ADDRESS TO THE PUBLIC CREDITORS
by a friend.
September 1, 1790.
It is probable that many of you are not sufficiently apprised of the advantages of your own situation, and that for want of judging rightly of it, and of your future prospects, you may be tempted to part with your securities much below their true value, and considerably below what it is probable they will sell for in eight or nine months from this time.
To guard you against an unnecessary sacrifice of your interests by a precipitate sale, I will now state to you, in a plain and concise way, what has been done for you in the course of the last session of Congress, and what you may reasonably expect.
Effectual provision has been made for actually paying you six per cent. yearly, on two thirds of the principal of your debt—that is, four per cent. on the whole amount of your principal. And at the end of ten years you are to receive six per cent. yearly, on the remaining third of your principal—that is, two per cent. more on the whole of your principal. And like effectual provision has been made for actually paying you three per cent. yearly, on whatever arrears of interest may be due to you on your principal. For this interest you are not even to wait to the end of a year, but you are to receive it in quarteryearly payments—that is to say, one fourth part at the end of every three months; and it is to be paid to you not in new certificates, or paper money, but in actual gold and silver. To secure this to you, the duties which have been laid on goods imported, and on the tonnage of ships or vessels (and which there is every reason, from the experience we have had, to believe will be sufficient), are absolutely mortgaged to you, till the whole of your debt is discharged. You will not have to depend, as under most of the State governments, upon a provision from year to year, with an entire uncertainty whether it would be continued, and with many examples of fickleness and change; but you will have to depend on a permanent provision made once for all, for the sacredness of which the faith, not of a single State, but of all the States, is solemnly bound to you, and which cannot be undone or altered, without the concurrence of three different branches of the government—the House of Representatives, the Senate, and the President of the United States. It cannot be supposed that if one of the two branches of Congress should hereafter be disposed to do so disgraceful and ruinous a thing as to repeal a law on which the credit of the government was at stake, that the other branch would be willing to concur in so pernicious a measure; or if both should be so unwise and dishonest, that the President of the United States would give his assent to it, or if he dissented, that two thirds of both Houses of Congress would be inclined to persist in spite of his disapprobation. Whoever considers the nature of our government with discernment will see, that though obstacles and delays will frequently stand in the way of the adoption of good measures, yet, when once adopted, they are likely to be stable and permanent. It will be far more difficult to undo than to do.
To destroy your confidence in future, there are too many publications which represent to you that Congress have, by their late proceedings, violated their past engagements, and that you can place no greater reliance upon those they now make than those they have heretofore made. Whether representations like these proceed from a sincere opinion in persons who have not accurately considered the matter, or from those who wish to depreciate the government, or from those who wish to buy securities cheap, or from all these descriptions of persons, I cannot say; but from whatever source they proceed, they are certainly not candid nor just.
Congress, it is true, submit to your consideration some alterations in the nature of your claims upon the government, for certain equivalents which they hold out to you, and of which you are to judge. A principal object they have in doing this is to obtain a suspension of the payment of one third of the interest, to which you are entitled for ten years, in order to avoid the necessity of burthening the community, or carrying the taxation to objects which might be displeasing to them. And you cannot wonder that a government so lately formed, and not without considerable opposition, should be cautious in this respect.
But whether you will accept the terms offered to you is certainly left to your own choice. There is not a syllable in the law that obliges you to do it. On the contrary, there is in it an express ratification of your former contracts; and to remove all possibility of future cavil about the true import or obligation, all questions of discrimination and the like, new titles are offered to you of the like import in substance with your old ones. And your rights are thus established, and their meaning defined, so as to render their future operation, under the sanction of the Constitution, unequivocal. They are not only not violated, but if possible they have received additional strength, and have become still more inviolable.
So far is there from being any thing compulsory in the acts of the government in the case, that those of you who do not choose to subscribe to the new terms are to receive, during the time allotted for determining upon them, exactly as much as those who do subscribe. And the faith of the government remains pledged to you to fulfil its engagements, which must be performed, as fast as its resources can be brought into action for the purpose. Your only security before the late arrangement was the faith of government. There were no funds pledged to you which have been taken away. You have still the faith of government upon a renewed assurance as your pledge, and while you are deliberating on the new proposals you are to receive a payment on account.
You are therefore to decide according to your own judgment, whether an acceptance of the new terms, under all these circumstances, are preferable or not to a dependence on the future resources of the country for more. This is a question of prudent calculation which you are at liberty to determine as you please.
Whence it is evident, that whatever other objections may be against the propriety of the provision which has been made for the public debt, the charge of a breach of contract is not well founded.
The better to form a comparison between the terms proposed and those of your former contract, it may be well to recollect that the latter will be satisfied by a provision, annually made, for paying you six per cent. Whatever the policy of the government may hereafter dictate, there is nothing in the existing contract that calls for a permanent appropriation of funds. Such a permanent appropriation, however, forms a part of the new loans, and will be of the essence of the new contract.
These remarks are intended to satisfy you that there is no cause, from any thing that has happened, for a diminution, but on the contrary much reason for an increase, of your confidence in the property you possess, as holders of the public debt.
I return to the subject of the value of your securities. Their present price, if compared with that at which they were current before the establishment of the new Constitution, will be deemed to be high, and is as great as at this time could reasonably have been expected; but compared with their true value, and the solidity of footing on which they stand, is still far too low. The rise which has already taken place is an earnest to you of their probable future rise. Such of you who do not incline to be permanent holders will at least do well to postpone a sale till after March, when the first payment of interest is to be made. The effect of this on the price of securities must undoubtedly be very favorable, and you may then calculate on a better market.
The holders of State securities have still stronger reasons for keeping those they have, the price of which, in most of the States, is out of all proportion lower than that of the present securities of the United States, and must, in all probability, undergo a considerable change for the better, as soon as funds are actually appropriated for them, which is not now the case, but which must of course be so at the ensuing session of December. The present debt of the United States having been provided for out of the duties on imposts and tonnage only, seems to leave no doubt of the facility of devising the means of providing for the amount which has been assumed of the State debts.
END OF VOL. II.