Letter Signed, five pages, quarto, Washington, D.C., July 11, 1842. To Lewis Cass, the prominent Michigan politician who was serving as United States Minister to France.
AN EXTRAORDINARY LETTER ON THE AMERICAN ECONOMY AND GOVERNMENT FINANCE, wherein President John Tyler introduces a special agent sent to Europe to help sell a U.S. loan, and then defends the American government and economy. John Tyler lays out the reasons why foreigners should invest in the country and tries to answer any objections they might have. “Col. William Robinson who will hand you this, has been deputed by the Secretary of the Treasury, to negociate in Europe so much of the Loan authorized by a late Act of Congress, as remains unsubscribed for. I recommend him to your particular kindness and attention and express the wish, that you will give him all aid, in the accomplishment of his Mission, which you can possibly afford him. He is a citizen of Pennsylvania, resident at Pittsburg, a man of fortune and of the best deserved reputation and character.
“I take occasion to say, that so favorable an opportunity of investing his funds to the limited extent desired, has rarely ever been offered to the European Capitalist. To you it is scarcely necessary to [portray] the true character of our resources. The present embarrassment, in our opinion is altogether temporary and ephemeral, and proceeds from the rapid diminution in the amount of duties, upon all articles of import, consequent upon the Act of Congress of 1833, commonly known as the compromise Act, which has been reduced from 200 per cent, on many articles of import to 20 percent ad valorem. This state of things must necessarily be temporary, and can exist no longer than the present Tariff shall continue in operation. By the express stipulations of the Act of 1833, Congress has full authority to increase the duties at any time that the wants of the Treasury shall require. That this will be done during the present Session, there can be no reasonable ground to doubt. A great Nation then, altogether out of debt, with its resources in the infancy of their development, and which has paid off the debt of two wars, seeks to borrow some Ten millions of Dollars. I do not permit myself to doubt but that the Capitalist of Europe will eagerly seize the opportunity of taking the Stock. I know the American securities are generally at a low ebb in Europe, arising from the indebtedness of the States, produced during a period of inordinate speculations. But this Government, is altogether different in the character of its resources from the States; while the sacredness of its engagements has never been for a moment questioned.
The amount of the debt which she seeks to fund does not exceed the amount of a single years revenue, even under the present moderate system of duties. I am also aware that every effort has been made, to impress the European mind, with the idea that this country is faithless to its engagements, and that the doctrine of repudiation is current among our people. Nothing ever was more false or unfounded. Mississippi has declared that she would not discharge certain bonds, not on any principle of bad faith, but upon the ground that fraud was practised in the negociation and that she is neither legally or morally bound to meet their payment. I offer no opinion as to her liability in a legal point of view—and only design to state the ground of her actions. Indiana and probably other states, may have failed to pay the interest on their debts, not in any spirit of bad faith, but from present inability. You are aware of the rapid development of the resources of the New States, and that altho’ a present inability to pay exists, it is likely to be only temporary. The repudiation of debts, may be contemplated by one person in one thousand of our population, and by no more, and if an opinion so extremely limited, is to influence the credit of this Government, remarkable as it has been, though, the whole course of its history, for punctuality, in meeting its engagements, what should be the condition of England with more than 3,000,000 of its people going up by petition to Parliament, and asking repudiation and cancellation of the National debt.
“Another idea I learn exists in Europe and that is that the holders of the State Stocks by refusing to take our loan, can compel us, as a condition of our doing so, to assume the payment of the State debts. This idea if it prevails, is supremely ridiculous. This Government resorts to a Loan merely to supply a temporary deficit. You will know that its resources are immense. Unlike the people of other countries her citizens are strangers to any system of direct taxation, so that the whole of the property of the Country, which is liable to be taxed, is untouched by this Government. The effort, if one exists, to constrain us to assume State debts is altogether delusive. If the holder of State Stocks pursued his true interest, he would step forward without the loss of a moment, and assist in placing this central Treasury, in a vigorous and healthful State—and thus perform the part of a good Physician, who when the animal system is out of order, restores the regular pulsation of the heart, with full knowledge that when that is done, the extremities will speedily become healthful and vigorous.
“May I solicit your best efforts, by making correct representations of the whole case, in aid of Col Robinson? You will thereby render the country an essential service, and be entitled to my thanks. I tender you assurances of my great respect and consideration.”
In 1842 the American economy was still suffering from a depression that had begun with the Panic of 1837. The John Tyler’s federal government had run a deficit almost every year during the depression, and the tariff, its chief source of revenue, was producing less income because of the lower rates adopted in the Compromise Tariff of 1833. In 1841, while new tariff legislation was under debate, Congress had authorized a loan of $12 million to finance federal expenditures. However, the Treasury had great difficulty selling its notes, in part because some state governments in the United States were repudiating the debts that they had incurred in the boom years of the early 1830s. Foreign investors had purchased many of these states bonds, used to finance internal improvements, and as the states reneged on their obligations, American credit suffered. John Tyler’s letter is clearly designed to be used by Cass to persuade European investors to buy American securities.