H.EPORT
Of the SECRETARY of the T R E ASU R Y to the
HOUSE of REPRESENTATIVES.
Treasury Department, Jan. g, 1790.
[continuation.]
BUT though many of the original holders fold from neceflity,
it does not follow, that this was the cafe with all of them. It
may well be supposed, that some of them did it either through
want of confidence in an eventual provision, or from the allure
ments ot some profitable (peculation. How shall these different
clafles be discriminated from each other ? How (hall it be ascer
tained, in any cafe, that the money, which the original holder
obtained for his security, was not more beneficial to him, than if
he had held it to the present time, to avail himfelf ot the provision
which lhall be made? How shall it be known, whether it the
purchaser had employed his money in some other way, he would
not be in a better situation, than by having applied it in the pur
chase of fecuritics,though hefliould now receive their full amount ?
And if neither of these things can be known, how lhall it be de
termined whether a discrimination, independent of the breach of
ccntraft, would not do a real injury to purchasers ; and il it in
cluded a compensation to the primitive proprietors, would not
give them an advantage,to which they had no equitable prctenfion.
It may well be imagined, »lfo, that there are not wanting in
stances, in v.' I ,ich individuals, urged by ajrefent neceflity, parted
with the securities received by them from the public, and shortly
after replaced them with others, as an indemnity for their firft
loss. Shall they be deprived of the indemnity which they have
endeavored to secure by so provident an arrangement ?
Questions of this fort, on a close infpeftion, multiply them
selves without end, and demonstrate the iujufticeof adifcrimina
tion, even on the most subtle calculations ot equity) abftra&ed
from the obligation of contract.
The difficulties too of regulating the details of a plan for that
purpose, which would have even the femblanceof equity, would
be found immense. It may well be doubted whether they would
not be insurmountable, and replete with such absurd, as well as
inequitable consequences, as to disgust even the proposers of the
measure. .
As a fpecimrn of its capricious operation, it will be fufficicnt
So notice the effect it would have upon two petfons, who may be
supposed two years ago to have purchased, each, securities at three
lhillings in the pDund, and one of them to retain those boughtby
him, till the discrimination should take place ; the other to have
parted with those boughtby him, within a month pift, at nine
shillings. The former, who had had most confidence in the go
vernment, would in this cafe only receive at the rate of three shil
lings and the interest ; while the latter, who had had less confi
dence would receive for what cos him the fame money at the rate of
nine (hillings, and his representative, Jtanding in his place, would
be entitled to a like rate.
The impolicy of a discrimination results from two confidera
lions ; one, that it proceeds upon a principle deftruftive of that
dunlih of the public debt, or the (lock of the nation, which is
essential to its capacity for answering the purposes of money—that
is thefecurity of transfer ; the other, that as well on this account,
as because it includes a breach of faith, it renders property in the
funds less valuable ; consequently induces lenders to demand a
higher premium for what they lend, and produces every other in
convenience of a bad state of public credit.
It will be perceived at firft fight, that the transferable quality
of stock is essential to its operation as money, and that this de
pends on the idea of complete fccurity to the transferree, and a
firm persuasion, that no diftinftion can in any circumstances be
made between him and the original proprietor.
The precedent of an invasion of this fundamental principle,
would of courfetend to deprive the community of an advantage,
with which no temporary saving could bear the lead comparison.
And it will as readily be perceived, that the fame cause would
Operate a diminution of the value of (lock in the hands of the firft,
as well as every other holder. The price, which any man, who
should incline to purchase, would be willing to give for it, would
be in a compound ratio to the immediate profit it afforded, and
to the chance of the continuance of his profit. If there was sup
posed to be any hazaid of the latter, the risk would be taken into
the calculation, and either there would be no purchase at all, or
it would be at a proportionably less price.
For this dimiuution of the value of stock, every person, who
should be about to lend to the government, would demand a com
pensation ; and would add to the ailual difference, between the
nominal and the market value, an equivalent for the chance of
greater decrease ; which, in a precarious state of public credit, is
always to betaken into the account.
Every compcnfation of this fort, it is evident, would be an
absolute loss to the government.
In the preceding discussion of the impolicy of adifcrimination,
the injurious ten dcncy of it to those, who continue to be the hold
ers of the securities, they received from the government, has
been explained. Nothing need be added, on this head, except
that this is an additional and interesting light, in which the injus
tice of the measure may be seen. It would not only divest pre
(ent proprietors by purchase, of the rights they had acquired un
der the fanftion of public faith, but it would depreciate the pro
perty of the remaining original holders.
It is equally unneceflary to add any thing to what has been al
ready said to demonstrate the fatal influence, which the principle
of discrimination would have on the public credit.
But there is still a point in view in which it will appear per
haps even more exceptionable, than in either of the former. It
would be repugnant to an express provision of the constitution of
the United States. This provision is, that " all debts contrasted
and engagements entered into before the adoption of that Consti
tution shall be as valid against the United Statcsunder it, as under
the Confederation," which amounts to a constitutional ratifica
tion of the contrasts refpe&ing the debt, in the state in which
they existed under the confederation. And resorting to that stand
ard, there can be no doubt, that the rights of assignees and origi
nal holders, must be considered as equal.
In exploding thus fully the principle of discrimination, the
Secretary is happy in reflecting, that he is only the advocate of
what has been already fanftioned by the formal and express au
thority of the government of the Union, in these emphatic terms—
" The remaining class of creditors (fay Congress in their circular
addrefsto the States, ofthe 26thof April,l7B3) is compofcd, partly
of such of our fellow citizens as originally lent to the public the use
of their funds, or partly of those, whose property has been either
advanced or afTumcd for the public fcrvice. To iifcrimmate the
merits of these several descriptions of creditors, would be a talk
equally unnecessary and inviduous. If the voice of humanity
plead more loudly in favor of some than of others, the voice of
policy, no less than of justice, pleads in favorof all. A wise
nation will never permit those who relieve the wants of their
country, or who rely mojl on its faith, itsfrmnefs, and its rcfources,
when either of them is distrusted, to fufferby the event."
The Secretary, concluding that a discrimination, between the
different clafles of creditors of the United States, cannot with
propriety be made, proceeds to examine whether a difference
ou"ht to be permitted to remain between them, and another de
fciiptionof public creditors—Those of the States individually.
The Secretarv, after mature reflection on this point, entertains a
full convifiion, that an alfumption of the debts of the particular
States by the Union, and a like provision for them, as for those
of the Union, will be a measure of found policy and substantial
justice.
It would, in the opinion of the Secretary, contribute, in ane
minent degree, to an orderly, ftabk and fitisia&oiy arrangement
of tie national finances
[—336—]
Admitting,3s ought to be the cafe,that a provision must I be rtad;
in some way or other for the entire debt ;it will foillo ,
greater revenues will be required, whether tha pro
made wholly by the United States, or partly by them, and par
ly by the States separately.
The principal question then must be, whether fnch a provision
cannot be more conveniently and effcftually made by one genera
plan issuing from one authority, than by different plans ortgina
tine in different authorities. .
In the firft place there can be no competition for resources ;
the lad, there must be such a competition. The consequences o
this, without the greatest caution on both fides, might be inter
fering regulations, and thence collision and confufion. ™ tlcula
branches of industry might also be oppressed by it. Ihe mol
productive obiefts of revenue are not numerous. Either then
must be wholly engrossed by one fide, which might leflen the et
ficacy of the provisions by the other : or both must have recourh
to the fame obiefts in different modes, which might occahon ar
accumulation upon them, beyond what they could properl)
bear. If this (hould not happen, the caution requisite to avoidinj
it, would prevent the revenue's deriving the full beneht ot eac
obieft. The danger of interference and of excess wou.d be apt t<
impole restraints very unfriendly to the complete comman o
those resources, which are the most convenient: and to compel th
having recourse to others, less eligible in themselves, and Icls a
greeable to the community.
The difficulty of an effefiual command of the public relouices
in cafe of separate provisions for the debt, may be seen in anothe
and perhaps more striking light. It would naturally happen tla
different States, from local considerations, would in some lnitancc:
have recourse to different objects, in others, to the fame object*, 11
different degrees, for procuring the funds of which they stood n
need. It is easy to conceive how this diversity would afreet tni
aggregate revenue of the country. By the supposition, article
which yielded a full supply in some states, would yield nothing
or an inefficient product, in others. And hence the public re
venue would not derive the full benefit of those articles, ' r ° ,n '' at<
regulations. Neither could the deficiencies be made good by tholi
of the union. It is a provision of the national constitution, tha
" all duties, imposts and excises, (hall be uniform throughout tlv
U.iited States." And as the general government would be undc
a neceflity from motives of policy, of paying regard to the duty
which may have been previously imposed upon any artic.e, thnug!
but in a single state, it would be constrained, either to refiati
wholly from any further imposition, upon such article, where i
had been already rated as hi b h as was proper, or to confine ltfel
to the difference between the existing rate, and what the articli
would reasonably bear. Thus the pre-occupancy oi an article b)
i Tingle state, would tend to arrest or abridge the impositions ol
the union on that article. And as it isfuppoteablc, that a great va
riety of articles might be placed in this situation, by diflimilar ar
rangements of the particular states, it is evident, that the aggregate
revenue of the country would be likely to be very materially con
rafted by the plan of separate provisions.
If all the public creditors receive their dues from one source
liftributed with an equal hand, their interest will be the fame
\nd having the fame intercfts, they -will unite in the support ol
he fifcal arrangements of the government : As these, too, can b(
nade with more convenience, where there is no competition •
These circumstances combined will insure to the revenue laws i
nore ready and more fatisfattory execution.
It on the contrary there arc aiftintt provisions, there will be
lillintt interests, drawing different ways. That union and con
crt of views, among the creditors, which in every government i;
>f great imporr.ance to their security, and to that of public credit,
vill not only not exist, but will be likely to give place to mutual
jealoufs and oppohtion And from this cause, the operation 01
he systems which may be adopted, both by the particular States
nd by the Union, with relation to their relpedlive debts, will be
n danger of being counteracted.
There are several reafont, which render it probable, that the fi
liation of the state creditors would be worle, than that ot the ere
litors of the Union, if there be not a national alTumption of the
It ate debts. Of these it will be fuflicient to mention two ; one,
hat a principal branch of revenue is exclusively veiled in the Uni
m ; the otiier, that a state must always be checked in the impofi
ion of taxes on articles of consumption, froin the want of power
o extend the fame regulation to the other States, and from the ten
lency of partial duties to injure its industry and commerce. Should
lie state creditors stand upon a less < ligiblefooting than the others,
t is unnatural to expett they would lee with pleasure a provifior
or them. The influence which their diflatisfa&ion might have
ould not but operate injuriously, both for the creditors, and the
redit, of the United States.
Hcnce it is even the interest of the creditors of the Union, thai
hose <>l the individual States should be comprehended in a general
>rovifion. Any attempt to secure to the former either exclusive
>r peculiar advantages, would materially hazard their intercfts.
Neither would it be iuft, that one class of the public creditors
hould be more favored than the other. The objects for which
>oth descriptions of the debt were contratted, are in the main the
a me. Indeed a great part of the particular debts ot the States has
risen from aflfumptions by them on account of the Union. And
t is most equitable, that there Ihould be the fame measure of re
ribution for all.
There is an obje£lion, however, to an alTumption of the state
lebts, which deserves particular notice. It may be supposed, that
t would increase the difficulty of an equitable settlement between
hem and the United States.
The principles of that settlement, whenever they shall be dif
:u{fcd, will require all the moderation and wisdom of the govern
nent. In the opinion of the Secretary, that difcuflion, till further
ights are obtained, would be premature.
All therefore which he would now think advifeable on the
>oint in question, would be, that the amount of the debts assumed
nd provided for, Ihould be charged to the refpc&ive states, to
bide an eventual arrangement. This, the United States, as aflign
s to the creditors, would have an indisputable right to do.
But as it might be a fatisfa&ion to the House to have before them
ume plan for the liquidation of accounts between the union and
ts members, which, including the alTumption of the state debts,
vould consist with equity : The Secretary will lubmit in this place
uch thoughts on the fubjeft, as have occured to his own mind, or
teen suggested to him, most compatible, in his judgment, with
he end proposed.
Let each state be charged with all the money advanced to it out
>f thetreafury of the United States, liquidated according to the
pecic value, at the time of e ch advance, with interest at fix per
ent.
Let it also be charged with the amount, in specie value, of all its
securities which Qiall be a (Turned, with the interest upon them to
the time, when interest (hall become payable by the United States.
Let it be credited for all monies paid and articles furnilhed to
the United States, and for all other expenditures during the war,
either towards general or particular defence, whether authorized,
or unauthorized by the United States ; the whole liquidated to
Ipecie value, and bearing an interest of fix per cent, from the sever
al times at which the several payments, advances and expenditures
accrued.
And let all sums of continental money now in the treasuries of
the refpe&ive states, which shall be paid into the treasury of the
United States, be credited at specie value.
Upon a statement of the accounts according to these principles,
there can be little doubt, that balances would appear in favor of
all the States, against the United States,
To equalize the contributions of the states, let each be then char
ged with its proportion of the aggregate of those balances, accord
ing to some equitable ratio, to be devised for that purpose.
If the contributions (hould be found difproportionate v tke result
of this sdjmlmtnt would be, that fame states would be creditor},
some debtors to the union.
Should this be the cafe, as it will be attended with lets incon.
venience for the United States, to have to pay balances to, than to
receive them from the particular states, it may perhaps, beprafti
cable to effect the form r by a second process, in the nature of a
transfer of the amount of the debts of debtor states, to the credit of
creditor states, observing the ratio by which the firft apportion
ment (hall have been made. This, whilst it would destroy the
balances due from the former, would incrcafe those due to th
latter. These to be provided for by the United States, at a rea
sonable interest, but not to be transferable.
The expediency of this fecoud process must depend on aknow.
ledge of the result of the firft. If the inequalities should be too
(treat, the arrangement may be impracticable, without unduly m
creafing the debt of the United States. But it is not likely, that
this would be the cafe. It is also to be remarked, that though
this fccond process might not, upon the principle of apportion
ment, bring the thing to the print aimed at, yet it may approach
so nearly to it, as to avoid essentially the .mbarraflment, of hav
ing considerable balances to collect from any of the states.
, The whole of this arrangement to be under the fupenntcndence
of commissioners, vetted with equitable discretion, and 'final ai>
The operation of the plan it exemplified in the Ichtdule A.
SPECULATION.
Says Joe to Jem, this speculation,
Will prove the ruin of the nation.
Gods ! that these fellows thus (hould thrive,
When you and I can scarcely live.
Says Jem to Joe, this speculation,
Has fav'd the credit of the nation ;
For when fate ftop'd the new emiflion,
Their cajh prefcrv'd us from perdition.
ANECDOTE.
SOON after the commencement of the peace,
the Matter of an American veflel, in London,
fell in company with some lharpers, who urged
him very much to join them in drinking a bottle
or two of porter. He, not aware of their policy,
consented to go to a public house ; where, after
they had all drank very freely, they dropt ofF,
one by one, till at last the Yankee was left quite
alone. The innkeeper coming in,fays to him,—
" What! are youleft alone !"—" Yes," replied
the other. The innkeeper observed to him, that
he iuppofed he was not much acquainted with
" our English blades." " 1 am not," replied
the American. " Well," laid the innkeeper, "the
reckoning falls on you."—" Does it !" replied
the other, affecting surprize, and clapping his
hand into his pocket as if to pay it—but,paufing,
he fays, "Well, if this be the cafe, give me ano
ther bottle before I go." The innkeeper stepped
out to get it. In the mean time the American
wrote upon the table—" I leave you American
Handles for your English Blades"—and
walked off in his turn.
THE REPORT of the SECRETARY of the
TREASURY,to the House of Reprefentativel, relative to a
provision for the support of the Public Credit of the United Stales,
in conformity to a resolution of the twenty-firft of Sept. 1789.
Publiftied by authority.
Printed if Francis Childs, and John Swaini—and fold at
their Office, No. igo, Water-Street; fold also by Berry and Roger;,
New-York, Jan. 1790. «
WILLIAM TAYLOR,
Has for Sale, at his EAST-INDIA GOODS STORE,
No. 4, Burling-Slif,
A General Aflortment of EAST-INDIA GOODS,
Among which are the following Articles :
BOOK Mufliiu 8.4 6-4 5-4 |l HUMHUMS,
Jackonet do. j| Long Cloths,
Hankerchiefs,of various kinds,|| Caffas,
Chintzes, j Seersuckers,
Gingham:, ([ Boglapores.
A Variety of handsome painted MUSLINS.
With many other Articles, which will be fold by the Piece W
Package, low for calh.
And a few pair large handsome Cotton COUN
TERPANES, much warmer than Blankets.
January 9, 1790. '•
BOSTON STAGE.
THE fubferiber informs the public, that having contra&cd to
carry the public mail in the ftagefrom New-York to Boston,
for the year 1790 —commencing January the full to go twice a
week till the firft of May, and three times a week from firft M a y
to firft. November, and to employ a person to go thro' with th«
mail to take Care of it. He engages that this covdufior ihall tran
fa£l all private business committed to him with fidelity at a rea
sonable Commission—he will carry bundles, money, newfpapeis,
&c. And may be seen every Wednesday and Saturday Evening
in New-York, at Fraunces Tavern, in Boston at the fubferibers
Houfc, in Hartford at Frederick Bull's, Coffee House.
Four attive men are now engaged as Conduttors, who have
given bonds for the faithful discharge of their trust.
January, 1790. LEVI PEASE.
The Bojlon, Albany, and Philadelphia Stages now put up at
Fraunces * Tavern, Cor tlandt-Street,where pajfengers will pleajetoappl^y.
ADVERTISEMENT.
(f3T THE Gazette of the United States circulates in every part of
the Union—being honored by fubferibers in Georgia, South and North
Carolina, Virginia, Maryland, Delaware, Pennsylvania, New-Jcrfey*
New-York, Connecticut, Rhode-lfland, Majjachufctts, New-Hampfhirti
and Dijlrih of Maine, Canada, Europe, ana the Wefl Indies. This e<-
tenjive circulation renders it a proper vehicle for Advertisement!
oj a general, commercial and governmental import'. —By the particular
aefire and advice, therefore, of a number of its patrons, this paper
will be open for the reception of advertisements of the above description;
which as they will convey intelligence of an interelling nature, the Edi
tor hopes their insertion will meet the approbation of hisfriends in
general. Should the number at any time amount to more than a P a ßf* a
the Gazette, they will be given in a Supplement. JOHN FENNO.
Published by JOHN FENNO, No. 9, Maiden-
La me, nvtvtht Ofwege-Markti, Nkw-Yorr.—[3 p r < an I
This day puHiJhed,