Assumption of the State Debts, [20 April] 1790
Assumption of the State Debts
[20 April 1790]
The House took up the report of the Committee of the Whole, consisting of eight resolutions, on 29 March. The first three passed, but the fourth (providing for the assumption of state debts) and the remaining resolutions were recommitted (, III, 347–48, 349). Although assumption had been approved earlier, the Committee of the Whole on 12 April rejected the fourth resolution by a vote of 31 to 29. The fifth resolution was approved (after that part relating to state debts had been struck out) on 16 April. The first alternative of the sixth resolution, providing that two-thirds of every hundred dollars be funded at 6 percent and that the other third be payable in lands at twenty cents per acre, was now under debate. Gerry moved to strike out the 6 percent interest, which he believed was too high in light of the last vote on assumption. Asserting that the revenue of the union rested “entirely on the mercantile interest,” who owned most of the state debts, the Massachusetts representative lamented the embarrassing financial consequences of the decision not to assume the state obligations (N.Y. Daily Gazette, 22 Apr. 1790).
Mr. Madison rose, and observed that whether the assumption of the state debts be before the house, or not, whether undecided or decided, that is the point to which the mind of the gentleman from Massachusetts gravitated: but his arguments at present were not more unseasonable than they were improper. They offered an indignity to 99/100 of the people of the United States, by supposing that the government was supported by the mercantile part alone.
(Mr. Gerry here rose to explain: he did not contend that the government was supported, in all respects, by the merchants, but only that its revenue system would be supported by them.)
Mr. Madison said (in continuation) that as revenue was essential to the government, it was still, in fact, saying that the government depends on a small part of the people for its support. He thought it was doing injustice to the patriotism of the merchants themselves to suspect that, if not gratified in a particular measure, they would violate their oaths, dishonor their profession, and defraud the public of its revenue. He had too much respect for that class of citizens to suppose this possible. If it were to be the case, he should not despair, either that the laws would be enforced, or the government find other modes of taxation.
He observed, that the proper order of proceeding was to provide for the debts of the United States, on the idea that the state debts would not be assumed. If the decision on that point should be reversed in the house, then it would be proper to re-model the provision for the debts of the union, if requisite. He considered it out of time now to enter into the merits of the assumption: when that should be the question, he should be ready to meet the arguments of the gentleman. As to the motion before the committee, he did not well understand the object of it. The reasons assigned had no force, and he hoped the words would not be struck out.
N.Y. Daily Gazette, 23 Apr. 1790. Gerry’s motion lost.