Front Page Titles (by Subject) A SEVENTH ESSAY ON Free Trade and Finance; In which the Expediency of Funding the Public Securities; Striking further Sums of Paper Money, and other important Matters, are considered. * [ First published in Philadelphia, Jan. 10, 1785.] - Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects
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A SEVENTH ESSAY ON Free Trade and Finance; In which the Expediency of Funding the Public Securities; Striking further Sums of Paper Money, and other important Matters, are considered. * [ First published in Philadelphia, Jan. 10, 1785.] - Pelatiah Webster, Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects 
Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects, published during the American War, and continued up to the present Year, 1791 (Philadelphia: Joseph Crukshank, 1791).
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A SEVENTH ESSAY ON Free Trade and Finance;In which the Expediency of Funding the Public Securities; Striking further Sums of Paper Money, and other important Matters, are considered.*
PUBLIC securities are notes or promises of payment, made in writing, to the public creditors, who had demands on the public for monies lent, supplies furnished, services rendered, &c. &c. Of these there are a great variety, and distinguished by divers appellations, such as loan-office certificates, depreciation certificates, final settlements, &c. &c.
As the public was in no condition to pay these securities when they became due, they suffered a great depreciation: the owners sold them for what they could get, and they have long been an article of traffic in the hands of the brokers and speculators; and the price-current, or estimated value of them, as they pass from hand to hand, is become as much fixed and as well known in the brokers’ offices, as that of any other goods or merchandises.
And this price-current, made in market by the general consent of buyers and sellers, determines the value of all articles of traffic, whether goods, bills of exchange, public securities, stocks of every kind, or even money itself: and this rule of estimation is so fixed and natural, that no external force or height of authority can alter it, as has been clearly proved by experiment (the strongest proof in nature) in the instances of tender-laws and regulation of prices, which have often been attempted in vain, tho’ pushed as far as law, authority, violence, and force could go.
Therefore it follows, that the public securities, when they become articles of exchange or traffic, are really worth what they will bring in market, and no more; i. e. let their nominal value be what it will, their real value is so much as, and no more than, they will bring in market: this is plain, natural law, which it is in vain for the greatest force or highest authority to oppose; it will prove too strong for the most mighty opposition; it is therefore most wise to submit to it, and obey its sovereign dictates, without reluctance.
The price-current of public securities has been different at different times, and the different kinds of them are estimated at different prices; very many have been purchased at 2s. 6d. in the pound, or 8 for 1; others at 6s. or 7s. in the pound, or about 3 for 1. A few instances may be produced of sales at higher and lower prices; but in general, I believe, the above prices may be estimated as the extremes: very great numbers of final settlements have been bought at 2s. 6d. in the pound, or 8 for 1.
It is very certain, and undoubtedly confessed on all sides, that our soldiers, when their services were over, and their accounts were fairly adjusted, were entitled to the liquidated balances in their favor, in genuine money; this was in justice due to them for their services, and if they were paid, no more than justice was done them; but if, instead of this, they were paid nominally twenty shillings in a certificate, note of public promise, or any other article of negotiation or traffic, which was worth, by general consent of buyer and seller, in the public exchange, no more than 2s. 6d. and would bring no more, it is plain they were paid but 2s. 6d. in the pound, and the remaining 17s. 6d. is still due to them.
We will suppose, that instead of a certificate of 20s. which would bring but 2s. 6d. they had been paid in brass, at 20s. per lb. which was worth in market, and would bring no more than, 2s. 6d. per lb. it is plain their condition would have been exactly the same, i. e. the soldier that received the pound of brass, which he could sell for 2s. 6d. and no more, would be just as well off, and as well paid, as the soldier who received the certificate of 20s. which he could sell for 2s. 6d. and no more; it is a very plain case that neither of them are paid more than 2s. 6d. in the pound, and that the remaining 17s. 6d. remains unpaid, and consequently due to them.
And if any justice or honor to the public faith is designed or attempted, it must be effected by paying to them what still remains due to them. But can the human mind conceive, that any sort of justice or honor to the public faith would be done, not by pitying the poor soldiers, and paying the balance due to them, but instead of this, by raising a large sum of money, by taxing the community, to buy in all the brass, and giving 20s. per lb. for it to the speculators who had bought it of the soldiers for 2s. 6d. per lb. (even whilst the current market price was but 2s. 6d.) and giving interest till the cash was paid? which would be giving those speculators eight times as much money as the capital they advanced, and 48 per cent. per ann. interest for it, till the cash was paid.
The brokers’ interest of 4 per cent. per month, is a fool to this; for this not only recovers 4 per cent. per month interest, but secures the payment of eight-fold the capital, when the interest ceases. Besides, the brokers run some risk of opprobrium and loss of their debt; but this plan gives honor and security to the whole transaction, by giving it the sacred sanction of the supreme power of the State.
It makes no difference to the argument, whether the article of traffic paid to the soldiers, and purchased in again by the State, be brass or certificates; because both, by the supposition, are of equal price in the market, and make a payment of equal value to the soldiers.
The whole argument holds good and in equal sorce, with regard to all original holders of public securities, as to the soldiers, all of whom are supposed to have furnished to the public, cash, goods, or services, to the amount of the certificates they received.
The argument also has the same sorce, with respect to speculators, who have purchased public securities at a higher exchange than 8 for 1: with respect to these, the conclusion is the same in nature, but differs only in degree.
This plan of paying the vast sums of public monies to speculators, which were originally due to the soldiers and other original holders of the public securities, and the payment being withheld from them to whom it ought to have been made, still remains due: I sav, the plan of paying these monies to the speculators, who at present hold the securities, i. e. paying to these speculators eight times the capital they advanced for the purchase of them, with 48 per cent. per ann. interest, till actual payment is made to them, and taxing the State to raise these monies, and of course taxing the poor soldiers (who, in their penury and distress, sold their certificates at 2s. 6d.) in the pound, for the money necessary to pay them at 20s. in the pound, with interest, to the speculators who purchased them: I say, this plan is adopted by some folks with great seriousness and gravity; and their ideas are supported with very specious arguments, the detail of which I wave considering just now, that I may mention one proposition, which I think necessary to introduce here, viz.
No ingenuity of argument can ever support an absurd conclusion; the absurdity of the conclusion for ever destroys the argument, however specious and ingenious the premises may be found: this is called by logicians reductio ad absurdum, has been taught in the schools a thousand years, and has always been allowed to be good reasoning.
All the arguments that can be adduced, can never convince any body that this plan is right; there is not a boy in a compting-house, or maid in a kitchen, who would not exclaim against the injustice of it, the moment they heard and understood it; the common sense which refides in every human breast, revolts against it; for this I appeal to the sentiments and feelings of every body who has any.
Do not you think, my fellow-citizens, that a speculator in public securities must be pretty well brazed, yea, brassed over, who can express his joy without blushing, in the face of the world, and tell us that he is enlivened with hopes of obtaining a public act, entitling him to eight times the capital of his speculations, with 48 per cent. per ann. interest, till he receives the principal in good, solid, hard cash; all which he knows to be the earnings of the poor, distressed soldier, who, with his family, languishes for want of the payment, which is withheld from him by means of the failure of the public faith?
This plan, however cruel, shocking, and execrable it may appear, is defended by some folks by this argument, viz. the public securities, like bonds, bills of exchange, promissory notes, &c. are assignable or transferable over, by which the assignee becomes possessed of all the right and interest, which the original holder had therein; that the whole property passes by the assignment, and the sum paid by the assignee to the original holder, whether little or much, is of no consideration in the case.
I suppose this holds true generally with respect to bonds, bills of exchange, promissory notes, &c. but I do not think it holds true universally: the rule has its exceptions, and I think the case in point is manifestly one of the strongest instances of them. The Continental money is a most notorious one; the public faith was plighted for the redemption of that money, as sacredly as sorce of words, height of authority, and appeals to Heaven could do it. Yet every man acknowledges, that if that money, tho’ all made payable to the bearer, was to be redeemed at a hard dollar for every Continental one, the most absurd injustice would be done.
The old State money of this State affords another instance of the same kind. The loan-office certificates afford a third instance, the value of which is estimated by Congress, by a public scale of depreciation, grounded on the real value of the certificates, at the several dates at which they were issued. Nobody pretends to object to this measure, or the principle on which it was founded.
Another instance may be adduced from a clear, decided rule of the law of the land, viz. if an executor buys up the bonds of his testator at a discount, i. e. by paying less than the nominal value for them, when he comes to make up the accounts of his executorship, he shall not be allowed the nominal value of those bonds, but so much only as he actually paid for them.
To all this I will venture to add here a proposed case, with my opinion on it, viz. suppose a merchant stops payment, who has thousands of bonds, notes, &c. against him, and upon the best survey of his affairs, it becomes the general opinion that he will pay 2s. 6d. in the pound, and his bonds and notes are generally passed from hand to to hand, at that exchange. Every broker and banker has them, and passes them for years together at that rate; but, after a series of time, the debtor becomes able and willing to pay his whole debt, and is cited into a most sovereign court of chancery, where mere right and justice is the rule of the court; where it is confessed that the 2s. 6d. is either paid or now due to the assignee of the note for 20s. and the sole question before the court is, who shall have the other 17s. 6d. whether the original creditor, to whom the debt was due, for full consideration paid, or to the assignee who had never paid any thing for it?
We will suppose the court is under no bias, but honestly mean to make such a decree as will be most just, do the most honor to their court, and be best approved in Heaven. I make no difficulty in giving my opinion, that the court will award in favor of the original creditor, who has paid the full consideration of the debt, in preference to the assignee, who has never paid any thing for it.
Find fault with and disprove this opinion, whoever of you can; I expose it with confidence, to the censure of you all. Where two persons are in equal possession of an estate, it shall be given to him that hath right. Original right is such a sacred thing, that it can and will go great lengths in favor of its proprietor, is ever reverenced by the law, and ever claims the principal attention of the court.
I take it, that the facts out of which the reasons grow, that govern assignments of bonds, bills of exchange, and negotiable notes, are so toto cœlo different from those in the case now under discussion, that it is impossible to argue from the one to the other without the most manifest absurdity.
One instance of this difference, of full notoriety, and striking enough, is this, viz. that in the case of transfer of bills of exchange, negotiable notes, &c. a valuable consideration is always presumed to be given; but in the case in point no such thing, but the very contrary, appears in full blaze of evidence; 2s. 6d. in the pound has not the least pretension of being a valuable consideration for eight times the principal advanced, and 48 per cent. interest for the same, till the whole shall be paid, together with 48 per cent. for several years’ interest due on the certificate, before the purchaser ever saw it, or even paid his 2s. 6d. for it.
This fact stands glaring in the face of the world, and strikes conviction of its own injustice and absurdity into every beholder; it gives concern to the most avaricious speculator, and brings a blush even into the anvil countenances of the sanguine promoters of the blessed scheme of making provision for the enormous payment.
They endeavour to palliate it, or shuffle it out of sight, by suggesting that the instances of this sort are but few and inconsiderable, and so blended with the right and justice due to the distressed widows, orphans, soldiers, and other worthy citizens, who are public creditors, that they cannot be separated, and are therefore not worthy to be noticed; but here again the fact is notoriously against them. I should think a man had need of a front as hard as anandiron, to affirm, in the face of the public, that these instances are but few and inconsiderable.
It is a matter of public notoriety and general belief, that almost the whole of the widows, orphans, soldiers, and other distressed public creditors, have sold their certificates, which are now in the hands of the speculators, who are known to be very numerous, and many of whom have a vast amount of them.
But let these instances be few or many, it is a vain pretence to say they are so blended with the other public creditors, that they cannot be separated. A method of justice and due discrimination is easily investigated; the public creditors are easily found; their names are all on the public books, with the balances which were due to them when their accounts were settled.
I propose then, that they shall be debited with the certificates they received, at the price, exchange, or value at which they passed or could be sold, when they received them, and have the residue of their balance paid to them honestly, with interest.
It will take no more money to pay them than to pay the speculators; and as to the certificates, except such as are in the hands of the original holders, let them be paid to whoever brings them in, at a scale of value founded on their original value when they were issued, or the mean exchange at which they have passed for two or three years back.
This will repay to the speculators all the cash they have advanced, which, I think, is all the justice or tenderness to which they are entitled from the public; for, to say the best of them, I esteem them a sort of men barely tolerable, but by no means worthy of encouragement.
Some people say they have merit, and support the public faith, by giving something for certificates, when others would not buy them at all; but I think we are not much beholden to them, for vilifying and decrying the public faith, till they have persuaded the poor soldiers to sell their certificates for 2s. 6d. in the pound, rather than trust the public any longer.
As my proposal leaves no ground of complaint on the part of the speculators, so I think it will do manifest justice to the widows, orphans, soldiers, and other distressed public creditors, who, in my opinion, most justly deserve all the groans of compassion which are so liberally bestowed on them by our honorable Assembly, and the committee of public creditors.
I should be sorry to see the zeal of these patriots for the public faith abate, and their concern for the distressed creditors cool away, if the speculators should happen to lose their point, and, of course, should lower their cry for justice and compassion, when they find they are not like to finger the money.—Hinc istæ lacrymæ.
What now remains for me is, to show that the case above proposed is (mutatis mutandis) in fact the case in point. The public is the merchant who stopped payment (no body will dispute this) the thousands of bonds and notes against him, are the public securities or certificates of all kinds; the general consent which determined that he would pay 2s. 6d. in the pound, is the exchange settled by general consent, at which the public securities, especially the final settlements, have been bought and sold for a long succession of time.
And the high court of chancery, with sovereign power, totally unbiassed by any considerations but those of mere right and justice, and who mean to make such decisions as shall do the highest honor to the State, deserve the highest esteem and approbation of their fellow-citizens and the world, and merit the best approbation of Heaven; I say, this high court of chancery is our General Assembly.
And the parties who appear before this august court of chancery, i. e. our General Assembly, are the soldiers, who served us with fatigue and blood thro’ a seven years’ war, and other virtuous citizens, who furnished the public, in the greatest public exigence and distress, with cash and other supplies, and who altogether saved the liberties of the country, and procured for our Assembly itself, the very privilege of sitting, uninterrupted, within the walls which they now occupy, and of debating whether they will pay them or not; I say, these soldiers and other creditors are the original creditors, and the assignees are the stock-jobbers and speculators in the public funds and securities, who have in their hands the certificates, which, during the reputed bankruptcy of the State, they purchased at 2s. 6d. in the pound, or 8 for 1, without any allowance for interest at all.
I say, these two parties are the original creditors and the assignees of the bonds who appear before this court, and the grand question now before the court is, whether they will pay these public monies to the soldiers and other virtuous citizens, who are the original creditors; or whether they will pay these same monies to a parcel of stock-jobbers and speculators in the public funds and securities, at the rate of 8 for 1 of the principal they have advanced, and 48 per cent. per ann. interest, till the principal is paid, together with 48 per cent. interest from the date of the certificate, to the time of the purchase of it by the speculator, which, in some cases, is several years, and raises the interest due on the certificates at the time of purchase, to a much greater sum than was paid for the whole certificate?
We will then, if you please, suppose our venerable high court of chancery, viz. our Assembly, to be sitting, with the public monies all on the table before them; and the two parties appear and make their claim to the money; it is confessed that the public have had a valuable consideration for it, and therefore justly owe it to somebody, and the only question before the court is, who shall have it?
The speculators bring in their certificates signed over to them, and claim to be admitted in the place of the original creditors, and paid as such, on the equity and common reason of assignments.
The widows, orphans, soldiers, and other original creditors, come in and say,—we claim this money, because we have earned it, and have paid the full, valuable consideration for it. We have not yet been paid. We received these certificates when they were not so good as money, and have sold them mostly at 2s. 6d. in the pound, which was all that they were worth, and would bring in market, when we received them, and which we are willing to allow should be debited to us. So far we have been paid, but no further the remainder of the debt due from the public to us at the time of settlement, is still due to us and unpaid, and we now claim it. The speculators have no such plea of a valuable consideration given; they have purchased at such vast discount, that they have no pretensions to a valuable consideration given; what they have paid we are content they should receive back with interest; the rest is our dear carnings, which the public have had the full benefit of, and which we now claim as our due, and demand payment.
This is stating the matter, I conceive, clearly and fairly, and I beg leave to give my opinion decidedly in favor of the original creditors. It does appear to me, that the quid pro quo, or valuable consideration, goes so into the nature, and makes such a part of, the very essence of commutative justice, that it is impossible that an equitable debt should be generated without it, by any contract whatever.
It is a matter of the most public notoriety, that the quid pro quo, or valuable consideration paid by the speculators, is no more than the exchange at which they purchased the certificates, which is such a mere trifle, that it affronts the common feelings of the human mind, to pretend that such a trifle (say, one sixth or eighth part) is a valuable consideration for the whole; it is a valuable consideration for no more than was paid, and of consequence can generate a debt of no more; the rest still stands connected with the original consideration paid, i. e. sticks to the original creditor, and there will adhere, till it is discharged by an adequate payment.
For no man is born with, or can acquire, a right to the carnings or fortune of another, without giving a valuable consideration for it, and that consideration must be of adequate value; for a penny can no more be a valuable consideration for a pound, than nothing at all can be for a penny; for it strikes the human understanding as plainly, and with as much force, that a pound is worth more than a penny, as that a penny is worth more than nothing at all.
Therefore I do conclude, and contend strongly for the conclusion, that the speculators are entitled to no more than they have paid a valuable consideration for, and therest remains due to the original creditors, as their dear earnings for which they have not yet been paid.
I know very well that the speculators have many ingenious arguments, spun as fine as silk, to prove their right to the whole debt specified in their certificates; but the soldier has a much better one, strong as iron, yea, made of iron, I mean his earnings with sword and musket, thro’ a seven years’ war, which yet remain unsatisfied. Do you think that the finest silken arguments of the speculator can stand any the least chance with this iron one of the soldier?
There is something in original right, which strikes the human mind with irresistible force: this original right will for ever attach itself to original earnings; there it will stick, and cannot be torn away by any force, nor be decoyed by any fraud, till it is satisfied by adequate payment. A just debt will for ever remain a debt due, till it is paid.
It therefore follows, that if we pay the Ipeculators the immense sums which they demand, the public debt of the whole sum will still remain due to the original creditors, who have, by their cash, supplies, and earnings, advanced the full, valuable consideration, out of which the debt first grew, and who have never been paid.
Public justice and the honor of the public faith require, not only that we pay as much money as we owe, but that we pay it to the persons to whom it is due; for paying it to any body else can be no satisfaction of that justice and faith which we owe to our real creditors, but is an additional injury to them.
The human mind can no otherwise know right and wrong, than by the force and manner in which they strike the mind, and raise an approbation or disapprobation in it; and I appeal to the feelings of all my readers, whether my propositions do not strike their minds strongly, and force their approbation of my conclusion. I challenge the hardiest speculator to believe it right, if he can, or rather not to believe it wrong, to lay the burden of a tax on the community, and among the rest on the public creditors themselves, to raise money to pay the public debt, and when it is collected, to pay it away, not to the real creditors, who, by their earnings and advances, have paid the full consideration for the debts due to them, but to others who never earned any thing for us, nor paid any valuable consideration to us, and, of consequence, can have nothing due to them from us.
There is another very serious consequence, which I aprehend from our paying such an enormous sum to the speculators, as they demand, if we now had the whole money in the treasury, viz. it would be such a drain of our public money, as would put it wholly out of our power to pay our real creditors in any tolerable season, and would, in a great measure, reduce them to despair, of ever receiving their debts due, and of course would greatly lessen all considence in the public faith.
But if the money is not in the public treasury (which I take to be the fact) our issuing another deluge of public promises, by way of funding such an enormous sum, I fear would hurt the credit of the State still more; for public promises, like all other promises that are broken, become of less and less value, the oftener they are repeated, and the more they are multiplied; and tho’ I profess to believe fully, that these new and multiplied public bills would be good enough to pay the speculators with, yet I should be sorry that our real creditors (who have paid a full consideration for their debts due from the public) should partake of the inconveniencies of them.
I therefore humbly propose, that the first thing we do, should be to set about raising the money; for this will be more acceptable when it comes, whoever is to have it, than any promises we can make.
And in the next place I would propose, that the real creditors should be paid first, and the speculators last of all, if it is judged necessary that they should ever be paid. I have several very urgent reasons for this proposition, both moral and political.
1. The real creditors have lain out of their money longer than the speculators, and it seems to me very reasonable and just, that the oldest dubts should be first paid.
2. The speculators who expect eight-fold their principal, and 48 per cent. interest, can better afford to lie awhile out of their money, than the real creditors, who have no pretensions to any more than barely their principal, and 6 per cent. interest.
3. The general esteem of the people, and public conviction of the justice of the demand, is much greater with respect to the real creditors, than to the speculators; and therefore, when the citizens of the State are told, when the money is to be collected, that it is designed for the payment of the real creditors, the tax will probably be paid more cheerfully, and with less uneasiness and disturbance, than may be expected if it was publicly known that it was to go to the speculators.
4. The real creditors are poor, and would be greatly relieved by the payment made to them, and be enabled to go into business for their own and the public advantage. But when the speculators are paid, they will all at once become so amazingly rich, that they will probably set up their carriages, and run into other courses of idleness and pleasures, luxury and dissipation, which are ever hurtful to the public; and I think it good policy to pay that money first which is like to do the most good, and to pay that which is like to do the most hurt, last of all, if it must be paid at all; for I shall ever think it sound wisdom, if evils and mischiefs cannot be wholly avoided, to keep them at as great a distance as possible.
On the whole, whether any or all my propositions can be admitted or not, it does at least appear that the real, original creditors, and speculators, are characters of such different predicament and merit, and their demands on the public, founded on such different original considerations, reasons, and real earnings, that the least consequence that can be drawn from the whole matter, is a most manifest necessity that there should be a discrimination between them; that they can, with no propriety, or appearance of justice, be considered on an equal footing with each other, or in any manner entitled to the same consideration and treatment from the public.
But I must stop here a moment, to consider a capital argument advanced very seriously, “that if all the certificates are not indiscriminately paid up to the holders of them, the public credit will receive such a wound that we shall never be able to persuade any body in future to loan money, or furnish supplies or services on the public faith, let our necessities be ever so great.” I believe it will be readily admitted, that I have stated this argument in the same light in which it is urged by those who make use of it; but I think there is a delusion in this statement of the argument, which I will endeavour to correct in the following manner, viz.
If, by any mismanagement or neglect, if, by any deficiency or misapplication of the public monies, it shall so fall out, that the real, worthy, public creditors cannot be paid; if matters are worked about by any shifts, arts, combinations, contrivances, or deceits, so that the man who has loaned money, furnished supplies, or rendered services to the public in its necessities, cannot be paid; no pretty, plausible excuse, no fine-spun arguments, no force of words, which really mean nothing, no pathetic addresses upon perverted facts, can help us out; but the public credit must suffer; and if the very men who make these mistakes, or even some wiser men, were to rule the roast in any future time of public distress, there is the highest probability that they would find people backward to lend their money, furnish supplies, or render services, on the credit of the public.
On the other hand, if we consent to pay the speculators the bare principal, which they have paid, with the interest of it, but shall refuse to secure by the public sanction, the profits of 8 or 900 per cent. which they demand, the amount of which, in moderate computation, cannot be less than 2 or 3,000,000 of dollars, which they never earned or paid for, nor we ever received any benefit or valuable consideration for; I say, if we refuse to pay to the speculators these enormous profits, it will so discourage them, that it may make them backward in venturing again, and so we may be obliged to do without them in future times, let us want them ever so much.
Both these alternatives are doubtless very dreadful, and I think there can be no doubt, but we are under an unavoidable necessity of incurring one of them; but I am in no condition to give my opinion, which would be the most terrible of the two. So having clearly and fairly stated the facts, I leave the rest to the reader.
But it may be further objected,—if all this is to be admitted, will it not put it out of the power of the holder of any public security, to sell it? Experience will perhaps furnish the best answer to this question. The depreciation of Continental money never stopped the circulation of it. As long as it retained any value at all, it passed quick enough; and would purchase hard money or any thing else, as readily as ever, when the exchange was 200 for 1, and when every hope, or even idea, of its being redeemed at nominal value, had entirely vanished.
I am told, the price of stocks or public securities in England is now at 55 per cent. i. e. reduced by depreciation to near half their nominal value; and not a man in England has the most distant idea that they will ever be redeemed at their nominal value, yet they pass quick enough at their exchange, and any person who is disposed to sell out, has no difficulty in finding a purchaser.
It may be further objected, that if the speculators could have known before-hand, that they should come off so, they would not have been concerned in such speculations at all; but would have laid out their money in trade, husbandry, manufactures, or some other way. However lamentable this may be, I must leave it unanswered.
It may be further objected, that this doctrine will overset and throw into confusion the common rules and laws, which regulate assignments of bonds, bills of exchange, negotiable notes, &c. which have had the sanction of long usage and practice, and have ever been found by experience to be both just and necessary.
I answer, it will not, for this plain reason, which would demonstrably govern the case, if nothing else could be said upon it, viz. every law or rule of right, whether commercial, political, moral, or divine, holds right and just, only in its mean; the moment it is pushed out of its mean, into its extremes, it loses the reasons on which it is founded, and becomes wrong and unjust.
We have a law which forbids to make graven images; but this prohibits not statues in gardens or heads on ships. We have another forbidding to do any work on the Sabbath; but this does not make it unlawful to put out the fire of a house that is burning, or laboring hard to save a drowning man, or to pull an ox out of the mire. We have a law that says, “thou shalt not kill;” but this prohibits not the execution of a malefactor, or fighting a battle: We have another that says, “thou shalt not steal;” yet a man may lawfully steal to satisfy his hunger.
The only question, I conceive, which the subject admits in this place is, whether the demand of the speculator is an extreme case, which comes not within the reasons, and of course cannot be justified or supported by the rule, of common assignments? I contend for the affirmative of this question, and for reason say the demand is morally wrong, because it would take an immense sum of money from the community, which must be a large proportion of their earnings, and give the same to the speculators, without any adequate valuable consideration, either paid by the speculators, or received from them by the citizens, contrary to the most fundamental law of commutative justice, which requires that a quid pro quo, or a valuable consideration, shall always be given in lieu of the property transferred. This is the most essential part of the moral law, which regards property.
Further, this is not only morally wrong, but politically so too.
1. Because it takes an immense property from those who had earned it, and would, of course, probably make the best use of it, and places it in the hands of people who have not earned it, and who would, of course, probably make the worst use of it. And it is certainly high policy to keep the wealth of the State as far as possible in the hands of those people who will make the best use of it.
2. Because this would impoverish the great body of the people, who are ever the strength of every nation, in order to throw immense wealth into the hands of individuals, which would not only weaken the State, but destroy that equality of the citizens which is necessary to the continuance of our republican form of government.
3. Because this plan will retard the increase of our trade and our population, and lessen the value of our lands. We all know that burdens on trade lessen it; heavy taxes on the country will discourage people from coming to settle on our lands, and, of course, the increase of our population will be retarded, which will reduce the number of purchasers of lands, and, of course, lessen their value.
Our neighbours, especially New-York, have a vast extent of unsettled lands; they court settlers with this powerful motive, that they have means to pay their debts without any burdensome recourse to taxes on their lands, labor, or cattle.
The funding plan in question, I am told, will require about 300,000 dollars per ann. to defray the interest only; besides which, we have sundry immense demands against the State. The principal debt, the funding of which is now under consideration, is about 5,000,000 of dollars, near half of which I take to be designed for clear profit to the speculators; to be due to them, or from us, it cannot be said, for they never paid us any thing for it; it must then be excessive generosity to them.
It may do for people to be generous, when their incomes are affluent, and cash, plenty; but when they are oppressed with debt to such an amount as to bring their credit, and even their capital, into danger, in this critical circumstance, the strictest economy, yea, even close parsimony, become very important duties. But in such a crisis of distress and danger, to assume an immense, needless, additional debt, even if a due consideration was paid for it, would be extreme ill policy; but to do it without any consideration at all, would be the height of absurdity and madness.
At all times we ought to be just, before we are generous. But at such a crisis, a lavishment that will put it out of our power to be just, must be reprobated as downright wickedness. And as the criminality of all crimes is estimated by the damage they do, that conduct in a ruler, which destroys the credit of a State, and even puts it out of the power of it to be just, and of course destroys the rights of thousands of its most meritorious citizens, ought to be branded, as the most censurable of any crime which can affect human property, character, and honor.
4. This plan is impolitic, because it will convey the money collected from the people to a great distance from the places where it was collected, and of course the people who paid it, will have little or no benefit from its future circulation. If the same monies were to be paid (as they ought to be) to the real creditors, i. e. the soldiers and others, who furnished monies, supplies, &c. who are scattered over the whole State, and are to be found in every part of it; I say, if the monies collected from the people were to be paid to those, it would be diffused over the whole State, and every person who paid the tax to raise these monies, would have a chance of taking benefit of its circulation.
But the cafe will be widely different, when it shall be paid to the speculators; most of them live in the city, and the few who reside in the country, when they come to receive their immense fortunes, will immediately come to the city, with all their money; the country will be no proper place to parade in; they will find nobody there fit to rank with; and that is not all; but when they clatter along in their carriages, they may chance to hear somebody say, “there goes a speculator or stock-jobber, who revels in the spoils of his country.”
In short, this will not do at all; they must move into the city, where they can find people of their own class to associate with.
And this is not the worst of it; the speculators, I suppose, must nominally belong to this State, but doubt not but they are in company, and share profits with many who live out of it, and consequently convey their wealth out of the State.
And this is not the worst of it, but I conceive that many of them, tho’ they reside in this State, are not natives of it; the domus animæ, domus optima, i. e. home is home, tho’ never so homely, is a strong affection in most men; and on the inducements of it, foreigners, when they travel abroad and acquire fortunes, have an inclination to return to their native country, to spend and enjoy them; and I think our speculators of foreign birth will have a motive additional to this natural one, to set off to their native country, viz. the powerful one of getting out of hearing of the curses of the people among whom they live.
It is here to be noted in a manner which I think deserves great attention, that however dirty, ragged, poor, and despicable an injured people may appear, they always have one species of revenge left to them, which they rarely fail to make the most of, viz. the power and privilege of cursing their oppressors; they curse them in the streets, they propagate their curses by their fire-sides to their children, who are not commonly apt to have much defect of memory, and they mix their execrations with their prayers to Heaven.
It is said that the curse causeless will not come; but I believe few States or individuals have reason to make themselves very easy under those curses which are not causeless. There is most certainly a Providence which governs the world, which pays the utmost attention to right and wrong, without the least respect imaginable to the lace or rags of the suitors.
Many more arguments might be adduced, but I deem the above fully sufficient, to prove that the plan in question is in its nature immoral and dishonest; and, in a political view, extremely injurious to the State, and I might almost add, fatally ruinous; and therefore is demonstrated to be an extreme case, not at all within the reasons of, and of course not justifiable by, the common law or rule of assignments, which, by long use, has been found to be both morally and politically good and useful.
The Committee of Public Creditors, in their last petition to the Assembly, have introduced one proposition, which pleases me very much, viz. “Nothing that is morallyweongcan ever be politicallyright.” I could wish this was written in letters of gold in the frontispiece of all our chambers of public council; and, what is more, might be engraved on the hearts of all our public men, as a practical principle too sacred to yield to any views of interest, however gaudily dressed, or finely colored: and, by way of giving it my little mite of improvement and support, I beg leave to add, that nothing which is both morally and politically wrong, can ever be right in any sense whatsoever.
I have one argument against satisfying the demands of the speculators, which I have not marked under either moral or political arguments, because it appears to me strongly to partake of both, and therefore ought to be mentioned by itself. It is this, viz. it gives public sanction, support, and even a kind of dignity, to a sort of speculation, which, if not wicked in itself, is of a nature very ruinous to the public, as it affords enormous profits without any earnings, viz. eight-fold the principal, and 48 per cent. interest, which (were they to be freed from disgrace and danger, and to be made reputable and safe by the sanction and support of the Legislature) would be enough to induce bad men of all professions to withdraw their stock in business, from their usual occupations, and vest it in such speculations of high profit and honor.
In my opinion, nothing scarcely can be worse than public laws or institutions, which tend to draw people from the honest and painful method of earning fortunes, and to encourage them to pursue chimerical ways and means of obtaining wealth by sleight of hand, without any earnings at all.
But were these speculators to gamble on each other’s purses only, I should think less of it; but it becomes publicly ruinous, when the public are to pay the losings.
The fatal experience of Europe might, methinks, be a warning to us. Ever since the blessed scheme of funding was first invented there, every nation has had a race of stockjobbers and speculators in the public securities, who never fail to appear in plenty whenever a State gets into distress, and the public faith faulters a little: they appear, to be sure, with a mighty pretty grace, in aid of the publiccredit, not indeed to keep it sound and whole, but to evince that it is not quite dead; and for a practical proof of this, they will offer to give at least something for it.
In the last days of Lewis XIV. (that noted æra of distress in France) this sort of people had the modesty to accept public securities of 32,000,000, for the loan of 8,000,000, which is 4 for 1. But our speculators go far beyond this; they give 2s. 6d. in the pound, which is 8 for 1. But it is no wonder that our speculators should exceed those of the most ingenious nation in Europe, since the American genius sets up to outdo all the world in every thing.
A crisis of public distress is the proper time for this kind of vermin to swarm, like flies about a sore, or crows round a carcass, not with any design to heal the sore, or restore life, but to feed themselves. This I admit to be a principle natural enough; but however excusable it may be in itself for these, like all other noxious animals, to pursue the means of their own preservation, yet I cannot think they are entitled to the gratitude, or support, or rewards, of the public.
I beg the reader to note here very particularly, that I do not mean by any thing I write, to oppose any practicable and wise plan of funding or paying the real public debts; all I object to is, funding or paying the profits of the speculators.
But however our public counsels may settle this question, and whatever is to be done with our public monies, when we get them, I here beg my readers’ attention a little, to the ways and means of raising them.
1. In the first place, I do object as strongly as I am able, to laying any considerable tax on polls and estates. This is taxing the labor, cattle, and lands of our people, which are the embryo, the first principles, the very feed, the raw materials of our wealth; and of course ought to be most carefully and tenderly nursed, cultivated, and encouraged; but by no means to be burdened and discouraged.
We have imported luxuries enough, which are hurtful to the public; the necessary restraints of which require a tax sufficiently large for the public use. It would be better for our people to pay a tax of a dollar per gallon on rum and wines, 50 per cent. on silks, &c. &c. than to suffer their labor and lands to be taxed. But if this, with our usual taxes on trade, &c. is not sufficient, I would rather tax our exported goods than our labor and lands; because I think it manifestly better to tax our finished goods, than our raw materials.
Besides, our past experience has sufficiently taught us, that the collection of any considerable tax on polls and estates is impracticable; the vast arrears of most of our counties are a full proof of this; and to make our treasury depend on revenues of uncertain product, is a sure way to subject our finance to constant disappointment, and of course to keep our public credit in a perpetual state of depression, and scandalous, as well as ruinous, deficiency. But I will not dwell longer here on this subject, having treated it more largely in my Sixth Essay on Free Trade and Finance, to which I refer the reader, if he desires to hear any more about it. [See p. 230.]
2. I object most seriously to issuing paper money, in our present circumstances, for the following reasons;
1. We have already a full sufficiency of circulating cash. The labor of our people, and all the great staple commodities of our country, produced by it, will and do bring not only immediate cash, but a high price; and it is not possible that money should be too scarce in any country, where the labor and produce of it have quick sale, good price, and command immediate cash; whilst this is the case, every natural and necessary end and use of cash is fully answered and satisfied; and, of course, if any body in such case wants money, the want must arise, not from any scarcity of cash, but from a want of something that will purchase it, i. e. from poverty; which the introduction of an additional quantity of circulating cash will by no means remove, but must increase, because it will directly tend to lessen industry, and introduce luxury.
It is no objection to this, that European and West-India goods will not bring ready cash; it is well known that the market is greatly glutted with those articles; and when a market is overstocked with any articles, they will not bring quick sale and ready cash, let money be ever so plenty.
2. Our cash for a year past has been not only fully sufficient for the purposes of our trade, but has been in a very settled, steady state, with very little fluctuation or variation in its value. This appears from the settled prices which our staple commodities have born thro’ the last year. The same thing appears from the negotiations of the Bank; from which it is manifest, that the state and quantity of hard cash is nearly the same with us now as it was a year ago; this proves that the quantity of circulating cash is sufficient; for were it not so, it would undulate and vary; for cash, like water, will always flow from the higher to the lower surface, and will never become fixed and steady till the true equilibrium is obtained.
3. It is admitted by every body, that cash was plenty enough before the war; but it is plain we have now much more of it than we had then; because the price of labor and the produce of the country are much higher now than they were then. On an average, about 40 or 50 per cent. more can now be obtained for labor and country produce, than their current price was in 1774.
It is no objection to this, that it is more difficult to borrow money on interest now than it was then; it is a want of public and private faith, and distrust of all security, and not a scarcity of cash, which makes the difficulty. Besides this, another cause may be assigned, viz. our monied men who used to dispose of their money in that way, have, at least many of them, lost their money, loaned on either public or private securities, by the defect of those securities, and of course the lenders of money are in this way reduced to a fewer number, whilst at the same time, the same cause adds to the number of those who have occasion to borrow; each of which naturally increases the difficulty of borrowing.
Striking paper money will lessen none of these difficulties, but will increase them all; as it is evident that it will much lessen all confidence in any securities of long continuance, and, in every view, diminish the number of lenders of money.
4. Making large and sudden additions (of either paper or hard money) to our circulating cash, will not increase our wealth; its effect will be an increase of the price of all articles of traffic, i. e. it will destroy the steady value of our money, by lessening its worth in an inverse ratio of the increase of its quantity, and so, without any benefit, will introduce the ruinous mischiefs of a fluctuating currency, from which, good Lord, deliver us!
5. I do not apprehend that we have the least chance of supporting the credit of paper money, if it should be issued; and to expose our public credit to further disgrace and insult, and to waste the public wealth in further stupid, absurd, and iniquitous appreciations of depreciated paper, appears to me the height of political frenzy. The pressure of a vast public debt, the low state of the public credit, the universal diffidence in that sort of money which prevails among the people of all ranks, and the dreadful apprehensions of its consequences, which are expressed by the Bank, and by all our merchants (who are certainly the best judges of the matter) I say, all these put together appear to me to destroy every degree of probability of supporting the credit of any additional paper currency.
And I cannot suppose any body distracted enough to think it proper to issue it, if every idea of the probability of supporting its credit must be given up. But I am apt to conjecture, that if our speculators fail in their scheme of getting their immense profits funded, the demand for that money will be greatly lessened, and so, perhaps, the zeal for striking paper may cool away, and, of course, any further arguments against it, may not be necessary. But if nothing can hinder the attempt, I am of opinion it must die in the birth.—For,
6. I do not believe it possible to usher paper money into general currency, either with or without a tender-act. Making it a tender is indeed too shocking to be admitted by any sober man that I have heard of; and without it, it must, I think, have the same effect, and share the same fate, as the other paper which has recently gone before it.
But after all, if it should gain a general currency, and a credit but little inferior to hard money, the effect, I think, must plainly and evidently be, that it will soon drive all the hard money out of the country, or at least out of circulation, as it will certainly be either hoarded or purchased up for exportation; and then we shall have nothing before us, but to increase the quantity of our paper, and supply the deficiency of its value by additions to its quantity, and make the most of it, Continental like, as long as we can make it pass at all.
7. With respect to the plan of opening a Loan-Office, and striking a sum of paper money to put into it, to be loaned out on private security to such persons as may want to borrow, I have to observe,
1. That all the objections which lie against striking paper money at all, lie with equal weight against striking any for this particular purpose.
2. This will bring the borrowers into difficulty, instead of helping them; for if they give a good security for the money, and find, when they have got it, that it is not equal to good money, but must be passed at a discount or depreciated value, their purposes will not be answered, nor their necessities be relieved by it. And,
3. This inconvenience will fall heaviest on the most distressed part of the community, for no others will give good security for bad money. And,
4. If the money should, by any strange turn, prove equal to hard money, the sum proposed, viz. 50,000l. is by no means equal to this demand, and, of course, will be immediately snapped up by favorites, or such who happen to stand nearest, and of course it will by no means operate by way of public benefit, or general relief of the distress of our people, but will be engrossed by a few sharp-sighted folks, with, perhaps, not the best title to public favors, or most likely to make the best use of them. I think that any scheme of this sort had better be put off, till we are in a condition tomake it operate in a way of effectual, impartial, and general utility.
Upon the whole matter, the great principle I go upon with respect to public securities, is this, viz. that all bills issued on the public credit, of every sort, under whatever denomination they may appear, whether of certificates, paper money, annuities, &c. &c. take their value, not from the sums specified in the face of them, but from the price or exchange at which they generally pass in market, and, of course, when they are redeemed by the public, it ought to be either at their original value, or at that price or exchange at which they generally pass at the time of redemption,excepting onlysuch securities as are in the hands of the original holder, and have never been alienated. Such securities are evidences of full consideration paid, and, of course, of a full debt due to such holder: but securities in the hands of a purchaser cannot be such evidence.
When public securities gain a currency, or become objects of traffic, and depreciate in the hands of the possessor, he doubtless sustains loss, and is really injured; and when the depreciation is great, say 8 for 1, or 200 for 1 (both which we have seen) the mischief becomes very heavy, and in its nature lies in the loss which the possessor of the securities sustained, by their depreciation whilst they were in his hands:
Hence it appears clearly enough where the mischief lies, and, of course, it is easy to see what must be the nature of the remedy it requires, viz. such a remedy as will make up the losses which every one has sustained by the depreciation of the public securities whilst in their hands. This is manifestly impracticable, and perhaps the utmost power of human invention cannot hit on any plan which will do this; what then ought the public to do? I answer, the same which any private man must do, who knows that he has had a valuable consideration for money, and honestly owes it, but knows not to whom it is due, or cannot find his creditor.
From this view of the matter it appears very plain, that appreciating the securities, and redeeming them at full value, gives not the least remedy to the sufferers by the depreciation, but is an additional injury to them; because the securities, at the time of redemption, will not be in the same hands in which they depreciated, and, of course, the sufferers will find themselves taxed to make up the money, which they lost by the depreciation, that it may be paid to the present holders of the securities, who never lost any thing. But if any one wishes to see this subject further discussed, I refer him to my Fifth Essay on Free Trade and Finance, where this matter is fully considered, with respect to Continental money. [See p. 97.]
I will conclude here by observing, that not one argument can be adduced for redeeming the public securities at full value, which will not apply to the Continental and old State money, and prove that both ought to be redeemed at full nominal value.
I take it that the public accounts are nearly all adjusted, and the public creditors have received certificates or public securities for their respective balances. But as those securities are mostly Continental, it will lie with Congress, and not with any particular State, to prescribe the time, mode, and value of their redemption.
In the mean time, I think we may do much for the present relief of our own distressed citizens, who suffer greatly by the delays of Continental payment; and I esteem the attempts of our Assembly very laudable in their principle. What I complain of is an error in the application. It is certainly very good in them to strain every nerve to raise money for the relief of our widows, orphans, soldiers, and other worthy and distressed public creditors; but I think it a mistake to plan the matter so, that when the money is raised, it shall not be applied to the relief of those worthy, distressed citizens, but shall go, at least a very considerable part of it, to a parcel of speculators, who neither ever earned it, nor are in any distress for want of it; for they are generally rich, and can command plenty of cash.
With the good leave of the public, I will sum up the matter, and humbly offer some propositions, which appear to me worthy of consideration.
I. I propose to set about raising all the money we can, not by a tax on polls and estates, which will be very burdensometo our people, hurtful to the capital interest of the State, and of very uncertain product; but by continuing our present duties on trade, with such further additional duties on luxuries,as will be necessary to restrain the excessive use of them: and this, I conceive, will require duties so high, as will be sufficient for the exigencies of the State, and will be of certain product.
II. I propose to pay all the interest which is now due to the inhabitants of this State, on all such public securities as are in the hands of the original holders, and have not been alienated (to be ascertained by affidavit or any other sufficient proof) and also to stop payment of all interest on any certificates which are not in the hands of the original holders; for I do not know that among citizens of equal merit, we can with justice make fish of one, and flesh of another.
III. I propose that commissioners be appointed to purchase up such public securities as were originally given to the citizens of this State, but have been alienated by the original holders, and are now in currency as objects of traffic or exchange; to purchase such securities, I say, at the current exchange, or as low as they can be bought. It is certainly as right for the State to buy up these securities, which are become a common object of traffic, as it is for any individual. Two great advantages will result from this:
1. The present holders will have the value of them paid in money: and,
2. The State will have them to produce to Congress, whenever our quota shall be demanded for the redemption of them; for the securities themselves will doubtless be accepted as good payment of our quota, both of principal and interest; and it will then be indifferent to us at what exchange, or in what manner or time, Congress may direct their redemption.
IV. I propose that all those original holders of public securities, who have alienated them, shall be debited on the public books, with the certificates they received, at the value (and no more) at which they could be sold at the time they received them, or the time of their date, and that the residue of their balance may be paid, together with the principal of the certificates,which are now in the hands of the original holders, and have not been alienated. I say, that both these be paid as soon as money sufficient can be raised by the State.
It will require, I know, a heavy sum of money to do this, but we shall have this satisfaction to animate our exertions, that we are doing an act of justice in favor of those to whom the money is justly due, and shall have the advantage of paying it to people who are scattered thro’ the State, and will immediately circulate the money among our citizens, in every part of the State, which, if the justice was equal, will be much preferable to paying the same money to people who would carry it all away to distant parts, from whence it would have little chance of returning into circulation, to the places where it was collected.
V. As the pressures of the State are very heavy, I think we ought to make all the savings we can; I therefore propose to lessen the House of Assembly, by taking away two-thirds of the members, and limiting the sessions of the Council to the Assembly’s sessions, unless the President should, on emergent occasions, summon them. I think one-third of our Assembly would do the business much better than all of them; and the President, with a good Secretary, would be sufficient for the common and usual business of the Council. I know of no advantage arising from over-numerous Legislatures, or Councils that sit too long. The extremes of democratical government tend to anarchy, or despotism, or ruin.
An idle, useless, or corrupt member is less noticed and easier lost in the crowd, in a large Assembly, than in a small one. Virtue and merit are, for the same reason, less conspicuous in a large than small Assembly; cabals, party-schemes, and interested plans, are easier formed in a large than in a small house, and the guilt or folly of an individual is more easily sheltered or concealed in great than in small numbers.
For when Assemblies are large, the business is most commonly done by a few, under the umbrage of the whole; the major part are not commonly in the secret. The American Congress rarely consists of more than thirty members present, yet no complaint has been made that their number is too small. The British House of Commons consists of more than five hundred members, not very famous for gravity, wisdom, or order. Their proceedings are commonly directed by the Premier, and a few leading members; yet if you ask Lord North, why he pushed the American war, he will tell you with great composure, that it was not his war, but the war of the Parliament.
When more people are employed about any business than are necessary to do it, the consequence has ever been found to be, that the business is not done so well, is clogged with more delays, is less consistent in its several parts, and not so well methodized. The people who are interested in the business, and have occasion to attend upon it, are not so well-served, and a greater expense is incurred, than would happen, if people just enough for the business, and no more, had been employed.
This, one would think, was grounded on natural fitness; for we find it holds true in all human affairs, from a house too full of servants, a field with too many reapers, a town-meeting of too many people, a kitchen with too many cooks, a committee of too many members, a church with too many deacons or too large a vestry, a court with too many judges, and so on, up to an assembly of the first dignity, with too many representatives.
Now to admit any principle or circumstance into our gravest and most important councils, which has ever been found hurtful in all cases where it has been adopted, is highly imprudent and dangerous, and tends to ruin. The fatal experience of many great nations proves this in a manner very forcible and convincing.
Rome and Greece lost their liberties by over-numerous Senates, &c. and Poland is now in desolation from the same cause; their Pospolite, which was instituted for the great defence of their nation, and their liberum veto, which they hugged with enthusiasm, as the standard of their liberty, together with their over-numerous Diets, have completely ruined them. But whether these observations are proper or not, we shall, by this proposition, at least save a vast expense, at a time when the utmost economy is necessary.
VI. At all times, but especially in times of public pressure, the peace and quiet of the State should be consulted, and the general confidence of the people in the government should be as far as possible secured, in order to its firm establishment, and the great principles of our civil policy should be strictly regarded. I therefore humbly propose the repeal of the test-act; for we can no how expect the internal peace and quiet of our people, and their confidence in our government, so long as we exclude one-third our citizens from any share in it.
Nor can we any how call our civil policy a government of the people, or reap the advantage of such a government, as long as so large a proportion of our citizens (if reckoned by numbers, influence, wisdom, or estate) are shut out and disfranchised. We need the counsels as well as the wealth of all our people, and our constitution gives equal right, as well as prescribes equal duty, to them all.
That the major must rule the minor, is undoubtedly a maxim essential to a democratical or republican government; but it is equally manifest, that the extremes of this maxim will destroy the very nature, as well as uses, of such governments. For if two-thirds can disfranchise the minor third, a majority of the remaining two-thirds may disfranchise the minority of them, and so on toties quoties, till there will be but two left undisfranchised, to govern the whole; which, I suppose, every body will allow to be somewhat worse than to have but one sovereign despot; for the two might quarrel, and each form his party, and so the State might be involved in a civil war, which could not happen, if there was but one despot, and nobody else left capable of forming a party.
It is doubtless necessary to adopt good maxims of government, but it is equally necessary to exercise some prudence and discretion in the use of them; for we may be ruined by the extremes of those very maxims, which, in their mean, are very salutary and useful.
It has been suggested by some ill-minded people (but for the honor of Pennsylvania, I must think, without the least reason) that some Members of our General Assembly are deeply interested in stock-jobbing and speculations in certificates, and are possessed of, or concerned in, public securities to a large amount, which they are not the original holders of, but obtained by purchase at 6 or 8 for 1, and are now using all their endeavours, power, and influence, in the Assembly, under the sanction of their sacred public character, to procure a vote of the Assembly, for sunding their certificates, and, of course, to vote the money of their constituents by thousands into their own pockets.
I think it necessary that the honorable Assembly should take proper measures to vindicate themselves from such scandalous aspersions; and if there are any such members, to take the necessary care that one scabby sheep shall not spoil the whole flock. There can certainly be no more reason or fitness, that a Member of Assembly, under the sacred fanction of his public character, should vote the money of the State into his own pocket, than that a judge or juryman should fit in judgment in a cause, in the event of which he is personally interested.
We are told by some folks of delicate feelings, that “the public credit or honor is like the chastity of a woman;” and we all know that the wife of Cæsar ought not to be suspected; it will therefore follow, by consent of every body, that every cause of suspicion of the integrity and disinterestedness of our honorable Assembly should be removed as far as possible; and this is the more necessary, as our Assembly is a single Legislature, whose acts are not subject to a revision, or require the concurrence of another house; and of course, if they err, the subject is without remedy.
On these considerations there can be no doubt but our Assembly, and every body else, will be thoroughly penetrated with the necessity of having every member of that august body most effectually acquitted from all suspicion of interestedness, when they come to decide a question, which demands 3 or 4,000,000 of dollars from the State.
I therefore propose, with all modesty, that when the great question shall be put finally in that supreme house, ‘Whether the public securities shall be funded,’ that there shall be some sort of voyer dire oath or test imposed on every member, to this purpose, viz. that he is not directly or indirectly possessed, interested, or concerned, otherwise than as an original holder, in any public securities, proposed to be funded, by the vote of Assembly now depending.
The principle of this proposition will doubtless be admitted by every body; and I conceive the Assembly will have no objection to the mode, as they are in their sentiments very favorable to test-acts. This method, I conceive, would set the character of the Assembly in the most unexceptionable point of light, and would give great dignity and weight to their decisions; and tho’ they might happen by this method to lose a vote or two, yet there is no doubt but they would have upright souls enough left, to make an ample majority in favor of any vote, which the real interest or honor of the State might make necessary.
It has ever been my fortune to write in the muns of popular prejudices; and in justice to my subject, and to my own judgment, I have often been obliged to mix some kind of censure on public measures, which were adopted by the leaders of the times, when I thought they were founded on principles of mistake and error, and tended to the ruin of the cause they were designed to support, and would, in their nature, operate in a manner very hurtful to my country. I accordingly met with little thanks; my rewards were such as any body may expect, who opposes the current tide of popular opinion, and the favorite plans of warm, zealous men.
I have sometimes met with that warmth and malignancy of censure, which can hardly be supposed to arise from an opposition to error of mere judgment, without some degree of corruption of heart. Yet time has evinced my most censured propositions to be necessary, and they have been adopted by our gravest and most dignified councils, and are now become very orthodox, and are justified by the sanction of general opinion. I therefore think I have some right to claim the attention of my fellow-citizens, at least I flatter myself I am intitled to their candor, while they read my propositions.
Nothing but my opinion of the vast importance of the subject of this Essay, could have induced me to write it. I had long determined to write no more on political matters; but when I came to see the State in danger of having some millions of the public money (in this our pressure of public debt) diverted from the objects who have every claim of justice to it, and lavished on people who never earned it;* and also to see a deluge of paper money rolling in upon the State, when I had not the least reason to suppose either that our public credit, in its present state of pressure and weakness, could support it, or that the quantity of our circulating cash (which is demonstrably quite sufficient) could bear such vast and sudden additions, without the most ruinous consequences. I say, when I viewed those matters, I really thought it a duty I owed to the State in which I live, to explain my sentiments, and, as far as in me lay, endeavour to avert these mischiefs.
I doubt not but the public will judge favorably of my intentions, and allow my arguments their due weight. The facts alleged are all of public notoriety; the reasonings are open to every man; and I have only to wish, that the reader may peruse this Essay with the same love of justice and truth, and the same zeal for the good, honor, and prosperity of this State, as occupied my whole breast when I wrote it.
[* ] The funding act of Pennsylvania was printed for public consideration some months before it was enacted into a law (March 16, 1785) during which time this Essay was published: the said act directed, among other things,
1. That one year’s interest should be paid by this State on all Continental certificates, which originally issued to any citizen or citizens of this State, &c. with a proviso, that that species of certificates, commonly called final settlements, which should be intitled to interest, should not have been alienated or transferred, but shall remain the property of the original holder, his heirs, &c. (which proviso, in my opinion, ought to have extended to all the other kinds of certificates, as well as to the final settlements:) by this proviso, every possessor of a final settlement, except he was the original holder of it, was excluded from receiving interest.
But I take it, that the true spirit, design, and reason of this proviso was, in a considerable degree, cluded in the subsequent practice; for the statute, among other proofs that the man who claimed interest, was really the original holder, prescribed this one, viz. that such claimant should make oath before a prothonatory, that he was truly the original holder of the certificate, and had not alienated it; and this certificate of the prothonatory of such oath being made, being annexed to the certificate on which interest was demanded, by construction of the statute, entitled the possessor of it to draw interest, tho’ he was not the original holder; by which means very many certificates were sold with such affidavits annexed, and the possessor, tho’ an alience, drew the interest on them as well as if he had been the original holder.
2. A tax was instituted for raising an annual sum of 76,945l. 17s. 6d. and,
3. An emission of 150,000l. in paper money, 50,000l. of which was reserved for a loan-office, and the other 100,000l. together with the aforesaid tax of 76,945l. 17s. 6d. were appropriated to the payment of said year’s interest, and other public purposes. The year’s interest at 6 per cent. paid under this act, amounted to 267,694 dollars, the capital of which, of course, was 4,461,570 dollars, nearly.
This high tax proved a heavy burden upon such of our people as happened to have no certificates on which they could receive interest, and little benefit even to the most of those who had them; for the certificates were monopolized into few hands, and not many of our people drew more interest than would pay their taxes.
And as these heavy sums were mostly paid to such holders of certificates, as had never rendered any services to the State, or contributed any supplies, or had any kind of merit or earnings, on which they could, with any pretence, found their claim to so great a contribution from the public, much uneasiness was generated, and our people found that their labor was vain, in as much as the profits of it were drained from them, for purposes of no use or advantage to them.
For it is to be noted here, that altho’ interest was granted by this act for but one year, yet it was expected to be continued, and really was so, for several years afterwards, by a subsequent act (March 1, 1786) tho’ under a somewhat different form, yet with the same burden as before.
The paper bills emitted by this act never passed as a general currency, but were negotiated in market, like other commodities, at the exchange which they happened to gain, but always in a depreciated state, i. e. at a discount from 10 to 30 per cent.
In fine, this unhappy measure has cost this State already more than 500,000l. and still we are not clear of it.
And, I believe, no man can count up 500d. benefit which the State ever received from it.
I clearly foresaw the mischiess of this satal measure, and to obviate and prevent them was the design of this Essay, and tho’ I did not succeed, yet I have real satisfaction in reilecting that I exerted my utmost abilities, and faithfully porformed my duty in the attempt, tho’ it proved not successful, to avert the calamities of the State of which I am a citizen.
[* ] I am told, that in the public debates on this subject which have since taken place, my plan of paying the original creditors in preference to the speculators, was admitted to be just and desirable, but it was objected to and rejected because it was thought impracticable to make the discrimination; and this supposed impracticability was strongly urged and greatly insisted on: on which I beg leave to observe,
1. That the names of the original creditors are on the public books, with the balances due to them, and are easily found; to which a reference must be made equally on both plans; for if a certificate is offered for payment, which is not entered there, it will be rejected as counterfeit.
2. The proof will lie on the man who demands payment, that he is an original creditor: if he cannot make this appear, he will fail of payment, as all persons must, who bring suits which they cannot support with proof.
3. If there are some, or even many, original creditors who cannot prove their demand, and so must lose it, it does not fellow that such as can prove their claim, should be rejected: this would be a mad conclusion.
4. If the original, rightful creditor cannot be found, he cannot be paid; but it does not follow, that the money due to him must be paid to any body else, who has no claim of either original or derivative right; it is certainly very plain, that, in such case, the money ought not to be paid at all to any body, as must be the case with every private man who owes money, but cannot find his creditor; or with the public, to whom all estates or property escheat, if the owners cannot be found, as in case of treasure-trove, wreck of sea, lands, when the owner dies without will or beirs, &c.
5. The whole objection, tho’ true, when urged against paying the original creditors, and in favor of paying the speculators, is nugatory and trifling; for such original creditors as cannot be found, or cannot prove their demands, are left equally without remedy under both plans; for payment to the speculators makes no more provision for such cases, than payment to the original creditors.
6. If such cases exist (as probably many of them may) no one pretends that they bear any proportion to the vast number (that can be found) of creditors possessed of full proof; and it is very plain, that the defect of proof in the one cannot injure or diminish the right of the other, whose claim is capable of full proof.
Indeed I think that nothing can be plainer than this, viz. that we ought to pay all the real creditors, whose wealth or services we have had the benefit of, and who are possessed of full proof of the debts due to them therefor, but by no means to pay the whole money to speculators, who have certainly no right at all, because some may probably have right which they cannot make appear.
The State of Pennsylvania, in their funding act (1785) made the discrimination I propose, with respect to one species of certificates (final settlements) but I never heard any difficulty was found in the practice or execution of the statute, on that account.
Some people are wild enough to propose to pay the public money to the speculators, for fear the real, original creditors should perjure themselves in proving their accounts. This is too foolish to require an answer: for,
1. If we are to reject oaths in proof of accounts, for fear of perjuries, the rule ought doubtless to be made general and extend to all accounts of all descriptions of persons; for certainly one man has as good a right to take benefit of his own perjuries, as another. But,
2. If such perjuries should happen, it surely cannot follow from thence, that the speculators ought to have all the money paid to them, which is due to the real, original creditors.
In fine, I think it really disgraceful to human nature, to suppose such arguments and such objections require answers, and I have to beg my reader’s pardon for offering them.