States; the securities have net ri'en above 6/8 in the pound. Ido not pretend that government fullers damage by funding ; but the contrary. Ihe creditors, however, acquire a new riglu ana a valuable intercft in the funds. For the appropriation is felling or mortgaging the public revenues, and making them private proper ty. It is the delivery of a pawn for the security of the debt. The gieat operation, however, to give permanency, and value to this pledge, and in a sense to insure the funds againfl adverse contingencies is the cftablilhment of a finking fund. It cannot be the interdict the creditors to receive perpetual annuities at any 1 ate ol .ntereft which lhall exclude this provision. For in that cale, fix and pofiibly even ten per cent, would give them a bad bargain. In proportion as the rate of intereil is raised, the secu rities ought to rife, but as the rilk ol a failure of payment would t>c cnctcaTca ever, more than in proportion to the rife of intercft, it is fiercely t* be doubted that the fecuritirs would link below the value which they wi 11 acquire by the proposed loan. It will be proper to ask here, will any gentleman affirm, with confidence that a lufftcient and sure provilion can be made at fix per cent ? Will he go further and dcfi;natc adequate and proper fubjifls of taxanon lo ensure the payment ? No genileman has yet attempted' this talk, nor do I believe that it can be done with any prudence- But even this talk if accomplilhcd by the advocates of lix per cent, ■will not be fufficient. They mull proceed and l urnilh a surplus .evenue a, a finking fund. In proportion as the rate of intereil is railed, the p'ovifion for it becomes hazardous—and in the degree that it 11 so, the finking fund mud be nude more ample to fa ure it—lt will be fafe to reft the argument on this point, and to infill th " * s n " evidence is offered to Ihew that funds adequate to these "bjetls cm be provided, the intcreftof the public ind its creditors equally forbids a dependence upon them.—The finking fund is an indifpenfibl; part of every system •, it secures the capital loaned as well as the intereft—for every million that shall be paid off will make the residue more fafe.—lf the whole debt was reduced from 8o millions to 8, it could fcarccly be so mismanaged as to want credit. The finking fund will lie conftanrly opeiatin* to bring it to that point. It is also a security againll the dangc °ari <i ig from an increase of public expence—it will alio prevent great fluctuation in the value of the paper—for when it shall bechcapeft, the purchafcs of government will raise it in the maiket — A»ain >nt>ur country the quantity of money and othci active properly is not in propoition to real e(late>—a great national debt when brought tu market may exceed the demand. Tiie purchafcs of government will bring the demand to an equality with, the llock offered for fair. Supfjnfc the amount of the money annually e'm ployed in buying up the public paper to be 5 millions—the dif conftt IS Bow 60 per cent, paper being at Blf. in the pound. It' go vernment could throw into the market one million for the like purpose, It would cncreafe the demand 25 percrnt. and the fame money wheA in circulation may be calculated to he in part at least employed by individuals for the purchase of fecuiities, which would further encreale the demand. Perhaps the Tingle operation ot a linking fund may be calculated to dimimlh the picfent d.r count one half. . r There is no fubjeft so purely artificial as the fcirnee of public debts whether 1 have afluraed Ulfe principles and drawn fanci ful conclusions from them will appear by resorting to Great-Britain has repeatedly changed' the form of her'debt— <.eorge the lit. wasfcarcely seated onthe throne before a rebellion hrokc out. This was suppressed, but doubts remained in regard to his title to the throne, and of the ability of the public to pay ltscreditors. To put the public credit on a liable basis, the par liament proposed a new loan of the debt, amounting to more than 3? "I llerling, at a reducrd rate of intercft (four per cent ) riii South Sea company were authorised to buy up the debts, or to futfcr the creditors to take (hares of the South Sea flock. This act pafleo in 1719. and the famous South Sea bubble happened the next year. rr A still greater operation of the like kind was accomplilhed in 1749, a,lfl 'he inter eft on a debt near double the amount of the I or mcr, 57 millions waj reduced from 4103 per ccnt. The war of >741, and which was ended in 1748 by the peace of Aix la Chap, ellc had greatly encreafed the puolic burdens. It was proposed to pay the former interest till the end of i 750, ll.cn three and an tl *' ie cn< * of 1757, and after that time, three per tent. It will fcem strange that the creditors should voluntarily accept a less rate of interest; we are well informed how f ver that they consented to it for the fake of the encreafcd fccuntv ol the capital, and the flipulated interest ; for by the favingsof in terest, the finking fund was encreafed— the conduct of the i ridit ors would be unintelligible otherwise ; for as the interest was lun belore, and regularly paid, the onlvmotive to be discerned for vonlcnungto the reduction, is what has beenjuftain ..led. The linking tund has been called the last hope of the nation, and the miTapplicaiion of it has been the lubjeil of great complaint and u may be demanded, was not this reasoning of the creditors iuft ? For 1! the public revenue had stood charged to the extent of what it could produce, would not the credit of the debt have rested on a very unsound balls. Britain had been frequently engaged in wars for extending commerce,or eftabliftiing the balance of power. And the unfuccefsful war of 1741 had ended in a precarious state of armed peace. Unless the nation could be relieved so far as to prepare for new wars, the creditors forcfaw the failur. of the pub lie faith. r I (hall be told that the proposal of a new loan is not to he defend ed unlets the terms are fair and free;and that, intheinlhncesallud cd to, Great-B'ircin offered i new loan in one hand.and the money to redeem the debt in the other. Eveiy thin;; regarding the pub lie faith is lo important as to he entitled toa full examination. The firft capital operation of the reduction of intcreft was in 1719- Was the offer to pay off (he creditors made at the fame time with the offer to pay 4 per cent. ? It feeins to have been un derltnod that the creditors were threatened in cafe they should re fufe to accept the reduced intcreft with being compelled to receive their capital. This however, is not true—no offer to pay off the capital was then made—the South Sea company was expressly au thorised to pay off t tie debts, or Jo rn.iny oj th-m at a tivie as they in rcgurd to their own circumjlumes and ability should think fit. Accord, ingiy the (ast corrcl'ponded with the authority—and nothing but the ftoi k of the company was offered inpayment for about five i P arls °' 'he debt.—lt is true indeed, that the ft ,v k fold at a great advance, and therefore wi. better than money—but it is al. so true that the company took advantage of the rife of flock to the titmoft and at the rate nf 375 per cent, exfept for about one sixth part which they offered to pay in money and their own bonds out as fto. k continued 10 rife, (hey made new offers at 500 per < ent. and near two thirds of the debt was fnbfcribcd in a few days they afterwards renewed rhe offer, but at 800 per cent. It was provided in the ast of parliament, that the debts not fnbfcribcd or paid oft ftiouM remain upon their former footing ; and not that the creditors Ibould have their capital redeemed—But a eiicnm ltance, abfolutcly conclusive agairift the reasoning urged in objec tion, is. that the half of the debt was irredeemable, and of courfc the creditors were not liable to the threats of government—that on re ruling the new loan tl.ey (hould be paid off. They had nothing to tear 011 that score, and ol course rould not regard any motive but the advantage 111 point of greater security which has been infilled on already. In 1749 the fail is equally against the argument in question. J Here wm not any offer on the part of irovrrnment to pay off the creditor —indeed a Jicond ast was ra-rie extending the term with in which the creditors fubfrnbe to the'new loan.—But so tar tram paying thrm oft', the terms were made harder a'ainfl c 1 and lhe /cduttion to 3 per cent, was appointed to a period Swo years earlier—l7ss. In a third ast it cannot he denied that means were ulrd to pay off the nonfubfcriSers. But the unfuh i.-nbrd debt was tben reduced to the moderate sum of one mil lion and thirfecu thousand pounds—and the bank was empovcr ed to payoffthat sum. The Kin;, the I.ords and the Commons tpcakoi tianfa&icß ?.s highly bcnc.fi. :al to the nation, atxd not including the lcaft. violation of the public faith. Accordingly.the bills paflf-d by great majorities, and with a great degree of popu larity with the nation. I am surprised that the opinion should have been so readily ad mitted thut such an offer ought to be made, or that it could be carried into execution. Could Britain have paid off 70 millions sterling. The existence of a national debt is proof that she could not : A nation that can pay the capital would not pay the inter est. It is so far from being true that Britain could payoff her debt, that all Europe could not do it. • America is at this moment more able to pay off than Britain— for two reasons. Her debt is not so great, and the of interest is higher, so that fixe might procure new loans on better terms in Europe. I cannot discern the obligation arifingfrom the justice or reason of the cafe to pay off on the retufal ot the terms. I should sup pose in my fiinpliciiy that if new terms were not to be approved, the old contract should continue—and that is precrfcl v the language of the Britilh Statutes. It does no injury to the creditors to pro pro pose to mend their condition ; the offer if refufed leaves the parties on the former footing. When it is urged, therefore, that government ought to offer payment when new terms are offered, am I not at liberty 'to affirm that this opinion is not warranted by history, nor pra6ticable in itfolf, nor required by the reason and justice of the cafe ? It is admitted, however, that the terms ought to be favrand free : Are those proposed by the Secretary such, and will they give the highest value, and inoft fixed quality to the debt ? On lome of the terms full payment is offered to such as may prefer land, on others, an equivalent. Whether this offer is, or is not an equivalent, remains to be en quired The debt is offered to be made irredeemable, except at the rate of one pet cent. Government agrees to forego the advantage of the fall of interest. In times of war and calamity, nations are ob liged to piy an high interest ; but when peace and commerce have reduced the rate of interest, they are enabled by new loans to re duce the debt to its proper standard. It is now peace, and go vernment may fairly offer to make the debt irredeemable at the due rate of interest. This is what the Secretary proposes. The question, however, recurs, is this arrangement beneficial to the creditor, and in what degree is it so ? It is urged that the creditors arc rather disposed to consider the redemption of the debt as a delirable thing : They wifli togcttheir H° w then, it is demanded, can the irredeemable quality of the debt be considered as a fubjeft of compilation and advan tage to the creditor ? However paradoxical it may seem, all that is jult flatcd may be conceded, and yet the irredeemable quality of the debt may be highly beneficial to the creditor. A compendious proof of this may be found in this way : Sup pose that the proposal was made to make the debt irredeemable at 6 per cent, interest. The burden upon the public would be man. j / uni * afon . aWc » anti thc " advantage to the creditor equally so ; and for this plain reason, the public would be restrained from tak ing advantage of the fall of interest in this country, or of the pre sent low rate in Europe. Making the debt redeemable will not redeem it, nor will it be of any ufeto the creditor. If 6 perc nt. irredeemable, would be a hard bargain to the public,will the like stipulation at a less rate of interest prove mutually beneficial ? This is a quftion for the public, on deliberation to propose, and the creditors freely to dccide. It is neceff-try to premifc that the Secretary has founded hit re port U p<in these two principles. 0.. the idea that the entire mass ot the debt conllitutes a burden which it is inconvenient to bear at once, he has piopofed to divide it into (wo portions. The fiift portion, of two thirds is to be provided for at 6 per cent, the o ther t.nrd is to be taken up afier the period of ten yean, when our flrength ma) be more equal to bearing it—and this postpone ment is propokd upon >rai,lc to both parties. It it fa vorable to the public—firft, because it relieves the public from the preijure of the present nectOity—and Iccondly, the debt to be unded is 19 percent, less than the present debt—that is, the pub lic receive 100 dollars, and in conlid eration of the irredeemable quajty stipulated in the loan, is burdened only with providing for 8x dollars. The amount of the > 9 perccni. upon the entire domrllic is near 13 millions. The advantage to the public is so manifeft that I entertain no fear of its being overlooked*—* more formidable difficulty arises irolft the Other quarter. It will be thfe- pub Ire it is true will gain ; but it gains too much, it is a difhoneit as well as enormdus gain which is extorted from the creditor. . , I respect this obje&ion, and will endeavor with proper candor to obviate its force ; and this will leadnie to the second principle of the Secretary. rhat the reduction of die market rate of in terest will make good to the creditor the release of 19 percent, of the capital loaned. 1 his question is fubn-itred to the security hoi tiers. Is it better for you to reccive a less rate of interest 0,1 the terms of receiving it a longer time or a higher rate for less time > we propose to pay longer on the condition of paying less yearly Supposing the funds to be sure, the value of the capital will be regulated by the rate of interest As interest falls, the capital will rife ; if i„ r years interest /liould fall to j per cent, and in 15 more to 4 per cent, the creditor will be compen (ated. Ihe grounds of this reduction of interest I are to be examined. It is made probable by fads— Before the war interest was at 5 per cent, in the Eastern part of America ; then things were in their natural Hate and as Toon as the violent causes which have dif' turbed their equipoise have ceased to acfl thev will return to it This is the more to be expect ed as the rate of interest in Europe is low. and be coming 11,111 lower. Trade is ft,ll extending k wealth continues to encreafe—the surplus property which the owner cannot employ is of lered 011 loan to those who can, and the market is more and more overstocked with the quantity ■ precisely the contrary has happened in thiscoun try—a great part of our active property was des troyed by the war—but most evils tend to their owncure-fuppofing a fafe and firm government, the h.gh rate of interest here naturally tends to draw the surplus property from Europe-it will find its level-peace is diligently repairing the wafteof war I turn with pleaftire from thU barren disquisition to a scene that is interesting to our philanthropy as well as patriotism.— My heart glows while 1 think of the contrast between the situation of this country i„ r 7 36 and now in r 700 No country ever made a more rapid progress to wards opulencc—Wheievet we look, induftryis -402- working miracles ; we may doubt • eft will not fall even farther than k i" 1 "* Probably trade will no, bear ... interelt f" » 6 per cent, and ,he person „ ho Z,"°, „'&* after paying the jntereft, reserve a nrofir J when tew are disposed to borrow, ni,y will bt ready to lend, and inter eft will fall. But a debt funded as u ,s proposed, will be fafer and ,nor e eligible than any p, lva te debts. Four per cen? from government will be nearlv enml to A e individuals and a debt so funded will itfelf'^ du.e the rate of interest.-For even if it ihou li be all fold to foreigners, they will pay the value -and the property paid will encreafe the com! inon ltock and lower inrereit. The debt is to be considered, when funded a, an increase of active capital. V\ e have been often told, that a public debt is not a bleffino, but an evil. We are not to compare a debt with no debt —for it is a desirable thing to be free from debt • but the debt is already contracted, and we are to compare an unfunded fluftuatingdebt with a fund ed debt. Such a debt as the latter may be com" paratively ablelfing, tor it makes the capital trans ferable as well as the income. We have but a small lhare of personal property—but this will make the very land and houses circulate. It is true it is an artificial capital formed by a charge upon every other capital—but it is alfotrue that it is formed by small savings in expence, and if the taxes were not to be laid, there would not be an increase of wealth at the end of a year equal to the debt, or the interest of it. A single cent in the price of an article cannot be said to impover lflithe people, or to rcftraim them from enjoyinz their usual habits of living. Indeed it may tend in some degree to prevent excess, and to promote frugality—which will enrich the people. But at the end of the year these almost imperceptible funis, by their union into one mass, acquire a new power. The whole may be said to have pro pel ties, which did not belong to the leparate parts. The a<ftive circulation promoted by the debt will in a considerable degree compensate the burden of paying taxes. 1 hose whole property is en creafed by possessing the debt, will become the greater conf'umers in proportion, and of course contribute largely to the revenue. Anothercircumftance ought to be regarded.— foreigners will be led to thinx the government fafe, when they think the funds so. Many will follow their property and come to live Whether the advantages of a funded debt will balance the burden of having one is a queftionof mere l'peculation. We have a debt, and mull provide for it. It cannot be denied, however, that these advantages will be considerable, and will tend to reduce the rate of interest. Such a reduction adtually took place in England after the eftablifnment of public credit. In about five years after 1693,intereft fell from 8 and 10 percent.'to J. Whether interest will or will not fall in the degree thai the Secretary experts, is a matter of fair calculation. Taking the reasons together which have been offered to evince the affirmative, there cannot be any impropriety in propofingto the creditors toeonfent to an arrangement which promises them such solid advantage. Let this advantage be computed—Bl dollars are to be fuuded at 6 per cent. This is nearly 41. 17 s - Bd. percent. The irredeemable quality of the debt may well be reckoned equal to one per cent. It will be worth near that to foreigners.— Add to this, interest is to be paid quarter-yearly. I his is not only convenient, but actually makes some increase of the rate of interest. 1 he question may very properly be proposed to the creditors—ls this a fair equivalent? Is this as good as 6 per cent ? Nay is it not better for them ? Their debt is to be funded—revenues to be mortgaged for the interest ; government agrees to continue paying, tho interest Ihould fall—and to provide a finking fund to ensure these advan tages. Nor can it be said that the loan is forced, for government, being at present in a condition to pay only 4 per cent, offers it equally to lublcri bers and non-fubferibers. This also removes the pretext that advantage is taken of their neceflities. Was any reloan ever proposed in any country, 011 terms more fair and beneficial to the credi tors ? We have examined the fads relating to the English funds. Their creditors facrificed more, and for less. Of all the modifications of a pub lic debt with which we are acquainted, is there one less exceptionable than that pro:>ofed by the Secretary ? However artificial this reasoning may appear, it is no longer considered as strange and vision ary in Europe. In this tranfadtion government is to accommodate its proposals to the ideas which experience has eftablilhed in other countries. I will not deny that I ihould have prefer'd a simple 6 per cent, proposition, redeemable at the plea sure of government. But we have seen the in expediency of that measure. Upon the whole I submit it to the candid judg-_ ment of the committee, whether if a Congress ot debtors only should legislate, they could, with jnftice, or even policy, secure greater advantages to the nation—or whether a Congress of creditors only could with any degree of prudence provide better fftrthemfelve??
Significant historical Pennsylvania newspapers