Speech of
Mr. Clement Comer Clay,
of Alabama.

On Mr. Grundy's report in relation to the assumption of the debts of the States by the Federal Government.

Mr. Clay [December 17, 1789 - September 7, 1866;  studied law; admitted to the bar] rose and said:

Mr. President: this debate appears to me to be singular and extraordinary, in several points of view.  It seems to me ill-timed and unprecedented in the present stage of the business.  It will be borne in mind that certain resolutions, involving various principles and propositions, were introduced at an early period of the session by an honorable member, [Mr. Benton] and, after lying on our table some time, were taken up, and somewhat discussed.  We were favored by the honorable mover himself, with a full and able exposition of his views and purposes;  and, almost without objection to the propriety or expediency of the course proposed, on motion of the Senator from Tennessee, [Mr. Grundy] the whole subject was referred to a select committee, to consist of seven members.  That committee took the resolutions under consideration, and, after ample time for that deliberation which their importance demanded, they had, through their chairman, [Mr. Grundy] submitted an able report.  But no sooner had the report been made -- before there had been time to understand its contents -- without suffering it to be printed -- which Mr. Clay believed had heretofore been the universal practice, before any attempt at discussion -- objections had been raised, rather to the reasoning, than to the conclusions, of the committee;  and an argument on all the important matters supposed to be involved, thus forced upon us.

Mr. Clay insisted that a discussion of such grave questions of constitutional law, and of policy and expediency, affecting the interest and welfare of the nation, at the present time, and under such circumstances, was altogether premature.  He said it was unjust and illiberal toward the committee thus to enter upon the merits of their report before it was printed, and before it could possibly be read and understood by those who were called upon to award judgment upon the matters it contained.

Mr. Clay said it was even unfair toward the other members of this honorable body, to call for their votes upon the report without an opportunity for investigation.  One objection, which had been urged with great apparent earnestness, was, to Mr. Clay's mind, most singular indeed;  that was, in effect, that the subject-matter of the report was not properly before us -- that it was, as the lawyers express it, entirely coram non judice.  Now, (said Mr. Clay)if we are to be bound by technical rules, it is altogether too late to take such an objection: a plea to the jurisdiction ought to be filed before pleading to the merits, and before an imparlance, if he correctly remembered the doctrine.  The proper time to have made it was when the resolutions were offered;  those opposed to them on the ground stated, should then have objected to receiving them, or, as soon as they were read, have moved, without further action, to lay them on the table definitively.  So far from this having been done, the reference is made and acquiesced in on all sides.  Moreover, (Mr. Clay said,) the course pursued on this occasion was destitute of that courtesy which usually distinguished this body, both toward the chairman and the other members of the committee.

After propositions had been regularly submitted, and clearly entertained by the Senate, and referred to a committee, did it not become their imperative duty to investigate and report upon them ?  Most unquestionably it did.  Then, how unjustifiable, in any member of the Senate, to charge the committee with having travelled out of line of their duty, and assumed unwarrantable powers, when they have only done what we commanded them to do !  Why, sir, gentlemen have charged the committee, in terms not very respectful, to say the least, with "impertinent intermeddling with the affairs of the States" -- and it has been contemptuously demanded of my venerable friend from Tennessee, the honorable chairman, [Mr. Grundy,] "Who authorized you to inquire into the indebtedness of the State ?"  "Under what authority did you examine into the character and objects of State stocks ?"  The honorable chairman responded very happily, and with great promptitude.  He spoke truly when he said, "You authorized me, the resolution of the Senate required me, to make the investigation alluded to."

Sir, (said Mr. Clay) what sort of justice or magnanimity would there be in those who possessed and exercised the power to command an agent to perform a given duty;  and who, when the duty had been truly and faithfully performed, would turn upon him, and insultingly demand, "By what authority have you done this thing ?"  Why, sir, would it not be downright mockery ?  Is such treatment the just reward of obedience and fidelity ?

But, sir, I have had some reflections upon the character of this debate, in another point of view.  The gentlemen who have resisted printing this report assume to be conservators of the rights and dignity of the States, which, they allege, are infringed by its matter and argument.  Why, sir, really if the friends of State rights -- more especially as they are understood in the quarter of the Union whence I come -- know the dramatis personœ, as I do, they must smile (I will not say incredulously) at this new recruit of friends.  Who are these new State Rights champions, who now manifest so much sensibility lest the rights of the States be touched or impugned ?  Those who have manifested the most zeal and excitement on this occasion, are the two Senators from Kentucky, [Mr. Crittenden and Mr. Henry Clay] the Senator from Massachusetts, [Mr. Webster] and the Senator from New Jersey [Mr. Southard!!]  Why, sir, when we hear those gentleman declaim so eloquently of State rights, and see them so extremely sensitive on the subject, is it not enough to excite "our special wonder ?"  When did they become converts to this doctrine ?  Always, heretofore, they have been regarded, as I thought, in favor of the very broadest constructions of the Federal Constitution --whereas the friends of State rights are well known to favor the most strict construction.  It must be generally known, that all the gentlemen alluded to have heretofore advocated the power of the General Government to carry on a system of internal improvements within the States, to create a protective tariff, to establish a National Bank;  and one of them, at least, [Mr. Webster] if I mistake not, holds it to be not only a legitimate power, but even the duty of this Government to create and furnish a paper currency.  How much astonished, and, perhaps, gratified, then, must be the friends of State rights, to witness this new and powerful accession to their ranks -- to see gentlemen, who have heretofore always indicated, by their acts and expression of sentiment, such faith in the potent influence of the terms "general welfare," now suddenly espousing their cause with such warm enthusiasm.

But, sir, to treat this branch of the subject more seriously, I think the intense feeling manifested by our opponents, on this occasion, may be very rationally accounted for;  the able report under consideration may be regarded as the sword of truth, which must cleave asunder and cut down error, whithersoever it is sent -- "the wounded pigeons may be always known by their flutterings" -- hence all this show of extraordinary excitement in the quarter referred to.

Sir, I think it may be easily demonstrated that the whole argument on the other side, and all the objections urged against this report, are predicated on assumptions of fact, wholly unfounded.  Why, sir, it is, in substance, assumed that none of the propositions discussed in the report are properly before the Senate;  that the committee had no right to take cognizance of the matters embraced by it;  and it has been asked, in a tone of triumph, that ought only to result from a conviction of the truth, "how came the subject here ?"  "Has any State proposed any thing like an assumption of her debts by the General Government ?"  Sir, we shall presently see.  I propose to set the facts, so far as I have been able to collect them, before the Senate, and before the country.  And, in the first place, I beg leave to recall your attention to some of the resolutions brought in by the honorable Senator from Missouri, and upon which the report is grounded.

[Mr. Clay here read the first two resolutions of Mr. Benton, as follows:]

"Resolved, That there is nothing in the Constitution of the United States which can authorize the legislative power of the Union to assume the debts of the States which have been contracted for local objects and State purposes.

"2.  That the assumption of such debts either openly, by a direct promise to pay them, or disguisedly by going security for their payment, or by creating surplus revenue or applying the national funds to pay them, would be a gross and flagrant violation of the Constitution, wholly unwarranted by the letter or spirit of that instrument, and utterly repugnant to all the objects and purposes for which the Federal Union was formed."

Sir, said Mr. Clay, I will not detain the Senate by reading the remaining resolutions;  they but amplify and enforce the principles distinctly laid down in those already brought to your view.  The first resolution marches directly up to the question of constitutional power in this Government to assume the debts of the States, which have been contracted for local objects and State purposes;  and plainly and emphatically denies the existence of any such power.  To meet the same question, if presented in the more insidious and dangerous form of indirect assumption, the second resolution denies the constitutional power of this Government to assume such debts of the States "either openly, by a direct promise to pay them, or disguisedly by going security for their payment, or by creating surplus revenue or applying the national funds to pay them;"  and affirms that such a proceeding, in any of those forms, "would be a gross and flagrant violation of the Constitution."  The remainder of the resolutions go on to specify the various injurious, corrupting, dangerous, and ruinous tendencies of the policy referred to;  and intended to be met and counteracted by the action of the Senate.

As before intimated, these resolutions were, at an early day of the session, introduced, printed, and laid upon our table.  Ample time was given for examination and reflection.  They were taken up and debated by the mover, and some others.  Did anyone then protest against the power or expediency of acting upon them ?  No, sir;  on the contrary, the gentleman themselves acquiesced in this course, at least by their silence.  Nor, during all this time, was it pretended that the subject was not properly before us, or that we were intermeddling in matters that did not pertain to our business.  The resolutions were taken up, after a full explanation of their intended bearing, and of the objects and inducements with which they had been brought forward;  and, upon the motion of the honorable Senator from Tennessee, they were referred to a select committee of more than the usual number of members, for more careful and deliberate examination.  Now, under all these circumstances, is it not most extraordinary, that gentlemen should insist, so vehemently, that the subject is not legitimately before us, and that the committee have acted unwarrantably in making their report ?  You first command your servants to perform a duty, and, when they have done so, censure them for their obedience.

Sir, this view of the subject is altogether an after thought.  The principles it sets forth and maintains, with so much power and ability, do not suit the taste, and do not correspond with the favorite policy of those who have assailed it with such unusual virulence, and poured forth such torrents of indignation against its author: otherwise we should have heard none of the complaints and objections now made.  Indeed, one of the gentlemen [Mr. Southard] has virtually admitted this, by avowing his expectation, when the reference was made, that the Senator from Tennessee would decline making any report on this, as he had done on another subject, at a former session.

But, sir, said Mr. Clay, no matter when the objection to its consideration might have been made, I maintain it is within the power and duty of the Senate to discuss and deliberate upon any subject of legislation connected with the rights and interests of the nation, and more especially upon one which involves questions of such vital importance to the welfare of our constituents, and even the permanency and purity of our institutions.  The time has been when certain gentlemen did not feel so much squeamishness and delicacy in reference to the power and duty of the Senate.  The time was, when some of those who now express so much alarm, and profess so much abhorrence for transcending the supposed limits of our authority, could, and did, without any apparent qualms of conscience, vote a virtual impeachment against the late President of the United States, in this body, though expressly restricted by the Constitution to judicial power alone over such questions, and when it was well understood no such proceeding had been, or was intended to be, instituted against him by the House of Representatives, where the exclusive power of impeachment existed, under the Constitution.  He said he would leave it for others to decide with what grace such professions of scrupulosity, in the exercise of power, now came from that quarter.

But, sir, said Mr. C. if it were even doubtful whether a question of the constitutional power of Congress, or of the expediency or inexpediency of legislation on a given subject, could be properly raised in the Senate, in the mode adopted by the Senator from Missouri, there is another ground on which the subject must be admitted fairly and fully before us.  The distribution of the proceeds of the public lands, as I shall show more fully hereafter, is one form of assumption of State debts by the General Government;  and, although it is not so open and undisguised in its character, it is not the less dangerous on that account.  Not to go back to the numerous similar propositions, which have been presented here for a number of years pest, the resolutions of the Legislatures of no less than four States have been presented here on the same subject, pro and con, during the present session of Congress.  On the 31st of December last, and some eight or ten days before the appointment of the select committee on the resolutions of the Senator from Missouri, the resolutions of the Legislature of New Hampshire were presented by the honorable Senator before me, [Mr. PIERCE,] and similar resolutions of the Legislature of Missouri were presented, on the same day, by the honorable Senator from that State, farthest from me, [Mr. Linn].  Subsequently, and as well as Mr. Clay recollected, on the 13th of January, the late colleague of the honorable chairman presented the resolutions of the Legislature of Tennessee -- one of which was upon the same subject of distribution.  Still subsequently, but before the report of the Select Committee was made, resolutions of the Legislature of Vermont, on the same subject, were presented by one of the honorable Senators from that State, [Mr. PHELPS.]  Now, sir, with all these facts before us, is it not astonishing that honorable gentlemen will rise upon this floor, and say the subject has not been brought here.

It is true, sir, that the three States, first named, protest against the proposed distribution of the proceeds of the public lands, and instruct their Senators, and request their Representatives, to vote against any such proposition;  while the last named State is as decidedly in favor of that measure.  But, sir, does that make any difference as to the question at issue, whether the subject has been brought before the Senate, by any State, or otherwise ?  Certainly not.  It is not alone by affirmative propositions that a subject may be properly presented here.  When the Legislature of a sovereign State of this Union has examined, and made up a deliberate opinion, upon any great question of constitutional power, or of national policy, and has expressly required it to be presented here, although it might assume a negative shape, it seemed to Mr. Clay to demand some action on our part.  According to his opinion, in such cases, whether a State advised or protested against a measure of so much magnitude, it would be more respectful toward her for us to take the subject into consideration, and respond to her views in respectful terms, whether we agreed or differed with her in sentiment or doctrine.  He thought it indisputable that a State opposed to a measure -- more especially one of such importance as this, which had probably been discussed in the Legislatures of all the States, and had been agitated amongst the people through out the Union for the last eight years -- was at least as much entitled to be heard, and have her views patiently and well considered, as one in favor of its adoption.  He thought every gentleman who had had much experience in matters of the kind, would agree that there was always more danger of too much, or over hasty, legislation, than too little.  Mr. Clay said, for his own part, he had always regarded this as a maxim never to be lost sight of, from his first entrance into political life.

Independently of what he had already noticed, Mr. Clay said he might maintain, with great propriety, that the question of the assumption of State debts by the Federal Government had been kept steadily before the Senate, and before the whole country, by a distinct and well known measure, for the last eight years.  He alluded to the "bill to appropriate, for a limited time, the proceeds of the sales of the public lands of the United States," commonly called the "Distribution bill," which had been reported from the Committee on Manufactures, as long ago as April, 1832, by the Senator from Kentucky farthest from him, [Mr. Clay of Kentucky,] and which had been ever since introduced, annually, he believed, by the same Senator.

Sir, said Mr. Clay, that bill has steadily brought up, and kept before us, and before the whole country, this same question of the assumption of State debts by this Government, at least to the extent of the amount of the proceeds of the public lands.  Although it might not have gone the full length of the assumption of the entire amount of those debts, he said he would presently make it manifest, that it was precisely the same measure in principle, and might justly be regarded as its origin.  Mr. C. said he would only occupy the time of the Senate by reading a single section of the bill, to which he alluded.  It was in the following word:

Sec. 2.  And be it further enacted, That after deducting the said ten per centum, and what, by the compacts aforesaid, has heretofore been allowed to the States aforesaid, the residue of the nett proceeds of all the public lands of the United States, wherever situated, which shall be sold said subsequent to the thirty-first day of December next, shall be divided among the twenty-four States of the Union, according to their respective Federal representative population, as ascertained by the last census, to be applied by the Legislatures of the said States to such objects of education, internal improvement, colonization, or reimbursement of any existing debt contracted for internal improvements, as the said Legislatures may severally designate and authorize.

Sir, said Mr. Clay, passing by, with a mere glance, other objectionable "objects" of appropriation, designated by the bill, amongst which were "education," "internal improvement," (without even a restriction to those of a national character,) "colonization," (a subject which had never entered the imaginations of those who framed the Constitution,) this clause is added:  "or reimbursement of any existing debt, contracted for internal improvements, as the said Legislatures may severalty designate and authorize."  Now, sir, is not this an express assumption of the "existing debts [of the States] contracted for internal improvements?"  Yes, sir, it must be admitted on all hands that it is not only an undertaking, but assumption and payment, both together, as far as the funds arising from the sales of the public lands would go.

Mr. Clay said he well remembered the first introduction of the bill he had just noticed.  It was brought in originally, pending the animated contest for the Presidency in 1832, when its distinguished author was one of the candidates for that most responsible and exalted station.  It immediately became a subject of exciting and general attention throughout the country.  Estimates were soon made, and almost universally circulated through the public press, exhibiting the amount that each State would be entitled to receive, under its provisions, making the highest amount ever received from the public lands, in any one year, the basis of calculation.  The sum thus held out to each State, as a boon from the General Government, if the measure succeeded, was highly fascinating.  Mr. Clay said, having been, at that time, a member of the other House, from one of the new States, and perceiving at once the blighting influence such a measure must have upon their growth and prosperity, his anxiety and apprehensions were intensely excited.  It was well understood by all who knew the constitutional opinions of the distinguished man then in the Chief Magistracy of the nation, that he could never consistently approve, much less recommend, such a measure;  and he could not entirely suppress the fear that a measure, apparently so captivating, would give to his competitor, and its author, considerably the advantage.  In a word, (said Mr. Clay) I had strong apprehensions that the hundreds of thousands of dollars, offered annually by this bill to some of the older and most populous States, might "seduce them from their propriety."  But, thanks to the intelligence, virtue, and devotion to the Constitution, which have ever animated the American people, on the most trying occasions, the contest resulted in the triumphant re-election of the then incumbent.

Mr. Clay said he had at first supposed that the measure originated with the occasion, and that, having failed to accomplish any desired change in public sentiment, it would be abandoned.  But, not so, (said Mr. Clay) it was brought forward again, at an early day of the succeeding session;  and so far as he had been able to trace its history, it had been introduced, session after session, ever since, perhaps with a single exception, substantially in the same form.  He said he knew of no instance of any other measure having been pressed for such a number of years, with such unyielding pertinacity and such untiring perseverance.  Why, sir, (said Mr. Clay) even at the last session, when it had not been introduced as an independent measure, while the bill to graduate and reduce the price of that portion of the public lands which had been offered at public sale and remained unsold, was pending, the Senator from Kentucky [Mr. Henry Clay] moved to strike out all of that bill after the enacting clause, and to insert, in lieu of it, all the principal provisions of his distribution bill.  Even since the commencement of the present session, it would be recollected, the same Senator had alluded to it, and had expressed his sympathies for the indebted States with much apparent feeling.

And, sir, (said Mr. Clay) shall we now be told, after these frequent and persevering efforts to carry a measure, one of whose principal features is not only to assume, but to pay, pre-existing debts of the States, contracted for State and local objects, that we travelling out of our way when we take up and discuss the question of assumption ?  Does the right of discussion belong exclusively to the advocates of that peculiar measure ?  And whilst they are continually presenting it to the country in the most alluring form, and lauding it in terms of the highest commendation, must those who see its unconstitutionality and ruinous tendencies remain inactive and silent ?

Mr. Clay said, representing as he did, in part, one of the new States, he should feel that he was recreant to duty, and merited the execrations of those who had so often honored him with their confidence, if he were to remain mute and passive under such circumstances.  Let not gentlemen attempt to escape the restraints of the Constitution, said Mr. Clay, on the ground that there is any difference in favor of the power of Congress over that portion of the public treasure derived from sales of the public lands, and that derived from customs, or any other source.  He said any man who would examine the subject, without prejudice, either with reference to the compacts between this Government and the States which had ceded territory, or under the Constitution, must become satisfied that no such power existed.  The language of the Virginia act of cession (which embraced much the largest portion of ceded territory) was explicit:  "that all lands within the territory so ceded to the United States, and not reserved for, nor appropriated to, any of the before mentioned purposes, or disposed of in bounties to the officers and soldiers of the American army, shall be considered a common fund for the use and benefit of such of the United States as have become, or shall become, members of the Confederation or Federal alliance of the said States, Virginia inclusive," &c.

The language of the act, by which Georgia ceded to the United State the territory comprised within the limits of Alabama and Mississippi, is no less explicit.  It declares that the land so ceded (after paying Georgia, and satisfying certain grants of her own) "shall be considered as a common fund for the use and benefit of the United States, Georgia included, and shall be faithfully disposed of for that purpose, and for no other use or purpose whatever."  This act, it would be remembered, passed in 1802, long after the adoption of the Constitution of the United States;  and the land ceded was received by this Government, according to its terms.

Now, said Mr. Clay, it is impossible for ingenuity to torture the language here employed, into a meaning to answer the purposes of the Opposition: they can never make the words, "common fund," mean twenty-six several sums, for the separate and distinct purposes of the different States of the Union.  Sir, said Mr. Clay, it is at variance with the whole history of the Constitution, which was intended to remedy the defects of the Government, under the articles of confederation, for general purposes --to "provide for the common defence, to promote the general welfare"-- and to sustain and regulate a National Government, leaving the States to regulate their own affairs.  We all know the chief solicitude of our Republican ancestors was to confine the General Government to such objects, and limit its operation to powers expressly granted.  So determined were they in this purpose, that they never paused in their exertions till they obtained the adoption of the tenth article in the amendments, which declares, "That powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."  Where, then, sir, is the power "delegated to the United States by the Constitution," to divide the proceeds of the public lands amongst the several States ?  Can any advocate of the measure point us to the clause ?  No, sir;  we may defy the advocates of this power on this ground.  If this view be correct, in regard to that portion of the public lands ceded to the General Government by the States, how much more conclusive is the argument against such an appropriation of the proceeds of the lands which have been purchased from France and Spain ?

Louisiana and Florida had been bought and paid for out of the National Treasury.  It was now generally admitted, that money could not be appropriated from the National Treasury to defray the expenses of State and local improvements.  Would it change the principle, for money to be first laid out in land, and then reconverted into cash ?  Did the money which had been paid out for those Territories, when brought back into the Treasury, by sale of the lands to individuals, assume any new quality, that gave us any new power of appropriation ?  He said he could not conceive any such magic influence, to be wrought by the simple process of paying out money, and receiving it back.

But, sir, said Mr. Clay, I am occupying your time unnecessarily, in the discussion of this question, on the present occasion.  I desire no better argument to go forth to the people of the Union, than that which is to be found in this report.  It presents the subject with so much clearness and ability, from its origin, both in reference to the articles of confederation, and the Constitution, that I believe no man who will read and understand it, can come to any other conclusion, than that any such measure would be a breach of good faith toward the States which ceded territory, as well as a violation of the plain letter and spirit of the Constitution.

That such a measure would, Mr. President, not only now be inexpedient, but that it would have been so, in the highest degree, heretofore, if it had been adopted, is perfectly demonstrable.  By recurring to the documents of this body, of the last session, it will be found, by a report of the Secretary of the Treasury, then made, responsive to a resolution of the Senate, that if the act entitled "An act to appropriate for a limited time the proceeds of the sales of the public lands of the United States," [Henry Clay's Land Bill,] which passed both Houses of Congress, had received the approbation of the President, and had been acted upon up to the 30th September, 1838, the nett proceeds, which would have been divided among the States, would have amounted to $51,011,732.  It further appears, from the same document, that had such distribution been made on the 1st day of January, 1839, it would have left a deficiency in the receipts of the Treasury, to meet the current demands upon it, amounting to $49,246,389.64 -- say, in round numbers, $50,000,000 !  Yes, sir, such would have been the effects of the measure, so often and so pertinaciously pressed upon Congress, if it had become a law;  and we should now have had a national debt of that amount, unavoidably created, or we should have been compelled to tax our constituents to have prevented it.

And, sir, can it be pretended, if it were merely a question of expediency, without any constitutional doubt or difficulty, that in the present situation of the country -- that now, when it has been intimated by those opposed to the Administration, and feared by some of its friends, that we might again be compelled to resort to extraordinary means to meet the current demands upon the Treasury -- I repeat sir, will it be insisted by any one that in the present state of things, we should distribute the proceeds of the public lands for the purposes contemplated;  or, in other words, assume the payment of State "debts contracted for internal improvements," to the amount received from that source ?

Sir, (said Mr. C.) I have no hesitation in declaring it as my opinion, that such a proposition would, in effect, be assuming the expediency of an increase of the tariff to the amount of six or eight millions of dollars annually.  The receipts from the public lands, now contributing to the support of the Government, may be considered equal to that average, which, being withdrawn from that object, would result in the necessity, absolute and inevitable, of a corresponding increase of taxation in some form.  Can we believe that the country is prepared to acquiesce in a measure even of that limited extent ?

But, sir, said Mr. Clay, independently of the inducements to examination and action on our part, which I have already noticed, we have seen the broad proposition for the assumption of the whole amount of State debts by the General Government plainly enough made in the circular of those well known and celebrated English bankers and stockjobbers, Messrs. Baring, Brothers and Co. which has already been brought to the view of the Senate.  As it was no doubt the principal cause which gave impulse to the advocates of this bold scheme, on this side of the Atlantic, the Senate will pardon me for again calling their attention to the insidious form in which the plan was originally sent forth.  The paragraph to which I have special allusion, is in the following words:

The late loan made by the United States Bank for about two years, and for £800,000 on deposit of Pennsylvania and other States' stocks, at a price which gives 10 per cent. annual interest to the subscribers, shows what rate of interest must be paid to obtain any amount of money on the best American securities, and serves therefore as a guide to capitalists here for their purchases of state stocks. We quote the last prices of the principal securities at which business has been done, but must add, that even at these rates only small and occasional sales are practicable. The continued fall in their market value destroys speculation, while many years will be required for real investments to absorb all that is at present in our market. We do not doubt but that such gradual purchases will continue of the stock of well known states which do not over issue, and which faithfully meet their engagements to their creditors, as the confidence in the resources and national honour of the United States remains undiminished in this country, as well as the conviction that by such investments, England employs her annual surplus of capital both safely and profitably, encourages her best customer, and binds more closely the ties of mutual interest between the two countries. "But if the whole scheme of internal improvements in the Union is to be carried into effect on the vast scale, and with the rapidity lately projected, and by the means of foreign capital, a more comprehensive guarantee than that of individual States will be required to raise so large an amount in so short a time.  A national pledge would undoubtedly collect capital together from all parts of Europe;  but the forced sales of loans made separately by all the individual States in reckless competition, through a number of channels, render the terms more and more onerous for all, lower the reputation of American credit, and (as reliance is almost exclusively placed on the London market) produce temporary mischief here, by absorbing the floating capital, diverting money from regular business, deranging banking operations, and producing an unnatural balance of trade against this country.  It would seem, therefore, as if most of the States must either pause in the execution of their works of improvement, or some general system of combination must be adopted."

All corporation stocks are neglected, nor do we hear of any transactions in Bank shares, except in those of the United States Bank.

We have the honour to be,
Your obedient servants,
Baring, Brothers, & Co.

Here allusion is artfully made to the internal improvements of this country -- a subject known to be of absorbing interest in almost every part of the Union -- and we are told, in substance, that this "scheme" cannot "be carried into effect on the vast scale, and with the rapidity lately projected, and by the means of foreign capital," without "a more comprehensive guarantee than that of individual States."  They then set forth more distinctly what they mean by a more comprehensive guarantee, by saying "a national pledge would undoubtedly collect capital together from all parts of Europe;"  and they reiterate, in the closing sentence of the paragraph, that "the States must either pause (that is, stop) in the execution of their works of improvement, or some general system of combination (meaning a "national pledge") must be adopted."  What arrogance and insolence !  Is not this saying to the States engaged in internal improvements, too plainly to be misunderstood, "we (the Messrs. Barings) no longer have confidence in your individual good faith and solvency, and therefore we will let you have no more money, unless you give us the General Government, or a combination of the States, as securities ?"  Yes, sir; they say to the sovereign States of this Union, "We cannot trust you without a 'national pledge' that you will maintain your good faith."  Yet, sir, this vile imputation, coming from foreign bankers and stockjobbers, against the honor and responsibility of the States, does not seem to excite the ire of those who have assumed, on this occasion, to be the peculiar guardians of their rights and dignity;  but they pour forth their indignation upon us, who would repel such insolent interference in our affairs, and who would rebuke the attempt to dictate what should be the policy of the National Government.

It is very well, in their opinion, for those who control the European stock market to say to the States, "You are not able, nor willing, to meet your liabilities;"  and, if we say, "We will not degrade the States, nor violate the Constitution, by acceding to their unwarrantable demands," we are accused of warring against the credit of the States.  Save us, kind Heaven! from such new-fangled State Rights doctrine !

Sir, whether this plan of the London bankers, impeaching the good faith and solvency of the States, and demanding security for the redemption of their obligations, emanated from any consultation, or pre-arrangement, with those of our own country, who are interested in the rise of stocks, and the profits or speculation consequent upon such rise, I am unable to say.  It is not to be presumed that there will ever be any precise development of all the circumstances which may transpire in reference to any such movement.  Brokers and stockjobbers are too shrewd to make their secret plans of operation known to the public.  You might as well expect a juggler to disclose the secret of the deception and imposture by which he earns his bread.  However the fact alluded to may be, there is certainly a remarkable coincidence between the tone of the (so called) Whig press in this country, and that of the "money changers" in England.

No sooner had the circular of the Barings reached this country, than you find, said Mr. Clay, all the leading Whig presses responding to its proposition in tones of the most cordial approbation;  and, so far as he had observed, there was not one dissenting voice amongst them.  He presumed the gentlemen of the opposition would acknowledge, with pride and pleasure, that the New York Courier and Enquirer was one of the principal organs of Whig sentiment.  Whether they did or not, Mr. Clay said, it would be well recollected by the whole country, that if its editor* (who had certainly become very notorious, if not distinguished) had not presided as accoucheur at the birth of the universal Whig party, he had, at least, officiated as grand high priest, in performing the baptismal ceremony of conferring upon that party, with general acquiescence, their present cognomen, when they were in the lamentable condition of having worn out all their former cognominal distinctions.  He said that editor should be regarded not only as the organ of the political, but of the monetary branch of the Whig party.  Every one would recollect his "fair business transaction" with the late president of the United States Bank, and would appreciate the high claim it gave him to the confidence of all who felt an interest in the pure character of that institution.  The New York Herald, another Whig paper, in November last, thus introduces and comments upon the views of the Courier and Enquirer upon this important subject:

This plan is so far matured by the leaders of the Whig party as to be officially promulgated by in the Courier and Enquirer of yesterday morning.  The following extract conveys, in petto, the skeleton of the scheme:

"Let the Government of the United States -- which means the people's immediate representatives in both Houses of Congress -- create three hundred millions of stock, bearing an interest of four per cent. per annum, and let this be apportioned among the States, on the principle of Mr. [Henry] Clay's Land bill -- that is, pro rata, according to the number of their Senators and Representatives in Congress -- and let the proceeds from the sales of public lands be set aside and sacredly pledged as a sinking fund for the redemption of this stock.  Let the Secretary of the Treasury, or some other suitable person, be appointed to exchange so much of this stock as may be the portion of any State for the stock of such State now issued;  and after a certain period --say six months-- pay over the balance to the respective States.  Most probably the holders of some State stocks would not be willing to make such exchanges;  and, if so, the State would receive its entire United States portion, and from the interest annually received on the United States stock, and sales of it from time to time, as their necessities required, be in a situation to progress at once with all its public works, whether commenced or only in embryo.  United Stated stock would then immediately fill the space at present occupied by about two hundred millions of State stock;  the remaining one hundred millions would be deposited in the State treasuries, and would only be offered for sale as their public works or other necessities required, and which the capitalists of Europe and America would gladly purchase at a premium."

In illustration of this great scheme, the Courier goes at length into its popularity, economy, and means of escape from direct taxation which the several States must submit to if the present system continue.  With every view taken on these points we cordially concur.  It is the only and efficient system of relief for the financial troubles of the age.  A new National Bank is as frail as a fair one of the third tier.  We have been the coup de grace given to the rotten fair one in Philadelphia.  Free banks are equally worthless and numerous.  Safety Fund can hardly cover their nakedness.  There is no place, no scheme, nothing short of a miracle from Heaven, can save the great credit system, except it be the plan now proposed.

Now, Mr. President, it will be perceived from this article, that the editor of the Courier and Enquirer, estimates the present amount of State stocks at "about two hundred millions" of dollars -- so far as I know, without any complaint of extravagance, or over-estimate, either by editors or politicians of his party, though it was considered very censurable in the select committee who submitted this report, to make precisely the same estimate;  and, by way of satisfying the non-indebted, as well as the indebted States, he proposes that the Government of the United States shall create stock to the amount of "three hundred millions" of dollars !  This stock is to be "apportioned among the States on the principle of Mr. Clay's (Distribution) Land bill;  that is, pro rata according to the number of their Senators and Representatives in Congress, and let the proceeds from the sales of the public lands be set aside, (that is, abstracted from the receipts into the Treasury,) and sacredly pledged as a sinking fund for the redemption of this stock."  Mark the perfect coincidence, the identity of principle, between this plan and that so long heretofore urged upon Congress, for the distribution of the proceeds of the public lands.  The only essential difference is, that, under the late plan, the Government is to issue stock, or give its bonds, besides giving a mortgage upon the public lands.

The editor of the Herald furnishes proof of the authorship of this scheme, which is worthy of consideration.  Speaking upon that subject in November last, he says:

"This plan is so far matured by the leaders of the Whig party, as to be officially promulgated in the Courier and Enquirer of yesterday morning."

He also adds:

"With every view taken on these points we cordially concur.  It is the only and efficient system of relief for the financial troubles of the age."

The New York Commercial Advertiser, another leading Whig paper, on the 22d of November last, in publishing the same circular of Baring, Brothers, and Co. expresses its views in the following language:

"There is a suggestion in the preceding extract, upon which we have been pondering for weeks, and which deserves the profound consideration of the American people, of the State Governments and of the National.  We refer to the proposition for a pledge of a national faith to sustain the credit of the States;  or, in other words, an assumption of the State stocks now oppressing both the European and American markets, by the United States, and the issue of a national stock in lieu thereof.  The suggestion, we doubt not, will startle many a reader;  but we cannot help that.  The subject is one of very great and very grave importance, and the position of many States of this Union is such that we cannot shut our eyes to their condition if we would.  Nor indeed should we.  The States of this Union are bound together by no common ties.  They are all one family -- it is a great and a rich family -- and what, though several of its members have, imprudently, certainly, and perhaps rashly, involved themselves in pecuniary difficulties, from which, singlehanded, they cannot well recover -- shall the other members of the family allow them to sink --to be crushed-- and their credit destroyed -- or rather, like a wealthy parent, able to protect the credit of his whole family, shall not the National Government interpose, and by some equitable arrangement with the embarrassed States, assume their liabilities, and thus afford timely relief to them, and at the same time, to the whole country ?"

Sir, (said Mr. Clay) I might go on with extracts from other Whig papers, exhibiting wonderful harmony of sentiment upon this subject, but it is unnecessary.  I will only add, that the Evening Star, the New York American, the Journal of Commerce -- indeed, so far as I have noticed, the whole Whig press of New York, approved the plan of assumption.  Nor, sir, were these views confined to the Whig press in the great commercial emporium -- they were echoed west of the Alleghany.  To prove this, I will only call your attention to a brief extract from the Cincinnati Gazette, one of the ablest Whig papers in that region.  Speaking of the embarrassments of the States and the adoption of this remedy, the editor remarks:

"But it will be objected the Federal Government has no constitutional rights to assume the debts of the State;  and farther, that it cannot be done without creating another national debt.  We grant that the letter of the Constitution confers no such power, unless it is to be found in the "general welfare" clause, and that clause was rendered inoperative by the successive vetoes and usurpations of President Jackson.  But there is yet a method by which the constitutional difficulty can be obviated, and the credit of the States sustained, by means which are already justly and truly their own.  Had not Mr. CLAY'S bill for the distribution of the proceeds of the public lands (passed by a triumphant majority of both Houses of Congress) been defeated -- not by a veto, for that would not have arrested its passage, since a majority of both Houses were awaiting such a message to vote it down -- but by an infamous act of the President, who thrust the bill into his pocket, and furtively carried it away from the Capitol -- every State in the Union would have already been in the possession of ample means, not only of sustaining their credit as to existing obligations, but of completing their works.

"Now, then, let the great legislator of the West renew the land bill, with the necessary modifications, dividing the proceeds of the public lands among the several States, conditioned that those proceeds shall be applied to the payment of the debts of the debtor States respectively.  Let the Federal Government issue a national stock, bearing, say, four per cent. interest, in exchange for the State stocks -- the holders of which would gladly enough make the exchange -- and let the proceeds of the public lands be attributed to the redemption of the said stock.  The fund is ample for the ultimate redemption of every dollar -- a large saving annually would be realized -- every State in the Union would be enriched, and the honor of the country redeemed.

"As to the other objection, the creation of a new public debt, it has no terrors for us.  But we reserve the discussion for another day."

Here we find the questions of constitutionality, and the creation of another public debt, alluded to -- but neither the one nor the other is regarded as any serious obstacle.  The editor surrenders the constitutionality of the power "unless it is to be found in the 'general welfare' clause" -- but he imagines that difficulty can be easily obviated by the bill for the distribution of the proceeds of the public lands.  Upon that question, it is unnecessary to repeat what I have already said.  And, as to the creation of a new national debt, it has no terrors for a Whig politician.

Nor, sir, has the leading organ of the Opposition in this city been silent upon this subject.  I allude to the National Intelligencer, in whose columns a communication was published, at least with the silent acquiescence of its editors, as long ago as the 28th of October last, proposing that the proceeds of the public lands should be set apart for the redemption of State debts.  And again, within the last few days, they transferred a communication which had been published in the Pennsylvania Inquirer, to their own columns, in which, amongst other things, the writer says:

"I think, therefore, as a matter of sheer justice, that the United States should pass a law to relieve the States.  The late distribution act was an apportioning of the moneys resulting from the sale of the public lands; and all that is required now is, that a portion equal to the State debts should be set apart an a sinking fund.  The lands need not be sold on the instant.  They will be reserved for a convenient season.  By this arrangement, the old States will start fair, unencumbered, and free from an onerous burden of taxation;  and the gentlemen who have this subject in their hands for adjustment, will find, if they do not accede to this proposition, that they will be swept from the stations they now occupy.  I confess I should want no better lever to upset them in oppressed and encumbered Pennsylvania, than a vote against the payment of her debt out of the public lands, that in part be long to her, and which her costly improvements have increased in value equal to the amount other debt."

In the close of his letter, the writer repeats emphatically:

"The people will pay their State debts out of the public lands.  Let this Congress look to it, or they will not find their seats in the next Congress."

To these views the National Intelligencer gave its sanction, in the following introductory paragraph:

"In the argument of the subjoined article, which we met with in reading over our mail papers yesterday, it must be admitted by every body that there are strong points, if it be not conclusive, in favor of such a distribution of the public lands, or the proceeds of the sale of them, as shall ensure to each State its just proportion of the benefits accruing from a property which, since the redemption of the debt for the payment whereof it was pledged, must be considered as a trust held by the United States for the common benefit of all the States.  We understand the writer, of course, to contemplate such a distribution as shall secure to each State its due proportion of the proceeds, without any consideration of its being in debt or out of debt, for its expenditures on roads and canals, public schools, or analogous objects.  Each State will of course be at liberty to employ its particular share in whatever manner it pleases."

Now, sir, said Mr. Clay, after this hasty review of the emanations of the Opposition press, without one jar of discord;  when we see it was distinctly announced by high authority, and without contradiction from any quarter, that "the plan" had been "so far matured" by the leaders of the Whig party, as to be officially promulgated in the Courier and Enquirer;  when it has been declared, in the article just quoted from the Intelligencer, to be a powerful electioneering theme -- "a lever to upset" the Democratic party in one of the largest States of this Union, is it not astonishing that gentlemen will rise here, and contend with such apparent earnestness, that we, a branch of the National Legislature, which their friends allege is not only competent, but bound, to carry the proposed policy into effect, have nothing to do with it?

Sir, let us no longer hear that this is not a proper subject for inquiry and consideration by Congress, when a powerful party are maturing and organizing their plans to involve us in a new national debt of three hundred millions of dollars !  "Eternal vigilance is the price of liberty."  When we see a conspiracy forming to plunge us into a debt of this amount, with all its attendant evils, are we to sit by with folded arms and sealed lips ?  On the contrary, it should arouse us to action and energy.  It behooves us, under such circumstances, to be up and doing, and, in the language of my friend from Tennessee, not to be too much afraid of danger either to understand or meet it.  When an insidious enemy is about to make war against me, I prefer to be first in taking the field, and not to sleep upon my post until, by a stolen march, I am surprised and captured.  As faithful sentinels, it is our duty to sound the alarm at the first approach of the enemy.  It is our business to meet, and defeat, if we can, this attempt to violate the Constitution, and to warn our constituents of a conspiracy to fix upon them another enormous national debt.

But the gentlemen on the other side are extremely sensitive on the subject of State credit.  The Senator from New Jersey [Mr. Southard] seems to have a peculiar sensibility on this subject, lest the value of State stocks should be depreciated.  He contends that this report is calculated not only to degrade the States, but to impair their credit.  Now, in my humble opinion, Mr. President, this apprehension is wholly founded in error.  If I understand the doctrines of the report, you will not find any thing in it which may either conflict with the ability or good faith of the States.  It does not in crease the amount of their debts, nor does it attempt to raise a doubt of their solvency.  So far from impeaching their ability or readiness to meet their engagements, I understand it to maintain the very converse of the proposition.  It professes to discuss the question of constitutional power, and the question of expediency, involved in the proposition to assume the debts of the States.  Suppose we determine it to be both unconstitutional and inexpedient -- as I trust we shell -- does that imply a want of confidence on our part that the States are both honest and able enough to meet their own liabilities ?  If I do not think proper to pay the debt of my friend, does that prove that I consider him either insolvent or dishonorable ?  Sir, I should be sorry to entertain such an opinion;  and I trust none of the States which have issued stocks, are in a condition so very pitiable as the argument to which I am replying would presuppose.

Mr. Clay said this subject might be viewed in another aspect, which might account for the extraordinary sensibility which had been manifested.  These stocks were owned, he believed, principally by certain large corporations in this country, and by foreign capitalists.  If he was not mistaken, an agent of the largest institution amongst us was now in Europe for the purpose of selling these bonds to save it from bankruptcy.  If the General Government were to assume their payment, or if the idea could be created that such a measure was likely to succeed, those stocks would sell promptly, and probably rise in value some twenty or thirty per cent. and consequently advance the interest of the holders in that ratio.  To adopt the report would be to defeat the hope of such a speculation, and would naturally excite some feeling --some nervous irritability-- amongst those interested.  But, sir, it cannot affect the interests of the States;  they are not now the holders of these bonds, except to a very limited extent.  They have sold the greater portion of the bonds issued by them;  and I am glad to see that some of the States are about to withdraw from the market, and to cancel such as have not been sold.  Nor have the holders of these stocks any right to complain of the States on account of our refusal to pay them;  no such pledge or inducement was held out when they became purchasers.  They took them on the faith and credit of the States alone, not upon those of the General Government.  Then what right have they to ask our endorsement ?  What right have they to complain if we decline giving it ?  We do not impair the guarantee under which they purchased -- it remains the same.

No, sir, none of the States, which have issued stock, stand in need of the securityship of the General Government to meet their engagements;  and, to urge the necessity or expediency of such a measure, is much better calculated to excite distrust and want of confidence in their honor and credit, than any discussion or vote in this body, on the resolutions submitted by the committee.  I cannot believe that a single one of them is obnoxious to a doubt, or suspicion, that should depreciate the value of her bonds.  The State which I have the honor to represent, in part, is one of those indebted -- yet it never entered my head to suppose that her character, or interest, was jeoparded by any part of the present proceeding.  Her resources are known to be ample -- her character for good faith is untarnished -- she has nothing to fear from fair discussion, here or elsewhere.  So far from desiring the aid of this Government to pay her debts, she is one of the protesting States, against the distribution scheme of the Senator from Kentucky, [Mr. Henry Clay] and I do not believe one of her Representatives will ever be found voting in favor of that measure.  For his own part, Mr. [Clement] Clay said, he was opposed to the whole doctrine of distribution of any part of the revenue of this Government, amongst the States, in every form.  In his opinion, no better plan could be devised to humble and degrade the States, and bring them to the footstool of Federal power, than to accustom them to come here for money to supply their wants.

Mr. Clay said, entertaining such views as he had taken occasion to express, he had felt surprise that any opposition should have been made to this report;  but that a motion to print it, merely for the use of the Senate, should have met any resistance, appeared still more extraordinary.  It would be recollected that he had made a proposition to print the usual number, merely to supply Senators;  yet it was thought to be of such dangerous tendency that gentlemen would not agree to print fifty copies, lest the credit of the States should be injured.  He said he would now repeat his proposition: let the report be printed in the usual manner.  If it be deemed objectionable, let gentlemen meet it with their arguments, and send forth the antidote with the bane.  And should it even be thought proper to express the confidence of the Senate in the good faith and ability of the indebted States to meet all their engagements, let a resolution to that effect be introduced, and he would give his vote in its favor.