Part 91

He then adverted to the doctrine of the Court of Equity; and urged that this court must be governed by principle. That were the committee this high court, and the United States the original creditor, and the present possessor before them; and if there appeared no fraud on the part of the possessor, the original creditor would have no just claim on him. That between the United States and original creditors, the United States were in fault, and the claim, if good, would be against them.

Mr. SMITH (of S. C.) remarked, that it was necessary and proper the House should give the subject the most ample discussion. The question had long agitated the public mind, and the people should know that it had occupied the serious attention of their Representatives, and be made acquainted with the principles of their decision. For his part, having bestowed on it the most attentive consideration, he could assert, that the more he contemplated it, the more he was impressed with a conviction, that the proposition was unjust, impolitic, and impracticable. It consisted of two parts: The one was to take away the property of one person; the other was to give that property to another; and this by a voluntary interposition of the House, by a mere act of power, without the assent of the former, or without even the application of the latter. For it was remarkable, that the original holders, who had alienated their certificates, had not come forward with this demand; and it is presumable, that, had they applied for redress, they would reject any indemnification which was the result of such manifest injustice. To prove that this was taking away the property of a citizen by force, he observed, that the purchaser had, by a fair purchase, acquired a right to the full amount of the sum expressed in the certificate, which it was not within the power of the House to divest him of. No tribunal on earth could lawfully deprive a man of his property fairly obtained. The purchaser bought under the act of Congress, making the securities transferable; and having given the market price, without fraud or imposition, he was, by virtue of such purchase, vested with the complete and absolute ownership of the certificate, as fully as the original holder; and had as much right to demand full payment as the original holder would have had, had the security been still in his hands. Even should the House refuse, by an act of power, to pay him more than half his demand, the other half would still remain against the public; it could not be extinguished. The debt would continue to haunt them; the creditors would loudly clamor for justice, and sooner or later the balance would be paid. Then would they incur all the odium of a violation of private rights, without deriving to the public any advantage whatever. He considered the measure as doing a certain evil, that a possible good might result from it. This was not, in his opinion, the proper mode of doing good. Justice cannot be founded on injustice; and to take money out of the pocket of one man, to put it into that of another, is a precedent which may justify future interferences. This step would lead the House to others: for, if the principle be a just one, then the Government should look into all the transactions and speculations of individuals, in order to correct them, and make retribution to every individual according to his losses. He was persuaded, that the true policy of a Legislative body was, to pursue the broad road of justice, clearly marked out before them; for it was an undeniable truth, that whenever they deviated into by-roads and trackless paths, without any other guide than their own imagination, they would get bewildered in a labyrinth of difficulties, and rejoice to trace back their steps, and regain the plain road. Now, the plain line of conduct is, to do strict justice, such as is enforced in judicial tribunals, between man and man, in a similar case. The debtor is bound to pay the debt to the holder of the security; the contract, between the giver of the bond and the person to whom it was given, is done away the moment the latter assigns it to another person. If A gives a bond to B, who parts with it to C, there is no longer any obligation on the part of A to pay B, but he must pay it to C. A has nothing to do with the private negotiations between B and C, nor to inquire what consideration was given for the security. All that he has to inquire is, whether he really signed it and had value received for it, and the amount of it. He cannot say to the holder, you gave but fifty dollars for this security of one hundred dollars, and I will pay you only fifty; for the law will compel him to pay the hundred. This is a point of justice between man and man. Is there another point of law and justice for the Government? By what rule is the Government to square its conduct, if not by those sacred rules which form the basis of civil society, and are the safeguard of private property?

The gentleman from Virginia has said, that giving the present holders, by alienation, the highest market price, would be doing them ample justice; but did the public mean to refund them the money they had actually advanced? No; they were to receive this ample justice by a bit of paper, nominally for ten shillings; but which this very measure would instantly depreciate to eight, or six shillings. They would have this consolation, that, according to the gentleman's reasoning, they would still have a claim against the Government for the balance. For, if the original holder, by selling his certificate for four shillings, has now a just claim against the Government for the balance of sixteen shillings, which it is asserted he has, of course the alienee, to whom the public should now acknowledge a debt of ten shillings, which he would sell for only six, would hereafter have a just demand against the public for four shillings. The reasoning might be carried further, for it would follow, that whenever the public shall pay in paper which shall depreciate, the seller will have a demand against the Government for the difference.

The constitution itself, he said, was opposed to the measure, for it was an ex post facto law, which was prohibited in express terms. The transfer of public securities was lawful at the time these alienations were made; an attempt, therefore, to punish the transferees is an attempt to make an ex post facto law, by making that now unlawful which was lawful at the time it was done. It alters the nature of the transaction, and annexes the idea of guilt to that which at the moment of commission, was not only perfectly innocent, but was explicitly authorized and encouraged by a public act of Congress. By that act those who had money were invited to purchase of those who held securities, and now we are called upon to punish the purchasers who bought under that invitation. The constitution restrains the States from passing any laws impairing the force of contracts; a fortiori is the Legislature of the Union restrained. What an example to hold up to the Judiciary of the United States! How could they annul a State law, when the State would be able to plead a precedent on the part of Congress? The right of property is a sacred right; no tribunal on earth can deprive a citizen of his property, unless for a fair equivalent, for the public welfare. The purchaser is vested, by the sale, with an absolute right, to the full amount of the security, and it is beyond their authority to divest him of it. They might, indeed, by an act of power, declare that he should be paid only half; but his right to the other moiety would not be extinguished. It had been said, that the original holder still had a claim against the public, because he had received only two shillings and sixpence for services worth twenty shillings. On the same principle, and with more justice, the present holder would still have a claim for ten shillings, because he has the public bond for twenty shillings. No ingenuity can overcome these stubborn principles of law and justice; they are immutable, and must ultimately prevail. The House had been told that if the Government had defrauded the original holders out of their dues, it was fit the public should rectify the fraud. The former Government was not deficient in inclination to do them ample justice; but, from the imbecility of the Confederation, had not the means. In those days of democratic enthusiasm, the people were afraid of an energetic Government: having so recently experienced the severity of the former one, the citizens of these States were cautious in trusting any Government with power; and it is not improbable that some of the original holders, who suffered their embarrassments, from the want of a Government competent to the payment of its debts, would themselves have opposed vesting Congress with powers adequate to this object. Even the present constitution, which is a mild one, met with considerable opposition: had it been rejected, the public securities would have never been paid.

Mr. AMES agreed with the gentleman from Virginia (Mr. MADISON) in regard to the validity of the debt. There was propriety in saying the nation is the same, though the Government be changed. The debt is the price of our liberties, and cannot be diminished a farthing, the gentleman from Virginia says; and why? Because the Government, as one of the contracting parties, cannot annul, or vary the bargain without the consent of the other. If the measure proposed by that gentleman corresponds with that sound principle, he should have the pleasure of agreeing with him on the ultimate decision; but if the measure should be found, on a fair discussion, to be subversive of that principle, it would not merit the countenance of the committee.

A claim upon our justice is made, on behalf of the original holders of securities, who have transferred them. Does the plighted faith of the country stand charged to pay the difference between the price their securities sold for in the market and their nominal sum? In order to make the affirmative appear, the worthy gentleman has said, that the paper is the only evidence of a prior contract; and while the paper was sold, the residuary right to the debt still remained in the seller. Supposing this novel doctrine to be true, which cannot be conceded, it will not warrant any conclusion in prejudice of any purchaser of the Loan-office debt; for the paper was given when the loan was made; as no prior debt existed, the paper is the very debt. The gentleman ought, therefore, to confine his motion to the army debt, as his principle seems inapplicable to any other. And even on liquidating the army debt, the certificate extinguished the prior debt; otherwise the public would be twice charged. As, when one man owes another an account, and gives his bond for the balance, the account is no longer of force. By the terms of the certificate, the person transferring has lost his claim against the public. He has freely transferred; for if violence or fraud were practised, the law will afford him redress. In society, as well as in a state of nature, property is changed by the consent of the last occupant. He may dispose of it by gift or at half price, and give a complete title. Nor will the pretence that this transfer was free only in appearance, avail; for the motives which disposed the owner to sell cannot affect the right of the purchaser. Every such creditor risked something; either that the Government would not pay him at all, or not in due season. The risk, computed in free and open market, will be nearly right. It is a kind of insurance against these risks, and the insurers and insured will calculate the rate of insurance better than Government can do it. If there is a new risk of Government interposing, it seems that the purchaser, who may be called the insurer, did not rate his risk high enough. It seems pretty clear, therefore, that there is no claim on the stipulated justice of the country.

The committee rose, reported progress, and obtained leave to sit again.

TUESDAY, February 16.

Public Credit.

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

Mr. MADISON's proposition still under consideration.

Mr. JACKSON observed, that although as young a politician as any on the floor, and convinced that the weight of experience was against him, on so important a national subject, he could not be silent; particularly as he had the honor of seconding the gentleman's motion (Mr. MADISON) now before the House, that it would be therefore expected that he should bring forward his reasons, and the principle which actuated him to it. He confessed, that had he not before leaned to the side of a discrimination, the arguments of that able gentleman would have induced him to support the plan he had brought forward. He was induced on another motive to rise, to show that the numerous arguments of the gentlemen in opposition, yesterday, had not convinced him of the impracticability or injustice of the composition.

The House were told much of the moral obligations we were under of paying our debts, and the impolicy and injustice of interfering with private contracts. The obligation, he believed, was nowhere denied; the debt was of the highest nature; it was the price of our independence: the only difficulty is, how that debt shall be discharged. He would here observe, that the justice of the plan before the House, had not been so fully objected to, as the impracticability, although it had been asserted to be unjust, by some of the gentlemen who had spoken.

He would consider the justice of the proposition. The House had been told the nature of those contracts, and the valuable considerations of them. The contract, as it struck him, fell under the legal terms of do, ut des; I give that thou mayest give--or, I give that I may receive. In all contracts there are three requisites: 1st. The agreement. 2d. The consideration. 3d. The thing to be done or omitted. This consideration is to be an equivalent, or full recompense for the thing to be performed. Let us examine what is the thing to be done, and what the consideration is. The creditor, who was to perform the third article of the contract, held twenty shillings, which was to be given for a valuable consideration. What was this consideration? Two shillings and sixpence. He argued, that if this twenty shillings was worth no more than two shillings and sixpence, the contract was fair and substantial; but, if gentlemen carried the idea further, and declared this twenty shillings was money of equal value with the two shillings and sixpence given, he contended that the contract was destroyed. Equity would relieve, would declare it an unrighteous bargain, that there was not an adequate compensation, and would set aside the contract.

This public opinion is in favor of the original creditor; it is impossible to be otherwise. The people of America are a grateful people, and they cannot, with indifference, view the earnings of those who established their independence, converted into the coffers of the wealthy and ambitious. The speculator, he contended, was already more than satisfied, if it was only on the principle of interest which had accrued for six, seven, and eight years past, and which they had speculated on since.

Mr. BENSON.--The gentlemen in favor of this motion come forward as the advocates of the late army. I wish, therefore, to be ascertained of one fact, do the army wish a measure of this kind to take place? I apprehend they do not; and I am led to this opinion from a knowledge of the habits of military men; they prefer their honor to every pecuniary consideration, and they generally are actuated by that principle alone. I will state a case. Suppose I purchased an officer's certificate for one hundred dollars, and I was to fund it; the Treasurer would say, you are to receive but fifty dollars, the other fifty are reserved for the original holder. Now, if I was to go and tell the officer, that, notwithstanding my purchase of all his right, title, and claim to the one hundred dollars, the Government would give me but fifty, retaining the other fifty for him, he would answer, I will never receive a farthing of it, because it is your money, fairly and honorably purchased of me. Now, in this case, what would you do? Should these fifty dollars fall to the Government, or to me? I reason in this manner, because I suppose this would be a general case. The Society of Cincinnati, of the State of New York, have, by a resolution, which they have published in the papers, disavowed the principle; and, in Rhode Island, a member of the Society was expelled for taking advantage of the tender-law of that State, and paying off a bona fide debt with depreciated paper. I apprehend the principle of action still remains the same throughout the whole of the army. When the soldier conveyed his certificate, there was a contract between the parties, that whatever sum the Government could pay, the whole of it should go to the assignee. Now, by an act of violence, you take the half of it away, and enable the assignor to discharge the contract by paying fifty dollars, when he had engaged that the purchaser should receive one hundred. This is, in effect, the same as the payment of depreciated paper under a tender-law, and would be equally rejected by those whom it is intended to favor.

I would state the case, as if it had happened between the gentleman and myself, could he hesitate to say the whole sum was fairly mine, and surrender it up, notwithstanding the legal interference of the Government? This is a question I would not suffer myself to reason upon; I would not trust my mind with it, lest it should preponderate in favor of self-interest, though against the common principles of truth and justice. I cannot think the army would accept the interposition; we ought, therefore, to be cautious how we trifle with the honor of other people.

I do not pretend to say, that the persons intended to be relieved by the proposed scheme have not a claim against the United States; but I deny that it is a claim upon our equity or justice; it may be a claim upon our humanity; and, whether we will satisfy this claim, depends on circumstances which have no connection with the present question.

Mr. JACKSON.--God forbid, Mr. Chairman, that I should trifle with the honor of men I value, and esteem so highly; it would be the last thing I could think of. But, sir, as a Legislator, I cannot consent that the pittance which was the reward of distinguished services, shall be torn from them by the arts of insidious speculators; but there are others, who have a claim in equity upon our justice, who ought not to be sacrificed to the soldier's honor.

Mr. WHITE said he agreed with the gentleman from Massachusetts (Mr. SEDGWICK) in the principle, that if a contract is made for a valuable consideration, and with the understanding of both parties, the Legislature ought not to interfere in it; and should it appear that the transaction between the original holders of certificates and the purchasers was a fair one, the dispute, in his mind, was at an end. But no gentleman had attempted to show that this was the case, though all the arguments against a discrimination were founded on that supposition. Perhaps it might be said, that every argument ought to be considered as fair; unless the contrary be proved. But where one man has obtained the property of another to the amount of £100 for £10, or £12 10s. the transaction must be explained to him, before he would believe it to be honest. What is the present case? The original holders, who have parted with the evidences of their debts, were principally common soldiers, militiamen, and farmers in indigent circumstances. Who were the purchasers? The Secretary of the Treasury tells us, that the most enlightened among our citizens are the creditors of the United States; common soldiers cannot be comprehended in this description. What must have passed, he asked, between the soldier, the militiaman, or farmer, and the purchaser? What reason could the purchaser assign for offering £10 for a paper which specified an obligation to pay £100? It must be something like this--the States will never pay you; if they do, it will be at a very remote period, so long as to be useless to you; but to relieve your present necessities, I will take the risk on myself, and give you £10. Now, could any enlightened man, he asked, in 1783, or at any subsequent period, in which time the transfers took place, believe that the independence of America was in danger, or that the debts could not be provided for?

He knew so many instances of transactions like that which he had stated, that he doubted not the greater part of the certificates had been obtained by similar means. Indeed he could not conceive any other by which they could be obtained.

He said we were, perhaps, without a precedent in any other nation which would be strictly applicable; but he desired gentlemen to determine for themselves, whether, under such circumstances, the man who had rendered services to his country should be deprived of his reward, or whether the purchaser ought to receive it. He said it was very different in the common transactions of life. If a man purchased a tract of land for £1,000, paid the money, and took a bond for the conveyance, a third person, by informing the purchaser that the seller could not make a title, or by other false suggestions should obtain a transfer of the bond in consideration of £100, and get a conveyance and possession of the land, yet, on repaying the £100, the conveyance would be set aside, and he would be restored to his land.

He gave some other instances of a similar nature, and said, he believed, if a bond, whether due, or to become due, was assigned under such circumstances, that the obligee would be justifiable in contesting it in a court of law, and that the injured person would, on application, obtain redress. He said, that in cases of extreme hardship, Courts of Equity would give relief without express proof of fraud; that this was the law of Great Britain, and was agreeable to the principles of the civil law; that the Roman jurists, he believed, had fixed the point of extreme hardship to one half of the value of the property transferred; in England the court was to judge.

He said he did not think the present holders were strictly entitled to any thing more than the original purchasers; that here the maxim, quoted on the other side of the question, that the assignee stands in the shoes of the assignor, properly applied. You cannot place another on more advantageous ground than that on which you stand yourself. The plea of an innocent purchaser could not take place; the nature of the transaction must appear evident to every man concerned in the transfer.

He said the reverse of this did not hold. An assignee was not always in as advantageous a situation as the assignor; and instanced the case of an executor who should obtain the assignment of his testator's bond at an undervalue; and who, he said, could not retain in his hands the amount of the sum specified in the bond, which the creditor might have recovered, but only the sum which he actually paid for the bond.

He said, that, though in his opinion the present holders of certificates were strictly entitled to no more than what had been paid to the original holders, yet, as an investigation of that circumstance would be involved in inextricable difficulties, and since we were (as had been very properly observed and well expressed by a gentleman from South Carolina) settling the business of a family, he was willing to acquiesce in the motion of his colleague. He said, that arbitrators often gave the injured party less than his due, for peace sake; and he was willing to act on the same principle. He doubted not but courts of justice would give relief in particular cases; but in a matter of that magnitude, he thought the interference of the Legislature very proper. The South Sea business, he thought, in that respect, a good precedent. Two gentlemen had mentioned the business; he would not say they had misstated the transaction, but he thought their accounts imperfect. They said they had the documents under their hands; he wished they had been read; he had them not, but would state from memory what he thought applicable to the case in question. The directors of the South Sea Company, by various arts, induced the people to give as high as £1,000 for £100 stock; in many instances the money was paid, in others it was contracted to be paid. A gentleman has said, that Parliament interfered, not to violate, but to perfect the contract: but what did Parliament do? They confiscated the estates of the directors, and applied the amount to the relief of those who had actually paid their money, and suspended suits against those who had not paid; and authorized the debtors to discharge their debts by the payment of ten per cent. on the real value of the stock subscribed for. But if he was wrong in supposing the present holders ought to stand in the place of the first purchasers, they could be considered only as having purchased, in market, a paper of indefinite value; if, then, they get the highest market price, they are not injured.

He would now endeavor to obviate some of the objections to the measure, on account of its impracticability; and in general terms observed, that much greater pains had been taken to show the impracticability than the injustice of it. He said, if it was just, we ought to adopt it; and he did not doubt but the wisdom of the Legislature would be able to carry it into effect. Purchasers, he said, had been represented as the supporters of public credit; but he could not consider them in that light. The offering a tenth or an eighth part of the value of the bond of an individual would tend rather to blast his credit than to support it; it would have the same effect with respect to the public.

He said he had lived long enough to be convinced that wise and great men, having the same object in view, often differ in opinion with respect to the means of accomplishing it; therefore, every proposition ought to be treated with candor and respect. He made that observation in consequence of what passed yesterday. A gentleman from Massachusetts had introduced his speech in a manner somewhat new--with an apology for an impropriety which he intended to commit. He pursued the arguments of those who went before him, in opposition to the amendment; but his speech consisted principally in an effusion of opprobrious epithets, some of which he repeated, and said, to detail the whole would perhaps fill half a column of a newspaper. He said he felt, on the occasion, not for himself, for he had not expressed his sentiments on the subject under debate, but for the honor of the House, in which, he thought, no such language ought to be used.