Part 11 (1/2)
Forbearance was no longer a virtue; and the state-prison, called the Bastile, being regarded as one of the strongholds of despotism, was attacked and taken by the people on the fourteenth of July. The conquering thousands then marched in triumph to the city-hall. The chief supporters of the king fled, and Louis, finding himself abandoned, hurried to the national a.s.sembly to make peace with it. ”Heaven knows,”
he exclaimed, ”that the nation, and I are one--I confide myself wholly to you. Help me, in this crisis, to save the state. Relying on the attachment and security of my subjects, I have ordered the troops to leave Paris and Versailles. I beseech you to make known my intentions to the capital!”
Lafayette and another hurried to the city-hall, in Paris, to inform the people of the king's declarations. ”He has. .h.i.therto been deceived,” he said, ”but he now sees the merit and justness of the popular cause.” The enthusiasm was general at this announcement. Tears of joy were shed, and the revolution appeared to be at an end. The king confirmed the nomination of Lafayette as the commander-in-chief of the national guard, by which he was put at the head of four millions of armed citizens; and the nation breathed free with hope. But the wily duke of Orleans, who desired the destruction of the king for the base purposes of his own exaltation, excited suspicions among the people, and a demand for the king's presence at the Tuilleries was made. Louis went voluntarily from Versailles to Paris, followed by sixty thousand citizens and a hundred deputies of the a.s.sembly, and there formally accepted the Declaration of the Rights of Man, which was presented to him. This set the minds of the people at rest, and quiet was restored to the capital and to France.
But Lafayette was filled with apprehension for the future. To Colonel John Trumbull, who was about to leave France for the United States at the close of summer, he communicated a special message to Was.h.i.+ngton concerning the state of affairs in France. After speaking of the changes already effected and the hopes for the future, he said: ”Unhappily, there is one powerful and wicked man, who, I fear, will destroy this beautiful fabric of human happiness--the duke of Orleans.” He had already been accused, and no doubt justly, of sending hired a.s.sa.s.sins to Versailles to murder Louis and the royal family, that he might be made regent of the kingdom. ”He does not, indeed,” said Lafayette, ”possess talent to carry into execution a great project; but he possesses immense wealth, and France abounds in marketable talents. Every city and town has young men eminent for abilities, particularly in the law--ardent in character, eloquent, ambitious of distinction, but poor.”
Such was the material that composed the leaders in the reign of terror which speedily followed, and deluged Paris in blood.
The revolution in France, under the direction of Lafayette and his a.s.sociates, was thorough as far as it went, yet it was conservative. It elicited the warmest sympathies of the American people, and Was.h.i.+ngton was rejoiced at the promise thus made of happiness for the French nation. ”The revolution which has taken place with you,” he wrote to Lafayette in October, ”is of such magnitude, and of so momentous a nature, that we hardly yet dare to form a conjecture about it. We however trust, and fervently pray, that its consequences may prove happy to a nation in whose fate we have so much cause to be interested, and that its influence may be felt with pleasure by future generations.” To the Count de Rochambeau he said: ”I am persuaded I express the sentiments of my fellow-citizens, when I offer our earnest prayer that it may terminate in the permanent honor and happiness of your government and people.”
The connection of the revolution, the first act of which we have delineated in outline, with the administration of Was.h.i.+ngton, will be developed hereafter. It has been given here because it was appropriate in the order of time.
Few public events of importance occurred in the United States, after Was.h.i.+ngton's return from his eastern tour, until the rea.s.sembling of Congress, early in January, 1790. The day appointed for that a.s.sembling was the fourth, but there was not a quorum of the two houses until the eighth, when the session was formally opened by Was.h.i.+ngton in person, with an address which he read in the senate chamber. According to a record in his diary, it was done with considerable state, conformably to arrangements made by General Knox and Colonel Humphreys.[25] In that address the president recommended adequate provision for the common defence, having special reference to Indian hostilities; an appropriation for the support of representatives of the United States at foreign courts and other agents abroad; the establishment of a federal rule of naturalization; measures for the encouragement of agriculture, manufactures, commerce, and literature; and adequate provision for the interest on the public debt. As at the opening of the first session, both houses now waited upon the president with formal answers to his message, and the various recommendations contained in it were referred to an equal number of committees. The latter practice has ever since been adhered to.
Three important questions, involving the establishment of precedents, were discussed and decided early in the session of 1790. The first was a decision, in accordance with the report of a joint committee of both houses, that the last session of each Congress should expire on the third of March. The second was in relation to the unfinished business of the former session. On the report of a joint committee, a rule was established that everything might be taken up where it had been left off at the adjournment, except bills which after having pa.s.sed one house had stopped in the other. These were to be considered as lost, and were not to be revived except in the form of new matter. The third question was as to the official intercourse of the heads of departments with Congress. The question grew out of an intimation from Mr. Hamilton, the secretary of the treasury, that he was ready to make a report on the national debt and the support of the public credit, according to the requirements of a resolution pa.s.sed at the last session. The question was, Shall the report be made orally or in writing? The decision was that it should be in writing; and ever since, the heads of departments have held intercourse with Congress only in writing, the secretary of the treasury reporting directly to Congress, the other secretaries through the president.
Hamilton's financial scheme was the most important subject that occupied the attention of Congress during that session. It was submitted to the house on the fifteenth of January. It was a most masterly performance, and commanded the profound attention and respect of the whole country. It boldly enunciated principles based upon the broad foundation of common honesty, by which, in the opinion of the secretary, the United States ought to be governed in relation to the public debt.
The report opened with an able and comprehensive argument in elucidation and support of these principles the fundamental ground of the whole argument being the justice and policy of making adequate provision for the final payment of the federal and state debts.
These debts amounted in the aggregate to a large sum. Hamilton estimated the foreign debt due to the account of France, to private creditors in Holland, and a small sum in Spain, at about eleven and three quarter millions of dollars. This sum included the arrears of interest (more than a million and a half of dollars) which had acc.u.mulated on the French and Spanish loans since 1786, and installments of the French loan overdue. The domestic debt, including interest to the end of 1790, and an allowance for unliquidated claims of two millions of dollars (princ.i.p.ally unredeemed continental money), he estimated at about forty-two and a half millions, nearly a third part of which was arrears of interest.
The domestic debt was due originally to officers and soldiers of the war for independence; farmers who had furnished supplies for the army, or suffered losses by seizure of their products; and capitalists who had loaned money to the continental Congress during the war, or spent their fortunes freely in support of the cause. These were sacred debts; but the position into which the paper which represented these outstanding claims had fallen, afforded a specious argument against the propriety of paying their nominal value to the holders. So long had public justice delayed in liquidating these claims, that they had sunk to one sixth of their nominal value, and a greater portion of the paper was held by speculators. It thus lost the power with which it appealed to the public sympathy when in the hands of the original holders, and there was a general sentiment against a full liquidation of these claims. It was therefore suggested that the principle of a scale of depreciation should be applied to them, as had been done in the case of the continental money, in paying them--that is, at the rates at which they had been purchased by the holders. It was especially urged that this principle should be applied to the arrears of interest, then acc.u.mulated to an amount almost equal to one half the princ.i.p.al.
In his report, Hamilton took strong grounds against this idea, as being unjust, dishonest, and impolitic. In the latter point of view, he justly argued that public credit was essential to the new federal government, and without it sudden emergencies, to which all governments as well as individuals are exposed, could not be met promptly and efficiently.
Public credit, he said, could only be established by the faithful discharge of public debts in strict conformity to the terms of contract.
In the case in question the contract was to pay so much money to the holders of the certificates, or to their a.s.signees. This was plain, and nothing but a full and faithful discharge of the nominal value of the debt could satisfy the contract. Thus he argued concerning the princ.i.p.al, and he applied the same logic to the acc.u.mulated overdue interest. It ought to have been paid when due, according to contract, and was as much an honest debt as the princ.i.p.al.
Hamilton went further. He strongly recommended the a.s.sumption of the state debts by the federal government, amounting in the aggregate, overdue interest included, to about twenty-five millions of dollars.
Both descriptions of debts, he argued, were contracted for the same objects, and were in the main the same. Indeed, a great part of the particular debts of the states had arisen from a.s.sumptions by them on account of the Union, and it was most equitable that there should be the same measure of retribution for all. The secretary considered such a.s.sumption ”a measure of sound policy and substantial justice.” The entire debt, federal and state, foreign and domestic, for the payment of which he recommended measures of provision, was almost eighty millions of dollars.
The secretary, after giving the whole subject a thorough investigation and discussion, proposed that a loan should be opened to the full amount of the debt, federal and state, upon the following terms:--
”_First._ That for every one hundred dollars subscribed payable in the debt, as well interest as princ.i.p.al, the subscriber should be ent.i.tled to have two thirds founded on a yearly interest of six per cent. (the capital redeemable at the pleasure of the government by the payment of the princ.i.p.al), and to receive the other third in lands of the western territory at their then actual value. Or,
”_Secondly._ To have the whole sum funded at a yearly interest of four per cent., irredeemable by any payment exceeding five dollars upon the hundred, per annum, both on account of princ.i.p.al and interest, and to receive as a compensation for the reduction of interest fifteen dollars and eighty cents, payable in lands as in the preceding case. Or,
”_Thirdly._ To have sixty-six and two thirds of a dollar funded at a yearly interest of six per cent., irredeemable also by any payment exceeding four dollars and two thirds of a dollar upon the hundred, per annum, on account both of princ.i.p.al and interest; and to have at the end of ten years twenty-six dollars and eighty-eight cents, funded at the like interest and rate of redemption.”
In addition to these propositions, the creditors were to have an option of vesting their money in annuities on different plans; and it was also recommended to open a loan at five per cent. for ten millions of dollars, payable one half in specie and the other half in the debt, irredeemable by any payment exceeding six dollars upon the hundred, per annum, both of princ.i.p.al and interest.
The secretary also proposed an augmentation of the duties on imported wines, spirits, tea, and coffee, to enable the treasury to meet the increased demand that would be made upon it; and a duty on domestic spirits was also recommended. Serious trouble grew out of the latter measure when adopted and put in force.
Hamilton's report, sent to Congress on the fourteenth of January, was taken up for consideration in the house of representatives on the twenty-eighth; but action was postponed until the eighth of February.
Its propositions, especially the one relating to the a.s.sumption of the state debts, were vehemently opposed, chiefly because of their tendency to a centralization of power, as giving an undue influence to the general government, and as being of doubtful const.i.tutionality. Many in different parts of the Union thought they saw great political evil in this financial union of the states; and Virginia, above all others, most earnestly opposed the scheme. It was believed that the funding of the state debts would materially benefit the northern states, in which was almost the entire capital of the country, while the southern states could see no benefit for themselves.
Finally, on the ninth of March, a bill predicated upon the secretary's report pa.s.sed in committee of the whole by a small majority, and went to the house for discussion. This continued from time to time until August, when, on the fourth, an act was pa.s.sed embodying essentially the several propositions in Hamilton's report. It authorized the president to borrow twelve millions of dollars, if so much were found necessary, for discharging the arrears of interest and the overdue installments of the foreign debt, and for the paying off the whole of that debt, could it be effected on advantageous terms, the money thus borrowed to be reimbursed within fifteen years. It also authorized the opening of a new loan, payable in certificates of the domestic debt at par value, and in continental bills of credit at the rate of one hundred for one.
Certificates were to be issued for subscriptions in the interest of the domestic debt to the full amount, redeemable at the pleasure of the government, and bearing interest at the rate of three per cent., the interest to be paid quarterly, and to commence with the first day of January, 1791; all interest becoming due on continental certificates, up to that time, to be funded as above. Subscriptions in the princ.i.p.al of the domestic debt were to bear interest at six per cent.; but upon one third of the amount, ent.i.tled ”deferred stock,” the interest was not to commence till the year 1800. This interest was not to be redeemable at a faster rate than eight dollars upon the hundred, annually, including the yearly interest, and it was left to the option of the public creditors to subscribe, or not, to this new loan.