If the debt should be placed on adequate funds, its operation on public credit could not be pernicious; in its present precarious condition, there was much more to be apprehended in that respect.
To the objection that it would accumulate in large cities, it was answered it would be a moneyed capital, and would be held by those who chose to place money at interest, but by funding the debt the present possessors would be enabled to part with it at its nominal value, instead of selling it at its present current rate. If it should center in the hands of foreigners, the sooner it was appreciated to its proper standard, the greater quantity of specie would its transfer bring into the United States.
To the injustice of charging those States which had made great exertions for the payment of their debts with the burden properly belonging to those which had not made such exertions, it was answered that every State must be considered as having exerted itself to the utmost of its resources, and that if it could not or would not make provision for creditors to whom the Union was equitably bound, the argument in favor of an assumption was the stronger.
The arguments drawn from local interests were repelled and retorted, and a great degree of irritation was excited on both sides.
After a very animated discussion of several days, the question was taken, and the resolution was carried by a small majority. Soon after this decision, while the subject was pending before the House, the delegates from North Carolina took their seats, and changed the strength of parties. By a majority of two voices, the resolution was recommitted, and, after a long and ardent debate, was negatived by the same majority.
This proposition continued to be supported with a degree of earnestness which its opponents termed pertinacious, but not a single opinion was changed. It was brought forward in the new and less exceptionable form of assuming specific sums from each State. Under this modification of the principle, the extraordinary contributions of particular States during the war, and their exertions since the peace, might be regarded, and the objections to the measure, drawn from the uncertainty of the sum to be assumed, would be removed. But these alterations produced no change of sentiment, and the bill was sent up to the Senate with a provision for those creditors only whose certificates of debt purported to be payable by the Union.
In this state of things the measure is understood to have derived aid from another, which was of a nature strongly to interest particular parts of the Union.
From the month of June, 1783, when Congress was driven from Philadelphia by the mutiny of a part of the Pennsylvania line, the necessity of selecting some place for a permanent residence, in which the government of the Union might exercise sufficient authority to protect itself from violence and insult, had been generally acknowledged. Scarcely any subject had occupied more time, or had more agitated the members of the former Congress than this.
In December, 1784, an ordinance was passed for appointing commissioners to purchase land on the Delaware, in the neighborhood of its falls, and to erect thereon the necessary public buildings for the reception of Congress and the officers of government; but the southern interest had been sufficiently strong to arrest the execution of this ordinance by preventing an appropriation of funds, which required the assent of nine States. Under the existing government, this subject had received the early attention of Congress, and many different situations, from the Delaware to the Potomac inclusive, had been earnestly supported, but a majority of both houses had not concurred in favor of any one place. With as little success, attempts had been made to change the temporary residence of Congress. Although New York was obviously too far to the east, so many conflicting interests were brought into operation whenever the subject was touched, that no motion designating a more central place could succeed. At length, a compact respecting the temporary and permanent seat of government was entered into between the friends of Philadelphia and the Potomac, stipulating that Congress should adjourn to and hold its sessions in Philadelphia for ten years, during which time buildings for the accommodation of the government should be erected at some place on the Potomac, to which the government should remove at the expiration of the term. This compact having united the representatives of Pennsylvania and Delaware with the friends of the Potomac, in favor both of the temporary and permanent residence which had been agreed on between them, a majority was produced in favor of the two situations, and a bill which was brought into the Senate in conformity with this previous arrangement, passed both houses by small majorities. This act was immediately followed by an amendment to the bill then depending before the Senate for funding the debt of the Union. The amendment was similar in principle to that which had been unsuccessfully proposed in the House of Representatives. By its provisions, $21,500,000 of the State debts were assumed in specified proportions, and it was particularly enacted that no certificate should be received from a State creditor which could be "ascertained to have been issued for any purpose other than compensations and expenditures for services or supplies toward the prosecution of the late war and the defense of the United States, or of some part thereof, during the same."
When the question was taken in the House of Representatives on this amendment two members, representing districts on the Potomac, who, in all the previous stages of the business, had voted against the assumption, declared themselves in its favor, and thus the majority was changed. {2}