396 INDEBTEDNESS OF THE UNITED STATES, OF THE STATES, ETC. 



end of 1780, when it had fallen to seventy-five for 

 one ; and the money circulated from the French army 

 being, by that time, sensible in all the States north of 

 the Potomac, the paper ceased its circulation' alto- 



C'ler in those States. In Virginia and North Caro- 

 it continued a year longer, Avithin which time it 

 fell to one thousand for one, and then expired, as it 

 had done hi the other States, without a single groan. 

 Not a murmur was heard on this occasion among the 

 people. On the contrary, universal congratulations 

 took place on their seeing this gigantic mass, Avhose 

 dissolution had threatened convulsions which should 

 shake their infant Confederacy to its center, quietly 

 interred in its grave. 



Mr. Jefferson estimates the value of the two 

 hundred millions of Continental currency at 

 the time of its emission at $36,367,719 in spe- 

 cie, and says : * " If we estimate at the same 

 value the like sum of $200,000,000 supposed 

 to have been emitted by the States, and reckon 

 the Federal debt, foreign and domestic, at about 

 $43,000,000, and the State debts at $25,000,000, 

 it will form an amount of $140,000,000, the 

 total sum which the war cost the United States. 

 It continued eight years from the battle of 

 Lexington to the cessation of hostilities in 

 America. The annual expense was therefore 

 equal to about $17,500,000 in specie." 



The foreign loans now contracted, practically 

 to pay and to refund portions of the debt, were 

 as follow : Holland loan, 1790 ; the same, 

 March, 1791 ; the same, September, 1791 ; the 

 same, December, 1791 ; the same, 1792 ; the 

 same, 1793; the same, 1794; Antwerp loan, 

 1791. Of the $9,400,000 thus borrowed, over 

 $3,000,000 was paid into the Treasury of the 

 United States and used in buying up the domes- 

 tic debt, under the operations of the sinking 

 fund ; the balance was used to pay the debt due 

 to Spain, debts due to foreign officers who 

 served in the armies of the Revolution, and a 

 large portion in paying off a part of the debt 

 due to France. 



ASSUMPTION OF STATE DEBTS. The indi- 

 vidual debts of the several States were con- 

 tracted partly in defending themselves against 

 the common enemy, partly in carrying on their 

 governments, or in undertakings with which 

 the rest of the country had nothing to do. 



A proposition was now made for the Federal 

 Government to assume these debts, and thus 

 add them to the amount of its indebtedness. 

 The following considerations were urged by the 

 Secretary of the Treasury, Alexander Hamil- 

 ton, as inducements to the assumptions : 



1 1. To consolidate the finances of the country and 

 give an assurance of permanent order in them; 

 avoiding the collision of thirteen different and inde- 

 pendent systems of finance under concurrent and co- 

 equal authorities, and the scramblings for revenue 

 which would have been incident to so many different 

 systems. 



2. To secure to the Government of the Union, by 

 avoiding those entanglements, an effectual command 

 of the resources of the Union for present and future 



exigencies. 



3. To equalise the condition of the citizens of the 

 several States in the important article of taxation ; 

 rescuing a part of them from being oppressed with 



* Jefferson's " Works," vol. ix, p. 260. 



burdens beyond their strength on account of extraor- 

 dinary exertions in the war, and through the want of 

 certain adventitious resources which it was the good 

 fortune of others to possess. 



"When the bill to authorize the assumption 

 of the State debts was before Congress, it be- 

 came combined with a bill to fix a seat of gov- 

 ernment. Each had failed by small majorities. 

 There was a strong sectional party for each, 

 but not a majority. The Eastern and Middle 

 States were for the assumption, but the South- 

 ern States were against it. These latter were 

 for the Potomac for the seat of government, 

 and the former for the Susquehanna. The dis- 

 content was extreme on each side at losing its 

 favorite measure. At last the measures were 

 combined. Two members from the Potomac 

 who had voted against the assumption agreed 

 to change their votes ; a few from the Eastern 

 and Middle States who had voted against the 

 Potomac agreed to change in its favor, and so 

 the two measures were passed. But the ac- 

 count of this arrangement, by President Jeffer- 

 son, omitting his strictures, deserves to be 

 stated : 



This measure (the assumption) produced the most 

 bitter and angry contest ever known in Congress, be- 

 fore or since the union of the States. I arrived in the 

 midst of it : but a stranger to the ground, a stranger 

 to the actors in it. so long absent as to have lost all 

 familiarity with the subject, and, as yet unaware of its 

 object, I took no concern in it. The great and trying 

 question, however, was lost in the House of Repre- 

 sentatives. So high were the feuds excited on this 

 subject that, on its rejection, business was suspended. 

 Congress met and adjourned from day to day without 

 doing anything, the parties being too much out of 

 temper to do business together. The Eastern mem- 

 bers threatened secession and dissolution. Hamilton 

 was in despair. As I was going to the President's 

 one day I met him in the street. He walked me back- 

 ward and forward before the President's door for half 

 an hour. He painted pathetically the temper into 

 which the Legislature had been wrought the disgust 

 of those who were called the creditor States the dan- 

 ger of the secession of their members, and of the sep- 

 aration of the States. He observed that the members 

 of the Administration ought to act in concert that 

 though this question was not of my department, yet 

 a common duty should make it a common concern 

 that the President was the center on which all admin- 

 istrative questions ultimately rested, and that all of 

 us should rally around him, and support with joint 

 efforts measures approved by him ; and that the ques- 

 tion having been lost by a small majority only, it was 

 probable that an appeal from me to the judgment and 

 discretion of some of my friends might effect a change 

 in the vote, and the machine of government, now 

 suspended, might be again set in motion. I told him 

 that I was really a stranger to the whole subject ; that 

 not having yet informed myself of the system of 

 finances adopted, I knew not how far this was a ne- 

 cessary sequence ; that undoubtedly, if its rejection 

 endangered a dissolution of the Union at this incipi- 

 ent stage, T should deem that the most unfortunate of 

 all consequences, to avert which all partial and tem- 

 porary evils should be yielded. I proposed to him, 

 however, to dine with me the next day, and I would 

 invite another friend or two, bring them into confer- 

 ence together, and I thought it impossible that reason- 

 able men, consulting together coolly, could fail, by 

 some mutual sacrifices of opinion, to form a compro- 

 mise which would save the Union. The discussion 

 took place. I could take no part in it but an exhorta- 

 tory one, because I was a stranger to the circumstances 



