Page images
PDF
EPUB

a nation. In such cases we submit to preserve the independence of Great Brione evil in order to avoid a greater. tain, it is just and right for the English

"3. In other cases it seems expedient people of the present day to pay the into incur public debts, even when they terest on the debt incurred in the proseare not absolutely necessary. The bene- cution of those wars. The Americans fits resulting from them may more than of the present generation have done no compensate for the evils.

more than justice in paying off the debt 64. Great caution should be had in of the Revolution, for they are in the full incurring public debts, because there are enjoyment of the blessings of the Revonot naturally the same check on them Jution. as on private debts. The private man “7. After a government has once who incurs a debt has to depend upon made a regular audit of a claim against himself alone for the payment of both it, and issued a negotiable acknowledgprincipal and interest. The public men ment of the same, it has no right in afwho create debts throw all the burden of ter years to re-open that audit. A negopaying them on others. They may incur tiable evidence of public debt, no matter these debts for their own special bene. what its form may be, transfers all the fit, and the community will have to pay rights of the original holder to the final them. Even when the selfish interests possessor. This point was very clearly of the lawgivers are not advanced in set forth by Mr. Sedgwick, of Massachuthis way, great caution ought to be had setts, in the debate in Congress, in Fein incurring public debts, as too great bruary, 1790, on the funding of the Revofacility in borrowing always leads to lutionary debt. profusion in expenses. In addition to “Whenever a voluntary engagement This, there is an important check on pri. is made for a valuable consideration for vate debts which does not apply to pub- property advanced, or services rendered, lic debts. A private man, when he incurs and the terms of the contract are undera debt, knows that he must not only pay stood, if no fraud or imposition is practhe interest punctually, but that he tised, the party engaging is bound to the will sooner or later be called upon for performance according to the literal the principal. But if a government only meaning of the words in which it is expays the interest punctually, the princi- pressed.” pal may remain unpaid for ever.

A correct understanding of the nature “5. Nothing but violations of constitu- 'of public debt, and of the obligation it tion, and violations of law, or gross frauds imposes, is of great importance in a in the negotiation of public debts, will country where running into debt appears justify a repudiation of them. No matter to be a leading principle not only of how unwise it may have been to borrow states and cities, but is becoming a leadit, and no matter how foolishly it may ing principle with counties. Once duly have been expended, if the money has impress the public mind with the docbeen borrowed according to law and trine that every public debt which has the constitution, it ought to be paid been fairly contracted, must be paid to

“6. There is no force in the observa- the uttermost farthing, no matter what tion that one generation is not bound by burden this may impose on the taxthe debts of another. The property payer, and we have a check against created by the industry of one genera- undue increase of public debt much tion, passes to that which succeeds it, more powerful than any mere paper and so on in perpetuity. The state never constitution can impose. dies. The individuals that compose the The course taken by the legislature state are always changing, just as the of the State of Texas in regard to the atoms of the human body are changing; scaling or repudiating a portion of the and it is impossible to mark the succes- debts of the republic, of which it is prosion of individuals that compose a state posed in the course of this sketch to give in such a way as to say that one class of some further account, is assailed by Mr. them shall not be responsible for the Gouge. The various arguments which debts incurred in the time of their pre- have been employed in defence of this decessors. The benefits that may arise course, are met and examined with abifrom incurring a public debt may extend lity. He maintains with Mr. Sedgwick, through many generations. If the wars in regard to the Revolutionary debts of of William Pitt were really necessary to the United States, that public obligations

Issue of Treasury Notes and Exchequer Bills.

383

should be fulfilled according to the their treasury notes floated off to the terms of the contract.

United States, and were there exchangWhen the Texans began their revolu. ed for the munitions of war and the ne. tionary movement, they had no money, cessaries of life. Without the aid thus or none worth speaking of, but they obtained, the revolution could not have drew freely upon their treasury, just as been brought to a successful issue. freely as they could have done, if it The result of all these different had beer full of money. This continued modes of borrowing was to bring the till their “audited draits," as they were government in debt in the following called, sunk to fifteen cents in the dollar. amount, as stated by Mr. Chalmers,

Then they commenced the issue of trea- the Texan Secretary of the Treasury, sury notes, bearing ten per cent. interest. in his report of Sept. 30th, 1841 : As these were for round sums, and many of them for small amounts, they were Audited drafts......

$193,643 53 much better adapted than were the funded debt

Treasury notes and bonds

4,381,004 64

1,672,300 00 “audited drafts" to serve the purposes of Loan from U. S. Bank..

457,380 00 a circulating medium. They accord. Naval debt....

1,000,000 00 ingly sustained their credit much better, anned their credit much better, Total ............................. $7,704,328 17

Total ..... but as more were issued than the demands for currency could absorb, theyThis it will be observed was nearly sunk rapidly in value.

four years before annexation was effeci. To these issues of treasury notes bear. ed. The independence of the country ing interest, succeeded others bearing no had been acknowledged by the United interest, and familiarly known as “red States, and also by France, England, backs" on account of a red impression and Holland, but it was still disputed on the back. These depreciated more ra- by Mexico. The crisis was a trying pidly than their predecessors.

one. Un to this time all its revenue The Texans tried to arrest the downward laws had yielded it only eight dollars course of their audited drafts and their in specie, and its credit was now entiretreasury notes, by various provisions for ly gone. In this emergency, the gofunding them in stocks bearing eight and vernment resorted to an expedient which ten per cent. interest. But as the audited nothing could justify and which only drafts at first, and afterwards the trea- sheer necessity could excuse. It sudsury notes, had been made receivable for denly declared that its treasury notes, public dues, the whole of the revenue of which owed all the little value they the government was received in its own had left to their being receivable for inconvertible paper. It consequently had public dues, should be no longer so renot the means of paying the interest onceivable. It then resorted to the issue its stocks, and the certificates thereof of what were called "exchecquer bills." sunk as matter of necessity, in a ratio These were, in fact, only a new kind corresponding with the treasury notes of treasury notes under a new name. and the audited drafts.

But as the issue was limited to 200,000 The Texans also sought to negotiate dollars, and as there was never more loans abroad, and with this view sent than forty thousand dollars in circulacommissioners to the United States and tion, at one time, and seldom so many, afterwards to Europe. But all efforts their credit was much better sustained to borrow in a direct way were unsuc- than had been that of the “red backs." cessful, excepting some small loans ob- So little confidence, however, could the tained in the early part of the revolu- government inspire, that these exchection from gentlemen of New York and quer bills, limited though they were New Orleans, and amounting in all to in amount, were seldom at par, and less than 70,000 dollars, and excepting sunk sometimes to twenty-five cents on a loan of $457,000 from the United States, the dollar. and the obligations increased to the By this contrivance, however, the amount of about $750,000 to Messrs. government, having disbanded its army, Schott & Whitney of Philadelphia, Mr. and laid up its navy in ordinary, managed Dawson of Baltimore, and Mr. Holford to sustain itself for about three years, of London, for the purchase of the navy, and till the annexation of Texas io the

In an indirect way the amount the United States was effected. Texans borrowed was very large: for By the resolution of annexation, it was

among other things provided, that the object was simply to ascertain the amount State of Texas

of the debt, by collecting together all "Should retain all the vacant and the evidences thereof, and separating unappropriated lands lying within its the genuine certificates from the counlimits, to be applied to the payment of terfeits that were afloat. Nor did some the debts and liabilities of said Republic of them discover their mistake till they of Texas; and the residue of said lands, received new certificates from the State after discharging said debts and liabili. of Texas, certifying that there was due ties, to be disposed of as said state may to them only three-fourths, one-half, onedirect; but in no event are said debts and fourth, and, in some instances, no more liabilities to become a charge against the than one-fifth, of the amount that had United States."

been expressed in the certificates that In this way the United States govern- had been issued to them by the late ment sought to relieve itself from the republic, liability it had incurred, according to Previous to this, however, some of the the laws of nations and the principles of creditors had petitioned the Congress of equity, on account of having absorbed the United States for relief. They mainthe revenues which had been pledged tained that however binding on Texas for part of these debts; and the people might be the provision in the articles of of Texas, in convention assembled, fully annexation, it did not release the United and freely assented to this arrangement, States government from the obligation by making the resolutions of annexation it was under, to discharge the debts for a part of their state constitution. which the revenues had been pledged,

The first legislature of the State of seeing that it had absorbed those very Texas (an entirely distinct body from the revenues. It had thereby left nothing Congress of the late Republic of Texas) to Texas but her wild lands, and wild assembled early in 1846, and determined lands are a poor fund out of which to that the debts of the late republic ought discharge debts either public or private. to be paid, but paid on principles which, They saw that Texas, having parted as far as our knowledge extends, are with her customs revenues, could not entirely new in the history of finance. comply with the engagement she had They determined that the debts should entered into in the articles of annexabe paid, not as expressed in the contract, tion. At the very first session of Con. but according to an arbitrary standard gress that followed the act of annexation, adopted by the legislature of the state, some of the creditors set this forth in as to the value the late republic was their memorial; and as fast as the scal. supposed to have received.

ing policy of Texas began to be underThe second legislature, which assem- stood, the number of these memorials bled in 1847, maintained the grounds increased. that had been assumed by the first, and To relieve itself from these difficulties, passed an act thus "to scale” the debt. and from other difficulties in which it This act was perfectly understood in found itself involved, the Congress of the Texas; but ns neither the words "scaling United States passed an act on the 9th or scaled" appeared in either its title of September, 1850, commonly known or any of its provisions, its true bearing as the “Boundary Act." In it it was, was seen by but few of the creditors among other things, provided, that tea living beyond the bounds of the state. million dollars, in five per cent. stocks, They supposed it to be what from its should be passed over to Texas, nomititle it purported to be, simply "an act nally in payment for certain lands purto provide for ascertaining the debt of the chased from that state, but really with late Republic of Texas." One of the the intention that Texas should theresections does indeed make it the “duty with pay the revenue creditors, and of the auditor and controller jointly to re- thereby relieve the United States from ceipt for all claims presented to them, all responsibility it had incurred on setting forth the par value thereof at the account of the debts of the late republic. time the same accrued;" but, in common As a matter of precaution, it was made language, the par value of a negotiable a condition, that only five million in security is its face value, and in this these bonds should be passed over imme. sense the phrase had been used in pre- diately to Texas, and that the residue of vious acts of Texas. They supposed the the bonds should be retained in the treg

Acts of the Legislature-Items of Debt.

385

sury at Washington, till releases should report to the legislature, in which they be signed by the creditors. exempting scaled the debt on the principles they the United States from all further liabi. had been directed to adopt. Two years lity on account of the debts of the late afterwards, November 12th, 1851, they republic.

made another and more complete report, Previous to the passage of the Boun- in which they represented the total debt dary Act, or in December, 1849, the to be as follows: -auditor and controller of Texas made a

Original amount,

Scaled amount. Claims filed, of all descriptions, including interest .............. $9,647,253 14 ........$4,807,764 37 Claims not filed, of all descriptions, including interest........... 2,769,736 20........ 2,019,514 27

Total........................................ ........ $12,436,991 34........ $6,827,278 64 The amount of claims not filed, is to act in conformity with the principles of some extent conjectural, and now be- this report. Suffice it to say that the lieved to be too large, by somewhere effect of the act was to divide the debt between half a million and a million into two classes, debt payable and of dollars. But this is not material. debt suspended ; and the debt which What is material is, that the legislature, was made payable immediately, emon the 31st of January, 1852, passed an braced the following items :

Original amount. Scaling rate, Scaled amount. Ten per cent, funded debt, created by act of Feb. 5, 1840.. $750,000 00...... $0 30...... $226,200 00 Eight per ct, funded debt, created by act of Feb. 5, 1840.. 24,280 00...... 0 30..... 7,284 00 Audited paper issued under various enactments..

74,441 26. ..... various.. 69,451 12 Miscellaneous liabilities ......

26,129 87...... 100...... 26,129 87 Amount filed and receipted for as second class debts...... 748,899 99......various.... 679,222 50 Ditto third class debts, since recognized as second class.. 16,467 95.

100......2

16,467 95 Amount audited by special acts........

34,023 55.

34,023 55 Total ....

............. $1,678,242 52...... ...... $1,058,778 99 These are the items of debt for which, are what are familiarly known as “the according to the decision of Mr. Secre- domestic debt" of Texas. tary Corwin and President Fillmore, The payment of the residue of the the United States are in no way respon- debt being that for which, according to sible, the customs revenue having not the decision of the United States authobeen pledged for their payment. The rities, the United States are responsible, whole of them, with the exception of was suspended. It consisted of the folthe eight and ten per cent. funded debts, lowing items :

Original amount. Scaling rate. Scaled amount, Ten per cent., consolidated fund, created by act of 7th of June, 1837.........

632,526 80...... $0 70...... $442,768 76 Ten per cent., consolidated fund, created by act of 7th of Jane, 1837, issued under an act created for relief of Swartwout and others......

7,970 43...... 100...... 7,970 43 Eight per cent. treasury bonds, created by act of 5th of February, 1840....

766,800 00...... 0 20...... 153,360 00 Ten per cent, treasury notes, issued under act of 9th of June, first issue......

41,630 00 ....... 100...... 41,630 00 Ten per cent. treasury notes, issued under act of 9th of June, second issue......

331,371 00...... 0 50 ..... 165,685 50 Treasury notes, without interest, issued under act of 19th of Jan., 1839, third issue .......

1,828,192 00...... 0 25..... 457,048 00 Ten per cent. bonds, issued by commissioners to negotiate

a loan for $5.000,000, viz: For loan obtained from Bank of United States.......... 457.380 00 ..... - ...... 400,000 00 For purchase of steamer Zavalla ...

195,907 00...... 0 50...... 90,014 84 For purchase of naval vessels under contract with F. Dunson, now owned by James Schott & E.D. Whitney 280,000 00...... 0 50...... 140,000 00 Total of debt suspended ....

........ $4,541,777 23...... ......$1,898,477 53 It was provided that the payment of amount the claims for which the credi. this amount, and of the interest thereon, tors might sign the required releases. should not be made, till the bonds re- While the legislature was yet in served in the treasury of the United session, the controller of the state, who States should be paid over to Texas, or had been dispatched to Washington, re. such portions thereof as might equal in turned with bonds to the amount of five

millions, and the interest that had ac- of Texas to induce the United States to crued thereon, amounting to $250,000, give up the reserved bonds. They in gold.

would then receive their pay, some at By the Sinking Fund Act of the 14th par, some at 87, and some at 70 cents in of January, 1840, the proceeds of the the dollar. This was resisted by the public lands were solemnly pledged for other creditors, as thereby they would he redemption of the debts of the repub- get only fifty, twenty-five, and in some lic. By the resolution of annexation, instances no more than twenty per cent. all the public lands were expressly of their claims. reserved for the payment of these debts. The result is, that, up to the time in The State of Texas disposed of part of which we write, (February 21st, 1853) these lands for ten million dollars, and the creditors of the late Republic of received in hand five millions of the Texas, with claims upon two governpurchase-money. It applied part of this ments, which claims are to a certain money to the payment of its "domestic extent recognized by both, are paid by creditors," a part to the payment of the neither. current expenses of the State Govern. All the facts connected with the ment, but not one cent to the payment origin and growth of the debt, embracof debts for which the United States had ing, of course, many of great interest become liable !

and importance, which could not be The effect of this act was to divide introduced into this sketch, are set forth the creditors into two parties. One in the order of their occurrence, and party, at the head of which was the with great clearness, in the volume the Bank of the United States, whose debt title of which is placed at the head of had been scaled at high rates, united this article. their efforts with those of the authorities

ART. VII. - PROGRESS OF THE REPUBLIO-CENSUS OF

ONE THOUSAND EIGHT HUNDRED AND FIFTY.

(Continued from our last, Number.) Wheat.-Wheat, where the soil and other grains, on the Elizabeth Islands, the climate are adapted to its growth, in Massachusetts, by Gosnold, at the and the requisite progress has been time he explored that coast, in 1602. In made in its culture, is decidedly pre- 1611, wheat, as well as other grains, ferred to all other grains, and next to was sown in Virginia, and by the year maize, is the most important crop in the 1648 there were cultivated many hunUnited States, not only on account of its dred acres in that colony. Although general use for bread, but for its safety premiums were offered as an encourageand convenience for exportation. It is ment of its growth in 1651, it was not not known to what country it is indigen. much cultivated for more than a century ous, any more than our other cultivated after in consequence of the ill-directed cereals, all of which, no doubt, have been attention to the culture of tobacco. essentially improved by man. By some, Wheat was introduced into the valley wheat is considered to have been coeval of the Mississippi by the “Western Comwith the creation, as it is known that pany," in 1718, where, from the careupwards of a thousand years before our less mode of cultivating it by the early era it was cultivated, and a superior va- settlers, and the sudden alternations of riety had been attained. It has steadily temperature, it would only yield from followed the progress of civilization from five to eightfold, running to straw and the earliest times, in all countries where blade, without filling the ear. In 1746, it would grow.

however, the culture had so far extend The introduction of this grain into the ed, that six hundred barrels of flour North American colonies dates back to were received at New Orleans from the the earliest period of their settlement by Wabash; and, by the year 1750, the Europeans. It was first sown, with French of Illinois raised three times as

« PreviousContinue »