Massachusetts April 29th. 1790.
I have ever considered the Assumption of the State Debts by Congress, as a measure necessarily flowing from the Adoption of the Constitution of the United States: That on it, the stability, the Respect, if not the Existence of the Government, would essentially depend.—Little did I suppose, that the Gentlemen composing the house of Representatives of Congress, would determine this Subject, upon the narrow, selfish Principles, as it respects State, and State; and put out of Sight its great Importance as it relates to the United States. When I considered the many Sources of Disunion, the Difference of Climate, Habits and Manners, between the States composing the Union, I looked upon the Debts of the several States as a happy Circumstance, wch Congress would gladly seize upon as a cementing Principle, to give Energy, & Stability to a Government, otherwise weak from a Thousand Causes: Little did I think, that some characters, which I have heretofore respected, and revered, would have exposed their little souls, before the great Theatre of the World, on a Subject, that must lead mankind to suppose them under a criminal Defection, to the very Government, they exercise.—The more I reflect upon the Plan of the Secretary of the Treasury, the more I am satisfied with it: and instead of his being thrown out of Office, like the Ministers of England, when their Plans are not supported by a Majority in Parliament the People of the Unite States will feel themselves interested in it, and will support the Man, for the sake of his Measures.—The Public Creditors of the United States, are too respectable a Class of Citizens in all the States, not to have a very strong and powerful Influence, especially when there is a Disposition in the people at large, seeing that the honourable Discharge of their Debts, is perfectly within their Power, to second their Views. For the great Body of the People of every Country, when not corrupted, possess the Principles of Honour, & Honesty, in the highest Degree, and there is nothing but absolute Inability will induce them to depart from these Principles. It is for this reason, that the faith of public Engagements has been always, more sacredly preserved in free, than arbitrary Governments.
But perhaps the Gentlemen of the house of Representatives, may cunningly cover their Opposition to the Assumption of the State Debts, under the Idea, of the Contract’s not being originally made by Congress, but this Subterfuge is too shallow: The Debt was contracted in a Common Cause, for common Purposes; Congress possess the whole, & only means, whereby it can be discharged, and therefore a partial Discharge will never give satisfaction. And what will Become of the Government of the United States, without the Confidence of the People, a non-Entity very Shortly. For will the People rest satisfied with one Class of the public Creditors being paid, while another Class, equally meritorious, shall have no Provision made for their Demands? If there is a distinction of Debts, there will of course be of Creditors: If the State Creditors are referred to the State Governments, for the discharge of their Debts, the Powers of Congress must be retrenched at least so far, as to put it in the Power of the several States to fullfill their Engagements; Nor will the State Creditors rest satisfied with any thing short of it.
From this Source then, will there imeadiately rise up an opposition to the Government, the State creditors who might have been made instrumental to its Support already begin to clamour agst. it, and will very shortly be in open opposition to it. Whatever appearance, these Observations may put on, it may be depended on, I am in no wise, interested in any public Securities whatever: I can<
look> judge therefore, of the probable Effect of Congress’s not assuming the State Debts, with some Degree of Impartiality. And it is with much concern, I foresee, that the Wellwishers to the Government of the United States have every thing to apprehend, if the late measures of Congress are persisted in.
It appears to me there is now an excellent Opportunity for the President to express his sentiments upon the Secretary’s Report. The Members of Congress having taken sides upon this Business, will hardly relinquish their Opinions to one another, unless by the judicious Interference of the Supreme Magistrate; whose conciliating advice and Influence might prove salutary upon this occasion. It may be said that the Presidt may be charged with Impropriety in interfering<
upon this occasion>; perhaps so; but it will be only by Those Members of Congress, who at present are blinded by their Passions & Prejudices, and who find their Vanity gratified in the supposed Success of their narrow, Selfish Designs. I am the more anxious for the President’s Opinion at this time, as a new choice of Representatives is just at hand; < the Presidents> His opinion therefore would be some thing like an appeal to the good Sense of the People, or it will be either rejected, one < [. . .]> whereby to regulate their next choice of < Representatives> Persons to represent them. In England, if a Dispute takes place between the Parliament, & the King’s ministers, the King either gives up his Ministers, or dissolves the Parliament, if the latter, it operates as an appeal to the People, whether they will vindicate the Measures of his Ministry by choosing fit Persons to enforce them < or not:>. By such an appeal the elastic Principle of the Government < will be> is tried, and the reaction of < the President’s Opinion> the Principle, in case there is a coincidence of Opinion, between the People & the Persons administering the Government will give < confidence> permenency & stability to it. Every Government ought to reflect the general Opinion, for when the Measures of it, counteract it, the great end of Government, is perverted, and the public are constrained to accept the narrow, Selfish Views of a few Individuals, instead of their own enlightened, & extended sentiments. The frequent Election of Representatives is hereby rendered necessary to pull down those, who through mistake or Design, act contrary to the general Opinion, and to elevate such, who are better qualified to discern, & to enforce it.
The great public have had before it, the funding system of the Secretary to the Treasury. The Public creditors did not at first seem satisfied with the Reduction of Interest, from six to four per Cent: but it is left optional, whether to subscribe to the Propositions of the Secretary, or not. The public felt, that from unavoidable Circumstances, the credit of the Securities had sunk to a very low price:—to raise them at once above par, wch would have been the Effect of funding the Debt at six per Cent Interest would have been an injustice to those, who have parted with their Securities; to have reduced them to their Value, as sold in the public market, or to have made a Discrimination between the Original Holders, & present Possessors, would be an injustice to the Present Possessors by not indemnifying them for the Risk they had run, & <
[. . .]> would be prostrating public Credit. For if the Securities are not to be wholly owned by the present Possessors, will the public Market give credit to the Notes of Congress in future? It is plain it would not. For the Notes being made transferable, the public Market will give the Principal, as long as, or whenever the annual Interest is punctually discharged. What then would become of this Principle, if a Discrimination between original Holders & present Possessors was to take place? It wd. be forever lost, and utterly out of the Power of Congress, to retrieve it. But the advantages of the Secretary’s Propositions, do not stop here, the Reduction of Interest promises us the Benefit of the Circulation of our own Debt. For if there was a great Temptation to Foreigners to become the Purchasers of it, wch. wd. have been the Case if it had been funded at six per Cent, the People of the States would in a few years have possessed but few of their own Securities, and the Monies raised by the Duties for the payment of the annual Interest, would be transported out of this Country, to its great Loss and Injury.
A Perfect System of Finance taken in the present State of the Debts of the United States, is not to be expected. A compromise of Opinion upon this subject, something like the one produced by the Secretary, will probably give general satisfaction. The Faith and credit of the United States may be preserved, whilst there is some Regard paid to the public Opinion, in consequence of the very great Depreciation of the Securities, in medio tutissimis ibis.
Every thing it appears to me stands suspended upon this important Question. If Congress assumes the State Debts, Peace, Tranquility and a firm Government, will be the Result. if not, a weak, and an inefficient one, or perhaps no Government at all, may be the Consequence. The Choice lies before Congress;—Honour, or Disgrace; I hope they’ll accept the first, that we may not be again exposed to the Inconveniences of a State of Anarchy and Confusion but if they prefer the last, may the Stigma of Defected rest upon those men, who seem disposed to sacrifice the Government, to their narrow, selfish & contracted Views.
With Sentiments of the highest Esteem, I have the honour to be, Sir, / Your most obedt. & very hble servant.
MHi: Adams Papers.