Life and Times of Washington, Volume 2 / Revised, Enlarged, and Enriched

by John Frederick Schroeder; Benson John Lossing

From the complex nature of the political system which had been adopted in America, the war was, in a great measure, carried on through the agency of the State governments, and the debts were, in truth, the debts of the Union, for which the States had made themselves responsible. Except the civil list, the whole State expenditure was in the prosecution of the war, and the State taxes had undeniably exceeded the provision for their civil list. The foundation for the several classes of the debt was reviewed in detail, and it was affirmed to be proved from the review, and from the books in the public offices, that, in its origin, a great part of it, even in form, and the whole, in fact, was equitably due from the continent. The States individually possessing all the resources of the nation, became responsible to certain descriptions of the public creditors. But they were the agents of the continent in contracting the debt, and its distribution among them for payment arose from the division of political power which existed under the old confederation. A new arrangement of the system had taken place, and a power over the resources of the nation was conferred on the general government. With the funds the debt also ought to be assumed. This investigation of its origin demonstrated that the assumption was not the creation of a new debt, but the reacknowledgment of liability for an old one, the payment of which had devolved on those members of the system who, at the time, were alone capable of paying it. And thence was inferred not only the justice of the measure, but a complete refutation of the arguments drawn from the constitution. If, in point of fact, the debt was in its origin continental and had been transferred to the States for greater facility of payment, there could be no constitutional objection to restoring its original and real character.

The great powers of war, of taxation, and of borrowing money, which were vested in Congress to pay the debts and provide for the common defense and general welfare of the United States, comprised that in question. There could be no more doubt of their right to charge themselves with the payment of a debt contracted in the past war, than to borrow money for the prosecution of a future war. The impolicy of leaving the public creditors to receive payment from different sources was also strongly pressed, and the jealousy which would exist between the creditors of the Union and of the States was considered as a powerful argument in favor of giving them one common interest. This jealousy, it was feared, might be carried so far as even to create an opposition to the laws of the Union.

If the State should provide for their creditors, the same sum of money must be collected from the people as would be required if the debt should be assumed, and it would probably be collected in a manner more burdensome than if one uniform system should be established. If all should not make such provision, it would be unjust to leave the soldier of one State unpaid, while the services of the man who fought by his side were amply compensated, and, after having assumed the funds, it would dishonor the general government to permit a creditor, for services rendered or property advanced for the continent, to remain unsatisfied, because his claim had been transferred to the State at a time when the State alone possessed the means of payment. By the injured and neglected creditor such an arrangement might justly be considered as a disreputable artifice.

Instead of delaying, it was believed to be a measure which would facilitate the settlement of accounts between the States. Its advocates declared that they did not entertain and never had entertained any wish to procrastinate a settlement. On the contrary it was greatly desired by them. They had themselves brought forward propositions for that purpose, and they invited their adversaries to assist in improving the plan which had been introduced.

The settlement between the States, it was said, either would or would not be made. Should it ever take place, it would remedy any inequalities which might grow out of the assumption. Should it never take place, the justice of the measure became the more apparent. That the burdens in support of a common war, which from various causes had devolved unequally on the States, ought to be apportioned among them, was a truth too clear to be controverted, and this, if the settlement should never be accomplished, could be effected only by the measure now proposed. Indeed, in any event, it would be the only certain, as well as only eligible plan. For how were the debtor States to be compelled to pay the balances which should be found against them?

If the measure was recommended by considerations which rendered its ultimate adoption inevitable, the present was clearly preferable to any future time. It was desirable immediately to quiet the minds of the public creditors by assuring them that justice would be done, to simplify the forms of public debt, and to put an end to that speculation which had been so much reprobated and which could be terminated only by giving the debt a real and permanent value.

That the assumption would impair the just influence of the States was controverted with great strength of argument. The diffusive representation in the State Legislatures, the intimate connection between the representative and his constituents, the influence of the State Legislatures over the members of one branch of the national Legislature, the nature of the powers exercise by the State governments, which perpetually presented them to the people in a point of view calculated to lay hold of the public affections, were guarantees that the States would retain their due weight in the political system and that a debt was not necessary to the solidity or duration of their power.

But the argument, it was said, proved too much. If a debt was now essential to the preservation of State authority it would always be so. It must therefore never be extinguished, but must be perpetuated in order to secure the existence of the State governments. If, for this purpose, it was indispensable that the expenses of the Revolutionary War should be borne by the States, it would not be less indispensable that the expenses of future wars should be borne in the same manner. Either the argument was unfounded or the constitution was wrong, and the powers of the sword and the purse ought not to have been conferred on the government of the Union. Whatever speculative opinions might be entertained on this point, they were to administer the government according to the principles of the constitution as it was framed. But, it was added, if so much power followed the assumption as the objection implies, is it not time to ask—is it safe to forbear assuming? If the power is so dangerous it will be so when exercised by the States. If assuming tends to consolidation, is the reverse, tending to disunion, a less weighty objection? If it is answered that the non-assumption will not necessarily tend to disunion, neither, it may be replied, does the assumption necessarily tend to consolidation.

It was not admitted that the assumption would tend to perpetuate the debt. It could not be presumed that the general government would be less willing than the local governments to discharge it; nor could it be presumed that the means were less attainable by the former than the latter.

It was not contended that a public debt was a public blessing. Whether a debt was to be preferred to no debt was not the question. The debt was already contracted, and the question so far as policy might be consulted, was, whether it was more for the public advantage to give it such a form as would render it applicable to the purposes of a circulating medium, or to leave it a mere subject of speculation, incapable of being employed to any useful purpose. The debt was admitted to be an evil, but it was an evil from which, if wisely modified, some benefit might be extracted, and which, in its present state, could have only a mischievous operation.