The National Intelligencer And Washington Advertiser

CONGRESS.

HOUSE OF REPRESENTATIVES.

TUESDAY, April 13, 1802.

Debate on the bill making provision for the redemption of the whole of the public debt of the United States.

In committee of the whole Mr. L. R. Morris in the chair.

Mr. Mott moved to amend the bill that the appropriation of 7,300,000 dollars applied to the annual discharge of the debt until the whole shall be redeemed should be stricken out, and words introduced making such appropriation for two years only.

Mr. Mott said that his reasons for the motion were that 7,300,000 dollars was so large a proportion of the whole revenue of the United States, that an appropriation of that sum for any great length of time might embarrass the operations of the government. Though we are now in a state of peace, we cannot promise ourselves that we shall remain so for ten, fifteen, or twenty years.

By the provisions of this bill the commissioners of the sinking fund are to be entrusted with the disposition of this large sum, and not the legislature. He was against reposing this extensive confidence for so great a length of time.

He knew no reason for such a measure, but the fear of trusting a subsequent legislature. He was as much in favor of a speedy extinguishment of the public debt, as any man; but he was averse to tying the hands of the legislature in this way. Of the propriety of continuing this appropriation the legislature in existence two years hence will be better judges than we now are, as they will be better acquainted with the situation of the country than we can possibly be.

If we shall be involved in war, we shall be obliged under the provisions of this bill, to incur new loans, or we shall be obliged to raise additional taxes—the collection of which being necessarily very slow, will not save us from the necessity of making loans. To refuse to trust a subsequent legislature must be on the contemplation that such legislature will not be so righteous or virtuous as ourselves; which opinion, Mr. Mott said he could not entertain. For these reasons he hoped his amendment would prevail.

Mr. Randolph. I hope the amendment will not be adopted, and that for the plainest reason that can be assigned, that its adoption will be equivalent to the rejection of the bill. The amendment proposes to limit the appropriation to two years; or, in other words, to make no appropriation at all. For by a recurrence to the report of the secretary of the treasury it will be seen that the necessary reimbursement of the public debt for the ensuing two years requires within about 200,000 dollars of the 7,300,000 dollars, proposed to be appropriated by this bill.

The gentleman says, and I agree with him in the opinion, that future congresses will be as wise as we are, and equally competent to provide for the discharge of the public debt. Those legislatures may say the same thing of their successors, and in this way provision will never be made. The great question now is whether congress will now provide for paying the public debt, for which payment there is at present no adequate provision. Whether this bill be passed or not, you must pay above seven millions. By passing it, you make no new appropriation; you only provide for paying that which you are already pledged to pay. It is true, that you may incur new loans, or you may prolong old ones to pay the installments becoming due; but I hope the committee will not agree to do this. I trust that the committee will be of opinion that this is the time to take efficient measures for the discharge of the whole debt.

The gentleman fears that the government may be hereafter embarrassed by this large appropriation. On what are his apprehensions founded? Is it apprehended that the revenue beyond the 7,300,000 will not be equal to the current expenditure of the government?

If such are his apprehensions, he ought not to have let go the old taxes which we have recently taken off, and he ought to be ready to lay new ones. But have we not reason to believe that the revenue will be equal to the calls of the government, when it is recollected that our duties on imports amount to 9,500,000 dollars?

Instead of devoting to the payment of the debt, the surplus above the expenditures of the government, it is proposed by this bill to give to the commissioners of the sinking fund a definite sum, which shall not be affected by the expenses of the government. Gentlemen will see, by documents on the table, what these surpluses have been under the old system. It will appear that the expenditure has in many cases exceeded the receipts.

It is certainly true that occurrences may take place that shall call for resources beyond our total revenue. But does it follow that government, under such circumstances, will be hampered by this provision? One million two hundred thousand dollars only is granted beyond the sum already appropriated, which may be considered as vested in the sinking fund. The expedient therefore of limiting the appropriation does not limit our resources; and a provision is introduced into the bill to derive from the sum of 7,300,000 dollars, the expenses incurred under treaties, if it shall be necessary; thus providing for a contingent defalcation of revenue. But if the situation of the country shall be such as to render it necessary to provide for a great defalcation, these provisions will not check us—we must borrow money.

What then will be our situation? We shall be paying 1,200,000 dollars with one hand, while we are borrowing a large sum with the other.

The same effect of the operation effected by this bill during this and the ensuing year will be to take a certain portion of the revenue and apply it to the discharge of the debt, leaving the balance to meet the expenses of the government, instead of first paying the expenses of the government, and then applying the surplus to the sinking fund.

If there shall be a great emergency, will the people have any objection to the imposition of necessary taxes, or to the making loans? When I speak of a great emergency, I allude entirely to war, as no other emergency can happen which shall require great expenditures.

Let us take a case which has already occurred. Exclusive of the 6 per cent interest which we are bound to pay, we engaged to pay annually 2 per cent on the principal. Circumstances occurred, which called for greater sums than the amount of our revenue. If then the money devoted to this purpose had not been vested in the sinking fund, it would have been a resource for navies and armies. We now propose to make the same provision for the deferred and other stock. What would have been the effect upon our stock, if the same provision had been heretofore made, which is now proposed by the gentleman from New-Jersey? We might perhaps have had two per cent instead of 18 redeemed.

A great effect of this appropriation will be to insure an economical disbursement of the public money, which will be sufficient for every purpose of government, in case a great emergence does not arise. And should such an emergency arise, can the committee suppose that a nation, which has taken such steps for the establishment of her credit, will be at a loss to borrow money? And money you must borrow, if such emergency shall occur; for in case of a war, the first gun fired will cost you more than 1,200,000 dollars, the additional sum appropriated by this bill. It will also be remarked that the sole object of this bill is to provide for the redemption of the public debt the ensuing years after this and the next year, and if the effects of the peace do not disable us from complying with our engagements in 1802, and 1803, it is clear that we shall be able to apply to the further payment of the debt the same sum thereafter.

I believe the committee will have little difficulty in agreeing that if the whole revenue that can be spared shall be applied to the extinguishment of the debt, the situation of the United States will be more advantageous, than if such application had not been made. The national credit must thereby be increased, which will rise in proportion to our ability and disposition to pay. But if we now refuse to make a permanent, irrepealable provision for all the debt, which the first administration has wisely done in relation to a part, then we may hereafter at a critical period be obliged to borrow at an interest, perhaps, of 10 or 12 per cent.

I regard this bill as involving a principle more important than any which has been adopted by this government, or which is likely to be adopted, for many years. I regard the motion now made as its death warrant; as it goes to deprive it of its vital principle—that of guarding the application of the resources of the government to the diminution of the debt, unless in the case of a great crisis. It is true that in such a case, you cannot touch the revenue which is now pledged; but you can borrow more; and wherein consists the difference between applying your ordinary revenue to the discharge of the debt, and creating by loan an equivalent debt; and the applying the ordinary revenue in the first instance to the current expenses, of the government? The effect is precisely the same.

The question was then taken on the amendment of Mr. Mott, which was lost without a division.

Mr. Griswold moved to strike out the 4th section, which authorizes the commissioners of the sinking fund, with the approbation of the President to reloan any of the installments of the Dutch debt becoming due.

Mr. Griswold said he did not know any necessity for reloaning the foreign debt. The installment due this year amounts to above two millions of dollars. This installment, we are told by the gentleman from Virginia, has been already remitted. The installment due the next year amounts to 2,347,000 dollars; that due on the ensuing year is short of two millions. Now, we have in the treasury three millions of specie—where then can be the difficulty of remitting under these circumstances? The bill purports to be a bill for extinguishing the whole debt; and yet here is a provision to perpetuate it. I hope the section will be stricken out, and that no further authority will be given to extend the debt.

Mr. Randolph. I believe the gentleman from Connecticut on reconsidering the reasons which he has assigned will be averse to striking out this section.

Let us recur to the report of the secretary of the treasury—he therein says: "The inconvenience of paying the large installments of Dutch debt, which fall due this and the ensuing years, is much increased by the obligation of discharging them abroad, on account both of the injury arising from such considerable portion of the circulating capital of the United States being thus drawn abroad, and of the difficulty and risk which attach to the purchase of so large an amount of remittances. Although those difficulties must be met if they cannot be obviated, it seems proper to adopt every measure which may diminish them. The plan, contemplated by the act of the 3d March, 1793, of converting that debt into a domestic debt, has heretofore been found impracticable, and from the latest advices, the event of peace absolutely precludes any expectation of its being carried into effect."

The gentleman has offered one of the strongest reasons, which could have been affirmed, for retaining this provision of the bill, and that is, that the installment due on the ensuing year exceeds two millions. Wherefore object, instead of making payment of the Dutch debt in the existing installments, some of which are extremely burdensome, and others as trivial, to paying it in equal installments, and to applying the difference between the amount to be paid and that actually paid, to the extinguishment of the debt at home? By this means the discharge of the debt will be as rapidly going on, and the ultimate period of payment will not be protracted.

It is a fact that the difficulty and danger of payment abroad are much greater than at home, as clearly appears in the case of Fulwar Skipwith recently before the House. In the transaction to which that case refers the secretary of the treasury encountered such difficulty in obtaining remittances, that he was obliged to contract for the purchase of bullion at a loss of 40,000 dollars. This difficulty is at present great, and it is likely to increase. It is so great that the bank of the United States, though highly disposed to aid the fiscal operations of the government, and notwithstanding the offer to lodge the money with them six months before the payment is to be made abroad, have formally declared they cannot undertake the agency. Now, after the opinion of the bank of the United States, who must be so much better acquainted with the necessary arrangements attending the remittance of money, than any member on this floor, I must be permitted to take their opinion as better authority than the opinion of the gentleman from Connecticut. Is it not somewhat surprising, that under these circumstances the gentleman from Connecticut is opposed to giving to the government a facility to comply with its engagements, not in the least degree calculated to impair a speedy discharge of the public debt.

The gentleman says that in this bill professing to discharge the whole debt, there is a clause giving perpetuity to it.

It is to be presumed that the gentleman has read the bill. If so, I cannot reconcile the avowal of such an opinion with the intelligence and discernment of that gentleman. The gentleman knows that the Dutch debt, consisting of six installments, is to be paid within six years. He knows too that this provision does not delay, but only equalizes them.

Mr. S. Smith. I am not fully acquainted with the contents of the bill, and when the gentleman from Connecticut was up, I felt disposed to consider this provision for a re-loan as unnecessary; but the arguments of the gentleman from Virginia have convinced me that it is necessary, and that the operation may be a good fiscal operation. The fund resulting from the re-exportation of imported articles will in a great measure cease with the war; and we will of course be thrown, for reliance on the exports of our own articles. These for the past year do not amount to more than 33 millions. From the fund derived from these, we will be obliged to pay the value of our imports, and the additional sum for bills of exchange: to the amount of these two millions of Dutch debt. This extraordinary demand for bills of exchange will probably raise them 5 per cent.

There will therefore on the purchase of two millions in bills be a charge of 100,000 dollars. The like occasion for bills existing for three years will add one fifteenth part to the whole demand. It may therefore be good policy to vest in the commissioners, subject to the control of the President, in case the price of bills should be injuriously high, a power to reloan any part of these installments.

Mr. Griswold. I think I cannot be mistaken in the effect of this provision in perpetuating the debt—a provision that authorizes the commissioners of the sinking fund, with the approbation of the President, when installments, become due on the Dutch debt to re-loan them for six years. The commissioners and the President may, if they see fit, reloan the whole sum becoming due this year, and so on, and thus perpetuate the debt with new charges; and a premium in addition to the ordinary charges. The bill provides that the interest shall not exceed 5 per cent. and the premium one per cent.—so that the amount may be 6 per cent. interest, which shall continue for six years: and then if you are not ready to pay, I suppose you must go again upon new loans. I am against such a provision, and in favor of that which shall immediately discharge the debt as it falls due.

Nor do I think there will be any inconvenience attending the operation. The secretary of the treasury has remitted the whole of the installment due this year. He has now in the treasury a specie balance of three millions, with which to pay the two installments of about two millions each, due for the two ensuing years. Saying there is a difficulty to remit, with this sum in the treasury, is, I conceive, saying a very strange thing. I believe the remittance will be perfectly easy, and that it can be better made in peace than war. The difficulty, in the case alluded to, arose altogether from the war. In times of peace there can be no difficulty in remitting. We ought therefore to avail ourselves of the present period of peace; we are possessed of ample funds; and though the immediate payment of the debt may subject us to some little inconvenience, I think it is better to submit to that, than to postpone the payment.

I know that the millions re-loaned might be applied to the reduction of the domestic debt; but I deem it most important to extinguish the foreign debt. For these reasons, I do say that the tendency of this section is to perpetuate the foreign debt; and though according to the provisions of this bill, the prolongation can only be for six years, yet at the expiration of that time some new cause may exist for a new loan and another provision to the like effect be introduced.

Mr. Randolph. With regard to the zeal of the gentleman from Connecticut to extinguish the debt, I suppose it is sufficiently great; but when that gentleman alludes to the whole sum due this year being paid, the committee will pardon me for considering the zeal and activity of the Secretary of the Treasury as at least equal to the zeal and activity of that gentleman. Now the Secretary of the Treasury, who has demonstrated his zeal by substantial acts, which have produced a benefit to the nation, tells you that it is, in his opinion, necessary to equalize the installments of Dutch debt; the gentleman from Maryland, (Mr. S. Smith,) whose commercial knowledge no one will deny, tells you that, in his opinion there will be difficulties in obtaining bills of exchange to so large an amount as will be required to meet the existing installments. The Secretary of the Treasury, though he had engaged all the Banks to obtain the best bills (yet from the recent failures, some will no doubt be bad) tells you he has experienced great difficulty. Yet the gentleman from Connecticut tells you there can be no difficulty in making remittance, and infers that there exists no necessity for this provision. He says the large sum of two million three hundred thousand dollars may be remitted with facility, immediately after the Secretary says it cannot be effected without difficulty; and after the Bank of the United States have determined that the difficulty and danger attending the operation are so great, that they will not undertake it; and at the same time that they offer to purchase for the government all the good bills they can obtain without a commission. Now on which information am I, an ignorant man, unacquainted with mercantile arrangements, to act;—that of the Secretary of the Treasury, who has had the experience derived from the purchase of two millions of bills, and of the Bank of the United States; or that of the gentleman from Connecticut, whose talents and knowledge, however, I feel no disposition to depreciate.

Does the gentleman wish the United States to buy good or bad bills; if good on what basis? Or is his zeal so great that he is willing to remit in specie. I believe if he stands on this ground, he will find himself in a small minority.

The demand now made by the Secretary of the Treasury shews by his previous conduct that it is not made with the view that is now assigned. The man, who, by his indefatigable diligence, has procured the whole remittances of the present year in one third of the time allowed, proves to you that it is no object with him to retard the operations connected with an extinguishment of the present debt. After contemplating the great exertions made by the Secretary, and witnessing the good that has accrued from them, I will not hesitate to give credit to the report of such an officer. That officer might undertake to remit the installments falling due; he might promise to remit them; but he might, notwithstanding every possible effort, be unable to perform. As therefore he sees that after all his exertions, difficulties may exist which he cannot surmount, like a good officer, he recommends a legal provision for complying with the engagements of the nation. And this is now to be refused by gentlemen who are not acquainted with the peculiar circumstances that attend the making remittances to Europe. For my part, I know nothing about bills of exchange; but I do know that the secretary from the commencement of the session, has regretted the difficulty of purchasing safe bills wherewith to make remittance.

"The difficulties and risks," says the secretary, "attaching to the purchase of remittances, and which can only be obtained at a distance from the treasury department, and without any immediate control of any officer of government, may not perhaps be obviated by any means."

And yet, after this information, gentlemen are prepared to tell the secretary of the treasury, who has been two years employed in making these remittances, and who from experience ought to be presumed to be well acquainted with circumstances, we are better acquainted with the duties of your station than you, and we will not grant your request, though you are of opinion that it is required for the preservation of public credit.

Mr. Bayard. I do not mean on this occasion to question the eulogium, pronounced by the gentleman from Virginia, on the secretary of the treasury, or to say that he is not entitled to our passive confidence; but I mean to say, that according to the provisions of his report, the propriety of this provision cannot be maintained; By his first report, it appears that, in his opinion, it was not necessary to reloan the whole of the Dutch debt. He says "the inconvenience and difficulty of procuring remittances to that amount, and the real injury arising from such heavy disbursements abroad, render an extension of the terms of payment by partial re-loans, a desirable object."

He says "partial reloans are the bill before us authorizes a reloan of the whole Dutch debt. The secretary goes on—"All that seems wanted is, that the gross amount of payments which are to take place during the eight next years, should be more equally apportioned amongst those years."

Now, according to this report, the bill before us is improper. But, in my opinion, it can be demonstrated that it
is good policy as soon as practicable to pay off the whole of this foreign debt. We are told by the secretary that we have the power to pay it off. We do not know that we shall the next year have the power. Before that time we may be involved in war, and then we shall not be able to pay it. Now we have the power. I ask then whether it is not best now to pay it, than to trust to contingencies which may prostrate our public faith. I find that for the last year nearly the same sum was remitted as will be required for the year 1803; and what was the impression then made? I do not know any great inconvenience that was then experienced; nor do I know that bills are now higher than they then were. But, even if there should be a small inconvenience, attending the discharge of this debt, I ask whether it would not be proper notwithstanding, to put our shoulders to the wheel at this favorable period.

It has been properly remarked by the gentleman from Connecticut (Mr. Griswold) that this provision may augment the debt; for we know that loans cannot be made without additional charges. We cannot therefore see from any information before us, that we should be able to make a reloan for a less expense than that attending a remittance.

If gentlemen will look at the documents on the table, they will see that the secretary contemplates the extinguishment in 1809 of certain portions of the debt, in which are included the payment of all the installments of Dutch debt; on this system any reloan will break in.

Upon the whole, as the inconvenience urged is entirely precious, as it is at best politic, and may probably be altogether avoided, I think it best to run the risk, rather than endanger the early payment of the debt.

(Debate to be Continued)