. Three years later, 20,000 pounds was expended for the same pur- pose ; while the supplementary charges of pensions and damages were very considerable. Forts had to be con- structed and a militia maintained at the public expense.' With the growing extent of the colony these items nat- urally became secondary in the regular peace budget, and the salaries' account once more became prominent. Whereas the sole charge in 1639 had been ;£'i,ooo for the Governor's support, with the expansion of the sphere of government this increased until the fixed salaries alone absorbed ;i^3,000 in 1700. By the middle of the next century it became nec- essary to raise over ;^4,ooo yearly for these items alone. The salary of the chief executive had been doubled during Governor Culpepper's term ; and the Council which at first had served without compensation was allowed i^3SO, together with a salary of ;^SOo for the Lord President. The per- quisites of this body moreover amounted to upwards of iJ^400.' As for the expenses of administering justfce, those services 'Hening i, 128, 143, 196. "^ Ibid., i, 423; Burk ii, Appendix, iv; Oldmixon; Dinwiddie Letters, OzX.a- ber 25th, 1754. 102 FIXANCIAL HISTORY [io2 which were not gratuitous were performed by the regular officials for the payment of a certain fee in tobacco.' In order to meet all of these increased expenses, the revenues of the colony had to be constantly augmented. At first a simple levy by the poll had sufficed. Then it became necessary to provide for a permanent revenue to meet the fixed charges, for which purpose the export tax upon tobacco was instituted. This, however, was not available for the other general expenses of government. The assembly had no control over it, since all accounts were made to the King's agent alone. At one time the proceeds of it were not even deposited in Virginia, but were transported to England, the payment of the salaries being strictly limited to the Crown officials.' The fund was therefore as completely removed from the control of the Assembly as if it had never existed, and the poll tax was still their sole support. And this was not a permanent source of income ; it was generally appro- priated by the same act which authorized its levy ; and no surplus remained for contingent expenses. To meet this need of a definite permanent income, the liquor duties were imposed in 1682 and the tax upon imported slaves was soon added. These taxes were to constitute a fund which should be exclusively subject to the control of the Assembly. Un- fortunately, however, they proved to be exceedingly inelastic, and too dependent upon the general social and political con- ditions of the colony. Yet in ordinary times they served well enough, and once or twice even yielded a surplus. With their establishment it became necessary to have an officer to care for the moneys which they produced, so that in 1695 ^ Treasurer was appointed who was made account- able to the Burgesses alone. He was independent of the ' Heniiig i, 176, 201, 266, 463; ii, 244. ^ McDonald MS S., October loth, 1676; viii, 238; Sainsbury A/SS., viii, 22. I03j OF VIRGINIA. 103 Auditor and the Receiver General, who were mere. agents of the Crown in the colony. Being possessed of a financial and administrative system of their own, the burg'esses were in a condition to develop further their system of indirect taxes. The customary direct tax came to be regarded as more and more oppressive, and every efifort was made to supersede it by increasing the cus- toms duties. This proved to be only partially feasible, how- ever. There was a limit to the revenues which could be derived from the liquor duties ; the Royal African Company would not hear of any increase of the slave duty ; and the British government would not allow duties upon the import of any manufactured goods. Yet the governmental expenses kept on increasing during the eighteenth century, and the assembly was forced to revert to its customary direct taxes. It was at this juncture that the struggle to obtain possession of the quit-rents occurred, with the result which we have seen. Being denied the proceeds of this land tax, there was nothing to do but to tax the polls whenever any emergency arose. In 1 66 1 the regular revenues were ;£^4,200, exclusive of the quit-rents and the general levy; by 1700 they stood at ^^4,500.^ For some years they did not increase, and at times were even less, being but ^^4,000 in 171 5. Then followed the great increase in the importation of slaves, which paid off all debts and even yielded a supplus. But this was soon cut short by the Royal African Company. After this time the regular revenues developed but slowly with the natural increase of population, until in 1754 they are said to have been ;^6,500.''' This paid the salaries and fixed charges, which were ;^4,345, the surplus being devoted to the con- ' Burkii, Appendix, iv; Oldmixon, 298; Charles Campbell's j^rforc 0/" Virginia. ''■ Dinwiddie Letters, 1755. I04 FINANCIAL HISTORY [104 tingent expenses, along with the poll tax. This last tax produced about ;^3,ooo at this time. The revenues of the colony, therefore, were derived mainly from two sources, the poll-tax and the export duty upon tobacco. The first of these was the simplest and most natural. The second was not introduced until the latter part of the seventeenth century. It yielded a constantly increas- ing income, but was subject to many limitations. The direct tax on the other hand was exceedingly elastic. The sub- joined table' shows that it produced .about one-half the 'Estimated Re'>'enue from the Poll Tax. Date. No. Tithes. Av. Levy in lbs. of Tobacco. Value per lb. Fixed for Quit Rents. Total in Pounds Currency. 1632 1644 1652 1654 1671 2000 5000 7000 7209- 13000 20000 30000 38000 63000 82000 105000 153000 64 1640 (i2d.) 1645 (3d.) 1661 (2d.) 1676(1.5.) 1682(1.2.) Id. 30 12 40 ± (extra) 16 5± 4 3 3 I sh. (war.) 1802 3250 1697 17H 1722 1742 1748 1759 1772 1333 625 633 790 1025 5250 127s Estimated Revenue from the Export Tax upon Tobacco. Date. 1671 1700 1740 1750-60 1770 Hogsheads Exported. 15000 30000 30000 50-60000 70000 Rate. («' 2 sh. Revenue in Pounds Currency. 1500 3000 3000 5-6000 7000 I05] OF viRGiyiA. 105 revenue during the second half of the seventeenth cen- tury; that it dechned till 1750; and then was reapplied with more vigor during the troublous times which followed. Thus the common opinion that the revenues of Virginia were mainly derived from indirect taxes is but partially true. Such taxes would have been exclusively adopted without doubt had not various external considerations prevented it in practice. It appears that the form of the budget was in great part determined by outward circumstances and environment. This is indeed natural, for it appears to be the rule in the early history of all human institutions. Only when such bodies becom.e fully matured, do they begin to react upon their surroundings ; and then it is that definite policies be- gin to be outlined, conditions moulded to suit the popular will, and a complete theory of the proper end, duty and authority of the state developed, in 'accordance with which the details of administration are regulated. After the estab- lishment of the political independence of the colony, when it became a complete governmental entity, the system be- came more complex. And then the modern budget ap- peared, with a treasury balance of considerable amount, with public debts and the development of public credit, with sink- ing funds and like devices for meeting future obligations, and with a definite policy of internal improvements. Some of these features appeared in a rudimentary form during the war of 1755. But the colony was then fresh and strong, and the Parliament of Great Britain stood at its back, lend- ing political and pecuniary support.' Its real strength was not tested until the Revolution, when all of these expedients had to be employed. Necessity gave them birth, and being once used they proved so efficient that they remained hence- 1 Hening viii, 334, 372. I06 FINANtlAL HISTORY [io6 forth as permanent features of the fiscal organization of the State. Public Domain and Lotteries. During the later colonial period there seems to have been no revenue derived from the public domains. Fees were often demanded for land patents, but they were generally illegal and extortionate in amount, and were soon removed by the Assembly. And while they subsisted they constituted no part of the public income, but were absorbed by the Secretary or the Governor as perquisites of office. The only project for a public do- main as a source of profit, was due to Governor Spotswood, who proposed in 1710 that the Assembly assume control of certain iron mines. This was " laid aside by the Assembly," and was never revived. During the Revolution, and for some years thereafter, the state owned a manufactory of arms. As it was largely a war-measure, it was of no profit to the state financially and has no fiscal importance. Thus it appears that the policy inaugurated by the Virginia Com- pany of founding a definite and permanent domain for the support of its officers was never successful. It did not accord with the principles of popular government, which de- mand that the executive shall always be in a measure finan- cially dependent upon the favor oi the representative legisla- ture. One of the most striking features of the colonial finance of Virginia is the absence of lotteries as a means of raising revenue. It is strange that this should be so, for the reck- less propensity for gambling among the planters during the colonial period has been noted by all writers on the history of that time. In Massachusetts, on the other hand, despite the rigidity of the moral ideas of Puritanism, the lottery was a fiscal engine regularly employed by the General Court. The early Virginia Company was supported almost en- tirely at first by means of the "great standing lotteries,'' lO;] OF VIRGINIA. 107 which were drawn from time to time in the West End of St. Paul's Churchyard.' Until 1621 these lotteries were the " real and substantial food" by which the colony was nour- ished.'' Yet after the time when a -real government was es- tablished, there is no mention of them until 1755. A lottery of £60QiO was authorized at that time to help defray the ex- penses of the war with the French ; but it was so unsuccess- ful that the time for drawing it had to be extended by the Assembly.^ It is improbable that any considerable revenue was obtained from this, and no others were authorized until after the Revolution, when they were employed extensively for many purposes. One reason for the absence of this fiscal expedient may have been that there was so great a disposition among the people at large to gamble, that the Burgesses felt it to be their duty to discourage all such habits. In 1739 the As- sembly prohibited all private lotteries as " productive of all manner of vice, idleness and immorality" in the community.* Yet the use of them during the Revolutionary period seems to have become general. They were soon employed for the benefit of schools, hospitals and charities. After this time for over a hundred years the policy of the Burgesses in regard to them was very uncertain. Every few years they condemned them as pernicious, and then proceeded to grant one to some individual for a benevolent purpose. The his- tory of the lottery, therefore, during the present century, gives a very interesting picture of the public morals of the people ; but it belongs to an epoch entirely different from the colonial one. Previous to 1776 the history of this com- monwealth is in marked contrast to that of some of the Northern colonies. ' Purchas's Pti^-mj iv, 1773; Hening i, 108. '' Extracts from the Transactions of the Virginia Company, by Rev. E. D. Neill, 14; Washington, 1868. ' Hening vi, 453. */foV., viii, 358. CHAPTER V. HARD MONEY. Early Systems. The current impression, even among his- torians, is that hard money and specie played a very subor- dinate role in the American colonies. A vast amount of loose writing has been bestowed on the peculiar systems of exchange which prevailed in different places. And much labor has been expended in compiling histories of paper currencies. The subject of hard money, however, is gen- erally dismissed with the remark that it was very scarce, and that all trade was carried on by means of wampum or barter. It is undoubtedly true that there was a great scarcity of any circulating medium in nearly all of these colonies. The records are filled with complaints ot the inconveniences and abuses which followed as a consequence ; and this is doubt- less the main reason for the general impression which pre- vails. But instead of warranting a total neglect of the sub- ject, it is rather a very urgent reason for seeking to know the few details which are attainable. In fact it is a trite saying, that "it is not the excellence, but the very defects of any system which lead men to write of it." Because hard money was so difficult to obtain and to keep in circulation, the ut- most ingenuity was exercised as a matter of necessity in the attempt to solve the problem. There is, therefore, we sub- mit, every reason to expect that the history of the struggles of legislators to grapple with the inexorable forces of specie gravitation may prove of considerable scientific interest. The very scarcity of coin and bullion served to render it all the more susceptible to the influence of hidden forces ; the 108 [108 109] '^^ VIRGINIA. 109 effects were exaggerated by this means ; and the intimate relations between money and trade were made more evident. In Virginia there is an excellent opportunity to study the question, since the customary paper money cure-all was not applied until a late day, and then only as a matter of neces- sity. The wisdom and moderation of her- legislators led them to adopt other expedients to cope with this universal difficulty. And the adequacy of their simple remedies -to settle the question is evidenced by the immunity from paper money and depreciation which Virginia enjoyed for so many years. It will be the purpose of this sketch to gather to- gether the few facts which are accessible ; to search for the real cause of this dearth of money; to see what remedies were applied by the Assembly; and finally, to discover hoiv far and in what way they were successful. It is probable that many of the early immigrants, espec- ially the indentured servant's and children, who were sent out at the Company's expense, brought no money with them at all. Even those who were well provided in this respect, speedily exchanged their money for the necessary supplies which were sent over to them from England. Yet this did not occasion any inconvenience at first. The communistic system which prevailed for several years rendered the use of any currency unnecessary, so far as the colonists themselves were concerned. A circujating medium was needed, there- fore, only in dealing with the British merchants, and with the Indians. With the latter class a species of wampum called " peak or Roenoke," was used for many years.' Moreover, the founders of the colony sent over several glass workers, and a factory for the making of glass beads was established, which lasted until the time of the Indian massacre. The evils of a depreciated currency were apparent even at that ' Beverley, History of Virginia, iii, chap. 1 2. I I o FINANCIAL HISTOR Y \\\0 early day, for the Company's orders were that " beads being the money you trade with the natives, we would by no meanes have through to much vilified, or the Virginians at all permitted to see or understand the manufacture of them.'" As to the foreign commerce, all trade was carried on through the Cape merchants, the theory being that " by this the same goinge for England with one hande, the price thereof may be upheld the better." All accounts with this common agent were kept in tobacco at fixed rates, " three shillings the beste, and the seconde sorte at i8d. the pound."* Thus there was little demand for coin in this direction. It was the original intention of the founders of the colony to have a special currency of their own. The charter of 1606 gave full power to establish and issue coins of any de- nomination or weight that the Council might choose to adopt. This provision was, however, removed from the sub- sequent charters, and no further mention of it occurs ; so that it is not likely the right was ever acquired, unless tem- porarily, during the Commonwealth. In fact, there is posi- tive evidence to the contrary, since the Burgesses petitioned the Privy Council in 1631 to issue a special coin for them. They asked, moreover, that it be debased twenty-five per cent., in order that it might more readily be retained in the colony .' We know that the right of mintage was strenuously denied in Massachusetts a few years later, and the same view of the powers of the colony in Virginia was probably held. There was a general reaction after 1630 from the system of using tobacco as the universal medium of exchange and account, which had been so eagerly accepted at first. It had been based upon the presumption that the price of to- bacco was a constant quantity. A few years' experience 'For a full history of this matter see PurchaS's Pilgrims iv, 1783; Virginia Historical Collections i, 95, 137, 151, 158; Neill, Virginia Company, 236.I ''■Journal, 1619. 'Jefferson's Notes, ed. 1787, pg. 283. Ill] OF VIRGINIA. Ill proved the fallacy of this idea ; the custom " bread many inconveniencies and occasioned many troubles;" and the Assembly tried to remedy the evil. In the absence of any new coin from Great Britain they could not abolish the old tobacco barter ; but they could return to the English stand- ard for their money of account. Tobacco, as we have seen, had fallen in value, and was in no wise suitable for this pur- pose. The Assembly, therefore, enacted that the estates of all decedents should henceforth be reckoned in English money and not in tobacco.' In 1633 this provision- was likewise extended to all contracts, bargains, pleas and judg- ments. The Mint Project. During the succeeding decade all of the various inconveniences incident upon an excessive produc- tion of tobacco made themselves keenly felt. Numberless regulations were imposed upon the culture of this staple in a vain attempt to uphold its price. Money was exceedingly scarce, and creditors often demanded extortionate rates for commuting money debts into tobacco. This became so com- mon that an act of 1642 declared all money debts contracted in future to be non-recoverable at law. This, however, proved to be too drastic a measure,, so that it was soon re- pealed.'' But in the next few years tobacco fluctuated so enormously in price that once more the Burgesses were com- pelled to recognize that it was not a proper standard for ac- counts. It happened that at just this time the political con- nections with Great Britain were somewhat relaxed ; in fact the colony was virtually independent during the Common- wealth period. There was no longer any question of author- ity ; and the Assemby resolved to establish a metallic cur- rency of its own. The motive for the enactment of this law was the consid- ' Hening i, 170. ^ Ibid., i, 262; ibid., 47. I 1 2 FINANCIAL HISTOR Y [112 eration, " How advantageous a quoine current would be to this colony, and the great wants and miseries which do daily happen unto us by the sole dependency upon tob'o." ' "The only way to procure the said quoine, and prevent the further " miseries" was to raise the value of the Spanish pieces of eight to six shillings, with the smaller coin proportionably thereto. Thus the bullion which would be needed for the supply of the mint was to be attracted to the colony. There was not much commerce between Virginia and the Spanish West Indies. The two were competitors so far as tobacco was concerned. Their productions were much the same, with the sole exception of sugar and molasses. It is . probable, therefore, that this measure was directed toward the New England colonies, rather than toward the Spanish main. These Yankees had carried on an extensive trade with the colonies of Spain, despite all the regulations of Great Britain's colonial policy." They carried fish and lum- ber to the South, and received sugar, molasses and rum in return. At this time they held almost a^ monopoly of the traffic, although New York and Pennsylvania soon became serious competitors.' There was, however, comparatively little demand for Virginia's products in the South ; and a far better market was to be found in New England. For twenty years there had been a very considerable coasting trade between the two sections.* Provisions as a rule com- manded a higher price in Massachusetts than in Virginia, Wheat had ranged from five to six shillings a bushel there previous to this time, whereas it could be procured in Vir- ginia for about four shillings of the same money.' Beef was also somewhat cheaper in the Southern colony, being two ' Hening i, 308. '^ Ibid., ii, 5 1 6. 'New York Colonial Documents, v, pg. 686. ■' Weeden i, 207, and Doyle, 205. ^ Weeden : A Perfect Description of Virginia, 1648, reprinted in Force. 113] °P VIRGINIA. 1 1 3 and one-half pence a pound, as against three pence in Massa- chusetts. Consequently the Yankee coasters exchanged salt-fish and the sugar and rum of the West Indies for these products of Virginia. There had long been a considerable amount of silver coin in circulation in Massachusetts. Not only was it the result of their legitimate trading, but a good deal of bullion was alfeo brought in by freebooters from the Spanish main.' And it is probable that this legislation in Virginia was an attempt to attain the same result which Massachusetts herself accom- plished by the establishment of a mint in 1656. The cus- tomary rate at which the piece of eight had passed there was five shillings ; and the rest of New England followed this example.'' And it appears that this bid of six shillings the piece for it in Virginia was a direct premium of a shilling put upon the import of each coin. New York was of little importance as yet,^ and there was therefore no other place, except New England, where money could be procured. Virginia wanted the silver and was willing to pay an extra price to procure it. The Assembly then resolved that " the said quoine will not continue with us unless we have a leger quoine." They therefore forbade all exchanges for tobacco in order to cre- ate a demand for small change, and made absolute forfeiture of all the goods so bought or sold the penalty for such trading. To take the place of this customary medium of exchange they resolved to import 10,000 pounds of copper at a cost of .^750 sterling, to be paid for in tobacco at one and one-half pence a pound. Every pound of copper was to be coined into twenty shillings in currency, with an al- ' Brodhead's History of New York, i, 335; ii, 525. ^ WeedeD, 142; The Republic of New Haven, by C. H. Levermore. ^ New York Historical Collections, Second Series, ii, 333. 1 1 4 FINANCIAL HIS TOR Y [114 lowance of twelve pence per pound to cover the cost of coin- age. These coins were to be of the denominations of two, three, six, and nine pence, respectively; and the whole issue was to be redeemed annually in new coin of a different de- sign, so as to prevent all counterfeiting. This elaborate plan apparently came to naught.' It is interesting, however, as being the first complete project for a mint in America; it may be that it served as a model for Massachusetts in 1656, and for Maryland in 1662. Not only was the mint project a failure ; it was also found that six shillings was too high a price to offer for the Span- ish piece of eight. Consequently its value was reduced once more to five shillings. Nevertheless, this lower price was extended to cover all money of whatever metal, that is to say, however debased, in the hope that some coin at least would be attracted.'^ This naturally put a premium on the importation of light and counterfeit pieces, so that the circu- lating of all false coins was finally prohibited in 1657. This expedient having failed, a new method of preventing the scarcity of money was next adopted : to wit, the prohibition of the export of all coin above the sum of forty shillings." And this prohibition was continued from time to time dur- ing the colonial period. Doubtless it was completely inop- erative, but it came to be enacted as a matter of course, so long as the scarcity of coin existed. It is curious, however, that the colony should have first prohibited the export of money at just about the same time that the mother country removed her prohibition of the export of bullion. Regulation of the Value of Money by Law. The coin of most general occurrence in all the colonies was the Spanish piece of eight. For this reason it may best serve as a stand- ' Chalmers, History of the American Colonies, i, 248. ^ Hening i, 410. ^/i^jV/., 493; and ii, 125. 115] '^^ VIRGINIA. 115 ard of comparison in a study of the legislation oy the differ- ent colonies on the subject of silver. The rate or value fixed upon this serves as a rough indication of the relative values at which all the foreign silver coins circulated in the colonies. It may be used also as showing in some measure the relative scarcity of coin in different localities, since a high valuation presupposes a considerable demand, other things being equal. For some reason there was an unusual scramble among the colonies for coin in the period after 1670. In 1671, Maryland attempted to raise the value of the piece of eight to six shillings, by setting an artificial premium upon it.' New York received it at six shillings in 1672, although this was increased to six shillings nine pence in 1676, at which it remained till the emission of paper money .^ Massachu- setts raised its value from five to six shillings in 1672,' or to six shillings eight pence if it weighed an ounce.* It passed in New Jersey four years later at seven shillings eight pence. And yet the customary valuation of it in Virginia was but five shillings.* We shall see that attempts were made to increase its value ; but these all proved fruitless. The only other colony which had so low a standard was Carohna, where it passed for five shillings until 1683, when its value was raised for the first time.* Virginia, however, did not ' A law of 1686, and another of 1708, fixing the value of the piece of eight at 6 shillings, is mentioned by Scharf, History of Maryland, ii, 35. Yet Blair and Chilton declare it to have been 4 sh. 6 d. in 1697, as also Hickcox, A History of the Bills of Credit or Paper Money issued by New York, 10. Probably the one was currency, the other sterling, the difference being fixed at 33"^ per cent. Archives, 1671. ^ Historical Society, First Series, i, 424. 'Felt, An Historical Account of Massackusetts Ctirrency, 41-3. * Ilickcox, An Historical Account of American Coinage, 9. » Hickcox, A History of the Bills of Creditor Paper Money issued by New York, 10; Oldmixon; and Blair and Chilton. ^ HickcoXr 0/. cit. 10; Carroll's Historical Collections of South Carolina, ii, 317. I 1 6 FINANCIAL niSTOR Y \\\6 vary the standard price of this coin until the next century, when a law of the sixth Anne declared that it should pass for six shillings in the colonies.' The New England currency passed at its nominal value, as was customary in all the colonies." Maryland so ordered it in 1671 ; New York a year later; and the smaller colonies followed suit. Yet this was debased two pence in the shilling below the English coin. Thus while on a par with the other provinces so far as this native coin was concerned, Virginia was at a decided disadvantage in respect to all the Spanish money. The inauguration of this policy of regulating the value of money by statutory enactment raised anew the question of the constitutional separation of powers among the branches of the government. The drain of coin was so serious, by reason of the premium offered by other colonies, that the Assembly in 1681 petitioned the king to enhance the value of this silver money by twenty-five per cent. Moreover, they agreed to pay the export duty upon tobacco in money if this were done." The Governor held obstinately to the opinion that this was an exclusive prerogative of the Crown, despite all protests raised by the Assembly ; and he certainly had the authority of his official instructions.* He, therefore, in 1683, proclairt^ed that the value of the crown, rix dollar, and the piece of eight, should be raised from five to six shillings. Yet the quit-rents, which were the Royal revenues, and the export tax upon tobacco, from which the Governor's salary was paid, were to be exempted from the provisions of the proclamation. Naturally, the people refused to obey this arbitrary measure ; and this so strenuously that the procla- tion was withdrawn. It is said that the government was 'Phillips, Historical Sketches of American Paper Currency, i, 31. ''Oldmixpn; Blair and Chilton. ^ Sainsbury MSS., ix, 106. * Burk ii, 237; McDonald MSS., vi. 1 1 7] OF VIRGINIA. I 1 7 considerably in arrears for the payment of the soldiers;' and that the Governor took advantage of this little ruse to pro- cure a quantity of light pieces of eight. These, it is averred, were bought during the period of enhanced value of the full weight coin, and were used to discharge these standing obli- gations. Whether this be- true or not, it is impossible to as- certain. It must be confessed, however, that there was apparent justification in the existing low valuation of this silver for enhancing its price. The early revocation of this measure, due to the opposition of the people, may indeed have offered a chance for a little speculation to designing debtors. But it is our opinion that the version of the affair given by Beverley may be somewhat unjust.^ It is certain that this act so harshly condemned was actually carried out some years later, to the manifest benefit of the colony. But for this time the question of authority proved of more importance, and the matter was left unsettled. The same dispute occurred under Lord Howard, who suc- ceeded Governor Culpepper. His instructions contained the following clause : " You shall not upon any pretence soever permit alteration in the value of coin without our approbation." ' There was much fraud at this time in the payment of the Royal revenues, and it may be that the Gov- ernor merely desired to secure a plenty of specie in circula- tion, so that he might enforce the payment of these in money. At all events he petitioned the Council in England in 1686 that power be conferred upon him to alter the rates 1 Beverley, History of Virginia. 'Culpepper's report to the Board of Trade, September 20th, 1683, puts a differ- ent light on the matter. He writes : " I ref erre my selfe to the proclamation w""" I issued forth at the Earnest Instance of the Councell, and to the GeneraU satis- faction of the country, though not to my owne ; For I neither beleeve it will pro- duce the advantage as Expected," etc. McDonald MSS., vol. vi. ' McDonald MSS., October 24th, 1683, § 75. 1 1 8 FINANCIAL HISTOR V [ 1 1 8 of exchange for the various coins.' The matter was referred to the Royal Commissioners of Customs, who reported ad- versely upon if They declared it the wisest policy to allow money "to rise and fall according to the scarcity and plenty;"' and they refused to agree to the proposition, even though the rates were changed in due proportion, fearing it might prove too great a temptation to fraud. As a conse- quence no further attempts of this nature were made, and henceforth in theory the rates at which coins should pass were fixed by the Council in England. The only other legislation in regard to money in Virginia for thirty years consisted of acts necessary to secure pay- ment of the quit-rents and export duties in specie.* The rates at which commodities should be received in barter, where specie or tobacco could not be obtained, were fixed from time to time.' This precaution was particularly neces- sary whenever the tobacco crop was artificially curtailed, to prevent the extortion of creditors in demanding tobacco at the lower rates of exchange, which ruled before the restrictive acts. The assembly always had a care for this; and the debtor's interests were generally well represented in the legislation of this period. Thus far it appears that the subject of money really ab- sorbed a considerable share of legislative attention during the seventeenth century. In fact there is reason to believe that in the tide -water region at all events, there was a con- sidefable proportion of specie current. In the interior there was probably little. Various commodities were used in- stead of money, as for instance " best winter beaver, killed '^ McDonald MSS; vol. vii, August 22nd, i686. ^ Sainsbury MSS., xi, 39. ' McDonald MSS., ibid. * Hening ii, 186, 283, 427. 'In 1682 the prices of twenty-three commodities were fixed by law. These be- ing rated in money as well as in tobacco, the inference would be that some fair amount of money was current. Hening ii, 507. 119] OF VIRGINIA. 119 in season," which was received for quit-rents at a certain rate per pound.' Yet despite such substitutes for money, the need for some portable and stable medium of exchange was doubtless very great. There are always numberless transac- tions which can be conveniently efifected in no other way. This scarcity of coin occurred in a time of peace, and when public credit was not in any way disturbed. Neither had there been any issues of paper money at this time. Of course either of these influences may contribute to produce a scarcity of money; but in the seventeenth century this dearth of coin was due to other causes, which operated con- stantly to limit the monetary circulation of the colony. Causes of the Dearth of Hard Money. The first of these influences, which was peculiar to the seventeenth century, is rather personal and political, than economic in its nature. This is the fact that it was the interest of the Governors of the colony to encourage tobacco, instead of money, as a medium of exchange.'' And we shall see that the introduc- tion of the system of tobacco notes was due to the enter- prise of the chief executive. This was opposed by the planters at first, as they were disposed to regard abundance of money as an evidence of prosperity. But the salaries of the Royal officials, as well as the Crown revenues, were customarily paid in bills of exchange on London. And it became in this way an object of interest to these officials, who desired to save any portion of their income through balances on their London accounts, that this rate of ex- change should rule as low as possible. This result was attained most eflfectively by keeping up the price, as ■well as the amount, of the tobacco exports. Moreover, the system of tobacco payments ofifered a favorable chance for a little private speculation. The situation was analogous to that of ' Calendar Virginia State Papers, i, 18. ^ Blair and Chilton. 120 FIX-LVC/AL mSTORY [120 the sihcr producers in the United States to-day, who are seeking to raise the price of a certain commodity by enlarg- ing the demand for it, through its use as mone\'. This official influence \vc believe to have been by no means insignificant, while the Governor's prerogative was at its height. There are instances of laws passed to regulate the value of coin, and facilitate its use as money, which were vetoed apparently for no other reason.' The succeeding century, however, was afTected to a less degree, for two reasons. The introduction of the tobacco notes in large part superseded the necessity for a metallic currency. And, secondl)', the Governors were gradually relegated to a sub- ordinate position, so far as initiation in legislation was con- cerned, so that their personal interests became of less importance. The other causes of this lack of money are economic in their nature. And of these the so-called unfavorable balance of trade with England was the most influential of all. It operated upon all the colonies of America, and was due to the peculiar colonial policy of Great Britain. In this unde- veloped state of international intercourse, there was no ex- change of credit between the colonies and the mother country, analogous to the modern foreign investments of capital which to-day affect the rate of exchange so profoundly. The main factor in the situation was the relative value of the imports and exports, and these in the main could only be regulated through Great Britain. It is difficult indeed to realize the complete dependence of the American colonics upon the markets of the mother country for nearly every article of domestic consumption. Attempts were made by Governor Berkeley to remedy this state of affairs in Virginia by encouraging the growth of ' Blair and Chilton. IJl] OF riRClXl.t. 12 1 certain industries after the Restoration. But the policy of the oii;lUeenth century, begun by his successors, was to stifle every infant industry at birth.' The colonists were even dcnieil the privileL;e of making their own clothing, when the low price of tobacco would not enable them to, purchase l^ritish goods. .And every effort was made to prevent the least independence of action,'^ so that by complete economic subjection, the political supremacy of Great Britain might stand secure. In X'irs^iuia, of all the vVnieriean colonics, the conditions were f.uor.ible to the utniost development of this polic}-. There were no towns, despite the vigorous attempts to en- courage "cohabitation," so that the adxantage of concerted action was largel}- denied, in extorting faxorable terms from the I'.nglish merchants. 1-ach planter was obliged to deal separatel}- with some chosen agent in London, who shipped goods to him in return for his consignments of tobacco. For the whole colon\- was virtually dependent upon this one staple, their carl\- trade in lumber, hoops and sta\es having been ruined b}- the Northern colonies." We h.u e already seen how onerous were the customs duties in England ; and these burdens were greatly increased by the. commissions demanded by these factors. Petty charges for "Tret," "Clough," "Draught" and "Sample" were imposed, often- times to the extent of fifteen or twenty shillings a hogshead.' They e\en went so far as to charge three pence a hogshead for many _\ears, without the consent of the planters them- selves, "to defr.i}' the expenses in applying to Parliament upon an\- occasion to relieve us (\'irginia) from tlie haul- ships we groan under." MicNcrlcv. * C,>/.ii.i,ir I'iicir''''' S/.i,'.' y.j/.v.f. i, 124. -"Oldmixon. < A clear statement of tliese abuses is yixeii iu a rare pamphlet entitled : T/if tj.>v .y' (i4« r.^.H.-.j J'UniYfs 0/ J i^/>ii,;\\ mid .1 J'>»