ASSUMPTION OF THE STATE DEBTS.
About one-half of the States had contracted debts abroad which they
were unable to pay when due, and in many instances were unable to
pay the current annual interest. These debts at this time amounted
to one hundred and seventy millions of dollars, and were chiefly
due in Great Britain. They had been converted into a stock, and
held in shares, and had gone into a great number of hands; and from
defaults in payments were greatly depreciated. The Reverend Sydney
Smith, of witty memory, and amiable withal, was accustomed to lose
all his amiability, but no part of his wit, when he spoke of his
Pennsylvania bonds--which in fact was very often. But there was
another class of these bond-holders who did not exhale their griefs
in wit, caustic as it might be, but looked to more substantial
relief--to an assumption in some form, disguised or open, virtual
or actual, of these debts by the federal government. These British
capitalists, connected with capitalists in the United States,
possessed a weight on this point which was felt in the halls of
Congress. The disguised attempts at this assumption, were in the
various modes of conveying federal money to the States in the
shape of distributing surplus revenue, of dividing the public land
money, and of bestowing money on the States under the fallacious
title of a deposit. But a more direct provision in their behalf was
wanted by these capitalists, and in the course of the year 1839 a
movement to that effect was openly made through the columns of their
regular organ--The London Bankers' Circular, emanating from the most
respectable and opulent house of the Messrs. Baring, Brothers and
Company. At this open procedure on the part of these capitalists, it
was deemed expedient to meet the attempt _in limine_ by a positive
declaration in Congress against the constitutionality, the justice,
and the policy of any such measure. With this view Mr. Benton, at
the commencement of the first session of Congress after the issuing
of the Bankers' Circular, submitted a series of resolutions in the
Senate, which, with some modification, and after an earnest debate,
were passed in that body. These were the resolutions:
"1. That the assumption of such debts either openly, by a
direct promise to pay them, or disguisedly by going security
for their payment, or by creating surplus revenue, or applying
the national funds to pay them, would be a gross and flagrant
violation of the constitution, wholly unwarranted by the letter
or spirit of that instrument, and utterly repugnant to all the
objects and purposes for which the federal Union was formed.
"2. That the debts of the States being now chiefly held by
foreigners, and constituting a stock in foreign markets greatly
depreciated, any legislative attempt to obtain the assumption
or securityship of the United States for their payment, or to
provide for their payment out of the national funds, must have
the effect of enhancing the value of that stock to the amount
of a great many millions of dollars, to the enormous and undue
advantage of foreign capitalists, and of jobbers and gamblers
in stocks; thereby holding out inducement to foreigners to
interfere in our affairs, and to bring all the influences
of a moneyed power to operate upon public opinion, upon our
elections, and upon State and federal legislation, to produce a
consummation so tempting to their cupidity, and so profitable to
their interest.
"3. That foreign interference and foreign influence, in all
ages, and in all countries, have been the bane and curse of free
governments; and that such interference and influence are far
more dangerous, in the insidious intervention of the moneyed
power, than in the forcible invasions of fleets and armies.
"4. That to close the door at once against all applications
for such assumption, and to arrest at their source the vast
tide of evils which would flow from it, it is necessary that
the constituted authorities, without delay, shall RESOLVE and
DECLARE their utter opposition to the proposal contained in
the late London Bankers' Circular in relation to State debts,
contracted for local and State purposes, and recommending to
the Congress of the United States to assume, or guarantee, or
provide for the ultimate payment of said debts."
In the course of the discussion of these resolutions an attempt was
made to amend them, and to reverse their import, by obtaining a
direct vote of the Senate in favor of distributing the public land
revenue among the States to aid them in the payment of these debts.
This proposition was submitted by Mr. Crittenden, of Kentucky; and
was in these words: "That it would be just and proper to distribute
the proceeds of the sales of the public lands among the several
States in fair and ratable proportions; and that the condition of
such of the States as have contracted debts is such, at the present
moment of pressure and difficulty, as to render such distribution
especially expedient and important." This proposition received a
considerable support, and was rejected upon yeas and nays--28 to
17. The yeas were Messrs. Betts of Connecticut, Clay of Kentucky,
Crittenden, Davis of Massachusetts, Dixon of Rhode Island, Knight
of Connecticut, Merrick of Maryland, Phelps of Vermont, Porter of
Michigan, Prentiss of Vermont, Ruggles of Maine, Smith of Indiana,
Southard of New Jersey, Spence of Maryland, Tallmadge, Webster,
White of Indiana. The nays were: Messrs. Allen of Ohio, Anderson
of Tennessee, Benton, Bedford Brown, Calhoun, Clay of Alabama,
Alfred Cuthbert, Grundy, Henderson of Mississippi, Hubbard, King of
Alabama, Linn of Missouri, Lumpkin of Georgia, Mouton, Nicholas of
Louisiana, Norvell of Michigan, Pierce, Preston, Roane, Robinson,
Sevier, Strange, Sturgeon, Tappan of Ohio, Wall of New Jersey,
Williams, Wright. As the mover of the resolutions Mr. Benton
supported them in a speech, of which some extracts are given in the
next chapter.