Necessity of Foreign Loans

Introduction

Due to the limited amount of specie in the country and Congress’ increasing expenditureexpenditure (noun) to use up or spend on the war, Congress continued to print paper money that soon became worthless due to inflation. In this passage James Lovell writes to John Adams in October 1778 calling for the need of foreign loans to help the country.

plots_58R_sm.jpg

Original Text

Do you not know that our Depreciation of Currency is the main Stay of our Enemies. We must immediately Loan 60,000,000 out of circulation & tax vigorously, or we shall be all afloat. Can we not borrow in your Neighbourhood? But, you are a wrong Man to ask. You are averse to Debts abroad. Believe me, it is the general Opinion here that our Sons & Grandchildren ought rightfully to pay a part of the purchase we are now making for them. We must therefore contract abroad a Debt for the Payment of which a sinking Fund must be established here. This need not hinder us from rendering such a Provision repealable by the Sale of Property which may easily be acquired southward of Georgia and Eastward of the Province of Maine.

Summary

Due to the severe financial limitation of funds, Lovell expresses the need to borrow from foreign countries to prevent the government from crashing. He acknowledges that amassing debt is unfortunate, but considering their options, it is the best choice for the colonies. Lovell is confident that paying back the loan will not be too burdensome with the revenue from the future sale of land. He takes the stance that foreign debt is a necessary evil, but one that is not permanent.

James Lovell's Whole Letter

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License