Chapter XXV: Introduction (24)

Mr. BENSON.--The gentlemen in favor of this motion come forward as the advocates of the late army. I wish, therefore, to be ascertained of one fact, do the army wish a measure of this kind to take place? I apprehend they do not; and I am led to this opinion from a knowledge of the habits of military men; they prefer their honor to every pecuniary consideration, and they generally are actuated by that principle alone. I will state a case. Suppose I purchased an officer's certificate for one hundred dollars, and I was to fund it; the Treasurer would say, you are to receive but fifty dollars, the other fifty are reserved for the original holder. Now, if I was to go and tell the officer, that, notwithstanding my purchase of all his right, title, and claim to the one hundred dollars, the Government would give me but fifty, retaining the other fifty for him, he would answer, I will never receive a farthing of it, because it is your money, fairly and honorably purchased of me. Now, in this case, what would you do? Should these fifty dollars fall to the Government, or to me? I reason in this manner, because I suppose this would be a general case. The Society of Cincinnati, of the State of New York, have, by a resolution, which they have published in the papers, disavowed the principle; and, in Rhode Island, a member of the Society was expelled for taking advantage of the tender-law of that State, and paying off a _bona fide_ debt with depreciated paper. I apprehend the principle of action still remains the same throughout the whole of the army. When the soldier conveyed his certificate, there was a contract between the parties, that whatever sum the Government could pay, the whole of it should go to the assignee. Now, by an act of violence, you take the half of it away, and enable the assignor to discharge the contract by paying fifty dollars, when he had engaged that the purchaser should receive one hundred. This is, in effect, the same as the payment of depreciated paper under a tender-law, and would be equally rejected by those whom it is intended to favor.

I would state the case, as if it had happened between the gentleman and myself, could he hesitate to say the whole sum was fairly mine, and surrender it up, notwithstanding the legal interference of the Government? This is a question I would not suffer myself to reason upon; I would not trust my mind with it, lest it should preponderate in favor of self-interest, though against the common principles of truth and justice. I cannot think the army would accept the interposition; we ought, therefore, to be cautious how we trifle with the honor of other people.

I do not pretend to say, that the persons intended to be relieved by the proposed scheme have not a claim against the United States; but I deny that it is a claim upon our equity or justice; it may be a claim upon our humanity; and, whether we will satisfy this claim, depends on circumstances which have no connection with the present question.

Mr. JACKSON.--God forbid, Mr. Chairman, that I should trifle with the honor of men I value, and esteem so highly; it would be the last thing I could think of. But, sir, as a Legislator, I cannot consent that the pittance which was the reward of distinguished services, shall be torn from them by the arts of insidious speculators; but there are others, who have a claim in equity upon our justice, who ought not to be sacrificed to the soldier's honor.

Mr. WHITE said he agreed with the gentleman from Massachusetts (Mr. SEDGWICK) in the principle, that if a contract is made for a valuable consideration, and with the understanding of both parties, the Legislature ought not to interfere in it; and should it appear that the transaction between the original holders of certificates and the purchasers was a fair one, the dispute, in his mind, was at an end. But no gentleman had attempted to show that this was the case, though all the arguments against a discrimination were founded on that supposition. Perhaps it might be said, that every argument ought to be considered as fair; unless the contrary be proved. But where one man has obtained the property of another to the amount of £100 for £10, or £12 10s. the transaction must be explained to him, before he would believe it to be honest. What is the present case? The original holders, who have parted with the evidences of their debts, were principally common soldiers, militiamen, and farmers in indigent circumstances. Who were the purchasers? The Secretary of the Treasury tells us, that the most enlightened among our citizens are the creditors of the United States; common soldiers cannot be comprehended in this description. What must have passed, he asked, between the soldier, the militiaman, or farmer, and the purchaser? What reason could the purchaser assign for offering £10 for a paper which specified an obligation to pay £100? It must be something like this--the States will never pay you; if they do, it will be at a very remote period, so long as to be useless to you; but to relieve your present necessities, I will take the risk on myself, and give you £10. Now, could any enlightened man, he asked, in 1783, or at any subsequent period, in which time the transfers took place, believe that the independence of America was in danger, or that the debts could not be provided for?

He knew so many instances of transactions like that which he had stated, that he doubted not the greater part of the certificates had been obtained by similar means. Indeed he could not conceive any other by which they could be obtained.

He said we were, perhaps, without a precedent in any other nation which would be strictly applicable; but he desired gentlemen to determine for themselves, whether, under such circumstances, the man who had rendered services to his country should be deprived of his reward, or whether the purchaser ought to receive it. He said it was very different in the common transactions of life. If a man purchased a tract of land for £1,000, paid the money, and took a bond for the conveyance, a third person, by informing the purchaser that the seller could not make a title, or by other false suggestions should obtain a transfer of the bond in consideration of £100, and get a conveyance and possession of the land, yet, on repaying the £100, the conveyance would be set aside, and he would be restored to his land.

He gave some other instances of a similar nature, and said, he believed, if a bond, whether due, or to become due, was assigned under such circumstances, that the obligee would be justifiable in contesting it in a court of law, and that the injured person would, on application, obtain redress. He said, that in cases of extreme hardship, Courts of Equity would give relief without express proof of fraud; that this was the law of Great Britain, and was agreeable to the principles of the civil law; that the Roman jurists, he believed, had fixed the point of extreme hardship to one half of the value of the property transferred; in England the court was to judge.

He said he did not think the present holders were strictly entitled to any thing more than the original purchasers; that here the maxim, quoted on the other side of the question, that the assignee stands in the shoes of the assignor, properly applied. You cannot place another on more advantageous ground than that on which you stand yourself. The plea of an innocent purchaser could not take place; the nature of the transaction must appear evident to every man concerned in the transfer.

He said the reverse of this did not hold. An assignee was not always in as advantageous a situation as the assignor; and instanced the case of an executor who should obtain the assignment of his testator's bond at an undervalue; and who, he said, could not retain in his hands the amount of the sum specified in the bond, which the creditor might have recovered, but only the sum which he actually paid for the bond.

He said, that, though in his opinion the present holders of certificates were strictly entitled to no more than what had been paid to the original holders, yet, as an investigation of that circumstance would be involved in inextricable difficulties, and since we were (as had been very properly observed and well expressed by a gentleman from South Carolina) settling the business of a family, he was willing to acquiesce in the motion of his colleague. He said, that arbitrators often gave the injured party less than his due, for peace sake; and he was willing to act on the same principle. He doubted not but courts of justice would give relief in particular cases; but in a matter of that magnitude, he thought the interference of the Legislature very proper. The South Sea business, he thought, in that respect, a good precedent. Two gentlemen had mentioned the business; he would not say they had misstated the transaction, but he thought their accounts imperfect. They said they had the documents under their hands; he wished they had been read; he had them not, but would state from memory what he thought applicable to the case in question. The directors of the South Sea Company, by various arts, induced the people to give as high as £1,000 for £100 stock; in many instances the money was paid, in others it was contracted to be paid. A gentleman has said, that Parliament interfered, not to violate, but to perfect the contract: but what did Parliament do? They confiscated the estates of the directors, and applied the amount to the relief of those who had actually paid their money, and suspended suits against those who had not paid; and authorized the debtors to discharge their debts by the payment of ten per cent. on the real value of the stock subscribed for. But if he was wrong in supposing the present holders ought to stand in the place of the first purchasers, they could be considered only as having purchased, in market, a paper of indefinite value; if, then, they get the highest market price, they are not injured.

He would now endeavor to obviate some of the objections to the measure, on account of its impracticability; and in general terms observed, that much greater pains had been taken to show the impracticability than the injustice of it. He said, if it was just, we ought to adopt it; and he did not doubt but the wisdom of the Legislature would be able to carry it into effect. Purchasers, he said, had been represented as the supporters of public credit; but he could not consider them in that light. The offering a tenth or an eighth part of the value of the bond of an individual would tend rather to blast his credit than to support it; it would have the same effect with respect to the public.

He said he had lived long enough to be convinced that wise and great men, having the same object in view, often differ in opinion with respect to the means of accomplishing it; therefore, every proposition ought to be treated with candor and respect. He made that observation in consequence of what passed yesterday. A gentleman from Massachusetts had introduced his speech in a manner somewhat new--with an apology for an impropriety which he _intended to commit_. He pursued the arguments of those who went before him, in opposition to the amendment; but his speech consisted principally in an effusion of opprobrious epithets, some of which he repeated, and said, to detail the whole would perhaps fill half a column of a newspaper. He said he felt, on the occasion, not for himself, for he had not expressed his sentiments on the subject under debate, but for the honor of the House, in which, he thought, no such language ought to be used.

It had been said we came forward as volunteers; that the original holders did not put in their claim. That might be easily accounted for; they were generally obscure and indigent; had too much modesty, or perhaps not the capacity, to come forward. That he believed the crowd in the gallery did not consist of original holders.

Mr. HARTLEY.--I do not wish to trespass upon the time of the committee, but I cannot consent to give a silent vote on this occasion. I mean, however, to confine myself to a few observations, as many of my ideas have been communicated by other gentlemen. The honorable gentleman from South Carolina (Mr. SMITH) has anticipated much of what I had to urge; I shall therefore reduce my view of the subject to two points; first, as to the justice or legality of the measure, in obliging a creditor, or assignee, to take less than a certificate expresses, and pay the difference to another: second, as to the practicability or policy of the motion and its consequences.

As to making further satisfaction to the officers and soldiers of the late army, who have sold their certificates for an inconsiderable sum, and who have in consequence reaped a less reward than the Government contracted for, and intended them, I conceive it has nothing to do with the present question. However, if there is a disposition in Congress to make a further compensation to those brave and meritorious men, I would be among the first to support the measure; but I think this a subject too momentous to be involved collaterally in the question now under consideration.

With respect to the first point that offers itself, I have to remark, that a man who enters into a contract should know the consideration, and understand the principles upon which it is made, and these should be expressed on the face of the evidence of the contract. Now, if this contract be of a negotiable nature, the person to whom the same is offered, looks on its face, from which it discovers the _agrementum_, and is naturally led to consider the circumstances of the debtor, his ability and integrity. Suppose even the evidence of the contract to be obtained by fraud, unless it be against the express provision of a statute, and is transferred to a third person for a valuable consideration, without notice of fraud, it, must be paid. A fraud in any link of the chain is corrected by a _bona fide_ transfer for a valuable consideration, without a knowledge of that circumstance by the purchaser.

Now, let us apply these principles to the present case. Here is an instrument of writing, specifying a debt to be due from the United States to the original holder, or bearer; this being brought into market, is offered to a third person, he, before his purchase, sees that the contract was executed in consequence of a consideration, and not against any positive statute; he then inquires the ability of the Union, and its disposition to comply with the contract; and, from a consideration of these circumstances, he concludes, with respect to his own interest and safety in the purchase, and pays what is conceived to be the value. What is there to discharge the Government from the payment? Is it pretended that the services and supplies were an inadequate compensation? If it even was so supposed, it would not authorize us to refuse a compliance with our engagements; any interference would set afloat the great principle upon which the public tranquillity and happiness depend. This leads me to consider the subject in my second point of view, with respect to its policy and practicability, and the consequences that would result from the attempt.

There are but few original holders who have transferred, that can be found; of consequence, you would throw the major part of the debt into an intricate labyrinth. The present possessor would be shifting back the certificate to the original holder, as far as a latitude is given. Many persons who were bare trustees, would be reaping advantages, and drawing money from the Public Treasury, to which they are not entitled; oaths would be multiplied on oaths; perjuries on perjuries; fraud upon fraud; and every species of speculation would ensue; deception would be a strong trait in the character of the times, and the whole of the United States would be in motion, each endeavoring to prey upon the other. The consequences of a second inundation of this nature are to be dreaded, and ought to be carefully avoided.

Mr. MOORE observed, that it was agreed on all hands, and proposed in the report of the Secretary, that some discrimination ought to take place. It was, therefore, incumbent on the House to inquire how this might be effected with the greatest degree of equity. He supposed the result would be, that we are at liberty to pay the most meritorious first. Who constituted this class of citizens? He trusted the late army had an incontrovertible title to it. He could never believe that the men who stripped the soldiers of their hard earnings, by allowing them a tenth of their claim, would have the temerity to pretend that they had acquired the title of merit with their money, and that the soldier relinquished, with his certificate, the honor of his corps.

Had the present question been agitated in the hour of distress, when an army was essential to our defence, the arguments of justice and equity would have had their weight. Perhaps it is the soldier's misfortune, that the question arises at a time when the object for which he was employed is secured. But notwithstanding all that has been said, I am fully convinced that his claim is insuperable in equity. The soldier did not engage to fight your battles to be compensated with a certificate, acknowledging you were indebted to him; it was specie you promised, and specie he had a right to expect, or something equal to it in reality. The public faith was actually pledged to him for a compensation for his services; but will any one say the public faith was inviolably kept with him, when a certificate, worth but two shillings in the pound was forced upon him as specie? The poor soldier, thus situated, was followed by gangs of speculators, who endeavored to impose on his judgment by the relation of artful and insidious opinions of the public capacity and integrity in the discharge of these acknowledgments. The soldier, incapable of detecting the specious falsehood, swallows the bait, and becomes the easy prey of designing men. The people felt and resented the injuries thus perpetrated on those they esteemed; and I am much mistaken if the citizens of America do not still retain favorable impressions of the soldiers' services.

A great deal has been said, with respect to public opinion on this question. It is impossible, perhaps, to ascertain the public mind with precision; but there is but one way in our power, that is, to suffer the subject to be suspended for the present session, and on our return, or the election of our successors, the public sentiment in this respect will be evinced; but if we are to determine the public mind from our own observation, I should not hesitate to say that nine out of ten would be in favor of a discrimination. The people would, on this principle, I conceive, submit cheerfully to the payment of those taxes which are requisite to discharge the public engagements; but if they are to flow into the large cities, or into the hands of foreigners, who have speculated upon the misfortunes of the most meritorious class of our citizens, they will bear the burthen with murmurs and complaints.

Can any principle of justice demand the payment of the present possessor of a certificate, that does not apply more forcibly as it respects original holders? Will gentlemen, then, comply with the one, and neglect the other? Or rather, as my colleague has proposed, if they are incapable to pay both, will they not prefer a composition?

Mr. WADSWORTH.--It appears to me that we have mistaken this business from the beginning, for we are proceeding as if it was taken for granted that all those who had alienated their certificates, have been compelled to it by necessity; there is nothing further from the truth. So far as it respects the army debt it may be just; and at this moment, were a soldiery to be paid in certificates, they would part with them at as great a discount as ever. There is a disposition in soldiers generally to despise pecuniary considerations; if they want money, they will dispose of their property at an inconsiderate value to obtain it. But this remark does not extend to the industrious part of the public creditors, because they have carefully retained the evidences of their debt, and now will receive its value. But even of the army, it is not true that they will suffer the loss of the discount at which their certificates have been sold. Having an opportunity of being well acquainted with the circumstances of the army, I know that many of the officers lived upon their friends, who supported them from time to time, with such sums as they had occasion for, and when they retired from the army, they repaid their friends with the certificates which they had received. The best way for gentlemen to ascertain the amount of the public debt which has been transferred from necessity, is to mix in the world, and try, from the circle of their acquaintance, to learn what the actual transfers have been. I have done this, and am conscious within myself, that seven-eighths of all the alienated debt has not been disposed of by the original holder from necessity.

When the requisitions of Congress were rejected by the State Assemblies, some of the most wealthy persons of the community, and those most violently opposed to Continental measures, seemed to concur in the opinion, that the States would never raise a revenue for the purpose of paying the domestic debt. The people finding this a prevailing opinion, were impressed with a dread of its consequences, and sold this species of negotiable property at a rate dictated by their apprehensions. I should conceive it as a great evil, if the Government were now to restore to such persons what they lost for want of confidence. I think this circumstance will operate considerably against the gentleman's principle of equity; now, as to the practicability of the measure, those gentlemen who are acquainted with the history of the manner in which the public debt was contracted, will readily agree with me, that it is an insuperable objection. In the years 1776 and 1777, very few advances were made to those who procured supplies to the public; they purchased what they got generally upon credit, and they were obliged, before their accounts could be settled, and they could get their money from the Public Treasury, to get receipts for all the articles they had furnished, and then they received orders upon the loan-officers, who, not having money, paid them in certificates, which these people, in return, paid over to those who furnished them with supplies. So that the agent appears a creditor to a very considerable amount, when his personal claim is very trifling, and those who risked their property, without pay of any kind, and who are undoubtedly deserving of some credit, appeared to be no other than speculators in public securities. I cannot see, in this case, any possible mode of discrimination. There are a variety of other official transactions which would demonstrate the impracticability, if it was necessary to oppose the proposition on that ground.

WEDNESDAY, February 17.

_Public Credit._

The House again went into a committee on the report of the Secretary of the Treasury, Mr. BALDWIN in the chair.

Mr. MADISON's proposition still under consideration.

Mr. PAGE.--I do not wish to trouble the committee with a formal argument in favor of the motion offered by my colleague; but I wish to inquire of the gentlemen in opposition, whether they conceive the principles upon which it is grounded to be unjust? I observed, that their replies have generally gone against the practicability of the measure; but that does not prove to me that it is inequitable. If there is justice in the case, we must not consider the difficulty of the attempt. I trust, if it shall be found to stand on the foundation of immutable justice, that its practicability will be demonstrated. However, I shall not enter on that ground, but leave it to my colleague, who has so ably supported it on the other.

I would, however, beg gentlemen to answer these questions, and show to my mind the injustice of the United States complying with their engagements made to the first holders of certificates, as far as the case, and their abilities, will permit. Or where is the justice of doing more for the assignee than he, or his assignor, expected could or would be done? Where is the breach of faith in Government, if it pays its whole debt, with a justice, blended with mercy, resembling that of Heaven itself, making impartial retribution among the children of men, on the great day of accounts? Where is the propriety of branding a measure of this nature with epithets of infamy? or using such harsh expressions as have issued like a torrent from a gentleman on the other side of the House? So far am I from viewing the propositions through such a discolored medium, that I am induced to believe, if Congress adopt it, they may submit its rectitude, and stand the decision, of not only a superior order of beings, but of the Great Judge of the Universe, who is immutable truth itself.

What will the assignee lose by the measure? He will lose nothing, but the sanguine expectation lately raised in his mind.

Where is the interference in contracts, when the proposition is to comply sacredly, as far as the case will admit, with the contract between the State and its creditors? Is not the assignment of the certificates confirmed by the nation? Does it not give to the assignee the very thing stipulated between the assignor and assignee, that is, whatever sum the Government shall be pleased to pay for the certificate? And is not the sum now proposed, more than either the first or last assignee ever contemplated, till within a few days past, would ever be paid him?

The time is now arrived when justice ought to be done; it is looked for, with anxious expectation, by all classes of our fellow citizens; it will not avail us to say, it is impracticable, until experience has demonstrated it to be so. But the measure we contend for is termed an _ex post facto_ law, and as such, is declared to be unconstitutional. Gentlemen torture every thing, in order to produce evidence against an act of justice. How can it be such an _ex post facto_ law as is prescribed by the constitution, when that expression is conjunctive with a bill of attainder? It relates to that only, and can have no reference to the subject of the proposition before us. The same idea, which prevents us from an interference on the present occasion, will prevent us, as was observed by the gentleman from Georgia, from making a statute of limitation, or from correcting any frauds, which have been perpetrated on the unsuspicious soldiery. We must not contemplate the restoration of the starving soldier, with his humble wife and numerous and naked offspring, to a more eligible situation; we must not restore confidence to the man of honor who is buried in abject poverty, because it is addressing a language to the heart, which the haughtiness of the head disdains to hear; but, in doubtful cases of justice, the heart is the best director on this subject; happy will it be for us, if, as I think, they both concur to give their approbation to the present measure.

THURSDAY, February 18.

_Public Credit._

The House again went into a committee on the Secretary of the Treasury's report, Mr. BALDWIN in the chair.

Mr. MADISON's proposition still under consideration.

Mr. STONE.--I shall not attempt to show the importance of the subject before us, as it relates to public credit; or as it will affect our character as a nation, at home and abroad. These have been explained; but it is proper for us to consider how far the amendment may operate to establish a precedent of Continental and State Legislation, the influence it may have on society, and the rules of civil conduct between man and man. Every community must experience that the conduct of the Government will influence the opinions of the individuals; and the spirit of the individual will transfuse itself into the Government. This action and reaction operates more powerfully in a Republican Government, founded on representation, than on any other.

Our situation is made more important, on the present occasion, by a disagreement on principles which ought to be fixed and plain; to me it seems that we differ on the principle of public justice. This may be unfortunate--let us endeavor to be reconciled. If the true distinction between natural and civil justice be accurately drawn, we may annihilate the point in contest. Agreeably to the principle of natural justice, no contract is perfect unless there be an equivalent; and that which we call a valuable consideration, on which to ground a contract, is founded on the idea of an equivalent, and presupposes it. And, I believe the idea of such a consideration being an equivalent, is the foundation of the validity of a contract, even in the English law; and is always carried into effect, wherever the execution is safe and certain; because I think, whenever it appears in any court of justice, that the consideration was not an equivalent, that then the contract is not carried into execution. The execution of the principle of natural justice then is safe; for instance, £99 19_s._ 11_d._ is not a consideration for £100, but a small sum may be a consideration for a valuable property; this does not arise from an infraction of the principle; but because the property may not have a determinate value in the society; and it would make judges arbitrary, legal proceedings extremely expensive, and contracts uncertain, if an extensive discretion as to the value was admitted. But whenever the consideration is so small and inadequate, as to appear so plainly and satisfactorily that the judge cannot be mistaken in determining it not to be an equivalent, there the contract is not valid.

Now, if we have received services from the soldier, and have given him paper, the question will be, whether that was an equivalent, and the paper a proper payment; or whether it is only an evidence of the debt? I take it to be a granted point that it was not a payment, but an obligation to pay whenever the United States should be able. It appears to me, then, that it was the duty of the person who received the paper, to wait a reasonable time; and the duty of the nation to make actual payment as speedily as possible. If the person who had received this paper had wantonly parted with it for nothing, I agree we should have been under no more obligation to pay him the expressed sum, than if we had paid him money, and he had flung it away or wasted it; but if, on the contrary, there was a delay in the execution of the contract, on the part of the Government, which compelled him to part with it, a compensation is equitable.

The same rule will apply between the original holder, or person who rendered the service, and present possessor or assignee; for shortness we will distinguish them by the names of soldier and speculator. The speculator, when he dealt with the soldier, must, from the nature of the thing, have induced him to believe that he gave him an equivalent for his purchase; and it might have been an inducement to the soldier to sell, to think he had something more than an equivalent; the speculator thought he had more than an equivalent, throwing necessity on the one side, and fraud on the other, out of the question. Then the confidence was equal, perhaps not a penny between them: I can hardly conceive the exchange took place on any other terms. You never can allow the confidence of the speculator to be estimated very highly, perhaps at not more than one for ten. For if it is admitted, that the speculator had entire confidence, he was guilty of a palpable fraud, and a violation of the first principle of justice; it amounted to this, that he gave £10 in money for £100 bond, which he was certain would be paid. I believe, if the case stood exactly in this form, no man would hesitate in deciding its illegality. If a man takes £100 for £10, it is illegal; but suppose there was a risk, and this risk was considered by the speculator as little less than ten for one, has he not discovered his own mistake when he sees he gets an interest of sixty per cent. on his capital; and that capital tenfold? This contract then ought to be void on the principle of a mistake; and here you place the speculator between Scylla and Charybdis. If he really thought the certificates only worth one for ten, you can give him no credit for his confidence; and you will admit that he ought to be satisfied with a reasonable advance on his purchase. But if you give him entire credit for his confidence in Government, you must give him no credit for his honesty. If both parties had known of this event, the contract would never have taken place. If you pay the whole sum, the speculator ought to take no more than what he gave a fair equivalent for. Gentlemen who seem afraid of giving to the soldier a part of his original claim, lest they affront his nobleness of soul, make no scruple to offer the speculator ten times the sum he is entitled to, on the principle of natural justice, without any apprehension that his honor will receive a wound. If the claim of the soldier was extinguished by receiving two shillings in the pound of the speculator, upon what principle is it contended that the latter should receive more than distributive justice? Arguments, proving that the justice due to the first has been satisfied by what has been done, apply with greater force to the latter.

It has been doubted, and a question has been agitated, whether we shall exercise the power of reconsidering these contracts, and whether a modification is constitutionally in our power? I will not go into this subject, or any other which ought to be taken for granted. I shall take it, that we are authorized, and do mean to interfere; you must act. Do you mean to pay the principal and interest now due? I believe not. Will you shelter yourself under the plea of necessity? That is impossible. I dare say, if the United States were sold, they would at least be worth six hundred millions of dollars; and we have but eighty millions to provide for. Having, then, the means and power, I trust you mean to exercise them; and as you exercise them, you ought to exercise them as justly as possible; then, to do this, you will, it is said, personify the three parties concerned--the United States, the original holder, and the speculator. I do not clearly comprehend the idea of a personified State; perhaps it arises from my dulness of apprehension. Man, in his natural capacity, is sometimes obliged to do what is considered unjust; but a State, when it has power, is not obliged to do what is unjust. The State, then, in this respect, is doing what an honest man would do, if he had the power of conducting this business as he thought proper.

The speculator comes to you with his bond, and tells you it is due. The soldier tells you that he has done services to a considerable amount, for which he never has been paid; and that those evidences of the demand which you gave to him, were obtained from him, for one-tenth part of what they were declared to be worth. The State says to the speculator, you have made a great deal, and out of a man who has risked his life, and borne every burthen which human nature could bear, with the greatest fortitude which the most virtuous heart is capable of exerting, let him have a part back. The speculator answers no; here is your bond. Consider again, replies the State, that the veteran's services, at the expense of his health and property, at the risk of his life, has saved you and yours; and not only that, but he is obliged to pay of your demand, more than he has ever received. What is now his answer? Here is the bond, pay me my bond. Under these circumstances, supposing the State an individual, he might, without much infamy to his character, exercise the power which he has over his own bond, in order to do justice between the parties. He might say to the speculator, you had the soldier in your power; you did him injustice; we have you now in our power, we will do you complete justice, but no more. A private man could never be injured in his reputation by such conduct: indeed, according to the result of these circumstances, the hardships of war, and the breach of contract, have unfortunately inflicted upon the man, the most meritorious in this community, or perhaps in any other community, sufferings and miseries--a punishment sufficient to atone for the guilt of the greatest crimes. This, in the event, appears to be the situation of the saviors of America.

Mr. _Madison_ said that the opponents of his proposition had imposed on its friends not only a heavy task, by the number of their objections, but a delicate one by the nature of some of them. It had been arranged as an embarrassing measure which ought to be facilitated, and producing discussions which might end in disagreeable consequences. However painful it might be to contradict the wishes of gentlemen whom he respected, he could promise nothing more, in the present case, than his endeavors to disappoint their apprehensions. When his judgment could not yield to the propositions of others, the right to make and support his own, was a right which he could never suffer to be contested. In exercising it, he should study to maintain that moderation and liberality which were due to the greatness of the subject before the committee. He felt pleasure in acknowledging, that the like spirit had, in general, directed the arguments on the other side. Free discussions thus conducted are not only favorable to a right decision, but to a cheerful acquiescence of the mistaken opponents of it. They might have the further advantage of recommending the result to the public, by fully explaining the grounds of it. If the pretensions of a numerous and meritorious class of citizens be not well founded, or cannot be complied with, let them see that this is the case, and be soothed, under their disappointment, with the proof that they have not been overlooked by their country.

He would proceed now to review the grounds on which the proposition had been combated; which he should do without either following those who had wandered from the field of fair argument, or avoiding those who had kept within its limits.

It could not have escaped the committee, that the gentlemen to whom he was opposed, had reasoned on this momentous question as on an ordinary case in a court of law; that they had equally strained all the maxims that could favor the purchasing, or be adverse to the original holder; and that they dwelt with equal pleasure on every circumstance which could brighten the pretensions of the former, or discredit those of the latter. He had not himself attempted, nor did he mean to undervalue the pretensions of the actual holders. In stating them, he had even used as strong terms as they themselves could have dictated; but beyond a certain point he could not go. He must renounce every sentiment which he had hitherto cherished, before his complaisance could admit that America ought to erect the monuments of her gratitude, not to those who saved her liberties, but to those who had enriched themselves in her funds.

All that he wished was, that the claims of the original holders, not less than those of the actual holders, should be fairly examined and justly decided. They had been invalidated by nothing yet urged. A debt was fairly contracted; according to justice and good faith, it ought to have been paid in gold or silver; a piece of paper only was substituted. Was this paper equal in value to gold or silver? No. It was worth, in the market, which the argument for the purchasing holders makes the criterion, no more than one-eighth or one-seventh of that value. Was this depreciated paper freely accepted? No. The Government offered that or nothing. The relation of the individual to the Government, and the circumstances of the offer, rendered the acceptance a forced, not a free one. The same degree of constraint would vitiate a transaction between man and man, before any Court of Equity on the face of the earth. There are even cases where consent cannot be pretended; where the property of the planter or farmer had been taken at the point of the bayonet, and a certificate presented in the same manner. But why did the creditors part with their acknowledgment of the debt? In some instances, from necessity; in others, from a well-founded distrust of the public. Whether from the one, or the other, they had been injured; they had suffered loss, through the default of the debtor; and the debtor cannot, in justice or honor, take advantage of the default.

Here, then, was a debt acknowledged to have been once due, and which was never discharged; because the payment was forced and defective. The balance, consequently, is still due, and is of as sacred a nature as the claims of the purchasing holder can be; and if both are not to be paid in the whole, is equally entitled to payment in part.

He begged gentlemen would not yield too readily to the artificial niceties of forensic reasoning; that they would consider not the form, but the substance--not the letter, but the equity--not the bark, but the pith of the business. It was a great and an extraordinary case; it ought to be decided on the great and fundamental principles of justice. He had been animadverted upon, for appealing to the heart as well as the head; he would be bold, nevertheless, to repeat, that, in great and unusual questions of morality, the heart is the best judge.

It had been said, by a member from Massachusetts, that the proposition was founded on a new principle in Congress. If the present Congress be meant, that is not strange, for Congress itself is new; if the former Congress be meant, it is not true, for the principle is found in an act which had been already cited. After the pay of the army had, during the war, been nominally and legally discharged in depreciated paper, the loss was made up to the sufferers.

It had been said, by a member from New York, that this case was not parallel, there being no third party like the present holders of certificates. This objection could not be valid. The Government paid ten dollars' worth in fact, but only one to the soldier. The soldier was then the original holder. The soldier assigned it to the citizen; the citizen then became the actual holder. What was the event? The loss of the original holder was repaired, after the actual holder had been settled with, according to the highest market value of his paper.

He did not mean, however, to decide on the whole merits of this last transaction; or to contend for a similitude, in all respects, between the two kinds of paper. One material difference was, that the bills of credit, by more frequent transfers, and by dividing the change of value among a greater number of hands, rendered the effect of less consequence to individuals, and less sensible to the public mind. But this difference, whatever force it might give to the claims of the purchasing holder of certificates, could diminish nothing from the claims of the original holders who assigned them.

It had been said, by another member from Massachusetts, that the old Government did every thing in its power. It made requisitions, used exhortations, and in every respect discharged its duty; but it was to be remembered, that the debt was not due from the Government, but the United States. An attorney, with full powers to form, without the means to fulfil engagements, could never, by his ineffectual, though honest efforts, exonerate his principal.

He had been repeatedly reminded of the address of Congress in 1783, which rejected a discrimination between original and purchasing holders. At that period, the certificates to the army, and citizens at large, had not been issued. The transfers were confined to loan-office certificates, were not numerous, and had been, in great part, made with little loss to the original creditor. At present, the transfers extend to a vast proportion of the whole debt, and the loss to the original holders has been immense. The injustice which has taken place has been enormous and flagrant, and makes redress a great national object. This change of circumstances destroys the argument from the act of Congress referred to; but if implicit regard is to be paid to the doctrines of that act, any modification of the interest of the debt will be as inadmissible as a modification of the principal.

It had been said, that if the losses of the original creditors are entitled to reparation, Congress ought to repair those suffered from paper money--from the ravages of the war, and from the act of barring claims not produced within a limited time. As to the paper money, either the case is applicable, or it is not: if not applicable, the argument fails; if applicable, either the depreciated certificates ought to be liquidated by a like scale, as was applied to the depreciated money; or the money, even if the whole mass of it was still in circulation, ought to be literally redeemed, like the certificates. Leaving the gentleman to make his own choice of these dilemmas, he would only add, himself, that if there were no other difference between the cases, the manifest impossibility of redressing the one, and the practicability of redressing the other, was a sufficient answer to the objection. With respect to the towns burnt, and other devastations of war, it was taught, by the writers on the law of nations, that they were to be numbered among the inevitable calamities of mankind. Still, however, a Government owed them every alleviation which it could conveniently afford; but no authority could be found that puts on the same footing with those calamities, such as proceed from a failure to fulfil the direct and express obligations of the public. The just claims barred by the act of limitation, were, in his opinion, clearly entitled to redress. That act was highly objectionable. The public, which was interested in shortening the term, undertook to decide, that no claim, however just, should be admitted, if not presented within nine months. The act made none of the exceptions usual in such acts, not even in favor of the most distant parts of the Union. In many instances, it had been absolutely impossible for the persons injured to know of the regulation. Some of these instances were within his own knowledge. To limit the duration of a law to a period, within which it could not possibly be promulged, and then take advantage of the impossibility, would be imitating the Roman tyrant, who posted up his edicts so high that they could not be read, and then punished the people for not obeying them.

It has been said, that if the purchased certificates were funded at the rate proposed, they would fall in the market, and the holders be injured. It was pretty certain, that the greater part, at least, would be gainers. He believed that the highest market price, especially with the arrears of interest incorporated, well funded at six per cent, would prevent every loss that could justify complaint.

But foreigners had become purchasers, and ought to be particularly respected. Foreigners, he remarked, had themselves made a difference between the value of the foreign and domestic debt; they would, therefore, the less complain of a difference made by Government here. It was his opinion that the term stated in the proposition would yield a greater profit to the foreign purchasers than they could have got for their money if advanced by them in any of the funds of Europe.

The proposition had been charged with robbing one set of men to pay another. If there were robbery in the case, it had been committed on the original creditors. But, to speak more accurately, as well as more moderately, the proposition would do no more than withhold a part from each of two creditors, where both were not to be paid the whole.

A member from New York has asked whether an original creditor, who had assigned his certificate, could, in conscience, accept a reimbursement in the manner proposed? He would not deny that assignments might have been made with such explanations, or under such circumstances, as would have that effect; but, in general, the assignments have been made with reference merely to the market value, and the uncertainty of the steps that might be taken by the Government. The bulk of the creditors had assigned under circumstances from which no scruples could arise. In all cases where a scruple existed, the benefit of the provision might be renounced. He would, in turn, ask the gentleman, whether there was not more room to apprehend that the present holder, who had got his certificate of a distressed and meritorious fellow-citizen for one-eighth or one-tenth its ultimate value, might not feel some remorse in retaining so unconscionable an advantage?

Similar propositions, it was said, had been made and rejected in the State Legislatures. This was not a fact. The propositions made in the State Legislatures were not intended to do justice to the injured, but to seize a profit to the public.

But no petitions for redress had come from the sufferers. Was merit, then, to be the less regarded, because it was modest? Perhaps, however, another explanation ought to be given. Many of the sufferers were poor and uninformed. Those of another description were so dispersed, that their interests and efforts could not be brought forward. The case of the purchasing holders was very different.

The constitutionality of the proposition had been drawn into question. He asked whether words could be devised that would place the new Government more precisely in the same relation to the real creditors with the old? The power was the same; the obligation was the same. The means only were varied.

An objection had been drawn from the article prohibiting _ex post facto_ laws. But as _ex post facto_ laws relate to criminal, not civil cases, the constitution itself requires this definition, by adding to a like restriction on the States an express one against retrospective laws of a civil nature.

It had been said, that foreigners had been led to purchase, by their faith in the article of the constitution relating to the public debts. He would answer this objection by a single fact: Foreigners had shown, by the market price in Europe, that they trusted the nature of foreign debt more under the old Government, than the nature of the domestic debt under the new Government.

Objections to the measure had been drawn from its supposed tendency to impede public credit. He thought it, on the contrary, perfectly consistent with the establishment of public credit. It was in vain to say, that Government ought never to revise measures once decided. Great caution on this head ought, no doubt, to be observed; but there were situations in which, without some legislative interposition, the first principles of justice, and the very ends of civil society, would be frustrated. The gentlemen themselves had been compelled to make exceptions to the general doctrine; they would probably make more before the business was at an end.