government; but the southern interest had been CHAP. IV. sufficiently strong to prevent an appropriation of 1790. funds, which required the assent of nine states; in consequence of which the ordinance had never been carried into execution. 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 in favour of no one place had a majority of both houses concurred. With as little success, had attempts 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. for the sessions of the legislature, 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, whereby it was stipulated that congress should adjourn to and hold their sessions in Philadelphia, for ten years, during which time, buildings for the accommodation of the government should be erected at some place to be selected, 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 perma nen residence which had been agreed on between them, a majority was produced in favour of the two situations, and a bill which was brought

CHAP. IV. into the senate in conformity with this previous 1790. arrangement, passed both houses by small major. ities. This act was immediately followed by an amendment to the bill then depending 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. The numbers in support of it were precisely the same with that by which it had before been rejected.*

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.

1790.

Thus was a measure carried which was sup, CHAP. IV. ported and opposed with a degree of zeal and earnestness that has been manifested but on few occasions, 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, but would long retain the impressions under which the debate had been conducted. 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 private opinion respecting it remained in his own bosom, yet it received the full approbation of his judgment.

This

The contest which arose in the legislature, respecting one other principle introduced by the secretary into his report, deserves also to be mentioned. From an apprehension that the pressure of an immediate and adequate provision for the whole debt might be so great as to endanger the system, and from a conviction that some reasonable modifications might be made in the first instance with the consent of the creditors, but that any subsequent failure in complying literally with the engagements of the government would be ruinous to public credit, certain deductions from the amount of debt, to be voluntary on the part of the creditor, had been proposed; and as a compensation for these deductions, it was offered to make the debt irredeemable, otherwise than by the

CHAP. IV. consent of the creditor, except in certain specified 1790. proportions.

To the resolution affirming this principle, a serious opposition was made.

It was declared to be a perpetuation of debt for which no competent motive existed. The proposition was founded on the calculation that the rate of interest would be reduced, and that the future flourishing state of the revenue would enable the government, by new loans on more advantageous terms, to discharge the whole of the present debt. Except for this calculation, the proposition could not be reconciled to national faith; and if the calculation was just, the United States ought not to relinquish the power of paying off the debt the instant they should acquire the ability to discharge it. It was not pretended that this irredeemable quality would enhance the value of public securities in the opinion of the American holders. To foreigners alone would it furnish an inducement to subscribe to the proposed loan. The transfer of the debt to foreigners, was averred to be a mischief which ought not to be increased. The payment of interest to creditors residing out of these states would be an annual drain of specie which would be severely felt. It would not only occasion the re-exportation of the gold and silver which might be imported to pay for the stock purchased, but would in a short time deprive the United States of a great part of their circulating medium. On this account, the proposed reduction of interest was not to be desired. Money in the southern states bore an interest of eight per

cent. Of consequence, no part of the debt could CHAP. IV. reside in that division of the union. It would 1790.

centre in the hands of foreigners, or in the eastern states; and the southern people would be taxed to pay an annual interest which could not return into circulation among them. To them it would be more advantageous that the contract should remain unchanged. It was also contended, that the reduction from the amount of debt could only be justified by necessity, of the existence of which no proofs were in the possession of the house. That the option offered to the creditors was not a fair one. In the cases cited as precedents, the creditor, if dissatisfied with the new terms proposed to him, might receive payment according to the original contract. But the United States were unable to offer payment to those who should object to this modification of their claims. It was therefore apparent that the propositions contained in the report, however disguised, involved a violation of the national faith.

By those who supported the resolution, it was admitted that the contract, according to its present terms, was obligatory on the United States, and could not be changed without the free consent of the creditors. A change might, it was believed, be made, in which the advantage and convenience of both parties would be promoted; and the resolution before the committee was advocated in the opinion that the interests of both would be advanced by its adoption.

From the discussion of this question, all suspicions of bad faith was to be excluded. Govern