James Madison Papers

Public Debt, [11 March] 1790

Public Debt

[11 March 1790]

Debate continued on the second alternative of the sixth resolution (see headnote to speech of 10 Mar.). JM wished to reduce “the number of alternatives,” preferring “a simple, unembarrassed system.” A motion to drop this option carried by a vote of 32 to 23 (or 24). Jackson then moved to strike out that part of the third alternative making $66.67 of every $100.00 subscribed irredeemable by any payment exceeding $4.67 per year. Speaking to this motion, JM “expressed a desire to shorten the term for paying off the public debt” (Gazette of the U.S., 27 Mar. 1790; N.Y. Daily Gazette, 12 and 13 Mar. 1790). Ames then launched into a lengthy examination of the subject, citing British precedents in defense of Secretary Hamilton’s proposed modification of the public debt.

Mr. Madison could not admit some of the doctrines of the gentlemen, nor some of the conclusions drawn from others. The proposed modifications, however veiled or varnished by ourselves, could not be reconciled with the tenor of the public engagements, and must rest for their justification with the world on the circumstances of the country. The British example adverted to was not applicable. The creditors there, by refusing to subscribe to the new loan, remained in possession of their stipulated interest. The creditors here would, by refusing, remain without their stipulated interest. It was but to let the transaction speak its true meaning: as it was decided to be the sense of the committee that the public circumstances required that the debt should be modified, the only questions left must relate to the form and words of the modifications to be proposed. He wished to simplify the debt as much as possible, and from that motive had agreed to strike out the second alternative. He wished also to shorten the duration of the debt as much as possible, and should therefore agree to strike out the clause restraining the right of redemption to the rate of 4 dollars and a fraction per annum, in order to authorise the government to pay it off at the rate of 10 dollars per annum, as suggested by another gentleman from Massachusetts. If this, said he, be done, it would be proper to adjust the sum to be funded at the end of ten years, to the change made in the irredeemable term. The gentleman had drawn a pleasing, and he hoped a true picture of the growing prosperity of this country. But what would result from it? Not that the debt should be perpetuated; but that we should be able to begin a reduction of the principal, and ought not therefore to throw away the right to do so.

N.Y. Daily Gazette, 13 Mar. 1790 (reprinted in Gazette of the U.S., 3 Apr. 1790).

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