for which the money is wanted; they declare the object at the head of the act. Whether it be a loan, a direct tax, or a duty on imports, the object of the loan, the tax, or the duty, is stated in the preamble to the act; Congress thus excusing and justifying themselves for the demand in the very act of making it, and telling the people plainly what they wanted with the money. This was the way in all the early statutes; the books are full of examples; and it was only after money began to be levied for objects not known to the constitution, that this laudable and ancient practice was dropped. Among the enumerated objects for which money can be raised by Congress, is that of paying the debts of the Union; and is it not a manifest absurdity to suppose that, while it requires an express grant of power to enable us to pay the debts of the Union, we can pay those of the States by implication and by indirection? No, sir, no. There is no constitutional way to assume these State debts, or to pay them, or to indorse them, or to smuggle the money to the States for that purpose, under the pretext of dividing land revenue, or surplus revenue, among them. There is no way to do it. The whole thing is constitutionally impossible. It was never thought of by the framers of our constitution. They never dreamed of such a thing. There is not a word in their work to warrant it, and the whole idea of it is utterly repugnant and offensive to the objects and purposes for which the federal Union was framed.
We have had one assumption in our country and that in a case which was small in amount, and free from the impediment of a constitutional objection; but which was attended by such evils as should deter posterity from imitating the example. It was in the first year of the federal government; and although the assumed debts were only twenty millions, and were alleged to have been contracted for general purposes, yet the assumption was attended by circumstances of intrigue and corruption, which led to the most violent dissension in Congress, suspended the business of the two Houses, drove some of the States to the verge of secession, and menaced the Union with instant dissolution. Mr. Jefferson, who was a witness of the scene, and who was overpowered by General Hamilton, and by the actual dangers of the country, into its temporary support, thus describes it:
"This game was over (funding the soldiers' certificates), and another was on the carpet at the moment of my arrival; and to this I was most ignorantly and innocently made to hold the candle. This fiscal manœuvre is well known by the name of the assumption. Independently of the debts of Congress, the States had, during the war, contracted separate and heavy debts, &c. **** This money, whether wisely or foolishly spent, was pretended to have been spent for general purposes, and ought therefore to be paid from the general purse. But it was objected, that nobody knew what these debts were, what their amount, or what their proofs. No matter; we will guess them to be twenty millions. But of these twenty millions, we do not know how much should be reimbursed to one State or how much to another. No matter; we will guess. And so another scramble was set on foot among the several States, and some got much, some little, some nothing. **** This measure produced the most bitter and angry contests ever known in Congress, before or since the union of the States. **** The great and trying question, however, was lost in the House of Representatives. So high were the feuds excited by this subject, that on its rejection business was suspended. Congress met and adjourned, from day to day, without doing any thing, the parties being too much out of temper to do business together. The Eastern members particularly, who, with Smith from South Carolina, were the principal gamblers in these scenes, threatened a secession and dissolution. **** But it was finally agreed that whatever importance had been attached to the rejection of this proposition, the preservation of the Union, and of concord among the States, was more important; and that, therefore, it would be better that the vote of rejection should be rescinded; to effect which, some members should change their votes. But it was observed that this pill would be peculiarly bitter to the Southern States, and that some concomitant measure should be adopted to sweeten it a little to them. There had before been propositions to fix the seat of government either at Philadelphia, or at Georgetown, on the Potomac; and it was thought that, by giving it to Philadelphia for ten years, and to Georgetown permanently afterwards, this might, as an anodyne, calm in some degree the ferment which might be excited by the other measure alone. So two of the Potomac members (White and Lee, but White with a revulsion of stomach almost convulsive) agreed to change their votes, and Hamilton undertook to carry the other point; and so the assumption was passed, and twenty millions of stock divided among the favored States, and thrown in as a pabulum to the stock-jobbing herd. * * * Still the machine was not complete; the effect of the funding system and of the assumption would be temporary; it would be lost with the loss of the individual members whom it had enriched; and some engine of influence more permanent must be contrived while these myrmidons were yet in place to carry it through. This engine was the Bank of the United States."
What a picture is here presented! Debts assumed in the mass, without knowing what they were in the gross, or what in detail – Congress in a state of disorganization, and all business suspended for many days – secession and disunion openly menaced – compromise of interests – intrigue – buying and selling of votes – conjunction of parties to pass two measures together, neither of which could be passed separately – speculators infesting the halls of legislation, and openly struggling for their spoil – the funding system a second time sanctioned and fastened upon the country – jobbers and gamblers in stocks enriched – twenty millions of additional national debt created – and the establishment of a national bank insured. Such were the evils attending a small assumption of twenty millions of dollars, and that in a case where there was no constitutional impediment to be evaded or surmounted. For in that case the debts assumed had been incurred for the general good – for the general defence during the revolution: in this case they have been incurred for the local benefit of particular States. Half the States have incurred none; and are they to be taxed to pay the debts of the rest?
These stocks are now greatly depreciated. Many of the present holders bought them upon speculation, to take the chance of the rise. A diversion of the national domain to their payment would immediately raise them far above par – would be a present of fifty or sixty cents on the dollar, and of fifty or sixty millions in the gross – to the foreign holders, and, virtually, a present of so much public land to them. It is in vain for the bill to say that the proceeds of the lands are to be divided among the States. The indebted States will deliver their portion to their creditors; they will send it to Europe, they will be nothing but the receivers-general and the sub-treasurers of the bankers and stockjobbers of London, Paris, and of Amsterdam. The proceeds of the sales of the lands will go to them. The hard money, wrung from the hard hand of the western cultivator, will go to these foreigners; and the whole influence of these foreigners will be immediately directed to the enhancement of the price of our public lands, and to the prevention of the passage of all the laws which go to graduate their price, or to grant pre-emptive rights to the settlers.
What more unwise and more unjust than to contract debts on long time, as some of the States have done, thereby invading the rights and mortgaging the resources of posterity, and loading unborn generations with debts not their own? What more unwise than all this, which several of the States have done, and which the effort now is to make all do? Besides the ultimate burden in the shape of final payment, which is intended to fall upon posterity, the present burden is incessant in the shape of annual interest, and falling upon each generation, equals the principal in every periodical return of ten or a dozen years. Few have calculated the devouring effect of annual interest on public debts, and considered how soon it exceeds the principal. Who supposes that we have paid near three hundred millions of interest on our late national debt, the principal of which never rose higher than one hundred and twenty-seven millions, and remained but a year or two at that? Who supposes this? Yet it is a fact that we have paid four hundred and thirty-one millions for principal and interest of that debt; so that near three hundred millions, or near double the maximum amount of the debt itself, must have been paid in interest alone; and this at a moderate interest varying from three to six per cent. and payable at home. The British national debt owes its existence entirely to this policy. It was but a trifle in the beginning of the last century, and might have been easily paid during the reigns of the first and second George; but the policy was to fund it, that is to say, to pay the interest annually, and send down the principal to posterity; and the fruit of that policy is now seen in a debt of four thousand five hundred millions of dollars, two
