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33D CONG....2D SESS.

Texas Debt.-Mr. Smyth, of Texas.

the different States, and invite the holders of her bills to loan them to the Government at a given rate of interest.

Mr. Chairman, having alluded to the loan-office certificates, created by the resolution of the 3d of October, 1776, in order to show the similarity between these certificates and the portion of the

Here we have the origin of that odious word scale, and by an easy derivation the word scaling, in its connection with public debt, from the sages of the Revolution-men to whom we are wont to look back for examples of purity and patriotism. I acknowledge that I had formerly some antipathy to this word scale; I thought a better expression might have been adopted that of equitable adjust-public debt of Texas, to which I have referred as ment, for example. But, seeing the high authority from which the expression emanated, I am reconciled to the word as well as to the idea.

But having referred to the scale of depreciation established by the resolution of Congress of the 28th of June, 1780, let us see what that resolution is. After reciting a preamble, that resolution proceeds, as follows:

"Resolved, That the principal of all loans that have been made to these United States, shall finally be discharged by paying the full current value of the bills when loaned, which payments shall be made in Spanish milled dollars, or the current exchange thereof in other money, at the time of payment.

"That the value of the bills when loaned shall be ascer tained for the purpose above mentioned, by computing thereon a progressive rule of depreciat on, commencing with the 1st day of September, 1777, and continuing to the 18th day of March, 1780, in geometrical proportion to the time, from period to period, as hereafter stated, assuming the depreciation at the several periods to be as follows:

"On the 1st day of March, 1778, one dollar and three quarters of the said bills for one Spanish milled dollar; on the 1st day of September, 1778, as four of the former for one of the latter; on the 1st day of March, 1779, as eighteen of the former for one of the latter; on the 18th day of March, 1780, as forty of the former for one of the latter.

"That the principal of all certificates that have been taken out since the 18th day of March last shall be discharged at the rate of one Spanish milled dollar, or the current exchange thereof in other money, at the time of pay ment, for forty dollars of said bills of credit received on Joan.

"That the principal of all certificates that shall hereafter be taken out, until the further order of Congress be discharged at the same rate, and in the same manner as those that have been taken out since the 18th day of March last. "That the interest on all loan-office certificates, at he rate of six per cent, per annum, computed on the principal ascertained as aforesaid, shall be discharged annually in like manner as the principal, until the whole shall be paid,

&c.

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The resolution of the 28th of June having referred to loan-office certificates, it may not be amiss to explain what these loan-office certificates were. By a resolution of the 3d of October, 1776, these loan offices were created, and it was provided that a commissioner should be ap ointed by each State, and an office opened in each for the purpose of receiving loans to the Government of their own bills of credit. The great object of Congress was to withdraw as large an amount of their bills from circulation as possible, in order to sustain the credit of the reniaining portion. For this purpose the holders of these bills were invited to come forward and loan them to the Government and receive for them these " loan-office certificates" bearing an interest of four per cent per

annum.

Now, by far the greater portion of that part of the public debt of Texas, to which I have alluded, is exactly similar to these-loan office certificates and bills of credit of the United States. The funded debt of Texas, evidenced by a certificate of stock bearing ten per cent. interest-principal and interest in 1846, amounting to $2,193,365. Her eight per cent. bonds, evidenced by a certificate of stock, or bonds, bearing an interest of eight per cent. per annum, amounting, principal and interest in 1846, to $1,135,400; and her promissory notes outstanding amounting to $2,674,447, making an aggregate of $5,993,212. I repeat, that most of this part of our public debt stands upon precisely the same foundation as the loan-office certificates and bills of credit issued by the Government of the United States. The object of Texas in opening books and inviting the holders of her bills to fund them, and receive in exchange a different species of security, bearing interest at eight and ten per cent, was to withdraw as large an amount of those bills from circulation as possible, and thereby sustain the credit of those which still continued to be used as a circulating mediumthe same motive which had induced the United States to cause commissioners to be appointed in

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her funded debt," and her "eight per cent. bonds," I will read the resolution itself. Here it is.

"Resolved That five millions of Continental dollars be

immediately borrowed for the use of the United States, at the annual interest of four per cent. per annum. "That the faith of the United States be pledged to the lenders for the payment of the sums to be borrowed, and the interest arising thereon, and that ceruficates be given to the lenders in the form following, viz: "The United States of America acknowledge the receipt of dollars from which they promise to pay to the said, or bearer, on the day of with interest annually, at the rate of four per cent. per annum, agreeably to the resolution of the United States, passed the 3d day of October, 1776. Witness the hand of the Treasurer, this day of , A. D. "Countersigned by the commissioners of one of the loan offices hereafter mentioned.

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"That, for the convenience of the lenders, a loan office be established in each of the United States, and a commissioner to superintend such office be appointed by the said States respectively, which are to be responsible for the faithful discharge of their duty in the said offices.

"That the business of said commissioners shall be to deliver certificates for all such sums of money as shall be brought into their respective offices agreeably to these resolutions."-Journals of Congress, vol. 2, p. 898.

According to this resolution, these commissioners were authorized to borrow five millions of Continental dollars, that is, their own bills only, and not the issues of the States. But the following resolution, of the 19th November, 1778, is still more explicit:

"Resolved, That the Commissioners of the Continental loan-offices of the United States be respectiv ly directed to receive for loan-office certificates such bills of credit only as have been or may be ented by Congress, any resolution to the contrary notwithstanding.”—Journals of Congress, vol. 4. p. 667.

The form of loan-office certificate given in the resolution of the 3d of October, 1776, carries on its face as solemn an obligation to pay, as the bonds of Texas, or any other bonds, and yet these are the very same loan-office certificates that, by the resolution of the 28th June, 1780, were required to be scaled at the rate of forty for one.

Mr. Chairman, I do not allude to this subject in order to disparage this Government; far from it. She has been our great exemplar in everything. To her we have looked up. She has furnished the model of our scaling system, as well as every other part of our system. We are under obligations to her for it, and are not disposed to rob her of whatever credit may be due for the introduction of that system.

Having, to some extent, reviewed the action of the old Congress on their public debt, I desire to call the attention of the committee to the action of the Convention which framed the Federal Constitution, on the same subject. In the debates in the Convention on the 23d of August, 1787, we find the following:

"The first clause of article seven, section one, being so amended as to read: The Legislature shall fulfill the engagements and discharge the debts of the United States, and shail have the power to lay and collect taxes, duties, imposts and excises,' was agreed to."-Madison Papers, vol. 3, p. 1412

reconsideration of this proposition, by a vote of On the 24th of August the Convention voted a Madison Papers, vol. 3, p. 1416. seven in the affirmative to two in the negative.

"August 25.-The first clause of article seven, section one, being reconsidered,

"Colonel Mason objected to the term shall fulfill the engagements and discharge the debts, &c., as too strong. It may be impossible to comply with it. The creditors should be kept in the same plight. They will in one respect be necessarily and properly in a better. The Government will be more able to pay them. The use of the term shall will be get speculations, and increase the pestilential practice of stock-jobbing. There was a great distinction be tween original creduors and those who purcha-ed fraudulently of the ignorant and distressed. He did not mean to include those who have bought stock in the open market. He was sensible of the difficulty of drawing the line in this case, but he did not wish to preclude the attempt Even fair purchasers, at four, five, six, eight for one, did not stand on the same footing with the first holders, supposing them not to be blamable. The interest they received, even in paper, is equal to their purchase money What he particularly wished was, to leave the door open for buying up the securities, which he thought would be precluded by the term "shall," as requiring nominal payment, and which

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was not inconsistent with his ideas of public faith. He was afraid, also, the world" shall" might extend to all the oid Continental ‚”—Madison papers, vol. 3, pp. 1424 and paper." 1425.

Mr. Randolph offered, as a substitute, the clause as it now stands in the Constitution, that, " All debts contracted, and engagements entered into, by or under the authority of Congress, shall be as valid against the United States under this Constitution, as under the Confederation." This substitute was adopted by a vote of ten in the affirmative to one in the negative. With the avowed object of doing away with the positive nature of the provision expressed by the phrase "shall fulfill the engagements and pay the debts,"&c., as originally adopted.

The whole debate on this part of the Constitution shows that the object of the convention was so to shape this clause in relation to the public debt as to leave the future Government at liberty to adopt whatever system for its adjustment might seem to them just to the creditors and to the country.

"

What Mr. Mason "particularly wished was, to leave the door open for buying up the serurities;" as was actually done by the act of the 8 h of May, 1792, as we shall presently see. This plan of buying up the public securities" was not inconsistent with his ideas of public faith." He was afraid, also, that the word "shall" might extend to all the old "Continental paper.' And yet, "this old Continental paper" was the same, concerning which Congress said, in 1779: "So circumstanced, you had no other resource but the natural value and wealth of your fertile country. Bills were issued on the credit of this bank, and your faith was pledged for their redemption." The very same bills which were, by the act of 1790, scaled at the rate of a hundred for one.

Mr. Chairman, having reviewed the action of the former Government, and the Federal Convention, in relation to their bills of credit and loanoffice certificates, we are now prepared to understand the act of the 4th of August, 1790, "making provision for the payment of the debt of the United States "The system adopted by that act was but a continuation of that which had been previously adopted by the Continental Congress in the resolutions of the 31 of October, 1776, and 28th of June, 1780, with some slight modifications. The third section with its preamble reads as follows:

"And whereas it is desirable to adapt the nature of the provision to be made for the domestic debt to the present circumstances of the United States, as far as it shall be found practicable, consistently with good faith and the rights of the creditors, which can only be done by a voluntary loan on their part:

SEC. 3 Be it therefore further enacted, That a loan to the full amount of the said domestic debt be, and the same is hereby, proposed; and that books for receiving subscriptions to he said loan be opened at the Treasury of the United States, and by a commissioner to be appointed in each of the said States, on the first day of October next, to continue open until the last da of September following, inclusively; and that the sums that shall be subscribed thereto be payable in certificates i-sued for the said debt, according to their specie value, and computing the interest upon such as bear interest to the last day of December next; which said certificates shall be of these several descriptions, viz:

"Those issued by the Register of the Treasury. "Those issued by the commissioners of loans in the several States, including certificates given pursuant to the act of Congress of the second of January, one thousand seven hundred and seventy nine, for bills of credit of the several emissions of the twentieth of May, one thousand seven hundred and seventy seven, and the eleventh of April, one thousand seven hundred and seventy-eight.

"Those issued by the commissioners for the adjustment of the accounts of the quartermaster, commissary, hospital, clothing, and marine departments.

"Those issued by the commissioners for the adjustment of accounts in the respective States.

"Those issued by the late and present paymaster general, or commissioner of army accounts.

"Those issued for the payment of interest, commonly called indents of interest.

"And the bills of credit issued by the authority of the United States in Congress assembled, at the rate of one hundred dollars in the said bills for one dollar in specie.

(EC. 6.) That a commissioner be appointed for each State, o reside therein, whose duty it shall be to superintend the subscriptions to the said loan; to open books for the same; to receive the certificates which shall be presented in payment thereof to liquidate the speeie value of such of them as shall not have been before liquidated; to issue the certificates above me tioued in ben thereof "— United States Statutes at Large, vol. 1, pp. 139, 140, and 141. A portion of the tenth section reads as follows: "But as some of the certificates now in circulation have not heretofore been liquidated to specie value."

33D CONG....2D SESS.

It then goes on to provide for the calling in of these certificates, and proceeds thus:

"That those of them who do not possess certificates issued by the Register of the Treasury, for the registered debt, should produce, previous to the 1st of June next, their respective certificates, either at the Treasury of the United States, or to some one of the commissioners to be appointed as aforesaid, to the end that the same may be canceled, and other certificates issued in lieu thereof, which new certificates shall specify the specie amount of those in exchange for which they are given, and shall be otherwise of the like tenor with those heretofore issued by the said Register of the Treasury."

It is clear from this act, that a portion of the debts of the United States had been scaled to their specie value, and that those which had not been thus scaled were required to be so. It is also clear, from the whole tenor of the act, that it was but a continuation of the Continental scaling system.

I have said that, in adopting this system for the equitable adjustment of our public debt, we had, as in everything else, followed the example of this Government. But we have followed it in kind only, not in degree; for while this Government has scaled some of her liabilities as low as one hundred dollars in her bills for one dollar in specie, the lowest of ours have only been scaled to five for one.

The act of the 8th of May, 1792, exhibits, however, a phase of the national debt which we have not imitated. That act authorized her commissioners to go into the market with her surplus revenue, and purchase her liabilities-already reduced to their specie value-"at the lowest price at which the same can be obtained by open purchase." (United States Statues, vol. 1., page 283.) Such is the language of the law. I do not allude to this, however, in a censorious spirit; I only allude to it as connected with the history of a revolutionary debt.

But to return to the revolutionary debt of Texas. I will now, Mr. Chairman, give a general, but brief explanation of the scaling system (as it has been called) adopted by Texas for the equitable adjustment of her public debt. The rule adopted, in few words, is this: To pay to the holders of her liabilities the full amount of the considerations which she received for them when she issued them with the stipulated interest.

In order to show the early period at which this system was adopted as the settled policy of the country, though not yet passed into a law, I will read a paragraph from a report made by a committee of the House of Representatives of the first Legislature of Texas, of which the Hon. Volney E. Howard was chairman. It reads thus:

"The fact that the debt of Texas was contracted during a revolutionary struggle, constitutes no reason, in the opinion of the committee, why we should not pay it in honesty and good faith. They, nevertheless, think that she should be bound to return to the public creditors only what, according to a just average, they paid for her securities, with the rate of interest stipulated on the land or other evidence of debt; they have endeavored to place their scheme of classification on the broad basis of paying back, with interest, to every man every dollar advanced in her service, or invested on the faith of her securities."

The committee accompanied this report with a bill, in which they recommend a system of classification of the public debt, upon the same general principle as that which was finally passed into a law in 1848. The classification is contained in the first section. The second section is as follows:

"That should the United States purchase the public domain of the State, the proceeds of such purchase are hereby inviolately pledged for the payment of the sums respectively found due to her public creditors under the foregoing classification."

Here is a solemn declaration, published to the world as early as 1846, of the terms upon which Texas would settle and pay her public debt, and that, too, looking directly to a sale of her public

domain.

Some persons seem to have imagined that Texas adopted her system of classification after the passage of the compromise measures of 1850. Such, however, has been shown not to be the fact. Her system was published to the world in 1846. It passed into all the solemnities of a law in 1848; and before the compromise acts of 1850 had become laws, a large amount of her securities had been surrendered, and new certificates issued for their specie value.

Texas Debt-Mr. Smyth, of Texas.

value expressed on their face, how could she have done this without manifest injustice to far the most meritorious part of her creditors-those who had stepped forward in the darkest hour of her struggle, and hazarded their means in her defense, under the influence of a generous impulse, without hope or reward?

At the passage of the compromise acts of 1850, the nominal amount of the public debt of Texas was about twelve millions and a half of dollars; the whole amount of indemnity offered to her by that act was only ten millions. What, under the circumstances, should Texas have done? Ought she to have placed the most meritorious class of her creditors on the same common level with those who had received her bills at the Treasury at six or eight for one, or the still less meritorious class who had gone into the market and purchased her liabilities at a mere nominal price? Every consideration of justice, every sentiment of gratitude, forbade it; but yet, this was the inevitable result of acknowledging all those liabilities without discrimination, at their nominal value. The rule adopted by Texas was probably the only one, under the circumstances, which would do justice to all without working injustice to any of her creditors. It did full justice and no more, to those who had generously advanced their means in her cause at par. It did full justice to those who had received those bills or other evidences of debt at a discount. And it did much more than justice to those who had gone into the market and bought up her securities on speculation, at a mere nominal price.

There is one other view which I wish to present on this subject. Many persons who presented their claims to the accounting officers of our government for settlement, before the government was willing to acknowledge any depreciation in her bills, were settled with at specie rates, and paid off in those bills at par. These persons were frequently compelled to sell those bills at two, three, or four for one. The party now comes forward, and says: "You owed me ten thousand dollars. You paid me in your "red backs," which were only worth to me twentyfive hundred dollars. I now demand the remaining seven thousand five hundred dollars, with interest to the present date, which, in all equity and good conscience, you still owe me." In one instance-if ma I not greatly in error-Texas has settled and paid a claim of large amount under circumstances similar to those just stated, and other claims of similar character have been présented; and, upon every principle of equity, they have a better claim than the present holders of her bills. But can Texas satisfy the demands of both? Can she pay the face value of her securities to their present holders, and yet make up the losses to the parties to whom they were originally issued? I do not pretend to say that Texas has adopted, or will adopt, the instance to which I have alluded as a general rule by which she will settle and pay similar claims, but such claimants certainly now have the weight of precedent on their side.

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vassalage and colonial dependence; in striking off the fetters with which the Mexican despot sought to bind her, she followed the example of this Government. Her declaration of independence was fashioned in the same mould as your own. Her constitution of the Republic was an imitation of that of the United States-I might almost say a servile imitation; because she imitated the Constitution of the United States in points in which her situation was entirely unlike, and where, consequently, her constitution should have been essentially different. During and after the revolution her public debt grew up in the same manner. It ran the same course of depreciation, and she has adopted the same general principles for its equitable adjustment which were furnished her by the illustrious example of this Government.

As I have already had occasion to remark, I have not run the parallel between the systems of classification of the United States and Texas, for the purpose of disparaging this Government, but for a very different purpose. The adoption of a system by the sages of the Revolution, which system was perpetuated by the great and patriotic men who put this Government in motion under the Federal Constitution, is prima facie evidence that the system itself is right; and if right in the Government of the United States, a system founded on the same principles, could not be wrong in the Government of Texas.

But, the laws enacted by both Governments in relation to their public debt, stand on much higher ground. They are but the reenactments of the great principles of equity-the laws of nature in relation to right and wrong. Those laws which teach us to return to all men the full value of what we receive at their hands, and to expect nothing more in return from others. All other rules of action between man and man, or citizen and Government, are fast yielding before the advancing light of Christian civilization. They are but the relics of a barbarous commercial policy, which has grown up in insular countries, like England and Venice, circumscribed to a mere speck on the ocean, and dependent upon commerce for subsistence; but they are altogether unsuited to a people whose empire spreads from sea to sea, and whose controlling interest is agriculture.

Even in England they are fast receding before the advancing civilization of the age. In proof of this position, what is the doctrine now held with regard to penal bonds? Does any man now think of collecting the penalty expressed in the face of a penal bond? Yet, in its language it purports to be a positive contract, and the form of the instrument shows that, at some period, it might have been collected. Take, as another example, the doctrine now held on the subject of mortgage. This is another instance in which the language used conveys the idea of a positive contract, vesting the fee in the mortgagee, subject only to defeasance upon the performance of the condition. But will a court of equity now enforce it in that sense? Imprisonment for debt is another relic of the commercial policy of a barbarous age, which must recede as civilization advances.

Judge Story, speaking of the jurisdiction of courts of equity, says:

"This jurisdiction was afterwards greatly enlarged in its operation, and applied to all cases, where relief is sought against the penalty of a bond, upon the ground that it is unjust for the party to avail himself of the penalty, when an offer of full indemnity is tendered.”—Story's Equity, vol. I, p. 106.

This fully expresses the great principle of equity on which our system of adjusting our public debt is predicated. We have "tendered full indemnity to our creditors." He proceeds:

Those who step forward and advance their means in a revolutionary struggle, in aid of a people contending for their rights, and in vindication of the great principles of civil and religious liberty, are supposed to do something under the influence of a generous sympathy-something from a patriotic regard to the great principles involved. It would be unjust to them to suppose that they are actuated by a mere sordid calculation of interest; that they advance their means on the same sort of calculation as men buy a lottery ticket, or stake their money upon a game of chance, with the hope of realizing, if successful, five or ten times the amount of the investment. We desire to look upon such public creditors as entitled not only to the gratitude of the people immediately interested, but of the friends of liberty and liberal institutions everywhere. But such sentiment of gratitude is alone compatible, in my opinion, with a disposition to accept the ample in-eral principle already stated; but I wish to examdemnity which Texas has offered to her creditors. Mr. Chairman, Texas, in all her movementsin every phase of her history-has looked up to

Government. In revolutionizing from the Government which attempted to hold her in perpetual

If Texas had even been disposed, out of a chiv-but one great model, and that model has been this alrous regard for the letter of her engagements, to recognize and pay all her securities at the full NEW SERIES.-No 11.

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"The same principle governs in the case of mortgages, where courts of equity constantly allow a redemption, although there is a forfeiture at law."

I design now, Mr. Chairman, to review some other portions of the public debt of Texas. A part of her bonds, or certificates of stock, bearing ten per cent. interest, have been scaled to seventy certs on the dollar. This was done on the gen

ine this question, and see what such bonds, if they were United States bonds, would actually be worth in the market. These bonds have run on interest at least sixteen years. A thousand dollars of these bonds, at seventy cents on the dollar, would be reduced to seven hundred dollars. Now, what

33D CONG....2D SESS.

Diplomatic and Consular System-Mr. Chandler.

would a United States bond for seven hundred dollars, drawing ten per cent. interest, and having sixteen years to run, be worth in the market? You will find, upon making the computation, that seven hundred dollars, with the interest at ten per cent. for sixteen years added, will yield the sum of one thousand eight hundred and twenty dollars; while a thousand dollars at five per cent., having the same period to run, will yield only one thousand eight hundred dollars; so that seven hundred dollars in bonds of the former kind would yield more, and would sell for more in the market, than a thousand dollars of the latter; and yet, the latter would be worth in the market more than ten per cent. premium. And when we make this offer to our creditors, is not "full indemnity tendered,"independently of the equitable consideration upon which these claims have been adjusted?

I would now ask attention to another claim; the claim of Mr. Dawson, for naval vessels furnished to the Republic of Texas. I would not be understood as aiming to detract, in the slightest degree, from the merit of this gentleman, as one of our most patriotic public creditors; but I once had occasion to examine this claim, and nothing is more evident to my mind than that the price of these vessels, originally, was $280,000. A second bond, however, for the same amount was deposited, and was to be forfeited if not paid against a specified time. The money was not paid, and both bonds were taken for the debt, thus making it, nominally, $560,000.

Now, I ask, in what does this case differ in principle from the case of an ordinary penal bond, where the penalty is double the amount of the original consideration? I can perceive no difference but in form; the cases are intrinsically the same; and yet, does any man in this age expect to collect the penalty expressed on the face of a bond? This claim has likewise been drawing interest at the rate of ten per centum, and has long since doubled the original sum. This claim Texas, in her classification, reduced to fifty cents on the dollar taking both bonds into consideration; that is, she has reduced it to the original price of the vessels, $280,000, with the accumulated interest at ten per centum. Was not this tendering full indemnity?

Some benevolent persons, who, in their tender mercies, have undertaken to keep the conscience of Texas, have also feared lest her interest should Buffer. They think she will never have credit unless the nominal amount of her debt should be paid. Has the United States Government any credit? The same prediction was made with regard to her, and for the same reasons. (American State Papers, vol. 1, Finance, p. 79.) How has the prediction been verified? Has she never been able to recover from the effect of her scaling system? Whenever Texas has received par for her securities, she has never hesitated to acknowledge the full amount expressed on their face, with the stipulated interest, though bearing the enor mous rate of ten per cent. Could Shylock himself desire more than this?

The course pursued by Texas in the liquidation of her public debt, so far from injuring her credit, should place her on as high ground as any State in this Confederacy. I desire to see the credit of my State forever bright, but the best way to keep it so, is to follow the advice of the Father of his country, in his parting admonition to the American people, and "use it sparingly." Our State constitution now prohibits the Legislature from contracting debt, exceeding, in the aggregate, $100,000; and I trust that feature in our organic law may long remain unchanged. I have no fears for the credit of my State.

There is another circumstance connected with our public debt which I do not wish to pass over without explanation. To the first article of the boundary act, there is this proviso:

"That no more than five millions of said stock shall be issued until the creditors of the State holding bonds, and other certificates of stock of Texas, for which duties on imports were specially pledged, shall first file, at the Treasury of the United States, releases of all claims against the United States for or on account of said bonds, or certificates, in such form as shall be prescribed by the Secretary of the Treasury, and approved by the President of the United States."-United States Statutes at Large, vol. 9, p. 447.

Texas, in the arrangement of her public debt,

divided it into three general classes. The first class, comprehending all that portion of her debt which had been audited, and which comprised much the larger portion of her debt. The second class including all that class of claims which had not been audited, but which were sustained by sufficient legal vouchers to authorize them to be audited. And the third class, embracing those which were believed to be just claims against the Government, but were not sustained by sufficient vouchers to authorize the accounting officers of the Government to audit them.

The former Administration so construed this proviso as to make it cover almost the entire first class debt; in fact, a majority of the entire debt; leaving, however, a small part of the first class, and the entire second and third classes, without the limits of the proviso. The entire debt, at its specie value, was estimated at about seven millions of dollars. What then could Texas do? The $5,000,000 received was insufficient to pay the entire debt. If she commenced paying indiscriminately, the entire sum would be exhausted, and a part of her debt would, necessarily, remain unpaid. That portion of her debt covered by the proviso was amply cared for. Five millions of dollars had been locked up in the Treasury of the United States for the special security of that class of her creditors. In the dilemma thus forced upon her, she adopted the alternative of paying that portion of her debt not embraced in the proviso; leaving the other part, for the security of which so great pains had been taken, to be paid out of the reserved $5,000,000, after the restriction should have been removed, and the bonds delivered to the State.

Under the operation of this general rule some innocent_parties have suffered; and this consequence Texas deeply deplores. But as to those who hung around the walls of this Capitol, and succeeded in fastening the proviso upon the boundary act, they have no right to complain, and they have none of our sympathies. They have eaten the fruit of the tree which their own hands have planted, and they are welcome to it.

And, here, in conclusion, I would remark, Mr. Chairman, that the human imagination cannot conceive of a thing more absurd than this proviso, under the construction placed upon it by the last Administration. Under that construction the proviso is made to embrace the promissory notes or bills of credit of Texas, for the last five doller bill of which a release must be filed before the restriction is removed; but, as many of these bills are doubtless lost or destroyed, the performance of this condition is impossible. Even under the construction of the present Administration, the holder of the smallest item of her certificates of stock may tie up the entire five millions for an indefinite period, to the great detriment of all others.

DIPLOMATIC AND CONSULAR SYSTEM.

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near the Court of -" has hardly been expressive of the geographical position which our Ministers have occupied. Many of them have been more near to the antipodes than to the courts to which they were accredited; and while they have been traveling all over the world-a species of peripatetic ministers-they have been credited, not only at the Government where they were, but credited at the State Department, for amounts of money which by no calculation could they ever have earned.

Mr. Speaker, in looking over the notes of the honorable gentleman who is my colleague on the Committee on Foreign Affairs, [Mr. PERKINS,] I was struck with some very remarkable facts which are worthy of consideration, not merely that some of the Ministers who are appointed with a salary of from $5,000 to $9,000 a year have been in the habit of remaining in this country for one, two, three, and four months after their appointment, and one remarkable instance occurred where thirteen months elapsed before the Minister left this country for the place to which he had been accredited. And then they have the whole distance to travel, and perhaps, in some instancesthough I do not know that-they have to stop in Paris to learn the French language before they go

on.

This is, perhaps, rather a caricature of the system, but the whole of it is a caricature on diplomatic relations, and it needs changing-needs changing very much.

But, Mr. Speaker, my desire is to express, as I feel it, a much greater anxiety for the consular relations of our country, and for those who represent our country in that capacity. It is of the utmost consequence that those who represent the commercial interests of this country, and who direct those interests, as many of them do, should be under certain kinds of regulations, by which they could be made amenable not only to our cus toms and manners, but to certain laws which must govern American citizens wherever they are. We have abroad, in our commercial marine, about one hundred and forty thousand seamen, who are unrepresented on this floor, who are unrepresented in our ports at home, and who have to seek abroad, in many instances, succor, assistance, and advice, from men whose fault it may be to entrap them into difficulties, and to tax them to get out of them.

Instances might be cited where these seamen, paid off at a foreign port, with pockets filled with the results of their hard labors, becoming, as the gentleman upon the other side of the House expressed it a few days since, somewhat elated in consequence of frequent visits to corner shops, have manifested considerable excitement upon seeing the beautiful flag of their nation flying over the consular house, and for the simple patriotic ebullition of the moment, have been frequently arrested by the very consul who should have protected them, and made to pay fines which go to enrich the consul, whose only excuse is, that if he does not get from them their money, somebody

SPEECH OF HON. J. R. CHANDLER, else will. I desire to draw the especial attention

OF PENNSYLVANIA,

IN THE HOUSE OF REPRESENTATIVES,
February 7, 1855.

On the bill to remodel the Diplomatic and Consular system of the United States.

Mr. CHANDLER said:

Mr. SPEAKER: In my opinion, no bill has reached your table which bears with it more important provisions than that which is now under consideration in this House-that for remodeling the diplomatic and consular system of this country. It reaches to the regulation of our affairs abroad; not merely to the political relations of the country, but it touches every salient point of a nation where a ship may reach; where one bundle of merchandise may tempt the cupidity of a trader, and where any of our own nation may reside. The bill, in the first place, contemplates a reformation of the diplomatic affairs of our country, and of the agencies of our country. It reaches to the salary and to the conduct of those who represent our country abroad; and it calls upon them to be the representatives of that country to the Court or near the Government to which they are accredited. Hitherto, Mr. Speaker, the term "Minister

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of the House to this evil, and to state that it is for the purpose of correcting this, among other evils, that this bill has been carefully drawn, and is now pressed upon the House for adoption.

It is impossible, Mr. Speaker, for one who has not traveled abroad, and been thrown, more or less, into contact with our consuls, or felt upon himself the injurious effects of our present system to appreciate as they should be appreciated, the reforms proposed by the bill before the House.

I would speak a few words, however, in behalf of the poor sailor, who has no representation on this floor, and who is exposed, from the nature of his pursuit and the thoughtlessness of his character, to grevious wrongs both abroad and at home.

We express a great deal of sympathy for this class of men, and well we may, for they are the heroes of our victories on the ocean, both of war and peace. In battle they have maintained the honor of our flag, and in commerce have borne it into every sea. It has, therefore, been the policy of the Government to guard, with peculiar care, the rights of these men. We build marine hospitals for their comfort at home, when old age or disease shall have overtaken them, and ever since the last war we have been paying annual amounts running up from ten thousand to one hun

33D CONG....2D SESS.

Diplomatic and Consular System-Mr. Chandler.

dred and twenty-five thousand dollars the past year, for the return of such as may have been left destitute abroad. We have made laws causing our sea-captains to give bond for the humane treatment, and the safe return of all American sailors that they take abroad with them; and our courts and juries look, with a kind eye, to their interest. And yet all the good intention, and all this effort at practical protection to the seaman in our legislation is neutralized, by defects in our consular system. The consul who is to be a judge between them and the captain in their difficulties abroad, is secured in the interest of the captain. He is feared, more for his power to punish, than looked to for his protection. The bad captain can easily obtain from him a certificate of the propriety of his conduct, while the good captain avoids him to escape imposition. Thus, nothing is more common than to hear, among our sea-faring men, the consul abroad spoken of in the light of a taxgatherer, whom it is their interest to avoid. Their fees, by a most impolitic rule, are measured by the usual, notarial port, and other charges of the country to which they are sent. By this means we are actually paying our consuls abroad to influence foreign Governments to tax our commerce in as many ways and to as large an amount as possible.

We have five millions of tonnage abroad, upon the ocean, which should look to the consulates of this country as so many points of security against wrong. In the vast millions of varied products which it bears from our shores to remote localities all round the globe, every domestic and industrial interest in this country is closely connected.

A bill, therefore, sir, which attempts to reform abuses in our consular system, to substitute posi-| tive law for discretion, make definite the fees charged; and to curtail abuses, which eat up the profits of our shipping and commercial interest, cannot be, and should not be, considered other than as a great national measure.

In illustration of the character of the charges made by consuls abroad, I append a list of those for extension of protests at differents points. They run from six dollars, or eight dollars, to forty dollars, for the same act, and, I am assured, in some instances of extortion have exceeded one hundred dollars. As the only existing rule governing the amount is the judgment of the consul as to the extent of his own labor, and the customs of the port where he is, it will be seen at once that the merchant can be imposed on, without any means of detecting it, by preclusion between the captain and the consul. Under the bill, as the fee does not go to the consul, and the extension of the protest itself, is not, necessarily, a consular duty, there can be no such imposition.

Mr. Speaker, I have been abroad; I have lived for most of my life in one of our largest commercial cities; and my pursuits have brought me into close relations with those engaged in foreign commerce. I have been for several years a member of this House, serving on various committees, always interested in legislation affecting our commerce; and I have been and am now a member of the Committee on Foreign Affairs, and therefore felt it a duty to look into what our foreign relations makes for the commerce and peace of this country; and I do not believe that there have often been bills before the House whose passage would be more for the interest of the whole country than the present one.

I know the difficulty of getting correct and full information on the subject of which this bill treats. Few members of the House have the leisure, if they had the inclination, to examine into it. All feel the necessity of some reform. Passed Congresses, previous Secretaries of State, different Chambers of Commerce, the whole newspaper press of the country, without, so far as I have seen, a single exception, all unite in urging some change. Under such circumstances, members who have not had time to look into this subject, and who are not disposed to plant themselves upon the judgment and suggestions of the Committee on Foreign Affairs, may very well vote for this bill under what seems to be the judgment and conviction of the whole country-that any change will be an improvement, and that no proposed system can, by any possibility, be worse than the present one. For myself, however, and

HO. OF REPS.

exportation of slaves from the interior of Africa, through his coast possessions, and since 1850 has prohibited even their introduction into his possessions. His disposition has been favorable to this country, and his commerce at this time is subject of strife with the nations of Europe.

for those who are disposed to vote for the present bill on the ground of its positive merits, I will repeat, that, after having thought much on the reform of our consular system; after having proposed to myself such a labor when I entered Congress; after having collected the material, and drawn up a bill for the purpose, I am satisfied It should be remarked, while speaking of the the present bill is decidedly the best that, under charges of our consuls abroad, that most of the existing circumstances, can be urged upon the fees which they demand and receive are not House, with any prospect of success. I speak || sanctioned by any definite law, but are regulated this after having examined with minuteness the according to the customs of the port at which they details of the bill. That there are imperfections are situated. Now, if it should happen that these in it, I have no doubt; experience is necessary to fees are exorbitant-as I am assured it does some perfect every system; and the great merit of the times happen, as it, indeed, must be when the combill before the House is, that while some may plaint is so general-it is evident that those who question the amount of this or that salary, and the are taxed for these fees are not likely to have a permission for this or that consul to trade, I have remedy. The custom of the port is regulated by not met one man who does not say that the prin- the body of consuls, not one of whom, if he reciples of the bill are plainly required by the public ceives his compensation in fees, is likely to violate interest:the custom by any reduction of fees; a proper esprit du corps would prevent that, even if a regard for self was not operative. Surely this supplies a motive for a change in the system, and that motive, I think, must be operative on this House. But these heavy charges, and the pursuits of trade on the part of our consuls lead to another great evil. It throws the commerce of this country into foreign hands, and leads to most mortifying results. A very large portion of our business in foreign goods is done on foreign account. The manifestos are thus without consular certificates, and the revenue suffers by such a diversion of business. It is said that sixty per cent. of our foreign trade is thus thrown into foreign hands.

It substitutes positive law for executive, and ministerial, and consular discretion. It establishes responsibility, and fixes it upon the immediate agent of any act. It makes open and plain to all, the nature and extent of the emoluments received by every one in the foreign service:

It allows no pay for service in advance; insures the personal discharge of the duties of an office, and puts an end to that species of Executive favoritism, by which political partisans may be pensioned, to a greater degree than under the English Government, and more dangerously, because clandestinely, and under the show of patriotic impulse. It relieves the one hundred and forty thousand seamen of the country from taxation in every imaginable form, and secures to them, in the consul, a disinterested friend and counselor:

It relieves the five millions of tonnage of the country of exposure in case of misfortune, shipwreck, or casualty abroad, to an enormous taxation in a variety of fees. It removes the discrimination now existing against small commercial adventures to contiguous ports in favor of large capitalists and distant trade. It gives our foreign agents abroad respect with the authorities of the country where they are located; frees them from the suspicion of selfish gain in the discharge of their duties, and thus secures them a moral influence over their countrymen abroad, far more potent for good than any mere legal authority with which we might arm them. The American traveling abroad will no more dread his consul, as a tax-gatherer, obstructing more than facilitating his power to travel without passport all over Europe. In fact, in peace and in war, the consul will exist, with a fixed salary and definite duties-an American in nationality, as well as in sentiment-and thus the rights of our citizens and the honor of the country will be better insured than can possibly be under any other system which does not limit our consulships to American citizens, with definite law for their guidance.

The bill has been framed with care, so that in accomplishing much, not to attempt other reforms not directly connected with our foreign machinery. The reorganization of the State Department itself, the classification of its clerks, the establishment of a consular bureau, and a provision for the publication of consular dispatches, may properly be embraced in another bill.

So, also, the bill does not change the special laws regulating the civil and criminal jurisdiction exercised under treaty stipulation by our consuls in China. These powers, however in their character exceptional, made so by the peculiar people with whom our consuls there have to deal. The bill also leaves the consulate in Japan and Borneo without a specified salary. Permission to establish these have been secured by recent treaties not yet carried into execution, and it was deemed advisable not to advise them, by the attempt to fix their salaries in this bill.

Trade in the East is rapidly increasing, and no doubt will receive, from another Congress, the attention its importance demands. The bill, however, puts on a good footing consuls at Zanzibar on the eastern coast of Africa, where the immense possessions of the Sultan of Zanzibar and Muscat have become of interest to the whole commercial world. As early as the year 1818, the Sultan, it may not be generally known, prohibited the

I feel that on this subject I am speaking for a large mercantile constituency, many of whom I know have suffered by a diversion of business, and felt the great inconvenience and loss in their mercantile pursuits, resulting from the advantage which foreigners derive from our consular system, and the consequences of its mal-arrangement. I speak, sir, thus, for America and for Americans, and ask for our country and our countrymen the benefits of our national legislation. We have too long been legislating for those who have no sympathy with us, no interest in our prosperity, and we delay to promote a trade that is truly Ameri

can.

I have already referred to other evils of the consular system, especially those that result from the consul being himself a merchant-of the advantage which he has over the unofficial merchant in the market in which he is, and over the market to which he and his unfortunate rivals may send goods. Business men will understand all this, and they have not been backward in expressing their opinion, and urging a remedy. I believe this bill proposes the best remedy than can now be had. It takes nothing from my argument that I do not cite special instances, and refer to persons to sustain my remarks. It should be enough for this House to know that sad evils, as I have mentioned, may exist, that the present system is undeniably liable to such a misdirection, and American business and American men exposed to such abuses. The legislation that is for their interests, and the citizens far distant from our courts and our general laws, should be explicit and definite, and as little as possible should be left to a discretion that is liable to be warped by opposing interests. At home the executive, the legislative, and the courts of the country are all easily approached, and the misconduct of a public officer is at once resented by the sufferer, and punished by the appropriate tribunal. Abroad, petty annoyances, personal grievances, and official vexation may be felt and resented, but it cannot, for a long time, be exposed; rarely, if ever, punished. Eminently, then, it is our duty to throw around our citizens abroad the ægis of our protective laws, and to remove from the guardian of their rights and the avenger of their wrongs all temptations to neglect or injure their interests.

The evils to which I have referred are those of a time of peace, when malpractice may only extend to the interests immediately injured. That is, of course, bad enough. But it is far worse in a season of war. The consul, dependent upon his fees for compensation, may grow rich by a favorable concurrence of circumstances in peace; but in a season of war he, without the stimulus of fees, may neglect the duties which belong to the

33D CONG....2D SESS.

office, or else use his consular powers in a way to involve our country in constant difficulty.

I may appeal to the experience of almost every gentleman now in this body, that Congress is, at every session, annoyed with application from Ministers, secretaries, chargés, &c., for extra compensation, for duties devolved upon them by the absence of others; and though some of these claims may be unfounded, yet generally they are just; and thus our diplomatic expenses (especially) are swollen far beyond all estimate which, it seems, could be as readily and exactly made as any, even for the most trifling duties in advance. But such is the unsystematized state of this part of our public service that we are almost invariably paying two salaries for one service, and sometimes three. The amount paid, though many thousand dollars, is of far less consequence than the unpleasant and mortifying results to which the practice leads. And in the uncertainty of our legislation, we often omit the proper compensation of officers who have been charged with the affairs of a Minister in the absence of a Minister; nay, we refuse or neglect to repay the amount that the confiding secretary or consul advanced, and allow him to suffer from our delay, and to occupy the attitude of a petitioner for favors.

All these evils will be obviated by the bill before us. Duties are, in it, specifically defined, time and place noted, and the compensation fixed, and the liberty of the officer properly restrained. The bill secures to our foreign service, diplomatic and consular, a dignified character. It removes from the consul the chance of importation, which, though they have been deserved by some, have not been earned by others. Much as have been the wrongs committed by persons acting as our consuls in other countries, it is not denied that many officers of that grade have discharged their duties with fidelity, and have manifested that dignity of feeling, and that justice of conduct which becomes the representative of the interests of a great nation, and it is precisely from this class of officers that the information relative to the abuses to which the present system is exposed, has been derived.

I ought to mention one instance of an American gentleman who, for the last six years, has discharged the duties of a consulate of vast importance to the commercial interest of his country, and often of much moment to his traveling countrymen. He has shrunk from the imposition of fees as far as possible; and while he maintained the character of a gentleman and an officer, had to combat with some of the prejudices which the errors of others of his rank had created.

We must not lose sight of the fact that our country needs good officers, and that the character of a nation, and often its interests, are judged of by the man selected for its representative. But especially must the interests of individuals, which the nation proposes to protect by the establishment of consulates, be affected by the conduct of the officer employed.

Beside the advantage which our commerce must derive from the provision of this bill that forbids the consul to be engaged in commerce, another great benefit results in the equalizing of compen

sation.

The bill, I believe, is right in principle, and as nearly so in its details as it can be made under present circumstances. Time and experience may suggest improvements-and Congress will not fail to enact whatever is thus suggested. Meantime let us, not allow the present opportunity to pass without correcting existing abuses.

I think, sir, it will be the best policy, at this late period of the session, and after the careful examination that I know has been given the subject, to pass the bill before the House without amendment. Its actual and positive advantages far outrun any doubtful improvement of which it is capable. It will be the germ, I have no doubt, of a system of foreign intercourse worthy of the country, and, in some degree, responsive to the character of our institutions.

Mr. Speaker, we are in the habit of smiling at the ridiculousness of the court-dress of England in an enlightened age. It is, however, sir, but the decoration of royalty, where royalty is a principle of Government. The English Government even in this, however, have not been more unwise

Invalid Pensions-Mr. Fenton.

than we have been. George the Third, pleased with the ordinary dress of his day, said "Let all who approach me, do so in this costume," and the dress of that period has since remained the court-dress of England. We, coming into existence as a nation with institutions directly opposed in principle to those of Great Britain, have discarded its idle trappings, which, at the most, would only have been laughed at in the street, but have retained her diplomatic and consular system, with all its cumbersome details and practical evils, down to the present day.

I trust the bill will pass. I cannot doubt the disposition of the House on the subject. I hope, then, that it will be soon sent to the other branch, and be as promptly and confidingly received there as, I believe, it will be passed here. We have other bills that must become laws, and will claim precedence. I hope, then, that no attempts to change any portion of the bill will here or elsewhere delay its passage.

England.

FEES, PROTEST (NOW COLLECTED.)-Fee charged for the extension of a protest, at several of the consulates in different countries. Two Sicilies. Liverpool... £1 19s. 6d. Messina..............$5α15 Glasgow......... 205 Cork........................... .$10 Hong Kong...

Calcutta........................... Melbourne........................... Hobart Town........ Gibralter...

16 Smyrna,

5

Palermo

Turkey.

.$4

32

China.

35 Shanghai....

$16

15

Sandwich Islands.

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Cape of Good Hope..... 15
St. Helena....
Halifax, N. S

Society Islands.

8

Tahiti..

20

New Zealand.

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Kingston, Jamaica..
Nassau, N. P.............
Turks Island........
Barbados
Bermuda

France.

Bordeaux........

Havre.....................................

.$15

$25||

Bay of Islands, (extending and engrossing).......$30 24 Feejee Islands, do....... 20 Hayti.

16

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8 Port au Prince..........$16
Aux Cayes....................................
Cape Haytien.......... 16
City of St. Domingo..... 16
Mexico.
Tampico.............................
..$14
Mazatlan.................................... 10
Acapulco............... 15
Central America.

Marsailles..
Guadaloupe, W. I.....8a16
Martinique

Cadiz Malaga.

Spain.

...16

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8$

8

6 San Juan del Norte.....$10 17 New Granada. 25 Carthagena................... Trinidad de Cuba....... 16 Panama St. Jago de Cuba....... 16 Ponce....

16

.$8 16

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Aspinwall.

Venezuela.

Maracaibo...... 16 La Guayra

St. John's, P. R........8a24
Manilla

Portugal.
Fayal, Azores.
Lisbon
Antwerp

Belgium.
Netherlands.

Curacao..

...

16

Ecuador. .$6 Brazil. Maranham Island....... $6 15 10

..$2 Guayaquil. 4 $16 Pernambuco..........

Rio de Janeiro.... .$16 Rio Grande..................................... 10 Bahia.....

8

10

Uruguay.

.$12

Amsterdam.............. Rotterdam............ Paramaribo,.................................. 14 St. Martin....................................... 8 Montevideo 16 Buenos Ayres Chili. .$16 Valparaiso 16 Talcahuana. ...$5 Callao...... 3

Denmark.

St. Croix..... St. Thomas..

Austria.

Trieste....... Venice.....

INVALID PENSIONS.

Peru.

Ho. OF REPS.

which the Committee of Ways and Means have deemed proper to report upon adversely, I cannot but feel a deep interest in the disposition to be made of it by this House. I will not so far trespass upon the indulgence and patience of the House, already wearied by protracted debate upon various questions, when time for action is so short and therefore so precious, as to make an elaborate argument in defense of my proposition;-in fact, it needs it not, but I desire in a word, if possible, to relieve the amendment from the unfair and unjust prejudice heaped upon it by the gentleman from Alabama, [Mr. HOUSTON,] and those of kindred views.

It is said it will take many millions to answer its requirements if adopted. Suppose it does; is this to be interposed as an argument against its passage? Has this declaration, even if true, in itself any force? I can well conceive how, in the early days of the Republic, with a depleted and bankrupt Treasury, the people depressed and borne down by protracted war, the Government should fail to pay the sums due those who had fought the battles for our Independence. But, sir, at this day, with an overflowing Treasury, and with a country illimitable in its resources, no such objection can be successfully interposed. This Congress cannot cover itself with a shield so transparent; it would subject us to the charge of parsimony and ingratitude.

I do not, however, admit the allegation. I am aware that no definite sum can be fixed upon. The nearest approximation is arrived at by him only who has given this subject the most extensive and searching investigation, and who, by his superior sagacity, is the better enabled to arrive at correct results. In the latter regard, I most respectfully yield to those gentlemen who entertain opinions adverse to my own; in the former, I join issue, and have to say to this House, after much attention, thought, and inquiry, that it will not take millions to subserve its requirements; ay, sir, it will not, in my opinion, require as much money for this as for the Senate (FESSENDEN) amendment, which, at the most exorbitant figure, is placed at $1,200,000; and yet I would do justice to the class of persons embraced in this proposition, if it exhausted the Treasury of the whole of that surplus now so prolific in corrupting legislation.

I propose to ingraft no new principle upon the $16 legislation of the country in regard to our pension laws. I desire, rather, to aniplify slightly the rule of construction at the Pension Bureau, and to remove largely the perplexity and intricacy which surround and run through the present laws and make it so difficult to obtain equal justice. The present laws extend to those widows only whose husbands have died in the Army, or after their return from disease contracted while in the service. Without adverting, for the purpose of argument, to the temptation placed before the ap$17a25 plicant, which might lead in less honest minds to duplicity, fraud, and even perjury, in making the proofs, I may say it is often difficult to trace the original cause of disability or death, and hence the embarrassment the Commissioner of Pensions is subject to, in the discharge of his official duty, and in determining upon this class of cases.

16

28 $10

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The House took up for consideration the making appropriations for the payment of Invalid Pensions for the year ending June 30, 1856.

The following amendment, previously offered by Mr. FENTON, was reported from the Committee of Ways and Means, with the recommendation that it be non-concurred in:

And be it further enacted, That any woman who was the wife or widow of an officer, non-commissioned officer, musician, private, seaman, or marine, who served in the Army or Navy of the United States in the revolutionary war, or in any subsequent war, and has since died in the land or naval service of the United States, shall also be entitled to the benefits of the pension laws, or of this act; but no woman shall receive a pension for any time during

which her husband received one.

Mr. FENTON said:

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bands. Our laws, in effect, offer a bounty to those widows of soldiers who disobey the laws of association, stifle the impulses of their nature, and prove indifferent to the usages of civilization; in other words, we say to her: providing you engage in matrimony, the stream of justice, benevolence, and charity, dispensed by this Government on account of the meritorious services of your husband in defense of his country, shall be dried at its source, the fountain shall swell with benificent tide no more; but continue in a state of widowhood, and the annual stipend shall be continued. Our laws proceed upon no such principle; it would be a reproach upon our institutions; and the practice of the Government so directly in contravention of every principle of justice and equity

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