H. OF R.] The Public Debt. [MARCH, 1792. never to have been intended as a real or solid ||like exhalations, and the price of stocks blown up equivalent. It was wholly calculated to be a sub- above all reasonable calculation; but perhaps beject of speculation, which might draw the atten- fore the next week arrives, we find the stocks tion of persons in those countries where, from the fallen a fourth or a fifth, and disappointment, banksuperabundance of specie capital, enormous na- ruptcy, and stagnation of the most useful branches tional debts, and long habits in stock-jobbing specu- of commerce, spreading consternation far and wide, lation is become a science. To promote this, the and the tales of villany and consequent distress unnatural and novel distinction of parts, which swell up the news of the day. Though I have not had no foundation in the contract, and a variety changed my opinion of the Funding System, since and necessary fluctuation in the comparative value it made its appearance, yet I confess its delusory was introduced. This distinction and variety was and ensnaring progress has been more rapid, the well adapted to be an inducement to the merito- bubbles have sprung up and burst in greater rious public creditors, especially such of them as variety and in quicker succession than I expected. resided in the country, to part with their certifi- General confidence and contentment among the citizens has not been among the effects produced by the irredeemability, and the complex and mysterious forms of the Funding System. cates. The two-thirds of two-thirds, the six per cents., the three per cents., deferred debt, &c., all in one certificate, which the farmer received, originally with an obligation simply of six per cent. upon the principal, until it was paid, is so much beyond his comprehension, that he prefers parting with it to keeping it on terms which he does not understand, and which he conceives may, with equal ease, be changed again by the same authority into other and more unintelligible varieties. To this end, it corresponded to admiration. Few, indeed, are the certificates now in the hands of original holders of the agricultural class. One leading advantage which the promoters of the Funding System suggested that would arise from its operation, was a circulation of the revenues to the more remote parts of the country, in payment of interest, which had been previously drawn into the Treasury by duties, and had the system been adapted to the genius and circumstances of the people of the United States, this no doubt would have been its effect, and in this way a beneficial balance of circulating specie would have been supported. It was also suggested, that the certificates when appreciated, would assume the form and use of a circulating medium, and in this way be as a substitute for money, promote the purchasing of land, improving the country, and give a general spring to industry; and this salutary effect a Funding System, calculated and guarded suitably for that purpose, might also have had. But these important consequences have been completely defeated by the irredeemability and other peculiarities of the Funding System; that the Funding System was calculated to be a field for speculation, was the general opinion of people of reflection when it was originated. And what has been the effects of its operation? Why, it has introduced the most extravagant combinations, promoted fictitious credits, and by giving a facility to stock-jobbing, in all its varied forms, has become an enormous and ruinous snare. It has occasioned many of the most enterprising characters to desert the useful paths of industry; dissipation, gambling, extravagant projects and extravagant modes of life, are promoted to such a degree as to be ruinous to our morals and degrading to our national character. Wealth hastily gotten, without industry, has changed the grades of society, and erected a new and formidable interest in the Commonwealth. One week we behold fortunes rising A principal advantage the Funding System was to produce, was, the lowering the rate of interest for money; indeed this was the principle upon which it was supposed to be calculated; it was to reduce the rate of interest to five or even four per cent. by its beneficial operation as a circulating medium, &c. I ask, sir, has it had this effect? No, it has not, but the reverse. I acknowledge certificates have been purchased at a rate that would not afford five per cent. upon the price given for them, and that even after they were above par; but at the same time the rate of negotiable interest rose to an usurious height. No such instance of usury was heard of in.this country at any former period, (except in the times of general distress and bankruptcy occasioned by old debts, losses in the course of the war, and an over-importation of goods at the conclusion of the war) and this has not been incidental, but the native effect of the system. Negotiable interest has risen too high for the solid purposes of commerce, and capital, and attention have been withdrawn from it by the baubles of the times; and by the prevailing fluctuations in the funds and private credit, the regular circulation of credit and cash suited to commercial purposes are obstructed. However, I do not deny but that importations are to as great amount as ever. I believe the amount is too great for the public good, but this is not the result of the quantity, or high price of our exports, but it is the return for our certificates transferred to foreigners, to whom they are in the more esteem because of that irredeemable quality to which I object. In consequence of this, we become tributaries to foreigners, over whom we have no control, and from whose wealth we can derive no advantage. This evil has already prevailed to a great degree, and by the present system can neither be remedied nor prevented. I have said that the Funding System is inconsistent with the original contract. This is evident from all its complex and mysterious division of parts and difference of value, which had no foundation in the original obligation. Many instances of this might be adduced, but I will only select one. The act of Congress provided for the redemption of the old Continental bills of credit at forty for one; the Funding System provides for it at the rate of one dollar for the hundred, and that dollar subject to its divisions of parts and MARCH, 1792.] The Public Debt. [H. of R value. Is not this a total departure from the con- proves that legal interest is supposed in the law tract, both in matter and form? It is vain to an-to be a sufficient compensation for the delay of swer, that the Congress money had been consider-payment. ed as lost, and had depreciated much lower than My first design was to have moved to amend one for forty. The sanction of an act of Congress, supported by the obligation of the Constitution, fixed it at forty for one; and the same power that could alter it to one hundred for one, could annihilate that or any original claim altogether. I am not here treating about the equity of the claims, but about the Legislative authority of Congress to change contracts which they were bound to fulfil, both by the acts of the old Congress and an express clause of the Constitution. In preparing and enacting the Funding law, Congress seems to have laid aside the character of the Legislature, and assumed that of the Judge; whereas, their most conspicuous character in transacting that business ought to have been that of a party prevailing for the payment of their debts: but, in acting the part of a Judge, they have taken it upon an original plan. They have changed the value and the principles of the claim by a mere act of their will, without being guided by reasons taken from the original obligations; but have rather been influenced by the contemplation of the mighty political machine they were about to erect, viz: an unextinguishable national debt and consolidated moneyed interest. the resolution so as to provide six per cent. for the principal, according to contract, and to have proposed some provision for paying the arrears of interest; but, upon reflection, I find the business so far put out of its natural course already, that I have relinquished that design. The progress of innovation has been so great that it is difficult to tread back the ground; therefore, I will vote for the amendment. One difficulty which influenced me to give up my first design was, that not only the arrears of interest which arose since the first of January, 1788, is funded at three per cent., to those who subscribed to the loan, but also the indents of interest issued previous to that period, under the Confederation, which had been disposed of and provided for by requisitions as fully as the power or laws of that Government permitted. Many, indeed I believe most of the States, had made adequate provision for them to their respective citizens; and those who did not, were under the same obligations to do it that they had been to do any other part of Federal duty in the course of the Revolution. Even these have been received again and funded at three per cent. The indents, and I have also said, that the irredeemable quality about three years' interest, which became due of the Funding System is contrary to the Consti- since the first of January, 1788, making, in all tution. Congress have the power of applying the above ten millions, have been funded. Above public resources towards paying the debts of the seven millions of these, if it was not a debt creUnion. Every successive Congress is equally ated by the Funding System, received a resurrecvested with that power. It is derived immediate- tion by it. This will explain the charge of creatly from the Constitution to every Congress, and ing a new debt, asserted by one of the gentlemen, not derived through the laws of one Congress to and denied by another. Here was above seven another; but, in the Funding System, the Con- millions received, which ought to have been congress who enacted it have decreed that no suc-sidered as redeemed, unless, perhaps, in a few inceeding Congress shall pay the existing debts of the United States, except in certain small and distinct instalments, which, perhaps, would occupy two, or a part of three, generations to complete. Certainly the present Congress cannot say unto the next, or to any future Congress, that they shall not do what the Constitution expressly says they have power to do; and yet, if we reject the amendment and adopt the resolution, we are in fact saying so. If we do so, we are holding out a further delusion to the citizens. Snares of this kind have proceeded far enough already. A future Congress certainly will disregard this restraint, and repeal the irredeemable quality of the Funding System. The creditors who hold those claims for which we are about to provide, have an unquestionable right to six per cent. interest upon the original claim-not to interest upon the interest-but to a provision for extinguishing the arrears of interest. All the different laws which I know of contemplate a delay of payment of interest and expressly guard against paying compound interest. The party to whom interest is due may claim and recover it at short periods, but if it is not claimed, or cannot be got, any supposed delay does not enable the creditor to claim interest thereon. This stances, to such as were not citizens of any State, and above three millions funded at three per cent., for the doing of which there existed no obligation. If it be answered, that equity required it, I will allege that, if the Congress, acting on the general claims of equity which originated in the course of the Revolution, a much greater amount must yet be provided for. I never knew a public creditor who expected interest upon his interest, or that expected the indent debt that had been disposed of to be received, or otherwise provided for than by a final settlement between the respective States and the United States. Why should they expect Congress to make provision where an.actual obligation did not exist, when, in the same act, they were destroying ten years' interest of one-third of the principal, where the most express obligation did exist, and where the claim was also founded in the strictest equity? This increase of the debt, and funding at three per cent., appears not to have been calculated for the profit, nor at the request of the public creditor; for what they gain in the one hand they lose in the other. Nor does it operate as a gain to the United States. If we may judge of its object by its effects, we may observe that, by receiving the indents redeemed by the States, an increase of revenue becomes ne cessary, and the States become like pensioners to Congress for the annual amount they are to receive. Thus the revenue must be the greater in the hands of those who conduct it, and the individual States must be dependent on the Treasury of the United States for the means of their support. Foreigners may make reprisals if they are not paid; nor does the support of their Government depend upon it. But this is not the case with dependent States. We know several of the States are in this way entitled to a greater annuity than is necessary for the support of their Governments, and the people are in the habit of living wholly free of State taxes; while, to accomplish this strange state of things, the debt of the Union is increased, obnoxious revenues are rendered necessary, ministerial influence, speculation, and consequent depravity, are advanced. [MARCH, 1792. forty-two pounds eight shillings and three pence, current money of the said State, the amount of a judgment rendered against him in the General Court of the same State, on account of horses purchased for the use of the United States, during the late war; and that the not been credited in the accounts of the same with the claim of the said State, by the payment aforesaid, hath United States: be authorized, and they are hereby directed, to adjust "Resolved, That the proper officers of the Treasury and settle the said claim with the Agent of the State aforesaid, any limitation in the acts of Congress to the contrary notwithstanding :" Ordered, That the said motion be referred to Mr. SENEY, Mr. GERRY, and Mr. SUMPTER; that they do examine the matter thereof, and report the same, with their opinion thereupon, to the House. A representation and memorial of the Legislature of the Commonwealth of Massachusetts was presented to the House and read, praying that the General Government will assume the balance of the debt of the said State. Referred to the Committee of the Whole House, on the Report of the Secretary of the Treasury on the subject of the Public Debt. THE PUBLIC DEBT. With respect to the dangerous effects which the irredeemable principle and unnecessary increase of funded capital will have upon the genius of our Government, and the interests of posterity, this subject has been investigated with too much ability by the gentlemen who were up before me in support of the amendment, that I will not now detain the Committee with any thoughts upon it, but will conclude with observing, that, having proved that the irredeemable principle, which the amendment is designed to correct, is not an equiva- The House again resolved itself into a Comlent for the departure from the terms of the con-mittee of the Whole House, on the Report of the tract, and that, being contrary to the Constitution, Secretary of the Treasury on the subject of the cannot be obligatory on any future Congress, but Public Debt. is delusory in its nature, and calculated to promote speculation and a transfer of the debt to foreigners; and that the increase of funded debt created in the Funding System was not necessary from the original obligation, nor profitable to the public creditors, but calculated for dangerous speculating and political purposes. I will sit down, with expressing a wish that, by adopting the amendment, we will prevent the worst effects of the Funding System from being further extended. The Committee now rose, and reported pro gress. SATURDAY, March 31. Mr. LIVERMORE, from the committee appointed, presented a bill in addition to an act, entitled "An act to provide for the Territory Northwest of the River Ohio;" which was received, read twice, and committed. Mr. GERRY offered a few remarks on the subject, and urged the justice and sound policy of completing a business which had, for reasons well known, been left in an unfinished state, but which equity and precedent now called on Congress to finish. Mr. CLARK was opposed to the proposition. Mr. HARTLEY.-After so long a discussion, my attempting to take up any great length of time would not be excusable; but I consider it my duty to say a word or two in answer to some expressions and observations used against the Constitution and operation of this Government; and give a few reasons why I shall now vote for the resolution under consideration. It will not be necessary to take into view the principles upon which the Constitution was framed; they were fully examined in the General Convention, as well as in the several State Conventions, and stood the test of the strictest scrutiny. They are favorable Mr. VINING, from the committee appointed, pre- to liberty and justice. As to the operation of the sented a bill to compensate the Corporation of Government, we may best understand it by conTrustees of the Public Grammar School and Aca-trasting the state of America at the adoption of demy of Wilmington, in the State of Delaware, the Constitution, with that of the present day. for the occupation of, and damages done to, the At the former period, our credit as United States said school, during the late war; which was re- of America was at a low ebb. Few of the indiceived, read twice, and committed. viduals of foreign countries would give credit to the individuals of this. The capital of Europe would not be trusted in America; they doubted "Whereas, by several documents and papers commuour justice as well as our Government; there was nicated in pursuance of a resolve of the Legislature of scarcely any credit given to individuals here; a Maryland, it appears that Nicholas Ruxton Moore re-universal distrust prevailed. Agriculture lanceived, from the Treasurer of that State, on the 24th day of November last, the sum of two hundred and On a motion made and seconded that the House do come to the following resolution: guished; the farmer diffident, he had lost his confidence; the great spur to industry was wanting. No ships on our stocks, few vessels in our harbors, commerce decayed; the vital spirit lost. I might say more; but I will turn from a disagreeable scene to one more pleasing. [H. OF R. resources as my worthy colleague, who has just sat down, I assure you I am not desponding. I think our resources are competent, and our circumstances not depressed; the great industry of What is our present state? The credit of our our citizens, and the great demand and high price Government is as good as that of any country. for our produce in foreign markets, which took Individuals of all nations will trust the individu- place about two years ago, gave a spring to our als of America. Individuals here (until a late wealth and industry, and furnished ample resourunfortunate bubble or abuse of credit, arising from ces to Government; our feelings have not been bad men or bad management, and which will pos- pierced with the cries of general distress, until sibly only do hurt for the moment) gave full very lately, through the abuse of the novel princredit to each other as far as their capital ex- ciples introduced in the Funding System. But tended, as well in the city as in the country, and though I rejoice with the gentleman in the sufficonfidence prevailed. Agriculture, where the peo- ciency of our means, yet I consider ourselves in ple are industrious and apply their attention to the situation of an unexperienced heir, newly the raising of those articles which are most in come to the enjoyment of a great estate, who, demand, is in the highest improvement ever being dazzled with his own splendor, and confiknown here before. I can speak with confidence dent of his means, sets about spending without of the State I live in. The idle and indolent can system or principles, and gets embarrassed before expect no great success in an art which depends he is aware. We are told, that the principle of upon the steady hand of industry. There are assuming the State debts is already admitted by ships on the stocks in every part where there are the last Congress, therefore it ought to be comship-builders and materials. The tonnage list pleted now; we are just told, too, that it was fully will evidence the mighty increase of the Ameri- considered there. I ask, then, why was not the can shipping; it has far exceeded the most san- business fully completed at that time? If it was guine expectation. Several of the first merchants not, then what good reason can be given for carstate your commerce in a most respectable situa-rying it further now? Is there any new discovery tion, far beyond any other period. Indeed, the of better rules to apportion by? or is the distress returns from the Secretary of the Treasury show of the States who have yet some unassumed debt, how great our imports and how vast our exports. as pressing as when they had to bear the burden In point of justice, our reputation stands high of three or four millions more than now? Genw the world: our courts will do justice. Pray tlemen know, that the length this business has wha. undation for those strong assertions which gone already, has given great uneasiness to those have been made against the Constitution and the States who made the greatest exertions to extinGovernment? guish their own debts, and to whose circumstances and feelings the resources applied to the assumed debts of the States, are distressing and disagreeable. For what purpose are the Commissioners employed in adjusting the accounts between the individual States and the United States, if the whole of the State debts were to be assumed previous to that settlement? We know the Government is not vested with powers to compel delinquent States to do justice, and that if ever justice is done to those States who have extinguished their own debt, it must be by increasing of the general revenue in proportion to the money Congress will have to pay to those States; and it is an unjustifiable and dangerous policy to draw the money from the people with one hand, to pay it to the State Governments with the other. 1 As to the Funding System, I shall say little at present. I much doubt if it deserves the hard names which have been given it. Abuses will be committed in all countries; no human plan can be secure against them. The assumption of the State debts was fully considered upon a former occasion. Several of us wished to fund the debt of the Union alone: many gentlemen of the South, when we came to look for ways and means, voted against us, and the Eastern Representatives were always ready to join in defeating us, unless the assumption of State debts also took place. The bill passed the House of Representatives for funding the debt of the Union alone; but the Senate sent it back, with an amendment, assuming State debts to a certain amount. After much argument, the amendment of the Senate was agreed to by the House of Representatives. Justice was nearly done to some States; others do complain, and I think Rhode Island with much reason. I could have wished that the accounts between the United States and the several States had been settled. But I will give the gentlemen who complain so much an opportunity of satisfying this House, (if they are able,) when the blanks are to be filled up in the bill, that the sums they demand are reasonable, and are intended to give relief to the people of their States. I will vote for the resolution. Mr. FINDLEY, in answer, said: If I am not altogether so elated with our present prosperity and I have such information as I can depend upon, that the Commissioners will report upon the final settlement of the State debts, in the course of next winter; and the resolution before the Committee makes no provision for interest until after the year 1792. Why then take this further leap in the dark, when those States who will be actually entitled to it, will be as soon relieved, according to the principles of justice, as they would be by distributing the public property in this manner, by the rule of thumb? I always thought the assumption of the State debts a measure which the Constitution did not contemplate, and which had a tendency to sow the seeds of discontent in many parts of the Unit ed States; and now it is argued that the precedent being set by the last Congress, we ought to copy it. I admit of no principles of infallibility in Congress: and if precedents produce an oblígation, we ought to be the more careful not to strengthen them, by repeating such as are improper or doubtful. The only plausible reason for assuming the State debts in the last Congress so far, was to ease the burden of such States as had been most backward in providing for their respective debts, so as that they might be able to provide for what remained until the accounts would be settled, and to make some provision for the States who had done much to extinguish their debt, as a security that the debts would be brought to a final settlement. Certainly those States, at whose desire and for whose convenience so much has been done, ought to have a little more moderation. Mr. MADISON observed, that a great deal had been said to prove that the General Government is under obligation to provide for the debts of the individual States. The gentlemen who maintain this opinion have not shown that the creditors themselves ever entertained an idea that they should look to the United States for payment of those debts. It is not pretended that the new Constitution varies the situation of the creditors; they stand precisely on the same ground they did under the old Confederation. He (Mr. M.) denied that in the former assumption, the creditors of the individual States were considered in the same point of light as the creditors of the Continent, and for the truth of this, he appealed to the law itself "making provision for the public debt." [APRIL, 1792. the remainder of the State debts totally unprovided for. The question on agreeing to this proposition was carried in the affirmative, 33 to 25, but was eventually lost. The Committee then rose, and had leave to sit again. MONDAY, April 2. The House proceeded to consider the report of the committee to whom was referred the Letter from the Secretary of the Treasury, enclosing Returns of Duties arising on Imports and Tonnage within the United States, for one year, ending the 30th of September; also, a Return of Exports within the same period. Whereupon, Ordered, That the abstract returns of duties on imports and tonnage, also the abstract of exports from the United States to foreign countries, be printed for the use of the members of this House; and that the Secretary of the Treasury be directed to report to this House, in the course of this session, the quantity and value of the exports from each State, anything in the order of the 10th of November last to the contrary notwithstanding. THE PUBLIC DEBT. The House again resolved itself into a Committee of the Whole House, on the Report of the Secretary of the Treasury on the subject of the the Chairman reported that the Committee had Public Debt; and, after some time spent therein, again had the said report under consideration, and come to several resolutions thereupon, as follow: "Resolved, That the term for receiving on loan that part of the domestic debt of the United States which yet remains unsubscribed, be extended to the first day next, on the same terms as was provided by the act making provision for the public debt of the Uni ted States. 66 The proposition now before the Committee he considered as unjust, as it would place some of the States which had made no exertions to dis- of charge its debts, in a more eligible situation than those which had made the greatest exertions to effect that object. He denied that the first assump-ment of the interest on the unsubscribed part of the Resolved, That provision ought to be made for paytion had been generally approved, or had been domestic debt of the United States, to the first day of acquiesced in, and adverted to the proceedings one thousand seven hundred and ninetyand resolutions of the State of Virginia on the on like terms as was provided by the act aforesaid. subject; papers are on the table to show the truth "Resolved, That the term for receiving on loan that of what is now asserted: he added, that he was part of the debt of the individual States assumed by the sorry to find that no more attention had been paid United States, yet unsubscribed, be extended to the first to those papers. Mr. M. then noticed the state of day of next, on the same terms as is provided imports and exports from the several States, to by the act making provision for the public debt. show the unequal operation of the assumption as "Resolved, That a subscription for a farther loan in it affects those States, particularly Virginia, which the debts of the individual States be opened and conpays so great an over-proportion of the interest tinued to the first day of next, not to exceed in on the debts of some of the States. millions of dollars, in the proportions following: that is to say, [Here enumerating the several States.] Provided, That the interest on such loan shall not be payable before the — day of And provided, That when the sum to be assumed for any the evidences in which the same is made receivable, the State shall not be subscribed by the holders of any of State shall not be entitled to receive interest on the Mr. GERRY stated a variety of instances to show that the debts of the individual States were always considered as founded ultimately on the faith of the Union; that the creditors had taken the paper of the States on that idea; that the States were considered as agents for the United States: and, on this principle, the contracts for supplies and services on a Continental account had been made, without which the war must have ceased, and the subjugation of the United States have followed. Mr. G. remarked on the partiality and evident injustice of leaving the possessors of the whole residue. |