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Life And Times Of Washington, Volume 2

Chapter 3 - THE PUBLIC CREDIT ESTABLISHED. 1789-1790.

Word Count: 12388    |    Released on: 06/12/2017

it to New England consumed so much time that he remained in New York till Congress reassembled. His eastern tour commenced on the 15th of October, a

tact with which he accommodated his style to the comprehension of the oriental sovereign. It was written in consequence of an intimation from Mr. Chiappe, the American agent at Mogadore, that the emperor was not well pleased at receiving no acknowledgm

MAGNANIMO

greeably to the constitution, of which I have the honor of herewith enclosing a copy. The time necessarily employed in the arduous task and the derangements occasioned by so great, though peaceable, a revolution, will a

tion of the late government, remained unanswered, has been delivered to me. I have also received the letters which your Imperial Majesty has been so kind as to write, in favor of the U

our territories there are no mines either of gold or silver, and this young nation, just recovering from the waste and desolation of a long war, has not as yet had time to acquire

with which you have caused the treaty with us to be observed, and the just and generous measures taken in the case of Captain

teem myself happy on every occasion of convincing your Majesty of the high sense which, in common with the whole nation, I entertain of the magnanimity, wisdom, and benevolence of your Majesty. In the course of the approaching winter the national Legislature, which is called by

jesty-our great and magnanimous friend-w

of New York, the 1st

o Mr. Savage for his portrait, to be placed in the philosophy chamber of the university. Washington promptly rep

hair of the Vice-President, after congratulating Congress on the accession of the important State of North Carolina to the Union and on the

attention, that of providing for the common defense will merit your particular reg

plan is requisite, and their safety and interest require that they should promote such manufactori

for their mature deliberation, and the indications of a hostile temper given by several tribes of Indians, were consider

f keeping up their intercourse with foreign nations should be provided, and

ion so immediately from the sense of the community as in ours, it is proportionally essential. To the security of a free constitution it contributes in various ways, by convincing those who are entrusted with the public administration that every valuable end of government is best answered by the enlightened confidence of the people, and by teaching the people themselves to know and to value their own rights; to discern and provide against

learning already established by the institution of a national university or by any oth

of high importance to the national honor and prosperity. In this sentiment I entirely concur, and to a perfect confidence in your best endeavors to devise such a provision as will be truly consistent with the end, I add an equal reliance on the cheerful cooperation of the

d concluded with saying: "The welfare of our country is the great object to which our cares and efforts ought to be directed, and I shall derive great satisfaction from a coopera

e of the harmony which subsisted between

neglect under which the creditors of the public had been permitted to languish could not fail to cast an imputation on the American republic, and had been sincerely lamented by the wisest among those who administered the former government. The power to comply substantially with the engagem

t of September (1789), he had prepared a plan for the support of public credit, which he was ready to report when the House should be pleased to receive it, and, after a short debate in which the person

an able and comprehensive argument elucidating and supporting the principles it contained. After displaying, with strength and perspicuity

according to the precise terms of the contract. It was to be regretted that, wit

elf against this discrimination. He deemed it "equally unjust and impolitic, highly injurious even to the original holders of public securities, and ruinous to public credit." To the arguments with which he enforced these opinions, he added the authority of the government of the Union. From the circular a

editors of the Union, the secretary proceeded to examine whether a difference oug

es had arisen from assumptions by them on account of the Union, and it was most equitable that there should be the same measure of retribution for all

nother which was equally meritorious, many arguments were urged in support

h the subject, the secretary proposed that a loan should be opened to the

to be of

to have two-thirds funded on a yearly interest of six per cent, (the capital redeemable at the pleasure of government by the

ceeding five dollars per annum both on account of principal and interest, and to receive as a compensation fo

any payment exceeding four dollars and two-thirds of a dollar per annum on account both of principal and interest, and to

lans, and it was also recommended to open a loan at five per cent, for ten millions of dollars, payable one-half in specie

ne, on principles stated in t

s of the creditors themselves would forbid. It was therefore to be hoped and expected that they would cheerfully concur in such modifications of their claims, on fair and equitable principles as would facilitate to the government an arrangement substantial, durable, and satisfactory to the community

ght to be attempted without their voluntary consent, and that this consent ought to be voluntary in fact, as well as in name. Consequently, that every proposal of a change ought to be in the shape of an appeal to their reason and to their interest, not to their necessities. To this end, it was

ort for paying to nonsubscribing creditors a dividend of the surplus which should remain in the treasury after paying the interest of the proposed loans; but, as the fu

augmentation of the duties on imported wines, spirits, tea, and coff

re, merits the more attention, because the first regular and systematic opposition to the principles o

ersions on the speculations in the public debt to which the report, it was said, had already giv

a provision for the foreign debt, the House agreed without a dissenting voice. The second, in favor of appropriating permanent funds f

Mr. Scott declared the opinion that the United States were not bound to pay the domestic creditors the sums specified in the certificates of debts in their possession. He supported this opinion by urging, not that the public had received less value than was expressed on the face of the paper which had been issued, but that those to whom it had been

overnment for its discharge according to settlements already made, and acknowledgments already given. The idea that the legislative body could diminish an ascertained debt was reprobated with great force, as being at the same time unjust, impolitic, and

length, the question was taken on Mr. Scott

lic creditors, so as to pay the present holder of assignable paper the highest price it had borne in the market, and give the residue to the person with whom the debt was

kson, Mr. White, Mr. Moore, Mr. Page

Lawrence, Mr. Smith, of South Carolina, Mr. Ames, Mr. Gerry, Mr. Boudinot, Mr. Wadsw

, animated, and interesting. At length the question was

y many. But a reduction from the claims of its present holders for the benefit of those who had sold their rights, was a measure which saved nothing to the public purse, and was therefore recommended only by considerations, the

of the secretary's report which was the succeeding subject of deliberation, affecting political interests and powers which are never to be approached without da

by Congress and partly by the States. When the system of requisitions was adopted, the transactions of the Union were carried on almost entirely through the agency of the States, and, when the measure of compensating the army for the depreciation of their pay became necessary, this burden, under the recommendation of Congress, was assumed by the respective States. Some had funded this debt, and paid the interest upon it. Others had made no provision for the interest; but

d to fund them in common with that which c

ended this principle of the

rmer, but it would absorb all the powers of taxation, and leave to the latter only the shadow of a government. This would probably terminate in rendering the State governments useless, and would destroy the system so recently established.

assume the debts of the States was questioned. Its powers,

merely the government of the Union, was co

se the impost would be dangerous, and the excise added to it would not produce funds adequate to the object. A tax on real estate must be resorted to, objections to which had been made in every part of the Union. It would be more advisable to leave this source

e that they were seriously opposed to the measure. Many of them would certainly view it with a jealous-a jaundiced eye. The convention of North Carolina which adopted the constitution had proposed, as an amendment to it, to de

heir debts, and the process might certainly be carried on more rapidly by them than by the Union. A public debt seemed to be considered by some as a public blessing, but to t

ebt must inevitably depreciate its value, since it was the character of paper, whatever deno

tisfaction excited by the payment of taxes would be increased by perceiving that the money raised from the people flowed into the hands of a few individuals. Still greater mischief was to be apprehen

reditors with the debts of those which had not made the same exertions. It would delay the settlement of accounts between the indi

presented a difficulty for which no provision was made, and of which no solution had been given. Should the creditors in some States come into the system, and those in others refuse to change their security, th

the conduct of particular States, and the opinions advance

rt, but of the whole, for which they had contended, and which they had acquired. The cause was a common cause. As brethren, the American people had consented to hazard property and life in its defense. All the sums expended in the attainment of this great object, whatever might be the authority under which they

ed by individual States were to be considered merely as State creditors, as if the debt had been contracted on account of

s origin, a great part of it, even in form, and the whole, in fact, was equitably due from the continent. The States individually possessing all the resources of the nation, became responsible to certain descriptions of the public creditors. But they were the agents of the continent in contracting the debt, and its distribution among them for payment arose from the division of political power which existed under the old confederation. A new arrangement of the system had taken place, and a power over the resources of the nation was conferred on the general government. With the funds the debt also ought to be assumed.

harge themselves with the payment of a debt contracted in the past war, than to borrow money for the prosecution of a future war. The impolicy of leaving the public creditors to receive payment from different sources was also strongly pressed, and the jealousy w

t make such provision, it would be unjust to leave the soldier of one State unpaid, while the services of the man who fought by his side were amply compensated, and, after having assumed the funds, it would dishonor the general government to permit a creditor, for services rendered or

t they did not entertain and never had entertained any wish to procrastinate a settlement. On the contrary it was greatly desired by them. They had t

more apparent. That the burdens in support of a common war, which from various causes had devolved unequally on the States, ought to be apportioned among them, was a truth too clear to be controverted, and this, if the settlement should never be a

It was desirable immediately to quiet the minds of the public creditors by assuring them that justice would be done, to simplify the forms of public debt

his constituents, the influence of the State Legislatures over the members of one branch of the national Legislature, the nature of the powers exercise by the State governments, which perpetually presented them to the people in

f future wars should be borne in the same manner. Either the argument was unfounded or the constitution was wrong, and the powers of the sword and the purse ought not to have been conferred on the government of the Union. Whatever speculative opinions might be entertained on this point, they were to administer the government according to the principles of the constitution as it was framed. But, it was added, if so much power foll

umed that the general government would be less willing than the local governments to discharge

was, whether it was more for the public advantage to give it such a form as would render it applicable to the purposes of a circulating medium, or to leave it a mere subject of speculation, incapable of being employe

public credit could not be pernicious; in its present precarious

t, but by funding the debt the present possessors would be enabled to part with it at its nominal value, instead of selling it at its present current rate. If it should

ch had not made such exertions, it was answered that every State must be considered as having exerted itself to the utmost of its resources, and that i

ere repelled and retorted, and a great deg

s decision, while the subject was pending before the House, the delegates from North Carolina took their seats, and changed the strength of

each State. Under this modification of the principle, the extraordinary contributions of particular States during the war, and their exertions since the peace, might be regarded, and the objections to the measure, drawn from the uncertainty o

have derived aid from another, which was of a natur

some place for a permanent residence, in which the government of the Union might exercise sufficient authority to protect itself from violence and i

r to the east, so many conflicting interests were brought into operation whenever the subject was touched, that no motion designating a more central place could succeed. At length, a compact respecting the temporary and permanent seat of government was entered into between the friends of Philadelphia and the Potomac, stipulating that Congress should adjourn to and hold its sessions in Philadelphia for ten years, during which time buildings for the accommodation of the government should be erected at some place on the Potomac, to which the government should remove at the expiration of the term. This compact having united the representatives of Pennsylvania and Delaware with the friends of the Potomac, in favor both of the temporary and permanent residence which had been agreed on between them, a majority was produced in favor

esenting districts on the Potomac, who, in all the previous stages of the business, had voted a

e opinions had been maintained, would not yield, contentedly, to the decision of a bare majority. This measure has constituted one of the great grounds of accusation against the first administration of the g

e proceeds of the sales of the lands lying in the western territory and, by a subsequent act of the same session, the surplus product of the revenue, after satisfying the appropriations wh

this adventitious collection of wealth in particular hands was a subject rather of chagrin than of pleasure, and the reputation which the success of his plans gave to the Secretary of the Treasury was not contemplated with unconcern. As if the debt had been created by the existing government, not by a war which gave liberty and independence to the United States, its being funded was ascribed by many, not to a sense of justice and to

losses sustained by the war, and the influence of the constitution on habits of thinking and acting, though silent, was considerable. In depriving the States of the power to impair the obligation of contracts or to make anything but gold and silver a tender in payment of debts, t

much warmth on both sides, and toward the close of March it was resolved, "That Congress have no authority to interfere in the emancipation of slaves, or in the treatment of them within any of the States." Laws for the naturalization of aliens, after two years' residence, for the patenting of useful inventions, and for securing to authors the copyright of their works; and others, regulating the mercantile marine of the Union, in respect to the seamen engaged in it; and forming a groundwork for a criminal code; for the ordering of what was called "the military e

elegant and convenient accommodations furnished the Congress of the United States," adjou

y badge of mourning for one month, "as a mark of veneration due to the memory of a citizen, whose native genius was not more an ornament to human nature than his various exertions of it have been precious to science, to freedom, and to his country." In the National Assembly of France, Mirabeau eloquently dilated in praise of the illu

a, to a certain district of western territory, and on the 20th of May, provision was made for i

to the ill results which must certainly follow her exclusion from the Union, adopted the constitutio

people of Kentucky and of the western counties of the middle States could only be relieved from the horrors of savage warfare by an exertion of the military strength of the Union. In the opinion of the President, the emergency required the immediate employment of a force competent to the object and which should carry terror and destruction int

herself greater, and, consequently, it is the most unfavorable moment to obtain advantageous terms from her in any bargain." He conducted his mission with ability and address, but was unable to bring it to a satisfactory conclusion. The communications laid before the American government at the same time by Major Beckwith, an English gentlemen, who had come in an informal manner to learn the dispositions of the American government towards England and Spain, between which a rupture was expected, gave Washington an insight of the object of the delays which had been practiced with Mr. Morris. He was persuaded that a disposition existed in the cabinet of London to retain things in their actual situation until the intentions of the American government should be ascertained with respect to the war supposed to be approaching. If America would make a common cause with Great Britain against Spain, the way would be smoothed to the

ice, been attacked by a severe disease, which reduced him to the brink of the grave. Exercise, and a temporary relief from the cares of office, being essential to the restoration of his health, he determined for the short interval afforded by the recess of the Legislature

r to avoid the manifestations of affection and gratitude that met him everywhere. He strove in vain-he was closely watched and the people would have their way. He wished to slip off unobserved from New York

his family were assembled, evidently much pleased in the belief that all was right, when, immediately under the windows, the band of the artillery struck up Washington's March. 'There,' he exclaimed, 'it's all over, we are found out. Well, well, they m

, as the barge swung round to the tide, Washington rose, uncovered, in the stern, to bid adieu to the masses assembled on the shore; he waved his hat, and, in a voice tremulous from emotion, pronounced-Farewell. It may be supposed that Major Bauman, who commanded the artillery on this interesting occasion, who was first captain of Lamb's regiment, and a favorite officer of the war of the Revolu

aiting to welcome the chief to those well-remembered shores. Escorts of cavalry relieved each other throughout the whole route up to the Pennsylvania line;

ade glad everything around these memorable spots, with the gloomy and desolate remembrances of '76! Then his country's champion, with the wreck of a shattered host, was flying before a victorious and well-appointed foe, while all

g in 1790, and, by their presence, gave a dignified tone and character to all public assemblages; and when you saw a peculiarly fine-looking soldier in those old days, and would ask: 'To what corp

the army. Her many intercessions with the chief for the pardon of offenders-her kindness to the sick and wounded-all ca

the manly beauty of his person, was General Walter Stewart, a son of Erin, and a gallant and distinguished officer of the Pennsylvania line. To Stewart, as to Cadwallader, Washington was most warmly attached; indeed, those officers were among the very choicest of the contributions of Pennsylvania to the army and cause o

light infantry, after some time, having opened a passage for the carriages. At the city tavern the President was received by the authorities of Philadelphia, who welcomed the chief magistrate to their city as to his home for the remainder o

to that home where he ever found rest from his weighty labors, and enjoyed the sweet

ve his mind from the cares of state by lively and familiar conversation, and social and convivial intercourse. On one occasion, some

, was present, and after retiring he wrote down in his diary Washington's own account of that remarkable incident in our history in his own word

hanged, and he appeared to be quite fallen; and, instead of thanking me, or expressing any pleasure at the appointment, never opened his mouth. I desired him to go on to my quarters and get something to refresh himself, and I would meet him there soon. He did so. Upon his arrival there he found Colonel Tilghman, whom he took aside, and, mentioning what I had told him, seemed to express great uneasiness at it-as his leg, he said, would not permit him to be long on horseback, and intimated a great desire to have the command at West Point. When I returned to my quarters Colonel Tilghman informed me of what had passed. I made no reply to it, but his behavior struck me as strange and unaccountable. In the course of that night, however, I received information from New York that General Clinton had altered his plan and was debarking his troops. This information obliged me likewise to alter my disposition and return to my former station, where I could better cover the country. I then determined to comply with Arnold's desire, and accordingly gave him the command of the garrison at West Point. Things remained in this situation about a fortnight, when I wrote to the Count Rochambeau, desiring to meet him at some intermediate place (as we could neither of us be long enough from our respective commands to visit the other), in order to lay the plan for the siege of Yorktown, and proposed Hartford, where I accordingly went and met the count. On my return I met the Chevalier Luzerne toward evening within about fifteen miles of West Point (on his way to join the count at Rhode Island), which I intended to reach that night, but he insisted upon turning back with me to the next public house, where, in politeness to him, I could not but stay all night, determining, however, to get to West Point to breakfast very early. I sent off my baggage, and desired Colonel Hamilton to go forward and inform General Arnold that I would breakfast with him. Soon after he arrived at Arnold's quarters a letter was delivered to Arnold which threw him into the greatest confusion. He told Colonel Hamilton that something required his immediate attendance at the garrison, which was on the opposite side of the river to his quarters, and immediately ordered a horse to take him to the river, and the barge, which he kept to cross, to be ready, and desired Major Franks, his aide, to inform me when I should arrive that he was gone over the river and would return immediately. When I got to his quarters and did not find him there I desired Major Franks to order me some breakfast, and, as I intended to visit the fortifications, I would see General Arnold there. After I had breakfasted I went over the river, and, inquiring for Arnold, the commanding officer told me that he had not been there. I likewise inquired at

s treason. It is also interesting to the general reader, as affording a specimen of Washingt

es. It brought up the question of State rights as opposed to centralization for the first time; and on many other accounts is

y withheld their assent from it when originally proposed in the House of Representatives in the opinion that the increase of the national debt added to the necessi

note: M

86, was the date of Messrs.

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