pression of my own opinions, both on the power of Congress and on the groundless charges against Northern men, I beg leave to refer you to my remarks in the debate on Mr. Foot's resolutions, in 1830.

I am, my dear Sir, with much true regard, your obedient servant,

DANIEL WEBSTER.

To Messrs. Baring Brothers & Co.

London, October 16, 1839. GENTLEMEN,—I have received your letter, and lose no time in giving you my opinion on the question which you have submitted for my consideration. The assertion and suggestions to which you refer, as having appeared in some of the public prints, had not escaped my notice.

Your first inquiry is, "whether the legislature of one of the States had legal and constitutional power to contract loans at home and abroad." To this I answer, that the legislature of a State has such power; and how any doubt could have arisen. on this point it is difficult for me to conceive.

Every State is an independent, sovereign, political community, except in so far as certain powers, which it might otherwise have exercised, have been conferred on a general government, established under a written constitution, and exercising its authority over the people of all the States. This general government is a limited government. Its powers are specific and enumerated. All powers not conferred on it still remain with the States or with the people. The State legislatures, on the other hand, possess all usual and ordinary powers of government, subject to any limitations which may be imposed by their own constitutions, and with the exception, as I have said, of the operation on those powers of the Constitution of the United States.

The powers conferred on the general government cannot, of course, be exercised by any individual State; nor can any State pass any law which is prohibited by the Constitution of the United States.

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Thus no State can by itself make war, or conclude peace, or enter into alliances or treaties with foreign nations. In these, and in other important particulars, the powers which would have otherwise belonged to the State can now be exercised only by the general government, or the government of the United States. Nor can a State pass a law which is prohibited by its own constitution. But there is no provision in the Constitution of the United States, nor, so far as I know or have understood, in any State constitution, prohibiting the legislature of a State from contracting debts, or making loans either at home or abroad. Every State has the power of levying and collecting taxes, direct and indirect, of all kinds, except that no State can impose duties on goods and merchandise imported, that power belonging exclusively to Congress by the Constitution. That power of taxation is exercised by every State, habitually and constantly, according to its own discretion and the exigencies of its own government.

This is the general theory of that mixed system of government which prevails in America. And as the Constitution of the United States contains no prohibition or restraint on State legislatures in regard to making loans, and as no State constitution, so far as known to me, contains any such prohibition, it is clear that, in this respect, those legislatures are left in the full possession of this power, as an ordinary and usual power of government. I have seen a suggestion, that State loans must be regarded as unconstitutional and illegal, inasmuch as the Constitution of the United States has declared that no State shall emit bills of credit. It is certain that the Constitution of the United States does contain this salutary prohibition; but what is bill of credit? It has no resemblance whatever to a bond, or other security given for the payment of money borrowed. The term bill of credit is familiar in our political history, and its meaning is well ascertained and settled, not only by that history, but by judicial interpretations and decisions from the highest sources.

For the purpose of this opinion, it may be sufficient to say, that bills of credit, the subject of the prohibition in the Constitution of the United States, were essentially paper money. They were paper issues, intended for circulation and for receipt into the treasury as cash, and were sometimes made a tender in pay

ment for debts. To put an end at once and for ever to evils of this sort, and to dangers from this source, the Constitution of the United States has declared, that no State shall emit bills of credit, nor make any thing but gold and silver a tender in payment of debts, nor pass any law which shall impair the obligation of contracts. All this, however, proves, not that States cannot contract debts, but that, when contracted, they must pay them in coin, according to their stipulation. The several States possess the power of borrowing money for their own internal occasions of expenditure, as fully as Congress possesses the power to borrow in behalf of the United States, for the purpose of raising armies, equipping navies, or performing any other of its constitutional duties. It may be added, that Congress itself fully recognizes this power in the States, as it has authorized the investment of large funds, which it held in trust for very important purposes, in certificates of State stocks. The security for State loans is the plighted faith of the State, as a political community. It rests on the same basis as other contracts with established governments, the same basis, for example, as loans made by the United States, under the authority of Congress; that is to say, the good faith of the government making the loan, and its ability to fulfil its engagements. The State loans, it is known, have been contracted principally for the purpose of making railroads and canals; and in some cases, although I know not how generally, the income or revenue expected to be derived from these works is directly and specifically pledged, and in others very valuable tracts of land. It cannot be doubted that the general result of these works of internal improvement has been, and will be, to enhance the wealth and ability of the States.

It has been said, that the States cannot be sued on these bonds. But neither could the United States be sued, nor, as I suppose, the crown of England, in a like case. Nor would the power of suing give to the creditors, probably, any substantial additional security. The solemn obligation of a government, arising on its own acknowledged bond, would not be enhanced by a judgment rendered on such bond. If it either could not or would not make provision for paying the bond, it is not probable that it could or would make provision for satisfying the judgment.

The States cannot rid themselves of their obligations otherwise than by the honest payment of the debt. They can pass no law impairing the obligation of their own contracts. They can make nothing a tender, in discharge of such contracts, but gold and silver. They possess all adequate power of providing for the case, by taxes and internal means of revenue. They cannot get round their duty, nor evade its force. Any failure to fulfil its undertakings would be an open violation of public faith, to be followed by the penalty of dishonor and disgrace; a penalty, it may be presumed, which no State of the American Union would be likely to incur.

I hope I may be justified by existing circumstances in closing this letter with the expression of an opinion of a more general nature. It is, that I believe the citizens of the United States, like all honest men, regard debts, whether public or private, and whether existing at home or abroad, to be of moral as well as legal obligation; and I trust I may appeal to their history, from the moment when those States took their rank among the nations of the earth to the present time, for proof that this belief is well founded. If it were possible that any one of the States should at any time so entirely lose her self-respect, and forget her duty, as to violate the faith solemnly pledged for her pecuniary engagements, I believe there is no country upon earth, not even that of the injured creditor, in which such a proceeding would meet with less countenance or indulgence than it would receive from the great mass of the American people. I have the honor to be, Gentlemen, your obedient servant, DANIEL WEBSTER.

To the Duke of Rutland.

London, November 16, 1839.

MY DEAR DUKE, I am obliged to you for the respectful manner in which, presiding at the meeting of the Waltham Agricultural Association, you were pleased to refer to our conversation at Belvoir, and I have still higher pleasure in noticing the just and liberal sentiments expressed by you on that occasion respecting the relations of our respective countries. Such

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sentiments, I assure you, will be heartily reciprocated on our side of the Atlantic. England and the United States are not only the two most commercial countries in the world, but they are also those two which have the greatest degree of intercourse with each other. This will strike any one who shall compare the small amount of annual trade between England and France with the great amount of that between England and the United States, and yet France is within sight of England, with thirtythree or thirty-four millions of people, and the United States are three thousand miles off, with half that amount of population; and, notwithstanding the progress which may be expected in some branches of manufactures in America, there is no reason to doubt that this intercourse will continue, and perhaps be increased by the rapid increase of population in America. While the United States continue to import British commodities, it is evidently the interest of England that her customers should increase both in numbers and in the ability to buy and consume her products. On the other hand, every intelligent person in America sees, not only the evils which would ensue from any interruption of the harmony existing between the two countries, but the embarrassments, also, which must be felt in America, whenever any disasters occur sufficient to derange the general prosperous course of trade and business in England.

The intimate relations of commerce subsisting between the two countries, the well-known laws of trade and exchange, and the important fact that both countries use, to a great extent, a representative paper currency, necessarily cause any great embarrassment which may be felt in one to be extended to the other. Your Grace was quite right, I think, in your observations on the subject of corn. America is indebted to England

in various ways, and is likely to remain so, while the interest of money remains much lower in the latter country than in the former. We have this year a most abundant wheat crop; and if England should have occasion to import corn or flour, both countries would be benefited by her taking her supply from us. We should be paying so much of our debt, and she would be receiving her supply without the necessity of sending abroad specie; and it is undoubtedly true that the short crop in England last year, leading to so heavy an export of gold and silver