156

33D CONG....2D SESS.

APPENDIX TO THE CONGRESSIONAL GLOBE.

treaty, he would still have been liable to pay the debts, upon the ground that the conqueror has no rights except those which belonged to the enemy, and that was a right to the territory, subject to the lien upon it.

If these positions are true in regard to conquest and cession, they are equally true in regard to peaceful annexation, by means of which the party annexing absorbs the sources of revenue pledged for the payment of debts, whether those sources are foreign imports or lands.

To apply briefly these principles, the State of Texas issued her bonds in order to raise money at a period when her political fortunes were almost desperate; and, for the purpose of giving additional sanction to them, she pledged to a class of her creditors the most valuable source of income she had her revenues from foreign imports, and investments in her stock were made chiefly upon the faith of this pledge.

When she became annexed to this Government we absorbed those revenues, and they have ever since been flowing into our Treasury, and will continue so to flow as long as this Union continues. Texas is still sovereign within her sphere, still able to contract debts and to lay taxes for the purpose of discharging those debts; but she is no longer sovereign within the sphere of her customhouses, for they belong to this Government, and Texas cannot apply the revenue derived from them to the payment of the debts for which they were pledged.

Now, it may be said that for a large part of her revenue debt she pledged not only her revenues from customs, but her lands and other resources, and that the creditors are first bound to look to the land and other resources before they come upon the customs. I presume it will hardly be contended that when two things of value have been pledged by a Republic for certain debts, it would be proper for the United States to interpose between the Republic and her creditors, and compel the latter to abandon the highest and most valuable security, and look to the lesser and inferior security.

But if it be supposed that the revenues in our hands should be applied in part only to pay the debts, which they, with other things, were hypothecated to secure, then I take the position that her revenues from customs, in our hands, ought to bear their equitable portion of the debts for which they, with lands and other resources, were pledged.

Now, in modern times, and among commercial nations, the revenues from customs form the most valuable resource for raising money for the payment of debts. It was so in the case of Texas. Her public lands were of but little value for the payment of her debts. Her customs were a constantly augmenting source of revenue, and had she not been annexed to this Union-an act by which much of her commerce was changed from foreign to coastwise and interior trade-her revenues from that source would have continued to increase in a much greater ratio than they have done since her annexation.

I conclude, therefore, that her customs were her most valuable source of revenue; and they ought to bear in our hands, for the discharge of her revenue debt, that proportion which their value bears to the other things which were pledged at the same time.

This being the case let us state the account. I have already stated that there will be in the Treasury, including interest and six per cent. premium, on the 1st of October, 1855, $6,487,000; and that the revenue debt of Texas, according to the decision of the Secretary of the Treasury, approved by President Fillmore, and the opinion of the present Attorney General, will, at the same period, amount to $11,983,000, leaving an excess of revenue debt, after paying for the land ceded by Texas, the amount we agreed to pay by the We boundary act, the sum of, say $5,500,000. have taken her revenue from customs; and now, what proportion of this $5,500,000 ought these revenues, in our hands, equitably to bear? I undertake to say, that there is no gentleman who has made himself familiar with the availability of the Texas lands for the payment of debts, but will agree that these revenues were the chief source of value. We have said in the bill that $2,000,000 is the equit

Texas Debt Bill—Mr. Breckinridge.

able portion which these revenues, in our hands,
ought to bear. That leaves $3,500,000 as the
I state,
portion to be borne by other sources.
without fear of contradiction, that the value of the
customs of Texas, in proportion to the value of
other sources of revenue which were pledged, is
greater than the proportion of two to three and a
half.

But I must pass from this branch of the sub-
juct to another. Whatever may have been the
original position which this country should have
taken in regard to her liability for any portion of
the Texas debt, I hold that she has admitted, by
her own legislation, that she is liable for the reve-
nue debt of Texas. I was not here and had noth-
ing to do with that legislation, but I take it as I
find it. I cannot construe the legislation of this
country in any other way than as an admission
of her liability for the revenue debt of Texas. To
put it in the weakest form of statement, our legis-
lation involves admissions; which make it emi-
nently desirable that we should extricate ourselves
by a fair compromise.

Let me recur, for a moment, to the history of
this transaction.

On page 28 of the documents published with
the bill, you find the joint resolution for annex-
ing Texas to the United States, approved March
1, 1845. Among other things the resolution
provides, that when Texas is admitted as a State
"into the Union, after ceding to the United
States all public edifices, fortifications, barracks,
ports, and harbors, navy and navy-yards, docks,
magazines, arms, armaments, and all other prop-
erty and means pertaining to the public defense,
belonging to said Republic of Texas, shall retain
all the public funds, debts, taxes, and dues of
every kind which may belong to or be due and
owing said Republic; and shall also retain all the
vacant and unappropriated lands lying within its
limits, to be applied to the payment of the debts
and liabilities of said Republic of Texas, and the
residue of said lands, after discharging said debts
and liabilities, to be disposed of as said State may
direct; but in no event are said debts and liabili-
ties to become a charge upon the Government of
the United States."

Recollect that this was our first transaction with
Texas. She was then about being annexed to
this Union. We were about to absorb her rev-
enues. We were fully aware of the fact that those
revenues were pledged for a particular class of
debts. We made a stipulation with Texas, to
which, however, her creditors were not parties,
that she should retain all the vacant and unappro-
||priated lands lying within her limits, to be applied
to the payment of these debts and liabilities. We
undertook to say that the Government of the Uni-
ted States should in no way be responsible for
these debts; but that was a stipulation between us
and Texas only, which could not affect our moral
and equitable obligations to her creditors. To see
the extreme anxiety of the Government of the
United States on this point, (a sort of instinct of
liability,) we have only to observe the great ex-
actitude which marks the terms of this stipulation
-Texas "shall also retain all the vacant and un-
appropriated lands lying within her limits, to be
applied to the payment of the debts and liabilities of said
Republic of Texas, and the residue of said lands, after
discharging said debts and liabilities, to be disposed of
as said State may direct."

That is the first legislative act, or contract, with
Texas touching this subject. She took the land,
but has not discharged those debts. I desire to
say, in passing, that I have no reflections to make
on the State of Texas. I am regarding this ques-
tion as one between the United States and those
revenue creditors. I have nothing to say, either
in approval or condemnation of the course of that
State.

Well, sir, what was the next legislative act? It was what is known as the boundary act, approved September 9, 1850. Besides relinquishing her forts, arsenals, and other public property, Texas agreed to surrender her claim to certain territory in controversy between her and New Mexico, for which the United States stipulated to pay her, in consideration of said establishment of boundaries and cession of claims, the sum of $10,000,000.

Mr. CLINGMAN. With the gentleman's permission, I would inquire whether he can inform

Ho. OF REPS.

the committee how much land Texas sold us under the boundary act of 1850, of that portion which was never claimed as belonging to New MexicoI mean of the northern part of Texas, which is watered by the Canadian, and other streams, to which her title was indisputable? My own impression is, that some thirty or forty thousand acres were sold.

Mr. BRECKINRIDGE. I am obliged to the attention to that fact, which I might have omitted. gentleman from North Carolina for calling my I am not able to state the amount with accuracy, but I understand that it was enough to make a State of the first class.

Mr. SMYTH. The amount was sixty-six million acres.

Mr. BRECKINRIDGE. I thank the gentleman. Sixty-six million acres to which New Mexico never made any claim whatever.

Very well, then in consideration of these sixtysix million acres ceded, to which she had a perfect right, and in consideration further of her relinquishment of her claim to territory which New Mexico also claimed, we agreed to pay her $10,000,000. Did we pay her that $10,000,000? No, sir. We were to issue stock payable in fourteen years, and bearing five per cent. interest, payable semi-annually. The natural and proper course of one sovereign State dealing with another, would have been to have issued the stock and paid it over to Texas. What did we do? We issued $5,000,000 of stock and handed it over to Texas. For the other $5,000,000 we put the following upon the record:

"Provided, No more than five millions of said stock shall be issued until the creditors of the State holding bonds and other certificates of stock of Texas, for which duties on imports were specially pledged, shall first file at the Treasury of the United States releases of all claims against the United States for or on account of said bonds or certificates, în such form as shall be prescribed by the Secretary of the Treasury, and approved by the President of the United States."

In the first transaction which we had with Texas we were careful to stipulate, as between us and her, that we were not to be chargeable with these revenue debts; that they were to be paid by her from the proceeds of the vacant and unappropriated lands which she retained. A few years afterward when we came to buy more land-and the very land which we had previously stipulated should be applied to the payment-we stipulated, in order to protect ourselves against liability for these revenue debts, that we would not pay the agreed to pay her for her land until these revenue sovereign State of Texas the money which we had creditors released the United States from all liability for these debts. Why did we make that stipulation? Why, in dealing with the Commonwealth of Texas as a sovereign State, did we undertake to retain $5,000,000 of that money until we were relieved from certain obligations? Was she not competent to pay her own debts? Was she not competent to manage her own affairs? Sir, it was a legislative admission of our liability, and it cannot be construed in any other sense. It was a declaration of the Congress of the United States that they considered themselves liable in some form to settle with the revenue creditors of Texas. In order to guard ourselves against legal, moral, and equitable claims of these creditors we retained the money in the Treasury. It is perfectly notorious to every gentleman familiar with the debates in Congress at that time, that it was thought $5,000,000 would be sufficient to cover the whole revenue debt of Texas. If this sum had not been tained the whole $10,000,000. It would have been supposed to be ample, Congress would have rewell if this had been done.

Mr. Chairman, I find these stipulations and admissions upon the statute-books; and I hold, even if it be a question of doubt, as an original proposition, whether we are bound for the revenue debt, even if it be a question of doubt whether this legislation is an admission on the part of our Government that she stands in some sort of relation of obligation to these revenue creditors-I hold that the case presents a fair ground for compromise.

Mr. TAYLOR, of New York. I would inquire whether the first section of the bill provides for all of the revenue debts of Texas; so that its passage will finally settle the matter.

33D CONG....2D SESS.

the Committee of Ways and Means have made to the bill, as it came from the Senate, are: first, a provision for the release of both the United States and Texas; and next, a provision that the act shall not take effect until the Legislature of the State of Texas shall pass an act withdrawing and abandoning all claims against the United States, growing out of Indian depredations prior to the admission of the State into the Union.

I do not mean to say, Mr. Chairman, that I consider that Texas has a just claim against this Government, growing out of those Indian depredations. We did not put it in as a consideration, to any great extent, for the amount in this bill. But I do mean to say, that it is a claim which, like many others brought before Congress, and finally paid, is a plausible claim-a claim to some extent admitted by Executive officers of the Government in times past-a claim pressed with great urgency by a distinguished Senator from Texas, and which he believes to be just, and one of those claims which it is just as well, in making a settlement, to include, if it can be done, so as to leave no subject of dispute or controversy between the State and the Federal Government. For that reason, sir, it was inserted in the bill. The amount of the claim is $3,800,000.

Brig General Armstrong-Mr. Pearce.

be defended principally upon two grounds. First,
it seems to be assumed that because Portugal is a
Sovereign Power we must necessarily deduce from
that sovereignty her ability to cause satisfaction
to be made for the injury which was committed
by the forces of another Power within her waters;
and, secondly, that our Government is liable,
because we have been guilty of gross negligence in
the management of the claim after it was put into
the hands of the Government by the claimants.
In regard to the last ground, I might perhaps say,
too, that it includes the allegation that the Govern-
ment of the United States have violated the rights
of the claimants by submitting the claim, without
their consent, to the arbitration of a neutral,
friendly Power.

Now, sir, I suppose that when a citizen claims damages for an injury committed by a foreign Government, and puts his claim for prosecution into the hands of his own Government, he is not like an individual employing an attorney, who is subject to his instructions, and bound by them. The dignity of the Government, its duty and interests will not permit any such analogy. I suppose that, from the moment the claimant has put his demand into the hands of the Government, that Government is to conduct the claim according to its own judgment of the fitness of things. From Mr. Chairman, I believe that, as a matter of compromise to put it upon the lowest ground-that moment it ceases to be an individual proceedfor the disposal of a subject which has been a perplexing and vexed one, and which, unless we pass some law of this sort, must continue to be a perplexing and a vexed one for years, I think that, as a matter of compromise, this bill is the best we can adopt. I believe that, in a financial point of view, it is the best for this Government, believing as I do, that, unless we adopt it, we shall not only have to pay the exact amount contained in this bill when the stock matures, but that we shall also have upon us this claim urged by Texas in regard to Indían depredations, and the balance of the revenue debt urged by the creditors, which now amounts to about $5,000,000, and is constantly increasing. I believe, therefore, that to close the subject, as this act will-Texas assenting and the creditors releasing, as they will do, worn out, as they are, by delay, and heart-sick from hope deferred-the passage of this bill is the best thing that the House can do. I hope, sir, that some disposition will be made of it to-day. I do not think it is asking too much of the committee to request that gentlemen, in view of the importance of the subject, and the pressure of public business, will continue the present sitting long enough to act upon all amendments that may be offered, and pass the bill in such form as the majority shall approve.

BRIG GENERAL ARMSTRONG.

SPEECH OF HON. J. A. PEARCE,
OF MARYLAND,

IN THE SENATE, February 9, 1855.
The question being on reconsidering the vote
by which the bill for the relief of the claimants of
the private armed brig General Armstrong was
ordered to be engrossed for a third reading-
Mr. PEARCE said:

Before the question is taken, I desire to make a very few remarks. There has been such an extended argument on the subject, and the case has been discussed by so many gentlemen of great ability, that I do not think it necessary to go into an argument; but I desire to state very briefly to the Senate the reasons why I consider this claim utterly unfounded.

It has been said that the attack made by the British squadron in the port of Fayal upon the privateer General Armstrong, was a gross violation of national law. That, sir, is nothing new in British naval history. I think with that nation, as with some others, the question of right has frequently been subordinate to the question of power; and there are even more conspicuous instances than this of her violation of neutral rights. But the violation of a neutral jurisdiction does not of itself justify a demand of satisfaction against the neutral Power. Still less does it necessarily authorize a demand by the injured party against his own Government. This claim seems to me to

ing, and assumes the character of nationality.
The Government may press the claim by war if
necessary, but everybody admits that it is not
bound to do that. Every one agrees that the
paramount duty of the Government to the great
body of its citizens is superior to its obligation to
the individual citizen. I think it is true that this
same duty of the Government, to regard the para-
mount interest of the whole country, will author-
ize the employment of any means to adjust claims
of this sort which the Government sees proper.
It may abandon the claims, as was admitted by
the Senator from Delaware, [Mr. CLAYTON,] in
the course of the debate last Friday. If the Gov-
ernment may abandon the claims, rather than
enter into a war for their prosecution, may not the
Government undertake to refer them to arbitra-
tion? Does not the larger power include the less?
If the Government is authorized to abandon it,
may it not seek, after it has exhausted argument
and reason with the Government on whom the
claim exists, to have that claim enforced by ap-
peal to the reason of another Power, that is to
say, by arbitration? This is one of the recognized
modes of settling international complaints, and I
think that the Government has the right, necessa-
rily, to settle a claim by any of these known
modes.

Now, in this very case I understand that, the
claimants did actually acquiesce in the reference
of this matter to the arbitration of the President
of France; but the Senator from Delaware [Mr.
BAYARD] says that our Government was guilty of
gross negligence in not securing to the claimants
the right of making an argument before the arbi-

trator.

Mr. SLIDELL. As I have already said, the friends of the bill will not pursue the discussion; and I, therefore, here desire merely to remark that I do not think any evidence can be found of any assent on the part of the claimants to the arbitration until after that submission had actually been made.

Mr. PEARCE. I do not mean to say to the contrary; but I recollect that Mr. Marcy, in his letter addressed to the Committee on Foreign Relations, stated that it was known at the Department of State that the parties interested acquiesced in the arbitration after the convention with Portugal had been made. But whether they acquiesced or not makes no difference, in the view which I have undeavored to present. Then it is assumed that there was gross negligence on the part of our Government, because the claimants were not permitted to submit an argument to the Prince President of France. The treaty stipulated that the claim should be submitted to the arbitrator upon the correspondence which had passed between Portugal and the United States upon this subject.

Mr. BAYARD. I look upon the Government and claimants more as being in the situation of a guardian and ward than as client and attorney. I did not intend to say that the refusal to submit the

written arguments of the claimants by the Secretary of State, was, in itself, a ground for the liability of this Government; but that as the claimants were ultimately injured in the arbitration by an erroneous decision, caused by giving a construction to the treaty that was made, which violated one of the chief rights of the individual which ought always to be secured to him, therefore a responsibility arises. I say that a treaty made upon that basis, makes, as I think, a just claim upon the Government.

Mr. PEARCE. I admit, that, if the Government, in the conduct of the arbitration, did not in good faith use all the means in its power to submit the facts fairly to the arbitrator, it would be liable; but I say it is impossible to suppose that this Government has been guilty of such negligence. The facts which have been presented to us disclose no such state of things; but, on the contrary, they make the conclusion irresistible that there was no such negligence as is alleged. Why, sir, the claim arose during the war of 1812-I think in 1814. Very soon afterwards it was placed in the hands of the Government; and, from that day to the time of arbitration, there has been an extraordinary amount of correspondence between the claimants and the Government, and between this Government and the Government of Portugal. The papers are voluminous; all the facts are substantially, and, indeed, minutely set forth in that correspondence; and they also contain an abundance of argument. I do not believe that there has been a particle of argument presented in the Senate which is not contained in the papers in the case. In point of fact, the whole case has been presented as fairly and as fully to the arbitrator as if the claimants had been allowed an opportunity to present to him a written argument by their attorney or agent. It is impossible to resist this conclusion. There has scarcely ever been a case in which there was more minute detail of fact, or more careful elaboration of argument.

As to the decision of the arbitrator, I do not wish to speak much of that. I confess I am surprised at the ground upon which he puts his award. It does not seem to me to correspond with the state of facts in the papers, as presented to the Senate; facts made by the Governor of Fayal in relation and I will particularly mention the statement of to the proceedings of the British force on the occasion of that outrage. I think it clearly demonstrable from his letter that the attack was made by the privateer or not, the attack was made by the the British. Whether the first gun was fired by British. She was in the act of repelling an aggression when she discharged, if she did discharge, the first gun. For, though it is manifest that the first British boat which approached the privateer was only reconnoitering, it is equally clear that the first detachment of armed boats fired into was sent from the squadron with hostile intentions, and therefore the crew of the privateer were fully justified in firing before they were boarded. But I do not mean to impeach the integrity of the arbitrator when I say this.

Upon the whole, I am clear that there is no ground upon which we can rest any allegation of gross negligence, or negligence of any sort, against this Government. The Senator from Delaware seems to assume that, because Portugal was a sovereignty, it followed necessarily that she was under the liability either to make Great Britain grant satisfaction through her to the claimants for the outrage, or to make it herself. He assumes, also, her ability to compel Great Britain to make such satisfaction. Now, I think one of these is a presumption of fact too violent to be made; and the other a legal assumption not warranted by any general principles, or by any authority from the law of nations on this subject, which, as in all other cases, when there is no conventional arrangement, is the law of reason, resting upon moral right and those obvious considerations which make it the duty of one Government to do, or omit to do, some particular thing. In fact, sir, Portugal had not the ability to compel the British Government to it was both her right and her duty to do. She make satisfaction. She did, indeed, do that which appealed in the strongest language, through her Secretary of State, to the British Government, the injury done to her friend within the waters of complaining of this violation of neutrality, and

He adds, too, that though when the war in Europe commenced, this treaty of 1795 with Great Britain had not been made; the President of the United States, (General Washington,) was of opinion that the United States were bound to apply SPEECH OF HON. GEO. W. SMYTH,

160

33D CONG....2D SESS.

APPENDIX TO THE CONGRESSIONAL GLOBE.

Here we have the origin of that odious word scale, and by an easy derivation the word scaling, in its connection with public debt, from the sages of the Revolution-men to whom we are wont to look back for examples of purity and patriotism. I acknowledge that I had formerly some antipathy to this word scale; I thought a better expression might have been adopted-that of equitable adjustment, for example. But, seeing the high authority from which the expression emanated, I am reconciled to the word as well as to the idea.

But having referred to the scale of depreciation established by the resolution of Congress of the 28th of June, 1780, let us see what that resolution is. After reciting a preamble, that resolution proceeds, as follows:

"Resolved, That the principal of all loans that have been made to these United States, shall finally be discharged by paying the full current value of the bills when loaned, which payments shall be made in Spanish milled dollars, or the current exchange thereof in other money, at the time of payment.

"That the value of the bills when loaned shall be ascer tained for the purpose above mentioned, by computing thereon a progressive rule of depreciation, commencing with the 1st day of September, 1777, and continuing to the 18th day of March, 1780, in geometrical proportion to the time, from period to period, as hereafter stated, assuming the depreciation at the several periods to be as follows:

"On the 1st day of March, 1778, one dollar and three quarters of the said bills for one Spanish milled dollar; on the 1st day of September, 1778, as four of the former for one of the latter; on the 1st day of March, 1779, as eighteen of the former for one of the latter; on the 18th day of March, 1760, as forty of the former for one of the latter.

"That the principal of all certificates that have been taken out since the 18th day of March last, shall be discharged at the rate of one Spanish milled dollar, or the current exchange thereof in other money, at the time of payment, for forty dollars of said bills of credit received on loan.

"That the principal of all certificates that shall hereafter be taken out, until the further order of Congress, be discharged at the same rate, and in the same manner as those that have been taken out since the 18th day of March last. "That the interest on all loan-office certificates, at the rate of six per cent. per annum, computed on the principal ascertained as aforesaid, shall be discharged annually in like manner as the principal, until the whole shall be paid, &c.

"Ordered, That the Board of Treasury prepare the proper tables for the direction of the commissions of the Continental loan offices in the several States, in paying off the principal and interest of loans, agreably to the foregoing resolutions."-Journals of Congress, vol. vi., pp. 100 and

101.

The resolution of the 28th of June having referred to loan-office certificates, it may not be amiss to explain what these loan-office certificates were. By a resolution of the 3d of October, 1776, these loan offices were created, and it was provided that a commissioner should be appointed by each State, and an office opened in each for the purpose of receiving loans to the Government of their own bills of credit. The great object of Congress was to withdraw as large an amount of their bills from circulation as possible, in order to sustain the credit of the remaining portion. For this purpose the holders of these bills were invited to come forward and loan them to the Government and receive for them these "loan-office certificates bearing an interest of four per cent per

annum.

Now, by far the greater portion of that part of the public debt of Texas, to which I have alluded, is exactly similar to these-loan office certificates and bills of credit of the United States. The funded debt of Texas, evidenced by a certificate of stock bearing ten per cent. interest—principal and interest in 1846, amounting to $2,193,365. Her eight per cent. bonds, evidenced by a certificate of stock, or bonds, bearing an interest of eight per cent. per annum, amounting, principal and interest in 1846, to $1,135,400; and her promissory notes outstanding amounting to $2,674,447, making an aggregate of $5,993,212. I repeat, that most of this part of our public debt stands upon precisely the same foundation as the loan-office certificates and bills of credit issued by the Government of the United States. The object of Texas in opening books and inviting the holders of her bills to fund them, and receive in exchange a different species of security, bearing interest at eight and ten per cent., was to withdraw as large an amount of those bills from circulation as possible, and thereby sustain the credit of those which still continued to be used as a circulating mediumthe same motive which had induced the United States to cause commissioners to be appointed in

Texas Debt.-Mr. Smyth, of Texas.

the different States, and invite the holders of her
bills to loan them to the Government at a given
rate of interest.

Mr. Chairman, having alluded to the loan-office
certificates, created by the resolution of the 3d of
October, 1776, in order to show the similarity
between these certificates and the portion of the
public debt of Texas, to which I have referred as
her funded debt," and her "eight per cent.
bonds,"I will read the resolution itself. Here it is.

"Resolved That five millions of Continental dollars be immediately borrowed for the use of the United States, at the annual interest of four per cent. per annum.

"That the faith of the United States be pledged to the
lenders for the payment of the sums to be borrowed, and
the interest arising thereon, and that certificates be given
to the lenders in the form following, viz;

"The United States of America acknowledge the receipt
of dollars from, which they promise to pay
day of
or bearer, on the
to the said
with interest annually, at the rate of four per cent. per
annum, agreeably to the resolution of the United States,
Witness the hand of
passed the 3d day of October, 1776.
A. D.
day of
the Treasurer, this
"Countersigned by the commissioners of one of the loan
offices hereafter mentioned.

"That, for the convenience of the lenders, a loan office
be established in each of the United States, and a commis-
sioner to superintend such office be appointed by the said
States respectively, which are to be responsible for the
faithful discharge of their duty in the said offices.

"That the business of said commissioners shall be to deliver certificates for all such sums of money as shall be brought into their respective offices agreeably to these resoJutions."-Journals of Congress, vol. 2, p. 898.

According to this resolution, these commissioners were authorized to borrow five millions of Continental dollars, that is, their own bills only, and not the issues of the States. But the following resolution, of the 19th November, 1778, is still more explicit:

"Resolved, That the Commissioners of the Continental loan-offices of the United States be respectively directed to receive for loan-office certificates such bills of credit only as have been or may be emitted by Congress, any resolution to the contrary notwithstanding."-Journals of Congress, vol. 4. p. 667.

The form of loan-office certificate given in the
resolution of the 3d of October, 1776, carries on
its face as solemn an obligation to pay, as the bonds
of Texas, or any other bonds, and yet these are
the very same loan-office certificates that, by the
resolution of the 28th June, 1780, were required
to be scaled at the rate of forty for one.

Mr. Chairman, I do not allude to this subject
in order to disparage this Government; far from
it. She has been our great exemplar in every-
thing. To her we have looked up. She has fur-
nished the model of our scaling system, as well as
We are under
every other part of our system.
obligations to her for it, and are not disposed to
rob her of whatever credit may be due for the
introduction of that system.

Having, to some extent, reviewed the action of
the old Congress on their public debt, I desire to
call the attention of the committee to the action of
the Convention which framed the Federal Con-
stitution, on the same subject. In the debates in
the Convention on the 23d of August, 1787, we
find the following:

"The first clause of article seven, section one, being so amended as to read: The Legislature shall fulfill the and shall have the power to lay and collect taxes, duties, engagements and discharge the debts of the United States, imposts and excises,' was agreed to."-Madison Papers, vol. 3, p. 1412.

On the 24th of August the Convention voted a reconsideration of this proposition, by a vote of seven in the affirmative to two in the negative.Madison Papers, vol. 3, p. 1416.

"August 25.-The first clause of article seven, section one, being reconsidered,

"Colonel Mason objected to the term shall fulfill the engagements and discharge the debts, &c., as too strong. It may be impossible to comply with it. The creditors should be kept in the same plight. They will in one respect be necessarily and properly in a better. The Government will be more able to pay them. The use of the term shall will beget speculations, and increase the pestilential practice of stock-jobbing. There was a great distinction between original creditors and those who purchased fraudulently of the ignorant and distressed. He did not mean to include those who have bought stock in the open market. He was sensible of the difficulty of drawing the line in this case, but he did not wish to preclude the attempt. Even fair purchasers, at four, five, six, eight for one, did not stand on the same footing with the first holders, supposing them not to be blamable. The interest they received, even in paper, is equal to their purchase money. What he particularly wished was, to leave the door open for buying up the securities, which he thought would be precluded by the term "shall," as requiring nominal payment, and which

HO. OF REPS.

was not inconsistent with his ideas of public faith. He was
afraid, also, the world" shall" might extend to all the old
Continental paper.”—Madison papers, vol. 3, pp. 1424 and
1425.

Mr. Randolph offered, as a substitute, the clause
as it now stands in the Constitution, that, “All
debts contracted, and engagements entered into, by
or under the authority of Congress, shall be as
valid against the United States under this Constitu-
tion, as under the Confederation." This substitute
was adopted by a vote of ten in the affirmative to
one in the negative. With the avowed object of
doing away with the positive nature of the pro-
vision expressed by the phrase "shall fulfill the
engagements and pay the debts,"&c., as originally
adopted.

The whole debate on this part of the Constitution shows that the object of the convention was so to shape this clause in relation to the public debt as to leave the future Government at liberty to adopt whatever system for its adjustment might seem to them just to the creditors and to the country.

was not

What Mr. Mason "particularly wished was, to leave the door open for buying up the securities;" as was actually done by the act of the 8th of May, 1792, as we shall presently see. This plan of buying up the public securities " inconsistent with his ideas "of public faith." He was afraid, also, that the word "shall" might And extend to all the old "Continental paper. yet, "this old Continental paper" was the same, concerning which Congress said, in 1779: "So circumstanced, you had no other resource but the natural value and wealth of your fertile country. 99 The Bills were issued on the credit of this bank, and your faith was pledged for their redemption.' very same bills which were, by the act of 1790, scaled at the rate of a hundred for one.

Mr. Chairman, having reviewed the action of the former Government, and the Federal Convention, in relation to their bills of credit and loanoffice certificates, we are now prepared to understand the act of the 4th of August, 1790, "making provision for the payment of the debt of the United States." The system adopted by that act was but a continuation of that which had been previously adopted by the Continental Congress in the resolutions of the 3d of October, 1776, and 28th of June, 1780, with some slight modifications. The third section with its preamble reads as

follows:

"And whereas it is desirable to adapt the nature of the provision to be made for the domestic debt to the present circumstances of the United States, as far as it shall be found practicable, consistently with good faith and the rights of the creditors, which can only be done by a voluntary loan on their part:

"SEC. 3. Be it therefore further enacted, That a loan to the full amount of the said domestic debt be, and the same is hereby, proposed; and that books for receiving subscriptions to the said loan be opened at the Treasury of the United States, and by a commissioner to be appointed in each of the said States, on the first day of October next, to continue open until the last day of September following, inclusively; and that the sums that shall be subscribed thereto be payable in certificates issued for the said debt, according to their specie value, and computing the interest upon such as bear interest to the last day of December next; which said certificates shall be of these several descriptions yiz:

"Those issued by the Register of the Treasury. "Those issued by the commissioners of loans in the several States, including certificates given pursuant to the act of Congress of the second of January, one thousand seven hundred and seventy-nine, for bills of credit of the several emissions of the twentieth of May, one thousand seven hundred and seventy-seven, and the eleventh of April, one thousand seven hundred and seventy-eight.

"Those issued by the commissioners for the adjustment of the accounts of the quartermaster, commissary, hospital, clothing, and marine departments.

"Those issued by the commissioners for the adjustment of accounts in the respective States.

"Those issued by the late and present paymaster general, or commissioner of army accounts.

"Those issued for the payment of interest, commonly called indents of interest.

"And the bills of credit issued by the authority of the United States in Congress assembled, at the rate of one hundred dollars in the said bills for one dollar in specie.

("SEC. 6.) "That a commissioner be appointed for each State, to reside therein, whose duty it shall be to superintend the subscriptions to the said loan; to open books for the same; to receive the certificates which shall be presented in payment thereof to liquidate the speeie value of such of them as shall not have been before liquidated; to issue the certificates above mentioned in lieu thereof."United States Statutes at Large, vol. 1, pp. 139, 140, and 141. A portion of the tenth section reads as follows: "But as some of the certificates now in circulation have not heretofore been liquidated to specie value,"

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