Fact No. I1
[Philadelphia, September 11, 1792]
For the National Gazette.
Much declamation has been indulged against certain characters, who are charged with advocating the pernicious doctrine, that “public debts are public blessings,” and with being friends to a perpetuation of the public debt of the country. Among these characters, if the secretary of the treasury has not been named, he has been pretty plainly alluded to. It is proper to examine what foundation there is for those charges.
That officer, it is very certain, explicitly maintained, that the funding of the existing debt of the United States would render it a national blessing: And a man has only to travel through the United States with his eyes open, and to observe the invigoration of industry in every branch, to be convinced that the position was well founded. But whether right or wrong, it is quite a different thing from maintaining, as a general proposition, that a public debt is a public blessing: particular and temporary circumstances might render that advantageous at one time, which at another might be hurtful.
It is known, that prior to the revolution, a great part of the circulation of the country was carried on by paper money; that in consequence of the events of the revolution that resource was in a great measure destroyed, by being discredited, and that the same events had destroyed a large proportion of the monied and mercantile capital of the country, and of personal property generally. It was natural to think, that the chasm created by these circumstances required to be supplied, and a just theory was sufficient to demonstrate, that a funded debt would answer the end.
To infer, that it would have such an effect, was no more to maintain the general doctrine of “public debts being public blessings,” than the saying, that paper emissions by the authority of government, were useful in the early periods of the country, was the maintaining, that they would be useful in all the future stages of its progress.
But to put the matter out of all doubt, and to shew how destitute of candor the insinuations against the secretary of the treasury, on this head, have been, I have extracted and shall insert here some passages from three of his reports to the house of representatives; by which it will be seen, that his conduct, as well as his language, have been in uniform opposition to the doctrine charged upon him. The length of these reports, it is probable, have prevented many well disposed persons from being acquainted with their contents; the presumption of which emboldens the calumniators of public characters and measures to make assertions, of the falsehood of which, the mere perusal of official documents would convict them.
Extract from a report of the secretary of the treasury, on the subject of a provision for the public debt, presented the 14th of January, 1790.2
“Persuaded as the secretary is, that the proper funding of the present debt, will render it a national blessing; yet he is so far from acceding to the position, in the latitude in which it is sometimes laid down, that “public debts are public benefits,” a position inviting to prodigality, and liable to a dangerous abuse,—that he ardently wishes to see it incorporated, as a fundamental maxim in the system of public credit of the United States, that the creation of debt should always be accompanied with the means of extinguishment. This he regards as the true secret for rendering public credit immortal. And he presumes, that it is difficult to conceive a situation, in which there may not be an adherence to the maxim. At least he feels an unfeigned solicitude, that this may be attempted by the United States, and that they may commence their measures for the establishment of credit with the observance of it.”
Extract from a report of the secretary of the treasury on manufactures, presented the 5th of December, 1791.3
After using several arguments to illustrate the operation of a funded debt as capital—the secretary concludes thus:—“There are respectable individuals, who, from a just aversion to an accumulation of public debt are unwilling to concede to it any kind of utility, who can discover no good to alleviate the ill with which they suppose it pregnant; who cannot be persuaded, that it ought in any sense to be viewed as an increase of capital, least it should be inferred, that the more debt the more capital, the greater the burthens, the greater the blessings of the community.
“But it interests the public councils to estimate every object as it truly is; to appreciate how far the good in any measure is compensated by the ill, or the ill by the good; either of them is seldom unmixed.
“Neither will it follow, that an accumulation of debt is desirable, because a certain degree of it operates as capital. There may be a plethora in the political, as in the natural body; there may be a state of things in which any such artificial capital is unnecessary. The debt too may be swelled to such a size, as that the greatest part of it may cease to be useful as a capital, serving only to pamper the dissipation of idle and dissolute individuals; as that the sums required to pay the interest upon it may become oppressive, and beyond the means which a government can employ, consistently with its tranquility, to raise them; as that the resources of taxation, to face the debt, may have been strained too far to admit of extensions adequate to exigencies, which regard the public safety.
“Where this critical point is, cannot be pronounced; but it is impossible to believe, that there is not such a point.
“And as the vicissitudes of nations beget a perpetual tendency to the accumulation of debt, there ought to be in every government a perpetual, anxious and unceasing effort to reduce that, which at any time exists, as fast as shall be practicable, consistently with integrity and good faith.”
Extract from a report of the secretary of the treasury relative to additional supplies for carrying on the Indian war, presented the 16th of March, 1792.4
“The result of mature reflection is, in the mind of the secretary, a strong conviction that the last of the three expedients, which have been mentioned (that was the raising of the sum required by taxes) is to be preferred to either of the other two.
“Nothing can more interest the national credit and prosperity, than a constant and systematic attention to husband all the means previously possessed for extinguishing the present debt, and to avoid, as much as possible, the incurring of any new debt.
“Necessity alone, therefore, can justify the application of any of the public property, other than the annual revenues, to the current service, or the temporary and casual exigencies of the country—or the contracting of an additional debt, by loans, to provide for those exigencies.
“Great emergencies indeed might exist, in which loans would be indespensible. But the occasions, which will justify them, must be truly of that description.
“The present is not of such a nature. The sum to be provided is not of magnitude enough to furnish the plea of necessity.
“Taxes are never welcome to a community. They seldom fail to excite uneasy sensations more or less extensive; hence a too strong propensity in the government of nations to anticipate and mortgage the resources of posterity, rather than encounter the inconveniences of a present increase of taxes.
“But this policy, when not dictated by very peculiar circumstances, is of the worst kind. Its obvious tendency is, by enhancing the permanent burthens of the people, to produce lasting distress, and its natural issue is in national bankruptcy.
“It will be happy, if the councils of this country, sanctioned by the voice of an enlightened community, shall be able to pursue a different course.”
Here is an example, added to precept; In pursuit of a doctrine, the opposite of that which is charged upon him, the secretary did not scruple to hazard the popularity of his administration with a class of citizens, who, as a class, have been among the firmest friends of the government, and the warmest approvers of the measures, which have restored public credit. The circumstance indeed has been a weapon dexterously wielded against him by his enemies; who in consequence of the increase of duties proposed have represented him as the oppressor of trade. A certain description of men are for getting out of debt; yet are against all taxes for raising money to pay it off; they are amongst the foremost for carrying on war, and yet will have neither loans nor taxes. They are alike opposed to what creates debt, and to what avoids it.
In the first case, their meaning is not difficult to be devined; in the last it would puzzle any man, not endowed with the gift of second sight, to find it out, unless it be to quarrel with and pull down every man who will not consent to walk in their leading strings; or to throw all things into confusion.
[Philadelphia] National Gazette, September 12, 1792.
1. A second article signed “Fact” appeared in the [Philadelphia] National Gazette, October 17, 1792.