MR. ADAMS'S LETTERS. LETTER XII. Amsterdam, Oct. 17, 1780. SIR, \A/ E . are . ~ow come s o your twelfth head of ( inquiry, which is, " What countenance have the finances ? How much does the exfe/ice exceed the yearly income P Does the annual revenue, deriv " from the taxes, increase or diminijh, in the " "whole, or in any particulars ? and what are the rea " sons given for it ?" Here I am apprehensive Ifhall find a difficulty to make niyfelf understood, as the American fi nances, and the mode of taxation differ so mate rially from any that I know of in Europe. In the month of May, t 775* when Congrefscame together, for the firlt time, after the battle of Lexington and Concord, they found it necellary to rail e an army, or rather, to adopt an army al ready jaiied, at Cambridge, in order to oppose the Britiih troops, and ffiut them up in theprifon 01 Lolton. But they found that the colonies were but jtill out of debt, had but just paid off the debts contracted in the last French war. 111 the several treasuries of the colonies they found only a few thousand pounds. They had before themaprof peftofa stagnation, or interruption of their trade, pretty universally, by the British men of war. 1 hey had a thousand perplexities before them, in the prospect of parting through thirteen revo lutions of government, from the royal authority to that of the people. They had armies and na vies to form ; they had conllitutions of govern ment to attend to; they had twenty tribes of In dians to negociate with ; they had vail numbers of negroes to take care of; they had all forts of arms, annnuuition, artillery, to procure, as well as blankets and cloathing, and fubiittence for the army; they had negociations to think of in Eu rope, and treaties to form of alliance and com merce ; and they had even fait to procure, for the subsistence of the inhabitants, and even their cattle, as well as their armies. In this situation, with so many wants and de mands, and no money or revenues to recur to, they had recourse to an expedient, which had been oft en praclifed in America, butno where else ; they determined to emit paper money. The American paper money is nothing but bills of credit, by which the public, the community, to pay the polleflor a certain sum in"a limited time. In a country where there is no coin, or not enough, in circulation, tliefe bills maybe emitted to a certain amount, and they will pass at par; but as soon as the quantity exceeds the value of the ordinary business of the people, it will depreciate, and continue to fall in value, in proportion to the augmentation ofthe quantity. The Congress, 011 the 18th of March lall, stated ta ' s depreciation at forty for one. This may be nearly the average, but it often pafles much lower. By this reiolution all the bills in circulation on that day (and none have been emitted since) a - mount to about one million and aquarter sterling. To this if you add the money borrowed upon loan certificates, and the debt contracted abroad jn I lance and Spain, the whole does not amount to but little more than five millions. early income we have none properly speaking. \\ e have 110 imposts or duties laid on any articles of importation, exportation, or consumption. The revenue confilts entirely of grants annually made by the legislatures, of fumsof money for the cur rent service of the year, and appropriated to cer tain uses. These grants are appottioned upon ail the polls and effates, real and personal, in the community ; and they are levied and paid into the public treasury with great punctuality, from ■whence they are issued in payments of the de mands upon the public. 011 fee then it is in Lhe power of the legislatures to raise what fuins are wanted, atleaft as much as the people can bear ; and they are usually pro portioned to the public wants and the people's a bihties. They are now conilantly laying 011 and paying very heavy taxes, although for the three or four nrft years of the war the obftru&ioiis of trade, iS.c. made it difficult to raise any taxes at all. The yearly taxes, annually laid on, have increased every year forthefe three years part, and will continue to be increased in proportion to the a bilities of the people. This ability, no doubt, increases, in proportion as population increases, as new lands are cultivated, and as property is in jiny way added to the common fleck ; it will also increase as our commerce increases, and as the suc cess in privateering increases. Lilt by the method of taxing, you fee that it is in the power of the legislatures to increase the taxes every year, as the public exigencies may re quire ; and they have 110 other reltraint or limit taan the people's ability. I have the honor to be, &c. „„„ „ JOHN ADAM S. MR. CALKOEN. ADVERTr S E M E N T. (t- T MR. ADAhS's LEITERS which have appeared in the Gal tette, are part oj t fines, 26 m number, wrote by his Excellency in H»lan