He further observed, that this contract having descended upon the Government, there was no right in the Legislature to impair the force of it. That the particular Governments are restrained from passing laws impairing the obligations of contracts. That this interference would be a violation of the contract, between the individuals, when the certificate was transferred; and it would not be presumed, the States being prohibited, that the General Government had the power to do it.
He then adverted to the principles of the gentleman, to wrest the obligation of the public to the original holder; and observed, that the same principles were in favor of the present possessor. That public justice required a performance of contracts, when there was no fraud on the part of the holder. That the possessor had been guilty of no fraud, no deception. That the contract between him and the original holder was fair, and that a hazard and risk attended the purchase adequate to the advantage. That nothing short of a revolution in Government could have produced payment. That if there was an imposition, the public occasioned it; and between the original holder and the public, there might be a claim for retribution. That public faith was as sacredly pledged to the bearer, or present possessor, as to the original creditor. That public credit results from fair and upright conduct; that the Government, to support it, must perform its contract. That this was a contract recognized by them, and as such should be discharged. That the condition we have been in made it proper for us to be cautious on this subject; and even at present, people doubted our disposition to establish our credit. That this would give a fatal blow to it, and when we should recover, if ever, was doubtful. That the public opinion was difficult to be ascertained; gentlemen had different modes to determine it. He supposed it was better ascertained by the acts of public bodies than by squibs in the newspapers, or by pamphlets written by individuals. That the uniform conduct of men, deputed by the particular States to represent them, in the late General Government, was the best standard; and their opinion, from the year 1783, was in favor of the present possessor. That the conduct of the particular States was another circumstance; that he did not know of any discrimination made by them, though it had been attempted. That the general opinion of men of property was in favor of it; and that these sources of public opinion were more certain than those he had before mentioned.
He further observed, that although he believed gentlemen supposed no advantage would be derived to the United States from this discrimination, yet much would arise. That part of the army was composed of foreigners, many had left the country, others were dead; all their part would be unclaimed. That certificates were issued to public officers to a great amount, and were paid by them to persons from whom they purchased. The difficulty of making proof of the original creditor would be great; and, from this circumstance, great sums would be gained to the public. That there were persons enough who would have sagacity to discern this; and they would doubt the purity of the public motive, should the gentleman's plan be adopted.
He then adverted to the circumstance of the new creditor receiving paper. That this paper might be subject to another liquidation on the same principle as the present. That it would introduce doubt and distrust of public engagements; and there would be no greater security, although a fund was pledged, than there is at present, for whenever the public pleased, they might destroy the obligation. Arguments were improperly addressed to their feelings; but that however hard it may be for the original creditor, who had parted with his certificates, to contribute to pay the debt, yet it would be equally hard on him who had been injured by Continental money, who had been plundered by the enemy, who had had his property burned by them in the course of the war; and that instances of these kinds were numerous.
He then adverted to the doctrine of the Court of Equity; and urged that this court must be governed by principle. That were the committee this high court, and the United States the original creditor, and the present possessor before them; and if there appeared no fraud on the part of the possessor, the original creditor would have no just claim on him. That between the United States and original creditors, the United States were in fault, and the claim, if good, would be against them.
Mr. Smith (of S. C.) remarked, that it was necessary and proper the House should give the subject the most ample discussion. The question had long agitated the public mind, and the people should know that it had occupied the serious attention of their Representatives, and be made acquainted with the principles of their decision. For his part, having bestowed on it the most attentive consideration, he could assert, that the more he contemplated it, the more he was impressed with a conviction, that the proposition was unjust, impolitic, and impracticable. It consisted of two parts: The one was to take away the property of one person; the other was to give that property to another; and this by a voluntary interposition of the House, by a mere act of power, without the assent of the former, or without even the application of the latter. For it was remarkable, that the original holders, who had alienated their certificates, had not come forward with this demand; and it is presumable, that, had they applied for redress, they would reject any indemnification which was the result of such manifest injustice. To prove that this was taking away the property of a citizen by force, he observed, that the purchaser had, by a fair purchase, acquired a right to the full amount of the sum expressed in the certificate, which it was not within the power of the House to divest him of. No tribunal on earth could lawfully deprive a man of his property fairly obtained. The purchaser bought under the act of Congress, making the securities transferable; and having given the market price, without fraud or imposition, he was, by virtue of such purchase, vested with the complete and absolute ownership of the certificate, as fully as the original holder; and had as much right to demand full payment as the original holder would have had, had the security been still in his hands. Even should the House refuse, by an act of power, to pay him more than half his demand, the other half would still remain against the public; it could not be extinguished. The debt would continue to haunt them; the creditors would loudly clamor for justice, and sooner or later the balance would be paid. Then would they incur all the odium of a violation of private rights, without deriving to the public any advantage whatever. He considered the measure as doing a certain evil, that a possible good might result from it. This was not, in his opinion, the proper mode of doing good. Justice cannot be founded on injustice; and to take money out of the pocket of one man, to put it into that of another, is a precedent which may justify future interferences. This step would lead the House to others: for, if the principle be a just one, then the Government should look into all the transactions and speculations of individuals, in order to correct them, and make retribution to every individual according to his losses. He was persuaded, that the true policy of a Legislative body was, to pursue the broad road of justice, clearly marked out before them; for it was an undeniable truth, that whenever they deviated into by-roads and trackless paths, without any other guide than their own imagination, they would get bewildered in a labyrinth of difficulties, and rejoice to trace back their steps, and regain the plain road. Now, the plain line of conduct is, to do strict justice, such as is enforced in judicial tribunals, between man and man, in a similar case. The debtor is bound to pay the debt to the holder of the security; the contract, between the giver of the bond and the person to whom it was given, is done away the moment the latter assigns it to another person. If A gives a bond to B, who parts with it to C, there is no longer any obligation on the part of A to pay B, but he must pay it to C. A has nothing to do with the private negotiations between B and C, nor to inquire what consideration was given for the security. All that he has to inquire is, whether he really signed it and had value received for it, and the amount of it. He cannot say to the holder, you gave but fifty dollars for this security of one hundred dollars, and I will pay you only fifty; for the law will compel him to pay the hundred. This is a point of justice between man and man. Is there another point of law and justice for the Government? By what rule is the Government to square its conduct, if not by those sacred rules which form the basis of civil society, and are the safeguard of private property?
The gentleman from Virginia has said, that giving the present holders, by alienation, the highest market price, would be doing them ample justice; but did the public mean to refund them the money they had actually advanced? No; they were to receive this ample justice by a bit of paper, nominally for ten shillings; but which this very measure would instantly depreciate to eight, or six shillings. They would have this consolation, that, according to the gentleman's reasoning, they would still have a claim against the Government for the balance. For, if the original holder, by selling his certificate for four shillings, has now a just claim against the Government for the balance of sixteen shillings, which it is asserted he has, of course the alienee, to whom the public should now acknowledge a debt of ten shillings, which he would sell for only six, would hereafter have a just demand against the public for four shillings. The reasoning might be carried further, for it would follow, that whenever the public shall pay in paper which shall depreciate, the seller will have a demand against the Government for the difference.
The constitution itself, he said, was opposed to the measure, for it was an ex post facto law, which was prohibited in express terms. The transfer of public securities was lawful at the time these alienations were made; an attempt, therefore, to punish the transferees is an attempt to make an ex post facto law, by making that now unlawful which was lawful at the time it was done. It alters the nature of the transaction, and annexes the idea of guilt to that which at the moment of commission, was not only perfectly innocent, but was explicitly authorized and encouraged by a public act of Congress. By that act those who had money were invited to purchase of those who held securities, and now we are called upon to punish the purchasers who bought under that invitation. The constitution restrains the States from passing any laws impairing the force of contracts; a fortiori is the Legislature of the Union restrained. What an example to hold up to the Judiciary of the United States! How could they annul a State law, when the State would be able to plead a precedent on the part of Congress? The right of property is a sacred right; no tribunal on earth can deprive a citizen of his property, unless for a fair equivalent, for the public welfare. The purchaser is vested, by the sale, with an absolute right, to the full amount of the security, and it is beyond their authority to divest him of it. They might, indeed, by an act of power, declare that he should be paid only half; but his right to the other moiety would not be extinguished. It had been said, that the original holder still had a claim against the public, because he had received only two shillings and sixpence for services worth twenty shillings. On the same principle, and with more justice, the present holder would still have a claim for ten shillings, because he has the public bond for twenty shillings. No ingenuity can overcome these stubborn principles of law and justice; they are immutable, and must ultimately prevail. The House had been told that if the Government had defrauded the original holders out of their dues, it was fit the public should rectify the fraud. The former Government was not deficient in inclination to do them ample justice; but, from the imbecility of the Confederation, had not the means. In those days of democratic enthusiasm, the people were afraid of an energetic Government: having so recently experienced the severity of the former one, the citizens of these States were cautious in trusting any Government with power; and it is not improbable that some of the original holders, who suffered their embarrassments, from the want of a Government competent to the payment of its debts, would themselves have opposed vesting Congress with powers adequate to this object. Even the present constitution, which is a mild one, met with considerable opposition: had it been rejected, the public securities would have never been paid.
Mr. Ames agreed with the gentleman from Virginia (Mr. Madison) in regard to the validity of the debt. There was propriety in saying the nation is the same, though the Government be changed. The debt is the price of our liberties, and cannot be diminished a farthing, the gentleman from Virginia says; and why? Because the Government, as one of the contracting parties, cannot annul, or vary the bargain without the consent of the other. If the measure proposed by that gentleman corresponds with that sound principle, he should have the pleasure of agreeing with him on the ultimate decision; but if the measure should be found, on a fair discussion, to be subversive of that principle, it would not merit the countenance of the committee.
A claim upon our justice is made, on behalf of the original holders of securities, who have transferred them. Does the plighted faith of the country stand charged to pay the difference between the price their securities sold for in the market and their nominal sum? In order to make the affirmative appear, the worthy gentleman has said, that the paper is the only evidence of a prior contract; and while the paper was sold, the residuary right to the debt still remained in the seller. Supposing this novel doctrine to be true, which cannot be conceded, it will not warrant any conclusion in prejudice of any purchaser of the Loan-office debt; for the paper was given when the loan was made; as no prior debt existed, the paper is the very debt. The gentleman ought, therefore, to confine his motion to the army debt, as his principle seems inapplicable to any other. And even on liquidating the army debt, the certificate extinguished the prior debt; otherwise the public would be twice charged. As, when one man owes another an account, and gives his bond for the balance, the account is no longer of force. By the terms of the certificate, the person transferring has lost his claim against the public. He has freely transferred; for if violence or fraud were practised, the law will afford him redress. In society, as well as in a state of nature, property is changed by the consent of the last occupant. He may dispose of it by gift or at half price, and give a complete title. Nor will the pretence that this transfer was free only in appearance, avail; for the motives which disposed the owner to sell cannot affect the right of the purchaser. Every such creditor risked something; either that the Government would not pay him at all, or not in due season. The risk, computed in free and open market, will be nearly right. It is a kind of insurance against these risks, and the insurers and insured will calculate the rate of insurance better than Government can do it. If there is a new risk of Government interposing, it seems that the purchaser, who may be called the insurer, did not rate his risk high enough. It seems pretty clear, therefore, that there is no claim on the stipulated justice of the country.