FEBRUARY, 1790.] Public Credit. [H. of R. to a provision for the support of public credit was first resolution proposed by the gentleman from before them. Mr. BALDWIN in the Chair. South Carolina. After a silence of some minutes, Mr. LIVERMORE asked what part of the report it was expected that gentlemen should speak to? He wished some gentlemen would select such parts as he conceived to be of importance, and submit them to the committee. Mr. SMITH, of South Carolina, was of opinion, that the committee had better consider the object of the report, in separate points of view, by which means they would be able to go through the investigation with a greater degree of accuracy than if they were left to range at large in the extensive field before them. The report contains objects so various, that it is possible gentlemen may agree, with respect to one or two, and yet differ on a third: from this consideration, he was induced to suggest the idea of single and independent resolutions, and had prepared the following: if the manner met the approbation of the committee, he would lay them on the table for consideration. They were to the following effect: Resolved, That Congress ought not to adjourn, until they have adopted such measures as will make an adequate provision for the public debt. Resolved, That in making such provision, no discrimination shall be made between the original holders of the evidences, and the assignees thereof. Resolved, That such of the debts of the individual States, as have been incurred by them, during the late war, ought to be assumed by the General Government, and like funds provided for them. Resolved, That the arrearages of interest on the Continental and State debts, ought to be funded, and consolidated with the principal. Resolved, That the interest to be paid thereon does not exceed per cent. per annum, for the present. These motions were severally expressive of objects.contemplated in the Secretary's report. The last was upon a principle of modification, such as was held out in the plan for reloaning the debt. If he was seconded, he would lay these resolutions on the table. Mr. BOUDINOT.-I take it, Mr. Chairman, we are now in a Committee of the Whole on the state of the Union, for the purpose of considering a report of the Secretary of the Treasury, founded on an order of this House, given at their last session; our business, therefore, is to contemplate the debt of the Union, and to devise the proper measures to be pursued in regard thereof. In the first instance, then, we are to consider the nature of the debt; and in the second, whether we will fund it in the manner proposed in the report on the table, or in what other way it shall be done. I apprehend, sir, we pledged ourselves to do this, when we resolved that an adequate provision for the support of public credit was a matter of high importance to the national honor and prosperity. We have since that given a solemn assurance, in our Address to the President, that this subject shall be among the first to engage our attention. Having, therefore, proceeded so far in this business, there can be little debate with respect to the We are bound by every principle of honor, of interest, and of policy, to look this subject in the face; and in doing this, let us advert to the origin of our debt, and view the end it was intended to answer. Perhaps a small portion of our time may be well spent, in recalling to our recollection the peculiar situation of these United States at that period. But I find the portrait better drawn, in an address of the late Congress, of May, 1789, than I can express it: I will therefore give it to you in their own language. Mr. B. here proceeded to read the address: in the first place it represents the then situation of our affairs. America, without arms, ammunition, discipline, revenue, government, or ally; almost totally stript of commerce, and in the weakness of youth, as it were, with a "staff and a sling," only dared "in the name of the Lord of Hosts," to engage a gigantic adversary, prepared at all points, boasting of his strength, and of whom mighty warriors "were greatly afraid." For defraying the expense of this uncommon war, your Representatives in Congress were obliged to emit paper money; an expedient that you know was heretofore generally and successfully practised on this Continent. They were very sensible of the inconveniences with which too frequent emissions would be attended, and endeavored to avoid them. For this purpose, they established loan offices so early as in October, 1776; and have, from that time to this, repeatedly and earnestly solicited you to lend them money on the faith of the United States. proved inadequate to the public exigencies. Our The sums received on loan have, nevertheless, enemy, prosecuting the war, by sea and land, with implacable fury, and with some success; taxation at home, and from borrowing abroad, in the midst of difficulties and dangers, were alike impracticable; hence the continued necessity of new emissions. The address goes on, and points out other causes of these emissions, which it was impracticable for Congress to redress at that time, but which they recommend now to be done. We are persuaded (say they) you will use all possible care to make the promotion of the general welfare interfere as little as may be with the ease and comfort of individuals; but, though the raising of these sums should press heavily on some of our constituents; yet the obligations we feel to your venerable clergy, the truly helpless widows and orphans, your most gallant, generous, meritorious officers and soldiers, the public faith, and the commonwealth, so irresistibly urges us to attempt the appreciation of your currency, that we cannot withhold obedience to those authoritative sensations. On this subject we will only add, that as the rules of justice are most pleasing to our infinitely good and gracious Creator, and an adherence to them most likely to obtain his favor, so they will ever be found to be the best and safest maxims of human policy. H. OF R.] Public Credit. [FEBRUARY, 1790. baffled troops of a nation impiously priding her self in notions of her omnipotence. To our constituents, we submit the propriety and purity of our intentions, well knowing they will not forget that we lay no burdens upon them Rouse yourselves, therefore, that this campaign but those in which we participate with them; a may finish the great work you have so nobly carhappy sympathy that pervades societies formed ried on for several years past. What nation ever on the basis of equal liberty. Many cares, many engaged in such a contest, under such a compli labors, and may we not add, reproaches, are pecu- cation of disadvantages, so soon surmounted many liar to us: these are the emoluments of our unso- of them, and in so short a period of time had so licited stations; and with these we are content, if certain a prospect of a speedy and happy conclu you approve our conduct. If you do not, we shall sion? We will venture to pronounce that so rereturn to our private condition, with no other re-markable an instance exists not in the annals of gret than that which will arise from our not having served you as acceptably, and as essentially, as we wished and strove to do, though as cheerfully and faithfully as we could. mankind. We well remember what you said at the commencement of this war. You saw the immense difference between your circumstances and those of your enemies; and you knew that the quarrel involved no less than your lives, liberties, and es tates. All these you liberally put to every hazard. resolving rather to die freemen than live slaves and justice will oblige the impartial world to confess that you have uniformly acted on the same general principle. Consider how much you have done, and how, comparatively, little remains to be done to crown you with success. Perse vere, and you insure peace, freedom, safety, glory, sovereignty, and felicity to yourselves, your chi dren, and your children's children. They then proceeded to detail the advantages arising from an alliance formed between the King of France and these United States; and observe that, when unprepared, undisciplined, and unsupported, we opposed the fleets and armies of our enemy in full conjoined force, then, if at any time, was conquest to be apprehended. Yet, what progress towards it did their violent and incessant efforts make? Judge from their own conduct. Having devoted you to bondage, and after vainly wasting their blood and treasure, in the dishonorable enterprise, they deigned at length to offer terms of accommodation, with respectful Encouraged by favors already received from addresses, to that once despised body, the Con- Infinite Goodness, gratefully acknowledge them gress, whose humble supplications, only for peace, earnestly imploring their continuance, constantly liberty, and safety, they had contemptuously reendeavoring to draw them down on your heads .jected, under the pretence that it was an uncon- by an amendment of your lives, and a conformity stitutional assembly. Nay, more desirous of seto the Divine Will, humbly confiding in the producing you into a deviation from the paths of rec-tection so often and so wonderfully experienced; titude, from which they had so far and so rashly wandered, they made most specious offers to tempt you into a violation of your faith, given to your illustrious ally. Their arts were as unavailing as their arms. Foiled again, and stung with rage, imbittered by envy, they had no alternative but to renounce an inglorious and ruinous controversy, or to resume their former modes of prosecuting it. They chose to horrid massacres of men, women, and children, the latter. Again the savages were stimulated and domestics to the murder of their masters. Again our brave and unhappy brethren were doomed to miserable deaths in jails and prison ships. To complete the sanguinary system, all the "extremities of war" were, by authority, denounced against us. Piously endeavor to derive this consolation from their remorseless fury, that "the Father of mercies" looks down with disapprobation on such audacious defiances of his holy laws; and be further comforted with recollecting that the arms assumed by you, in your righteous cause, have not been sullied by any unjustifiable severities. army, Your enemies, despairing, however, as it seems, of the success of their united forces against our main have divided them, as if their design was to harass you by predatory, desultory operations. If you are assiduous in improving opportunities, Saratoga may not be the only spot on the Continent to give a new denomination to the vigorously einploy the means placed by Provi dence in your hands for completing your labors. Fill up your battalions; be prepared in every part to repel the incursions of your enemies; place your several quotas in the Continental Treasury lend your money for public uses; sink the emis for expediting the conveyance of supplies for your sions of your respective States; provide effectually armies and fleets, and for your allies; prevent the officers; diligently promote piety, brotherly love produce of your country from being monopolized: effectually superintend the behaviour of pic be approved, before Almighty God, worthy learning, frugality, and moderation; and may you those blessings we devoutly wish you to enjo This being the situation of our country, gress, in the September following, called on the citizens for loans, and for taxes, and pledged the United States for the ultimate redemption of the principal, and the intermediate punctual paymen of the interest. They then took up the subject of finance, unde: three different heads: 1st. Whether, and in what manner, the faith the United States had been pledged for the re demption of their bills? them 2d. Whether the United States had put selves into a political capacity to redeem the bills? This is a question which calls for more full discussion. Our enemies, as well foreign as domestic, have labored to raise doubts on this head. They argu T. that the confederation of the States remains yet to be perfected; that the Union may be dissolved, Congress be abolished, and each State, resuming its delegated powers, proceed, in future, to hold and exercise all the rights of sovereignty appertaining to an independent State. In such an event, say they, the Continental bills of credit, created and supported by the Union, would die with it. This position being assumed, they next proceed to assert this event to be probable; and in proof of it, urge our divisions, our parties, our separate interests, distinct manners, former prejudices, and many other arguments, equally plausible, and equally fallacious. Examine this matter. [H. OF R. constituents. To this end, repeated attempts have been made to draw an absurd and fanciful line of distinction between the Congress and the people, and to create an opinion and a belief, that their interests and views were different and opposed. Hence, the ridiculous tales, the invidious insinuations, and the whimsical suspicions, that have been forged and propagated by disguised emissaries and traitors, in the garb of patriots. Hence has proceeded the notable discovery, that as Congress made the money they also can destroy it; and, that it will exist no longer than they find it convenient to permit it. It is not surprising, that in a free country, where the tongues and pens of such people are and must be licensed, such politiFor every purpose essential to the defence of cal heresies should be inculcated and diffused; but those States in the progress of the present war, it is really astonishing, that the mind of a single and necessary to the attainment of the objects of virtuous citizen in America should be influenced it; these States now are as fully, legally, and ab- by them. It certainly cannot be necessary to resolutely confederated, as it is possible for them to mind you, that your representatives here are be. Read the credentials of the different dele- chosen from among yourselves; that they are gates who composed the Congress in 1774, 1775, sent to speak your sentiments, and that it is conand part of 1776, you will find that they establish stantly in your power to remove such as do not. an union for the express purpose of opposing op- You surely are convinced, that it is no more in pressions of Britain, and obtaining redress of their power to annihilate your money than your grievances. On the fourth of July, 1776, your re-independence, and that any act of theirs for either presentatives in Congress, perceiving that nothing less than unconditional submission would satisfy our enemies, did, in the name of the people of the thirteen United Colonies, declare them to be free and independent States, and, "for the support of that declaration, with a firm reliance on the protection of Divine Providence, did mutually pledge to each other their lives, their fortunes, and their sacred honor." Was ever confederation more formal, more solemn, or more explicit? It has been expressly assented to, and ratified by every State in the Union. Accordingly, for the direct support of this declaration, that is, for the support of the independence of these States, armies have been raised, and bills of credit emitted, and loans made to pay and supply them. The redemption, therefore, of these bills, the payment of these debts, and the settlement of the accounts of the several States, for expenditures of services for the common benefit, and in this common cause, are among the objects of this confederation; and, consequently, while all or any of its objects remain unattained, it cannot, so far as it may respect such objects, be dissolved, consistently with the laws of God or man. 3d. Whether, admitting the ability and political capacity of the United States to redeem their bills, there is any reason to apprehend a wanton violation of the public faith? It is with great regret and reluctance, that we can prevail upon ourselves to take the least notice of a question which involves in it a doubt so injurious to the honor and dignity of America. The enemy, aware that the strength of America lay in the union of her citizens, and the wisdom and integrity of those to whom they committed the direction of their affairs, have taken unwearied pains to disunite and alarm the people, to depreciate the abilities and virtue of their rulers, and to impair the confidence reposed in them by their of these purposes would be null and void. If, then, neither our ability, nor our inclination to discharge the public debt are justly questionable, let our conduct correspond with this confidence, and let us rescue our credit from its presIent imputations. H. OF R.] Public Credit. [FEBRUARY, 1790. the magnitude of the object we have successfully accomplished; but it can by no means be consid ered so large as to prevent us from an attempt to discharge it. that discussion which the subject requires, as the most important that has, or can come before us Mr. FITZSIMONS had the same idea with the gentleman from South Carolina, (Mr. SMITH,) that the attention of the committee ought to be confined to specific objects. With this view he had endeavored to collate, and render perspic They then go on, and point out the means by which this may be done. The war, though drawing fast to a successful issue, still rages. Disdain to leave the whole business of your defence to your ally. Be mindful that the brightest pros- Let us then adopt the motion now on your tapects may be clouded, and that prudence bids us ble, or something like it; not, perhaps, immedito be prepared for every event. Provide, there-ately, because it might be supposed to preclude fore, for continuing your armies in the field, till victory and peace shall lead them home; and avoid the reproach of permitting the currency to depreciate in your hands, when, by yielding a part to taxes and loans, the whole might have been appreciated and preserved. Humanity, as well as justice, makes this demand upon you; the complaints of ruined widows, and the cries of fa-uous, the great outline of the Secretary's plan. therless children, whose whole support has been placed in your hands, and melted away, have doubtless reached you. Rouse, therefore; strive who shall do most for his country; rekindle that flame of patriotism which, at the mention of disgrace and slavery, blazed throughout America, and animated all her citizens. Determine to finish the contest as you began it, honestly and gloriously. Let it not be said, that America had no sooner become independent than she became insolvent; or, that her infant glories and growing 2. Resolved, That permanent funds ought to be sp fame were obscured and tarnished by broken con-propriated for the payment of interest on, and the gre tracts and violated faith, in the very hour when dual discharge of, the domestic debt of the United all the nations of the earth were admiring, and al- States. most adoring the splendor of her rising. I conceive, Mr. Chairman, after duly considering the momentous circumstances I have brought to your attention, there is no man possessed of the principles of common honesty, within the sound of my voice, that will hesitate to conclude with me, that we are bound by every principle of honor, justice, and policy, to fund the debt of the United States, which has been one great means, under heaven, of securing to us our independence. I presume, sir, on this point we shall have no dispute. All that remains, then, for our consideration, is the manner and means of accomplishing it. We must view it as a debt of honor, from the nature of the contract, from the objects effected, and the happy state we are now in. The principles of interest call loudly upon us to complete the business so happily begun. The Secretary, in the report before us, observes, with great justice, that exigences are to be expected to occur in the affairs of nations, in which there will be a necessity for borrowing, and particularly in a country like this, possessed of little moneyed capital. How much, then, is it our interest to secure our public credit on a stable and sure foundation? Besides this, it is our interest in another point of view; by this means we shall introduce a medium into circulation which will give a spring to the agriculture, commerce, and manufactures of the Union. Our policy also guides us into the adoption of some such measure as is proposed in the report. A punctual performance of our public engagements will invite moneyed men, in the days of distress, to lend us every pecuniary aid. Our debt undoubtedly is large; but not so large as might have been reasonably expected, considering They were more particular than those laid on the table, though they were substantially the same. He wished to be understood, that if the committee inclined to take them into consideration, he did not mean to bind himself to support then by the part he had taken in bringing them forward. He then read them, as follows: 1. Resolved, That adequate provision ought to be made for fulfilling the engagements of the United States in respect to their foreign debt. 3. Resolved, That the arrears of interest, including in dents issued in payments thereof, ought to be provided for on the same terms with the principal of the said debt. 4. Resolved, That the debts of the respective States ought, with the consent of the creditors, to be assumed and provided for by the United States. 5. Resolved, That it is advisable to endeavor to effect of the particular States, with the voluntary consent of a new modification of the domestic debt, including that the creditors, by a loan, upon terms mutually beneficial to them and to the United States. 6. Resolved, That for the purpose expressed in the last preceding resolution, subscriptions towards a loan ought to be opened to the amount of the said debt. cluding that of the respective States, upon the terms following, to wit: That for every hundred dollars subscribed. perable in the said debt (as well interest as principle) the subscriber be entitled, at his option, either To have two-thirds funded, at an annuity or years interest of six per cent., redeemable at the pleasure of the Government, by payment of the principal; and to receive the other third in lands in the Western Tem tory, at the rate of twenty cents per acre: or To have the whole sum funded at an annuity or yearly interest of four per cent., irredeemable by any payment exceeding five dollars per annum, on account both of principal and interest; and to receive as a coffiand eighty cents, payable in lands, as in the preceding pensation for the reduction of interest, fifteen dollars case or per annum, on To have sixty-six dollars and two-thirds of a dollar funded immediately, at an annuity or yearly interest of six per cent., irredeemable by any payment exceeding four dollars and two-thirds of a dollar account both of principal and interest; and to have, the end of ten years, twenty-six dollars and eighty-eigh cents, funded at the like interest and rate of redemp tion; or 8. Resolved, That the funds which shall be appro priated according to the second of the foregoing resolutions be applied, in the first place, to the payment of interest on the sums subscribed towards the proposed loan; and that, if any part of the said domestic debt shall remain unsubscribed, the surplus of the said funds be applied by a temporary appropriation to the payment of interest on the unsubscribed part, so as not to exceed for the present four per cent. per annum; but this limitation shall not be understood to impair the right of the non-subscribing creditors to the residue of the interest on their respective debts; and in case the aforesaid surplus shall prove insufficient to pay the non-subscribing creditors, at the aforesaid rate of four per cent., that the faith of Government be pledged to make good such deficiency. [H. OF R. After some suspense, this motion not being seconded, the question was taken on the first resolution, which was carried in the affirmative unanimously. Mr. JACKSON.-Believe me, Mr. Chairman, I have as high a sense of the obligation we are under to the public creditors, and feel as much I shall ever cheerfully acknowledge the duty we gratitude towards them as any man on this floor. owe to our benefactors, and in a peculiar manner to those brave soldiers who, at the risk of their lives and fortunes, secured the independency of America. I have also the most sincere wishes for the re-establishment of public credit, and that upon firm and solid ground, and on principles which cannot be called in question; but there appears to me a previous question, which has not yet been brought forward; it is this, whether there exists an immediate necessity for funding the national debt in the permanent manner proposed? The high regard I have for the nature and circumstances of the foreign debt, induced me to let the first proposition pass without any animadversion. The vote which has been taken on that point will serve to show foreigners that we are concerned to preserve our credit with them by a rigid performance of our stipulations; trusting, at the same time, that our fellow-citizens cannot obMr. PAGE requested the report of the Secretary for, notwithstanding what the domestic creditors ject to a distinction so just and proper in itself; to be read, as it was the groundwork of the business they were in committee upon; and he re-in a great measure, established our independence. may say, it is the money of foreigners that has, quested gentlemen to offer their motions, when the part of the report to which they related was under consideration. After reading the report, the committee rose and reported progress. It is doubtful with me whether a permanent funded debt is beneficial or not to any country; some of the first writers in the world, and who are most admired on account of the clearness of their perceptions, have thought otherwise, and declared that wherever funding systems have been adopted in a Government, they tend more to injure posterity than they would injure the inhabThe House again resolved itself into a Commit-itants to pay the whole debt at the time it was tee of the Whole on the state of the Union, Mr. BALDWIN in the Chair. TUESDAY, February 9. PUBLIC CREDIT. Mr. SMITH withdrew his motion of yesterday, to make way for the resolutions of Mr. FITZSI MONS. Mr. JACKSON objected to receiving the whole of those resolutions, lest it should be inferred that the committee bound themselves to adopt them. Mr. FITZSIMONS said. he had declared his intentions to the committee yesterday when he brought them forward; he would repeat them again; he meant that the committee should have some systematic plan of proceeding before them, to consider and decide on each resolution singly; but he by no means intended the resolutions, if admitted, to be binding on any member; he did not mean to pledge even himself to support them all. Mr. JACKSON was satisfied to go into a consideration of them on these terms. Mr. STONE moved to amend it by striking out the words "in respect to their foreign debt," and then modify the next resolution by striking out the word "domestic." 1st CoN.-37 contracted. The principle, I apprehend, is demonstrated by experience; the first system of the kind that we have any account of originated in the State of Florence in the year 1634; that Government then owed about £60,000 sterling, and being unable to pay it, formed the principal into a funded debt, transferable with interest at five per cent. What is the situation of Florence in consequence of this event? Her ancient importance is annihilated. Look at Genoa and Venice; they adopted a similar policy, and are the only two of the Italian Republics who can pretend to an independent existence, but their splendor is obscured; they have never been able since the period at which a funding system was introduced to raise themselves to that formidable state to which they were before. Spain seems to have learned the practice from the Italian Republics, and she, by the anticipation of her immerse revenue, has sunk her consequence beneath that level which her natural situation might have maintained. France is considerably enfeebled, and languishes under a heavy load of debt. England is a melancholy instance of the ruin attending such engagements. |