2032. DEBT (Revolutionary), Divisions of.—
The first and great division of our federal
debt, is, into 1, foreign; and 2, domestic.
The foreign debt comprehends, 1, the loan from
the government of Spain; 2, the loans from the
government of France, and from the Farmers
General; 3, the loans negotiated in Holland by
order of Congress. This branch of our debt
stands absolutely singular; no man in the United
States having ever supposed that Congress, or
their legislatures, can, in any wise, modify or
alter it. They justly view the United States
as the one party, and the lenders as the other,
and that the consent of both would be requisite,
were any modification to be proposed. But with
respect to the domestic debt, they consider Congress
as representing both the borrowers and
lenders, and that the modifications which have
taken place in this have been necessary to do
justice between the two parties, and that they
flowed properly from Congress as their mutual
umpire. The domestic debt comprehends, 1,
the army debt; 2, the loan office debt; 3, the liquidated
debt; and 4, the unliquidated debt. The
first term includes debts to the officers and soldiers
for pay, bounty and subsistence. The
second term means moneys put into the loan
office of the United States. The third comprehends
all debts contracted by quarter-masters,
commissaries, and others duly authorized
to procure supplies for the army, and which
have been liquidated (that is, settled) by commissioners
appointed under the resolution of
Congress, of June 12, 1780, or by the officers
who made the contract. The fourth comprehends
the whole mass of debts, described in the
preceding article, which have not yet been liquidated.
These are in a course of liquidation
and are passing over daily into the third class.
* * * No time is fixed for the payment of
the debts of this third class, that is the liquidated
debt; no fund is yet determined, nor any
firm provision for the interest in the meantime.
The consequence is that the certificates of these
debts sell greatly below par. When I left America,
they could be bought for from two shillings
and sixpence to fifteen shillings in the
pound; this difference proceeding from the circumstance
of some States having provided for
paying the interest on those due in their own
State, which others had not. Hence, an opinion
had arisen with some, and propositions had
even been made in the legislatures, for paying
off the principal of these debts with what they
had cost the holder, and interest on that. This
opinion is far from being general, and I think
will not prevail. But it is among possible
events.—
To Messrs. Van Staphorst. Washington ed. i, 471.
Ford ed., iv, 106.
(P.
1785)
