CHAP.IV. therefore recommended only by considerations, 1790. the operation of which can never be very extensive. Against it were arranged all who had made purchases, and a great majority of those who conceived that sound policy and honest dealing require a literal observance of public contracts. Not even sellers were united in its support. At the meeting of the cincinnati of New York, a petition which had been offered in favour of the discrimination was taken into consideration, and the vote disapproving its principle, was unanimous. As the enemies to the claims of the actual holders generally founded their hostility on the opinion that the nation ought to profit from the depreciation of the public debt, the decision of congress against a discrimination in favour of the original creditor produced no considerable sensation; but the determination on that part of the secretary's report which was the succeeding subject of deliberation, was understood to affect political interests and powers which are never to be approached without danger, and seemed to unchain all those fierce passions which a high respect for the government and for those who administered it, had in a great measure restrained.

The manner in which the several states entered into and conducted the war of the revolution will be recollected. Acting in some respects separately, and in others conjointly, for the attainment of a common object, their resources were exerted, sometimes under the authority of congress, sometimes under the authority of the local government, to repel the enemy wherever he appeared. The

debt incurred in support of the war was therefore, CHAP. IV. in the first instance, contracted partly by the con- 1790. tinent, and partly by the states. When the system of requisitions was adopted, the transactions of the union were carried on in a great degree through the agency of the states, and when the measure of compensating the army for the depre. ciation of their pay became necessary, this burden, under the recommendation of congress, was assumed by the respective states. Some had funded this debt, and paid the interest upon it. Others had made no provision for the interest; but all, by taxes, paper money, or purchase, had in some measure reduced the principal. In their exertions, some degree of inequality had obtained; and they looked anxiously to a settlement of accounts between them, for the ascertainment of claims which each supposed itself to have upon the union. Measures to effect this object had been taken by the former government; but they were slow in their progress, and there were in the thing itself intrinsic difficulties not easily to be

overcome.

To assume these debts, and to fund them in common with that which continued to be the proper debt of the union, was proposed by the secretary of the treasury.

The resolution which comprehended this principle of the report, was vigorously opposed.

It was contended that the general government would acquire an undue influence, and that the state governments would be annihilated by the measure. Not only would all the influence of the

CHAP. IV. public creditors be thrown into the scale of the 1790. former, but it would absorb all the powers of

taxation, and leave to the latter only the shadow of a government. This would probably terminate in rendering the state governments useless, and would destroy the system so recently established. The union it was said, had been compared to a rope of sand; but gentlemen were cautioned not to push things to the opposite extreme. The attempt to strengthen it might be unsuccessful, and the cord might be strained until it should break.

The constitutional authority of the federal government to assume the debts of the states was questioned. Its powers it was said, were specified, and this was not among them.

The policy of the measure, as it affected merely the government of the union, was controverted, and its justice was arraigned.

On the ground of policy it was objected, that the assumption would impose on the United States a burden, the weight of which was unascertained, and which would require an extension of taxation beyond the limits which pru. dence would prescribe. An attempt to raise the impost would be dangerous; and the excise added to it would not produce funds adequate to the object. A tax on real estate must be resorted to, objections to which had been made in every part of the union. It would be more advisable to leave this source of revenue untouched in the hands of the state governments who could apply to it with more facility, with a better understand

ing of the subject, and with less dissatisfaction to CHAP. IV. individuals than could possibly be done by the government of the United States.

There existed no necessity for taking up this burden. The state creditors had not required it. There was no petition from them upon the subject. There was not only no application from the states, but there was reason to believe that they were seriously opposed to the measure. Many of them would certainly view it with a jealous,...a jaundiced eye. The convention of North Carolina, which adopted the constitution, had proposed as an amendment to it, to deprive congress of the power of interfering between the respective states and their creditors: and there could be no obli gation to assume more than the balances which on a final settlement would be found due to creditor states.

That the debt by being thus accumulated would be perpetuated was also an evil of real magnitude. Many of the states had already made considerable progress in extinguishing their debts, and the process might certainly be carried on more rapidly by them than by the union. A public debt seemed to be considered by some as a public blessing; but to this doctrine they were not converts. If as they believed, a public debt was a public evil, it would be enormously increased by adding those of the states to that of the union.

The measure was unwise too as it would affect public credit. Such an augmentation of the debt must inevitably depreciate its value; since it was the character of paper, whatever denomination it

1790.

CHAP. IV. might assume, to diminish in value in proportion 1790. to the quantity in circulation.

It would also increase an evil which was already sensibly felt. The state debts when assumed by the continent, would, as that of the union had already done, accumulate in large cities; and the dissatisfaction excited by the payment of taxes, would be increased by perceiving that the money raised from the people flowed into the hands of a few individuals. Still greater mischief was to be apprehended. A great part of this additional debt would go into the hands of foreigners; and the United States would be heavily burdened to pay an interest which could not be expected to remain in the country.

The measure was unjust, because it was burdening those states which had taxed themselves highly to discharge the claims of their creditors, with the debts of those which had not made the same exertions. It would delay the settlement of accounts between the individual states and the United States; and the advocates of the measure were openly charged with intending to defeat that settlement.

It was also said that in its execution, the scheme would be found extremely embarrassing, perhaps impracticable. The case of a partial acces. sion to the measure by the creditors, a case which would probably occur, presented a difficulty for which no provision was made, and of which no solution had been given. Should the creditors in some states come into the system, and those in others refuse to change their security, the gov