CHAPTER charge of the claims at that reduced rate. The actual, II. and not the nominal, value of the certificates when given 1790. was, he thought, the substantial thing to be looked at, and to redeem them at that rate would be a substantial fulfillment of the contract. This view of the case applied not merely to holders by assignment, but to the original creditors themselves, as to whom it was coolly hinted that, even though no provision should ever be made for their reimbursement, yet they might consider themselves amply indemnified by that independence and freedom which their advances had helped to secure.

To this it was answered that the certificates in question were precisely bonds or notes of hand, accepted by the creditors, not as cash, or in discharge of the debts at the current value of the certificates, but merely as fixing the amount due and making the claim transferable, and, in consequence, merchantable. This fact in the case was, indeed, so unquestionable as to drive most of those who argued against full payment into bewailing the fate of the creditors who had parted with their certificates for a trifle. Should full payment be made, those same unfortunate creditors, to whom the certificates had originally been given, might be obliged, it was said, to refund a greater sum in taxes than they have received in exchange for their claims!

It seemed to be generally admitted in the course of the debate that the original holders of the certificates had in many cases been "unhandsomely dealt with," so one of the speakers expressed it. But on this topic, as is apt to be the case in such matters, there seems to have been considerable exaggeration. The original holders of the certificates might be arranged into three classes: officers and soldiers of the Revolutionary army, to whom had thus been made up arrears of pay and clothing, defi

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ciencies growing out of the depreciation of the paper CHAPTER money, and the commutation of the half-pay for life; farmers, who had been paid in certificates for provisions 1790. forcibly levied for the support of the army; and capitalists, who had made loans in the old paper, for the specie value of which certificates had been given. Of all these holders, the only ones likely to have been the subjects of actual frauds were the common soldiers, who, no doubt, in many cases had parted with their certificates as lightly as they would have done had those certificates been money. But in the general transfer of the public debt from hand to hand, during the seven years since the close of the war, no ground appears for complaints as to misconduct on the part of the present holders. That the farmers should, for the most part, have parted with their certificates in payment of their debts or for the purchase of supplies was naturally to be expected; nor was it to be supposed that any thing more would have been obtained for them than their current value in the market, which appears to have been quite as great as was warranted by the state and prospects of the federal finances.

The chief speakers in favor of funding the debt at its nominal value were Sedgwick, Ames, Gerry, Sherman, Boudinot, Hartley, Fitzsimmons, Stone of Maryland, Page, and Smith of South Carolina. The principal advocates of the other view were Scott, Livermore, Tucker, and Jackson. Some of the speakers urged that the United States being a party to the contract had no right to enter into any equitable view of the matter, or to undertake on such grounds to cut down the nominal amounts. But the case of the paper money was pressed by way of answer to this view, and finally Sedgwick admitted both the power and right of government, in this

CHAPTER and every other case, not only to act the part of a court II. of equity in bringing exorbitant nominal claims within 1790. the limits of reason and fair dealing, but, where the stability of the social system was in danger, to decline altogether even the fulfillment of bona fide public contracts, and to interfere, should there be need, with private contracts also. Such a power, however, was only to be exercised in cases of the most extreme and palpable necessity, a case which the present circumstances of the United States did not present.

Feb 11.

Scott's motion having been voted down, Madison rose to explain his views. In all the former business of the House he had acted as leader, but on this question he had hitherto preserved silence. No logic, he thought, could disprove the obligation of the United States to pay the whole amount, principal and interest, promised on the face of their certificates. But to whom should this payment be made? Where the certificates remained in the hands of the original holders, no question of this sort could arise; but in cases of transfer, there seemed to be two parties having a claim upon the justice of the nation. The original holder, obliged to take a certificate depreciated, at the moment it was given, to a sixth or seventh of its nominal value, might justly allege that such a certificate could not fairly be esteemed a discharge of the debt; and in support of that view, might refer to the case of the depreciation allowances made to the army during the late war. The holder, on the other hand, might say, that in taking the risk of losing the whole, he had justly acquired, in accordance with the tenor of the certificate, a right to the full amount. To pay both sets of claimants in full would perhaps exceed the ability of the nation; at any rate, it would be to refund a sum greatly beyond that originally received by the pub

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lic, a stretch of generosity not expected by the world, CHAPTER nor by the parties themselves. To deprive the present holders of a fair profit on their speculation would be fatal 1790. to the proposed establishment of public credit. To make

the unfortunate persons who had sold their certificates. at a great sacrifice, and who were now to be taxed to pay the present holders, the sole victims, was abhorrent to every principle of humanity. He proposed, therefore, and he moved an amendment to that effect, that while holders by transfer should receive the highest price which the certificates had ever yet borne in the market, thus giving to the larger part of them a very handsome profit, the balance, amounting to one half or more of the entire amount, should be paid to the original creditors.

This proposition, which seems to have taken the House quite by surprise, was very far from meeting the views entertained on either side of it. It had been the object of those who had attempted to belittle the claim of the present holders to find an excuse in so doing for a new repudiation. If nothing could be saved to the public, they cared but little to whom the money was paid. Those, on the other hand, who went for full payment, whether impelled by the policy of supporting the public credit, or through desire of attaching the moneyed interest to the support of the new government, were little disposed to favor a proposition which the very moneyed men whom it was desired to gain over would hardly fail to consider a violation of their rights.

Boudinot objected to the impracticable character of Madison's proposition. The certificates being payable to bearer, had often issued to merely nominal persons, and not to the actual creditors. This was especially the case with those paid out for supplies furnished to the army, the commissioners taking a quantity of certificates

CHAPTER payable to themselves which they transferred by delivery. II. Sedgwick objected that the proposed partition of pay1790. ment between the original holder and his assignee would have the effect of an ex post facto law, or, at all events, of a law violating the obligation of contracts, amounting, in fact, to a transfer back to the original creditor of a part of that property with which he had voluntarily parted for a valuable consideration, an interference with private contracts highly dangerous as well as unconstitutional. The loss suffered by the original creditors, whether by the fault or the misfortune of the government, could not justify the making reparation by seizing for that purpose on the lawfully-acquired property of other people. Even granting that the original creditor might have an equitable claim on the present holder for a part of the money, it was the business, not of Congress, but of the judicial courts, to enforce that claim; and to them it should be left. Similar views were urged with great ability by Lawrence and Smith of South Carolina. Ames poured out against Madison's proposition a torrent of invective. Benson, Hartley, Goodhue, and Wadsworth maintained the right of the present holders to the entire payment. The galleries were crowded with spectators, many of them large holders of certificates, who looked on with beating hearts. The unexpected payment in full which the secretary had proposed, seemed to them already like a property in possession; and men who would have been well satisfied a few months before to be secure of fifty per cent. on the face of the certificates, regarded now with no little indignation the proposal to allow to them that sum, and as much more to the original holders.

Madison's proposition was supported by Jackson and Page, and by his two colleagues, White and Moore, but