Mr. MERCER made some remarks tending to a reconsideration of the act declaring general funds to be necessary, which revived the discussion of that subject.

Mr. MADISON said, that he had observed, throughout the proceedings of Congress relative to the establishment of such funds, that the power delegated to Congress by the Confederation had been very differently construed by different members, and that this difference of construction had materially affected their reasonings and opinions on the several propositions which had been made; that, in particular, it had been represented by sundry members that Congress was merely an executive body; and, therefore, that it was inconsistent with the principles of liberty and the spirit of the constitution, to submit to them a permanent revenue, which would be placing the purse and the sword in the same hands; that he wished the true doctrine of the Confederation to be ascertained, as it might, perhaps, remove some embarrassments; and towards that end would offer his ideas on the subject.

He said, that he did not conceive, in the first place, that the opinion was sound, that the power of Congress, in cases of revenue, was in no respect legislative, but merely executive; and, in the second place, that, admitting the power to be executive, a permanent revenue collected and dispensed by them in the discharge of the debts to which it should be appropriated would be inconsistent with the nature of an executive body, or dangerous to the liberties of the republic.

As to the first opinion, he observed that, by the Articles of Confederation, Congress had clearly and expressly the right to fix the quantum of revenue necessary for the public exigencies, and to require the same from the states respectively, in proportion to the value of the land; that the requisitions thus made were a law to the states, as much as the acts of the latter for complying with them were a law to their individual members; that the Federal Constitution was as sacred and obligatory as the internal constitutions of the several states; and that nothing could justify the states in disobeying acts warranted by it, but some previous abuse and infraction on the part of Congress; that as a proof that the power of fixing the quantum, and making requisitions of money, was considered as a legislative power over the purse, he would appeal to the proposition, made by the British minister, of giving this power to the British Parliament, and leaving to the American assemblies the privilege of complying in their own mode, and to the reasonings of Congress and the several states on that proposition. He observed, further, that by the Articles of Confederation was delegated to Congress a right to borrow money indefinitely, and emit bills of credit, which was a species of borrowing, for repayment and redemption of which the faith of the states was pledged, and their legislatures constitutionally bound. He asked whether these powers were reconcilable with the idea that Congress was a body merely executive. He asked what would be thought in Great Britain, from whose constitution our political reasonings were so much drawn, of an attempt to prove that a power of making requisitions of money on the Parliament, and of borrowing money, for discharge of which the Parliament should be bound, might be annexed to the crown without changing its quality of an executive branch, and that the leaving to the Parliament the mode only; of complying with the requisitions of the crown would be leaving to it its supreme and exclusive power of legislation.

As to the second point, he referred again to the British constitution, and the mode in which provision was made for the public debts; observing that, although the executive had no authority to contract a debt, yet, that when a debt had been authorized or admitted by the Parliament, a permanent and irrevocable revenue was granted by the legislature, to be collected and dispensed by the executive; and that this practice had never been deemed a subversion of the constitution, or a dangerous association of a power over the purse with the power of the sword.

If these observations were just, as he conceived them to be, the establishment of a permanent revenue—not by any assumed authority of Congress, but by the authority of the states at the recommendation of Congress, to be collected and applied by the latter to the discharge of the public debts— could not be deemed inconsistent with the spirit of the Federal Constitution, or subversive of the principles of liberty; and that all objections drawn from such a supposition ought to be withdrawn. Whether other objections of sufficient weight might not lie against such an establishment, was another question. For his part, although for various reasons* he had wished for such a plan as most eligible, he had never been sanguine that it was practicable; and the discussions which had taken place had finally satisfied him, that it would be necessary to limit the call for a general revenue to duties on commerce, and to call for the deficiency in the most permanent way that could be reconciled with a revenue established within each state, separately, and appropriated to the common treasury. He said, the rule which he had laid down to himself, in this business, was to concur in every arrangement that should appear necessary for an honorable and just fulfilment of the public engagements, and in no measure tending to augment the power of Congress, which should appear to be unnecessary; and particularly disclaimed the idea of perpetuating a public debt.

[Note *: * Among other reasons, privately weighing with him, he had observed that many of the most respectable people of America supposed the preservation of the Confederacy essential to secure the blessings of the revolution, and permanent funds for discharging debts essential to the preservation of union. A disappointment to this class would certainly abate their ardor, and, in a critical emergency, might incline them to prefer some political connection with Great Britain, as a necessary cure for our internal instability. Again, without permanent and general funds, he did not conceive that the danger of convulsions from the army could be effectually obviated. Lastly, he did not think that any thing would be so likely to prevent disputes among the states, with the calamities consequent on them. The states were jealous of each other; each supposing itself to be, in the whole, a creditor to the others. The Eastern States, in particular, thought themselves so with regard to the Southern States. (See Mr. Gorham, in the debates of this day.) If general funds were not introduced, it was not likely the balances would ever be discharged, even if they should be liquidated. The consequence would be a rupture of the confederacy. The Eastern States would, at sea, be powerful and rapacious the Southern, opulent and weak. This would be a temptation; the demands on the Southern States would be an occasion; reprisals would be instituted; foreign aid would be called in by, first, the weaker, then the stronger side; and, finally, both be made subservient to the wars and politics of Europe.]

Mr. LEE, in answer to Mr. Madison, said the doctrine maintained by him was pregnant with dangerous consequences to the liberties of the confederated states; that, notwithstanding the specious arguments that had been employed, it was an established truth that the purse ought not to be put into the same hands with the sword; that like arguments had been used in favor of ship-money in the reign of Charles the First, it being then represented as essential to the support of the government; that the executive should be assured of the means of fulfilling its engagements for the public service. He said, it had been urged by several in behalf of such an establishment for public credit, that without it Congress was nothing more than a rope of sand. On this head he would be explicit; he had rather see Congress a rope of sand than a rod of iron. He urged, finally, as a reason why some states would not, and ought not, to concur in granting to Congress a permanent revenue, that some states (as Virginia) would receive hack a small part by payment from the United States to its citizens; whilst others (as Pennsylvania) would receive a vast surplus, and, consequently, be draining the former of its wealth.

Mr. MERCER said, if he conceived the federal compact to be such as it had been represented, he would immediately withdraw from Congress, and do every thing in his power to destroy its existence; that if Congress had a fight to borrow money as they pleased, and to make requisitions on the states that would be binding on them, the liberties of the states were ideal; that requisitions ought to be consonant to the spirit of liberty; that they should go frequently, and accompanied with full information; that the states must be left to judge of the nature of them. of their abilities to comply with them, and to regulate their compliance accordingly; he laid great stress on the omission of Congress to transmit half-yearly to the states an account of the moneys borrowed by them. &c., and even insinuated that tiffs omission had absolved the states, in some degree, from the engagements. He repeated his remarks on the injustice of the rule by which loan-office certificates had been settled, and his opinion that some defalcations would be necessary.

Mr. HOLTON was opposed to all permanent funds, and to every arrangement not within the limits of the Confederation.

Mr. HAMILTON enlarged on the general utility of permanent funds to the federal interests of this country, and pointed out the difference between the nature of the constitution of the British executive and that of the United States, in answer to Mr. Lee’s reasoning from the case of ship-money.

Mr. GORHAM adverted, with stone warmth, to the doctrines advanced by Mr. Lee and Mr. Mercer, concerning the loan-office creditors. He said the union could never be maintained on any other ground than that of justice; that some states had suffered greatly from the deficiencies of others already; that, if justice was not to be obtained through the federal system, and this system was to fail, as would necessarily follow, it was time this should be known, that some of the states might be forming other confederacies adequate to the purposes of their safety.

This debate was succeeded by a discharge of the committee from the business of devising the means requisite for restoring public credit. &c. &c., and the business referred to a committee, consisting of Mr. Gorham, Mr. Hamilton, Mr. Madison, Mr. Fitzsimmons, and Mr. Rutledge,

No Congress till

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