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H. OF R.]

Public Credit.

(FEBRUARY 18, 1790.

standing the plausible reasoning he had heard able to re-enlist the soldiers, was reduced alupon that hear!, he was satisfied a regard was most to the necessity of abandoning the extendue, and must be paid to the opinions of the sive lines in the vicinity of Boston; that notpeople, and to their feelings. Government was withstanding this, such were the préjuciices in formed for their benefit; under the present Con favor of short enlistinents, and such the dread stitution, all the powers of it flow from them as of a standing army, that Congress were obliged the source; they have the means of carrying in- to enlist the second army for one year, and to execution their will; and, under those cir- their times of service expired at or about the cumstances, he could not believe the Legisla- end of 1776. During that campaign, Congress ture ought to be indifferent as to their senti- were so fully convinced of the fatal consequenments.

ces of such policy, as, at all events, to deterGentlemen had founded their opposition to mine that the next enlistment should be for the the amendment, principally upon the rigid rules war; but they were afterwards constrained to strictly adhered to in the courts of Coinmon provide the alternative, " or for three years;"* Lair; rules which had often been the means of and those who enlisted for this term, lelt the stilling justice, to correct the rigor of which Le-army in 1780. We shall also find that, in 1780), gislatures had often interposed. Such rules the army was greatly reduced, and the States could not be used as fetters for the supreme earnestly called on to recruit their respective power of Government. The history of nations regiments; but such were the prospects of gain, proves that Legislatures are superior to them; from privateering and other measures-such their objects are extensive; and in all extraor: had been the sufferings of the army, and so dinary cases, they will make such provisions as weakened was the confidence in public faith, may be requisite to effect general justice and as to require enormous bounties in specie for obequity. The case under consideration was cer: taining recruits; the average of bounty, in many tainly one of an extraordinary kind. He could States, was two hundred and fifty ilollars, in not think that those, whose exertions has res- specie; and in Massachusetts, upwards of two cued them and us from despotism and slavery, bundred and eighty. Thus, then, if we divide were ever honestly paid those hard-earned the army into four classes, it will appear, that claims they were so justly entitled to; and the soldiers of the first and second classes were could not but believe, that as long as those discharged and fully paid, in 1775 and 1776; claims existed, so loug there would exist a stig: that the soldiers of the third class, who enliste ma on the justice, humanity, and gratitude of for the war, between 1777 and 1780, served six, this country.

five, or four years, without any other prospect Mr. GERRY observed, that it was with great for reward than the stipulations of Congress; concern he should express his sentiments on a and that the fourth class, some who served two. subject so important in its consequences; that and an half years, others two years, and others after mature deliberation he had formed an opi- one, were ainply paid by bounties, the least of pion; but should arguments hereafter convince which amounted to one hundred dollars a year, him that his opinion was incorrect, he should or eight and one-third dollars a month, in spethink it consistent not only with honesty, but cie, exclusive of the allowance marle by Conwith honor to give it up.

gress. The third and fourth classes were, how The amendment proposed by the gentleman ever, entitled, by their contract, to six and from Virginia differed from the proposition be- two-thirds of dollars, in specie, per month, or fore the committee in other points, besides that to an equivalent, exclusive of bounties, rations, of discrimination; and he proposed, as an amend- and clothing; and how has the contract been ment to the amendment, to strike out all that fulfilled? related to this question, that the sense of the He then referred to a memorial of the officers committee may be fairly ascertained, " Whe- and soldiers of the army, stating their grievanther there shall be a discrimination between ces to Congress, in April, 1783; and likewise a the original and assigned holders of public se resolve of Congress in July, in the same year, curities!"

for liquidating the accounts of the army, and He stated, that the foundation of the motion for issuing certificates which would then pro · for a discriinination, was the heavy losses sus. duce but two shillings and six-pence in the tained by our brave and veteran soldiers, in the pound, for the balance due to each officer aud sale of their public securities. Little or nothing soldier. And asked, is this a fulfilment of the had been urged in favor of meritorious officers, contract? Was ever a brave army so paid beand of citizens who, by the loan of their proper- fore? If, then, the contract has not been fulfilty, had contributed to the support of the war, led, ought not the party, failing to do this, to and much less of assignees; although he could indemnify the party who have sustained dasee no reason why equal justice should not be mages? Justice may be in favor of the fourth done to these two classes of original creditors. class; but justice, generosity, and humanity, To form a judgment, then, of the foundation of plead loudly for the third class, the amount of the motion for a discriinination, let us advert to whose demands will not exceed two millions of the history of the army, and we shall find that dollars. their first enlistments expired at the end of The question then is, Who ought, in justice, 1775; that the Commander-in-Chief, not being to make good these losses of the soldiery? Some

FEBRUARY 18, 1790. ]

Public Credit.

(H. OF R.

gentlemen say, those who purchased their certi- premium, and selling it at eighty per cent. disficates. On what principle? From their having count? Or, where is the injustice of the meareceived them without an equivalent. Let us sure in either case? But should the enemy be attend to the nature of the contract of the sol- expelled, and stock again at par, can the origidiers with the assignees; for it differs widely nal stockholder, in justice, demand any part of from that with Congress. Some gentlemen the eighty per cent. premium, or of the eighty consider it in the nature of a specialty or bond, per cent. discount, on a pretence that he has and have carried us to Courts of Law, to prove, not received an equivalent? If the whole had that whatever has been paid short of the nomi- been lost, would he have returned the twenty nal value of the certificates, is now due from per cent. which he received of the insurer or the assignees. This mode of reasoning is inad- purchaser? Surely not. And it must be evi, missible, because particular decisions of law dent, that although the nominal was the real courts cannot apply to great national questions; value of stock before the appearance and after and the Legislature is authorized to regulate the repulse of the enemy, yet that the value was such courts, and is not to be regulated by them. reduced by the danger of conguest, and that the But if admissible, is the transfer of a soldier's market price, at that period, was an equivacertificate in the nature of an assigned special. | lent. ty? For, if not, arguments on this principle Several cases have been cited as precedents will fall to the ground, and we shall be again for discriminating; that which relates to the refreed froin Courts of Law.

duction of the Canada bills, mentioned by the Jie undertook to show what a bond was, ac- gentleman from Virginia (Mr. Madison) was, cording to the law definition of it, and that a by his own acknowledgment, not applicable. certificate differed from it; as in the latter, The case referred to in the act of Queen Anne, there was no condition of performance, or seal, cited by the gentleman, was not analogous; for, and in the transfer no endorsement is necessa- independent of other considerations, the debt ry. The title of an assignee to a certificate was contracted by the Queen, for the support of her by a sale, which is, “a transinutation of pro- household, was unliquidated; and by a vote of perty froin one man to another, in consideration the House of Commons, had been disallowed. of some value or recompense.

Had the debt been liquidated, and certificates He further observed, that the public securi- of it issued, as in the case of our soldiers, there ties of the United States, are a species of stock would have been no interference of Parliament and property similar to merchandise; they are in the subsequent transfer of such certificates, sold in open market, and at the market price, as their whole conduct evinces. which is always an equivalent; for the market Gentlemen, in favor of discriinination, have price of stock was regulated by the public opi- also mentioned the South Sea and Mississippi nion, and depended, in a great measure, on the schemes.' The gentleman from New Jersey circumstances of the nation, and on events. It (Mr. BOUDINOT) had clearly shown that the had always been subject to great variations, and conduct of Parliament in the South Sea scheme ever would be, whilst communities are subject was directly against discrimination; for although to calamities; and this is a quality inseparable they imprisoned the directors and others, and from that species of property. To illustrate confiscated their property, yet they never interthis argument, he stated two cases, the latter of posed in the transfers of stock by other propriewhich was as follows: Suppose that the public tors, although it was bought and sold from par debt was funded, and the stock at par; that a to thirteen or fourteen hundred per cent. combination of European Powers had been se. The bistory of the Mississippi scheme, I procretly formed to subdue us; that a fleet, with a pose not to state fully; but to mention a few formidable army, had suddenly appeared on our particulars. In the year 1717, the Government coast, and that the enemy had landed before ar- of France were deeply indebted, and had issu: rangements could be made to resist them, and ed State bills to the amount of several hundred bad overrun half the country, would not stock, millions of livres; they were sold at sixty or under such circumstances, be reduced in value? seventy per cent discount, and the Regent of If a stockholder should insure his property in France, desirous of appreciating them, estathe funds, would not the policy be as valid blished a Commercial Company, with the ex against such an enemy as any other policy in clusive privilege of trading to the Mississippi, time of war?

to consist of such as would subscribe sixty mil. Let us suppose, that this calamity had raised lions, payable in State bills at par; at first there the premiums to eighty per cent. and the stock were few disposed to be concerned, but at holder had agreed to allow it, would not the in- length the sum was subscribed; the stock, by surer be justly entitled to it for taking the risk? another arrêt, was increased to one hundred But if the stockholder, instead of giving the millions, the farm of tobacco, amounting to four premium, had made sale of his property at millions a year, was then granted to the Coineighty per cent. discount, being one-fifth of its pany, as a fund to pay the interest, and, under former value, would not that fifth be an equiva- the direction of Mr. Law, they made greater lent, and the sale valid? Where is the differ- profits from it. Stocks were hus enhanced ence, except merely the mode of negotiating, from seventy per cent. below, to twenty, per between insuring his property at eighty per cent. cent. above par: The India and African Com

H. OF R.]

Public Credit.

(FEBRUARY 18, 1790.

panies were afterwards incorporated with the Or for a noncompliance of some of the States Mississippi, whose capital was further extend with the requisitions for sinking the old bills of ed, by which means stocks rose to five or six credit? Or for the mutinying of part of the hundred, and, in the progress of this matter, tu army? Or for defeating the plan of the impost one thousand per cent. At this period, a sub- and supplementary funds? Or for the consescription was opened for fifty millions of livres, quent commotions? Or did the assignees deat ten for one, payable at ten different pay- ceive the original holders? Did they act the ments; and so infatuated was the nation, that part of sharpers and swindlers? If so, bring the subscription, in a few days, amounted to the culprits to justice; your country demands seventy-five millions, being half as much more it. But if their only criine is good fortune in as was wanted; and the day after the subscrip- their negotiations, if they have purchased the tion closed, those who had given one thousand securities in open market, and honestly paid for sold for two thousand per cent. When the them, treat them as good citizens, acquit them bubble burst, as it is expressed, no atteinpt was of fraud, and do them justice. Being among made by Government to interfere in the trans- those original holders who have transferred part fers made by individuals, but all such transfers of their certificates, and not replaced them, I were valid.

can feel for myself as well as for our brave solFrom all which, I think it will appear that diers, but am against discrimination. So much stocks are, in their natures, a species of proper- for the justice of the measure. Let us now conty subject to great variations from calamities sider the policy of it. and other causes; that the market price will be It is admitted on all sides, that the preservaregulated by public opinion, and that it is al- tion of public faith is indispensable to the welways considered as an equivalent. A transfer fare of the Union, and in what does it consist? of property in the funds, at market price, dif- Public faith, as I conceive, consists in a puncfers widely from the gambling of stock-jobbers, tual fulfilment of engagements and contracts a pernicious species of traffic, of the nature of on the part of Government. To preserve pubwagers or bets; and those concerned therein lic faith, therefore, it is necessary that a nation have no property in the funds, and generally should have adequate resources, the Governare subject to punishment,

ment adequate powers, and those who adminisShould inquiry be made, what calamity have ter it integrity and abilities. That our resourwe been under to reduce so low the price of ces are equal to the payment of our debts, had our stocks? I answer, the calamity of a defective not been denied; that Congress have not suffiNational Government, the effects of which were cient power, I presuine none will assert. severely felt. In 1780, Congress called on the The preservation then, of public faith, will States to sink their respective proportions of the principally depend on their integrity and abiliold paper money: part complied, and part did ties. Their abilities may not be questioned, but not. The consequence was, that, in 1781, the their conduct, in this case, will be critically bubble burst, and almost ruined the public cre-examined, and tried by the standard of moralidit. Early in 1783, the army, from want of pay, ty. If it will stand the test, they will have the were nearly mutinying, and part of them soon confidence of the people; but if not, vain will be after did mutiny, and drove Congress froin every attempt to establish public credit. For Philadelphia. Again, Congress, by the Con- this is nothing but the confidence of the people federation, were authorized to tax the States on in public faith, and the people will think that, a valuation of their respective property; but the whatever resources they may have, or power to States were unable to produce the documents change the form of Government, the defective required for forming that valuation, and refused principles of the rulers can only be corrected to adopt a new rule proposed by Congress, who by the sovereign of the universe. Is it good could therefore levy no tax. To evince an policy, then, to rest the public faith on an act honest disposition, and to support public credit of discrimination, which is intended to saddle as far as possible, Congress proposed the plan one class of citizens with a tax to repair the of impost, and supplementary funds. This was loss which another class has sustained by a accepted by some States, and violently opposed breach of contract on the part of the publici in others, which produced apprehension that a This will wear the appearance of committing considerable part of the Union wished to apply one fraud to cure another. The right of specuthe sponge to the public debt. These circum-lators to purchase certificates at the market stances, and the consequent commotions, so price is undoubted, and their conduct in making weakened Government, ihat we had no credit, the purchases and payments is unexceptionapublic or private, at home or abroad. By these ble; but if there was a cloubt of this in regard and other calamities, and the load of our debt, to some, would it be a sufficient ground for a were the stocks reduced, the public opinion discrimination? fixed their rates, and taking the risk, they were Again: the whole expense of the war is supworth no more; but circumstances are now al. posed to be about 176,000,000 dollars, of which tered, and they are increased in value.

there is now due 80,000,000 dollars, exclusive Gentlemen, to support discrimination, have of 2,000,000 dollars supposed to be due to the charged assignees with fraud. Are the assignees third class of soldiers. Is it good policy, by chargeable for the defects of the Confederation? funding the debt, to do every thing necessary FEBRUARY 18, 1790.]

Public Credit.

[H. or R.

for the support of public credit, except making ing the old debt, to sink it, and of beginning payment of 2,000,000 dollars, and then, at the anew, or of giving up the cause. Sad alternarisk of public credit, by an act of discrimina- tive! to violate the public faith or be enslaved! tion, to save the sum last inentioned, which is but They chose the former, but aimed to do all posone eighty-eighth part of the expense of the war: sible justice. Indeed they had one reason for

But how are we to obtain loans in future: scaling bills of credit, which applies not to the Some gentlemen conceive the establishment of liquidated debt. The public did not receive our funds will always precede the loans. Can the value of the former, but did of the latter, any gentleman insure this? I conceive not. according to the nominal sums; and had each There is not a nation in Europe so happily cir- emission been scaled according to its value cumstanced; and if an unfunded debt should when issued, the public would probably have again be requisite, who will lend when your un- been better satisfied, but having reduced the funded securities cannot be transferred, be- old bills from forty to one, did Congress at. cause you have established a precedent for dis- tempt to re-scale them when they sunk a thoucrimination? Is it not evident, then, the pro- sand for one? Or did they provide that original position is pregnant with ruinous consequences? holders, who passed Continental money for less

If inquiry be made, what is to be done with than they received it, should be reimbursed by the suffering soldiers? I answer, pay them, the assignees? If not, the precedent is against if your funds are sufficient; if not, assure them discrimination. Indeed, if the precedent lavoryou will do it as soon as funds can be provided. ed such a measure, it is admitted by the gentleIt has been suggested that they have relinquish- man who produced it to have been a violation ed to the public seven-eighths of their proper of faith, and is therefore a bad precedent, which ty; if they have, I think it unjust to accepi it. can never sanctify a bad act, or alter the eterBut is this the fact? Would they not have re- oal rules of justice. Because, then, Congress, ceived the whole of their liquidated demands in a distressing war, without a form of Governin specie, had it been offered? There can be no ment, and at the end of their resources, violatreason to doubt of this. Some gentlemen say, ed their faith, can we, on a principle of policy, they wish to compound the matter between the in a profound peace, with a strong Government soldiers and their assignees, because we cannot and sufficient resources, be justified in taking a pay both. Would not a composition, on such measure which promises so little advantage, principles, be a declaration of national bank- and which may involve such dangerous conseruptcy? And shall the United States, with quences? If This measure is adopted, what is three million inhabitants, with the most tatter to be done with those who have given Congress ing prospects arising from the increase of com- a dollar in public securities for an acre of land, merce, hiusbandry, and manufactures; with such such as you will now sell for one-fifth of a dolan extensive territory, and in the vigor of their lar in the same securities? Ought not Congress, youth, declare bankruptcy for a debt, includ- on their own principle, as the assignee of the ing the Federal, State, and Foreign loans, not purchaser, to reimburse four-fifths of this proexceeding 80,000,000 dollars, or £18,000,000 perty? But what security will a speculator in sterling; when Great Britain, with only eight land have, who may purchase of an original millions of inhabitants, can fund a lebt of proprietor, that when the value of the land is £240,000,000 sterling? I hope not;and consent- enhanced, a similar discrimination will not be ing to such a measure, I would never own my-made? And who, thus circumstanced, will self an American.

purchase your lands? Some gentlemen have referred us to the act With respect to the practicability of thus disof Congress for scaling the Continental curren- criminating, gentlemen in favor of the measure cy, to prove both the policy and justice of a dis- have not removed the objections of those who crimination. Let us examine the matter. Con- are against it, and have only said a provision gress, from the commencementof the war to Feb- must be made in certain cases, withoui explainruary 1781, were but a meeting of State Commis- ing: It has been said, if the latter will unite sioners, without any form of Government or with the former, the difficulties, although great, powers, except such as were contained in their may be removed; but no effort can make a meadiscordant commissions. From April, 1775, to sure practicable which is impracticable. Such the end of 1779, they supported the war by arti- attempts tend to weaken Government, and to ficial credit. At that period they had issued bring the laws into contempt, as we have seen 200,000,000 of paper dollars, and borrowed in regulating acts. 35,000,000 of dollars on loan office certificates, Public opinion has been mentioned as an arwhich were afterwards reduced to 11,000,000 of gument in favor of the plan. I have the highest dollars; they had borrowed all they could in respect for public opinion, but have not argued Europe, and were reduced to the necessity of on this ground: First, because, in the present stopping emissions, and for depending on the case, we know not the public opinion; and, seStates for monthly supplies of 15,000,000 of de-condly, because conjecture is endless and usepreciated dollars, on domestic loans. In March, less. Indeed, in great national concerns, the 1780, the proposed taxes and loans failed; emis- public will generally form their opinions by the sions on the fornier plan were at an end, and proceedings of the Legislature, because the lat. Congress were reduced to the necessity of scal- | ter have a more general view of matters, and H. of R.]

Public Credit.

[FEBRUARY 18, 1790.

the best means for forming a judgment. If, on session, as well as at the time of its formation the whole, then, the justice, policy, or practi- and ratification, he could never have supposed cability of the measure was only in question, that gentlemen would apply precedents from ought we to accept it? But when we ar doubt an omnipotent Parliament to a limnited Govern-ful of all, ought we not to reject the proposition? ment, as a rule of action. If there was an an.

Mr. Bland agreed in opinion with the gen- alogy in the two Governments, he had not distleman who had just taken his seat. He was covered it; but if he had discovered it at the apprehensive the idea of discrimination had al-proper time, he should have been as strenuous ready worked mischief. He then explained the in opposing the Constitution as he had been in fallacy and injustice of such a measure, which advocating that measure. He could not, under he thought had been clearly proved to the House, his idea of that instrument, refuse to admit, as and assigned, among other reasons, its imprac- a legislator, the rigid maxims of law and justicability, which, if there were ninety-nine rea- tice, as it regarded the property in dispute, sons for it, that in itself was sufficient to make which the gentleman had spoken so lightly of. him vote against the amendment.

After these observations, he would admit so Holders will come to the Treasury and de- much of the precedent as applied, but no more. mand payment; there their claims must lie until The depreciation of pay allowed the late army proofs can be obtained. The same inconve- is not a case in point. Here there are three nience will arise respecting the interest. Sup. persons, one to be benefited at the expense of anpose a creditor, if the amendment should pass, other; there the soldier had justice done to him was obliged to look for proofs, where must he at the expense of the Government; but before seek them-in the grave? beyond the sea? in the depreciation was allowed, Congress had deAsia? Suppose a creditor was unwilling to termined that their paper had fallen in value comply with this law, you must then pass an- as forty for one; but before the case can be other law to compel him to deposit his security. parallel, Congress must determine that the

The question had not been answered to his certificates are depreciated forty for one; but satisfaction, and he should not have risen, were this would be less unjust, if all the public it not on account of the point of discrimination, creditors were equally affected; by the grato which he had always entertained an aver- dual reduction of the nominal value, the desion, as involving the loss of the most valuable preciation of the Continental money operatand inestimable jewel, public credit.

ed equally. But Congress were governed, If we commit this breach of public faith, it on that memorable occasion, by another prinwould be little better than the tender-laws of ciple than is now contended for; it was poRhode Island. No doubt some of the specula- licy which dictated the allowance to the army tors had deserved punishment, but others are of their depreciation, not general and equal jusinnocent. He observed that he was no specu- tice; if general justice had been attended to, lator, but he held original securities, therefore those who left the army, as well as those who the decision could not affect him. There is continued in service, ought to have had the dehardly a State in the Union that wishes for any preciation of their pay allowed them; but they discrimination. If the State accounts are to be have never yet been allowed the depreciaall reckoned, what a day of reckoning would tion. This demonstrates the principle which that be, to travel back and issue fresh notes; it governed at that time to be policy; they feared would be two final settlements. In short, there without this measure was put in execution, that appeared so much intricacy and difficulty, that the army would disband, and they would never it was utterly impossible and impracticable in be able to collect or keep anoiher together. his opinion.

The Government having, at its own expense, Mr. Lawrence said, it appeared to him that on that occasion, done partial justice, is a prethe gentleman from Virginia (Mr. MADISON) cedent for doing whati' For doing partial jushad taken much pains with the subject, froin tice to one set of men at the expense of another the accurate manner in which he treated it. set; speaking the authoritative language of desOn this occasion he had been a listener often, potism, and trampling the sacred rights of proa speaker seldom, and, of consequence, had perty under foot. weighed it with peculiar attention; but, never- The next precedent adduced is that of the Catheless, it appeared to him that the gentleman nada bills. "If my memory serve me, those bills had erred in principle. This had been suffi- were paid by the French army to individuals in ciently demonstrated by those who had gone Canada; afterwards they were purchased by the before him; be therefore would not notice any English' merchants; but were they, in consething on that point. But, as the honorable gen- quence, a claim upon the English Government? tleman had put the propriety of the business No. They were a claim upon the French Governon precedent, he would notice only those pre- ment. The individuals never could contemcedents; when the cause is committed to pre- plate that it would be proper to involve the cedent for support, great care should be used to nation in a war for compelling the payment of adduce such only as are applicable.

those bills; therefore, it was their wish and He confessed, after the Constitution under agreement at the treaty of peace, to accept of which they deliberated had gone through such what they could get; but this was no violent a full investigation as it had done in the last linterference on the part of Government to take

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