II.

advocating the claims of holders by purchase to payment CHAPTER in full. At the same time, Gerry expressed his willingness to make up to that part of the army which had been 1790. paid in certificates the full amount of their loss by depreciation, which, according to a calculation which he submitted, would not require more than two millions of dollars. Bland favored that plan.

If the public were to be taxed to the full amount of the debt, Lawrence thought the money ought to go to the present holders. Burke took the same side. He thought that at least the officers of the army had been well enough paid already, in honors, if not in money. "In South Carolina, no other class of citizens stood any chance in competition with officers. They were promoted to the stations of governor, of lieutenant governor, of privy counselors; they were to be found presiding in the tribunals of justice, in the Legislature, and on the floor of Congress; and the gratitude of the people followed them even in the private walks and ordinary occupations of life.

He mentioned this as an answer for the people, to clear them from the charge of ingratitude."

"If paper," said Madison, in reply, "can discharge just debts, payable in gold and silver, we can exonerate ourselves not only from those due to the original creditors, but from the claims of the assignees also. So far as paper goes, it is they who already possess that compensation. If honors can discharge the debt, they too have received civil honors. Look round to every state in the Union, and you will see these assignees sharing distinctions equal to those bestowed on the original creditors. But the debt due in gold and silver is not payable in honors, nor appointments, nor paper." He insisted that the objections to the practicability of his scheme, a good deal dwelt upon by several speakers,

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CHAPTER Were not solid. The records of the five great staff departments of the Continental army, and those of the com1790. missioners of loans, would furnish most of the necessary information. Cases in which the certificates had issued

in names other than those of the actual creditors might be adjudicated by a board with full powers for that pur

pose.

Equitable as Madison's proposition might seem to be, it was supported by only thirteen votes to thirty-six against it, including among the negatives all the lawyers and merchants in the House. The few who supported Madison were all planters, and most of them his own colleagues. There were, indeed, very serious diffi culties in the way of carrying such a scheme into execution, but the principal obstacle was of a different character. The holders of the certificates had the great advantage of having in hand the legal evidence of a liquidated debt; and however the claim of the original creditors, subjected to loss by the failure of the government to fulfill its obligations, might, in abstract equity, be equally strong, according to the established usages of law and commerce, and the uniform tenor of prevailing ideas, it was not so regarded. The one was considered a claim on the justice, the other on the benevolence of Congress, and it was insisted that the nation ought to be just before it undertook to be generous. With this disadvantage to begin with, what chance had the mass of poor persons, soldiers and farmers, without organization and unknown to each other, who had sold their certificates at a loss, as compared with the wealthy and watchful body of the present holders, able to bring so many influ ences to bear, and active in doing so?

Madison's motion being rejected, Fitzsimmons's second resolution was carried, as was also the third, which

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affirmed that the interest of the domestic debt ought to CHAPTER be provided for on the same terms with the principal.

Upon the fourth resolution, that respecting the as- 1790. sumption of the state debts, there arose a vehement de- Feb. 22. bate, which grew presently to be very acrimonious.

The amount of the debts with which the individual states had found themselves burdened at the close of the late war, and also the policy since pursued as to the discharge of the interest and principal, had been very various. Massachusetts and South Carolina, notwithstanding a considerable reduction of principal by sales of lands, still owed upward of five millions each. Hitherto Massachusetts had been enabled to pay the interest, though not quite to the full amount, nor very punctually, out of the proceeds of an impost on goods imported and an excise on certain articles of consumption. The impost was lost already by the adoption of the Federal Constitution; and should a federal excise be imposed, as the secretary's report recommended, the state excise would have to be given up, as two taxes of that kind could hardly be collected simultaneously. posed hitherto in almost every thing else, the states of Massachusetts and South Carolina agreed in warmly supporting the assumption of the state debts. Connecticut, whose debt was about two millions, was in favor of the same policy.

Op

The debt of Virginia had been greatly reduced by funding the outstanding state paper money at a thousand for one, and by extensive sales of Kentucky lands. Land warrants, in fact, had been disposed of sufficient to cover that entire district two or three times over. The Virginia debt stood at present at about three millions and a half, upon which the interest had been regu. larly paid by means of a tax on imports. Considering

CHAPTER herself as having done much more than any other state II. to relieve her own embarrassments, Virginia was strong1790. ly opposed to the assumption, as a measure by which she would lose more than she would gain. To this might be added political objections to it, as tending to an augmentation of the influence of the federal government. Maryland, which owed less than a million, was inclined to the same view. Pennsylvania, whose debt was less than two millions, the interest upon which had all been regularly paid, seemed to tend in the same direction, but a part of her members supported the assumption on federal grounds. It was also supported by New York and New Jersey, the one owing considerably more, the other considerably less than a million. Georgia and New Hampshire, whose debts were small, took the opposite side. The debt of Delaware was trifling, but Vining, the able representative of that state, supported the assumption as a federal measure.

The unsettled condition of the accounts between the states and the Union left ample room for presumptions on both sides. It was argued in favor of the assumption that, when the final settlement came to be made, it would turn out that the Union was indebted to the states in just about the amounts which it was now proposed to assume, the debts of the states being a pretty good test of their relative exertions in the common cause. That settlement was now going on by a board constituted by the late Continental Congress, a provision for filling vacancies in it having been made by an act of the former session. These state debts were equally meritorious with those of the Union, and the whole might best be provided for by one common system, thus avoiding any clash in the matter of taxes between the states and the Union, and the heart-burnings and jealousies which might

otherwise arise between state and federal creditors.

Not CHAPTER

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to assume would indeed be highly unjust, since the taxation necessary to meet the interest on the federal debt 1790. would effectually disable the states to provide for their own. Even hitherto the state interest had been but partially met, notwithstanding the resources of duties on imports, and, in some states, of paper money, both of which were now gone.

On the other hand, it was said to be very unjust that states which had regularly paid the interest, and had exerted themselves to reduce the principal of their debts, should be called upon to make up for the deficiencies of their dilatory neighbors. That the state debts afforded any probable test of the balances of account between the states and the Union was denied; indeed, the probability, should the assumption take place, that any such settlement would ever be made, was pointedly called in question. Certain items of the state debts, the cost of the unfortunate Massachusetts expedition to Penobscot, the purchase of a state frigate by South Carolina, the sum allowed by Pennsylvania as an indemnity to the Penn family, and the certificates issued by New York for the benefit of certain original owners of confiscated estates, were pointed out as especially unfit to be assumed by the Union. Comparisons were also made as to the relative merits and sacrifices of the states, the debate at times becoming very warm.

The assumption was supported by Lawrence, Ames, Sedgwick, Sherman, Clymer, Burke, Smith of South Carolina, Fitzsimmons, and Gerry. It was strongly opposed by Stone of Maryland, Livermore, Jackson, and White. Madison proposed that, simultaneously with the assumption, effectual provision should be made for liquidating the accounts between the states and the Union.