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their speeches added nothing to the argument. They CHAPTER seemed, indeed, to be very much under the influence of envy at the great profits about to be made-profits in 1790. which the planters would have little share, but which would chiefly redound to merchants and money-lenders. They drew pathetic and rather highly-colored pictures of war-worn veterans seduced by the artful persuasions of cunning speculators to sell their certificates for a great deal less than the value. In fact, the whole business of the purchase of certificates was denounced as having been little better than a fraud.

This drove some speakers on the other side into questioning whether the soldiers, after all, had such claims on the government as had been represented. Taking their enormous bounties into consideration, they had been better paid than any other soldiers. The public creditors, who had transferred their certificates, had asked for no such relief as this motion proposed, nor could they accept it with honor. They had voluntarily transferred their whole claim for a valuable consideration, and any thing which might now be paid to them under color of discharging that claim they would be bound in honor and justice to pay over to their assignees.

To all the denunciations, some of them rather warm, leveled against his motion, as if it were a proposal to rob the present holders of the certificates for the benefit of the original creditors, Madison replied with great calmness and dignity. He admitted that, according to the strict rules of law, the present holders were alone entitled to payment, and that the original creditors, in parting with their certificates, had lost all legal claim on the government; but their claim in equity still remained, and a great political question like this was not to be settled on mere grounds of technical jurisprudence. The

CHAPTER great object in paying at all was avowed to be the politII. ical object of establishing public credit. In strict justice, 1790. the present holders might be entitled to the whole face

of the certificates, and the original creditors to an additional indemnity out of the public treasury equal to the difference between the face of the certificates and the sums for which they had been obliged to sell. But the nation was able, or, what in a government like ours amounted to the same thing, was willing to pay no more in the whole than a sum equal to the original debt, with the interest upon it. How should that sum be distributed? Should all of it go to the mere technical creditor, whose sole merit consisted in having confidence enough in the government to speculate in its securities, or should those also come in for a share by whom services had act ually been rendered and supplies actually furnished, but whom the necessities of government and their own had compelled to accept a very partial equivalent? Holders of certificates by purchase had unquestionably a certain merit and a certain claim; but ought they not to be satisfied with being paid the utmost amount which, prior to the secretary's report, they could have expected, and which they would then have very gladly received? Those who, for services performed and advances made, had realized but a very inadequate recompense, had also a merit and a claim. Would not the public credit be better established by recognizing both these claims, and meeting both to the extent of the public means, rather than by paying one in full to the total exclusion of the other? That method would establish a credit only with capitalists; the other would establish a credit not less essential with those from whom was to be expected the actual rendition of services.

Gerry, Ames, and Lawrence replied at great length,

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 difficulties 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 influences to bear, and active in doing so?

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

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

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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. Opposed 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.

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 regularly paid by means of a tax on imports. Considering