H. OF R.]

Public Credit.

[APRIL 20, 1790.

This motion being objected to, as informal, it subsided, and the House went into a Committee of the whole.

to a provision for the support of the public credit. The motion being seconded, occasioned a debate. Some gentlemen wished the committee to be discharged from further proceeding The motion for striking out the clause reon the report, till a plan of accommodation specting the State debts in the proposition for should be agreed to, in respect to the assump-effecting a new modification of the domestic tion of the State debts. The House were warm- debt, was carried in the affirmative. ly agitated on this subject for a considerable The proposition for opening a loan on the first length of time. Several members were called plan was then read; when Mr. BOUDINOT movto order, and a variety of motions respecting ed that the words, order were made. At length the yeas and nays were called for, and taken, and were as follows: YEAS. Messrs. Ashe, Baldwin, Brown, Carroll, Clymer, Coles, Contee, Fitzsimons, Floyd, Gale, Griffin, Hartley, Hathorn, Heister, Jackson, Lawrence, Lee, Madison, jun. Matthews, Moore, Muhlenberg, Page, Parker, Rensselaer, Scott, Seney, Sinnickson, Smith, of Maryland, Sumpter, Tucker, White, Williamson, and Wynkoop.-33.

NAYS.--Messrs. Ames, Benson, Bland, Bloodworth, Boudinot, Burke, Foster, Gerry, Gilman, Goodhue, Grout, Huntington, Leonard, Livermore, Partridge, Sherman, Sylvester, Smith of S. C., Sturges, Thatcher, Trumbull, Vining, Wadsworth.--23.

The House accordingly resolved into a Committee of the whole on this subject, Mr. LIVERMORE in the chair.

The proposition for effecting a modification of the public debt being read, Mr. SENEY moved to strike out the clause which relates to the debts of the particular States. This motion was seconded by Mr. PARKER. Messrs. SHERMAN, GERRY, AMES, and BLAND, spoke against the motion. Messrs. WHITE and SENEY in its support; but the committee rose without coming to a decision.

The order of the day being called for on the report of the Secretary of the Treasury, Mr. FITZSIMONS said, he wished a suspension of the motion while he read a proposition which he meant to offer for the consideration of the House. It was in substance as follows, viz:

That a Committee be appointed to devise a plan for the assumption of debts, payable by the respective States, and a mode of paying the interest thereon; also to provide for the speedy and effectual settlement of accounts between the United States and individual States.

To receive the other third in lands in the Western Territory, at the rate of 20 cents per acre,' should be struck out; and proposed a substitute similar to that which he offered in the former discussion of this subject.

This motion occasioned a debate which lasted till 3 o'clock; and the vote being taken, the motion was negatived. The Committee ther rose, and the House adjourned till Monday.

MONDAY, April 19.

JOHN STEELE, another member from North Carolina, appeared and took his seat.

The report of the Secretary of the Treasury on the memorial of the Baron Steuben, was read a second time. This report was lengthy; the reading and discussion employed the attention of the House this day. The result was the That a Committee be appointed to report a adoption of a motion introduced by Mr. GERRY, bill, or resolutions, in conformity to the report of the Secretary of the Treasury." The Committee appointed consisted of Messrs. Gerry, WADSWORTH, VINING, LAWRENCE, and SMITH, of South Carolina.

TUESDAY, April 20.

PUBLIC CREDIT.

A Committee consisting of Mr. FITZSIMONS, Mr. WILLIAMSON, Mr. SMITH, of Maryland, Mr. SCHUREMAN, and Mr. STURGES, was appointed to ascertain what further measures are necessary to be adopted to effect a speedy settlement of accounts between the United States and individual States, and to report to the House.

The House then again resolved itself into a Committee of the whole on the report of the Secretary of the Treasury, Mr. LIVERMORE in the Chair.

The proposition to fund two-thirds of the debt other third in lands, was read. at 6 per cent. per annum, and to receive the

mittee were on the ground of non-assumption, Mr. GERRY, after premising, that as the Comthey could not with propriety, in his opinion, engage to pay six, five, or even four per cent. on two-thirds of the debt, moved that six per cent. be struck out, in order to admit a less rate of interest. This motion was supported by Mr. SMITH, of South Carolina, and opposed by Mr. JACKSON, Mr. FITZSIMONS, Mr. MADISON, and Mr. WHITE. The question being taken, the motion was lost, and the proposition agreed to.

To have the whole sum funded at a yearly interest of 4 per cent. irredeemable by any payment exceeding five dollars per annum on account both of prin- scribe to the amount of the debt of such State to be cipal and interest; and to receive as a compensation assumed as aforesaid, such State shall receive interest for the reduction of interest, fifteen dollars and eigh-mainder of said sum, until a final settlement of its acat the rate of four per cent. per annum, on the rety cents, funded at the like interest and rate of redemption.,

H. OF R.]

PUBLIC CREDIT.

Public Credit.

The House again went into a Committee of the whole on the Report of the Secretary of the Treasury, Mr. LIVERMORE in the chair.

The resolutions were read; when Mr. MADISON Said, it is not without much reluctance that I trouble the committee with any observations on the subject which has been so long under discussion, and may be thought to be entirely exhausted. I must refer for my apology to the uncommon perseverance with which the advocates for an assumption adhere to their object, notwithstanding the difficulties which oppose it. On the supposition that the measure in question were ever so eligible, if it could be so modified as to be acceptable to the general sense of the Government, and of its constituents at large, every member ought, I think, to be struck with the impropriety of pressing a matter of such peculiar importance and delicacy, by a bare majority.

The proposition now under debate, is liable to all the objections to the former one, as well as to the many others that have been stated against it. From the explanations given by the gentleman from Connecticut, it is evident that this proposition may, in the result, assume the shape of the original one. It may therefore be fairly combated by all those arguments that were brought either against the original proposition, or against the very objectionable manner in which the blanks are proposed to be filled up.

[APRIL 22, 1790.

United States, must they not be debts of the United States also when in the Treasuries of the different States?

Will gentlemen say, that what are called the State debts, ought to be viewed in that light when in the hands of citizens, and that this quality forsakes them the moment they are received into a State Treasury? If they wish to preserve consistency in their reasoning, they must say, either that the debts are dissimilar in the hands of private citizens, or that they are similar in the hands of States.

The debts of the particular States cannot, in any point of view, be considered as actual debts of the United States; and the United States are not bound, by any past requisition, or any resolutions now existing, to assume them, till the accounts are settled and the balances ascertained. We have been told, sir, not only that the assumption of the State debts by the United States, is a matter of right on the part of the States, and a matter of obligation on the part of the United States, but likewise that it is equitable; nay, that it is a matter of necessity.

It has been said, that the United States are invested with the resources of the particular States, and that therefore they are bound to provide for the debts of those States. I think I may safely rest the issue of this question on a question of fact, Whether the States most urgent in this business are incapacitated from providing for their debts by the establishment of I am not insensible that an assumption of the the present Constitution? If gentlemen assert State debts is, under certain aspects, a measure that to be the case, I think it is incumbent upon not unworthy of a favorable attention. If it them then to prove, either that the resources had not, at least, plausible recommendations, I which they have given up would exceed their do not think it could have obtained so respectable quota of the Federal requisitions, or that the a patronage here. I am sure, it would not have use of these resources by the General Governoriginated in the quarter which proposed it. ment will throw a disproportioned burthen upon But, sir, it is a question that must be considered that particular part of the community. Let us and reconsidered, in all its various points of consider, sir, what is the ratio in which the view, and the more it has already been investi-States, in their individual capacity, ought to gated, the more objections have multiplied, and bear the debts of the United States, and what the more solid they have appeared. The arguis the ratio in which they will contribute under ments used in favor of the measure have been the taxes that it is proposed to levy. The only supposed weighty, but, sir, I consider them as evidence by which we can guide ourselves in unsupported. It has been contended, that the this inquiry, is a statement from the several State debts are in their nature the debts of the custom-houses. I believe, indeed, that such a United States; that they were only from differ- statement may not be conclusive. I think it is ent offices, and have borne a different denomi-imperfect; at the same time it is the best guide nation, but, that in justice, they are the debts of the United States, and that the individual creditors can of right claim payment of the same from the General Government.

in our reach, and probably it will be sufficient to illustrate the present argument. The State of New Hampshire, according to this statement, will contribute about one hundredth part I deny the principle, sir, and I think it is dis-of what will be contributed by the whole. Her proved by the arguments of the gentlemen them-ratio of contribution, according to her represenselves. If the debts of the particular States be tation, would be nearly about one-twentieth. nothing more than the debts of the United States Here, then, in fact, is a saving of four-fifths to under another denomination, and if we are bound that State. The State may then take this savto provide for them precisely as for the debts of ing, and apply it to the purpose of discharging the United States, let gentlemen consider whe- her domestic debt; she is relieved in that prother they are not bound to view them in this portion, and, therefore, in that proportion she is light wherever they may be found. If they are more able to provide for her State debt under the debts of the United States in the hands of indi- new Constitution than under the old one. vidual citizens, for the same reason that the other debts in private hands are debts of the

The State of Connecticut will contribute about one thirty-eighth; her proper quota would

APRIL 22, 1790.]

Public Credit.

[H. or R.

them, which cannot be expected to remain in the country; and in proportion as you increase the debt of the United States, you will increase this evil.

be about one-thirteenth. Here, then, is a sav-back to the expectations of the people, I do not ing of two-thirds to the State of Connecticut; think that there is a single indication that this and in that proportion is her situation better measure was ever thought of by our constitu under the new Constitution than the old. Tak-ents. Sir, I may safely say, it was never exing the States eastward of New York altoge-pected by the generality of them. ther, that the gentlemen say are rendered inca- It has been said, too, that policy recommends ' pable of bearing the burthen of the State debts, the measure. It has been repeated, that if the by the adoption of the new Constitution; I say, assumption does not take place, no part of the take the whole together, and they will contri- revenues drawn from the Union at large will bute about a sixth only; whereas they would return to the distant parts of it. Sir, I thought have had to contribute, a fourth, if this Consti- this argument had been set aside sometime tution had not been established, and they had since. The very reverse will happen. The paid their part of the debt of the United States. State debts have begun already to travel toIn my apprehension, then, sir, as the payment wards the central parts of the Union, and to of the State debts cannot be claimed as a mat- such an amount as to make it probable, that if ter of right, neither can such payment be called they are provided for by us, nearly the whole for on the principles of equity, or what is most will follow. Should this be the case, I believe of all urged, necessity. But we are told, that such disadvantages will ensue as will prove the policy is also in favor of the measure. A gen- measure very impolitic. In proportion as the tleman from Massachusetts has said, that the whole money contributed in the way of taxes people of Massachusetts never would submit to shall center near the Government, or in a para rejection of the measure; that it will create a ticular part of the Union, you increase the evil spirit of opposition to the Government; in short, of discordant interests and local jealousies, that it will endanger the Union itself. I con- which is already too much felt. But, perhaps, fess, that these are consequences that would be this is not the worst consequence to be appredreadful to me, if I could suppose they would hended. I conceive that a very great part of really take place, and that evils of greater mag- the proper debt of the United States will go nitude would not ensue from an adoption of the into the hands of foreigners, and that we shall measure. It is my opinion, sir, that if the refu-be heavily burdened in paying an interest to sal to assume the State debts would produce dangerous consequences to the Union, from the discontents that it is apprehended will grow out of the measure, much more have we to fear from an assumption, particularly if hazarded by a I am of opinion also, that the measure is not small majority. Sir, if we could ascertain the politic, because, if the public debt is a public opinions of our constituents, individually, I be- evil, an assumption of the State debts will enorlieve we should find four fifths of the citizens of mously increase, and perhaps, perpetuate it. It the United States against the assumption. I be- is my idea, sir, that the United States and the lieve we should find more. I believe I speak several States could discharge a debt of eighty within bounds when I say, that those who would millions, with greater ease, and in less time, be for an assumption would not amount to one- than the United States alone could do it. I fifth. This is, indeed, probable conjecture only. found my opinion on this consideration, that But on the other hand, let me ask, what evi- after the United States shall have resorted to dence have we that there will be any great dis-every means of taxation within their power, appointment or discontents from a non-assump- there will still remain resources from which tion? The Legislature of the State of New moneys may be raised by the States. Nay, I Hampshire have lately been in session; have will go further, and illustrate the remark by they asked for this assumption? No; on the adding, that after a State shall have extended contrary, though they have not instructed their its power of taxation to every object falling unDelegates to vote against it, it appears that it der general laws, there would still remain rewas thought of, and that the bulk of the mem- sources from which further taxes might be drawn bers disapproved of it. The Legislature of within subdivisions of it, by the subordinate auMassachusetts have been in session; they were thorities of the State. But, sir, when we conapprized that this matter was under considera-sider, that in some parts of the Union there is tion, and yet there has been no declaration from them, as far as I know, that can induce us to believe they wish for it; on the contrary, it would appear, from the measures they have taken to provide for the payment of their State debt, that they had proceeded on a supposition that an assumption would not take place. With respect to several other States, their Legisla- It has been asserted that it would be politic tures have also been in session, and none of to assume the State debts, because it would add them, except South Carolina, have made any strength to the National Government. There declaration on the subject. If we are to dis-is no man more anxious for the success of the regard that species of evidence, and to look Government than I am, and no one who will

an unconquerable aversion to direct taxes, at least if laid by the General Government; that in other parts an equal aversion to excises prevails; how will the United States, so circumscribed as to the field of taxation, be able to draw forth such resources as are contemplated by the advocates of an assumption?

join more heartily in curing its defects; but I wish these defects to be remedied by additional constitutional powers, if they should be found necessary. This is the only proper, effectual, and permanent remedy.

[APRIL 22, 1790.

assumed. Much, indeed, has been said of the distresses and exertions of Massachusetts; but if we are to be governed by inquiries of this sort, we must extend them to every part of the Union, and we shall then find that an assumption will Several gentlemen, sir, have gone into another give as much dissatisfaction and work as much field of argument in favor of this measure. It injustice to a majority of the States, as a nonhas been said, that the Constitution itself re- assumption may disappoint the citizens of Masquires the assumption. One of my colleagues sachusetts. I do not wish to go into local inhas asked a very proper question-If, as we quiries; but the present subject seems, in its have been told, the assumption originated in nature, to make them in some degree unavoidthe Convention, why were not words inserted able. The conduct of gentlemen on the other that would have incorporated and made the side, at least, renders the task on this indisState debts part of the debts of the United pensable. What would be the operation of the States? Sir, if there was a majority who dis- measure with respect to Virginia? It will not approved of the measure, certainly no argument be denied, that Virginia sacrificed as much durcan be drawn from this source; if there was a ing the war, in one shape or other, and contrimajority who approved of it, but thought it in-buted as much to the common defence of the expedient to make it a part of the Constitution, States, as any among them, certainly as much they must have been restrained by a fear that as Massachusetts. These are facts that can in it might produce dissensions and render the suc- time be proved. Since the peace, that State cess of their plan doubtful. I do recollect that has made great exertions to comply with the such a measure was proposed; and, if my memo- requisitions of Congress. I might say, sir, that ry does not deceive me, the very gentleman who she was almost unequalled in her exertions. now appeals to the Constitution in support of Her specie payments into the Federal Treasury his argument, disrelished the measure at that since the peace, exceed six hundred thousand time, and assigned for a reason, that it would dollars, whereas those of Massachusetts are administer relief perhaps exactly in proportion only between two and three hundred thousand as the States had been deficient in making ex- dollars. In indents Massachusetts has, indeed, ertions. It has been also remarked, that the paid most, but by no means in such proportion Constitution having been established for obtain-as to balance the difference in the specie paying perfect justice, it cannot be carried into effect, unless full justice is done on this subject, or, in other words, unless the State debts are assumed. Sir, if we are to take these words in their full extent, we must not stop merely with securing justice to the creditors of the Government, we should also endeavor to secure justice to every private creditor whatever. The gentleman says, that, by the Constitution, all debts that existed against the United States at the time of the adoption of the Constitution are If, during the war, she has made as great exto be as valid now as they were before its adop-ertions, and has suffered as much as any of the tion. States; if she has, since the peace, paid her full proportion of the supplies to the Federal Treasury, at the same time exerting herself to the utmost to discharge her State debt, and if, finally, she will probably be found to be in advance to the Union, and would, therefore, if justice could at once be done, be now entitled to a reimbursement-what must be said by the citizens of that State, if, instead of a reimbursement, they are called upon to make further advances? Sir, I may add here, that their contributions to the Federal Treasury, under the proposed system of revenue, will exceed the ratio by which they would contribute, by taxes laid in proportion to their representation. I do not wish to extend this investigation any further than has been already done; but were I to do it, the evidence would be more striking, that the payments from those parts of the Union that would receive least benefit from the assumption, would be greater than from those that would receive the immediate benefit of it.

What was the situation of the State debts before the adoption of the Constitution? Was it understood that they were a part of the debt of the United States, any further than there might be found a balance on a final settlement? Was it ever supposed that they were to be thrown into one common mass, and that the States should be called on collectively to provide for them? What would have been thought of such a proposition? Would it have been considered as consistent with equity? Would it have been thought constitutional? I am persuaded, if such a proposition had been made in the old Congress, it never would have found a second; and for this reason, that the debts of the particular States were never considered as the debts of the United States. In whatever light we view the question, it appears to me, that the arguments urged in support of it, are themselves unsupportable.

Much has been said of the situation of particular States, in case these debts should not be

ments. The exertions of Virginia to discharge the debt she involved herself in by the war, have also been very great; she is not behind any of the States, she is before most of them; there can be no doubt but that she has certainly discharged more of her debts than Massachusetts, and as little doubt, in the opinion of the best informed, that whenever a final settlement shall take place, that State will be found a creditor to the United States.

One of my colleagues seems to be of opinion,