H. OF R.]

The Public Debt.

[MARCH, 1792.

there could be no public revenue or private in- of taxation would have paid the interest and supcome. It follows, then, that any transfers of pub- ported Government even at this day; and all this lic resources to any persons, citizens or foreign-debt must have began in the memory of men now ers, is a transfer of such a portion of the labor of living. the farmer and mechanic, and their posterity. No money-lender would lend one farthing, to be paid out of the labor of the rich, to all eternity. It is true that the rich are, by such transfers, diminished in their comforts and conveniences, by withdrawing from them, and giving to others, that part of the labor of the industrious and productive classes, which they before enjoyed under contracts and the laws of society; but they are no objects to the money-lender. It is true, that all public burdens fall, in a great measure, on the land, so as to diminish its value and price, as I shall observe; but then, to the men who lend to Government, lands have no value but from the hands that are to work it.

That this Government would have funded, in less than five years from its origin, near fifty millions of dollars, and would now propose to fund near twenty millions more-that we should have ransacked the whole United States to find debts to effect this, invite them from every quarter, and set them to find out, create, and revive debts already sunk, to secure as large a share of the general revenue as possible:-that we should have carried the principle to the extravagant excess we have done, by the invention of deferred stock, which no nation ever ventured to hazard, all in our earliest infancy, must afford sublime prospects of our progress in mature age.

Something unexampled must be done; for, if That country is happy and free, in proportion we adopt the addition now proposed. I believe we as its political institutions and public economy shall find ourselves saddled with a greater funded leaves to the industrious the greater portion of the debt than Great Britain herself, comparatively fruits of their industry. On the contrary, that with the relative wealth of the respective nations; country is wretched, and its people slaves, what- and I believe their debts make even the boldest ever they may be called, whose labor and industry, veteran of the projecting tribe quake with terror. by any mechanism or movement of society, be- It is true, we may not feel it so sensibly in conselongs to others. As this evil proceeds, such coun-quence of paying no immediate interest in so great try must decline; and, when arrived at a certain extent, it must be deserted.

a proportion as the deferred stock; yet it is a debt our children will feel, and some of us.

It will in the aggregate form a mass of seventy millions of dollars. The property of the United States is worth what it will sell for at an ordinary market. Although it cannot be precisely ascer

Contemplate a public debt as a mortgage on industry and labor; extend its effects to posterity; exempt ourselves from the burden, and put it wholly on them, on the principle of the deferred stock, and then say that they shall not free them-tained what the amount would be, we are still selves by payment, and what does it amount to? That a free man, born now, has a right to the labor of a free man born twenty or thirty years hence; and that, because he will be then dead and gone, and cannot enjoy it, he may sell it now to a third person, and spend the money. Thus truly simplified, Is any American prepared to avow the principle?

furnished with sufficient data to form a tolerable estimate. In the State I have the honor to represent, industry and economy have long given a high relative value to their property. That property was assessed, soon after the war was raised, to an ideal height, to twelve millions their money. From the fall of price, I do not believe that the whole or any proportion of it would now bring, at fair

So much for the right. I now beg leave to re-market, the money. From this we must deduct mark with respect to the policy.

From reasons stated, it would be readily imagined what experience has sanctioned that a Funding System, once began in any nation, has always increased-the motives that led them to run in debt act with double force to prevent their getting out. It is a cancer in the body politic that acquires strength from amputation; if any remedy exists in nature, it is yet to be discovered. It is so pleasant to spend at other people's cost, that it arms all the powerful passions against the judgment. Hence the rapid accumulation of public debts throughout Europe-the increase exhibits the appearance of the regular ascent of a mountain, while the reductions appear like gullies in the sides, scarcely discernible, impeding the progress but for a moment. Great Britain has run in debt two hundred and fifty millions sterling in less than a century. Had she originally adopted a plan of rendering the debt irredeemable, and had not seized every favorable rise of credit to lower the interest, by which means she pays now three per cent. for money borrowed at eight, no system

four millions for the negro property, which cannot be included in a relative comparison with other countries, when the laborers, although equally and more valuable, are not considered as property; there would then remain eight millions. Maryland is at least one-twelfth of the United States; she has, indeed, always been rated at a higher proportion; this would fix the property of the United States at two hundred and sixty millions of dollars; the debt, then, is more than one-fourth of the whole value of the property.

The wealth of Great Britain is estimated, by Mr. Young and Mr. Pulteney, and I believe there is no good reason to question their authority, at one thousand millions sterling; they owe two hundred and fifty millions, which is a fourth; their debt, then, is relatively less than ours. Ágain, from their extensive and lucrative Colonial establishments in the East and West Indies, their annual income is increased so as to yield a net revenue of one hundred millions sterling per annum, so that they really do not owe three years income. What our annual net income is, I have

no satisfactory document to form any estimate of, but I fear it is but small. The deferred stock may defer the extent of the evil, but it is by a sacrifice of all principle to convenience.

And for what has all this magic building been erected? What were the benefits expected? The States were going on rapidly in extinguishing their debts; there was no complaint that their certificates were too low in 1785 and 1786. The Maryland certificates were nearly as high as they are now, or would be if assumed. Perhaps some sound understandings were led away by vigor of genius, uncorrected by experience, and became bewildered by the visionary dreams of Pinto, Champion, and a variety of calculators. To compare the Secretary's first Report on the Public Debt with the last on the Frontier Defence, furnishes at least the consolation that a candid mind will relinquish error. Had he adhered to those apostles of political truth, Montesquieu and Smith, the first pages of the first Report would have been stricken out.

[H. of R.

stock. If the exchange takes place at all, it is first
by a sale, and money is the medium. It bears, .
therefore, such a proportion to the money in cir-
culation, and requires so much, that it pinches all
other objects of sale, land, produce, and I believe
commerce too. It is an old maxim, and I believe
a true one, that if money is to be had, it will be
had to game with. Stocks are so uncertain, that
traffic in them has ever been considered as a spe-
cies of gaming. Their value is supported by it.
Withdraw the gamesters, and the whole fabric
vanishes. They are the leaven that raises the
bread of the stockholders. The misfortune is, it
is so extensive as to withdraw men from the solid
pursuits and moderate profits of useful occupation
into a vortex of corruption and vice. This is a com-
plaint from all quarters, and so very general, that
I must believe it has too much foundation.

This kind of gaming has ever been considered as highly pernicious to the public morals. If it is so, no benefits (if such exist) could compensate the injury. To a Republic, whose existence depends It has answered, I will venture to assert, but on a due proportion of disinterested virtue, such one good effect of those predicted, for the myriads an over-dose of poison administered must either of evils it has entailed. It has enabled many destroy the patient, or be thrown off by some viodebtors to pay off on better terms. But the num-lent and latent power of the Constitution. ber of them are but few; distressed people cannot A love and veneration of equality is the vital keep these things; they early get into other hands. principle of free Governments. It dies when the As to its increasing our capital, that ground is general wealth is thrown into a few hands. now abandoned even by bigotry itself. To mort-effect of stocks is to transfer the fruits of the lagage an estate adds nothing to its value-an estate is not doubled by dividing its profits. So much wealth as is borrowed on property, of so much less value is the property to him that holds, pays the interest, and stands charged.

Every atom of funded debt is so much taken from the value of the land in the hand of the landholders, and so much diminished from the value of labor to the laborer. Thus one great blessing of the funded debt predicted, the rise of land, has taken a contrary direction; unless it is round some towns, lands will hardly sell at all. Even in England and the old countries, where there is a variety of other wealth, the public debt has so far lessened the value of land, that an estate that actually produces £90,000 a year, is in fact only estimated at about £63,000, and when sold the year's purchases are estimated at the latter sum. Men that purchase land are not so thoughtless of posterity as administrators usually are. They purchase in a great measure for children. They consider the incumbrances, and fix their price accordingly. Although we pay no interest on deferred stock, yet it enters deeply into the price of our lands.

There is another consideration that is weighty on this subject. That stock in every country, particularly in one situated as we are, is ever varying in value. Since I have been here, in five weeks, it has altered its value one-third. It cannot serve them as a medium of commerce, for that must be some certain common standard. To measure our commodities by a standard more variable than the commodities themselves, has always been held as absurd. Consequently, I never heard of land, or indeed any thing else, sold for

The

bor of the many, who are able to appreciate its value by the difficulty of acquirement, and would convert it into useful improvement, into the hands of the opulent few, who exchange them for foreign luxuries, and consume in an hour the labor of industrious families for years. It prevents a general diffusion of wealth by drawing it to a centre, and saps the foundation of a Republican Government, especially in a large Continent.

In a young country, these effects of individual opulence are particularly hurtful. Such men are not only idle themselves, but they maintain numerous idle dependants and menial servants, whose lives are consumed in ministering to their luxuries, and whose services die the moment they are rendered. Their want is felt in an unimproved, thinly populated country, where there are no supernumerary hands, differently from an old well settled State, where there are more hands than employment. But of all opulence, that of the wealthy stockholder is most fatal to a young country. Where a man's revenue arises from landed property, it is created by productive labor employed on the land, and the necessaries of life are increased as his income increases. As his wealth depends on the value of some particular estate, it becomes his interest to improve it. His private advantage becomes the public prosperity. He also who employs his capital in manufactures, increases thereby the aggregate of necessary productions; and even he who lends money on interest to individuals, generally selects the industrious from motives of safety, and so increases the general welfare.

But wealthy stockholders who have lent their money to Government, are interested in no par

H. OF R.]

The Public Debt.

[MARCH, 1792.

ticular spot of land or manufacture. They im- for it; they can make better bargains with them. prove nothing, but take something from all. They There is a still further consideration that will are citizens of the world; oftener foreigners than affect this country powerfully, and is peculiar to natives; attached to no country. At the first ap-it. Our people will not purchase to hold at the pearance of danger, they sell out, and sink your prices stocks have risen to. Foreigners have the credit at the moment it becomes essential. As market to themselves, and they must finally settle your distresses increase, they fly you. When the with them; this prevents their lending money to impending cloud of misfortune casts its gloom be- us in peace, on the terms we obtained when under yond you, these sunshine friends disappear in a the pressure of every calamity, and had no right to expect the establishment of our independency. They purchase into our funds instead of lending; this is the effect of the irredeemable quality of the stock; it deprives us of every benefit of the rise of credit, and gives the market to foreigners. The strange terms on which it is constituted, must keep its value always unsettled, as the redemption is rendered so contingent; this also deprives it of every useful quality as a medium of intercourse, and must keep it an object of barter.

moment.

So far as foreigners are proprietors in our funds, the inquiry into the operation is truly interesting to the independence and prosperity of the community. In peace you are tributary, in war you are at their mercy. Great Britain and Holland, allied as they are with their interest in our funds, present an object that must be viewed with concern. How far our pecuniary interest is benefited is also truly consequentiai. I have been, some time ago, told that they possessed eleven millions of the thirty-one, and from the proportion of pur-deemable quality? Why, as our credit rose at chase made since it was supposed they owned at least one-half. A great deal of money ought to have come in for this. Is this the fact, or have we taken in exchange their gewgaws and luxuries, and eaten up the fat of our land? I fear the fact is so. Had their purchases been made with money, there must have been a demand for money here, and exchange would have fallen. It is an invariable tide-mark, to try the flux and reflux of money. It has almost always been, I believe, considerably above par, except one year when there was a demand for produce; then it fell at once fifteen per cent. below par. Money certainly came then, and I believe one year's good price for produce of more real advantage than any stock that could be devised, or any price that could be wished for it.

But this mode of employing money has reduced produce to nothing. It takes considerable capital to make the expensive and circuitous voyages necessary to vend our produce, and the profits can never be large; for the difference between the price of the necessaries of life, and raw materials in different countries, will not bear high commission or charges of transportation.

What would be our operation but for this irremarket, we would do as Great Britain has done-form new loans at a lower interest, and pay off the debt at the higher interest; this is done without a sinking fund on hand, and shows the folly of those that say we cannot redeem now as fast as we have the liberty. In Great Britain, soon after the establishment of their Funding System, they effected new loans, and in 1717 reduced the eight and six per cents. to five; and in 1727, they reduced the five to four; and from 1750 to 1757, they reduced the four to three; which was equal to the sinking half their debt: and from the first creating of their three, to 1757, they averaged at market, par, that is, were equal to gold and silver. By these operations, there was no injury to the creditor in reality, for he could, at the end, sell the £100 that bore three per cent. for as much money as he lent Government at eight. At this moment, if it were not for the irredeemable quality, we could, if our credit is worth four per cent. as we are told, make an operation that would be equal to the sinking of our debt nearly one-half in value, on the same plan that Great Britain has pursued so successfully. And the public creditors are really not benefited by this irredeemable quality; for, although it raises the price of sixes with foreigners, yet it keeps down that of threes; which, by a reduction such as I mention, and the liberation of our commerce from high duties, must soon be on equal terms to what they were in Great Britain in the infancy of their Funding System, that is, near par.

Thus I have considered all the boasted benefits of Funding Systems but one, and that is the strengthening of Government. That, to a certain extent, they may have this effect, may be true; but, carried beyond it, they certainly operate in a contrary direction. Let the interest settle chiefly in the hands of foreigners, or let the agricultural In fine, the debt is to be deplored, but it must be interest, which in a young country must always paid; let as much of it be paid, and as fast, as pospreponderate, become alarmed at its extent, and sible; these are the true principles of public credit. jealous of a moneyed interest acting in opposition Let us reprobate the idea of increasing or continuto their wishes and principles, and it may destroying it when it can be avoided, upon the principles a Government that otherwise might have secured the public happiness; but these are trifling circumstances. The position may be justly reduced to this: A good Government will always be supported without these aids by the good sense of a great majority of its members, and a bad one ought not to be supported by it. Now the mischief is, that these people support bad Government more willingly than good, because they are better paid

of any political enterprise. It seems strange to be called upon to fund it now, and provide the funds hereafter. It looks too much like taking an undue advantage of a future Legislature, and has a suspicious, and low, lurking aspect, when we know that we are really not the true Representatives of the people. Are we afraid that a real representation of the people would act otherwise? If we are, we ought to hesitate. All the virtue of this

It happens, somewhat unfortunately for this hypothesis, that those who maintain it are those who are to be gainers by it. It may well be expected that less evidence will satisfy South Carolina that she is a creditor State, than New Hampshire that she is a debtor; and more efficacious logic must be used to induce the latter to pay seven or eight hundred thousand dollars of the debt of the former, than to persuade the former to put that burden off her own shoulders and lay it upon the latter. Let The same reasoning would apply to the other not gentlemen imagine that New Hampshire, States who have sums assumed beyond their just though she is a small State and of no great improportion. Upon these principles, too, they must portance in the Union, patiently submitted to the prove to us that New Hampshire, upon a final set-injustice of the former assumption. They remontlement of accounts, would be found in debt to the Union more than seven hundred thousand dollars; that is, that she is the greatest delinquent in the Union. I ask gentlemen if they have any documents to prove this.

H. OF R.]

The Public Debt.

[MARCH, 1792.

called upon to pay seven or eight hundred thou- not to have the whole benefit of it. If they are sand dollars of the debt of South Carolina, Mas- in favor of an assumption, they should be in favor sachusetts, or some other State. Why should it of an equal one. Some gentlemen have taken be taken for granted, they ask, that we are a debtor? much pains to convince us that the citizens of What documents are gentlemen possessed of that their States are zealous for the measure. I am justify such a supposition? Let them be produced. not disposed to doubt it; if they can have their If the opinion of gentlemen who have spoken with- burdens taken from their own shoulders, and placed in these walls and without, is to be relied upon, upon their neighbors', it is not to be expected that there is scarce a State in the Union but that has they should complain. But because the winners done far more than her proportion; so that there are pleased, it by no means follows that the losers must be a great balance due to each State. All are pleased too. But we are told that the inequalithis tends to show, that it is unreasonable to ex- ties of both assumptions will be remedied by the pect that any one State will patiently submit to a settlement. Who, is it expected, will be deceived measure which takes that for granted which they by this State device? Is there any one so ignorant? do not believe, and which it is never their interest What is it but saying, submit to injustice now, to admit. There never was, in my opinion, but and we will redress it hereafter. Only be so kind one principle which could justify any assumption as to acknowledge now that you are a debtor State, previous to a final settlement, and that was, giving and we will be much obliged to you; and if it relief to States who had unquestionably contracted should turn out, on settlement of accounts, that a debt much beyond their just proportion, and you have been paying our debts for us, we will who were groaning beneath the burden of that then repay you. But do not these same persons debt. Where it could be known with tolerable tell us, that the accounts never will be settled; or, certainty that a balance would be finally due to if they are, that balances never will be paid or resuch a State, much might be said in favor of an- ceived. I believe it. I consider this assumption ticipating the payment of it. But was this the as signing the death-warrant of the settlement of principle which governed? Was this principle accounts. Therefore, let the assumption be equal. at all pursued? Were $2,200,000 assumed from If any take place at this time, I hope it will be a Pennsylvania, because she was or would be a cre- just and equal one; nay, more, that it will redress ditor State, or because she was heavily burdened the inequalities of the former one; and that the with debt? Will gentlemen undertake to say that States who have laid heavy burdens on their citiany principle at all was adhered to in the assump-zens, will not be punished for their laudable zeal in tion? Was it not a mere bargain and sale between certain States who were interested, that an assumption should take place; and who, provided they could be only exonerated from their own debt, would not stick at any means to accomplish so desirable a thing? Was it not at the expense of justice, and at the expense of certain States, particularly at the expense of the State I represent? If the States who had the largest portion of debt to struggle with, at the adoption of the present Constitution, were to be relieved, such relief might have been afforded without any violation of the principles of justice and equality. The United States might have afforded a temporary relief, till the accounts were settled; or, if it was thought best to assume the balances due from those States to their creditors, a proportionate sumwhich is what I now advocate-should have been assumed from every other State. The United States could never advance a sum to any one State without advancing a proportionate one to every other State, without at the same time declaring that the one had better pretensions to such a grant than the other. And what can authorize such a declaration? I know of no data on which to found it. A gentleman from Masaachusetts objects to this; he says this would greatly increase the public debt, and he appears now to be a great enemy to such an increase. When this argument was urged against any assumption, it was treated with great contempt. It seems, however, that gentlemen have no objection to increasing the public debt, as far as the debts of their respective States will do it. They do not wish to go further. They are against accumulating the public debt, if they are

extinguishing their debts, but that they will at least fare as well as those who have made no such exertions. In one word, I am against any assumption; but if any assumption obtain, as it cannot be known which State is debtor or which creditor, let the sums assumed from each be equal, that is, according to their respective numbers.

Mr. BALDWIN said, he was not in the situation just complained of, the Representative of a State, the whole of whose debt had been before assumed, and therefore interested in opposing any further assumption. He was from a State, the half of whose debt was not before assumed, and they were not consoled by observing, that four-fifths was assumed for their next neighbor, neither was it a solitary instance of treatment, such as had not been expected from that House. He did not indulge the habit of complaining; but he felt it to be his duty to remember them, and the people from which he came could not easily forget them. He was however of opinion that these evils would not be corrected by a general assumption, on principles so ungovernable as were contained in the proposition now under consideration, and that it would administer injury rather than relief.

Each State had been made debtor for the sum assumed, and as the General Board of Commissioners for settling all accounts between the United States and individual States, had reported that the whole would be finished in little more than a year from this time, he was of opinion it would give much more effectual relief to the States which had been injured in the apportionment of the former assumption, and upon principles much less injurious than the general and promiscuous as