posals and all the matters of the loan and the payment arfe
16 DISSERTATIONS ON GOVERNMENT.
agreed on ; and an act is passed, according to the usual form
of passing acts, ratifying and confirming this agreement.
This act is final.
In the second case The State, as in the preceding one,
wants a loan of money the assembly passes an act holding
forth the terms on which it will borrow and pay: this act
has no force, until the propositions and terms are accepted
of and acceded to by some person or persons, and when
those terms are accepted of and complied with, the act is
binding on the State. But if at the meeting of the next
assembly, or any other, the whole sum intended to be bor-
rowed should not be borrowed, that assembly may stop
where they are, and discontinue proceeding with the loan,
or make new propositions and terms for the remainder ; but
so far as the subscriptions have been filled up, and the
terms complied with, it is, as in the first case, a signed
deed : and in the same manner are all acts, let the matters
in them be what they may, wherein, as I have before men-
tioned, the State on one part, and certain individuals on the
other part, are parties in the act.
If the State should become a bankrupt, the creditors, as
in all cases of bankruptcy, will be sufferers ; they will have
but a dividend for the whole ; but this is not a dissolution of
the contract, but an accommodation of it, arising from ne
cessity. And so in all cases of acts of this kind, if an inabi-
lity takes place on either side, the contract cannot be per*
formed, and some accommodation must be gone into or the
matter falls through of itself.
It may likewise happen, though it ought not to happen,
that in performing the matters, agreeably to the terms of
the act, inconveniences, unforeseen at the time of making
the act, may arise to either or both parties ; in this case,
those inconveniences may be removed by the mutual con-
sent and agreement of the parties, and each finds its benefit
in so doing: for in a republic it is the harmony of its parts
that constitutes their several and mutual good.
But the acts themselves are legally binding, as much as
if they had been made between two private individuals.
The greatness of one party cannot give it a superiority of
advantage over the other. The State, or its representatives,
the assembly, has no more power over an act of this kind,
after it is passed, than if the State was a private person. It
is the glory of a republic to have it so, because it secures
the individual from becoming the prey of power, and pre-
vents MIGHT overcoming RIGHT.
DISSERTATIONS ON GOVERNMENT. 17
If any difference or dispute arise afterwards between the
State and the individuals with whom the agreement is made,
respecting the contract, or the meaning, or extent of any of
the matters contained in the act, which may affect the
property or interest of either, such difference or dispute
must be judged of, and decided upon, by the laws of the
land, in a court of justice and trial by jury; that is, by the
laws of the land already in being at the time such act and
contract was made. No law made afterwards can apply
to the case, either directly, or by construction or implica-
tion: for such a law would be a retrospective law, or a law
made after the fact, and cannot even be produced in court
as applying to the case before it for judgment.
That this is justice, that it is the true principle of
Republican Government, no man will be so hardy as to
deny : If therefore, a lawful conract or agreement, sealed
and ratified, cannot be affected or altered by any act made
afterwards, how much more inconsistent and irrational,
despotic and unjust would it be, to think of making an act
with the professed intention of breaking up a contract al-
ready signed and sealed.
That it is possible an assembly, in the heat and indiscre-
tion of party, and meditating on power rather than on the
principle by which all power in a Republican Government
is governed, that of equal justice, may fall into the error of
passing such an act, is admitted ; but it would be an useless
act, an act that goes for nothing, an act which the courts of
justice, and the established laws of the land, could know
Because such an act would be an act of one party only,
not only without, but against the consent of the other; and,
therefore, cannot be produced to affect a contract made be-
tween the two. That the violation of a contract should be
set up as a justification to the violator, would be the same
thing as to say, that a man by breaking his promise is freed
from the obligation of it, or that by transgressing the laws
he exempts himself from the punishment of them.
Besides the constitutional and legal reasons why an assem-
bly cannot, of its own act and authority v undo or make void
a contract made between the State (by a former assembly)
and certain individuals, may be added, what may be called,
the natural reasons, or those reasons which the plain rules
of common sense point out to every man. Among which
are the following :
The principals, or real parties, iu the contract, are th&
18 DISSERTATIONS ON GOVERNMENT.
State and the persons contracted with. The assembly, is
not a party, but an agent in behalf of the State, authorized
and empowered to transact its affairs.
Therefore it is the State that is bound on one part and
certain individuals on the other part, and the performance
of the contract, according to the conditions of it, devolves
on succeeding assemblies, not as principals, but as agents.
Therefore, for the next or any other assembly to under-
take to dissolve the State from its obligation is an assump-
tion of power of a novel and extraordinary kind It is the
servant attempting to free his master.
The election of new assemblies following each other
makes DO difference in the nature of the thing, The State
is still the same State. The public is still the same body.
These do not annually expire, though the time of an assem-
bly does. These are not new-created every year, nor can
they be displaced from their original standing; but are a
perpetual permanent body, always in being and still the
But if we adopt the vague inconsistent idea that every
new assembly has a full and complete authority over every
act done by the State in a former assembly, and confound
together laws, contracts, and every species of public busi-
ness, it will lead us into a wilderness of endless confusion
and insurmountable difficulties. It would be declaring an
assemby despotic for the time being. Instead of a govern-
ment of established principles administered by established
rules, the authority of government by being strained so high,
would, by the same rule, be reduced proportionably as low,
and would be no other than that of a committee of the State
acting with discretionary powers for one year. Every new
election would be a new revolution, or it would suppose the
public of the former year dead, and a new public risen in its
Having now endeavoured to fix a precise idea to, and to
distinguish between, legislative acts and acts of negociation
and agency, I shall proceed to apply this distinction to the
case now in dispute, respecting the charter of the Bank.
The charter of the Bank, or what is the same thing, the
act for incorporating it, is to all intents and purposes an act
of negociation and contract, entered into, and confirmed,
between the State on one part, and certain persons men-
tioned therein on the other part The purpose for which
the act was done on the part of the State is therein recited,
viz, the support which the finances of the country would
DISSERTATIONS ON GOVERNMENT. 19
derive therefrom. The incorporating clause is the condition
or obligation on the part of the State ; and the obligation on
the part of the Bank, is, " that nothing contained in that act
shall be construed to authorise the said corporation to exer-
cise any powers in this State repugnant to the laws or con-
Here are all the marks and evidences of a contract. The
parties the purport and the reciprocal obligations.
That it is a contract, or a joint act, is evident from its
being in the power of either of the parties to have forbidden
or prevented its being done. The State could not force the
stockholders of the Bank to be a corporation, and therefore
as their consent was necessary to the making the act, their
dissent would have prevented its being made; so on the
other hand, as the Bank could not force the State to incor-
porate them, the consent or dissent of the State would have
had the same effect to do, or to prevent its being done; and
as neither of the parties could make the act alone, for the
same reason can neither of them dissolve it alone: but this
is not the case with a law or act of legislation, and therefore
the difference proves it to be an act of a different kind.
The Bank may forfeit the charter by delinquency, but the
delinquency must be proved and established by a legal
process in a court of justice and trial by jury; for the State,
or the assembly, is not to be a judge in its own case, but
must come to the laws of the land for judgment; for that
which is law for the individual, is likewise law for the
Before I enter farther into this affair, I shall go back to
the circumstances of the country and the condition the go-
vernment was in, for some time before, as well as at the
time it entered into this engagement with the Bank, and this
act of incorporation was passed: for the government of this
State, and I suppose the same of the rest, were then in want
of two of the most essential matters which governments
could be destitute of. Money and credit.
In looking back to those times, and bringing forward
some of the circumstances attending them, 1 feel myself
entering on unpleasant and disagreeable ground; because
some of the matters which the attack on the Bank now
make necessary to state, in order to bring the affair fully
before the public, will not add honour to those who have
promoted that measure, and carried it through the late
House of Assembly; and for whom, though my own judg-
ment and opinion on the case oblige me to differ from, I
20 DISSERTATIONS ON GOVERNMENT.
retain my esteem, and the social remembrance of times past.
Bat, I trust those gentlemen will do me the justice to recol-
lect my exceeding earnestness with them, last spring, when the
attack on the Bank first broke out ; for it clearly appeared to
me one of those over-heated measures, which, neither the
country at large, nor their own constituents, would justify
them in, when it came to be fully and clearly understood ;
for however high a party measure may be carried in an
assembly, the people out of doors are all the while following
their several occupations and employments, minding their
farms and their business, and take their own time and leisure
to judge of public measures ; the consequence of which is,
that they often judge in a cooler spirit than their repre-
sentatives act in.
It may be easily recollected, that the present Bank was
preceded by, and rose out of, a former one, called the Penn-
sylvania Bank, which began a few months before ; the occa-
sion of which I shall briefly state.
In the spring 1780, the Pennsylvania Assembly was com-
posed of many of the same members, and nearly all of the
same connection, which composed the late House that
began the attack on the Bank. I served as clerk of the
assembly of 1780, which station I resigned at the end of
the year, and accompanied a much lamented friend, the
late Colonel John Laurens, on an embassy of France.
The spring of 1780 was marked with an accumulation of
misfortunes. The reliance placed on the defence of Charles-
ton failed, and exceedingly lowered, or rather depressed,
the spirits of the country. The measures of government,
from the want of money, means, and credit, dragged OD
like a heavy loaded carriage without wheels, and were
nearly got to what a countryman would understand by a
The assembly of that year met by adjournment at an
unusual time, the tenth of May, and what particularly
added to the affliction, was, that so many of the members,
instead of spiriting up their constituents to the most nervous
exertions, came to the assembly furnished with petitions to
be exempt from paying taxes. How the public measures
were to be carried on, the country defended, and the army
recruited, clothed, fed, and paid, when the only resource,
and that not half sufficient, that of taxes, should be relaxed
to almost nothing, was a matter too gloomy to look at. A
language very different from that of petitions ought at this
time to have been the language of every one. A declaration
DISSERTATIONS ON GOVERNMENT. 21
to have stood forth with their lives and fortunes, and a
reprobation of every thought of partial indulgence would
have sounded much 'better than petitions.
While the assembly was sitting, a letter from the com-
mander-in-chief was received by the executive council, and
transmitted to the House. The doors were shut, and it fell
officially to me to read.
In this letter the naked truth of things was unfolded.
Among other informations, the General said, that notwith-
standing his confidence in the attachment of the army to the
cause of the country, the distresses of it, from the want of
every necessary which men could be destitute of, were
arisen to such a pitch, that the appearance of mutiny and
discontent were so strongly marked on the countenance of
the army, that he dreaded the event of every hour.
When the letter was read I observed a despairing silence
in the house. Nobody spoke for a considerable time. At
length a member of whose fortitude to withstand misfor-
tunes I had a high opinion, rose : " if," said he, " the ac-
count in that letter is a true state of things, and we are in
the situation there represented, it appears to me in vain to
contend the matter any longer. We may as well give up
at first as at last."
The gentleman who spoke next, was (to the best of my
recollection) a member from Bucks county, who, in a cheer-
ful note, endeavoured to dissipate the gloom of the house
" Well, well," said he, " don't let the house despair, if
things are not so well as we wish, we must endeavour to
make them better." And on a motion for adjournment, the
conversation went no farther.
There was now no time to lose, and something absolutely
necessary to be done, which was not within the immediate
power of the house to do ; for what with the depreciation of
the currency, the slow operation of taxes, and the petitions
to be exempt therefrom, the treasury was moneyless, and
the govern meat creditless.
If the assembly could not give the assistance which the
necessity of the case immediately required, it was very-
proper the matter should be known by those who either
could or would endeavour to do it. To conceal the infor*
mation within the house, and not provide the relief which
that information required, was making no use of the know^
ledge and endangering the public cause. The only thing
that now remained, and was capable of reaching the case,
was private credit, and the voluntary aid of individuals;
22 DISSERTATIONS ON GOVERNMENT.
and under this impression, on my return from the house, I
drew out the salary due to me as clerk, inclosed five hun-
dred dollars in a letter to a gentleman in this city, in part
of the whole, and wrote fully to him on the subject of our
The gentleman to whom this letter was addressed is Mr.
Blair M'Clenaghan. I mentioned to him, that notwithstand-
ing the current opinion that the enemy were beaten from
before Charleston, there were too many reasons to believe
the place was then taken and in the hands of the enemy:
the consequence of which would be, that a great part of
the British force would return, and join that at New York.
That our own army required to be augmented, ten thousand
men, to be able to stand against the combined force of the
enemy. I informed Mr. M'Clenaghan of General Washing-
ton's letter, the extreme distresses he was surrounded with,
and the absolute occasion there was for the citizens to exert
themselves at this time, which there was no doubt they
would do, if the necessity was made known to them; for
that the ability of government was exhausted. I requested
Mr. M'Clenaghan to propose a voluntary subscription
among his friends, and added, that I had enclosed five hun-
dred dollars as my mite thereto, and that I would increase
it as far as the last ability would enable me to go.^
The next day Mr. M'Clenaghan informed me, he had
communicated the contents of the letter at a meeting of
gentlemen at the coffee-house, and that a subscription was
immediately began that Mr. Robert Morris and himself
had subscribed two hundred pounds each, in hard money,
and that the subscription was going very successfully on.
This subscription w T as intended as a donation, and to be
given in bounties to promote the recruiting service. It is
dated June 8th, 1780. The original subscription list is now
in my possession it amounts to four hundred pounds hard
money, and one hundred and one thousand three hundred
and sixty pounds continental.
While this subscription was going forward, information
of the loss of Charleston arrived,t and on a communication
* Mr. M'Clenaghan being now returned from Europe, has my
consent to shew the letter to any gentleman who may be inclined
to see it.
f Colonel Tennant, aid to General Lincoln, arri-ecl the 14tli of
Juno, with dispatches of the capitulation of Charleston.
DISSERTATIONS ON GOVERNMENT. 23
from several members of Congress to certain gentlemen of
this city, of the increasing distresses and dangers then
taking place, a meeting was held of the subscribers, and
such other gentlemen who chose to attend at the city tavern.
This meeting was on the 17th of June, nine days after the
subscriptions had began.
At this meeting it was resolved to open a security sub-
scription to the amount of three hundred thousand pounds,
Pennsylvania currency, in real money ; the subscribers to
execute bonds to the amount of their subscriptions, and to
form a Bank thereon for supplying the army. This being
resolved on and carried into execution, the plan of the first
subscriptions was discontinued, and this extended one esta-
blished in its stead.
By means of this Bank the army was supplied through
the campaign, and being at the same time recruited, was
enabled to maintain its ground : and on the appointment of
Mr. Morris to be superintendant of the finances the spring
following, he arranged the system of the present Bank,
styled the Bank of North America, and many of the sub-
scribers of the former Bank transferred their subscriptions
Towards the establishment of this Bank, Congress passed
an ordinance of incorporation, December 21st, 1781, which
the Government of Pennsylvania recognized by sundry
matters : arid afterwards, on an application from the presi-
dent and directors of the Bank, through the mediation of
the executive council, the assembly agreed to, and passed
the State Act of Incorporation April 1st, 1782.
Thus arose the Bank produced by the distress of the
times and the enterprising spirit of patriotic individuals.
Those individuals furnished and risked the money, and the
aid which the Government contributed w r as that of incorpo-
rating them. - It would have been well if the State had
made all its bargains and contracts with as much true policy
as it made this ; for a greater service for so small a consi-
deration, that only of an act of incorporation, has not been
obtained since the Government existed.
Having now shewn how the Bank originated, I shall pro-
ceed with my remarks.
The sudden restoration of public and private credit, which
took place on the establishment of the Bank, is an event as
extraordinary in itself as any domestic occurrence during
the progress of the revolution.
How' far a spirit of envy might operate to produce the
24r DISSERTATIONS ON GOVERNMENT.
attack on the Bank during the sitting of the late assembly,
is best known and felt by those who began or promoted
that attack. The Bank had rendered services which the
assembly of 1780 could not, and acquired an honour which
many of its members might be unwilling to own, and wish
But surely every wise Government, acting on the princi-
ples of patriotism and public good, would cherish an insti-
tution capable of rendering such advantages to the com-
munity. The establishment of the Bank in one of the
most trying vicissitudes of the war, its zealous services in
the public cause, its influence in restoring and supporting
credit, and the punctuality with which all its business has
been transacted, are matters, that so far from meriting the
treatment it met with from the late assembly, are an honour
to the State, and what the body of her citizens may be
proud to own.
But the attack on the Bank, as a chartered institution,
under the protection of its violators, however criminal it
may be as an error of Government, or impolitic as a measure
of party, is not to be charged on the constituents of those
who made the attack. It appears from every circumstance
that has come to light, to be a measure which that assembly
contrived of itself. The members did not come charged
with the affair from their constituents. There was no idea
of such a thing when they were elected, or when they met.
The hasty and precipitate manner in which it was hurried
through the house, and the refusal of the house to hear the
Directors of the Bank in its defence, prior to the publication
of the repealing bill for public consideration, operated to
prevent their constituents comprehending the subject:
therefore, whatever may be wrong in the proceedings lies
not at the door of the public. The house took the affair on
its own shoulders, and whatever blame there is, lies on
The matter must have been prejudged and predetermined
by a majority of the members out of the house, before it
was brought into it. The whole business appears to have
been fixed at once, and all reasoning or debate on the case
Petitions from a very inconsiderable number of persons
suddenly procured, and so privately done, as to be a secret
among the few that signed them, were presented to the
house and read twice in one day, and referred to a com-
mittee of the house to inquire and report thereon. I here
DISSERTATIONS ON GOVERNMENT. 2&
subjoin the petition* and the report, and shall exercise the
right and privilege of a citizen in examining their merits,
not for the purpose of opposition, but with a design of
making an intricate affair more generally and better under-
So far as my private judgment is capable of comprehend-
ing the subject, it appears to me, that the committee were
unacquainted with, and have totally mistaken, the nature
and business of a Bank, as well as the matter committed to
them, considered as a proceeding of Government.
They were instructed by the house to inquire whether the
Bank established at Philadelphia was compatible with the
It is scarcely possible to suppose the instructions meant
no more than that they were to inquire of one another. It
is certain they made no inquiry at the Bank, to inform
* Minutes of the Assembly, March 21, 1785.
Petitions from a considerable number of the inhabitants of
Chester county were read, representing that ,the Bank established'
at Philadelphia, has fatal effects upon the community ; that whilst
men are enabled, by means of the Bank, to receive near three times-
the rate of common interest, and at the same time to receive their
money at a very short warning, whenever they have occasion for it,
it will be impossible for the husbandman or mechanic to borrow on
the former terms of legal interest and distant payments of the
principal ; that the best security will not enable the person to
borrow ; that experience clearly demonstrates the mischievous con-
sequences of this institution to the fair trader ; that impostors have
been enabled to support themselves in a fictitious credit, by means
of a temporary punctuality at the Bank, until they have drawn in
their honest neighbours to trust them with their property, or to
pledge their credit as sureties, and have been finally involved in
ruin and distress ; that they have repeatedly seen the stopping of
discounts at the Bank operate on the trading part of the commu-