be provided, were calculated to produce only four per cent. on the entire debt, the dividend, for the present, was not to exceed that rate of interest.

To enable the treasury to support this increased demand upon it, an augmentation of the duties on imported wines, spirits, tea, and coffee, was proposed, and a duty on home made spirits was also recommended.

This celebrated report, which has been alike the fruitful theme of extravagant praise and bitter censure, merits the more attention, because the first regular and systematic opposition to the principles on which the affairs of the union were administered, originated in the measures which were founded on it.

On the 28th of January, this subject was taken up; and, after some animadversions on the speculations in the public debt to which the report, it was said, had already given birth, the business was postponed until the eighth of February, when it was again brought forward.

Several resolutions affirmative of the principles contained in the report, were moved by Mr. Fitzsimmons. To the first, which respected a provision for the foreign debt, the house agreed without a dissenting voice. The second, in favour of appropriating permanent funds for payment of the interest on the domestic debt, and for the gradual redemption of the principal, gave rise to a very animated debate.

Mr. Jackson declared his hostility to funding systems generally. To prove their pernicious influence, he appealed to the histories of Florence, Genoa, and Great Britain; and, contending that the subject ought to be deferred until North Carolina should be represented, moved, that the committee should rise. This question being decided in the negative, Mr. Scott declared the opinion that the United States were not bound to pay the domestic creditors the sums specified in the certificates of debts in their possession. He supported this opinion by urging, not that the public had received less value than was expressed on the face of the paper which had been issued, but that those to whom it had been delivered, by parting with it at two shillings and sixpence in the pound, had themselves fixed the value of their claims, and had manifested their willingness to add to their other sacrifices this deduction from their demand upon the nation. He therefore moved to amend the resolution before the committee so as to require a resettlement of the debt.

The amendment was opposed by Mr. Boudinot, Mr. Lawrence, Mr. Ames, Mr. Sherman, Mr. Hartley, and Mr. Goodhue. They stated at large the terms on which the debt had been contracted, and urged the confidence which the creditors had a right to place in the government for its discharge according to settlements already made, and acknow

ledgments already given. The idea that the legislative body could diminish an ascertained debt was reprobated with great force, as being at the same time unjust, impolitic, and subversive of every principle on which public contracts are founded. The evidences of debt possessed by the creditors of the United States were considered as public bonds, for the redemption of which the property and the labour of the people were pledged.

After the debate had been protracted to some length, the question was taken on Mr. Scott's amendment, and it passed in the negative.

Mr. Madison then rose, and, in an eloquent speech, replete with argument, proposed an amendment to the resolution, the effect of which was to discriminate between the public creditors, so as to pay the present holder of assignable paper the highest price it had borne in the market, and give the residue to the person with whom the debt was originally contracted. Where the original creditor had never parted with his claim, he was to receive the whole sum acknowledged to be due on the face of the certificate.

This motion was supported by Mr. Jackson, Mr. White, Mr. Moore, Mr. Page, Mr. Stone, Mr. Scott, and Mr. Seney.

It was opposed with great earnestness and strength of argument, by Mr. Sedgewic, Mr. Lawrence, Mr. Smith, of South Carolina, Mr. Ames, Mr. Gerry, Mr. Boudinot, Mr. Wadsworth, Mr. Goodhue, Mr. Hartley, Mr. Bland, Mr. Benson, Mr. Burke, and Mr. Livermore.

The argument was ably supported on both sides, was long, animated, and interesting. At length the question was put, and the amendment was rejected by a great majority.

This discussion deeply engaged the public attention. The proposition was new and interesting. That the debt ought to be diminished for the public advantage, was an opinion which had frequently been advanced, and was maintained by many. But a reduction from the claims of its present holders for the benefit of those who had sold their rights, was a measure which saved nothing to the public purse, and was therefore recommended only by considerations, the operation of which can never be very extensive. Against it were arranged all who had made purchases, and a great majority of those who conceived that sound policy and honest dealing require a literal observance of public contracts.

Although the decision of congress against a discrimination in favour of the original creditor produced no considerable sensation, the determination on that part of the secretary's report which was the succeeding subject of deliberation, affecting political interests and powers which are never to be approached without danger, seemed to unchain all those

fierce passions which a high respect for the government and for those who administered it, had in a great measure restrained.

The manner in which the several states entered into and conducted the war of the revolution, will be recollected. Acting in some respects separately, and in others conjointly, for the attainment of a common object, their resources were exerted, sometimes under the authority of congress, sometimes under the authority of the local government, to repel the enemy wherever he appeared. The debt incurred in support of the war was therefore, in the first instance, contracted partly by the continent, and partly by the states. When the system of requisitions was adopted, the transactions of the union were carried on, almost entirely, through the agency of the states; and when the measure of compensating the army for the depreciation of their pay became necessary, this burden, under the recommendation of congress, was assumed by the respective states. Some had funded this debt, and paid the interest upon it. Others had made no provision for the interest; but all, by taxes, paper money, or purchase, had, in some measure, reduced the principal. In their exertions some degree of inequality had obtained; and they looked anxiously to a settlement of accounts, for the ascertainment of claims which each supposed itself to have upon the union. Measures to effect this object had been taken by the former government; but they were slow in their progress, and intrinsic difficulties were found in the thing itself, not easily to be overcome.

The secretary of the treasury proposed to assume these debts, and to fund them in common with that which continued to be the proper debt

of the union.

The resolution which comprehended this principle of the report, was vigorously opposed.

It was contended that the general government would acquire an undue influence, and that the state governments would be annihilated by the measure. Not only would all the influence of the public creditors be thrown into the scale of the former, but it would absorb all the powers of taxation, and leave to the latter only the shadow of a government. This would probably terminate in rendering the state governments useless, and would destroy the system so recently established. The union, it was said, had been compared to a rope of sand; but gentlemen were cautioned not to push things to the opposite extreme. The attempt to strengthen it might be unsuccessful, and the cord might be strained until it should break.

The constitutional authority of the federal government to assume the

debts of the states was questioned. Its powers, it was said, were specified, and this was not among them.

The policy of the measure, as it affected merely the government of the union, was controverted, and its justice was arraigned.

On the ground of policy it was objected, that the assumption would impose on the United States a burden, the weight of which was unascertained, and which would require an extension of taxation beyond the limits which prudence would prescribe. An attempt to raise the impost would be dangerous; and the excise added to it would not produce funds adequate to the object. A tax on real estate must be resorted to, objections to which had been made in every part of the union. It would be more adviseable to leave this source of revenue untouched in the hands of the state governments, who could apply to it with more facility, with a better understanding of the subject, and with less dissatisfaction to individuals, than could possibly be done by the government of the United States.

There existed no necessity for taking up this burden. The state creditors had not required it. There was no petition from them upon the subject. There was not only no application from the states, but there was reason to believe that they were seriously opposed to the measure. Many of them would certainly view it with a jealous,-a jaundiced eye. The convention of North Carolina, which adopted the constitution, had proposed, as an amendment to it, to deprive congress of the power of interfering between the respective states and their creditors: and there could be no obligation to assume more than the balances which on a final settlement would be found due to creditor states.

That the debt by being thus accumulated would be perpetuated was also an evil of real magnitude. Many of the states had already made considerable progress in extinguishing their debts, and the process might certainly be carried on more rapidly by them than by the union. A public debt seemed to be considered by some as a public blessing; but to this doctrine they were not converts. If, as they believed, a public debt was a public evil, it would be enormously increased by adding those of the states to that of the union.

The measure was unwise too as it would affect public credit. Such an augmentation of the debt must inevitably depreciate its value; since it was the character of paper, whatever donomination it might assume, to diminish in value in proportion to the quantity in circulation.

It would also increase an evil which was already sensibly felt. The state debts when assumed by the continent, would, as that of the union had already done, accumulate in large cities; and the dissatisfaction excited

by the payment of taxes, would be increased by perceiving that the money raised from the people flowed into the hands of a few individuals. Still greater mischief was to be appreended. A great part of this additional debt would go into the hands of foreigners; and the United States would be heavily burdened to pay an interest which could not be expected to remain in the country.

The measure was unjust, because it was burdening those states which had taxed themselves highly to discharge the claims of their creditors, with the debts of those which had not made the same exertions. It would delay the settlement of accounts between the individual states and the United States; and the supporters of the measure were openly charged with intending to defeat that settlement.

It was also said that, in its execution, the scheme would be found extremely embarrassing, perhaps impracticable. The case of a partial accession to the measure by the creditors, a case which would probably occur, presented a difficulty for which no provision was made, and of which no solution had been given. Should the creditors in some states come into the system, and those in others refuse to change their security, the government would be involved in perplexities from which no means of extricating itself had be shown. Nor would it be practicable to discriminate between the debts contracted for general and for local objects.

In the course of the debate, severe allusions were made to the conduct of particular states; and the opinions advanced in favour of the measure, were ascribed to local interests.

In support of the assumption, the debts of the states were traced to their origin. America, it was said, had engaged in a war, the object of which was equally interesting to every part of the union. It was not the war of a particular state, but of the United States. It was not the liberty and independence of a part, but of the whole, for which they had contended, and which they had acquired. The cause was a common cause. As brethren, the American people had consented to hazard property and life in its defence. All the sums expended in the attainment of this great object, whatever might be the authority under which they were raised or appropriated, conduced to the same end. Troops were raised, and military stores purchased, before congress assumed the command of the army, or the control of the war. The ammunition which repulsed the enemy at Bunker's Hill, was purchased by Massachusetts; and formed a part of the debt of that state.

Nothing could be more erroneous than the principle which had been assumed in argument, that the holders of securities issued by individual states were to be considered merely as state creditors;—as if the debt