Meeting of congress.... President's speech.... Report of the
secretary of the treasury on public credit.... Debate
thereon.... Bill for fixing the permanent seat of
government.... Adjournment of congress.... Treaty with the
Creek Indians.... Relations of the United States with Great
Britain and Spain.... The President visits Mount Vernon....
Session of congress.... The President's speech.... Debates
on the excise.... On a national bank.... The opinions of the
cabinet on the law.... Progress of parties.... War with the
Indians.... Defeat of Harmar.... Adjournment of congress.
{1790}
On the eighth of January, 1790, the President met both houses of
congress in the senate chamber.
[Sidenote: Meeting of the second session of the first congress.]
In his speech, which was delivered from the chair of the vice
president, after congratulating congress on the accession of the
important state of North Carolina to the union, and on the prosperous
aspect of American affairs, he proceeded to recommend certain great
objects of legislation to their more especial consideration.
"Among the many interesting objects," continued the speech, "which
will engage your attention, that of providing for the common defence
will merit your particular regard. To be prepared for war is one of
the most effectual means of preserving peace.
"A free people ought not only to be armed but disciplined; to which
end, a uniform and well digested plan is requisite; and their safety
and interest require that they should promote such manufactories as
tend to render them independent on others for essential, particularly
for military supplies."
As connected with this subject, a proper establishment for the troops
which they might deem indispensable, was suggested for their mature
deliberation; and the indications of a hostile temper given by several
tribes of Indians, were considered as admonishing them of the
necessity of being prepared to afford protection to the frontiers, and
to punish aggression.
The interests of the United States were declared to require that the
means of keeping up their intercourse with foreign nations should be
provided; and the expediency of establishing a uniform rule of
naturalization was suggested.
After expressing his confidence in their attention to many
improvements essential to the prosperity of the interior, the
President added, "nor am I less persuaded that you will agree with me
in opinion that there is nothing which can better deserve your
patronage than the promotion of science and literature. Knowledge is
in every country the surest basis of public happiness. In one, in
which the measures of government receive their impression so
immediately from the sense of the community as in ours, it is
proportionably essential. To the security of a free constitution it
contributes in various ways: by convincing those who are intrusted
with the public administration, that every valuable end of government
is best answered by the enlightened confidence of the people; and by
teaching the people themselves to know and to value their own rights;
to discern and provide against invasions of them; to distinguish
between oppression and the necessary exercise of lawful authority;
between burdens proceeding from a disregard to their convenience, and
those resulting from the inevitable exigencies of society; to
discriminate the spirit of liberty from that of licentiousness,
cherishing the first, avoiding the last, and uniting a speedy but
temperate vigilance against encroachments, with an inviolable respect
to the laws.
"Whether this desirable object will be best promoted by affording aids
to seminaries of learning already established, by the institution of a
national university, or by any other expedients, will be well worthy
of a place in the deliberations of the legislature."
Addressing himself then particularly to the representatives he said:
"I saw with peculiar pleasure at the close of the last session, the
resolution entered into by you, expressive of your opinion, that an
adequate provision for the support of the public credit is a matter of
high importance to the national honour and prosperity. In this
sentiment I entirely concur; and to a perfect confidence in your best
endeavours to devise such a provision as will be truly consistent with
the end, I add an equal reliance on the cheerful co-operation of the
other branch of the legislature. It would be superfluous to specify
inducements to a measure in which the character and permanent
interests of the United States are so obviously and so deeply
concerned; and which has received so explicit a sanction from your
declaration."
Addressing himself again to both houses, he observed, that the
estimates and papers respecting the objects particularly recommended
to their attention would be laid before them; and concluded with
saying, "the welfare of our country is the great object to which our
cares and efforts ought to be directed: and I shall derive great
satisfaction from a co-operation with you in the pleasing though
arduous task of insuring to our fellow citizens the blessings which
they have a right to expect from a free, efficient, and equal
government."
The answers of both houses were indicative of the harmony which
subsisted between the executive and legislative departments.
Congress had been so occupied during its first session with those
bills which were necessary to bring the new system into full
operation, and to create an immediate revenue, that some measures
which possessed great and pressing claims to immediate attention had
been unavoidably deferred. That neglect under which the creditors of
the public had been permitted to languish could not fail to cast an
imputation on the American republics, which had been sincerely
lamented by the wisest among those who administered the former
government. The power to comply substantially with the engagements of
the United States being at length conferred on those who were bound by
them, it was confidently expected by the friends of the constitution
that their country would retrieve its reputation, and that its fame
would no longer be tarnished with the blots which stain a faithless
people.
[Sidenote: Report of the secretary of the treasury of a plan for the
support of public credit.]
On the 9th of January, a letter from the secretary of the treasury to
the speaker of the house of representatives was read, stating that in
obedience to the resolution of the 21st of September, he had prepared
a plan for the support of public credit, which he was ready to report
when the house should be pleased to receive it; and, after a short
debate in which the personal attendance of the secretary for the
purpose of making explanations was urged by some, and opposed by
others, it was resolved that the report should be received in writing
on the succeeding Thursday.
Availing himself of the latitude afforded by the terms of the
resolution under which he acted, the secretary had introduced into his
report an able and comprehensive argument elucidating and supporting
the principles it contained. After displaying, with strength and
perspicuity, the justice and the policy of an adequate provision for
the public debt, he proceeded to discuss the principles on which it
should be made.
"It was agreed," he said, "by all, that the foreign debt should be
provided for according to the precise terms of the contract. It was to
be regretted that, with respect to the domestic debt, the same
unanimity of sentiment did not prevail."
The first point on which the public appeared to be divided, involved
the question, "whether a discrimination ought not to be made between
original holders of the public securities, and present possessors by
purchase." After reviewing the arguments generally urged in its
support, the secretary declared himself against this discrimination.
He deemed it "equally unjust and impolitic; highly injurious even to
the original holders of public securities, and ruinous to public
credit." To the arguments with which he enforced these opinions, he
added the authority of the government of the union. From the circular
address of congress to the states, of the 26th of April, 1783,
accompanying their revenue system of the 18th of the same month,
passages were selected indicating unequivocally, that in the view of
that body the original creditors, and those who had become so by
assignment, had equal claims upon the nation.
After reasoning at great length against a discrimination between the
different creditors of the union, the secretary proceeded to examine
whether a difference ought to be permitted to remain between them and
the creditors of individual states.
Both descriptions of debt were contracted for the same objects, and
were in the main the same. Indeed, a great part of the particular
debts of the states had arisen from assumptions by them on account of
the union; and it was most equitable that there should be the same
measure of retribution for all. There were many reasons, some of which
were stated, for believing this would not be the case, unless the
state debts should be assumed by the nation.
In addition to the injustice of favouring one class of creditors more
than another which was equally meritorious, many arguments were urged
in support of the policy of distributing to all with an equal hand
from the same source.
After an elaborate discussion of these and some other points connected
with the subject, the secretary proposed that a loan should be opened
to the full amount of the debt, as well of the particular states, as
of the union.
The terms to be offered were,--
First. That for every one hundred dollars subscribed payable in the
debt, as well interest as principal, the subscriber should be entitled
to have two-thirds funded on a yearly interest of six per cent, (the
capital redeemable at the pleasure of government by the payment of the
principal) and to receive the other third in lands of the western
territory at their then actual value. Or,
Secondly. To have the whole sum funded at a yearly interest of four
per cent., irredeemable by any payment exceeding five dollars per
annum both on account of principal and interest, and to receive as a
compensation for the reduction of interest, fifteen dollars and eighty
cents, payable in lands as in the preceding case. Or,
Thirdly. To have sixty-six and two-thirds of a dollar funded at a
yearly interest of six per cent., irredeemable also by any payment
exceeding four dollars and two-thirds of a dollar per annum on account
both of principal and interest, and to have at the end of ten years
twenty-six dollars and eighty-eight cents funded at the like interest
and rate of redemption.
In addition to these propositions the creditors were to have an option
of vesting their money in annuities on different plans; and it was
also recommended to open a loan at five per cent, for ten millions of
dollars, payable one half in specie, and the other half in the debt,
irredeemable by any payment exceeding six dollars per annum both of
principal and interest.
By way of experiment, a tontine on principles stated in the report was
also suggested.
The secretary was restrained from proposing to fund the whole debt
immediately at the current rate of interest, by the opinion, "that
although such a provision might not exceed the abilities of the
country, it would require the extension of taxation to a degree, and
to objects which the true interest of the creditors themselves would
forbid. It was therefore to be hoped and expected, that they would
cheerfully concur in such modifications of their claims, on fair and
equitable principles, as would facilitate to the government an
arrangement substantial, durable, and satisfactory to the community.
Exigencies might ere long arise which would call for resources greatly
beyond what was now deemed sufficient for the current service; and
should the faculties of the country be exhausted, or even strained to
provide for the public debt, there could be less reliance on the
sacredness of the provision.
"But while he yielded to the force of these considerations, he did not
lose sight of those fundamental principles of good faith which dictate
that every practicable exertion ought to be made, scrupulously to
fulfil the engagements of government; that no change in the rights of
its creditors ought to be attempted without their voluntary consent;
and that this consent ought to be voluntary in fact, as well as in
name. Consequently, that every proposal of a change ought to be in the
shape of an appeal to their reason and to their interest, not to their
necessities. To this end it was requisite that a fair equivalent
should be offered, for what might be asked to be given up, and
unquestionable security for the remainder." This fair equivalent for
the proposed reduction of interest was, he thought, offered in the
relinquishment of the power to redeem the whole debt at pleasure.
That a free judgment might be exercised by the holders of public
securities in accepting or rejecting the terms offered by the
government, provision was made in the report for paying to
non-subscribing creditors, a dividend of the surplus which should
remain in the treasury after paying the interest of the proposed
loans: but as the funds immediately to be provided, were calculated to
produce only four per cent, on the entire debt, the dividend, for the
present, was not to exceed that rate of interest.
To enable the treasury to support this increased demand upon it, an
augmentation of the duties on imported wines, spirits, tea, and
coffee, was proposed, and a duty on home made spirits was also
recommended.
This celebrated report, which has been alike the fruitful theme of
extravagant praise and bitter censure, merits the more attention,
because the first regular and systematic opposition to the principles
on which the affairs of the union were administered, originated in the
measures which were founded on it.
On the 28th of January, this subject was taken up; and, after some
animadversions on the speculations in the public debt to which the
report, it was said, had already given birth, the business was
postponed until the eighth of February, when it was again brought
forward.
[Sidenote: Debate thereon.]
Several resolutions affirmative of the principles contained in the
report, were moved by Mr. Fitzsimmons. To the first, which respected a
provision for the foreign debt, the house agreed without a dissenting
voice. The second, in favour of appropriating permanent funds for
payment of the interest on the domestic debt, and for the gradual
redemption of the principal, gave rise to a very animated debate.
Mr. Jackson declared his hostility to funding systems generally. To
prove their pernicious influence, he appealed to the histories of
Florence, Genoa, and Great Britain; and, contending that the subject
ought to be deferred until North Carolina should be represented,
moved, that the committee should rise. This question being decided in
the negative, Mr. Scott declared the opinion that the United States
were not bound to pay the domestic creditors the sums specified in the
certificates of debts in their possession. He supported this opinion
by urging, not that the public had received less value than was
expressed on the face of the paper which had been issued, but that
those to whom it had been delivered, by parting with it at two
shillings and sixpence in the pound, had themselves fixed the value of
their claims, and had manifested their willingness to add to their
other sacrifices this deduction from their demand upon the nation. He
therefore moved to amend the resolution before the committee so as to
require a resettlement of the debt.
The amendment was opposed by Mr. Boudinot, Mr. Lawrence, Mr. Ames, Mr.
Sherman, Mr. Hartley, and Mr. Goodhue. They stated at large the terms
on which the debt had been contracted, and urged the confidence which
the creditors had a right to place in the government for its discharge
according to settlements already made, and acknowledgments already
given. The idea that the legislative body could diminish an
ascertained debt was reprobated with great force, as being at the same
time unjust, impolitic, and subversive of every principle on which
public contracts are founded. The evidences of debt possessed by the
creditors of the United States were considered as public bonds, for
the redemption of which the property and the labour of the people were
pledged.
After the debate had been protracted to some length, the question was
taken on Mr. Scott's amendment, and it passed in the negative.
Mr. Madison then rose, and, in an eloquent speech, replete with
argument, proposed an amendment to the resolution, the effect of which
was to discriminate between the public creditors, so as to pay the
present holder of assignable paper the highest price it had borne in
the market, and give the residue to the person with whom the debt was
originally contracted. Where the original creditor had never parted
with his claim, he was to receive the whole sum acknowledged to be due
on the face of the certificate.
This motion was supported by Mr. Jackson, Mr. White, Mr. Moore, Mr.
Page, Mr. Stone, Mr. Scott, and Mr. Seney.
It was opposed with great earnestness and strength of argument, by Mr.
Sedgewick, Mr. Lawrence, Mr. Smith, of South Carolina, Mr. Ames, Mr.
Gerry, Mr. Boudinot, Mr. Wadsworth, Mr. Goodhue, Mr. Hartley, Mr.
Bland, Mr. Benson, Mr. Burke, and Mr. Livermore.
The argument was ably supported on both sides, was long, animated, and
interesting. At length the question was put, and the amendment was
rejected by a great majority.
This discussion deeply engaged the public attention. The proposition
was new and interesting. That the debt ought to be diminished for the
public advantage, was an opinion which had frequently been advanced,
and was maintained by many. But a reduction from the claims of its
present holders for the benefit of those who had sold their rights,
was a measure which saved nothing to the public purse, and was
therefore recommended only by considerations, 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.
Although the decision of congress against a discrimination in favour
of the original creditor produced no considerable sensation, the
determination on that part of the secretary's report which was the
succeeding subject of deliberation, affecting political interests and
powers which are never to be approached without danger, 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, in the first instance, contracted partly by the
continent, and partly by the states. When the system of requisitions
was adopted, the transactions of the union were carried on, almost
entirely, through the agency of the states; and when the measure of
compensating the army for the depreciation 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,
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 intrinsic
difficulties were found in the thing itself, not easily to be
overcome.
The secretary of the treasury proposed to assume these debts, and to
fund them in common with that which continued to be the proper debt of
the union.
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 public creditors be
thrown into the scale of the 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 prudence 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 adviseable 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 understanding of the subject, and
with less dissatisfaction to 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 obligation 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 might assume,
to diminish in value in proportion 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 supporters 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
accession 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 government would be involved in perplexities from which
no means of extricating itself had been shown. Nor would it be
practicable to discriminate between the debts contracted for general
and for local objects.
In the course of the debate, severe allusions were made to the conduct
of particular states; and the opinions advanced in favour of the
measure, were ascribed to local interests.
In support of the assumption, the debts of the states were traced to
their origin. America, it was said, had engaged in a war, the object
of which was equally interesting to every part of the union. It was
not the war of a particular state, but of the United States. It was
not the liberty and independence of a part, but of the whole, for
which they had contended, and which they had acquired. The cause was a
common cause. As brethren, the American people had consented to hazard
property and life in its defence. All the sums expended in the
attainment of this great object, whatever might be the authority under
which they were raised or appropriated, conduced to the same end.
Troops were raised, and military stores purchased, before congress
assumed the command of the army, or the control of the war. The
ammunition which repulsed the enemy at Bunker's Hill, was purchased by
Massachusetts; and formed a part of the debt of that state.
Nothing could be more erroneous than the principle which had been
assumed in argument, that the holders of securities issued by
individual states were to be considered merely as state creditors;--as
if the debt had been contracted on account of the particular state. It
was contracted on account of the union, in that common cause in which
all were equally interested.
From the complex nature of the political system which had been adopted
in America, the war was, in a great measure, carried on through the
agency of the state governments; and the debts were, in truth, the
debts of the union, for which the states had made themselves
responsible. Except the civil list, the whole state expenditure was in
the prosecution of the war; and the state taxes had undeniably
exceeded the provision for their civil list. The foundation for the
several classes of the debt was reviewed in detail; and it was
affirmed to be proved from the review, and from the books in the
public offices, that, in its origin, a great part of it, even in form,
and the whole, in fact, was equitably due from the continent. The
states individually possessing all the resources of the nation, became
responsible to certain descriptions of the public creditors. But they
were the agents of the continent in contracting the debt; and its
distribution among them for payment, arose from the division of
political power which existed under the old confederation. A new
arrangement of the system had taken place, and a power over the
resources of the nation was conferred on the general government. With
the funds, the debt also ought to be assumed. This investigation of
its origin demonstrated that the assumption was not the creation of a
new debt, but the reacknowledgment of liability for an old one, the
payment of which had devolved on those members of the system, who, at
the time, were alone capable of paying it. And thence was inferred,
not only the justice of the measure, but a complete refutation of the
arguments drawn from the constitution. If, in point of fact, the debt
was in its origin continental, and had been transferred to the states
for greater facility of payment, there could be no constitutional
objection to restoring its original and real character.
The great powers of war, of taxation, and of borrowing money, which
were vested in congress to pay the debts, and provide for the common
defence and general welfare of the United States, comprised that in
question. There could be no more doubt of their right to charge
themselves with the payment of a debt contracted in the past war, than
to borrow money for the prosecution of a future war. The impolicy of
leaving the public creditors to receive payment from different sources
was also strongly pressed; and the jealousy which would exist between
the creditors of the union and of the states, was considered as a
powerful argument in favour of giving them one common interest. This
jealousy, it was feared, might be carried so far, as even to create an
opposition to the laws of the union.
If the states should provide for their creditors, the same sum of
money must be collected from the people, as would be required if the
debt should be assumed; and it would probably be collected in a manner
more burdensome, than if one uniform system should be established. If
all should not make such provision, it would be unjust to leave the
soldier of one state unpaid, while the services of the man who fought
by his side were amply compensated; and, after having assumed the
funds, it would dishonour the general government to permit a creditor
for services rendered, or property advanced for the continent, to
remain unsatisfied, because his claim had been transferred to the
state, at a time when the state alone possessed the means of payment.
By the injured and neglected creditor, such an arrangement might
justly be considered as a disreputable artifice.
Instead of delaying, it was believed to be a measure which would
facilitate the settlement of accounts between the states. Its
advocates declared that they did not entertain, and never had
entertained any wish to procrastinate a settlement. On the contrary,
it was greatly desired by them. They had themselves brought forward
propositions for that purpose; and they invited their adversaries to
assist in improving the plan which had been introduced.
The settlement between the states, it was said, either would or would
not be made. Should it ever take place, it would remedy any
inequalities which might grow out of the assumption. Should it never
take place, the justice of the measure became the more apparent. That
the burdens in support of a common war, which from various causes had
devolved unequally on the states, ought to be apportioned among them,
was a truth too clear to be controverted; and this, if the settlement
should never be accomplished, could be effected only by the measure
now proposed. Indeed, in any event, it would be the only certain, as
well as only eligible plan. For how were the debtor states to be
compelled to pay the balances which should be found against them?
If the measure was recommended by considerations which rendered its
ultimate adoption inevitable, the present was clearly preferable to
any future time. It was desirable immediately to quiet the minds of
the public creditors by assuring them that justice would be done; to
simplify the forms of public debt; and to put an end to that
speculation which had been so much reprobated, and which could be
terminated only by giving the debt a real and permanent value.
That the assumption would impair the just influence of the states was
controverted with great strength of argument. The diffusive
representation in the state legislatures, the intimate connexion
between the representative and his constituents, the influence of the
state legislatures over the members of one branch of the national
legislature, the nature of the powers exercised by the state
governments which perpetually presented them to the people in a point
of view calculated to lay hold of the public affections, were
guarantees that the states would retain their due weight in the
political system, and that a debt was not necessary to the solidity or
duration of their power.
But the argument it was said proved too much. If a debt was now
essential to the preservation of state authority, it would always be
so. It must therefore never be extinguished, but must be perpetuated,
in order to secure the existence of the state governments. If, for
this purpose, it was indispensable that the expenses of the
revolutionary war should be borne by the states, it would not be less
indispensable that the expenses of future wars should be borne in the
same manner. Either the argument was unfounded, or the constitution
was wrong; and the powers of the sword and the purse ought not to have
been conferred on the government of the union. Whatever speculative
opinions might be entertained on this point, they were to administer
the government according to the principles of the constitution as it
was framed. But, it was added, if so much power follows the assumption
as the objection implies, is it not time to ask--is it safe to forbear
assuming? if the power is so dangerous, it will be so when exercised
by the states. If assuming tends to consolidation, is the reverse,
tending to disunion, a less weighty objection? if it is answered that
the non-assumption will not necessarily tend to disunion; neither, it
may be replied, does the assumption necessarily tend to consolidation.
It was not admitted that the assumption would tend to perpetuate the
debt. It could not be presumed that the general government would be
less willing than the local governments to discharge it; nor could it
be presumed that the means were less attainable by the former than the
latter.
It was not contended that a public debt was a public blessing. Whether
a debt was to be preferred to no debt was not the question. The debt
was already contracted: and the question, so far as policy might be
consulted, was, whether it was more for the public advantage to give
it such a form as would render it applicable to the purposes of a
circulating medium, or to leave it a mere subject of speculation,
incapable of being employed to any useful purpose. The debt was
admitted to be an evil; but it was an evil from which, if wisely
modified, some benefit might be extracted; and which, in its present
state, could have only a mischievous operation.
If the debt should be placed on adequate funds, its operation on
public credit could not be pernicious: in its present precarious
condition, there was much more to be apprehended in that respect.
To the objection that it would accumulate in large cities, it was
answered it would be a monied capital, and would be held by those who
chose to place money at interest; but by funding the debt, the present
possessors would be enabled to part with it at its nominal value,
instead of selling it at its present current rate. If it should centre
in the hands of foreigners, the sooner it was appreciated to its
proper standard, the greater quantity of specie would its transfer
bring into the United States.
To the injustice of charging those states which had made great
exertions for the payment of their debts with the burden properly
belonging to those which had not made such exertions, it was answered,
that every state must be considered as having exerted itself to the
utmost of its resources; and that if it could not, or would not make
provision for creditors to whom the union was equitably bound, the
argument in favour of an assumption was the stronger.
The arguments drawn from local interests were repelled, and retorted,
and a great degree of irritation was excited on both sides.
After a very animated discussion of several days, the question was
taken, and the resolution was carried by a small majority. Soon after
this decision, while the subject was pending before the house, the
delegates from North Carolina took their seats, and changed the
strength of parties. By a majority of two voices, the resolution was
recommitted; and, after a long and ardent debate, was negatived by the
same majority.
This proposition continued to be supported with a degree of
earnestness which its opponents termed pertinacious, but not a single
opinion was changed. It was brought forward in the new and less
exceptionable form of assuming specific sums from each state. Under
this modification of the principle, the extraordinary contributions of
particular states during the war, and their exertions since the peace,
might be regarded; and the objections to the measure, drawn from the
uncertainty of the sum to be assumed, would be removed. But these
alterations produced no change of sentiment; and the bill was sent up
to the senate with a provision for those creditors only whose
certificates of debt purported to be payable by the union.
In this state of things, the measure is understood to have derived aid
from another, which was of a nature strongly to interest particular
parts of the union.
From the month of June, 1783, when congress was driven from
Philadelphia by the mutiny of a part of the Pennsylvania line, the
necessity of selecting some place for a permanent residence, in which
the government of the union might exercise sufficient authority to
protect itself from violence and insult, had been generally
acknowledged. Scarcely any subject had occupied more time, or had more
agitated the members of the former congress than this.
[Sidenote: Bill for fixing the permanent seat of government.]
In December, 1784, an ordinance was passed for appointing
commissioners to purchase land on the Delaware, in the neighbourhood
of its falls, and to erect thereon the necessary public buildings for
the reception of congress, and the officers of government; but the
southern interest had been sufficiently strong to arrest the execution
of this ordinance by preventing an appropriation of funds, which
required the assent of nine states. Under the existing government,
this subject had received the early attention of congress; and many
different situations from the Delaware to the Potomac inclusive, had
been earnestly supported; but a majority of both houses had not
concurred in favour of any one place. With as little success, attempts
had been made to change the temporary residence of congress. Although
New York was obviously too far to the east, so many conflicting
interests were brought into operation whenever the subject was
touched, that no motion designating a more central place, could
succeed. At length, a compact respecting the temporary and permanent
seat of government was entered into between the friends of
Philadelphia, and the Potomac, stipulating that congress should
adjourn to and hold its sessions in Philadelphia, for ten years,
during which time, buildings for the accommodation of the government
should be erected at some place on the Potomac, to which the
government should remove at the expiration of the term. This compact
having united the representatives of Pennsylvania and Delaware with
the friends of the Potomac, in favour both of the temporary and
permanent residence which had been agreed on between them, a majority
was produced in favour of the two situations, and a bill which was
brought into the senate in conformity with this previous arrangement,
passed both houses by small majorities. This act was immediately
followed by an amendment to the bill then pending before the senate
for funding the debt of the union. The amendment was similar in
principle to that which had been unsuccessfully proposed in the house
of representatives. By its provisions, twenty-one millions five
hundred thousand dollars of the state debts were assumed in specified
proportions; and it was particularly enacted that no certificate
should be received from a state creditor which could be "ascertained
to have been issued for any purpose other than compensations and
expenditures for services or supplies towards the prosecution of the
late war, and the defence of the United States, or of some part
thereof, during the same."
When the question was taken in the house of representatives on this
amendment, two members representing districts on the Potomac, who, in
all the previous stages of the business, had voted against the
assumption, declared themselves in its favour; and thus the majority
was changed.[45]
[Footnote 45: It has ever been understood that these members
were, on principle, in favour of the assumption as modified
in the amendment made by the senate; but they withheld their
assent from it when originally proposed in the house of
representatives, in the opinion that the increase of the
national debt, added to the necessity of giving to the
departments of the national government a more central
residence. It is understood that a greater number would have
changed had it been necessary.]
Thus was a measure carried, which was supported and opposed with a
degree of zeal and earnestness not often manifested; and which
furnished presages, not to be mistaken, that the spirit with which the
opposite opinions had been maintained, would not yield, contentedly,
to the decision of a bare majority. This measure has constituted one
of the great grounds of accusation against the first administration of
the general government; and it is fair to acknowledge, that though, in
its progress, it derived no aid from the President, whose opinion
remained in his own bosom, it received the full approbation of his
judgment.
A bill, at length, passed both houses, funding the debt upon
principles which lessened considerably the weight of the public
burdens, and was entirely satisfactory to the public creditors. The
proceeds of the sales of the lands lying in the western territory,
and, by a subsequent act of the same session, the surplus product of
the revenue after satisfying the appropriations which were charged
upon it, with the addition of two millions, which the President was
authorized to borrow at five per centum, constituted a sinking fund to
be applied to the reduction of the debt.
The effect of this measure was great and rapid. The public paper
suddenly rose, and was for a short time above par. The immense wealth
which individuals acquired by this unexpected appreciation, could not
be viewed with indifference. Those who participated in its advantages,
regarded the author of a system to which they were so greatly
indebted, with an enthusiasm of attachment to which scarcely any
limits were assigned. To many others, this adventitious collection of
wealth in particular hands, was a subject rather of chagrin than of
pleasure; and the reputation which the success of his plans gave to
the secretary of the treasury, was not contemplated with unconcern. As
if the debt had been created by the existing government, not by a war
which gave liberty and independence to the United States, its being
funded was ascribed by many, not to a sense of justice, and to a
liberal and enlightened policy, but to the desire of bestowing on the
government an artificial strength, by the creation of a monied
interest which would be subservient to its will.
The effects produced by giving the debt a permanent value, justified
the predictions of those whose anticipations had been most favourable.
The sudden increase of monied capital derived from it, invigorated
commerce, and gave a new stimulus to agriculture.
About this time, there was a great and visible improvement in the
circumstances of the people. Although the funding system was certainly
not inoperative in producing this improvement, it can not be justly
ascribed to any single cause. Progressive industry had gradually
repaired the losses sustained by the war; and the influence of the
constitution on habits of thinking and acting, though silent, was
considerable. In depriving the states of the power to impair the
obligation of contracts, or to make any thing but gold and silver a
tender in payment of debts, the conviction was impressed on that
portion of society which had looked to the government for relief from
embarrassment, that personal exertions alone could free them from
difficulties; and an increased degree of industry and economy was the
natural consequence of this opinion.
[Sidenote: Adjournment of congress.]
On the 12th of August, after an arduous session, congress adjourned,
to meet in Philadelphia the first Monday in the following December.
While the discussions in the national legislature related to subjects,
and were conducted in a temper, well calculated to rouse the active
spirit of party, the external relations of the United States wore an
aspect not perfectly serene. To the hostile temper manifested by the
Indians on the western and southern frontiers, an increased degree of
importance was given by the apprehension that their discontents were
fomented by the intrigues of Britain and of Spain. From Canada, the
Indians of the north-west were understood to be furnished with the
means of prosecuting a war which they were stimulated to continue;
and, to the influence of the governor of the Floridas had been partly
attributed the failure of the negotiation with the Creeks. That this
influence would still be exerted to prevent a friendly intercourse
with that nation was firmly believed; and it was feared that Spain
might take a part in the open hostilities threatened by the irritable
dispositions of individuals in both countries. From the intimate
connexion subsisting between the members of the house of Bourbon, this
event was peculiarly deprecated; and the means of avoiding it were
sought with solicitude. These considerations determined the President
to make another effort at negotiation; but, to preserve the respect of
these savages for the United States, it was at the same time resolved
that the agent to be employed should visit the country on other
pretexts, and should carry a letter of introduction to M'Gillivray,
blending with other subjects a strong representation of the miseries
which a war with the United States would bring upon his people; and an
earnest exhortation to repair with the chiefs of his nation to the
seat of the federal government, in order to effect a solid and
satisfactory peace. Colonel Willett was selected for this service; and
he acquitted himself so well of the duty assigned to him, as to induce
the chiefs of the nation, with M'Gillivray at their head, to repair to
New York, where negotiations were opened which terminated in a treaty
of peace,[46] signed on the 7th day of August.[47]
[Footnote 46: On the first information at St. Augustine that
M'Gillivray was about to repair to New York, the
intelligence was communicated to the governor at the
Havanna, and the secretary of East Florida came to New York,
with a large sum of money to purchase flour, as it was said;
but to embarrass the negotiations with the Creeks was
believed to be his real design. He was closely watched, and
measures were taken to render any attempts he might make
abortive.]
[Footnote 47: See note, No. IV. at the end of the volume.]
[Sidenote: Treaty with the Creek Indians.]
The pacific overtures made to the Indians of the Wabash and the Miamis
not having been equally successful, the western frontiers were still
exposed to their destructive incursions. A long course of experience
had convinced the President that, on the failure of negotiation, sound
policy and true economy, not less than humanity, required the
immediate employment of a force which should carry death and
destruction into the heart of the hostile settlements. Either not
feeling the same impressions, or disposed to indulge the wishes of the
western people, who declared openly their preference for desultory
military expeditions, congress did not adopt measures corresponding
with the wishes of the executive, and the military establishment[48]
was not equal to the exigency. The distresses of the frontier
establishment, therefore, still continued; and the hostility they had
originally manifested to the constitution, sustained no diminution.
[Footnote 48: On giving his assent to the bill "regulating
the military establishment of the United States," the
President subjoined to the entry in his diary the remark,
that although he gave it his sanction, "he did not conceive
that the military establishment was adequate to the
exigencies of the government, and to the protection it was
intended to afford." It consisted of one regiment of
infantry, and one battalion of artillery, amounting in the
total, exclusive of commissioned officers, to twelve hundred
and sixteen men.]
[Sidenote: United States in relations with Great Britain and Spain.]
No progress had been made in adjusting the points of controversy with
Spain and Britain. With the former power, the question of boundary
remained unsettled; and the cabinet of Madrid discovered no
disposition to relax the rigour of its pretensions respecting the
navigation of the Mississippi. Its general conduct furnished no
foundation for a hope that its dispositions towards the United States
were friendly, or that it could view their growing power without
jealousy.
The non-execution of the 4th, 5th, 6th, and 7th articles of the treaty
of peace, still furnished the United States and Great Britain with
matter for reciprocal crimination, which there was the more difficulty
in removing, because no diplomatic intercourse was maintained between
them. The cabinet of St. James having never appointed a minister to
the United States, and Mr. Adams having returned from London without
effecting the object of his mission, the American government felt some
difficulty in repeating advances which had been treated with neglect.
Yet there was much reason to desire full explanations with the English
government, and to understand perfectly its views and intentions. The
subjects for discussion were delicate in their nature, and could not
be permitted to remain in their present state, without hazarding the
most serious consequences. The detention of a part of the territory of
the United States, was a circumstance of much importance to the
honour, as well as to the interests of the nation, and the commercial
intercourse between the two countries was so extensive, as to require
amicable and permanent regulations. The early attention of the
President had been directed to these subjects; and, in October, 1789,
he had resolved on taking informal measures to sound the British
cabinet, and to ascertain its views respecting them. This negotiation
was entrusted to Mr. Gouverneur Morris, who had been carried by
private business to Europe; and he conducted it with ability and
address, but was unable to bring it to a happy conclusion. The result
of his conferences with the Duke of Leeds, and with Mr. Pitt, was a
conviction that the British government, considering the posts they
occupied on the southern side of the great lakes as essential to their
monopoly of the fur trade, would surrender them reluctantly, and was
not desirous of entering into a commercial treaty. Those ministers
expressed a wish to be on the best terms with America; but repeated
the complaints which had been previously made by Lord Carmarthen, of
the non-execution of the treaty of peace on the part of the United
States. To the observations made by Mr. Morris, that the constitution
lately adopted, and the courts established under it, amounted to a
full compliance with that treaty on the part of the American
government, it was answered, that losses had already been sustained in
consequence of the obstructions given by the states to the fair
operation of that instrument, which rendered a faithful observance of
it, at present, impossible; and, in a note, the Duke of Leeds avowed
the intention, if the delay on the part of the American government to
fulfil its engagements made in the treaty should have rendered their
final completion impracticable, to retard the fulfilment of those
which depended entirely on Great Britain, until redress should be
granted to the subjects of his majesty on the specific points of the
treaty itself, or a fair and just compensation obtained for the
non-performance of those stipulations which the United States had
failed to observe. Though urged by Mr. Morris to state explicitly in
what respects, and to what degree, he considered the final completion
of those engagements to which the United States were bound, as having
been rendered impracticable, no such statement was given; and the
British government seemed inclined to avoid, for the present, those
full and satisfactory explanations, which were sought on the part of
the United States.
After detailing the motives which in his opinion influenced the
English cabinet in wishing to suspend for a time all discussions with
America, Mr. Morris observed, "perhaps there never was a moment in
which this country felt herself greater; and consequently, it is the
most unfavourable moment to obtain advantageous terms from her in any
bargain."
Whilst these negotiations were pending, intelligence was received at
London of the attack made on the British settlement at Nootka Sound;
and preparations were instantly made to resent the insult alleged to
have been offered to the nation. The high ground taken on this
occasion by the government, and the vigour with which it armed in
support of its pretensions, furnished strong reasons for the opinion
that a war with Spain, and probably with France, would soon be
commenced.
In America, this was considered as a favourable juncture for urging
the claims of the United States to the free navigation of the
Mississippi. Mr. Carmichael, their charge d'affaires at the court of
Madrid, was instructed not only to press this point with earnestness,
but to use his utmost endeavours to secure the unmolested use of that
river in future, by obtaining a cession of the island of New Orleans,
and of the Floridas. A full equivalent for this cession would be
found, it was said, in the sincere friendship of the United States,
and in the security it would give to the territories of Spain, west of
the Mississippi.
Mr. Carmichael was also instructed to point the attention of the
Spanish government to the peculiar situation of the United States. To
one half of their territory, the use of the Mississippi was
indispensable. No efforts could prevent their acquiring it. That they
would acquire it, either by acting separately, or in conjunction with
Great Britain, was one of those inevitable events against which human
wisdom could make no provision. To the serious consideration of the
Spanish government, therefore, were submitted the consequences which
must result to their whole empire in America, either from hostilities
with the United States, or from a seizure of Louisiana by Great
Britain.
The opinion, that in the event of war between Great Britain and Spain,
Louisiana would be invaded from Canada, was not a mere suggestion for
the purpose of aiding the negotiations at Madrid. It was seriously
adopted by the American government; and the attention of the executive
was turned to the measures which it would be proper to take, should
application be made for permission to march a body of troops, through
the unsettled territories of the United States, into the dominions of
Spain; or should the attempt be made to march them, without
permission.
Among the circumstances which contributed to the opinion that, in the
event of war, the arms of Great Britain would be directed against the
settlements of Spain in America, was the continuance of Lord
Dorchester in the government of Canada. This nobleman had intimated a
wish to visit New York on his return to England; but the prospect of a
rupture with Spain had determined him to remain in Canada. Under the
pretext of making his acknowledgments for the readiness with which his
desire to pass through New York had been acceded to, his lordship
despatched Major Beck with, a member of his family, to sound the
American government, and if possible, to ascertain its dispositions
towards the two nations. Alluding to the negotiations which had been
commenced in London, this gentleman endeavoured to assign a
satisfactory cause for the delays which had intervened. It was not
improbable, he said, that these delays, and some other circumstances,
might have impressed Mr. Morris with an idea of backwardness on the
part of the British ministry. His lordship, however, had directed him
to say, that an inference of this sort would not, in his opinion, be
well founded, as he had reason to believe that the British cabinet was
inclined not only towards a friendly intercourse, but towards an
alliance with the United States.
Major Beckwith represented the particular ground of quarrel as one
which ought to interest all commercial nations in favour of the views
of Great Britain; and, from that circumstance, he presumed that,
should a war ensue, the United States would find their interest in
taking part with Britain, rather than with Spain.
After expressing the concern with which Lord Dorchester had heard of
the depredations of the savages on the western frontier of the United
States, he declared that his lordship, so far from countenancing these
depredations, had taken every proper opportunity to impress upon the
Indians a pacific disposition; and that, on his first hearing of the
outrages lately committed, he had sent a messenger to endeavour to
prevent them. Major Beckwith further intimated, that the perpetrators
of the late murders were banditti, composed chiefly of Creeks and
Cherokees, in the Spanish interest, over whom the governor of Canada
possessed no influence.
These communications were laid before the President, and appeared to
him to afford an explanation of the delays experienced by Mr. Morris.
He was persuaded that a disposition existed in the cabinet of London
to retain things in their actual situation, until the intentions of
the American government should be ascertained with respect to the war
supposed to be approaching. If the United States would enter into an
alliance with Great Britain, and would make a common cause with her
against Spain, the way would be smoothed to the attainment of all
their objects: but if America should be disinclined to such a
connexion, and especially, if she should manifest any partiality
towards Spain, no progress would be made in the attempt to adjust the
point of difference between the two nations. Taking this view of the
subject, he directed that the further communications of Mr. Beckwith
should be heard civilly, and that their want of official authenticity
should be hinted delicately, without using any expressions which
might, in the most remote degree, impair the freedom of the United
States, to pursue, without reproach, in the expected war, such a line
of conduct as their interests or honour might dictate.
In the opinion that it would not only be useless but dishonourable
further to press a commercial treaty, or the exchange of ministers,
and that the subject of the western posts ought not again to be moved
on the part of the United States, until they should be in a condition
to speak a decisive language, the powers given to Mr. Morris were
withdrawn. Should the interest of Britain produce a disposition
favourable to an amicable arrangement of differences, and to a liberal
commercial intercourse secured by compact, it was believed that she
would make the requisite advances; until then, or until some other
change of circumstances should require a change of conduct, things
were to remain in their actual situation.
About the time of adopting this resolution, the dispute between
Britain and Spain was adjusted. Finding France unwilling to engage in
his quarrel, his Catholic Majesty, too weak to encounter alone the
force of the British empire, yielded every point in controversy; and
thus were terminated for the present, both the fear of inconveniences,
and the hope of advantages which might result to America from
hostilities between the two powers, whose dominions were in her
neighbourhood, and with each of whom she was already engaged in
controversies not easily to be accommodated.
[Sidenote: The president visits Mount Vernon.]
Incessant application to public business, and the consequent change of
active for sedentary habits, had greatly impaired the constitution of
the President; and, during the last session of congress, he had, for
the second time since entering on the duties of his present station,
been attacked by a severe disease which reduced him to the brink of
the grave. Exercise and a temporary relief from the cares of office
being essential to the restoration of his health, he determined, for
the short interval afforded by the recess of the legislature, to
retire to the tranquil shades of Mount Vernon. After returning from a
visit to Rhode Island,[49] which state not having then adopted the
American constitution, had not been included in his late tour through
New England, he took leave of New York; and hastened to that peaceful
retreat, and those rural employments, his taste for which neither
military glory, nor political power, could ever diminish.
[Footnote 49: Rhode Island had adopted the constitution in
the preceding May, and had thus completed the union.]
After a short indulgence in these favourite scenes, it became
necessary to repair to Philadelphia, in order to meet the national
legislature.
[Sidenote: The president's speech.]
In the speech delivered to congress at the commencement of their third
session, the President expressed much satisfaction at the favourable
prospect of public affairs; and particularly noticed the progress of
public credit, and the productiveness of the revenue.
Adverting to foreign nations,[50] he said, "the disturbed situation of
Europe, and particularly the critical posture of the great maritime
powers, whilst it ought to make us more thankful for the general peace
and security enjoyed by the United States, reminds us at the same time
of the circumspection with which it becomes us to preserve these
blessings. It requires also, that we should not overlook the tendency
of a war, and even of preparations for war among the nations most
concerned in active commerce with this country, to abridge the means,
and thereby at least to enhance the price, of transporting its
valuable productions to their proper market." To the serious
reflection of congress was recommended the prevention of
embarrassments from these contingencies, by such encouragement to
American navigation as would render the commerce and agriculture of
the United States less dependent on foreign bottoms.
[Footnote 50: In a more confidential message to the senate,
all the objects of the negotiation in which Mr. Morris had
been employed were detailed, and the letters of that
gentleman, with the full opinion of the President were
communicated.]
After expressing to the house of representatives his confidence
arising from the sufficiency of the revenues already established, for
the objects to which they were appropriated, he added, "allow me
moreover to hope that it will be a favourite policy with you not
merely to secure a payment of the interest of the debt funded, but as
far, and as fast as the growing resources of the country will permit,
to exonerate it of the principal itself." Many subjects relative to
the interior government were succinctly and briefly mentioned; and the
speech concluded with the following impressive and admonitory
sentiment. "In pursuing the various and weighty business of the
present session, I indulge the fullest persuasion that your
consultations will be marked with wisdom, and animated by the love of
country. In whatever belongs to my duty, you shall have all the
co-operation which an undiminished zeal for its welfare can inspire.
It will be happy for us both, and our best reward, if by a successful
administration of our respective trusts, we can make the established
government more and more instrumental in promoting the good of our
fellow citizens, and more and more the object of their attachment and
confidence."
The addresses of the two houses, in answer to the speech, proved that
the harmony between the executive and legislative departments, with
which the government had gone into operation, had sustained no
essential interruption. But in the short debate which took place on
the occasion, in the house of representatives, a direct disapprobation
of one of the measures of the executive government was, for the first
time, openly expressed.
In the treaty lately concluded with the Creeks, an extensive territory
claimed by Georgia, under treaties, the validity of which was
contested by the Indian chiefs, had been entirely, or in great part,
relinquished. This relinquishment excited serious discontents in that
state; and was censured by General Jackson with considerable warmth,
as an unjustifiable abandonment of the rights and interests of
Georgia. No specific motion, however, was made, and the subject was
permitted to pass away for the present.
Scarcely were the debates on the address concluded, when several
interesting reports were received from the secretary of the treasury,
suggesting such further measures as were deemed necessary for the
establishment of public credit.
It will be recollected that in his original report on this subject,
the secretary had recommended the assumption of the state debts; and
had proposed to enable the treasury to meet the increased demand upon
it, which this measure would occasion, by an augmentation of the
duties on imported wines, spirits, tea, and coffee, and by imposing
duties on spirits distilled within the country. The assumption not
having been adopted until late in the session, the discussion on the
revenue which would be required for this portion of the public debt
did not commence, until the house had become impatient for an
adjournment. As much contrariety of opinion was disclosed, and the
subject did not press,[51] it was deferred to the ensuing session; and
an order was made, requiring the secretary of the treasury to prepare
and report such further provision as might, in his opinion, be
necessary for establishing the public credit. In obedience to this
order, several reports had been prepared, the first of which repeated
the recommendation of an additional impost on foreign distilled
spirits, and of a duty on spirits distilled within the United States.
The estimated revenue from these sources was eight hundred and
seventy-seven thousand five hundred dollars, affording a small excess
over the sum which would be required to pay the interest on the
assumed debt. The policy of the measure was discussed in a well
digested and able argument, detailing many motives, in addition to
those assigned in his original report, for preferring the system now
recommended, to accumulated burdens on commerce, or to a direct tax on
lands.
[Footnote 51: The interest on the assumed debt was to
commence with the year 1792.]
A new tax is the certain rallying point for all those who are
unfriendly to the administration, or to the minister by whom it is
proposed. But that recommended by the secretary, contained intrinsic
causes of objection which would necessarily add to the number of its
enemies. All that powerful party in the United States, which attached
itself to the local, rather than to the general government, would
inevitably contemplate any system of internal revenue with jealous
disapprobation. They considered the imposition of a tax by congress on
any domestic manufacture, as the intrusion of a foreign power into
their particular concerns, which excited serious apprehensions for
state importance, and for liberty. In the real or supposed interests
of many individuals was also found a distinct motive for hostility to
the measure. A large portion of the American population, especially
that which had spread itself over the extensive regions of the west,
consuming imported articles to a very inconsiderable amount, was not
much affected by the impost on foreign merchandize. But the duty on
spirits distilled within the United States reached them, and
consequently rendered them hostile to the tax.
{1791}
[Sidenote: Debate on the excise law.]
A bill, which was introduced in pursuance of the report, was opposed
with great vehemence by a majority of the southern and western
members. By some of them it was insisted that no sufficient testimony
had yet been exhibited, that the taxes already imposed would not be
equal to the exigencies of the public. But, admitting the propriety of
additional burdens on the people, it was contended that other sources
of revenue, less exceptionable and less odious than this, might be
explored. The duty was branded with the hateful epithet of an excise,
a species of taxation, it was said, so peculiarly oppressive as to be
abhorred even in England; and which was totally incompatible with the
spirit of liberty. The facility with which it might be extended to
other objects, was urged against its admission into the American
system; and declarations made against it by the congress of 1775, were
quoted in confirmation of the justice with which inherent vices were
ascribed to this mode of collecting taxes. So great was the hostility
manifested against it in some of the states, that the revenue officers
might be endangered from the fury of the people; and, in all, it would
increase a ferment which had been already extensively manifested.
Resolutions of Maryland, Virginia, and North Carolina, reprobating the
assumption, were referred to as unequivocal evidences of growing
dissatisfaction; and the last mentioned state had even expressed its
decided hostility to any law of excise. The legislature of North
Carolina had rejected with scorn, a proposal for taking an oath to
support the constitution of the United States; had refused to admit
persons sentenced to imprisonment under the laws of the United States
into their jails; and another circumstance was alluded to, but not
explained, which was said to exhibit a temper still more hostile to
the general government than either of those which had been stated.
When required to produce a system in lieu of that which they so much
execrated, the opponents of the bill alternately mentioned an
increased duty on imported articles generally, a particular duty on
molasses, a direct tax, a tax on salaries, pensions, and lawyers; a
duty on newspapers, and a stamp act.
The friends of the bill contended, that the reasons for believing the
existing revenue would be insufficient to meet the engagements of the
United States, were as satisfactory as the nature of the case would
admit, or as ought to be required. The estimates were founded on the
best data which were attainable, and the funds already provided, had
been calculated by the proper officer to pay the interest on that part
of the debt only for which they were pledged. Those estimates were
referred to as documents, from which it would be unsafe to depart.
They were also in possession of official statements, showing the
productiveness of the taxes from the time the revenue bill had been in
operation; and arguments were drawn from these, demonstrating the
danger to which the infant credit of the United States would be
exposed, by relying on the existing funds for the interest on the
assumed debt. It was not probable that the proposed duties would yield
a sum much exceeding that which would be necessary; but should they
fortunately do so, the surplus revenue might be advantageously
employed in extinguishing a part of the principal. They were not, they
said, of opinion, that a public debt was a public blessing, or that it
ought to be perpetuated.
An augmentation of the revenue being indispensable to the solidity of
the public credit, a more eligible system than that proposed in the
bill, could not, it was believed, be devised. Still further to burden
commerce, would be a hazardous experiment which might afford no real
supplies to the treasury. Until some lights should be derived from
experience, it behoved the legislature to be cautious not to lay such
impositions upon trade as might probably introduce a spirit of
smuggling, which, with a nominal increase, would occasion a real
diminution of revenue. In the opinion of the best judges, the impost
on the mass of foreign merchandise could not safely be carried further
for the present. The extent of the mercantile capital of the United
States would not justify the attempt. Forcible arguments were also
drawn from the policy and the justice of multiplying the subjects of
taxation, and diversifying them by a union of internal with external
objects.
Neither would a direct tax be adviseable. The experience of the world
had proved, that a tax on consumption was less oppressive, and more
productive, than a tax on either property or income. Without
discussing the principles on which the fact was founded, the fact
itself was incontestable, that, by insensible means, much larger sums
might be drawn from any class of men, than could be extracted from
them by open and direct taxes. To the latter system there were still
other objections. The difficulty of carrying it into operation, no
census having yet been taken, would not be inconsiderable; and the
expense of collection through a country thinly settled, would be
enormous. Add to this, that public opinion was believed to be more
decidedly and unequivocally opposed to it, than to a duty on ardent
spirits. North Carolina had expressed her hostility to the one as well
as to the other, and several other states were known to disapprove of
direct taxes. From the real objections which existed against them, and
for other reasons suggested in the report of the secretary, they
ought, it was said, to remain untouched, as a resource when some great
emergency should require an exertion of all the faculties of the
United States.
Against the substitution of a duty on internal negotiations, it was
said, that revenue to any considerable extent could be collected from
them only by means of a stamp act, which was not less obnoxious to
popular resentment than an excise, would be less certainly productive
than the proposed duties, and was, in every respect, less eligible.
The honour, the justice, and the faith of the United States were
pledged, it was said, to that class of creditors for whose claims the
bill under consideration was intended to provide. No means of making
the provision had been suggested, which, on examination, would be
found equally eligible with a duty on ardent spirits. Much of the
public prejudice which appeared in certain parts of the United States
against the measure, was to be ascribed to their hostility to the term
"excise," a term which had been inaccurately applied to the duty in
question. When the law should be carried into operation, it would be
found not to possess those odious qualities which had excited
resentment against a system of excise. In those states where the
collection of a duty on spirits distilled within the country had
become familiar to the people, the same prejudices did not exist. On
the good sense and virtue of the nation they could confidently rely
for acquiescence in a measure which the public exigencies rendered
necessary, which tended to equalize the public burdens, and which in
its execution would not be oppressive.
A motion made by Mr. Jackson, to strike out that section which imposed
a duty on domestic distilled spirits, was negatived by thirty-six to
sixteen; and the bill was carried by thirty-five to twenty-one.
Some days after the passage of this bill, another question was brought
forward, which was understood to involve principles of deep interest
to the government.
[Sidenote: On a national bank.]
The secretary of the treasury had been the uniform advocate of a
national bank. Believing that such an institution would be "of primary
importance to the prosperous administration of the finances; and of
the greatest utility in the operations connected with the support of
public credit," he had earnestly recommended its adoption in the first
general system which he presented to the view of congress; and, at the
present session, had repeated that recommendation in a special report,
containing a copious and perspicuous argument on the policy of the
measure. A bill conforming to the plan he suggested was sent down from
the senate, and was permitted to proceed, unmolested, in the house of
representatives, to the third reading. On the final question, a great,
and, it would seem, an unexpected opposition was made to its passage.
Mr. Madison, Mr. Giles, Mr. Jackson, and Mr. Stone spoke against it.
The general utility of banking systems was not admitted, and the
particular bill before the house was censured on its merits; but the
great strength of the argument was directed against the constitutional
authority of congress to pass an act for incorporating a national
bank.
The government of the United States, it was said, was limited; and the
powers which it might legitimately exercise were enumerated in the
constitution itself. In this enumeration, the power now contended for
was not to be found. Not being expressly given, it must be implied
from those which were given, or it could not be vested in the
government. The clauses under which it could be claimed were then
reviewed and critically examined; and it was contended that, on fair
construction, no one of these could be understood to imply so
important a power as that of creating a corporation.
The clause which enables congress to pass all laws necessary and
proper to execute the specified powers, must, according to the natural
and obvious force of the terms and the context, be limited to means
_necessary_ to the _end_ and _incident_ to the _nature_ of the
specified powers. The clause, it was said, was in fact merely
declaratory of what would have resulted by unavoidable implication, as
the appropriate, and as it were technical means of executing those
powers. Some gentlemen observed, that "the true exposition of a
necessary mean to produce a given end was that mean without which the
end could not be produced."
The bill was supported by Mr. Ames, Mr. Sedgwick, Mr. Smith, of South
Carolina, Mr. Lawrence, Mr. Boudinot, Mr. Gerry, and Mr. Vining.
The utility of banking institutions was said to be demonstrated by
their effects. In all commercial countries they had been resorted to
as an instrument of great efficacy in mercantile transactions; and
even in the United States, their public and private advantages had
been felt and acknowledged.
Respecting the policy of the measure, no well founded doubt could be
entertained; but the objections to the constitutional authority of
congress deserved to be seriously considered.
That the government was limited by the terms of its creation was not
controverted; and that it could exercise only those powers which were
conferred on it by the constitution, was admitted. If, on examination,
that instrument should be found to forbid the passage of the bill, it
must be rejected, though it would be with deep regret that its friends
would suffer such an opportunity of serving their country to escape
for the want of a constitutional power to improve it.
In asserting the authority of the legislature to pass the bill,
gentlemen contended, that incidental as well as express powers must
necessarily belong to every government: and that, when a power is
delegated to effect particular objects, all the known and usual means
of effecting them, must pass as incidental to it. To remove all doubt
on this subject, the constitution of the United States had recognized
the principle, by enabling congress to make all laws which may be
necessary and proper for carrying into execution the powers vested in
the government. They maintained the sound construction of this grant
to be a recognition of an authority in the national legislature, to
employ all the known and usual means for executing the powers vested
in the government. They then took a comprehensive view of those
powers, and contended that a bank was a known and usual instrument by
which several of them were exercised.
After a debate of great length, which was supported on both sides with
ability, and with that ardour which was naturally excited by the
importance attached by each party to the principle in contest, the
question was put, and the bill was carried in the affirmative by a
majority of nineteen voices.
[Sidenote: The opinions of the cabinet on the constitutionality of
this last law.]
The point which had been agitated with so much zeal in the house of
representatives, was examined with equal deliberation by the
executive. The cabinet was divided upon it. The secretary of state,
and the attorney general, conceived that congress had clearly
transcended their constitutional powers; while the secretary of the
treasury, with equal clearness, maintained the opposite opinion. The
advice of each minister, with his reasoning in support of it, was
required in writing, and their arguments were considered by the
President with all that attention which the magnitude of the question,
and the interest taken in it by the opposing parties, so eminently
required. This deliberate investigation of the subject terminated in a
conviction, that the constitution of the United States authorized the
measure;[52] and the sanction of the executive was given to the act.
[Footnote 52: See note, No. V. at the end of the volume.]
[Sidenote: Progress of parties.]
The judgment is so much influenced by the wishes, the affections, and
the general theories of those by whom any political proposition is
decided, that a contrariety of opinion on this great constitutional
question ought to excite no surprise. It must be recollected that the
conflict between the powers of the general and state governments was
coeval with those governments. Even during the war, the preponderance
of the states was obvious; and, in a very few years after peace, the
struggle ended in the utter abasement of the general government. Many
causes concurred to produce a constitution which was deemed more
competent to the preservation of the union, but its adoption was
opposed by great numbers; and in some of the large states especially,
its enemies soon felt and manifested their superiority. The old line
of division was still as strongly marked as ever. Many retained the
opinion that liberty could be endangered only by encroachments upon
the states; and that it was the great duty of patriotism to restrain
the powers of the general government within the narrowest possible
limits.
In the other party, which was also respectable for its numbers, many
were found who had watched the progress of American affairs, and who
sincerely believed that the real danger which threatened the republic
was to be looked for in the undue ascendency of the states. To them it
appeared, that the substantial powers, and the extensive means of
influence, which were retained by the local sovereignties, furnished
them with weapons for aggression which were not easily to be resisted,
and that it behoved all those who were anxious for the happiness of
their country, to guard the equilibrium established in the
constitution, by preserving unimpaired, all the legitimate powers of
the union. These were more confirmed in their sentiments, by observing
the temper already discovered in the legislatures of several states,
respecting the proceedings of congress.
To this great and radical division of opinion, which would necessarily
affect every question on the authority of the national legislature,
other motives were added, which were believed to possess considerable
influence on all measures connected with the finances.
As an inevitable effect of the state of society, the public debt had
greatly accumulated in the middle and northern states, whose
inhabitants had derived, from its rapid appreciation, a proportional
augmentation of their wealth. This circumstance could not fail to
contribute to the complacency with which the plans of the secretary
were viewed by those who had felt their benefit, nor to the irritation
with which they were contemplated by others who had parted with their
claims on the nation. It is not impossible, that personal
considerations also mingled themselves with those which were merely
political.
With so many causes to bias the judgment, it would not have been
wonderful if arguments less plausible than those advanced by either
party had been deemed conclusive on its adversary; nor was it a matter
of surprise that each should have denied to those which were urged in
opposition, the weight to which they were certainly entitled. The
liberal mind which can review them without prejudice, will charge
neither the supporters nor the opponents of the bill with insincerity,
nor with being knowingly actuated by motives which might not have been
avowed.
This measure made a deep impression on many members of the
legislature; and contributed, not inconsiderably, to the complete
organization of those distinct and visible parties, which, in their
long and dubious conflict for power, have since shaken the United
States to their centre.
Among the last acts of the present congress, was an act to augment the
military establishment of the United States.
[Sidenote: War with the Indians.]
The earnest endeavours of the President to give security to the
north-western frontiers, by pacific arrangements, having been entirely
unavailing, it became his duty to employ such other means as were
placed in his hands, for the protection of the country. Confirmed by
all his experience in the opinion that vigorous offensive operations
alone could bring an Indian war to a happy conclusion, he had planned
an expedition against the hostile tribes north-west of the Ohio, as
soon as the impracticability of effecting a treaty with them had been
ascertained.
General Harmar, a veteran of the revolution, who had received his
appointment under the former government, was placed at the head of the
federal troops. On the 30th of September, he marched from fort
Washington with three hundred and twenty regulars. The whole army when
joined by the militia of Pennsylvania and Kentucky amounted to
fourteen hundred and fifty-three men. About the middle of October,
Colonel Harden, who commanded the Kentucky militia, and who had been
also a continental officer of considerable merit, was detached at the
head of six hundred men, chiefly militia, to reconnoitre the ground,
and to ascertain the intentions of the enemy. On his approach, the
Indians set fire to their principal village, and fled with
precipitation to the woods. As the object of the expedition would be
only half accomplished, unless the savages could be brought to action
and defeated, Colonel Harden was again detached at the head of two
hundred and ten men, thirty of whom were regulars. About ten miles
west of Chilicothe, where the main body of the army lay, he was
attacked by a party of Indians. The Pennsylvanians, who composed his
left column, had previously fallen in the rear; and the Kentuckians,
disregarding the exertions of their colonel, and of a few other
officers, fled on the first appearance of an enemy. The small corps of
regulars commanded by Lieutenant Armstrong made a brave resistance.
After twenty-three of them had fallen in the field, the surviving
seven made their escape and rejoined the army.
[Sidenote: Defeat of Harmar.]
Notwithstanding this check, the remaining towns on the Scioto were
reduced to ashes, and the provisions laid up for the winter were
entirely destroyed. This service being accomplished, the army
commenced its march towards fort Washington. Being desirous of wiping
off the disgrace which his arms had sustained, General Harmar halted
about eight miles from Chilicothe, and once more detached Colonel
Harden with orders to find the enemy and bring on an engagement. His
command consisted of three hundred and sixty men, of whom sixty were
regulars commanded by Major Wyllys. Early the next morning, this
detachment reached the confluence of the St. Joseph and St. Mary,
where it was divided into three columns. The left division, commanded
by Colonel Harden in person, crossed the St. Joseph, and proceeded up
its western bank. The centre, consisting of the federal troops, was
led by Major Wyllys up the eastern side of that river; and the right,
under the command of Major M'Millan, marched along a range of heights
which commanded the right flank of the centre division. The columns
had proceeded but a short distance, when each was met by a
considerable body of Indians, and a severe engagement ensued. The
militia retrieved their reputation, and several of their bravest
officers fell. The heights on the right having been, from some cause
not mentioned, unoccupied by the American troops, the savages seized
them early in the action, and attacked the right flank of the centre
with great fury. Although Major Wyllys was among the first who fell,
the battle was maintained by the regulars with spirit, and
considerable execution was done on both sides. At length, the scanty
remnant of this small band, quite overpowered by numbers, was driven
off the ground, leaving fifty of their comrades, exclusive of Major
Wyllys and Lieutenant Farthingham, dead upon the field. The loss
sustained by the militia was also considerable. It amounted to upwards
of one hundred men, among whom were nine officers. After an engagement
of extreme severity, the detachment joined the main army, which
continued its march to fort Washington.
General Harmar, with what propriety it is not easy to discern, claimed
the victory. He conceived, not entirely without reason, that the loss
of a considerable number of men, would be fatal to the Indians,
although a still greater loss should be sustained by the Americans,
because the savages did not possess a population from which they could
replace the warriors who had fallen. The event, however, did not
justify this opinion.
The information respecting this expedition was quickly followed by
intelligence stating the deplorable condition of the frontiers. An
address from the representatives of all the counties of Kentucky, and
those of Virginia bordering on the Ohio, was presented to the
President, praying that the defence of the country might be committed
to militia unmixed with regulars, and that they might immediately be
drawn out to oppose "the exulting foe." To this address, the President
gave a conciliatory answer, but he understood too well the nature of
the service, to yield to the request it contained. Such were his
communications to the legislature, that a regiment was added to the
permanent military establishment, and he was authorized to raise a
body of two thousand men, for six months, and to appoint a major
general, and a brigadier general, to continue in command so long as he
should think their services necessary.
[Sidenote: Adjournment of congress.]
With the 3d of March, 1791, terminated the first congress elected
under the constitution of the United States. The party denominated
federal having prevailed at the elections, a majority of the members
were steadfast friends of the constitution, and were sincerely
desirous of supporting a system they had themselves introduced, and on
the preservation of which, in full health and vigour, they firmly
believed the happiness of their fellow citizens, and the
respectability of the nation, greatly to depend. To organize a
government, to retrieve the national character, to establish a system
of revenue, and to create public credit, were among the arduous duties
which were imposed upon them by the political situation of their
country. With persevering labour, guided by no inconsiderable portion
of virtue and intelligence, these objects were, in a great degree,
accomplished. Out of the measures proposed for their attainment,
questions alike intricate and interesting unavoidably arose. It is not
in the nature of man to discuss such questions without strongly
agitating the passions, and exciting irritations which do not readily
subside. Had it even been the happy and singular lot of America to see
its national legislature assemble uninfluenced by those prejudices
which grew out of the previous divisions of the country, the many
delicate points which they were under the necessity of deciding, could
not have failed to disturb this enviable state of harmony, and to
mingle some share of party spirit with their deliberations. But when
the actual state of the public mind was contemplated, and due weight
was given to the important consideration that, at no very distant day,
a successor to the present chief magistrate must be elected, it was
still less to be hoped that the first congress could pass away,
without producing strong and permanent dispositions in parties, to
impute to each other designs unfriendly to the public happiness. As
yet, however, these imputations did not extend to the President. His
character was held sacred, and the purity of his motives was admitted
by all. Some divisions were understood to have found their way into
the cabinet. It was insinuated that between the secretaries of state
and of the treasury, very serious differences had arisen; but these
high personages were believed, to be equally attached to the
President, who was not suspected of undue partiality to either. If his
assent to the bill for incorporating the national bank produced
discontent, the opponents of that measure seemed disposed to ascribe
his conduct, in that instance, to his judgment, rather than to any
prepossession in favour of the party by whom it was carried. The
opposition, therefore, in congress, to the measures of the government,
seemed to be levelled at the secretary of the treasury, and at the
northern members by whom those measures were generally supported, not
at the President by whom they were approved. By taking this direction,
it made its way into the public mind, without being encountered by
that devoted affection which a great majority of the people felt for
the chief magistrate of the union. In the mean time, the national
prosperity was in a state of rapid progress; and the government was
gaining, though slowly, in the public opinion. But in several of the
state assemblies, especially in the southern division of the
continent, serious evidences of dissatisfaction were exhibited, which
demonstrated the jealousy with which the local sovereignties
contemplated the powers exercised by the federal legislature.