FIRST ACT IN THE FRENCH REVOLUTION--LAFAYETTE'S PARTICIPATION IN
IT--AMERICAN SYMPATHY IN THE MOVEMENT--WASHINGTON'S EXPRESSION OF
FEELINGS--OPENING OF THE SECOND SESSION OF CONGRESS--WASHINGTON'S
MESSAGE--PRECEDENTS ESTABLISHED--HAMILTON'S REPORT ON THE PUBLIC
DEBT AND PUBLIC CREDIT--HIS FINANCIAL SCHEME--THE PLAN BEFORE
CONGRESS--ASSUMPTION OF STATE DEBTS--FINANCIAL MEASURES ADOPTED BY
CONGRESS--EFFECTS OF THE DISCUSSION OF THE SUBJECT--WASHINGTON'S
OPINIONS--HIS LETTER CONCERNING SECTIONAL JEALOUSIES.
During the summer of 1789 a revolution had broken out in France, and its
influence was soon materially felt in the politics of the United States.
It was severe at the beginning and terrible in its subsequent course.
For a long time the enormous corruptions of state had been apparent, and
an attempted cure by the most violent means appeared inevitable to the
thoughtful and sagacious. The French monarch was a weak man and governed
much by bad advisers; and he often refused to listen to the true friends
of himself and France when they talked of political and social reforms.
Among these was the good, and brave, and generous Lafayette, who loved
the king for his many virtues, but loved France and her true glory,
based upon the welfare and prosperity of her people, far more.
Lafayette's principal associates in the scheme of reform were the Duke
de Rochefoucauld and M. Candorcet. These and one or two others were
regarded as the leaders. They aimed to obtain for France a constitution
similar to that of England, which they regarded as the most perfect
model of human government then known. They desired to retain the throne,
but to diminish very materially the power of the monarch. They desired a
house of peers, with legislative powers similar to that of England, but
restricted in number to one hundred members. They desired a house of
representatives, to be chosen by the great body of the people from among
themselves, and to make the government a constitutional monarchy upon a
republican basis.
With this view Lafayette with his coadjutors had labored for several
months, when, in the assembly of Notables in April, he boldly demanded a
series of reforms, and among others a national assembly. "What!"
exclaimed the Count d'Artois, one of Louis's bad advisers, "do you make
a motion for the states-general?"--"Yes, and even more than that,"
quickly responded Lafayette. That _more_ was a charter from the king, by
which the public and individual liberty should be acknowledged and
guarantied by the future states-general. The measure was carried, and
early in May a session of the states-general was opened at Versailles.
Had the king now listened to the advice of his true friends, and made
concessions, all would have been well. But he ordered the hall of the
national assembly, or states-general, to be closed. He also allowed
German troops from every quarter to gather around Paris, and when
requested by the national assembly to send them away he refused. M.
Necker, the patriotic controller of the treasury, and other ministers
who favored reform were dismissed, and the populace became greatly
excited. For three days there were scenes of violence in the French
capital that presaged the most terrible results. The national assembly
decreed the establishment of an armed militia of forty-eight thousand
men, when no less than two hundred and seventy thousand citizens
enrolled themselves. Arms were seized, and the greatest exasperation
appeared on every side. Again the removal of the troops around Paris was
demanded. "I alone," replied the king, "have the right to judge of the
necessity, and in that respect I can make no change."
Forbearance was no longer a virtue; and the state-prison, called the
Bastile, being regarded as one of the strongholds of despotism, was
attacked and taken by the people on the fourteenth of July. The
conquering thousands then marched in triumph to the city-hall. The chief
supporters of the king fled, and Louis, finding himself abandoned,
hurried to the national assembly to make peace with it. "Heaven knows,"
he exclaimed, "that the nation, and I are one--I confide myself wholly
to you. Help me, in this crisis, to save the state. Relying on the
attachment and security of my subjects, I have ordered the troops to
leave Paris and Versailles. I beseech you to make known my intentions to
the capital!"
Lafayette and another hurried to the city-hall, in Paris, to inform the
people of the king's declarations. "He has hitherto been deceived," he
said, "but he now sees the merit and justness of the popular cause." The
enthusiasm was general at this announcement. Tears of joy were shed, and
the revolution appeared to be at an end. The king confirmed the
nomination of Lafayette as the commander-in-chief of the national guard,
by which he was put at the head of four millions of armed citizens; and
the nation breathed free with hope. But the wily duke of Orleans, who
desired the destruction of the king for the base purposes of his own
exaltation, excited suspicions among the people, and a demand for the
king's presence at the Tuilleries was made. Louis went voluntarily from
Versailles to Paris, followed by sixty thousand citizens and a hundred
deputies of the assembly, and there formally accepted the Declaration of
the Rights of Man, which was presented to him. This set the minds of the
people at rest, and quiet was restored to the capital and to France.
But Lafayette was filled with apprehension for the future. To Colonel
John Trumbull, who was about to leave France for the United States at
the close of summer, he communicated a special message to Washington
concerning the state of affairs in France. After speaking of the changes
already effected and the hopes for the future, he said: "Unhappily,
there is one powerful and wicked man, who, I fear, will destroy this
beautiful fabric of human happiness--the duke of Orleans." He had
already been accused, and no doubt justly, of sending hired assassins to
Versailles to murder Louis and the royal family, that he might be made
regent of the kingdom. "He does not, indeed," said Lafayette, "possess
talent to carry into execution a great project; but he possesses
immense wealth, and France abounds in marketable talents. Every city
and town has young men eminent for abilities, particularly in the
law--ardent in character, eloquent, ambitious of distinction, but poor."
Such was the material that composed the leaders in the reign of terror
which speedily followed, and deluged Paris in blood.
The revolution in France, under the direction of Lafayette and his
associates, was thorough as far as it went, yet it was conservative. It
elicited the warmest sympathies of the American people, and Washington
was rejoiced at the promise thus made of happiness for the French
nation. "The revolution which has taken place with you," he wrote to
Lafayette in October, "is of such magnitude, and of so momentous a
nature, that we hardly yet dare to form a conjecture about it. We
however trust, and fervently pray, that its consequences may prove happy
to a nation in whose fate we have so much cause to be interested, and
that its influence may be felt with pleasure by future generations." To
the Count de Rochambeau he said: "I am persuaded I express the
sentiments of my fellow-citizens, when I offer our earnest prayer that
it may terminate in the permanent honor and happiness of your government
and people."
The connection of the revolution, the first act of which we have
delineated in outline, with the administration of Washington, will be
developed hereafter. It has been given here because it was appropriate
in the order of time.
Few public events of importance occurred in the United States, after
Washington's return from his eastern tour, until the reassembling of
Congress, early in January, 1790. The day appointed for that assembling
was the fourth, but there was not a quorum of the two houses until the
eighth, when the session was formally opened by Washington in person,
with an address which he read in the senate chamber. According to a
record in his diary, it was done with considerable state, conformably to
arrangements made by General Knox and Colonel Humphreys.[25] In that
address the president recommended adequate provision for the common
defence, having special reference to Indian hostilities; an
appropriation for the support of representatives of the United States at
foreign courts and other agents abroad; the establishment of a federal
rule of naturalization; measures for the encouragement of agriculture,
manufactures, commerce, and literature; and adequate provision for the
interest on the public debt. As at the opening of the first session,
both houses now waited upon the president with formal answers to his
message, and the various recommendations contained in it were referred
to an equal number of committees. The latter practice has ever since
been adhered to.
Three important questions, involving the establishment of precedents,
were discussed and decided early in the session of 1790. The first was a
decision, in accordance with the report of a joint committee of both
houses, that the last session of each Congress should expire on the
third of March. The second was in relation to the unfinished business of
the former session. On the report of a joint committee, a rule was
established that everything might be taken up where it had been left off
at the adjournment, except bills which after having passed one house had
stopped in the other. These were to be considered as lost, and were not
to be revived except in the form of new matter. The third question was
as to the official intercourse of the heads of departments with
Congress. The question grew out of an intimation from Mr. Hamilton, the
secretary of the treasury, that he was ready to make a report on the
national debt and the support of the public credit, according to the
requirements of a resolution passed at the last session. The question
was, Shall the report be made orally or in writing? The decision was
that it should be in writing; and ever since, the heads of departments
have held intercourse with Congress only in writing, the secretary of
the treasury reporting directly to Congress, the other secretaries
through the president.
Hamilton's financial scheme was the most important subject that
occupied the attention of Congress during that session. It was submitted
to the house on the fifteenth of January. It was a most masterly
performance, and commanded the profound attention and respect of the
whole country. It boldly enunciated principles based upon the broad
foundation of common honesty, by which, in the opinion of the secretary,
the United States ought to be governed in relation to the public debt.
The report opened with an able and comprehensive argument in elucidation
and support of these principles the fundamental ground of the whole
argument being the justice and policy of making adequate provision for
the final payment of the federal and state debts.
These debts amounted in the aggregate to a large sum. Hamilton estimated
the foreign debt due to the account of France, to private creditors in
Holland, and a small sum in Spain, at about eleven and three quarter
millions of dollars. This sum included the arrears of interest (more
than a million and a half of dollars) which had accumulated on the
French and Spanish loans since 1786, and installments of the French loan
overdue. The domestic debt, including interest to the end of 1790, and
an allowance for unliquidated claims of two millions of dollars
(principally unredeemed continental money), he estimated at about
forty-two and a half millions, nearly a third part of which was arrears
of interest.
The domestic debt was due originally to officers and soldiers of the war
for independence; farmers who had furnished supplies for the army, or
suffered losses by seizure of their products; and capitalists who had
loaned money to the continental Congress during the war, or spent their
fortunes freely in support of the cause. These were sacred debts; but
the position into which the paper which represented these outstanding
claims had fallen, afforded a specious argument against the propriety of
paying their nominal value to the holders. So long had public justice
delayed in liquidating these claims, that they had sunk to one sixth of
their nominal value, and a greater portion of the paper was held by
speculators. It thus lost the power with which it appealed to the public
sympathy when in the hands of the original holders, and there was a
general sentiment against a full liquidation of these claims. It was
therefore suggested that the principle of a scale of depreciation should
be applied to them, as had been done in the case of the continental
money, in paying them--that is, at the rates at which they had been
purchased by the holders. It was especially urged that this principle
should be applied to the arrears of interest, then accumulated to an
amount almost equal to one half the principal.
In his report, Hamilton took strong grounds against this idea, as being
unjust, dishonest, and impolitic. In the latter point of view, he justly
argued that public credit was essential to the new federal government,
and without it sudden emergencies, to which all governments as well as
individuals are exposed, could not be met promptly and efficiently.
Public credit, he said, could only be established by the faithful
discharge of public debts in strict conformity to the terms of contract.
In the case in question the contract was to pay so much money to the
holders of the certificates, or to their assignees. This was plain, and
nothing but a full and faithful discharge of the nominal value of the
debt could satisfy the contract. Thus he argued concerning the
principal, and he applied the same logic to the accumulated overdue
interest. It ought to have been paid when due, according to contract,
and was as much an honest debt as the principal.
Hamilton went further. He strongly recommended the assumption of the
state debts by the federal government, amounting in the aggregate,
overdue interest included, to about twenty-five millions of dollars.
Both descriptions of debts, he argued, 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. The secretary considered such
assumption "a measure of sound policy and substantial justice." The
entire debt, federal and state, foreign and domestic, for the payment of
which he recommended measures of provision, was almost eighty millions
of dollars.
The secretary, after giving the whole subject a thorough investigation
and discussion, proposed that a loan should be opened to the full amount
of the debt, federal and state, upon the following terms:--
"_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 founded on a yearly interest of six per
cent. (the capital redeemable at the pleasure of the 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
upon the hundred, 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 upon the hundred,
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 upon the hundred, per
annum, both of principal and interest.
The secretary also proposed an augmentation of the duties on imported
wines, spirits, tea, and coffee, to enable the treasury to meet the
increased demand that would be made upon it; and a duty on domestic
spirits was also recommended. Serious trouble grew out of the latter
measure when adopted and put in force.
Hamilton's report, sent to Congress on the fourteenth of January, was
taken up for consideration in the house of representatives on the
twenty-eighth; but action was postponed until the eighth of February.
Its propositions, especially the one relating to the assumption of the
state debts, were vehemently opposed, chiefly because of their tendency
to a centralization of power, as giving an undue influence to the
general government, and as being of doubtful constitutionality. Many in
different parts of the Union thought they saw great political evil in
this financial union of the states; and Virginia, above all others, most
earnestly opposed the scheme. It was believed that the funding of the
state debts would materially benefit the northern states, in which was
almost the entire capital of the country, while the southern states
could see no benefit for themselves.
Finally, on the ninth of March, a bill predicated upon the secretary's
report passed in committee of the whole by a small majority, and went to
the house for discussion. This continued from time to time until August,
when, on the fourth, an act was passed embodying essentially the several
propositions in Hamilton's report. It authorized the president to borrow
twelve millions of dollars, if so much were found necessary, for
discharging the arrears of interest and the overdue installments of the
foreign debt, and for the paying off the whole of that debt, could it be
effected on advantageous terms, the money thus borrowed to be reimbursed
within fifteen years. It also authorized the opening of a new loan,
payable in certificates of the domestic debt at par value, and in
continental bills of credit at the rate of one hundred for one.
Certificates were to be issued for subscriptions in the interest of the
domestic debt to the full amount, redeemable at the pleasure of the
government, and bearing interest at the rate of three per cent., the
interest to be paid quarterly, and to commence with the first day of
January, 1791; all interest becoming due on continental certificates, up
to that time, to be funded as above. Subscriptions in the principal of
the domestic debt were to bear interest at six per cent.; but upon one
third of the amount, entitled "deferred stock," the interest was not to
commence till the year 1800. This interest was not to be redeemable at a
faster rate than eight dollars upon the hundred, annually, including the
yearly interest, and it was left to the option of the public creditors
to subscribe, or not, to this new loan.
The amount of state debts assumed by the general government, by the act,
was twenty-one millions, five hundred thousand dollars. For this the act
authorized an additional loan, payable in certificates of the state
debts, which were distributed among the states in specific
proportions;[26] but no certificates were to be received except such as
had been issued for services or supplies during the war.
"The effect of this measure," says Marshall, "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."
The discussions which Hamilton's report produced in and out of
Congress, in the public press and in private circles, fearfully agitated
the country, and called forth the first regular and systematic
opposition to the principles on which the affairs of the Union were
administered. In this discussion Washington was greatly interested, yet
he avoided all semblance of participation in it. He heartily approved of
Hamilton's plan for restoring the public credit and laying the
foundation of national policy, as the most perfect that human wisdom had
yet devised; but he concealed his opinions in his own breast, except
when in private conversation with intimate friends. He looked with
ineffable disgust upon the sectional jealousies which the discussion
revealed; and in an able letter to Dr. Stuart, written toward the close
of March, in reply to remarks of that gentleman concerning a spirit of
jealousy in Virginia toward the eastern states, he spoke out warmly. The
latter section of the Union had united in favor of Hamilton's scheme,
while Virginia, for reasons already alluded to, opposed it. Stuart
wrote: "It is represented that the northern phalanx is so firmly united
as to bear down all opposition, while Virginia is unsupported even by
those whose interests are similar to hers.[27] Colonel Lee tells me that
many who were warm supporters of the government are changing their
sentiments, from a conviction of the impracticability of union with
states, whose interests are so dissimilar to those of Virginia."
"I am sorry such jealousies as you speak of should be gaining ground, or
are poisoning the minds of the southern people," Washington wrote in
reply. "But admit the fact, which is alleged as the cause of them, and
give it full scope--does it amount to more than was known to every man
of information before, at, and since the adoption of the constitution?
Was it not always believed that there are some points which peculiarly
interest the eastern states? And did any one who reads human nature, and
more especially the character of the eastern people, conceive that they
would not pursue them steadily by a combination of their force? Are
there not other points which equally concern the southern states? If
these states are less tenacious of their interest, or if, whilst the
eastern move in a solid phalanx to effect their views, the southern are
always divided, which of the two is most to be blamed? That there is a
diversity of interests in the Union none have denied; that this is the
case also in every state is equally certain; and that it even extends to
the counties of individual states can be as readily proved. Instance the
southern and northern parts of Virginia, the upper and lower parts of
South Carolina. Have not the interests of these always been at variance?
Witness the county of Fairfax. Have not the interests of the people of
that county varied, or the inhabitants been taught to believe so? These
are well-known truths; and yet, it did not follow that separation was to
result from the disagreement.
"To constitute a dispute there must be two parties. To understand it
well, both parties and all the circumstances must be fully heard; and,
to accommodate differences, temper and mutual forbearance are requisite.
Common danger brought the states into confederacy, and on their union
our safety and importance depend. A spirit of accommodation was the
basis of the present constitution. Can it be expected, then, that the
southern or eastern parts of the empire will succeed in all their
measures? Certainly not. But I will readily grant that more points will
be carried by the latter than the former, and for the reason which has
been mentioned, namely, that in all great national questions they move
in unison, whilst the others are divided. But I ask, again, which is
most blameworthy--those who see, and will steadily pursue their
interest, or those who can not see, or seeing will not act wisely? And I
will ask another question, of the highest magnitude in my mind, to wit:
if the eastern and northern states are dangerous in union, will they be
less so in separation? If self-interest is their governing principle,
will it forsake them, or be restrained by such an event? I hardly think
it would. Then, independently of other considerations, what would
Virginia, and such other states as might be inclined to join her, gain
by a separation? Would they not, most unquestionably, be the weaker
party?"
FOOTNOTES:
[25] The following is the record:--
"According to appointment, at eleven o'clock I set out for the
city-hall in my coach, preceded by Colonel Humphreys and Major
Jackson in uniform (on my two white horses), and followed by
Messrs. Lear and Nelson in my chariot, and Mr. Lewis, on horseback,
following them. In their rear were the chief justice of the United
States, and secretary of the treasury and war departments, in their
respective carriages, and in the order they are named. At the outer
door of the hall I was met by the doorkeepers of the senate and
house, and conducted to the door of the senate chamber; and passing
from thence to the chair through the senate on the right, and house
of representatives on the left, I took my seat. The gentlemen who
attended me followed and took their stand behind the senators, the
whole rising as I entered. After being seated, at which time the
members of both houses also sat I arose (as they also did) and made
my speech, delivering one copy to the president of the senate, and
another to the speaker of the house of representatives; after
which, and being a few moments seated, I retired, bowing on each
side to the assembly (who stood) as I passed, and descending to the
lower hall, attended as before, I returned with them to my house."
[26] The following were the amounts: New Hampshire, $300,000;
Massachusetts, $4,000,000; Rhode Island, $200,000; Connecticut,
$1,600,000; New York, $1,200,000; New Jersey, $800,000; Pennsylvania,
$2,200,000; Delaware, $200,000; Maryland, $800,000; Virginia,
$3,000,000; North Carolina, $2,400,000; South Carolina, $4,000,000;
Georgia, $300,000.
[27] South Carolina joined New England in favor of Hamilton's scheme.