Notes on Debates
MS (LC: Madison Papers). See Notes on Debates, 4 November 1782, ed. n.
The States of N. H. & Masts. having redeemed more than their quotas of the Emissions prior to the 18th. of March 1780, had called on Congress to be credited for the surplus,3 on which the Superintendt of Finance reported that they ought to be credited at the rate of 1 Dollar specie for 40 of the sd. Emission, according to the act of March aforesaid.4 This report being judged by Congress unjust as the money had been called in by those States at a greater depreciation, was disagreed to. Whereupon a Motion was made by Mr. Osgood, that the States who had redeemed a surplus should be credited for the same according to its current value at the time of5 This motion with a letter afterwards rcd. from the State of Mass: on the same subject, were referred to the grand committee in question.6
The Committee were unanimous that Justice required an allowance to the States who sd. sink a surplus, to be apportioned on the deficient States: The different expedients7 suggested were
1. That Congress sd. renew their call on the States to execute the Acts of the 18th of M. 1780 and leave it to the states to level the money by negociations among themselves. This was Mr. Hamilton’s idea. The objections against it were that either nothing wd. be done in the case or the deficient States wd. be at the mercy of the hoarding States; altho’ the former were perhaps prevented from doing their part by invasions; & the prosperity of the latter enabled them to absorb an undue proportion8
By Mr. Madison9 It was proposed that Congress should declare that when ever it sd. appear that the whole of the bills emitted prior to the 18th. of M. 1780 shall have been collected into the Treasuries of the several States, Congress wd. proceed to give such credit for any surplus above the quotas assigned as equity might require, and debit the deficient States accordingly. In favor of this expedient it was supposed that it would give a general encouragement to the States to draw the money outstanding among individuals into the public treasuries, and render a future equitable arrangemt. by Congress easy. The objections were that it gave no satisfaction immediately to the complaining States, & would prolong the internal embarrassments which have hindered the States from a due compliance with the requisitions of Congress.10
It was lastly proposed by Mr. Fitzimmons11 that the Commissioners appointed to traverse the U. S. for the purpose of settling accounts should be empowered to take up all the outstanding old money12 and issue certificates in place of it, in specie value according to a rule to be given them by Congress. The amount of the certificates to be apportioned on the States as part of the public debt. The same rule to determine the credit for redemptions by the States. This proposition was on the whole generally thought by the Committee least objectionable and was referred to a sub committee composed of Mr. Rutlidge, Mr. Fitzimmons & Mr. Hamilton to be matured & laid before the Grd. Come.13 One consideration suggested by Mr. Hamilton in its favor was that it would multiply the advocates for federal funds for discharging the public debts, and tend to cement the Union.14
2. For the activities of this grand committee, appointed on 22 July 1782 “to take into consideration and report the most effectual means of supporting the credit of the United States,” see Randolph to JM, 6 August, n. 23; JM to Randolph, 13 August, n. 14; 10 September, nn. 7, 9, 12, 17; 16–17 September, n. 13; JM to Pendleton, 22 October, n. 10; Notes on Debates, 20 November 1782, n. 1.
3. For New Hampshire in this regard, see Papers of Madison description begins William T. Hutchinson, William M. E. Rachal, et al., eds., The Papers of James Madison (5 vols. to date; Chicago, 1962——). description ends , IV, 121–23; 123, n. 2; 173–74; 175, nn. 2, 3. On 25 November Congress referred to the grand committee a letter of 21 October 1782 from the General Court (legislature) of Massachusetts, which declared that its citizens owned “enormous sums of Old Paper Money,” rendered valueless “by the Neglect of many States to comply” with the terms of the ordinance of 18 March 1780 (ibid., II, 49, n. 2; 71). After also reminding Congress that Massachusetts had paid to the United States treasury “a very large Sum more than its Proportion compar’d with the Advances of other States,” the letter warned that unless the citizens of Massachusetts were relieved of the “inequality of burthen” imposed by their possession of a huge amount of unusable continental currency, they could not pay taxes and, consequently, the state would be unable to honor further financial requisitions of Congress (NA: PCC, No. 65, II, 201–2, 204).
4. For earlier instances of the vain effort to maintain the 1 for 40 ratio between specie and the old continental currency, as stipulated by the act of 18 March 1780, when that currency depreciated far more in the market place, see Papers of Madison description begins William T. Hutchinson, William M. E. Rachal, et al., eds., The Papers of James Madison (5 vols. to date; Chicago, 1962——). description ends , II, 181, n. 3; 261–62.
5. See Harrison to Virginia Delegates, 16 August 1782, and n. 4. On 9 September 1782 Robert Morris had suggested that Congress instruct the commissioners appointed for settling the accounts of the several states to credit each state in hard money at the rate of 40 to 1 for whatever amount of the old continental currency that state had in its treasury beyond its quota assigned under the act of 18 March 1780 (JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXIII, 560–61). Nine days later, after postponing a consideration of Morris’ proposal, Congress agreed, in spite of the dissent of the Rhode Island and Massachusetts delegates, including Samuel Osgood, to limit the destruction of the “continentals” in the treasury of each state to the amount of its quota. Thereupon Congress referred to the grand committee Osgood’s motion proposing that whatever sum of old continental currency a state possessed beyond its quota should be credited to that state “according to the current value thereof compared with Gold and Silver at the time when such state had delivered over its proportion to the loan officer” (JCC description begins Worthington Chauncey Ford et al., eds., Journals of the Continental Congress, 1774–1789 (34 vols.; Washington, 1904–37). description ends , XXIII, 590–91). JM probably meant to complete his sentence by adding “delivering their proportion to the loan officer” or words to that effect.
6. In this sentence JM combined the orders of referral by Congress on 18 September (n. 5) and 25 November (n. 3). The remainder of his notes on debates for 26 November summarizes the discussion and its outcome within the grand committee on that day.
7. That is, although the grand committee agreed that the request of the Massachusetts General Court was just (n. 3), the delegates were not in accord about the most expedient means of transferring her undue share of the “burthen” upon those states which had failed to redeem their quotas of the old continental currency.
8. Of the thirteen states, those south of Maryland suffered most from “invasions” between 1779 and 1781, while “hoarding States,” including New Hampshire and Massachusetts, excluding the Maine coast, were comparatively prosperous and rarely visited by the enemy’s troops during those years. Judging from the handwriting, JM interlineated “hoarding” in his old age after deleting “hording.” Following “invasions,” JM at first wrote “of which the latter took advantage of their new prosperity to absorb an undue proportion of the currency.” His revision, seemingly made not long after the notes were first written, freed the passage from having any invidious implication.
9. JM evidently inserted his surname many years after he wrote his notes.
10. See n. 3, above. The general problem of the assumption of the “national” debt by the states suggests the issue of the assumption of state debts by the national government about a decade later. In both instances the depreciation of the paper currency was a complicating factor, and JM’s view of an equitable solution disagreed with that of Hamilton.
11. Thomas FitzSimons of Pennsylvania.
12. JM interlineated “old” and, after “money,” deleted “from individuals.” For the “Commissioners,” see Papers of Madison description begins William T. Hutchinson, William M. E. Rachal, et al., eds., The Papers of James Madison (5 vols. to date; Chicago, 1962——). description ends , IV, 56, n. 6; 67–68; 69, n. 7; 333, n. 2.
14. After “H,” JM interlineated “amilton in its.” Hamilton as secretary of the treasury also favored among competing economic proposals the one seemingly best adapted to the fostering of nationalism.