The Student's Life of Washington; Condensed from the Larger Work of Washington Irving For Young Persons and for the Use of Schools

little had the country been able to fulfil its engagements, owing to the want of a sovereign legislature having the sole and exclusive power of laying duties upon imports, and thus providing adequate resources, that the debt had swollen, through arrears of interest, to upwards of fifty-four millions. Of this amount nearly eight millions were due to France, between three and four millions to private lenders in Holland, and about two hundred and fifty thousand in Spain; making altogether, nearly twelve millions due abroad. The debt contracted at home amounted to upwards of forty-two millions, and was due, originally, to officers and soldiers of the revolutionary war, who had risked their lives for the cause; farmers who had furnished supplies for the public service, or whose property had been assumed for it; capitalists who, in critical periods of the war, had adventured their fortunes in support of their country’s independence. The domestic debt, therefore, could not have had a more sacred and patriotic origin; but in the long delay of national justice, the paper which represented these outstanding claims, had sunk to less than a sixth of its nominal value, and the larger portion of it had been parted with at that depreciated rate, either in the course of trade, or to speculative purchasers.
    The debt, when thus transferred, lost its commanding appeal to patriotic sympathy, but remained as obligatory in the eye of justice. In public newspapers, however, and in private circles, the propriety of a discrimination between the assignees and the original holders of the public securities, was freely discussed. Beside the foreign and domestic debt of the federal government, the States, individually, were involved in liabilities contracted for the common cause, to an aggregate amount of about twenty-five millions of dollars; of which, more than one-half was due from three of them; Massachusetts and South Carolina each owing more than five millions, and Virginia more than three and a half. The reputation and the well-being of the government were, therefore, at stake upon the issue of some plan to retrieve the national credit, and establish it upon a firm and secure foundation.
    The Secretary of the Treasury (Mr. Hamilton), it will be remembered, had been directed by Congress to prepare such a plan during its recess. In the one thus prepared, he asserted, what none were disposed to question, the propriety of paying the foreign debt according to its terms. He asserted, also, the equal validity of the original claims of the American creditors of the government; whether those creditors were the original holders of its certificates or subsequent purchasers of them at a depreciated value. The idea of any distinction between them, which some were inclined to advance, he repudiated as alike unjust, impolitic, and impracticable. He urged, moreover, the assumption, by the general government, of the separate debts of the States, contracted for the common cause, and that a like provision should be made for their payment as for the payment of those of the Union. They were all contracted in the struggle for national independence, not for the independence of any particular part. No more money would be required for their discharge as federal, than as State debts. He recommended, therefore, that the entire mass of debt be funded; the Union made responsible for it, and taxes imposed for its liquidation.
    The plan was reported to the House by Mr. Hamilton, the 14th of January, but did not undergo consideration until the 8th of February, when it was opposed with great earnestness, especially the point of assuming the State debts, as tending to consolidation, as giving an undue influence to the general government, and as being of doubtful constitutionality. This financial union of the States was reprobated not only on the floor of Congress, but in different parts of the Union, as fraught with political evil. The Northern and Eastern States generally favored the plan, as did also South Carolina, but Virginia manifested a determined opposition. The measure, however, passed, in Committee of the Whole, on the 9th of March, by a vote of 31 to 26.
    The funding of the State debts was supposed to benefit materially the Northern States, in which was the entire capital of the country; yet, South Carolina voted for the assumption. The fact is, opinions were honestly divided on the subject. The great majority were aiming to do their duty—to do what was