Gentlemen have mentioned a sinking fund for the extinguishment of a debt; and do they propose that the States shall bear this unequal burthen, until the debt is paid off by the fund The gentleman has said that this is a measure contemplated by the Secretary of the Treasury? which the State creditors did not expect. He holds out nothing for this purpose, that I When did they expect it? Was it not at the recollect, but the revenue arising from the Post-time when no such Government as this existed? office; a fund that never yet produced any It was at that period when Congress had no thing, and what it may hereafter produce is in-power to call out the resources of America; volved in absolute darkness. I believe that when they were dependent upon the pleasure officer wishes to establish a fund for the extin- of the States, who might, or might not comply guishment of the national debt; but I do not with the requisitions, as they judged most exthink the one he has fixed upon will do it agree-pedient. Requisitions were known to be inefably to his expectations.

FEBRUARY 25, 1790.]

Public Credit.

raising revenue, mentioned by him, will be the most consistent with the plan. Excise duties were to be preferred to direct taxation; and if the impost is insufficient, recourse must be had to one or to the other.

When the war was first entered into, no man entertained a doubt but all the expense would be defrayed out of a Common Treasury. The centre of the Union was the grand theatre of the war; but the seat of the Government being in the neighborhood, it furnished the supplies for the army. The places remote from the centre being attacked, they were forced to rely upon their own exertions. With regard to South Carolina, she was obliged to provide for her defence from her own resources; but plundered, burnt, and depopulated as she was, at the termination of hostilities, she became unable to continue her exertions to the degree which her honor and disposition inclined her, to provide sufficient funds for the payment of the numerous debts she had contracted in her struggles for the common defence. But if her revenues have hitherto been inadequate, what are they likely to become now Congress has taken out of her hands her principal resource? Sir, unless the United States take the debt upon themselves, as it was contracted in their service, the creditors of South Carolina must go to ruin.

With respect to the apprehension that the measure would be disagreeable to the States, because it might tend to lessen their importance, I think it altogether unfounded; the State from which I come wishes and expects its adoption.

[H. OF R

laid the direct tax, their representatives in Congress or their representatives in the State Legislatures? They would confine themselves to the inquiry, which was the best and least expensive mode? And here the result would be favorable to the General Government. The collectors of taxes, under the State regulations, are prodigiously multiplied; in South Carolina, I believe, they amount to one hundred and forty, besides Custom-house officers, &c. In Connecticut, I am told, they amount to between two and three hundred. I suppose their whole number, throughout the Union, to be about one thousand four hundred. Under the General Government, where the impost is so productive, the deficient revenue might be collected by a much less number. It must be obvious to every gentleman, how much an uniformity in system and one general superintendence are superior to irregular and opposing schemes of finance, varied almost with the changing seasons of the year.

It has been thought that the creditor States should wait for their balances till the final settlement of accounts. If this should be the case, they must go to ruin. But why are we to delay the assumption until the final settlement of accounts? If it is to be done then, why not do it now? It can make no difference to the Union in point of expense, but it will tend to give stability to your measures; the Continental creditors will be benefited by it, because the due collection of the revenue will be attended to not only by them, but by the State creditors also; the latter will serve as auxiliaries, and the vigilance and exertions of the whole corps of creditors will be a good security to Government for the faithful execution of its ordinances:

It is said to be unconstitutional; at least it is thought to be against the spirit of the Constitution, to declare the State debts to be the debts It was said by the gentleman from Maryland, of the United States. What are the State debts? that the securities of his State were at fifteen Debts contracted for the defence of the United shillings in the pound; and, therefore, the creStates, and for the attainment of their inde- ditors of Maryland would refuse to subscribe pendence. If these are not debts of the United to the loan. I believe the price of stock in a States, then there are no such things as debts great measure depends upon the extent of its of the United States. But at most, the gentle- circulation. The Continental stock will, from man's constitutional objection goes no further its nature, have a more extensive circulation than a mere metaphysical difference; the sub-than the stock of Maryland; consequently, it stance is the same, though there may be some difference in the sound as the resolution now stands; it ought not, perhaps, to be called an assumption, but rather a recognition; for the debts are now, and ever were, bona fide debts of the United States.

The gentleman said, that a State might run into debt, and afterwards disobey the laws of the Union, in order to get the debt assumed by Congress, and be bribed by them into a compliance. It is a singular idea, that a State should incur a debt, and disobey the laws of the Union, in order to induce Congress to pay it for her hereafter. I cannot conceive such an event in the smallest degree probable.

It was said, that the States would lay direct taxes for the payment of the State debts, but that the United States could not. I apprehend the inquiry of our citizens would not be who

would become the interest of the creditors of Maryland to subscribe to the Continental loan.

The State of Maryland has bottomed her securities upon the fund arising from the sale of confiscated property. I observed, the other day, that South Carolina was once in possession of a large fund of the same nature; but which, from motives of humanity, and obedience to the request of Congress, she gave it up. On inquiry, I find that the confiscated property which she restored, amounted to £456,111 sterling; this, at the rate at which securites were then selling, would have bought up three times as much as South Carolina is indebted. If she is now unable to pay it, it is the duty of Congress to undertake it for her; she ought to be indemnified for the loss she sustained by her obedience.

Gentlemen have expressed an antipathy to

H. OF R.]

Public Credit.

[FEBRUARY 25, 1790.

speculators; they lament that one consequence sion on this head. From this circumstance, of establishing public credit should be the mak-gentlemen will see that the assumption of the ing of those men's fortunes. Let gentlemen State debts was in contemplation from the very remember, there is but a small part of the State commencement of the new Government. debts transferred; therefore the assumption will have a more desirable effect than the provision for the domestic debt.

The gentleman last up has objected to the statement which I made. He says the States are not to be considered as the agents of ConIt was observed by the gentleman from Vir-gress, and if they are not so considered, then ginia, (Mr. WHITE,) that the creditors of some my hypothesis must fall; but I still think my States would not subscribe to the new loan, be- position to be a just one. The Congress of the cause the States have provided satisfactory United States are the representatives of the sefunds. He instanced Virginia, and thought its veral States; they being thus formed into a new creditors would not relinquish the securities body, constitute a Nation. The States becom they now held. I am informed that the Virginia ing the special members of the Nation, are as State securities sell for six shillings and eight agents only to the chief. Had it been in the pence in the pound. When the debts of the power of the States to furnish their respective Union come to be funded, they will sell for proportions, Congress had sufficient power to more than that. I should imagine they would call upon them for that purpose as members of never fall below fifteen shillings in the pound; the Nation; but it being impossible to ascertain whilst the State debt would be depreciated by their proportions, Congress could not call upon the endeavors of those who were indebted to them. But the Nation made use of their indithe State, and who wanted to purchase these vidual credit, in order to support the great cause securities in order to make payment in them. in which they were all embarked. It is clear Mr. WHITE said, that the securities of Vir-in the case of enlisting troops, when Congress ginia sold for four shillings in the pound twelve Inonths ago; that just before the interest became due, two or three months ago, they sold for six shillings and eight pence; but at this day, although the interest had been drawn, they sold for eight shillings in the pound. The reason of this depreciation, was not, in his opinion, a want of confidence in the Government, but certain circumstances under which the holders of the certificates labored. The certificates had been originally given instead of money. The poor men, who were thus disappointed, sold them generally at very low rates to shopkeep- The gentleman from. New Hampshire felt ers and others, who being unable to keep them, hurt that Congress should attempt to take away sold them in their turn; and as long as certifi- the funds which the States still continued to cates remain in such hands, they must be de-rely upon, though he admitted that Congress preciated; but Virginia has redeemed a great proportion of her debt, and the certificates for the remainder are passing into the hands of those who can afford to keep them; when they get into this state, generally, they will rise to their real value, whether they are Continental or State securities, provided they. are equally well funded.

Mr. GERRY.-Gentlemen have said, that it never was in contemplation to assume the State debts. When the present Constitution was under consideration in the General Convention, a proposition was brought forward, that the General Government should assume and provide for the State debts, as well as the debts of the Union. It was opposed on this ground, that it did not extend to the repayment of that part which the States had sunk, as well as that which remained unpaid; had it not been for this objection, I believe the very provision which gentlemen say was never expected, would have Been incorporated in the Constitution itself. If I recollect rightly, it was also contended, in Convention, that the proposition would be useless, as Congress were authorized, under other parts of the Constitution, to make full provi

sent the States bills of credit for the purpose, that they acted as agents; so they did when they used their credits in pursuit of the same object;, they were as much National agents as the quarter-masters and commissaries were.

The gentleman has said, that the creditors did not originally conceive that they were to be paid by Congress. I ask, upon what foundation were the debts contracted? They were contracted for the general defence of the United States. Is it not just and reasonable, then, that the United States should pay them.

could make them more productive; he would not agree to a directtax, because the General Government could manage it better than the States.

[Mr. LIVERMORE interrupted Mr. GERRY, and said, he had given it as his opinion that Congress could collect the impost and excise better than it could be collected by the individual States; but that the States, in their individual capacities, could lay and collect direct taxes with more ease and much less oppression than the General Government.]

Mr. GERRY acknowledged he had misunderstood the honorable gentleman, if those were his sentiments; however, he thought the whole train of his reasoning went to prove that Congress were the best financiers. I think, he said, we possessed such excellent qualities, that we could extract gold from a rock. I presume he referred to the abilities of the New Hampshire delegation. I have a high opinion of his talents, and no doubt if he would apply them to finance, we should do well under his administration; I think we should be able to collect the excise much better under his sole guidance, than that of all the Legislatures in the several States, from Georgia to bis own State inclusive.

FEBRUARY 25, 1790.]

Public Credit.

The same honorable gentleman has told us, that if being in debt is being in danger, we shall run out needlessly into danger, by adding millions to what we owe. But how is this? Either the State debts are, or they are not the debts of the United States. If they are the debts of the United States, by assuming the payment we do not run into debt; we only do what we are in equity bound to do. If they are not debts of the United States, I am sure I can never advocate the assumption.

[H. OF R.

wise, but that is not to the point; the true ground on which the question must rest, and be finally determined, is, are the United States indebted to South Carolina? Probably they are, and they ought to pay her; but I want to see the accounts; let us have them settled first, and then if there is any thing due, we will either pay her, or assist her with our credit.

The gertlemen have instructions from the State of South Carolina to urge this matter; perhaps those instructions weigh considerably Mr. BURKE expressed much apprehension for with them, and perhaps it is right they should. the fate of South Carolina; if the present ques- But when his business is put upon issue, there tion was lost, he was almost certain it would may be sone difficulty in the determination. I end in her bankruptcy, for she was no more may say, hat I am informed that the Legisla able to grapple with her enormous debt, than a ture of the State of New Hampshire have apboy of twelve years of age is able to grapple pointed a committee, to draw up instructions with a giant. He would show her ability, by for their celegates in Congress to oppose the stating the condition of her funds. Before the measure; his may be the case, although we speculators, sent from here the other day, went have not yet received the letter. I must own into that country, her State debt was at six for to you, sir. that instructions would operate very one. Upon the report of this speculation going forcibly on me, even if I was not convinced forward, they rose to five; but after thinking a that the measure was improper in itself, but in little on the subject, and recollecting the ina- this case itperfectly accords with my own judg bility of the State, they fell down to eight for ment; and I shall, without more cogent reasons one, and so they now remain. Such is and will are adduced than any I have yet heard, vote be the situation of public credit in that State, against theassumption altogether, unless it is if Congress do not interfere, and undertake to modified, as mentioned by the gentleman from pay for her what she had assumed when the Virginia, (Mr. WHITE,) that is, to assume the Continental credit was as low as hers is now. balances found to be due to the creditor States, Every spectator will acknowledge that her mis-upon the fital adjustment and liquidation of the fortunes reflect on the Unitad States, and not upon herself; she has done all she could, and if she is now suffered to fall, every thinking mind must lay the blame on the United States. After wheedling us into the Union, and wheedling us out of the impost, we must consider ourselves as wretchedly duped, if we are now abandoned to our fate. The impost was the only thing we had in our hands to do justice to our creditors, upon a debt contracted in the common cause, in fighting the battles of the Union, and beating her enemies. In this debt we make no ac- Mr. SMITI (of S. C.) supposed, in consecount of the great exertions in fortifying Charles-quence of what the worthy gentleman from ton; of the loss of property by both armies; of New Hampshire, who was last up, had said, the loss of men; so great has this been, that that his coleague (Mr. LIVERMORE) was misthere was not less than fourteen hundred wi- taken; and hat he went upon the ground of audows in one county, at the close of the war. ticipation. He had hopes that New Hampshire After all these things, to be left to be pressed was in favor of the measure, and that instrucdown by the enormous weight of taxes, is un-tions to support it would be sent on, in which reasonable and unjust; it must strike every man at the first blush as an ungrateful remembrance. I rise merely to press upon the House, that the refusal would be making a distinction without difference; however, I will trouble the committee no further at this time.

accounts between the United States and the individual Sutes.

Mr. FOSTER had communicated to his colleague (M. LIVERMORE) Some information, but he was afraid he had been misunderstood. He said, he had seen a paper from New Hampshire, in which it was related, that a committee was appoined to report instructions on this subject, in order to be sent on to their representatives in Congress; but no report was as yet made.

case he flatered himself with the suffrage of that gentleman, who paid so much respect to instructions, but on that point, he would say, that his instuctions did not give the tone to his conduct on his occasion; he was stimulated by a regard forthe general interests and welfare of the Union; t was a conscientious discharge of his duty that made him press the adoption of the measure

Mr. LIVERMORE.-I have not altered my opinion, notwithstanding all that has been said of the necessity of the measure. I conceive that the debt of South Carolina, or Massachusetts, Mr. STON persisted that the State debts or of an individual, has nothing to do with our were not the debts of the United States; the deliberations. If they have involved themselves gentlemen on the other side consider all the in debt, it is their misfortune, and they must debts owing by the States as contracted for extricate themselves as well as they can. I am Continental purposes; and under this idea, they sorry, however, that South Carolina is embar-are willing to say they are the debts of the Conrassed with her debt, and wish it were other tinent; but f they say so of all, they say what

Mr. SMITH, of South Carolina, lad no doubt but the debt of Maryland, contracted for military supplies, ought to be allowed in her ac counts against the United States.

[FEBRUARY 26, 1790.

FRIDAY, February 26.

The bill for the encouragement of learning was read the second time, and committed.

PUBLIC CREDIT.

The House again went into a Committee on the report of the Secretary of the Treasury, Mr. BENSON in the chair.

is not true; they never yet were adopted by Congress, and I trust they never will be. The State of Maryland entered into a scheme of making great provision for her defence; she ran into debt to Van Staphorst two hundred thousand dollars for powder and miliary stores, just before the close of the war; and these articles arriving after the peace, were disposed of at a considerable loss. Now, under the Secre- Mr. WHITE'S proposition for amending the tary's plan, this is to be a debt due by the original resolution being under consideration. United States, because it was a debt owing by Mr. STONE. It has been said, that the asMaryland, one of the United States; and Mr. sumption of the State debts will afford immeVan Staphorst, because he holds the note of the diate relief to the States which are burthened State of Maryland, is a Continental creditor to with debts beyond their proportion, on account the amount of 200,000 dollars. f the State of their exertions during the war. Gentlemen debts were really, as gentlemen sy they are, see that it is necessary to attempt the establishContinental debts, there would be no occasion ment of these positions, or all the arguments in of assuming them. Maryland has also gone to favor of the assumption, which they have the expense of building a very elegant State thought proper to use, falls to the ground. For house in Annapolis: she has experded a con- if the States can wait, a final settlement will siderable sum in clearing the navigation of the have the effect to assume all the debts which Potomac. She has not paid cash for hese things, the United States are liable for: if, upon a comand are the debts contracted for her State-plete settlement, the fact should turn out difhouse, and opening that river, the lebts of the ferently from what gentlemen so fondly believUnited States? You may adopt hese debts, ed, and Massachusetts and South Carolina and say they are the debts of the United States; should not be creditor States, would gentlemen but the fact cannot be changed; they are not the from those States wish Congress should pay debts of the United States, nor ever will be. their creditors? But gentlemen, surely, in the eagerness to benefit their constituents, forget a most material circumstance; immediate relief, sir, is not intended by the report. One year is to be consumed in the details preparatory; Mr. SEDGWICK said, it made to difference taxes are then to be laid, and they will not be whether the debts were contracted for Conti- in the Treasury in less than a year. Hence, nental purposes or not, because it was evident we see, that at least two years will elapse bethat each State had a greater denand against fore the wished-for relief will be afforded. Genthe United States than the present amount of tlemen promise great exertions to effect a final their debts. And if the State of Maryland had settlement. Is it clear that a settlement cana claim against the United Statesfor 3,000,000 not take place within two years? I am sure, if dollars, and owed her own citizensbut 1,000,000 your establishments are liberal and proper, that dollars, the United States assuming the whole it may take place; and then, perhaps, at the of this, would not balance the accounts, there moment you are ready to pay the debts you are would be more still due. He said, he could pleased to ascertain, you will see the injustice; undertake to prove to the commttee, that the you may find that the credits of the States now State of Massachusetts would have to pay an- complaining, have existed only in fond partialinually 920,000 dollars, if the Stae debts were ties of their representatives, and their debts are not assumed. independent of contingencies; only the effects of inattention, fraud, and waste. and he would submit it to those vho consider- In fine, you take this vast and dangerous leap ed the habits and manners of that people, whe- blindfold, impelled by the assumption of one ther it did not exceed their abiity, and whe- position that is clearly ill founded, and of anther the State or Continental cralitors, so far other that is doubtful. In the mean time, to atas depended on that State, must rot, in part, go tain imaginary equity you are guilty of positive unpaid? He was satisfied there vas no gentle- injustice. You will injure the credit of Contiman within these walls who wished to see those nental certificates, and if the plan takes place, meritorious citizens, by whose exertions and some of the State certificates must fall in vaservices the liberty and independence of Ame- lue. In Maryland, the citizens have, perhaps, rica was secured, left unprovided for. He had £200,000 solid property, in debts due from the a perfect reliance on their cando and humani-State: reduce them as low as finals, and you ty; but he appealed to their justice, on the present occasion, and he had no doubt but that they would honorably reward the men to whom reward was due.

Mr. CARROLL moved the committee to rise; - whereupon the committee rose, and the House adjourned.

destroy £50,000 of the property of our people. Other States may be similarly situated; and for what? Because Massachusetts and South Caro lina say they have done more than their proportion, and cannot pay their debts.

It appears to me to be of consequence to consider the effect which taxation will have, collected in the one way or in the other,