Part 90

NAYS.--Messrs. Baldwin, Bland, Burke, Coles, Huger, Jackson, Matthews, Sylvester, Smith, (of South Carolina,) Stone, and Tucker--14.

The memorials were referred accordingly.

MONDAY, February 15.

Public Credit.

The House went again into a Committee of the Whole on the report of the Secretary of the Treasury, Mr. BALDWIN in the chair.

Mr. MADISON's motion for a discrimination being under consideration,

Mr. SEDGWICK.--The proposition, Mr. Chairman, contains a question of the utmost importance. And the committee must be obliged to the gentleman who brought it forward for his very ingenious discussion of the subject of the domestic debt. With respect to the question now before the committee, so much has been said, that I think it will not be necessary to consume much of their time in the investigation. On the subject of contracts I have to observe, that whenever a voluntary engagement is made for a valuable consideration for property advanced or services rendered, and the terms of the contract are understood, if no fraud or imposition is practised, the party engaging is bound to the performance, according to the literal meaning of the words in which it is expressed. Such contract, whether of a Government or an individual, may be either transferable or not transferable. The latter species of contract receives an additional value from its capacity of being transferred, if the circumstances of the possessor should render a sale of it necessary or convenient to him. To render the transferable quality of such evidences of contract in any degree advantageous to the possessor, it is necessary to consider, in case of sale, the alienee possessed of all the property of the original holder; and indeed it is highly absurd, and even contradictory, to say, that such evidences of debt are transferable, and at the same time to say that there is in them a kind of property that the holder could not convey by bona fide contract.

This is the construction which has invariably been given to these contracts, whether formed by Government or by individuals. To deprive the citizen of the power of binding himself by his own voluntary contract, or to prevent a disposition of property in its nature alienable, would be a violent and unjustifiable invasion of one of those rights of which man, as a citizen, is the most tenacious, and would indeed break one of the strongest bonds by which society is holden together.

In the transfers which have been made, the contracts were fairly made; the whole rights have been transferred. It is not pretended any fraud or imposition has been practised. The risk was calculated by the parties, and it was observed, that the risk contemplated a revolution in the Government.

From the foregoing deduction of particulars, it is presumed to be proved that a property is vested in the transferees. That if this property is divested by the Government, the law for that purpose would have a retrospective operation, and that no ex post facto law could be more alarming than that by which the right of private property is violently invaded.

Having considered the nature of the contract, and of the obligations which result from it, I beg leave to call the attention of the committee to those circumstances by which that obligation may be destroyed, impaired, or suspended. They are stated to be, 1. Performance. 2. Voluntary discharge. 3. Composition. 4. Inability.

And gentlemen are called upon to give information of any other causes which can produce either of those effects.

With regard, more particularly, to the proposition before the committee, I have, to observe, that with regard to these contracts, there has existed a depreciation in consequence of the failure of Government regularly to pay the interest. That in this depreciated state, the securities have been alienated; that of course the original holders have sustained a loss; that if the loss resulted from the fault, and not the misfortune of Government, the creditors have, undeniably, a demand against the Government for compensation; that this demand, however well founded, can never authorize the Government to invade the honestly acquired property of the present possessors, a property warranted by the terms of the contract itself, and sanctioned by the act of Congress, of April, 1783, and the validity of it recognized by the constitution we have sworn to support.

With regard to the claims of the original holders, it is, however, observable, that the domestic creditor, at the time the contract was formed, well knew the nature of the constitution of the Government administered by Congress, the other contracting party; that its power of performance depended on the ability and good-will of the States; that Congress had always performed its duty, had made the necessary requisitions; that this was its utmost power; and that the failure had arisen wholly from the neglect of the States. I therefore submit it to the committee, whether, if the original holder has a just or equitable demand, he should not resort to the State of which he is a member?

I admit, that the case of an original holder is indeed a hard one; that I have a respect for his misfortunes and for his pretensions; that if satisfaction is discovered to be just and practicable, I would not hesitate to go to the utmost ability of the Government for that purpose. But let me ask, what merit will the Government possess, if it strip one class of citizens, who have acquired property by the known and established rules of law, under the specious pretence of doing justice to another class of citizens?

It was implicitly agreed, that eighty per cent. depreciation would not authorize the interference proposed by the motion. I ask, then, for some point of depreciation to be pointed out, which will authorize such interference.

The question for which I contend has received the universal approbation of mankind; there are no instances of the interference contended for, and this general sense of mankind affords me some evidence of truth.

This contract was founded on a valuable consideration. It was the price of our liberty and independence. The possessor claimed, according to the very terms of the contract, though it is not pretended that the engagements of Government have been performed. No composition with the creditors is proposed; nor is the proposition founded on any pretended inability of the Government; for to comply with the intention of it, 1,600,000 dollars, annually, more than is proposed by the report of the Secretary, would be required.

By reason of the circumstances which have taken place, the honorable gentleman (Mr. MADISON) supposes, that, if the whole amount of a security shall be paid to the present possessor, he will have a sum of money to which the original holder is equitably entitled. If this is true, then, no interposition is necessary, it being a well-known rule of law, that an action will always lie to recover money out of the hands of another, to which the plaintiff, from the principles of equity and good conscience, is entitled.

With regard to the effects, which will probably result from this measure, I have to observe, that they will be destructive to our national character. That the world is now willing, charitably, to impute our former miscarriages to events we could not control; but should our first measures, in regard to public faith, be a violent infraction of our contracts, it will sanction all our bitterest enemies have said, to our disadvantage. With regard to its effects on credit, little dependence will be placed on the plighted faith of a Government which, under the pretence of doing equity, has exercised a power of dispensing with its contracts, and has thereby formed for itself a precedent of future violations, both with respect to its funds and contracts. With regard to discovering who was the original holder, except so far as respects the army debt, I am certain there are no documents by which the necessary facts can be discovered.

I presume it is a fact, with regard to much the greater part of the debt, that any fictitious name was inserted. And with regard to the army debt, the soldiers, generally, who were in the service at the conclusion of the war, had received ample satisfaction for their services, at the time of their enlistment, having been paid more, on an average, than two hundred and fifty dollars per man.

I have only to add, that the proposed system will lay a foundation for infinite frauds and perjuries, and that it will, beyond all powers of calculation, multiply the evils of speculation.

Mr. LAWRENCE observed, that the proposition of the gentleman from Virginia (Mr. MADISON) derived force from the talents and knowledge of that gentleman in public transactions; but that, on examination, it would be found to contain doctrines very repugnant to the interest and prosperity of the Union.

He then stated, that the debts contracted by the United States were for loans of money, supplies of articles necessary for the public wants, and for actual services rendered in different employments. That these debts were ultimately adjusted and reduced to their present transferable form. That every part of the contract was essential to it. The negotiability was a material part. That the nature of the contract was frequently recognized by the late Government. That, in 1783, Congress recommended certain funds to be established to pay the interest, and put the principal in a course of discharge. That this recommendation was unequivocal, as to the nature of it, and made no discrimination between the possessor and original holder. That the subsequent conduct of that body was conformable to this recommendation. That they had annually called on the States to furnish money to pay the interest, without discriminating between the original holder and present possessor. That they had paid interest on the securities, without making any discrimination. That provision had been made for holders of loan-office certificates that were subject to liquidation, to have them cancelled, and others issued for the specie value. That the holders of certificates were enabled to have them registered, to guard against accidents; and that no distinction was made between the original holder and the alienee. That the transferable nature of the claim was for the benefit of the creditor, because it gave it an active value. That he consented to take it, and consulted his own advantage. That the conduct of the late Congress, since the war, had been uniform in the support of this contract, and they had done no act to impair its obligation, according to the terms of it. That this contract was valid against the Government; for, notwithstanding the truth of the gentleman's observations, that the nation is the same, though the bodies that administered the Government were different, there was yet far greater security; and to remove all doubt, a clause that made all debts and engagements valid against the United States, under the late General Government, valid against the present, was inserted in the constitution.

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.