Mr. Scott.—Some time was spent yesterday in the consideration of this subject; in my opinion, that time was not ill spent, nor would two or three days more be ill spent in discussing the question, for it involves in it the whole doctrine of discrimination and liquidation. If these two great points are once settled, the way will be clear and open before us to proceed to the discussion of the report: for if the principles of the report are good, I believe the plan itself is good. I believe, upon the principles which it holds forth, that it is wisely and judiciously drawn out, and does great honor to the officer who framed it. But it is incumbent on us to examine its principles before we adopt it; if they do not consist with equity and justice among the several inhabitants of the Union, they must be rejected. Now I doubt whether they consist with that equity and justice; I think there are others on this floor who have their doubts also. I wish, therefore, that we should coolly examine those principles, consult our judgment and understanding, and when we have collected all the information we can get from each other, we may determine; and when we have determined this, and the two grand points I have mentioned, our business will be easy.
In support of the principles held out in the report, it is said that a solemn contract is entered into that cannot be violated; that the debt is ascertained and cannot be extinguished, but by the absolute payment of what it acknowledged to be due. Now, I doubt whether the necessary concomitants of a contract to the amount mentioned on the face of the paper, really accompanies the public securities. Let us revert back to the time that this contract was entered into. At the close of the war, at the commencement of issuing final settlements, there was a demand against the United States for real and essential services rendered; the claimants came forward, and asked something for their demand. Congress having no money to give them, offered something; what? A certificate to a certain nominal amount; nay more, of a certain known value; the nominal amount was twenty shillings, the certain known value was two and sixpence. Did the soldier accept of this offer? Yes. On what principle did he accept it? He knew it was putting the capstone on the building which he had erected by his labor and cemented with his blood. I have done you services, said he, to the amount of twenty shillings, but you are poor and unable to pay me; I will accept now of your two and sixpence, and give you a discharge. Thus, the soldier who had, through blood and slaughter, established the liberties of his country, crowned the whole by the sacrifice of pecuniary emoluments. His consent was given to the contract, and he received two and sixpence in the pound. Now, if there is any other contract existing like this, I cannot see it. The soldier never received it, nor the officer who handed it out, never believed it to be worth more than two and sixpence in the pound. It was like compounding a debt by the consent of the creditor, and there an equal liquidation ought to take place. If this reasoning is right, we know the value at once of our paper currency; if it is not right, I would wish to know upon what principle of rationality, a rate can be established for the value of our certificates.
Mr. Boudinot.—I am convinced that the principles laid down by the gentleman from Pennsylvania, if true, ought to effect the final determination of this question; and if I was satisfied with them, I should clearly vote with him. If I was convinced that the certificates, at the time they were given out, were worth no more than 2s. 6d. in the pound, and that the creditors received them at that price, in full discharge of their demands, I should be very loath to raise them to so great a value; I would treat them precisely the same as Continental money. I should think that the public did complete justice by complying with the terms of their contract; while this is a matter of dispute we can never agree in our determination. But if I can show that this is not the case, that he has not looked into the origin of this debt, so as to be well ascertained of the fact, I hope he will give up his opinion, and join with me in the conclusion.
The debt of the United States is of four kinds; first, paper money; second, money lent; third, the pay to the army, including commutation, and the allowance for depreciation; and fourth, certificates, or evidences of the debts due from the United States to individuals, for supplies furnished, or services rendered at different periods of the last war. As to the bills of credit, I mentioned yesterday that they stand upon a different footing from the rest; because it was one of the parties who ascertained their depreciation, contrary to the opinion of the other, who had a desire of keeping them up to their nominal value. The money loaned to the United States, is a debt which we are bound to pay, on every principle of honor and justice; nor can it be said that the certificate given to the person who loaned the money, was given as a payment in discharge of the debt. With respect to the army, including commutation, I shall beg leave to read two or three resolutions of Congress, to show that Congress had a different idea of the certificates they gave to the officers and soldiers, in evidence of the balance of their account, which is still due. When they were first issued to the soldiers, Congress guarded them from being transferable; but as the soldiers could get nothing for them in that form, upon representation, Congress passed another resolution, by which they were made transferable, in order that the soldier might avail himself of the acknowledgment of Congress in his favor; (the resolutions referred to were in May, 1783, April, 1784, and June, 1784.) This recurrence to the resolutions of Congress, under which the evidences of the debt were issued, sufficiently explodes a supposition, that they were understood to be worth no more than 2s. 6d. in the pound, at the time they were issued and received. From the personal knowledge I have of the transactions of that time, I can venture to say, that no idea of payment was ever entertained. They were, in fact, and were so considered, evidences of the liquidated and specific sums due to the creditors of the United States. The step which Congress took for the benefit of the army, in making their certificates transferable, so far from accommodating them, would have proved a real injury. If the assignee had supposed himself to stand in a less eligible situation than the assignor, he never would have been induced to have given him the price which he did. If the soldier had received a certificate of twenty shillings, as only 2s. 6d. nobody would have inclined to have given him 2s. 6d. for it, because he could never expect to obtain a repayment of a greater sum, even in such money as Congress should find convenient; upon every principle of assignation of debts or contracts, such an idea ought to be reprobated.
Mr. Sedgwick.—I will express my idea on the point which the gentleman has made an inquiry respecting, in a few words. I said, that I conceived a delay of this business would endanger the peace of the Union by diminishing the energy of the Government, without which this constitution would be of no value. These are considerations which must appear weighty and important, if justly considered by the committee. A great and respectable body of our citizens are creditors of the United States. There are a variety of opinions prevailing respecting their claims, with respect to funding, discrimination, and interest. This diversity of opinion may probably irritate and produce heats and animosities, which may terminate in forming factions among the people. The State debts may produce a difference between the General and particular Governments. If the matter is taken up as the business of a party, one may be pitted against the other, until, in the end, they disturb the public tranquillity, or sacrifice the general welfare to opposition and party spirit. Besides this, the reputation, the credit of the Government is at stake; the public expectation is alive to all the measures of Government at the present moment. They expect that justice and equity will be administered as far as the abilities of our country extend; it lies with the Legislature to realize this expectation. If Congress pursue the present inquiry, and come to a determination without delay, the public sentiment will be brought to a point, and a general acquiescence may be expected; but if it is postponed to a future session, such may be the effect of faction and disappointment during the recess, that the probability is, that no one party will comprise a sufficient number to comprehend the majority of the whole.
Mr. Jackson.—Do not gentlemen think there is some danger on the other side? Will there not be ground of uneasiness when the soldier and the meritorious citizen are called upon to pay the speculator more than ten times the amount they ever received from him for their securities? I believe, Mr. Chairman, there is more just reason of alarm on this than on the other side of the question.
A gentleman from Pennsylvania (Mr. Hartley) has noticed my arguments of yesterday, respecting a funding system. I beg leave to make a few observations in answer to him. He has said, that a funded debt is of great advantage to a nation, and has adduced the situation of England as a proof, founded on experience. But England is a solitary example, and the force of that example dwindles into nothing, if we examine into the real cause of her seeming affluence. She does not owe much of respectability to her national debt; she owes the most of it, at present, to the troubles of other countries, and when those have subsided, the bubble of her credit may blow up, as did the South Sea project, for Government stock can never be considered as cash. The stock employed in agriculture, commerce, and manufactures may, by great prospects of advantage, be diverted into the hands of brokers, for the purpose of speculating further in the funds; but no real addition will be made to the means of productive industry, nor was any thing of this kind contemplated at the time funding was first introduced into England. We learn from Blackstone, that the reason for establishing a national debt, was in order to support a system of foreign politics, and to establish the new succession at the revolution; because it was deemed expedient to create a new interest, called the moneyed interest, in favor of the Prince of Orange, in opposition to the landed interest, which was supposed to be generally in favor of the king, who had abdicated the throne. I hope there is no such reason existing here; our Government, I trust, is firmly established without the assistance of stock-jobbers. We ought to reign universally in the hearts of our fellow-citizens, on account of the salutary tendency of our measures to promote the general welfare, and not depend upon the support of a party, who have no other cause to esteem us but because we realize their golden dreams of unlooked-for success.
Mr. Smith, (of South Carolina.)—If we were about to contract debts for the purpose of funding them, the observations of the gentleman from Georgia would apply; but we have already contracted them, and the only question is, shall we fund or pay? We must do one or the other. With respect to the remark of Blackstone, he is writing of an enormous public debt when he mentions it as injurious, because he expressly says, that "a certain proportion of debt seems to be highly useful to a trading people; but what proportion that is it is not for me to determine." To be sure he adds afterwards, "that the present magnitude of our national encumbrances very far exceeds all calculations of commercial benefit, and is productive of the greatest inconveniences." And here I agree with him: but our public debt is not of such enormous magnitude as to counterbalance the good effects of throwing out such a quantity of a stable paper as will answer all the purposes of a circulating medium.
Mr. Tucker.—I very much applaud the gentleman who made the motion now before the committee, because he has boldly come forward to combat an opinion so generally received in this place, that many thought it could not be controverted by any man possessed of common honesty; and because I am persuaded, that he has done it with an honorable intention of substituting real and substantial justice, in the place of that which he deems to be only the name and the shadow.
Although it is probable I differ with the gentleman who moved the amendment, I am inclined to think a discrimination of some kind is equitable and necessary. I believe it may be fairly said, that there are three classes of domestic creditors. The first, those who hold the Continental bills of credit, which have been long out of circulation. Second, those who hold certificates that were given for services or supplies, in their own names. And, third, those who hold certificates by purchase. I would wish to consider the obligation to each of these three classes, and whether, in equity, some kind of discrimination may not be made. On a strict and impartial examination, I am inclined to believe they will not appear to be the same. I will now turn to the examination of the first; namely, the holders of the Continental bills of credit. The Secretary of the Treasury has reported in favor of some degree of provision being made for them. But, sir, what is the situation of the people who hold these bills? If I recollect rightly, the face of the bills declares, that the bearer shall be entitled to receive so many Spanish milled dollars as is therein expressed. When these bills were issued, their real value was equal to their nominal value; no person refused, or wished to refuse, them as such; but, in a short time, too large a quantity were issued, and they began to depreciate. Congress then recommended to the several States to pass tender-laws for the support of their credit. This was done by all the States; and they continued, in some of them, to pass as specie, under those laws, when they were depreciated twenty, thirty, and forty for one. Those people, who received them in this state, suffered a very great loss by an act of the Government, and many were ruined by the measure. When these bills had thus depreciated, Congress passed a resolution, calling them in at forty for one. This ordinance of Congress immediately reduced the claims of the first class of creditors by an arbitrary act of power. I do not pretend to say that the measure was unnecessary, but it was rigorous to deprive them of 39-40ths of their claims. Perhaps we cannot return to all the transactions of that time, because it would involve the Government in a thousand difficulties, and produce, perhaps, greater evils than it would remedy. But there remains a claim upon our justice to pay the holders one dollar, at least, for forty. By the act of Congress, which I alluded to before, these bills were thrown out of circulation, and have ever since lain in the hands of individuals. Now, it appears to me, that, in equity, we ought to make all the reparation in our power. Surely, then, we ought to allow interest on the principal from the time the bills were scaled, and forced out of circulation. These creditors, I take it, have a strong claim upon us; because the Government has materially injured them, and the least satisfaction we can give them, is to put this part of the debt on the best footing we can; if we cannot do complete justice, let us approximate towards it as far as it is in our power. The second class of our creditors have obligations that are strong. It has been said, and generally passed current as an incontrovertible opinion, that those who transferred their certificates have conferred to the purchaser every claim they had upon the public. I mean, sir, to deny this assertion. There is a claim which they could not transfer, that is, a claim in equity;, they were entitled to the principal sum when they presented their accounts to the United States, and we ought, in justice, to have paid it at that time; but, perhaps, from our inability to do this, we were obliged to force on them a certificate of the balance, with a promise to pay them an annual interest thereon; but a promise to pay the interest does not exonerate us from paying the principal, as soon as we have it in our power. Now, this is a claim which the original creditor, who parted with the evidence of his debt, did not transfer to the person to whom he sold it. The United States are under no contract with the purchaser who bought a loaned debt, to pay him any thing more than what the paper specifies, that is, to pay him the interest from year to year, but not the principal, until we find it convenient.