The Debates and Proceedings in the Congress of the United States, First Congress, First Session, Volume 2 Page: 1,369
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1369 GALES & SEAT
H of R ] pHbhc
jealous eye, as wiesting fiom them what they
have long been accustomed to considei as then
own
Iheie is anothei argument, which I admit
ought to have its weight; that is, the eventual
opeiation of this system, and its immediate ef
fects I can answei lor Pennsylvania, tint it
would be unfavoiable to that State, because she
has contiibuted hei full piopoition of the ex
pense of the wai, and has since redeemed moie
of hei debt than any other State perh ips had
the cipacity to do She owes but a small pio
portion ol whit th° State debt is calculated to
be; much le^s, [ believe, than what the Secie
taiy has supposed; but if the debts aie assumed,
I believe moie will be collected from the State
in the additional duty than the inteiest on the
debt she owes Hei debt is supposed to b^ two
millions two hundied thousand dollais, on
which she is paying an intci est of si\ pel cent ,
this amounts to one hundied and thu ty two
thousand of dollar annually lhe aggicgate
of the State debts is supposed to be twenty live
millions; thepiopoition to be paid by Pennsylva-
nia, one seventh of which, atfoui pei cent , the
late proposed by the Secietary, will amount to
one hundied and forty three thousand dollais;
moieovei, Pennsylvania will have to account
eventually with the United States, foi the pie
miums given to induce the i eduction of mtei est,
so that in the end her conliibution will be much
larger than il she continued to pay hei own ere
ditois I hope, howevei, vvhatcvei inequalities
mayan^in the hist instance, they will, on the
final adjustment ol accounts, be done away and
corrected; letubution must at last be made,
and it is undei this idea that I agiceto the pio
position now belore you
Theie is anothei reason, which also induces
me to agiee to the assumption Lveiy gentle
man must believe, when we considei the mime
of the domestic debt, and the minner in which
it was contiacted, that by fai the gieatest pait
of it is in the hand- of the citizens who ie--ide
neai the centre of the Union. If we confine
our levenue to this pait alone, we must draw
considerable sums from the extremes of the
Union; and what inducements do you hold out
to the citizens at those extremities toco opeiate
with you in the faithful collection of money, to
be sent out of then countiy? On the other hand,
is the gieatest pait of the State debts are ow-
ing by the States at the extremity of the Union,
if theyaie assumed, the money which is col
lected in those paits will be retained, in older
to pay the inteiest due on then otate debt; by
which means the beneficial effects of the fund
ing system will be more generally and equally
felt throughout eveiy put of the Union
Mi Smith, (of S C )—I admit the impoit
ance of the piesent question; but I cinnot pei
nut myself to doubt but Congi ess will decide it
upon the principles of honesty and ju fice
Nothing can appeal lo me to be moiecleu, than
th?t a State debt being incuiied in the common
defence, shou'd be made a common buthen.
'S HISTORY 1370
Credit [February 23, 1790
we should consider oui selves as settling the af-
lairs of a gieat family, and be studious to equa-
lise the task necessary to be boine by eveiy
one
My colleague lias properly stated the great
suftenngs and haidships of the countiy fioin
which we come; but he might have added, that
oui Stafe had it m hei power to discharge the
debt she had incuned The confiscated pio
peity would have bi ought into hei Treisuiy
three times the sum she owed, but in conse-
quence of the lecoinmendation of Congiess,
they [emitted the greatest pait of the estates in
that piedicanient If, theiefoie,in consequence
of an act of Congress, the State disabled heiself
fiom dischaiging the debts «he owed, it is the
duty of Congress to assist her now; but it was
an adventitious thing that the State incuned
the debt, because the demands were leally
agunst the Continent; but the Continent being
unable to pij, and the State desirous of giving
eveiy assistance in hei power, assumed those
demands, and made herself liable to the pay-
ment: but now a Government being formed,
possessed of sufficient resouices, it ought to
take back the debts leally due by it, though as
sumed by the States for the support of the na
tional credit I conceive the situation of the
State Governments to be the same as il a pei-
soii had accepted a bill foi the honoi of the
drawer, to pieserve his reputation, but with a
design that the drawei should ultimate!) pay
it The demand of the cieditoi aiose from sei-
vices or supplies foi Continental purposes, but
the State agreed to stand in the place of the
Continent, till the Continent should be able to
pay it When it is examined, it will be found
th .t a gieat part of the debt of South Caiohna
was incuired in this mannei Oui State debt
■s veiy considerable in consequence, and ev eiy
possible exertion Irs been made to reduce it, as
well as to pay the inteiest The State is=ued
indents, in payment of the inteiest, making
them receivable in payment ol duties This
gave thein a cuculation, and kept up their va
lue lemarkably well; in 1784 and 1785, they
depreciated only twelve oi thu teen pei cent;
but the distress of thit State has been such, since
that time, with the expense and ruin of the war,
the gieat load of private debts, and some other
causes, that these securities hav e amazingly de-
preciated; and at the last session of the Legis-
lature, such was the sense of their exhausted
state, and of the obligation which Congress lay
undei to assume the debts conti acted foi Con-
tinental pui poses, that they made nopiovision
for them
I wish to be indulged in a reaiaikupon one
observation It seems to be admitted, bv eveiy
gentleman, that ultimately this measuie ought
to take pi ice: but some say not at piesent
We have been told that a great pait of the
Continent il debt has been purchased up by the
speculators, who will, by the funding system,
leap ill the piofit, while the poor men, who
vi eie ongiml eieditois, ai e obliged to go unie-
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Gales, Joseph, 1761-1841. The Debates and Proceedings in the Congress of the United States, First Congress, First Session, Volume 2, book, 1834; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc29466/m1/49/: accessed April 24, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.