Part 93

The same rule will apply between the original holder, or person who rendered the service, and present possessor or assignee; for shortness we will distinguish them by the names of soldier and speculator. The speculator, when he dealt with the soldier, must, from the nature of the thing, have induced him to believe that he gave him an equivalent for his purchase; and it might have been an inducement to the soldier to sell, to think he had something more than an equivalent; the speculator thought he had more than an equivalent, throwing necessity on the one side, and fraud on the other, out of the question. Then the confidence was equal, perhaps not a penny between them: I can hardly conceive the exchange took place on any other terms. You never can allow the confidence of the speculator to be estimated very highly, perhaps at not more than one for ten. For if it is admitted, that the speculator had entire confidence, he was guilty of a palpable fraud, and a violation of the first principle of justice; it amounted to this, that he gave £10 in money for £100 bond, which he was certain would be paid. I believe, if the case stood exactly in this form, no man would hesitate in deciding its illegality. If a man takes £100 for £10, it is illegal; but suppose there was a risk, and this risk was considered by the speculator as little less than ten for one, has he not discovered his own mistake when he sees he gets an interest of sixty per cent. on his capital; and that capital tenfold? This contract then ought to be void on the principle of a mistake; and here you place the speculator between Scylla and Charybdis. If he really thought the certificates only worth one for ten, you can give him no credit for his confidence; and you will admit that he ought to be satisfied with a reasonable advance on his purchase. But if you give him entire credit for his confidence in Government, you must give him no credit for his honesty. If both parties had known of this event, the contract would never have taken place. If you pay the whole sum, the speculator ought to take no more than what he gave a fair equivalent for. Gentlemen who seem afraid of giving to the soldier a part of his original claim, lest they affront his nobleness of soul, make no scruple to offer the speculator ten times the sum he is entitled to, on the principle of natural justice, without any apprehension that his honor will receive a wound. If the claim of the soldier was extinguished by receiving two shillings in the pound of the speculator, upon what principle is it contended that the latter should receive more than distributive justice? Arguments, proving that the justice due to the first has been satisfied by what has been done, apply with greater force to the latter.

It has been doubted, and a question has been agitated, whether we shall exercise the power of reconsidering these contracts, and whether a modification is constitutionally in our power? I will not go into this subject, or any other which ought to be taken for granted. I shall take it, that we are authorized, and do mean to interfere; you must act. Do you mean to pay the principal and interest now due? I believe not. Will you shelter yourself under the plea of necessity? That is impossible. I dare say, if the United States were sold, they would at least be worth six hundred millions of dollars; and we have but eighty millions to provide for. Having, then, the means and power, I trust you mean to exercise them; and as you exercise them, you ought to exercise them as justly as possible; then, to do this, you will, it is said, personify the three parties concerned--the United States, the original holder, and the speculator. I do not clearly comprehend the idea of a personified State; perhaps it arises from my dulness of apprehension. Man, in his natural capacity, is sometimes obliged to do what is considered unjust; but a State, when it has power, is not obliged to do what is unjust. The State, then, in this respect, is doing what an honest man would do, if he had the power of conducting this business as he thought proper.

The speculator comes to you with his bond, and tells you it is due. The soldier tells you that he has done services to a considerable amount, for which he never has been paid; and that those evidences of the demand which you gave to him, were obtained from him, for one-tenth part of what they were declared to be worth. The State says to the speculator, you have made a great deal, and out of a man who has risked his life, and borne every burthen which human nature could bear, with the greatest fortitude which the most virtuous heart is capable of exerting, let him have a part back. The speculator answers no; here is your bond. Consider again, replies the State, that the veteran's services, at the expense of his health and property, at the risk of his life, has saved you and yours; and not only that, but he is obliged to pay of your demand, more than he has ever received. What is now his answer? Here is the bond, pay me my bond. Under these circumstances, supposing the State an individual, he might, without much infamy to his character, exercise the power which he has over his own bond, in order to do justice between the parties. He might say to the speculator, you had the soldier in your power; you did him injustice; we have you now in our power, we will do you complete justice, but no more. A private man could never be injured in his reputation by such conduct: indeed, according to the result of these circumstances, the hardships of war, and the breach of contract, have unfortunately inflicted upon the man, the most meritorious in this community, or perhaps in any other community, sufferings and miseries--a punishment sufficient to atone for the guilt of the greatest crimes. This, in the event, appears to be the situation of the saviors of America.

Mr. Madison said that the opponents of his proposition had imposed on its friends not only a heavy task, by the number of their objections, but a delicate one by the nature of some of them. It had been arranged as an embarrassing measure which ought to be facilitated, and producing discussions which might end in disagreeable consequences. However painful it might be to contradict the wishes of gentlemen whom he respected, he could promise nothing more, in the present case, than his endeavors to disappoint their apprehensions. When his judgment could not yield to the propositions of others, the right to make and support his own, was a right which he could never suffer to be contested. In exercising it, he should study to maintain that moderation and liberality which were due to the greatness of the subject before the committee. He felt pleasure in acknowledging, that the like spirit had, in general, directed the arguments on the other side. Free discussions thus conducted are not only favorable to a right decision, but to a cheerful acquiescence of the mistaken opponents of it. They might have the further advantage of recommending the result to the public, by fully explaining the grounds of it. If the pretensions of a numerous and meritorious class of citizens be not well founded, or cannot be complied with, let them see that this is the case, and be soothed, under their disappointment, with the proof that they have not been overlooked by their country.

He would proceed now to review the grounds on which the proposition had been combated; which he should do without either following those who had wandered from the field of fair argument, or avoiding those who had kept within its limits.

It could not have escaped the committee, that the gentlemen to whom he was opposed, had reasoned on this momentous question as on an ordinary case in a court of law; that they had equally strained all the maxims that could favor the purchasing, or be adverse to the original holder; and that they dwelt with equal pleasure on every circumstance which could brighten the pretensions of the former, or discredit those of the latter. He had not himself attempted, nor did he mean to undervalue the pretensions of the actual holders. In stating them, he had even used as strong terms as they themselves could have dictated; but beyond a certain point he could not go. He must renounce every sentiment which he had hitherto cherished, before his complaisance could admit that America ought to erect the monuments of her gratitude, not to those who saved her liberties, but to those who had enriched themselves in her funds.

All that he wished was, that the claims of the original holders, not less than those of the actual holders, should be fairly examined and justly decided. They had been invalidated by nothing yet urged. A debt was fairly contracted; according to justice and good faith, it ought to have been paid in gold or silver; a piece of paper only was substituted. Was this paper equal in value to gold or silver? No. It was worth, in the market, which the argument for the purchasing holders makes the criterion, no more than one-eighth or one-seventh of that value. Was this depreciated paper freely accepted? No. The Government offered that or nothing. The relation of the individual to the Government, and the circumstances of the offer, rendered the acceptance a forced, not a free one. The same degree of constraint would vitiate a transaction between man and man, before any Court of Equity on the face of the earth. There are even cases where consent cannot be pretended; where the property of the planter or farmer had been taken at the point of the bayonet, and a certificate presented in the same manner. But why did the creditors part with their acknowledgment of the debt? In some instances, from necessity; in others, from a well-founded distrust of the public. Whether from the one, or the other, they had been injured; they had suffered loss, through the default of the debtor; and the debtor cannot, in justice or honor, take advantage of the default.

Here, then, was a debt acknowledged to have been once due, and which was never discharged; because the payment was forced and defective. The balance, consequently, is still due, and is of as sacred a nature as the claims of the purchasing holder can be; and if both are not to be paid in the whole, is equally entitled to payment in part.

He begged gentlemen would not yield too readily to the artificial niceties of forensic reasoning; that they would consider not the form, but the substance--not the letter, but the equity--not the bark, but the pith of the business. It was a great and an extraordinary case; it ought to be decided on the great and fundamental principles of justice. He had been animadverted upon, for appealing to the heart as well as the head; he would be bold, nevertheless, to repeat, that, in great and unusual questions of morality, the heart is the best judge.

It had been said, by a member from Massachusetts, that the proposition was founded on a new principle in Congress. If the present Congress be meant, that is not strange, for Congress itself is new; if the former Congress be meant, it is not true, for the principle is found in an act which had been already cited. After the pay of the army had, during the war, been nominally and legally discharged in depreciated paper, the loss was made up to the sufferers.

It had been said, by a member from New York, that this case was not parallel, there being no third party like the present holders of certificates. This objection could not be valid. The Government paid ten dollars' worth in fact, but only one to the soldier. The soldier was then the original holder. The soldier assigned it to the citizen; the citizen then became the actual holder. What was the event? The loss of the original holder was repaired, after the actual holder had been settled with, according to the highest market value of his paper.

He did not mean, however, to decide on the whole merits of this last transaction; or to contend for a similitude, in all respects, between the two kinds of paper. One material difference was, that the bills of credit, by more frequent transfers, and by dividing the change of value among a greater number of hands, rendered the effect of less consequence to individuals, and less sensible to the public mind. But this difference, whatever force it might give to the claims of the purchasing holder of certificates, could diminish nothing from the claims of the original holders who assigned them.

It had been said, by another member from Massachusetts, that the old Government did every thing in its power. It made requisitions, used exhortations, and in every respect discharged its duty; but it was to be remembered, that the debt was not due from the Government, but the United States. An attorney, with full powers to form, without the means to fulfil engagements, could never, by his ineffectual, though honest efforts, exonerate his principal.

He had been repeatedly reminded of the address of Congress in 1783, which rejected a discrimination between original and purchasing holders. At that period, the certificates to the army, and citizens at large, had not been issued. The transfers were confined to loan-office certificates, were not numerous, and had been, in great part, made with little loss to the original creditor. At present, the transfers extend to a vast proportion of the whole debt, and the loss to the original holders has been immense. The injustice which has taken place has been enormous and flagrant, and makes redress a great national object. This change of circumstances destroys the argument from the act of Congress referred to; but if implicit regard is to be paid to the doctrines of that act, any modification of the interest of the debt will be as inadmissible as a modification of the principal.

It had been said, that if the losses of the original creditors are entitled to reparation, Congress ought to repair those suffered from paper money--from the ravages of the war, and from the act of barring claims not produced within a limited time. As to the paper money, either the case is applicable, or it is not: if not applicable, the argument fails; if applicable, either the depreciated certificates ought to be liquidated by a like scale, as was applied to the depreciated money; or the money, even if the whole mass of it was still in circulation, ought to be literally redeemed, like the certificates. Leaving the gentleman to make his own choice of these dilemmas, he would only add, himself, that if there were no other difference between the cases, the manifest impossibility of redressing the one, and the practicability of redressing the other, was a sufficient answer to the objection. With respect to the towns burnt, and other devastations of war, it was taught, by the writers on the law of nations, that they were to be numbered among the inevitable calamities of mankind. Still, however, a Government owed them every alleviation which it could conveniently afford; but no authority could be found that puts on the same footing with those calamities, such as proceed from a failure to fulfil the direct and express obligations of the public. The just claims barred by the act of limitation, were, in his opinion, clearly entitled to redress. That act was highly objectionable. The public, which was interested in shortening the term, undertook to decide, that no claim, however just, should be admitted, if not presented within nine months. The act made none of the exceptions usual in such acts, not even in favor of the most distant parts of the Union. In many instances, it had been absolutely impossible for the persons injured to know of the regulation. Some of these instances were within his own knowledge. To limit the duration of a law to a period, within which it could not possibly be promulged, and then take advantage of the impossibility, would be imitating the Roman tyrant, who posted up his edicts so high that they could not be read, and then punished the people for not obeying them.

It has been said, that if the purchased certificates were funded at the rate proposed, they would fall in the market, and the holders be injured. It was pretty certain, that the greater part, at least, would be gainers. He believed that the highest market price, especially with the arrears of interest incorporated, well funded at six per cent, would prevent every loss that could justify complaint.

But foreigners had become purchasers, and ought to be particularly respected. Foreigners, he remarked, had themselves made a difference between the value of the foreign and domestic debt; they would, therefore, the less complain of a difference made by Government here. It was his opinion that the term stated in the proposition would yield a greater profit to the foreign purchasers than they could have got for their money if advanced by them in any of the funds of Europe.

The proposition had been charged with robbing one set of men to pay another. If there were robbery in the case, it had been committed on the original creditors. But, to speak more accurately, as well as more moderately, the proposition would do no more than withhold a part from each of two creditors, where both were not to be paid the whole.

A member from New York has asked whether an original creditor, who had assigned his certificate, could, in conscience, accept a reimbursement in the manner proposed? He would not deny that assignments might have been made with such explanations, or under such circumstances, as would have that effect; but, in general, the assignments have been made with reference merely to the market value, and the uncertainty of the steps that might be taken by the Government. The bulk of the creditors had assigned under circumstances from which no scruples could arise. In all cases where a scruple existed, the benefit of the provision might be renounced. He would, in turn, ask the gentleman, whether there was not more room to apprehend that the present holder, who had got his certificate of a distressed and meritorious fellow-citizen for one-eighth or one-tenth its ultimate value, might not feel some remorse in retaining so unconscionable an advantage?

Similar propositions, it was said, had been made and rejected in the State Legislatures. This was not a fact. The propositions made in the State Legislatures were not intended to do justice to the injured, but to seize a profit to the public.

But no petitions for redress had come from the sufferers. Was merit, then, to be the less regarded, because it was modest? Perhaps, however, another explanation ought to be given. Many of the sufferers were poor and uninformed. Those of another description were so dispersed, that their interests and efforts could not be brought forward. The case of the purchasing holders was very different.

The constitutionality of the proposition had been drawn into question. He asked whether words could be devised that would place the new Government more precisely in the same relation to the real creditors with the old? The power was the same; the obligation was the same. The means only were varied.

An objection had been drawn from the article prohibiting ex post facto laws. But as ex post facto laws relate to criminal, not civil cases, the constitution itself requires this definition, by adding to a like restriction on the States an express one against retrospective laws of a civil nature.

It had been said, that foreigners had been led to purchase, by their faith in the article of the constitution relating to the public debts. He would answer this objection by a single fact: Foreigners had shown, by the market price in Europe, that they trusted the nature of foreign debt more under the old Government, than the nature of the domestic debt under the new Government.

Objections to the measure had been drawn from its supposed tendency to impede public credit. He thought it, on the contrary, perfectly consistent with the establishment of public credit. It was in vain to say, that Government ought never to revise measures once decided. Great caution on this head ought, no doubt, to be observed; but there were situations in which, without some legislative interposition, the first principles of justice, and the very ends of civil society, would be frustrated. The gentlemen themselves had been compelled to make exceptions to the general doctrine; they would probably make more before the business was at an end.

It had been urged, that if Government should interpose in the present case, as interposition would be authorized in any case whatever where the stock might fluctuate, the principle would apply as well to a fall of sixty or seventy per cent. as to a fall of six hundred or seven hundred per cent. He could not admit this inference. A distinction was essential between an extreme case, and a case short of it. The line was difficult to be drawn; but it was no more incumbent on him than on his opponents to draw it. They themselves could not deny that a certain extremity of the evil would have justified the interposition. Suppose that the distress of the alienating creditors had been ten times as great as it was; that instead of two, three, and four shillings in the pound, they had received a farthing only in the pound; and that the certificates lay now in the hands of the purchasers in that state, or even at a less value, was there a member who would rise up and say, that the purchasers ought to be paid the entire nominal sum, and the original sufferer be entitled to no indemnification whatever?

Gentlemen had triumphed in the want of a precedent to the measure. No government, it was said, had interposed to redress fluctuations in its public paper. But where was the government that had funded its debts under the circumstances of the American debt? If no government had done so, there could be no precedent either for or against the measure, because the occasion itself was unprecedented. And if no similar occasion had before existed in any country, the precedent to be set would at least be harmless, because no similar occasion would be likely to happen in this.

If gentlemen persisted, however, in demanding precedents, he was happy in being able to gratify them with two, which, though not exactly parallel, were, on that account, of the greater force, since the interposition of Government had taken place where the emergency could less require them.