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The Writings of James Madison, comprising his Public Papers and his Private Correspondence, including his numerous letters and documents now for the first time printed, ed. Gaillard Hunt (New York: G.P. Putnam’s Sons, 1900). Vol. 5.

Author: James Madison
Editor: Gaillard Hunt

Part of: The Writings of James Madison, 9 vols.

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TO THOMAS JEFFERSONmad. mss.

New York Jan^y. 24, 1790.

Dear Sir

A dysenteric attack at Georgetown with its effects retarded my journey so much that I did not arrive here till a few days ago. I am free at present from the original complaint, but a little out of order with the piles generated by that or the medicine it required.

The Cato in which were the busts of P. Jones and the box of books for myself never arrived till the day before yesterday, having sprung a leak which obliged her to put into an English Port. Everything consigned to me appears as far as the parcels are yet opened to have escaped injury. I beg you to accept my unfeigned thanks for the proof medals, of which the value is much enhanced in my estimation by the circumstance which demands that tribute. I have supposed that I could not better dispose of the letters to Mr Eppes as well as that to Col: Lewis than by inclosing them to yourself.

The business of Cong^s. is as yet merely in embryo. The principal subjects before them are the plans of revenue and the Militia, reported by Hamilton & Knox. That of the latter is not yet printed, and being long is very imperfectly understood. The other has scarcely been long enough from the press to be looked over.1 It is too voluminous to be sent entire by the mail. I will by the next mail commence a transmission in fractions. Being in possession at present of a single copy only I cannot avail myself of this opportunity for the purpose. You will find a sketch of the plan in one of the Newspapers herewith inclosed. Nothing has passed either in Cong^s or in conversation from which a conjecture can be formed of the fate of the Report. Previous to its being made, the avidity for stock had raised it from a few shillings to 8s or 10s in the pound, and emissaries are still exploring the interior & distant parts of the Union in order to take advantage of the ignorance of holders. Of late the price is stationary, at or fluctuating between the sums last mentioned. From this suspence it would seem as if doubts were entertained concerning the success of the plan in all its parts.

I take for granted that you will before the receipt of this, have known the ultimate determination of the President on your appointment.2 All that I am able to say on the subject is that a universal anxiety is expressed for your acceptance, and to repeat my declarations that such an event will be more conducive to the general good, and perhaps to the very objects you have in view in Europe, than your return to your former station.

I do not find that any late information has been received with regard to the Revolution in France. It seems to be still unhappily forced to struggle with the adventitious evils of public scarcity, in addition to those naturally thrown in its way by antient prejudices and hostile interests. I have a letter from Hav^r. of the 13th Nov^r., which says that wheat was then selling at 10 liv^rs. per Bushel, and flour at 50 liv^s. per 100 , and the demand pressing for all kinds of materials for bread. The letter adds that a bounty of 2 liv^s. per 100 . marc on wheat & on flour in proportion &c &c was to commence the 1st Dec^r last & continue till the 1st of July next, in fav^r. of imports from any quarter of the Globe.

With sincerest affection I am D^r. Sir Your Obed^t friend & Serv^t..

SPEECHES IN THE FIRST CONGRESS—SECOND SESSION, 1790.

FEBRUARY 3. NATURALIZATION OF ALIENS1

When we are considering the advantages that may result from an easy mode of naturalization, we ought also to consider the cautions necessary to guard against abuses. It is no doubt very desirable that we should hold out as many inducements as possible for the worthy part of mankind to come and settle amongst us, and throw their fortunes into a common lot with ours. But why is this desirable? Not merely to swell the catalogue of people. No, sir, it is to increase the wealth and strength of the community; and those who acquire the rights of citizenship, without adding to the strength or wealth of the community, are not the people we are in want of. And what is proposed by the amendment is, that they shall take nothing more than an oath of fidelity, and declare their intention to reside in the United States. Under such terms, it was well observed by my colleague, aliens might acquire the right of citizenship, and return to the country from which they came, and evade the laws intended to encourage the commerce and industry of the real citizens and inhabitants of America, enjoying at the same time all the advantages of citizens and aliens.

I should be exceedingly sorry, sir, that our rule of naturalization excluded a single person of good fame that really meant to incorporate himself into our society; on the other hand, I do not wish that any man should acquire the privilege, but such as would be a real addition to the wealth or strength of the United States.

It may be a question of some nicety, how far we can make our law to admit an alien to the right of citizenship, step by step; but there is no doubt we may, and ought to require residence as an essential.1

FEBRUARY 11. PUBLIC DEBT1

No gentleman, Mr. Chairman, has expressed more strongly than I feel, the importance and difficulty of the subject before us. Although I have endeavored to view it under all its aspects, and analyze it in all its principles, yet have I kept my mind open, and been anxious to aid my own reflections by the reflected light to be expected from gentlemen on this floor who enter into the discussion. For this purpose, I have chosen hitherto rather to be a hearer than a speaker on the subject, and should even at this moment have continued in my seat, but that the turn which the business has taken, renders it requisite for me now, if at all, to trouble the committee with my reflections, and the opinion in which they have terminated.

It has been said, by some gentlemen, that the debt itself does not exist in the extent and form which is generally supposed. I confess, sir, I differ altogether from the gentlemen who take that ground. Let us consider, first, by whom the debt was contracted, and then let us consider to whom it is due. The debt was contracted by the United States, who, with respect to that particular transaction, were in a national capacity. The Government was nothing more than the agent or organ, by which the whole body of the people acted. The change in the Government which has taken place has enlarged its national capacity, but it has not varied the national obligation, with respect to the engagements entered into by that transaction. For, in like manner, the present Government is nothing more than the organ, or agent, of the public. The obligation which they are under, is precisely the same with that under which the debt was contracted; although the Government has been changed, the nation remains the same. There is no change in our political duty, nor in the moral or political obligation. The language I now use, sir, is the language of the Constitution itself; it declares that all debts shall have the same validity against the United States, under the new, as under the old form of Government. The obligation remains the same, though I hope experience will prove that the ability has been favorably varied.

The next question is, to what amount the public are at present indebted? I conceive the question may be answered in a few words. The United States owe the value they received, which they acknowledge, and which they have promised to pay: what is that value? It is a certain sum in principal, bearing an interest of six per cent. No logic, no magic, in my opinion, can diminish the force of the obligation.

The only point on which we can deliberate is, to whom the payment is really due; for this purpose, it will be proper to take notice of the several descriptions of people who are creditors of the Union, and lay down some principles respecting them, which may lead us to a just and equitable decision. As there is a small part of the debt yet unliquidated, it may be well to pass it by and come to the great mass of the liquidated debt. It may here be proper to notice four classes into which it may be divided:

First. Original creditors, who have never alienated their securities.

Second. Original creditors who have alienated.

Third. Present holders of alienated securities.

Fourth. Intermediate holders, through whose hands securities have circulated.

The only principles that can govern the decision on their respective pretensions, I take to be, 1. Public Justice; 2. Public Faith; 3. Public Credit; 4. Public Opinion.

With respect to the first class, there can be no difficulty. Justice is in their favor, for they have advanced the value which they claim; public faith is in their favor, for the written promise is in their hands; respect for public credit is in their favor, for if claims so sacred are violated, all confidence must be at an end; public opinion is in their favor, for every honest citizen cannot but be their advocate.

With respect to the last class, the intermediate holders, their pretensions, if they have any; will lead us into a labyrinth, for which it is impossible to find a clew. This will be the less complained of, because this class were perfectly free, both in becoming and ceasing to be creditors; and because, in general, they must have gained by their speculations.

The only rival pretensions then are those of the original creditors, who have assigned, and of the present holders of the assignments.

The former may appeal to justice, because the value of the money, the service, or the property advanced by them, has never been really paid to them.

They may appeal to good faith, because the value stipulated and expected, is not satisfied by the steps taken by the Government. The certificates put into the hands of the creditors, on closing their settlements with the public, were of less real value than was acknowledged to be due; they may be considered as having been forced, in fact, on the receivers. They cannot, therefore, be fairly adjudged an extinguishment of the debt. They may appeal to the motives for establishing public credit, for which justice and faith form the natural foundation. They may appeal to the precedent furnished by the compensation allowed to the army during the late war, for the depreciation of bills, which nominally discharged the debts. They may appeal to humanity, for the sufferings of the military part of the creditors can never be forgotten, while sympathy is an American virtue. To say nothing of the singular hardship, in so many mouths, of requiring those who have lost four-fifths or seven-eighths of their due, to contribute the remainder in favor of those who have gained in the contrary proportion.

On the other hand, the holders by assignment, have claims, which I by no means wish to depreciate. They will say, that whatever pretensions others may have against the public, these cannot effect the validity of theirs. That if they gain by the risk taken upon themselves, it is but the just reward of that risk. That as they hold the public promise, they have an undeniable demand on the public faith. That the best foundation of public credit is that adherence to literal engagements on which it has been erected by the most flourishing nations. That if the new Government should swerve from so essential a principle, it will be regarded by all the world as inheriting the infirmities of the old. Such being the interfering claims on the public, one of three things must be done; either pay both, reject wholly one or the other, or make a composition between them on some principle of equity. To pay both is perhaps beyond the public ability; and as it would far exceed the value received by the public, it will not be expected by the world, nor even by the creditors themselves. To reject wholly the claims of either is equally inadmissible; such a sacrifice of those who possess the written engagements would be fatal to the proposed establishment of public credit; it would moreover punish those who had put their trust in the public promises and resources. To make the other class the sole victims is an idea at which human nature recoils.

A composition, then, is the only expedient that remains; let it be a liberal one in favor of the present holders, let them have the highest price which has prevailed in the market; and let the residue belong to the original sufferers. This will not do perfect justice; but it will do more real justice, and perform more of the public faith, than any other expedient proposed. The present holders, where they have purchased at the lowest price of the securities, will have a profit that cannot reasonably be complained of; where they have purchased at a higher price, the profit will be considerable; and even the few who have purchased at the highest price cannot well be losers, with a well funded interest of six per cent. The original sufferers will not be fully indemnified; but they will receive, from their country, a tribute due to their merits, which, if it does not entirely heal their wounds, will assuage the pain of them. I am aware, that many plausible objections will lie against what I have suggested, some of which I foresee and will take some notice of. It will be said, that the plan is impracticable; should this be demonstrated, I am ready to renounce it; but it does not appear to me in that light. I acknowledge that such a scale as has often been a subject of conversation, is impracticable.

The discrimination proposed by me, requires nothing more than a knowledge of the present holders, which will be shown by the certificates; and of the original holders, which the office documents will show. It may be objected, that if the Government is to go beyond the literal into the equitable claims against the United States, it ought to go back to every case where injustice has been done. To this the answer is obvious: the case in question is not only different from others in point of magnitude and of practicability, but forces itself on the attention of the committee, as necessarily involved in the business before them. It may be objected, that public credit will suffer, especially abroad; I think this danger will be effectually obviated by the honesty and disinterestedness of the Government displayed in the measure, by a continuance of the punctual discharge of foreign interest, by the full provision to be made for the whole foreign debt, and the equal punctuality I hope to see in the future payments on the domestic debts. I trust also, that all future loans will be founded on a previous establishment of adequate funds; and that a situation, like the present, will be thereby rendered impossible.

I cannot but regard the present case as so extraordinary, in many respects, that the ordinary maxims are not strictly applicable to it. The fluctuations of stock in Europe, so often referred to, have no comparison with those in the United States. The former never exceeded 50, 60, or 70 per cent: can it be said, that because a Government thought this evil insufficient to justify an interference, it would view in the same light a fluctuation amounting to seven or eight hundred per cent.?

I am of opinion, that were Great Britain, Holland, or any other country, to fund its debts precisely in the same situation as the American debt, some equitable interference of the Government would take place. The South Sea scheme, in which a change, amounting to one thousand per cent. happened in the value of stock, is well known to have produced an interference, and without any injury whatever to the subsequent credit of the nation. It is true, that in many respects, the case differed from that of the United States; but, in other respects, there is a degree of similitude, which warrants the conjecture. It may be objected, that such a provision as I propose will exceed the public ability: I do not think the public unable to discharge honorably all its engagements, or that it will be unwilling, if the appropriations shall be satisfactory. I regret, as much as any member, the unavoidable weight and duration of the burdens to be imposed; having never been a proselyte to the doctrine, that public debts are public benefits. I consider them, on the contrary, as evils which ought to be removed as fast as honor and justice will permit, and shall heartily join in the means necessary for that purpose. I conclude with declaring, as my opinion, that if any case were to happen among individuals, bearing an analogy to that of the public, a Court of Equity would interpose for its redress; or that if a tribunal existed on earth, by which nations could be compelled to do right, the United States would be compelled to do something not dissimilar in its principles to what I have contended for.

FEBRUARY 18. PUBLIC DEBT

Mr. Madison said, that the opponents of his proposition had imposed on its friends not only a heavy task, by the number of their objections, but a delicate one by the nature of some of them. It had been arraigned as an embarrassing measure which ought to be facilitated, and producing discussions which might end in disagreeable consequences. However painful it might be to contradict the wishes of gentlemen whom he respected, he could promise nothing more in the present case than his endeavors to disappoint their apprehensions. When his judgment could not yield to the propositions of others, the right to make and support his own, was a right which he could never suffer to be contested. In exercising it, he should study to maintain that moderation and liberality which were due to the greatness of the subject before the committee. He felt pleasure in acknowledging that the like spirit had, in general, directed the arguments on the other side. Free discussions, thus conducted, are not only favorable to a right decision, but to a cheerful acquiescence of the mistaken opponents of it. They might have the further advantage of recommending the results to the public, by fully explaining the grounds of it. If the pretensions of a numerous and meritorious class of citizens be not well founded, or cannot be complied with, let them see that this is the case, and be soothed, under their disappointment, with the proof that they have not been overlooked by their country.

He would proceed now to review the grounds on which the proposition had been combated; which he should do without either following those who had wandered from the field of fair argument, or avoiding those who had kept within its limits.

It could not have escaped the committee, that the gentlemen to whom he was opposed, had reasoned on this momentous question as on an ordinary case in a Court of Law; that they had equally strained all the maxims that could favor the purchasing, or be adverse to the original holder; and that they had dwelt with equal pleasure on every circumstance which could brighten the pretensions of the former, or discredit those of the latter. He had not himself attempted, nor did he mean to undervalue the pretensions of the actual holders. In stating them, he had even used as strong terms as they themselves could have dictated; but beyond a certain point he could not go. He must renounce every sentiment which he had hitherto cherished, before his complaisance could admit that America ought to erect the monuments of her gratitude, not to those who saved her liberties, but to those who had enriched themselves in her funds.

All that he wished was, that the claims of the original holders, not less than those of the actual holders, should be fairly examined and justly decided. They had been invalidated by nothing yet urged. A debt was fairly contracted; according to justice and good faith, it ought to have been paid in gold or silver; a piece of paper only was substituted. Was this paper equal in value to gold or silver? No. It was worth, in the market, which the argument for the purchasing holders makes the criterion, no more than one-eighth or one-seventh of that value. Was this depreciated paper freely accepted? No. The Government offered that or nothing. The relation of the individual to the Government, and the circumstances of the offer, rendered the acceptance a forced, not a free one. The same degree of constraint would vitiate a transaction between man and man before any Court of Equity on the face of the earth. There are even cases where consent cannot be pretended; where the property of the planter or farmer had been taken at the point of the bayonet, and a certificate presented in the same manner. But why did the creditors part with their acknowledgment of the debt? In some instances, from necessity; in others, from a well-founded distrust of the public. Whether from the one or the other, they had been injured; they had suffered loss, through the default of the debtor; and the debtor cannot, in justice or honor, take advantage of the default.

Here, then, was a debt acknowledged to have been once due, and which was never discharged; because the payment was forced and defective. The balance, consequently, is still due, and is of as sacred a nature as the claims of the purchasing holder can be; and if both are not to be paid in the whole, is equally entitled to payment in part. He begged gentlemen would not yield too readily to the artificial niceties of forensic reasoning; that they would consider not the form, but the substance—not the letter, but the equity—not the bark, but the pith of the business. It was a great and an extraordinary case; it ought to be decided on the great and fundamental principles of justice. He had been animadverted upon for appealing to the heart as well as the head: he would be bold, nevertheless, to repeat, that, in great and unusual questions of morality, the heart is the best judge.

It had been said, by a member from Massachusetts, that the proposition was founded on a new principle in Congress. If the present Congress be meant, that is not strange, for Congress itself is new; if the former Congress be meant, it is not true, for the principle is found in an act which had been already cited. After the pay of the army had, during the war, been nominally and legally discharged in depreciated paper, the loss was made up to sufferers.

It had been said, by a member from New York, that this case was not parallel, there being no third party like the present holders of certificates. This objection could not be valid. The Government paid ten dollars worth in fact, but only one to the soldier. The soldier was then the original holder. The soldier assigned it to the citizen; the citizen then became the actual holder. What was the event? The loss of the original holder was repaired, after the actual holder had been settled with, according to the highest market value of his paper.

He did not mean, however, to decide on the whole merits of this last transaction; or to contend for a similitude, in all respects, between the two kinds of paper. One material difference was, that the bills of credit, by more frequent transfers, and by dividing the change of value among a greater number of hands, rendered the effect of less consequence to individuals, and less sensible to the public mind. But this difference, whatever force it might give to the claims of the purchasing holder of certificates, could diminish nothing from the claims of the original holders who assigned them.

It had been said, by another member from Massachusetts, that the old Government did every thing in its power. It made requisitions, used exhortations, and in every respect discharged its duty; but it was to be remembered, that the debt was not due from the Government, but the United States. An attorney, with full powers to form, without the means to fulfil engagements, could never, by his ineffectual though honest efforts, exonerate his principal.

He had been repeatedly reminded of the address of Congress in 1783, which rejected a discrimination between original and purchasing holders. At that period, the certificates to the army, and citizens at large, had not been issued. The transfers were confined to loan-office certificates, were not numerous, and had been, in great part, made with little loss to the original creditor. At present, the transfers extend to a vast proportion of the whole debt, and the loss to the original holders has been immense. The injustice which has taken place has been enormous and flagrant, and makes redress a great national object. This change of circumstances destroys the argument from the act of Congress referred to; but if implicit regard is to be paid to the doctrines of that act, any modification of the interest of the debt will be as inadmissible as a modification of the principal.

It had been said, that if the losses of the original creditors are entitled to reparation, Congress ought to repair those suffered from paper money—from the ravages of war, and from the act of barring claims not produced within a limited time. As to the paper money, either the case is applicable, or it is not; if not applicable, the argument fails; if applicable, either the depreciated certificates ought to be liquidated by a like scale, as was applied to the depreciated money; or the money, even if the whole mass of it was still in circulation, ought now to be literally redeemed, like the certificates. Leaving the gentleman to make his own choice of these dilemmas, he would only add, himself, that if there were no other difference between the cases, the manifest impossibility of redressing the one, and the practicability of redressing the other, was a sufficient answer to the objection. With respect to the towns burnt, and other devastations of war, it was taught, by the writers on the law of nations, that they were to be numbered among the inevitable calamities of mankind. Still, however, a Government owed them every alleviation which it could conveniently afford; but no authority could be found that puts on the same footing with those calamities, such as proceed from a failure to fulfil the direct and express obligations of the public. The just claims barred by the act of limitation, were, in his opinion, clearly entitled to redress. That act was highly objectionable. The public, which was interested in shortening the term, undertook to decide, that no claim, however just, should be admitted, if not presented within nine months. The act made none of the exceptions usual in such acts, not even in favor of the most distant parts of the Union. In many instances, it had been absolutely impossible for the persons injured to know of the regulation. Some of these instances were within his own knowledge. To limit the duration of a law to a period, within which it could not possibly be promulgated, and then take advantage of the impossibility, would be imitating the Roman tyrant, who posted up his edicts so high that they could not be read, and then punished the people for not obeying them.

It has been said that if the purchased certificates were funded at the rate proposed, they would fall in the market, and the holders be injured. It was pretty certain, that the greater part, at least, would be gainers. He believed that the highest market price, especially with the arrears of interest incorporated, well funded at six per cent. would prevent every loss that could justify complaint.

But foreigners had become purchasers, and ought to be particularly respected. Foreigners, he remarked, had themselves made a difference between the value of the foreign and domestic debt; they would, therefore, the less complain of a difference made by Government here. It was his opinion that the terms stated in the proposition would yield a greater profit to the foreign purchasers than they could have got for their money if advanced by them in any of the funds of Europe.

The proposition had been charged with robbing one set of men to pay another. If there were robbery in the case, it had been committed on the original creditors. But, to speak more accurately, as well as more moderately, the proposition would do no more than withhold a part from each of two creditors, where both were not to be paid the whole.

A member from New York has asked, whether an original creditor, who had assigned his certificate, could, in conscience, accept a reimbursement in the manner proposed? He would not deny that assignments might have been made with such explanations, or under such circumstances, as would have that effect; but, in general, the assignments have been made with reference merely to the market value, and the uncertainty of the steps that might be taken by the Government. The bulk of the creditors had assigned under circumstances from which no scruple could arise. In all cases where a scruple existed, the benefit of the provision might be renounced. He would, in turn, ask the gentleman, whether there was not more room to apprehend that the present holder, who had got his certificate of a distressed and meritorious fellow-citizen for one-eighth, or one-tenth its ultimate value, might not feel some remorse in retaining so unconscionable an advantage?

Similar propositions, it was said, had been made and rejected in the State Legislatures. This was not a fact. The propositions made in the State Legislatures were not intended to do justice to the injured, but to seize a profit to the public.

But no petitions for redress had come from the sufferers. Was merit, then, to be the less regarded, because it was modest? Perhaps, however, another explanation ought to be given. Many of the sufferers were poor and uninformed. Those of another description were so dispersed, that their interests and efforts could not be brought forward. The case of the purchasing holders was very different.

The Constitutionality of the proposition had been drawn into question. He asked whether words could be devised that would place the new Government more precisely in the same relation to the real creditors with the old? The power was the same; the obligation was the same. The means only were varied.

An objection had been drawn from the article prohibiting ex post facto laws. But as ex post facto laws relate to criminal, not civil cases, the Constitution itself requires this definition, by adding to a like restriction on the States an express one against retrospective laws of a civil nature.

It had been said that foreigners had been led to purchase, by their faith in the article of the Constitution, relating to the public debts. He would answer this objection by a single fact: Foreigners had shown, by the market price in Europe, that they trusted the nature of foreign debt more under the old Government, than the nature of the domestic debt under the new Government.

Objections to the measure had been drawn from its supposed tendency to impede public credit. He thought it, on the contrary, perfectly consistent with the establishment of public credit. It was in vain to say, that Government ought never to revise measures once decided. Great caution on this head ought, no doubt, to be observed. but there were situations in which, without some Legislative interposition, the first principles of justice, and the very ends of civil society, would be frustrated. The gentlemen themselves had been compelled to make exceptions to the general doctrine: they would probably make more before the business was at an end.

It had been urged, that if Government should interpose in the present case, as interposition would be authorized in any case whatever where the stock might fluctuate, the principle would apply as well to a fall of sixty or seventy per cent. as to a fall of six hundred or seven hundred per cent. He could not admit this inference. A distinction was essential between an extreme case, and a case short of it. The line was difficult to be drawn; but it was no more incumbent on him than on his opponents to draw it. They themselves could not deny that a certain extremity of the evil would have justified the interposition. Suppose that the distress of the alienating creditors had been ten times as great as it was; that instead of two, three, or four shillings in the pound, they had received a farthing only in the pound; and that the certificates lay now in the hands of the purchasers in that state, or even at a less value, was there a member who would rise up and say, that the purchasers ought to be paid the entire nominal sum, and the original sufferer be entitled to no indemnification whatever?

Gentlemen had triumphed in the want of a precedent to the measure. No Government, it was said, had interposed to redress fluctuations in its public paper. But where was the Government that had funded its debts under the circumstances of the American debt? If no government had done so, there could be no precedent either for or against the measure, because the occasion itself was unprecedented. And if no similar occasion had before existed in any country, the precedent to be set would at least be harmless, because no similar occasion would be likely to happen in this.

If gentlemen persisted, however, in demanding precedents, he was happy in being able to gratify them with two, which, though not exactly parallel, were, on that account, of the greater force, since the interposition of Government had taken place where the emergency could less require them.

The first was the case of the Canada bills. During the war which ended in 1763, and which was attended with a revolution of the Government in Canada, the supplies obtained for the French army in that province were paid for in bills of exchange and certificates. This paper depreciated, and was bought up chiefly by British merchants. The sum and the depreciation were so considerable as to become a subject of negotiation between France and Great Britain at the peace. The negotiations produced a particular article, by which it was agreed by France that the paper ought to be redeemed, and admitted by Great Britain that it should be redeemed at a liquidated value. In the year 1766 this article was accordingly carried into effect by Ministers from the two Courts, which reduced the paper in the hands of the British holders, in some instances, as much as seventy-five per cent. below its nominal value. It was stated, indeed, by the reporter of the case, that the holders of the paper had themselves concurred in the liquidation; but it was not probable that the concurrence was voluntary. If it was voluntary, it shows that they themselves were sensible of the equity of the sacrifice.

The other case was of still greater weight, as it had no relation to war or treaty, and took place in the nation which has been held up as a model with respect to public credit. In the year 1713, the civil list of Great Britain had fallen into arrears to the amount of £500,000. The creditors who had furnished supplies to the Government, had, instead of money, received debentures only from the respective officers. These had depreciated. In that state, they were assigned in some instances; in others, covenanted to be assigned. When the Parliament appropriated funds for satisfying these arrears, they inserted an express provision in the act, that the creditors who had been obliged, by the default of Government, to dispose of their paper at a loss, might redeem it from the assignees by repaying the actual price, with an interest of six per cent., and that all agreements and covenants to assign should be absolutely void. Here then was an interposition on the very principle, that a Government ought to redress the wrongs, sustained by its default, and on an occasion trivial when compared to that under consideration; yet it does not appear that the public credit of the nation was injured by it.

The best source of confidence in Government was the apparent honesty of its views. The proposition could not possibly be ascribed to any other motive than this, because the public was not to gain a farthing by it. The next source was an experienced punctuality in the payments due from the Government. For this support to public credit, he relied on what had been experienced by a part of the foreign creditors; on the provision to be made for the residue; and on the punctuality which, he flattered himself, would be observed in all future payments of the domestic creditors. He was more apprehensive of injury to public credit from such modifications of the interest of the public debt as some gentlemen seemed to have in view. In these the public would be the gainer, and the plea of inability the more alarming, because it was so easy to set up, so difficult to be disproved, and for which, consequently, the temptations would be so alluring

The impracticability of the measure was the remaining ground on which it had been attacked. He did not deny that it would be attended with difficulties, and that perfect justice would not be done. But these were not the questions. It was sufficient that a grievous injustice would be lessened, and that the difficulties might be surmounted. What he had in view was, that for the conveniency of claimants some authority should be provided, and properly distributed through the Union, in order to investigate and ascertain the claims; and that, for the security of the public, the burden of proof should be thrown on the claimants. A scrutiny on this plan, aided by original settlements in the books of the army department, and the State commissioners, and other office documents, would be a remedy, at once, for all the difficulties stated with regard to fictitious names, certificates issued as money by commissaries and quartermasters, due bills, &c.

For some particular cases, special provisions might be requisite. The case of loan-office certificates, alienated at early periods, before they were much depreciated, fell under this description. Legacies might be another. He would have no objection to some special regulation, as to the payments of debts in certificates to persons within the British lines, said to have been authorized by the laws of New York; though he presumed few such payments had been made, and that of this few the greater part had, by this time, passed from the creditors into other hands. There might be a few other cases equally entitled to some particular attention in the details of the provision. As to the merchants who had compounded for their debts in certificates, or persons who had exchanged bonds for them, it could not be doubted that the transactions had reference to the market value of the paper, and therefore had nothing peculiar in them.

The expense incident to such a plan of investigation ought to form no difficulty. It bears no proportion to the expense already incurred by commissioners, &c., for effecting a less proportion of justice. Rather than justice should not be done, the expense might be taken out of the portion to the original sufferers.

The danger of frauds and perjuries had been worked up into a formidable objection. If these had always been equally alarming, no provision could ever have been made for the settlement or discharge of public debts. He reminded the committee of the frauds and perjuries for which a door had been opened by the final settlements, &c., of the frauds and perjuries inseparable from the collection of imposts and excises; yet these were all submitted to as necessary evils, because justice could not be done without them. The frauds and perjuries incident to this supplementary provision for justice must be very inconsiderable in number; and still more so, when compared either with the object to be obtained, or with the like evils already encountered in pursuit of a like object.

Great ingenuity and information had been exerted by the gentlemen on the other side in raising difficulties. He was sure that, after an adoption of the proposition, the same exertion would be used in removing them, and with such aid, the idea of impracticability would vanish.

FEBRUARY 24. ASSUMPTION OF STATE DEBTS

Mr. Madison observed on the measure, that the principle of it is in favor of the United States, so far as it may tend to bring about a final settlement and payment of all the accounts between the United States and the individual States. I believe this to be, however, a work of amazing difficulty, though not absolutely impossible. If it should be accomplished, it must go at least hand in hand with the Secretary’s plan; and if it can be accomplished, it will do more honor to the revolution in our Government than almost any other measure.

I acknowledge that I cannot subscribe to all the reasons which some gentlemen urge. I am far from thinking that the assumption of the State debts will be the means of keeping the debts dispersed throughout the States. The assumption of those debts will give them, immediately, the character of debts of the United States; they will be embarked in the same bottom; they will take the same course, and, of consequence, will arrive at the same place where it is acknowledged the domestic debts of the United States, by degrees, have assembled. Whether they will remain in this place, or flow out of the United States altogether, is a question which time will decide. I look for such a revolution of the debt as will place the greatest part of it in foreign hands.

Neither do I subscribe to the opinion of the gentleman from Maryland (Mr. Stone) that the United States can raise more revenue by the exercise of a sole authority, than by the concurrent operation of the General and State Governments. There are, I conceive, objects of taxation of three kinds: The first is that which can only be operated upon by the United States; the second, which can be operated upon by the United States and individual States jointly; and, in the last place, such as can be best operated upon by the individual States only.

An impost or excise can be best regulated by the sole authority of the United States. Some taxes can be collected by the two Governments, without any interference: the land tax generally falls under this description; but in some particular cases, the local authority alone can make the proper provision. I conclude, therefore, that the authority of the United States and individual States, taken together, will draw more revenue than either can separately draw from the same sources.

But if we can accomplish the great object of doing full justice in so complicated a case, perhaps it will reward us for all the difficulties and sacrifices we shall be compelled to make; but, in order to accomplish it, we must go much further than the object of the proposition on the table.

Some gentlemen have made the passage of this resolution a condition of providing for the acknowledged debt of the United States. I think this a preposterous condition, and a language improper to be held, after the decision which has taken place. In priority of time and obligation, we ought to provide for the acknowledged debt. Before we determine to enter into a new obligation, we should see how far we are able to discharge those positively due by us. The connexion between these resolutions is not such as to require or justify the condition. The plan of the Secretary draws a distinction between the two debts.

If we are to make a common stock of the debts of the States, not yet discharged, it can only be justified by securing provision for those which are discharged; with this view, therefore I will now move to add to the resolution these words: “that effectual provision be, at the same time made for liquidating and crediting to the States, the whole of their expenditure during the war, as the same hath been or may be stated for the purpose: and, in such liquidation, the best evidence shall be received that the nature of the case will permit.”

It may be said, that this is a superfluous condition; because there is a Board in existence charged with the trust; but, sir, their power does not reach the great object contemplated. The limitation act has already barred a great number of equitable claims of one State; perhaps there are other States in the same predicament. I do not know whether the power of the Board has a latitude sufficient to receive such evidence as the nature of the case will permit; and if adequate provision is not made on this head, a great deal more injustice will be done than by a refusal to assum the State debts.1

I hope I shall be excused for connecting these provisions; because I think it impossible to separate them, in justice or propriety. If, by providing for the first, we can secure a provision for the last, we may do great honor to the councils of America, and establish its character for equity and justice. If we do not wish to decide precipitately on the question, I shall be content to delay it; and perhaps gentlemen may be impressed with the propriety of doing so till they take a view of the funds which are in contemplation, and see how effective and adequate they are likely to prove.

end of volume v.

[1 ]August 28, 1789, a memorial and petition to Congress from public creditors in Pennsylvania praying that provision be made for the public debt was referred to a committee of which Madison was chairman. September 10th he reported in favor of taking the matter up at the next session. January 14th Hamilton’s report was submitted in favor of “funding and assumption.”

[2 ]Washington informed Jefferson of his appointment to be Secretary of State October 10, 1789. February 14, 1790, from Monticello Jefferson wrote definitely accepting and soon thereafter assumed office.—The Department of State, History and Functions (Hunt), 60, 61.

[1 ]The bill became a law March 26, 1790, and provided for admission to citizenship of free white aliens of good moral character after residence in the United States of two years.—1 Stat., 103.

[1]

TO THOMAS JEFFERSON

New York, Feby 4, 1790.

Dear Sir,—

Your favor of Jany. 9, inclosing one of Sepr. last did not get to hand till a few days ago.* The idea which the latter evolves is a great one; and suggests many interesting reflections to Legislators; particularly when contracting and providing for public debts. Whether it can be received in the extent to which your reasonings carry it, is a question which I ought to turn more in my thoughts than I have yet been able to do, before I should be justified in making up a full opinion on it. My first thoughts lead me to view the doctrine as not in all respects compatible with the course of human affairs. I will endeavour to sketch the grounds of my skepticism. “As the Earth belongs to the living, not to the dead, a living generation can bind itself only; in every Society the will of the majority binds the whole; according to the laws of mortality, a majority of those ripe for the exercise of their will do not live beyond the term of 19 years; to this term then is limited the validity of every act of the Society, nor can any act be continued beyond this term without an express declaration of the public will.” This I understand to be the outline of the argument.

The Acts of a political society may be divided into three classes:

1. the fundamental constitution of the Government.

2. laws involving some stipulation, which renders them irrevocable at the will of the Legislature.

3. laws involving no such irrevocable quality.

1. However applicable in theory the doctrine may be to a Constitution, it seems liable in practice to some weighty objections.

Would not a Government ceasing of necessity at the end of a given term, unless prolonged by some Constitutional Act, previous to its expiration, be too subject to the casualty and consequences of an interregnum?

Would not a Government so often revised become too mutable & novel to retain that share of prejudice in its favor which is a salutary aid to the most rational Government?

Would not such a periodical revision engender pernicious factions that might not otherwise come into existence; and agitate the public mind more frequently and more violently than might be expedient?

2. In the second class of acts involving stipulations, must not exceptions at least to the doctrine, be admitted?

If the earth be the gift of nature to the living, their title can extend to the earth in its natural state only. The improvements made by the dead form a debt against the living, who take the benefit of them. This debt cannot be otherwise discharged than by a proportionate obedience to the will of the Authors of the improvements.

But a case less liable to be controverted may perhaps be stated. Debts may be incurred with a direct view to the interests of the unborn as well as of the living. Such are debts for repelling a Conquest, the evils of which descend through many generations. Debts may even be incurred principally for the benefit of posterity: Such perhaps is the debt incurred by the U. States. In these instances the debts might not be dischargeable within the term of 19 years.

There seems, then, to be some foundation in the nature of things; in the relation which one generation bears to another, for the descent of obligations from one to another. Equity may require it. Mutual good may be promoted by it. And all that seems indispensable in stating the account between the dead and the living, is to see that the debts against the latter do not exceed the advances made by the former. Few of the incumbrances entailed on nations by their predecessors would bear a liquidation even on this principle.

3. Objections to the doctrine, as applied to the third class of Acts must be merely practical. But in that view alone they appear to be material.

Unless such temporary laws should be kept in force by acts regularly anticipating their expiration, all the rights depending on positive laws, that is most of the rights of property would become absolutely defunct, and the most violent struggles ensue between the parties interested in reviving & those interested in reforming the antecedent state of property. Nor does it seem improbable that such an event might be suffered to take place. The checks & difficulties opposed to the passage of laws which render the power of repeal inferior to an opportunity to reject, as a security against oppression, would here render the latter an insecure provision against anarchy. Add to this that the very possibility of an event so hazardous to the rights of property could not but depreciate its value; that the approach of the crisis wd increase the effect; that the frequent return of periods superseding all the obligations dependent on antecedent laws & usages, must by weakening the sense of them, co-operate with motives to licenciousness already too powerful; and that the general uncertainty & vicissitudes of such a state of things would, on one side, discourage every useful effort of steady industry pursued under the sanction of existing laws, and on the other, give an immediate advantage to the more sagacious over the less sagacious part of the Society.

I can find no relief from such embarrassments but in the received doctrine that a tacit assent may be given to established Governments & laws, and that this assent is to be inferred from the omission of an express revocation. It seems more practicable to remedy by well-constituted Governments the pestilent operation of this doctrine, in the unlimited sense in which it is at present recd., than it is to find a remedy for the evils necessarily springing from an unlimited admission of the contrary doctrine.

Is it not doubtful whether it be possible to exclude wholly the idea of an implied or tacit assent, without subverting the very foundation of Civil Society?

On what principle is it that the voice of the majority binds the minority? It does not result I conceive from a law of nature but from compact founded on utility. A greater proportion might be required by the fundamental Constitution of Society, if under any praticular circumstances it were judged eligible. Prior therefore to the establishment of this principle, unanimity was necessary, and rigid Theory, accordingly presupposes the assent of every individual to the rule, which subjects the minority to the will of the majority. If this assent cannot be given tacitly, or be not implied where no positive evidence forbids, no person born in Society, could on attaining ripe age, be bound by any acts of the majority, and either a unanimous renewal of every law would be necessary, as often as a new member should be added to the Society, or the express consent of every new member be obtained to the rule by which the majority decides for the whole.

If these observations be not misapplied, it follows that a limitation of the validity of all Acts to the computed life of the generation establishing them, is in some cases not required by theory, and in others not consistent with practice. They are not meant however to impeach either the utility of the principle as applied to the cases you have particularly in view, or the general importance of it in the eye of the Philosophical Legislator. On the contrary it would give me singular pleasure to see it first announced to the world in a law of the U. States, and always kept in view as a salutary restraint on living generations from unjust & unnecessary burdens on their successors. This is a pleasure however which I have no hope of enjoying. The spirit of Philosophical legislation has not prevailed at all in some parts of America and is by no means the fashion of this part, or of the present Representative Body. The evils suffered or feared weakness in Government and licenciousness in the people, have turned the attention more towards the means of strengthening the powers of the former, than of narrowing their extent in the minds of the latter. Besides this it is so much easier to descry the little difficulties immediately incident to every great plan, than to comprehend its general & remote benefits, that further light must be added to the Councils of our Country before many truths which are seen through the medium of Philosophy, become visible to the naked eye of the ordinary politician.—Mad. MSS.

[1 ]On the same day Madison offered the following:

Resolved, That adequate funds ought to be provided for paying the interest and principal of the domestic debt, as the same shall be liquidated; and that in such liquidation, the present holders of public securities, which have been alienated, shall be settled with according to the highest market rate of such securities; and that the balance of the sums due from the public, be paid in such proportion to the original holder of such securities.

[1]

TO JAMES MADISON

N. Y. Feby 27 1790.

Hond. Sir:

I have not yet recd. a single line from Orange since I left it. The letter from my brother when at Alexa. is the only written information that I have had the pleasure of, a few lines from Mr. Hite excepted. These gave an account of my sisters marriage, and added that about that period my mother was better. I am anxious to hear more on that subject, and indulge my hopes that her health will yet be reestablished.

The papers inclosed at different times will have shewn the state of the business before Congs. The proposition for compromizing the matter between original sufferers & the stockjobbers, after being long agitated was rejected by considerable majority, less perhaps from a denial of the justice of the measure, than a supposition of its impracticability. The idea is much better relished I find in the Country at large, than it was in this City. The subject now before Congs is the proposed assumption of the State debts. Opinions are much divided on it, and the result can not be foretold. These difficulties and discussions seem to have produced here a suspense of the public opinion. Stock has been stationary in consequence of it at about 7/. in the pound. I am afraid that the people at a distance from information will continue to be a prey to those who hover about the public councils, and communicate with emissaries all over the Continent. I wish it were possible to defend the uninformed from these impositions. The best they can do is not to deal with speculators, but to await patiently the event.

I find by a letter from Mr Jefferson that grain is getting as high in Virga. as here. The run on our market from Europe seems to be increasing. If the alarm be not artificial in France England &c. which can not be altogether the case, it is probable that the price will be high for several years.

I remain your dutiful son

Js. Madison Jr.

[1]

TO THOMAS JEFFERSON

New York, Feby 4, 1790.

Dear Sir,—

The Acts of a political society may be divided into three classes:

1. the fundamental constitution of the Government.

2. laws involving some stipulation, which renders them irrevocable at the will of the Legislature.

3. laws involving no such irrevocable quality.

1. However applicable in theory the doctrine may be to a Constitution, it seems liable in practice to some weighty objections.

Would not a Government so often revised become too mutable & novel to retain that share of prejudice in its favor which is a salutary aid to the most rational Government?

Would not such a periodical revision engender pernicious factions that might not otherwise come into existence; and agitate the public mind more frequently and more violently than might be expedient?

2. In the second class of acts involving stipulations, must not exceptions at least to the doctrine, be admitted?

3. Objections to the doctrine, as applied to the third class of Acts must be merely practical. But in that view alone they appear to be material.

Is it not doubtful whether it be possible to exclude wholly the idea of an implied or tacit assent, without subverting the very foundation of Civil Society?

[* ]See the letter in Ford’s Writings of Jefferson, v., 115.

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1790 - TO THOMAS JEFFERSON mad. mss. - James Madison, The Writings, vol. 5 (1787-1790) [1904]

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TO THOMAS JEFFERSONmad. mss.

Dear Sir

SPEECHES IN THE FIRST CONGRESS—SECOND SESSION, 1790.

FEBRUARY 3. NATURALIZATION OF ALIENS1

FEBRUARY 11. PUBLIC DEBT1

FEBRUARY 18. PUBLIC DEBT

FEBRUARY 24. ASSUMPTION OF STATE DEBTS

TO THOMAS JEFFERSON

Dear Sir,—

TO JAMES MADISON

Hond. Sir:

I remain your dutiful son

TO THOMAS JEFFERSON

Dear Sir,—