The ground upon which was founded the refusal to receive upon the subscription to the loan in State debt, the Certificates of North Carolina, on account of the Government of that State was simply this. The preamble to the clauses which relate to the assumption and various expressions in those clauses evidently contemplate “a provision for the debts of the respective states.”2 Now a bond or other security for a debt being once cancelled or discharged by, or surrendered to the Debtor without fraud or accident, there ceases to be a debt. The certificates therefore of the State of North Carolina, in this case the debtor, which were in the hands of its government, constituted no existing debt of the state; of course nothing upon which the assumption could operate.

If any thing was requisite to elucidate so clear a position, or make plainer the intent of the law, it might be found in that provision which directs, That interest on the difference between the sum in each case assumed and the sum actually subscribed shall be paid to each state, in trust for the non subscribing creditors of such state;3 this clearly indicating that a state is in no event to receive any of the monies appropriated to the purpose of its own debt except as a trustee for actual creditors which necessarily supposes existing debts.

Here too is found an answer to the claim that a state should be permitted to subscribe, on its own account, such part of its debt as may have been extinguished subsequent to the act of assumption. As the state is to receive interest on all the unsubscribed part of its debt, within the limits of the sum assumed, untill a settlement of accounts shall determine the equity of a further continuance of the payment, there is no necessity in point of equity, that a State should be permitted to subscribe the part of its debt, so subsequently extinguished. If the idea of a settlement of accounts were excluded, an equity of that kind would doubtless arise

Not chusing in a matter of this kind to rely wholly on my own opinion, I suspended a definitive judgment, untill an opinion of the Attorney General had confirmed my own ideas.4

I have already incidentally answered the second object of your enquiry. It appears to me that both the letter and the spirit of the act require that the interest on the abovementioned difference between the sum assumed and the sum subscribed should be paid to each state untill there shall be a settlement of accounts and “a provision for the balance, if any, which may then appear in favour of the State,” without enquiry in the mean time into the existance or number of non subscribing creditors. The Law appears to me to take there existance for granted, and to rely on the settlement of accounts to furnish a rule for the continuance or discontinuance of the payment of interest to a State. This construction is strengthened by the circumstance of the payment being directed to continue untill provision shall be made for any balance which may appear in favour of a State. That payment has therefore the further operation of a pledge for this provision.

I have the honor to be, with great  consideration, Dear Sir  your obedient servant