country the surest basis of public happiness. In one, in which the measures of government receive their impression so immediately from the sense of the community as in ours, it is proportionably essential. To the security of a free constitution it contributes in various ways, by convincing those who are intrusted with the public administration that every valuable end of government is best answered by the enlightened confidence of the people, and by teaching the people themselves to know and to value their own rights; to discern and provide against invasions of them; to distinguish between oppression and the necessary exercise of lawful authority-between burdens proceeding from a disregard to their convenience, and those resulting from the inevitable exigencies of society; to discriminate the spirit of liberty from that of licentiousness, cherishing the first, avoiding the last, and uniting a speedy but temperate vigilance against encroachments, with an inviolable respect to the laws.

"Whether this desirable object will be best promoted by affording aids to seminaries of learning already established by the institution of a national university or by any other expedients, will be well worthy of a place in the deliberations of the Legislature."

Addressing himself then particularly to the representatives, he said: "I saw with peculiar pleasure, at the close of the last session, the resolution entered into by you, expressive of your opinion that an adequate provision for the support of the public credit is a matter of high importance to the national honor and prosperity. In this sentiment I entirely concur, and to a perfect confidence in your best endeavors to devise such a provision as will be truly consistent with the end, I add an equal reliance on the cheerful co-operation of the other branch of the Legislature. It would be superfluous to specify inducements to

a measure in which the character and permanent interests of the United States are so obviously and so deeply concerned, and which has received so explicit a sanction from your declaration."

Addressing himself again to both houses he observed that the estimates and papers respecting the objects particularly recommended to their attention would be laid before them, and concluded with saying: "The welfare of our country is the great object to which our cares and efforts ought to be directed, and I shall derive great satisfaction from a co-operation with you in the pleasing though arduous task of insuring to our fellow-citizens the blessings which they have a right to expect from a free, efficient, and equal government."

The answers of both houses were indicative of the harmony which subsisted between the executive and legislative departments.

Congress had been so occupied during its first session with those bills which were necessary to bring the new system into full operation and to create an immediate revenue, that some measures which possessed great and pressing claims to immediate attention had been unavoidably deferred. The neglect under which the creditors of the public had been permitted to languish could not fail to cast an imputation on the American republic, and had been sincerely lamented by the wisest among those who administered the former government. The power to comply substantially with the engagements of the United States being at length conferred on those who were bound by them, it was confidently expected by the friends of the constitution that their country would retrieve its reputation, and that its fame would no longer be tarnished with the blots which stain a faithless people.

On the 9th of January (1790), a letter from Mr. Hamilton,

the Secretary of the Treasury, to the Speaker of the House of Representatives, was read, stating that, in obedience to the resolution of the 21st of September (1789), he had prepared a plan for the support of public credit, which he was ready to report when the House should be pleased to receive it, and, after a short debate in which the personal attendance of the secretary, for the purpose of making explanations, was urged by some and opposed by others, it was resolved that the report should be received in writing on the succeeding Thursday.

Availing himself of the latitude afforded by the terms. of the resolution under which he acted, the secretary had introduced into his report an able and comprehensive argument elucidating and supporting the principles it contained. After displaying, with strength and perspicuity, the justice and the policy of an adequate provision for the public debt, he proceeded to discuss the principles on which it should be made.

"It was agreed," he said, " by all, that the foreign debt should be provided for according to the precise terms of the contract. It was to be regretted that, with respect to the domestic debt, the same unanimity of sentiment did not prevail."

The first point on which the public appeared to be divided, involved the question, "whether a discrimination ought not to be made between original holders of the public securities and present possessors by purchase." After reviewing the arguments generally urged in its support, the secretary declared himself against this discrimination. He deemed it "equally unjust and impolitic, highly injurious even to the original holders of public securities, and ruinous to public credit." To the arguments with which he enforced these opinions, he added the authority of the government of the Union. From the circular ad

dress of Congress to the States of the 26th of April, 1783, accompanying their revenue system of the 18th of the same month, passages were selected indicating, unequivocally, that in the view of that body the original creditors, and those who had become so by assignment, had equal claims upon the nation.

After reasoning at great length against a discrimination between the different creditors of the Union, the secretary proceeded to examine whether a difference ought to be permitted to remain between them and the creditors of individual States.

Both descriptions of debt were contracted for the same objects and were in the main the same. Indeed, a great part of the particular debts of the States had arisen from assumptions by them on account of the Union, and it was most equitable that there should be the same measure of retribution for all. There were many reasons, some of which were stated, for believing this would not be the case, unless the State debts should be assumed by the nation.

In addition to the injustice of favoring one class of creditors more than another which was equally meritorious, many arguments were urged in support of the policy of distributing to all with an equal hand from the same

source.

After an elaborate discussion of these and some other points connected with the subject, the secretary proposed that a loan should be opened to the full amount of the debt, as well of the particular States as of the Union.

The terms to be offered were

First. That for every $100 subscribed payable in the debt, as well interest as principal, the subscriber should be entitled to have two-thirds funded on a yearly interest of six per cent. (the capital redeemable at the pleasure of government by the payment of the principal), and to re

ceive the other third in lands of the western territory at their then actual value. Or,

Secondly. To have the whole sum funded at a yearly interest of four per cent., irredeemable by any payment exceeding five dollars per annum both on account of principal and interest, and to receive as a compensation for the reduction of interest, fifteen dollars and eighty cents, payable in lands as in the preceding case. Or,

Thirdly. To have sixty-six and two-thirds of a dollar funded at a yearly interest of six per cent., irredeemable also by any payment exceeding four dollars and two-thirds of a dollar per annum on account both of principal and interest, and to have at the end of ten years twenty-six dollars and eighty-eight cents funded at the like interest and rate of redeemption.

In addition to these propositions, the creditors were to have an option of vesting their money in annuities on different plans, and it was also recommended to open a loan at five per cent. for ten millions of dollars, payable onehalf in specie and the other half in the debt, irredeemable by any payment exceeding six dollars per annum both of principal and interest.

By way of experiment, a tontine, on principles stated in the report, was also suggested.

The secretary was restrained from proposing to fund the whole debt immediately at the current rate of interest, by the opinion, "that although such a provision might not exceed the abilities of the country, it would require the extension of taxation to a degree and to objects which the true interests of the creditors themselves would forbid. It was therefore to be hoped and expected that they would cheerfully concur in such modifications of their claims, on fair and equitable principles as would facilitate to the government an arrangement substantial, durable, and sat