University of Virginia Library

FEBRUARY 11. PUBLIC DEBT[135]

No gentleman, Mr. Chairman, has expressed more strongly
than I feel, the importance and difficulty of the subject before
us. Although I have endeavored to view it under all its
aspects, and analyze it in all its principles, yet have I kept

my mind open, and been anxious to aid my own reflections
by the reflected light to be expected from gentlemen on this
floor who enter into the discussion. For this purpose, I
have chosen hitherto rather to be a hearer than a speaker on
the subject, and should even at this moment have continued
in my seat, but that the turn which the business has taken,
renders it requisite for me now, if at all, to trouble the committee
with my reflections, and the opinion in which they have
terminated.

It has been said, by some gentlemen, that the debt itself
does not exist in the extent and form which is generally supposed.
I confess, sir, I differ altogether from the gentlemen
who take that ground. Let us consider, first, by whom the
debt was contracted, and then let us consider to whom it is
due. The debt was contracted by the United States, who,
with respect to that particular transaction, were in a national
capacity. The Goverment was nothing more than the agent
or organ, by which the whole body of the people acted. The
change in the Government which has taken place has enlarged
its national capacity, but it has not varied the national obligation,
with respect to the engagements entered into by that
transaction. For, in like manner, the present Government is
nothing more than the organ, or agent, of the public. The
obligation which they are under, is precisely the same with
that under which the debt was contracted; although the

Government has been changed, the nation remains the same.
There is no change in our political duty, nor in the moral or
political obligation. The language I now use, sir, is the language
of the Constitution itself; it declares that all debts
shall have the same validity against the United States, under
the new, as under the old form of Government. The obligation
remains the same, though I hope experience will prove
that the ability has been favorably varied.

The next question is, to what amount the public are at
present indebted? I conceive the question may be answered
in a few words. The United States owe the value they received,
which they acknowledge, and which they have promised
to pay: what is that value? It is a certain sum in
principal, bearing an interest of six per cent. No logic, no
magic, in my opinion, can diminish the force of the obligation.

The only point on which we can deliberate is, to whom the
payment is really due; for this purpose, it will be proper to
take notice of the several descriptions of people who are
creditors of the Union, and lay down some principles respecting,
them, which may lead us to a just and equitable decision.
As there is a small part of the debt yet unliquidated, it may
be well to pass it by and come to the great mass of the liquidated
debt. It may here be proper to notice four classes into
which it may be divided:

First. Original creditors, who have never alienated their
securities.

Second. Original creditors who have alienated.

Third. Present holders of alienated securities.

Fourth. Intermediate holders, through whose hands securities
have circulated.

The only principles that can govern the decision on their
respective pretensions, I take to be, 1. Public Justice; 2.
public Faith; 3. Public Credit; 4. Public Opinion.

With respect to the first class, there can be no difficulty.
Justice is in their favor, for they have advanced the value
which they claim; public faith is in their favor, for the written

promise is in their hands; respect for public credit is in their
favor, for if claims so sacred are violated, all confidence must
be at an end; public opinion is in their favor, for every honest
citizen cannot but be their advocate.

With respect to the last class, the intermediate holders,
their pretensions, if they have any, will lead us into a labyrinth,
for which it is impossible to find a clew. This will be
the less complained of, because this class were perfectly free,
both in becoming and ceasing to be creditors; and because,
in general, they must have gained by their speculations.

The only rival pretensions then are those of the original
creditors, who have assigned, and of the present holders of
the assignments.

The former may appeal to justice, because the value of the
money, the service, or the property advanced by them, has
never been really paid to them.

They may appeal to good faith, because the value stipulated
and expected, is not satisfied by the steps taken by the
Government. The certificates put into the hands of the
creditors, on closing their settlements with the public, were
of less real value than was acknowledged to be due; they
may be considered as having been forced, in fact, on the
receivers. They cannot, therefore, be fairly adjudged an extinguishment
of the debt. They may appeal to the motives
for establishing public credit, for which justice and faith
form the natural foundation. They may appeal to the precedent
furnished by the compensation allowed to the army
during the late war, for the depreciation of bills, which nominally
discharged the debts. They may appeal to humanity,
for the sufferings of the military part of the creditors can
never be forgotten, while sympathy is an American virtue.
To say nothing of the singular hardship, in so many mouths,
of requiring those who have lost four-fifths or seven-eighths
of their due, to contribute the remainder in favor of those
who have gained in the contrary proportion.

On the other hand, the holders by assignment, have claims,

Which I by no means wish to depreciate. They will say, that
whatever pretensions others may have against the public,
these cannot effect the validity of theirs. That if they gain
by the risk taken upon themselves, it is but the just reward
of that risk. That as they hold the public promise, they have
an undeniable demand on the public faith. That the best
foundation of public credit is that adherence to literal engagements
on which it has been erected by the most flourishing
nations. That if the new Government should swerve from
so essential a principle, it will be regarded by all the world as
inheriting the infirmities of the old. Such being the interfering
claims on the public, one of three things must be done;
either pay both: reject wholly one or the other, or make a
composition between them on some principle of equity. To
pay both is perhaps beyond the public ability; and as it
would far exceed the value received by the public, it will not
be expected by the world, nor even by the creditors themselves.
To reject wholly the claims of either is equally inadmissible;
such a sacrifice of those who possess the written
engagements would be fatal to the proposed establishment of
public credit; it would moreover punish those who had put
their trust in the public promises and resources. To make
the Other class the sole victims is an idea at which human
nature recoils.

A composition, then, is the only expedient that remains;
let it be a liberal one in favor of the present holders, let them
have the highest price which has prevailed in the market;
and let the residue belong to the original sufferers. This will
not do perfect justice; but it will do more real justice, and
perform more of the public faith, than any other expedient
proposed. The present holders, where they have purchased
at the lowest price of the securities, will have a profit that
cannot reasonably be complained of; where they have purchased
at a higher price, the profit will be considerable; and
even the few who have purchased at the highest price cannot
well be losers, with a well funded interest of six per cent.

The original sufferers will not be fully indemnified; but they
will receive, from their country, a tribute due to their merits,
which, if it does not entirely heal their wounds, will assuage
the pain of them. I am aware, that many plausible objections
will lie against what I have suggested, some of which
I foresee and will take some notice of. It will be said, that
the plan is impracticable; should this be demonstrated, I am
ready to renounce it; but it does not appear to me in that
light. I acknowledge that such a scale as has often been a
subject of conversation, is impracticable.

The discrimination proposed by me, requires nothing more
than a knowledge of the present holders, which will be shown
by the certificates; and of the original holders, which the
office documents will show. It may be objected, that if the
Government is to go beyond the literal into the equitable
claims against the United States, it ought to go back to every
case where injustice has been done. To this the answer is
obvious: the case in question is not only different from others
in point of magnitude and of practicability, but forces itself
on the attention of the committee, as necessarily involved in
the business before them. It may be objected, that public
credit will suffer, especially abroad; I think this danger will
be effectually obviated by the honesty and disinterestedness
of the Government displayed in the measure, by a continuance
of the punctual discharge of foreign interest, by the full
provision to be made for the whole foreign debt, and the
equal punctuality I hope to see in the future payments on the
domestic debts. I trust also, that all future loans will be
founded on a previous establishment of adequate funds; and
that a situation, like the present, will be thereby rendered
impossible.

I cannot but regard the present ease as so extraordinary,
in many respects, that the ordinary maxims are not strictly
applicable to it. The fluctuations of stock in Europe, so often
referred to, have no comparison with those in the United
States. The former never exceeded 50, 60, or 70 per cent;

can it be said, that because a Government thought this evil
insufficient to justify an interference, it would view in the
same light a fluctuation amounting to seven or eight hundred
per cent.?

I am of opinion, that were Great Britain, Holland, or any
other country, to fund its debts precisely in the same situation
as the American debt, some equitable interference of the
Government would take place. The South Sea scheme, in
which a change, amounting to one thousand per cent. happened
in the value of stock, is well known to have produced
an interference, and without any injury whatever to the
subsequent credit of the nation. It is true, that in many
respects, the case differed from that of the United States;
but, in other respects, there is a degree of similitude, which
warrants the conjecture. It may be objected, that such a
provision as I propose will exceed the public ability: I do
not think the public unable to discharge honorably all its
engagements, or that it will be unwilling, if the appropriations
shall be satisfactory. I regret, as much as any member,
the unavoidable weight and duration of the burdens to be
imposed; having never been a proselyte to the doctrine, that
public debts are public benefits. I consider them, on the
contrary, as evils which ought to be removed as fast as honor
and justice will permit, and shall heartily join in the means
necessary for that, purpose. I conclude with declaring, as my
opinion, that if any case were to happen among individuals,
bearing an analogy to that of the public, a Court of Equity
would interpose for its redress; or that if a tribunal existed
on earth, by which nations could be compelled to do right,
the United States would be compelled to do something not
dissimilar in its principles to what I have contended for.