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T A B L E OF

k
k

CONTENTS

*
by M r . H a m i l t o n on Public C r e d i t
by M r . H a m i l t o n on a National B a n k by M r . H a m i l t o n on M a n u f a c t u r e s
by M r . H a m i l t o n on Establishing a Mintt
by M r . H a m i l t o n on Public C r e d i t
by M r . Gallatin on the F i n a n c e s
by M r . Gallatin on the F i n a n c e s
by M r . Gallatin on the F i n a n c e s
by M r . Gallatin on the F i n a n c e s
by M r . Gallatin on the F i n a n c e *
by M r . Gallatin on the F i n a n c e s
Report by M r . Gallatin on the F i n a n c e s
* ^ R e p o r t by M r . Gallatin on the F i n a n c e s
Report by M r . Gallatin on the F i n a n c e s
R e p o r t by M r . Gallatin on the F i n a n c e s
" ^ R e p o r t by M r . G a l l a t i n on the F i n a n c e s
^ R e p o r t by M r . Gallatin on the F i n a n c e ?

Fag<?.

^Report
J ^ Report
J. Report
^^Report
^wieport
^Report
Report
'J IT7
Report
-}• Report
^Report
V, Report

January,

17.90

December,
December,
May,

1790
1791
1791

54
78
133

-

January,

-

December,
December,
October,

1795
1801
1802

157
216

1303

November,
December,

1804
1305

December,
November,

1806

-

-

-

-

December,
June,

-

December,

-

December,
November,

-

-

R e p o r t by M r . Gallatin on the F i n a n c e s

-

. . R e p o r t by W i l l i a m J o n e s , ( A c t i n g Secretary

the F i u a n c e s

P^ Report by W i l l i a m Jones, ( A c t i n g Secretary

the F i n a n c e s

° R e p o r t by G. W . Campbell on the F i n a n c e s

<0

VOL. I . — 1

C
M




-

December,
June,

1807
1808
1809
1S09
1810
1811
1812

December,

1813
1813

December,

1814

3

252
262
285
297
331
35G
373
391
398
421
443
468
488
499
523

R

1795.]

SECRETARY OF T H E TREASURY.

157

PUBLIC CREDIT, No. 2.
JANUARY, 1795.
The Secretary of the Treasury respectfully makes the following report to
the Senate:
The President of the United States, with that provident concern for the
public welfare which characterizes all his conduct, was pleased, in his speech
to the two Houses of Congress at the opening of the present session, to invite their attention to the adoption of a definitive plan for the redemption
ol the public debt, and to the consummation of whatsoever may remain
unfinished of our system of public credit, in order to place that credit, as
far as may be practicable, on grounds which cannot be disturbed, and to
prevent that progressive accumulation of debt, which must ultimately
endanger all government.
It was, at the same time, very justly intimated, that the period which has
elapsed since the commencement of our fiscal measures, (now more than
lonr years.) has so far developed our resources as to open the way to the
important work. And it is matter of solid consolation that the result, predating a state of oar finances prosperous beyond expectation, solicits the
public councils to enter with zeal and decision upon measures commensurate
with the greatness of the interests to be promoted.
Inder the influence of this conviction, in conformity with the suggestions
'jlthe President, and pursuant to the duty which the constitution of the
'Apartment, as by law established, enjoins upon the Secretary of the Treasury he hsts employed himself in digesting and preparing the materials of
a
P ' a n for the attainment of the invaluable ends which are recommended.
And he now respectfully submits them to the consideration of Congress.
Towards a clear and distinct conception of the means necessary to the
accomplishment of those ends, it will be useful, in the first place, to review
what has been heretofore done. This will be presented under three heads.
revenucs
which have been established,
"pon f t
Prov'sions
funding the debt, and for the payment of interest
The provisions for reimbursing and extinguishing the debt.
he revenues which have been established appear in the following acts:
1st. « An act for laying a duty on goods, wares, and merchandises, imported into the United States," passed June the 1st, 1789. This act, as its
1 le
imports, lays various specific and ad valorem rates on all articles (with
^ception of a few useful to agriculture and manufactures) imported from
rei n
£ countries. The lowest ad valorem rate is five per cent., with a disc
10 per cent, in favor of our own bottoms. The duration assigned
en(
sess on
day of
*
'
Congress next succeeding the first
1

a

Jjd. " An act imposing duties on tonnage," passed July 20, 1789.
act
v
arious rates of duty on the tonnage of ships and vessels
;
ered m the United States from foreign countries.^ and, in certain cases,
one
Pa" of the United States from another.




158

REPORTS OF T H E

[1795.

Its duration was indefinite, no limit having been assigned.
3d. " An act imposing duties on the tonnage of ships and vessels," passed
July 20, 1790.
This act is a substitute for the one last mentioned, preserving the same
rates of duty, but applying them, in some instances, differently. It is, like
the former, of indefinite duration.
4th. " An act making further provision for the payment of the debts of
the United States," passed August 10. 1790.
This act repeals, after the last of December, 1790, the duties on imported
articles laid by the act above cited, and substitutes new, and generally increased rates, specific and ad valorem.
The lowest ad valorem rate in this, as in the former act, is five percent.;
but the number of articles to which it applies is much narrowed ; and instead
of a discount in favor of our own bottoms, an addition of ten per cent, is
made to the disadvantage of foreign bottoms.
The number of free articles is somewhat extended, in further encouragement of agriculture and manufactures.
It is declared that the duties laid by this act shall continue till the debts
and purposes for which they are appropriated shall be satisfied ; reserving, however, a right to Congress to substitute other duties or taxes of
equal value.
5th. " An act to incorporate the subscribers to the Bank of the United
States," passed the 25th of February, 1791.
The second section of this act authorizes the President to cause a subscription to be made to the stock of the bank, on account of the Tailed States,
to the amount of $2,000,000; and with a view to the accomplishment of
that object, to borrow of the bank $2,000,000, to be reimbursed in ten equal
yearly instalments.
The difference between the interest payable on the loan, and the dividends
on the stock, constitutes an item of annual income to the United States. It
is unappropriated.
6th. An act repealing, after the last day of June next, the duties heretofore laid upon distilled spirits imported from abroad, and laying others
in their stead; and, also, upon spirits distilled within the United States, and
for appropriating the same," passed the 3d of March, 1791.
This act, in conformity with its title, repeals, after June, 1791, the duties
on imported spirits laid by the act of the 10th of August. 1790. and establishes. in lieu of them, higher rates, namely, from 20 to 40 cents per gallon,
according to proof. It also lays duties, to commence at the same tune, »P°n
spirits distilled within the United States, namely, on those from fore'i*
materials, from 11 to 30 cents, according to proof; on those from domestic
materials, if distilled in cities, towns, or villages, from 9 to 25 cents per
gallon, according to proof; if distilled in other places, it imposes a yearly
rate of bO cents per gallon of the capacity of each still, with an option to
the distiller to keep and render an account of the produce of his still, ana
to pay nine cents per gallon of the quantity of spirits distilled therein.
These duties are appropriated, primarily, in the .same manner, and t»
[he same purposes as those laid on imported articles by the act of W
10th of August, 1/90, and are to continue for the same time, w i t h the
like reservation of a right to substitute other duties or taxes of equal value1 here is a further appropriation, which will be noticed hereafter.



1795.]

SECRETARY OF THE TREASURY.

159

7th. "An act for raising a further sum of money for the protection of the
frontiers, and for other purpose* therein mentioned," passed May 2, 1792
This act repeals, after June, 1792, the former duties on a number of imported articles, and establishes higher duties in their stead.
| It extends, among other thiugs, the duties on foreign distilled spirits layin? on those made from grain 28 to 50 cents per gallon ; on others, 25 to
4b cents per gallon. The appropriation and duration of these new duties
are conformable and co-ex tensive with those repealed. There is. likewise,
an addition of 2\ per cent, to that class of duties ad valorem, which, before,
was rated at 5 per cent.; but this additional duty is limited to the term of
two years.
Out of the surplus of these duties, after satisfying the permanent appropriations, certain gross sums are appropriated for the service of the War
Department.
8th. " An act concerning the duties on spirits distilled within the United v, y,
States," passed May 8, 1792.
'
This act repeals, after the last day of June, 1792, the former duties on b ^
spirits distilled within the United States, and on stills; and, instead of them, '
establishes lower duties, namely, on those made of foreign materials, from
10 to 25 cents per gallon, according to proof; on those made of domestic
materials, if in cities, towns, or villages, or at distilleries where the stills,
singly or together, are of the capacity of 400 gallons or upwards, from 7
to li> cents per gallon, of the spirits distilled, according to proof; if made in
ot
ner places, or at distilleries where the stills are of inferior capacity, the
yearly rate of 54 cents per gallon of the capacity of each still. A new opion is given to the distiller, which is, instead of paying the yearly rate, to
Jake out licenses for the monthly employment of his stills, paying, each
"We, 10 cents per gallon of the capacity of each still.
These new duties are appropriated in the same manner, and for the
same purposes, and art to continue for the same time, as those for which
'f'J are substitutes; and to make good, any deficiency which may accrue
' ^ l o w e r i n g the rates, the surplus of the duties imposed by the act of
2d of the same month is appropriated.
" An act to promote the progress of useful arts, and to repeal the act hereWore made for that purpose,' passed February 21, 1793.
1 his act ordains certain fees to be paid, by persons to whom patents are
panted, for inventions, discoveries, or improvements, and appropriates
to the purpose of defraying clerk hire in the Department of State.
m
duration is indefinite.
IT".
"An act to establish the post office and post roads within the
bn
'ted States," passed May 8, 1794.
1 his act establishes, to commence on the first of June following, various ?
p
ates of postage on letters, and directs that the Postmaster shall render to
"
S U r y I e artment
a
and u T
^ P
> quarterly account of receipts and expenditures,
d shall pay quarterly, into the Treasury, the balance in his hands.
«f A.® d u r a t l o n of this act is also indefinite. It contains no appropriation
pald i,lto t h e
Treasury.
_ 0 th. "An act laying duties upon carriages for the conveyance of per- ~
^
passed June 5, 1794.
'
fcl"*
lays different rates
upo
of duty, from ten dollars down to one dollar,
for r C a r r ' a ^ e s / o r
conveyance of persons, kept by or for any person,
O W n use
ffers- ° r i
» or to be let to hire, or for the conveying of passen; and to guard against misapprehension, declares, that the duties shall



REPORTS OF T H E

160

[1795.

not be construed, to extend to any carriage usually and chirjly employed
in husbandry, or for the transporting or carrying of goods, wares, merchandise, produce, or commodities.
The duration of the duties is limited to the end of the session of Congress
which shall be next after the term of two years from the time of passing the
act. It contains no appropriation.
11th. " An act laying duties on licenses for selling wines and foreign distilled spirituous liquors by retail," passed June 5, 1794.
This act requires that every retail denier in wines shall take out a yearly
license, and shall pay for it a duty of five dollars; and that every retail
dealer in foreign distilled spirituous liquors shall also take out a yearly
license, and pay for it a duty of five dollars. It defines n retail dealer in
wines to be a person who deals in the selling of wines, to be carried or sent
out of the house, building, or place of his or her dwelling, in less quantities
at one time than thirty gallons, except in the original cask, ease, box, or
package, in which it is imported. A retail dealer of spirituous liquors to be
a person who shall deal in the selling o{foreign distilled spirituous liquors,
to be carried or sent out of the house, building, or place of his or her dwelling, in less quantities than twenty gallons at one time." No difference is
made between the dealer in several kinds of wines, or several kinds of
foreign distilled liquors, and the dealer in one kind.
The same duration is assigned to this act as to the one last cited. It is
equally without an appropriation.
12th. « An act laying certain duties upon snuff and refined suifar," passed
June 5, 1794.
a > r—'
This act lays a duty of 8 cents per pound on all snuff, which, after the
30th of September, 1794, should be manufactured within the United States,
and of 2 cents per pound on all sugar which, after that day, should be refined within the United States. The remark made Upon the two last recited acts is applicable to this, as to the duration of the duties, and the appropriation of their proceeds.
13th. « An act laying additional duties on goods, wares, and merchandises, imported into the United States," passed June 7. 1794.
This act lays upon sundry enumerated articles, on their importation from
loreign countries, certain specific and ad valorem rates of duty, in addition
to those before charged upon them, and adds, generally a duty of two and
a halt per centum on all that class of articles which were b e f o r e chargeable
with seven and a half per centum acl valorem. It also prolong the temporary two and a half per centum, laid by the act of Mnv 2 1792. till the
1st of January, 1797, to which period the other duties laid by it are to continue. it contains no appropriation.
1794 th ' " A n

aCt l a y i n ? d tieS

"

° n 0!°P ert y

801(1 a t

Miction," passed June 9,

thehws a of a a \ a " C t i o n > b y
licensed according to
I ^er rent nf th '
u*
P r o h l b , t » * <>*<** from selling at auction, of
L or e s t L .n i ?
r m ° D e y a r i s i n £ f r o m t h e ^ of any right, interJ S f c t e n f m e n t S : o r hereditaments, utensils in husbandry,
Ve l8 of
r ; £ P° r c e n t ^ purchase money,
Thf t ™ S *
S°ods, chattels, rights, or credits.
d
i
the e x ^ ^ J ^ t W ^ ?a rl S i f rm m tt hee ^ t h e e
of the session n e * t a £
s without an appropriation. °
w X u ln
° v
of passing the act, which also
is
But, by an act entitled "An act making appropriations for certain pur


1795.]

SECRETARY OF THE TREASURY.

161

poises therein expressed," passed the same 9th of June, 1794, certain specific
sums, amounting together to $1,292,137 38, are charged upon the proceeds
of the revenues, which are created by the five last mentioned acts, and there Jo
is a reservation made out of thein of a sum sufficient to pay the interest of
I whatever moneys may be borrowed pursuant to the act entitled u An act
making further provision for the expenses attending the intercourse of the
United States with foreign nations," <fcc., passed the 20th of March, 1794.
tohirk sum is pledged far the payment of that interest.
These acts comprehend all the current revenues of the United States.
Their product will appear hereafter.
In addition to them, a fund will be derived from the sale of the public
lands in the Western Territory. And there likewise occur, from time to
time, payments into the Treasury on account of old debts; but these are too
casual, and of too little magnitude, to bj more than cursorily mentioned.
The lands in the Western Territory, of which the Government of the
' nited States has acquired the right of soil, are estimated in a report of the
late Secretary of State to amount to 21,000.000 of acres. This quantity,
at twenty cents per acre, the price upon former occasions contemplated,
would yield a sum of $4,200,000. But it is believed that it would be unsafe to count upon so large a sum Besides the uncertainty as to the proportion which may be of a saleable quality, and as to the price which may
be obtained for it, the boundary line between the United States and the Indians is understood to be unsettled wim regard to a large part of the tract
on which the computation is made. If it ultimately yields three millions
of dollars, it will probably equal erery reasonable expectation.
The provisions for funding the debt, and for payment of interest upon it,
are comprised in the following acts:
1. " An act making provision for the debt of the United States," passed
August 4, 1790.
This act, commonly called the funding act, contains these several provisions, viz:
I. It reserves out of the proceeds of the duties on imports and tonnage,
for the support of the Government of the United States, and their common
defence, the yeariy stun of $600,000.
II- It appropriate* so much of the same proceeds as should be necessary
10
the payment of interest on foreign loans before that time contracted, or
which should afterwards be contracted, for discharging the arrears of interest, and the principal of antecedent foreign loans, to continue so appropriated till the debt created by those loans should be fully discharged.
III. It authorizes the President to borrow any sum or sums not exceeding
$12,000,000, to discharge the arrears of interest upon, and the instalments
of the principal of, the foreign debt due, and to grow due; and if to be effected on advantageous terms, to pay off the whole of that debt; and further authorizes him to make such other contracts respecting it as should be
found for the interest of the United States, so that no engagement or contract should preclude from reimbursing the sums borrowed within fifteen
years after they should be borrowed.
IV. In order to adapt the form of the domestic debt to the then circumstances of the United States, as far as should be found practicable, " conwith good faith and the rights of the creditors," which it truly
declares "could only be done by a voluntary loan on their
partit
proposes a loan to the United States, (directing for that purpose books for
VOL.
11



162

REPORTS OF THE

[1795.

subscriptions to be opened at the Treasury, and by commissioners of loans
in the several States, on the 1st of October, 17^0, and to continue for a
year;) the sums subscribed to the loan to iaj paid ill certain enumerated
evidences of the debt of the United States, upon these terms, viz:
1st. That the interest unpaid on the principal of those evidences, should
be computed up to the last of December, 1790.
2d. That for any sum subscribed and paid in the principal of the debt,
the subscriber shoulci be entitled to one certiiicate for a sum equal to twothirds of the sum subscribed, bearing an interest of six per cent, per annum,
commencing the 1st day of January, 1791, payable quarter-yearly, and
subject to redemption by payments not exceeding in one year, on account
both of principal and interest, eight dollars upon a hundred of the original sum so subscribed and paid ; and to another certificate for a sum equal
to the remuiniug third of that sum, which, after the year 1M)0, should bear
a like interest, payable in like manner, and subject to a like rate of redemption. But thai th United States, though having a right to redeem in the
abovementioned proport ion, should not be obliged to do it.
3d. That for *ny sum subscribed and paid in the interest of the dtbl, the
subscriber should be entitled to a certificate for a sum equal to the sum subscribed. bearing aiMvttt rest of three per cent, per annum from the said last
day of December, 171)0. payable quarter-yearly, and redeemable ut pleasure,
by payment of the principal.
4th. That the new *toclt created hy the said loan should be transferable
on the books upon which the rr uit foi it should stand by the proprietor or
his attorney; these I ooks to be either «hose kept for the purpose at the
Treasury, or by commissioners of baas in the respective States; a mcie
being provided for tue transfer from the books at one place to those at
another.
5th. That the interest should be payable wheresoever the credit for the
stock should exist, when tlic payment of interest should become due, except
that the dividend ot interest for any quarter of a yet\r, which should nut ue
demanded before the expiration of a third quarter, s h o u l d ailei wards be
demandable only at the Treasury.
6th. That for the regular payment of the interest on the several kinds of
stock, to arise from the Joan as it should accrue, including that which is
deferred, the proceeds of the public revenues, which bebre that time had
S L I R ' F 6 THEN R R : SH^,LD PRO> ,DOD'AFIER
v«rl*
$600,000 for the support of the Government of 'he United States and
their common defence, and such sum as should b necessary for payment
of interest on the foreign loans before mentioned, should bL and thereby
were,
SLOCK. pledged and appropriated till the final redemption of the capital
Y Premising that some of the creditors of the United States might not
think fit to become subscribers to the loan, this act declares that « nothing
contained in it should be construed in any wise to alter, abridge. or
pair, the rights of those creditors of the L'nited States who should not
C0 Uract
^ Z n l n
!
', "I*™ which their respective clai®
sa d
w l n n f v . i t -' A
! ^ c t s and rights should remain in M
A, d t0 0bvu ue
i
:
;
idea of compulsion on the creditors
to subscribe, it allows to non-subscribers, during the pendency of the 1<**
ana unui tne end o the yearh 1791, at o
rate per centum on their respective
S t ' T t
^ Wh,C ^ * *
G i b i n g creditors; on the sole
condition, that the evidences of debt holden by them; except thoU which had




1795.]

SECRETARY OF THE TREASURY. 8

been issued by the R a s t e r of the Treasury for the regislered debt, should
he exchanged for other certificates, specifying the spccie amount of those
in exchange for which they were qjven, ai-d otherwise of the like tenor
y with those which had theretofore been issued by the Register of the Trcaj sury for the registered debt; stating, as the grounds of this condition, that
some ol the certificates then in circulation had not been liquidated to specie
value; that most of them were greatly subject to counterfeit: that counterfeits had actually taken place in numerous instances: and that embarrassment and imposition might attend the pavment of interest on these certificates in their then form.
VI This act likewise proposes another loan to the amount of .$21,500,000
payable in the principal and interest, indiscriminately, of the evidences of
debt of the respective States, according to certain quotas, to be conducted in
the same manner, and to be open for the same time, as that in the domestic
debt of the United States. The terms of this loan to be—
1st. That, for any sum subscribed, Ihr subscriber should lie entitled to one
certificate for a sum equal to four ninths of the subscribed sum, bearing an
interest of six per centum per annum, commencing the 1st day of January,
1791; to another certificate for a sum eq'ial to two-aiutbsof the said subscribed sum, bearing an interest, after the year 1HM), of six per centum per
annum; and to a third certificate, for a sum equal to thive-ninths of the said
subscribed sum, bearing an interest of three per centum per annum, commencing on the same 1st day of January. 1791: the interest in each case
to be payable in like manner, and to be subject to the like redemption as
that on the correspondent kinds of stork to be created by this the said
first mentioned loan. And the stock to be created by ifiis second loan, to
j>e transferable, on the same principle.*, and in the same modes, as that produced by the former.
2d. That for the regular payment of interest on the sererai kinds of stock
(a ar
>*e from this loan, as it should accrue, including thn which is deferred,
f
fie proceeds ol the public revenues, which, before that time, had been, or
during the then session should be provided, after rtservhig the aforesaid
ynrly sum, of $000,000, the sum necessary for pymcnl of interest on
the foreign loans made and to be made, and the sum, necessary for paymtt,
t of intcr°st on the loan in the domestic debt. sl*HlId be, and thereby
We
re. ledged and appropriated; to continue so ploiged and appropriak 1
until the final redemption of thi cqiital stock.
VII. To secure the due application of these revenues, according to the
appropriations, an account oflhetn is direci « 0 be kept, distinct from that
d
of the proceeds of any oth=»r revenues, exc pt such as should be raised to
m l
ke good a deficiency in those; and the fait'j of the United States is pledged
to appropriate addition tl and permanentft»?fdsfor satisfying such deficiency.
VIII. The proceeds of t;ie siles of hn.is in the Western Territory, then
belonging, or which thereafter should belong to the United States, are
pledged an J appropriated for the discharge of the debts which the United
States then owed, or by virtue of that act should owe.
There are several collateral ind supplementary provisions, which are
°nntted as immaterial to the intended view of the subject.
2. "An act repealing, after the last day of June next, the duties heretofore laid upon distilled spirits," <fcc., p;issed the 3d of March, 1791.
The proceeds of the duties laid by this act are made subject to the same
appropriations, and m the same ordjr of priority, as those contained in the



REPORTS OF THE

164

[1795.

funding act; and to secure their due application an account is directed to be
kept of them, distinct from that of any other revenues, except those appropriated by the funding act.
-;
3. " An act for raising a further sum of money for the protection of frontiers/' &c., passed May 2d, 1792.
This act, which, as has been before noticed, increased permanently the
duties on certain imported articles, and laid a temporary additional duty on
some others, appropriates primarily the proceeds of the permanent augmentations in the same manner, and to the same purposes, as the antecedent
duties were appropriated; that is. in conformity with the funding act.
4. " An act concerning the duties on spirits distilled within the United
States," passed May 8th, 1792.
This act, which lowers the duties on spirits distilled within the United
States, and on stills, appropriates the proceeds of the reduced duties in the
same manner as were the former duties; and to make good whatever deficiency might be occasioned by the reduction of the rates, pledges as a substitute the surplus of the augmented duties laid by the last cited act.
5. " An act providing for the payment of the second instalment, due on a
loan made of the Baukof the United States", passed June 4th, 1794.
This act, in addition to a provision for paying that second instalment, appropriates so much of the dividends on the stock which the United States
hold in the bank, as should be necessary to the payment of interest on the
capital of a loan of $2,000,000, had of the bank, pursuant to the 11th section of the act by which it is incorporated. It also fixes the last day of
December, in each year, as the aunual period for the payment of the successive instalments of that loan.
6. « An act making provision for the payment of the interest on the
balances due to certain States, upon a final settlement of accounts between
the United States and the individual States;" passed May 30th. 1794.
This act directs 'hat interest shall be allowed and computed on the balances to creditor Sates, from the last of December, 1789, to the last of
December, 1794; which, being placed to their credit respectively, shall bear
an interest of three per centum per aunum, from the period last'mentioned.
It further directs that the interest on the principal balances, to be funded
agreeably to the terms of the act for the settlement of accounts, together
with the interest upon the arrears of interest, computed on those balances,
and forming a new capitaV shall be payable at the offices of the commissioners of loans within the States to which the balances are respectively
due and shall be paid quartor-yearly, after the last day of December, 1794,
3 T

!? * a c h

at Which interest is payable on the other

parts of the funded debt; to which end, so much of thrproceeds of the duties on imports and tonnage as rmy be necessary, and as were not otherV t Z ^ A a f Z r 0 p r t a ? d J * * Wopnated; and the faith of the United
m ^ ^ ^ T ^ t

A

N

Y

*FICIENCY *HLCH - Y

O o n
in TheTomeXTr^ T * 5 debts,F onl the S ' t i m e to time, the subscriptions
n the domestic and Suite ! ?
sarae terms as by the funding act;

ter1794 w h l T ^ f 1
~ e d
to the last dav of December 1,94 which acts, together with the acts particularly cited compr^
all those that relate to the funding of the pubUc debt and thL w m J t of
RJ e S and h D E U R, s h T h ethe 1 1 ° f t h e f * a K S ^
,
I""
mu T L ^ *
defc'Znrnllu^ o* f
of l h e foreign debt; that of the funded
debt the probable amount of that which remains unfunded, of what com


1795.]

SECRETARY OF THE TREASURY.

165

posed, and (he annual amount of interest upon the different portions of
debt according to contract, and according to the plan of this report.
The provisions for reimbursing and redeeming the public debt are contained in the following acts, and are as follows, viz:
I. w An act making provision for the debt of the United States," passed
the 4 th of August, 1790.
This act, which is the one that regulates the funding of the debt, by the
last section appropriates the proceeds of the sales of lands in the Western
Territory, then belonging, or thereafter to belong, to the United States, to
the sinking or discharging of the debts for which the United States then
were, or by virtue of that act should be holden, to be applied solely to that
use. until they should be fully satisfied.
II. "An act making provision for the reduction of the public debt,"
passed August 12th, 1790.
This act, premising that it is desirable, by all just and proper means, to
effect a reduction of the public debt, and that the application of the surplus
revenue to that object will not only contribute to this desirable end. but
will be beneficial to the creditors of the United States, by raising the price
of their stock, and be productive of considerable saving to the United
States, enacts:
1st. That the surplus of the duties on imports and tonnage to the end of
ibe year 1790, shall be applied to the purchase of the debt of the United
States, at its market price, if not exceeding the par or true value thereof.
2d. That the purchases to be made shall be conducted under the direction
of the President of the Senate, the Chief Justice, the Secretary of State,
the Secretary of the Treasury, and the Attorney General ; who, or any three
of whom, with the approbation of the President, are authorized to cause
them to be made, in such manner, and under such regulations, as shall appear to them best calculated to fulfil the intent of this act: Provided, That
the same should be made openly, and with due regard to the equal benefit
of the several States.
3d. That the accounts of the application of the fund should be settled as
other public accounts, accompanied with returns of the amount of debt purchased at the end of each quarter of a year; and that a full and exact report
of the proceedings of the commissioners should be laid before Congress,
within the first fourteen days of each session, including a statement of the
disbursements and purchases; specifying the times when, prices at which,
and persons of whom, the purchases were made.
4th. That, in addition to this fund, the President should be authorized to
borrow any sum or sums, not exceeding 2,000,000 of dollars, at an interest
not exceeding five per centum, to be applied to purchases of public debt, in
like manner, and under the same direction and regulations as the first mentioned fund: Provided, That out of the interest of the debt to be purchased,
there should be appropriated annually a sum not exceeding eight per
centum of the sums borrowed, towards paying the interest and reimbursing the principal of these sums.
But to guard against the possibility of a deficiency of means to pay the interest on the debt\vhich was to accrue in the year 1791, authority is given
to reserve and apply to that purpose, out of the first mentioned fund, as
much as might be necessary to supply the defect of receipts during that
year, on account of the duties which should accrue after the year 1790.
III. u An act repealing, after the last day of June next, the duties here distilled spirits," <fcc., passed the 3d of March, 1791.
tofore laid upon


166

REPORTS OF THE

[1795.

This act appropriates whatever surplus may remain from year to year of
the proceeds ot the duties which it imposes, after satisfying prior appropriations, to the reduction of the public debt, unless such surplus shall be required for the current public exigencies, and by special acts of Congress
shall be appropriated thereto.
IV. "An act supplementary to the act making provision for the reduction
of the public debt," passed the 3d day of March, 1791.
This act declares that the terms of a loan of three millions of florins, obtained in Holland, bearing five per cent, interest, and four and a half per
cent, for charges, and future loans on the same terms, should be deemed to
be within the meaning of the act of the 12th of August, 1790.
V. "An act supplementary to the act making provision for the debt of
the United States," passed May 8, 1792.
This act makes provision for the payment of a debt due to certain foreign
officers who had served the United States, (the interest of which was, by
stipulation, payable at Paris,) out of the moneys authorized to be borrowed
by the funding act. It also establishes a permanent sinking fund, to be
composed,
1st. Of the interest of the public debt purchased, redeemed, or paid into
the Treasury, in satisfaction of an) debt or demand.
2d. Of the surplus, if any, which should remain of moneys appropriated
for paying the interest of the public debt, after paying that interest.
This fund is to be applied under the direction of the commissioners nominated m the act of the 12th of August, with the like approbation of the
President,
1st. To the purchase of the several species of stock constituting the debt
ol the United States, at their respective market prices, not exceeding the par
or true value thereof, and as nearly as may be iu e q u a l proportions, until
the annual amount of the fund shall be erpinl to tiro per centum of the
whole amount of the outstanding funded stock, bearing a present interest
of six per centum. Thenceforth,
•i *Jt ^Vq? redemPl.\on, o f that
according to the right reserved to
the United States, until the whole should be redeemed. And lastly, after
Z f y j ^ 1 0 ^ ! ° J h e Pur^*e> a t its market price, of any unredeemed
debt of the United States: which purchases are directed to be made at the
owest prices at which they can be effected, by open purchase, or by receivthe
* h e commissioners, or
)e?sons a t C S K
he n r n ^
^ by
u t 0 m a k e P h a s e s , and of the persons making
o n C S ^ a n d are t0 ^ a c c o u i l t t d
*
Treasury, and reported to
maUner
the
yf?An £?
Purchases
authorized to be made,
the year 1793.;'m
appropriations for the support of Government for
m ^ h onhe P lo^ de nV h « at
° f l h e l J n i t e d States shall cause so
lHe R m k
f the Unilcd
n t h action o n h e T ^ r
°
^ ' c s , pursuant to the
5 0 O C O & S i ! a l h i ^ n ? r p ° L a U O n ' l ° ** P aKj o f f y sums not less tim
than
T
inay? f
l u n a t e
r r
r
Z
may
m
e
regard to the exigencies of Z r** n d l h h e t reasury, having due
a
t
S t e ^ r r
^
Wropnations made
t
o n a ' L m m ^ T ^ ^ T n T ' If ff hoe r U mhtee d ® " *
W
the first instalment due
e
k
% lis
^
°
States," passed March 2d. 1793.
m i L s t f d o ° r ( the ^
<* "
of two
 had of the Bank of the United States, pursuant to the lltb
minions of dollars



1795.]

SECRETARY OF THE TREASURY.

167

section of the act by which it is incorporated, out of the moneys borrowed
upon the authority of the act making provision for the reductiou of the
public debt.
VIII. " An act providing for the payment of the second instalment due on
a loan made of the Bank of the United States," passed June 4th, 17.J4
This act authorizes the payment of that sec >nd instalment out of the proceeds of any foreign loans before that time transferred to the United Suites.
It makes other provisions, which have been noticed under a preceding h;:ad.
These acts comprise all the provisions which have been made for reimbursing and redeeming the debt of the United Stales. The result of the
last, of December, 1794, is presented in the statement E.
There are two other acts, which, though not falling properly under
either of the foregoing heads, require, from their relation to the subject, to
be brought into view.
1st. "An act relative to claims against the United States, not barred by
any act of limitation, and which have not been already adjusted," passed
February 12th, 1793.
This act directs that all claims, of tho description given in the title, shall
be presented at the Treasury for adjustment by the 1st of May, 1794,
or shall be forever after barred: except those for loan-office certificates,
final settlements, indents of interest, registers' certificates, balances on
the books of the Treasury, loans of money in foreign countries, ccrlifirates issued under the act entitled " An act making provision for the debt
of the United States."
Such of the claims presented as cannot be admitted in the course of the
Treasury, are to be reported to Congress by the accounting officers.
Among the claim* inadmissible in the ordinary course of the Treasury,
is a sum >f $90,574 of the bills of credit commonly called new emission
money.
2d. " An act making further provision for the expenses attending the intercourse of the United States with foreign nations," &c., passed March 20th,
1794.
This act appropriates, in addition to former provisions, one million of
dollars for the purposes mentioned in the title, to be paid out of any moneys
which may be in the Treasury not otherwise appropriated, and to be applied under the direction of the President of the United States, who is also
authorized, if necessary, to borrow the whole, or any part of the sum ; but
there is no special appropriation either for paying the interest or reimbursing the principal of the loan.
The act already quoted, of the 9th of June, 1794; entitled " An act mak»ng appropriations for certain purposes therein expressed," with a view to
remedy this defect, appropriates out of the proceeds of the taxes laid during
the last session, such sum as shall be sufficient to pay the interest on whatever moneys may be borrowed pursuant to the act of March 20th, 1794.
The foregoing review of the laws which constitute the fiscal system of
the United States, displays these prominent points as the leading features of
that system:
1st." That all the current revenues of the United States are derived from
these sources, to wit: I M P O R T E D A R T I C L E S ; the T O N N A G E ot ships and
vessels; S P I R I T S distilled within the United States, and H T I L I . S ; the P O S T A G E
of letters; P E E S ON P A T E N T S ; D I V I D E N D S of bank stock; S N U F F manufactured within the United States; SUGAR refined within the United States;



16

8

REPORTS OF THE

S A L E S A T A U C T I O N ; L I C E N S E S lo retail
R I A G E S for the conveyance of persons.

[1795.

wiues and distilled spirits•

CAR-

2d. That of these revenues, the principal part of the duties on imported
articles those on the tonnage of ships or vessels, those on distilled spirits
and stills, those on the postage of letters, patent fees, the dividends on hank
stock, are permanent; (the three first being commensurate with the existence ot the debt for the payment of the interest of which they are pledged:
the fourth and fifth having no limit assigned in the laws; and the last beinu
commensurate with the duration of the property in the stock :) all the othera
temporary; being limited to continue no longer than till the end of the session of Congress next after the expiration of two years from the respective
Z Z 0 L ^ S l D g . t h e > W S w h i c h established them, except the temporary
dunes on imports and tonnage, which are to continue till the 1st of January,
J l ™ a t t h e Permanent duties on imported articles, the tonnage duties,
S intS d S t ,
!nhWt to these ppermanent l dispositions e: U l l i t c d
'
¥ within ,h
and on stills, arc
subject
of C0fl 000
«f\t
'
for the support
of the Government of the LnitedSta.es and their common dclel.ce.
M. I o an appropriation of so much as mav lie necessarv to nav
oV,d
T T l o an Z t f ° r T *T sop rmuche d f o r b>' be necessary to nav
Sd. o l appropriation of
as may

moVetron rlv
ftS"*-^
Z* ? e
«
c l
more properly, in the original debt of the^ United States.^ S M %
4th. l o an appropriation of so much as may be neeessaxv to dis-

t h e 6 i l ; ' t c ^ t a o n „ a , K V a ' i 0 n ° J 5 0 m u c h " m a >' >* necassary to pay
lio^s establi^i p i f n
? creditor S t a t e ; which d. s
,hl
S e r e t u t c r a . r , T I E 8 ' "CCOrd,ng
'
«» »<>"* **

no such U l t i m a , " " "

that , , ,o the
»/ "" Mer dui.es hat.

""
^

ncu dividend «
nation.
^ a specific sum of
of 1,000,000 d M w Z h ^ A * ? ! t h C W ^ 1 1 1 o f intend on a sum
intercourse.
'
^ ^ tobe Crowedfor the expenses of foreign
d e S ^ T n g now Z e l f h e ^ T f ft ^
**
the domestic
f
the S,0ck Cfeated
the loans fn the 3
°
^
debts of the several Stages, and bv the ^ I
States, and in the particular
bottomed on certain V ^ e f r ^ l t ^ T ^ U6 10 Cmdltor StateS'
f
payment of the i*ercTu£n
t £ ^ % fl*4*"* ° r hWoOucated for th*
of the United States.
' d t h n s co "stitute the F U N D E D DEBT
8th. That the funded DoniesTir H-k* r
. .
the L n , t e d S t a t e s consists d
three species of stock : one bearing. ^
of six
annum ; another bearing a
I** cent, per
3 th,rd
a present interest o f t h r n ™ em, m p € r a n n u m t^k e
* ^
case payable quarter yearly.
5
interest in each



1795.]

SECRETARY OF THE TREASURY.

169

9th. That the six per cent stock, present and deferred, can be redeemed
in no greater proportion than at the rate of eight per centum per annum of
the original sum, on account both of principal and interest; but the three
per cent, stock is redeemable at pleasure.
10th. That the provision for subscribing to the loan in domestic debt expired on the last of December, 1794, and that no further provision has
been made for the unsubscribed residue.
11th. That the funding act expressly confirms the contracts and rights
of the creditors of the United States, who shall not think Jit to subscribe to
the loan, and gives au expectation to them of further and other arrangements upon the event of the propositions made to them.
12th. That the proceeds of all the lands of the United States in the
V estern rl erritory are appropriated to the redemption of all that part of the
\
public debt for which, prior to the funding act, or by virtue thereof, the
united Suites were, or are, liable.
13th. That in addition to this, a regular S I N K I N G F U N D has been successively constituted, to be applied under the direction of five principal officers
ol the I nited States, with the approbation of the President, hitherto composed of three parts : 1st. The surplus of the duties ou imports and tonnage to the end of 1790; 2dly, the proceeds of loans, not exceeding
4000,000 of dollars, authorized to be borrowed for the purpose; (these two
iunds to be invested in purchases;) and, 3dly, (in which the two former resolve themselves, the mterest ou the public debt, purchased, redeemed, or
patd into the Treasury, together with the surpluses (if any) of moneys
"impropriated for interest, to be applied first to purchases of the debt, till
the fund is equal to two per centum of the outstanding stock, bearing a
present interest of six per cent.; secondly, to the redemption of that stock;
lastly, to purchases of any unredeemed residue of the public debt. But
"!re ^ reserved out of this fund a sum not exceeding eight per centum
per annum, towards the payment of interest, and reimbursing of the principal of the loans made for purchases of the debt.
lo this recapitulation of the leading features of our fiscal system, it may
. e useful to adJ a summary exhibition of certain results which appear more
111
r p ^ 1 ' ' o r are deducible from the tables or statements annexed to this report.
1 he particulars and amount of the debt of the United States are as follow: j
J orcign debt, as per statements B and C, $14,599,129 35
duct instalment of foreign debt in the
year 1795, to be paid out of proceeds
of foreign loans
853,750 00

Ue

$13,745,379 35
funded domestic debt, viz.:
«• Arising from original domestic debt, subscribed to
J?"' proposed by funding act:
0ck
bearing a present interest of 6 per
St?, nt i " .
'
- $17,912,138 01
^ ock bearing a future interest of ditto 8,538,228 97
ck
a r
£ ^ . >ng an interest of 3 per cent. - 12,275,347 55
- Arising from State debts assumed:
® °ck bearing a present interest of 6 per ct.
7,908,374 19
o 0C * bearing a future interest of ditto - 3,940,608 96
ock
bearing an interest of 3 per cent. 5,994,115 70




[1795.

REPORTS OF THE

170

3. Arising from balances to creditor States :
Stock bearing a present interest of 6 per
cent. $2,346,066 00
Stock bearing a future interest of ditto 1,172,528 00
Stock bearing an interest of 3 per cent. 703,510 80
$60,789,914 13
Unsubscribed debt, viz:
Principal, exclusive of loan-office certificates, bearing interest on nominal value
Interest thereupon, including indents
Principal of loan-office certificates, bearing interest on nominal sum Interest thereupon
.
.
.

1,072,583 40
452,826 74
27.935 00
7,830 00
1,561,175 14

Total unredeemed debt

§76,096,468 67

This is exclusive of a sum of 81,400,000 due to the Bank of the United
States, on account of the loan of §2,000,000 had of that institution, pursuant to the eleventh section of the act by which it is incorporated, and which
is not included in the mass of the debt, because it is more than counterbalanced by a greater value in stock. It is also exclusive of those loans
which are temporary anticipations of the revenue.
The particulars and amount of the annual current revenues of the
United States, are as follow:
APPROPRIATED.

PERMANENT.

Duties on imports and tonnage, domestic - $4,199,791 67
Duties on distilled spirits and stills
400.000 00
Fees on patents (jy
UNAPPROPRIATED.

Postage of letters Surplus dividends on bank stock -

* 29,722 16
62.500 00
£4,692,673 83

Temporary duties on imports

TEMPORARY.

1,479,626 91

INTERNAL.

Duties on snuff, refined sugar, sales at auction, licenses to retail spirits and wines,
carriages for conveyance of persons
Total annual current revenue

3S0.000 00

1,859,626 91
$6,552^0Ojf

and am unt
ffrfticu,ars
?
of the annual stated e x p ^ d i ^ r e bf £
United States, computing the army and navy establishments on the scale
of an Indian and Algenne war, are as follow •
interest on the foreign debt
. '
490 58
Interest on domestic funded debt .
^ooq .741 50
Interest on unfunded debt
.
.
.
.
1°
Interest on temporary loans
"
*
IQO'OOO




1795.]

SECRETARY OF T H E TREASURY.

171

Expenses of the civil Gove rnment, including foreign intercourse .
.
.
®
_ §475,249 53
^xpenses of military land service .
.
. 1511.975 29
Expenses of military naval service
.
.
'441508 80
Miscellany
„
.
109,357 04
Total annual expenditure

- $5,6S1,S43 84

This sum is liable to be increased by the interest which will begin to accrue on the deferred slock the 1st of January, 1801, being, on the present
amount of that stock, 8871,401 92.
The annual force of the sinking fund, as depending on ascertained funds,
may be stated as follows:
interest for a year on sums already carried to its credit
- $68,225 55
interest for a year on debts of foreign officers, in a course of
payment, including arrears of interest to be carried to the
credit of this fund
13,439 49
Interest for a year on the unexpended surplus of the revenues
at the end of the year 1790, being $411,659 49, supposing this to be invested by purchase in an equal sum of
present six per cent, stock
.
.
.
.
24.699 56
& 106.364 60
farther liable to be increased by an investment in purchases of
«bbo,098 11, which, together with the sums from that source already invested in purchases and payments, will amount to #2,000,000, the sum authorized to be borrowed for purchases of the debt.
But, as this auxiliary depends on an operation, not only future, but, in
some degree, casual, it cannot be token into an estimate of the actual strength
the fund.
i he proceeds of the sales of western lands must also be considered as an
eventual resource.
There are other contingent sources of augmentation not computed, because they are contingent But, 011 the other hand, the fund is liable to be
reduced, by a sum reserved out of it for the payment of principal and interest of the two millions authorized to be borrowed, for purchases not exceedni? eight per centum per annum.
I he sum applicable, in the first instance, to the redemption of that por•on of the funded debt which bears a present interest of six per centum,
excluding that stauding to the credit of the commissioners of the sinking
8
"nd, is as follows:
tr
< «nsferable stock
$516,410 24
1 untransferable stock, arising from balances to creditor
^ates
.
.
.
.
.
.
46.901 12
$563,311 36
1 ile s n m
applicable in the
def^i 1 2 ' , 0 t h e rederop1'0"
r
stock, excluding that
n f ,i
n

first instance, that is, on the 1st day of Jan°fthat portion of the funded debt now called
standing to the credit of the commissioners
the sinking fund, wilfbe as follows!




172

REPORTS OF THE

[1795.

Of transferable stock
.
.
.
.
.
£249.576 75
Of untransferable stock, arising from balances to creditor
States
.
.
23,150 56
8273.027 31
These sums would complete the redemption of the whole amount of the
stock to which they are applicable within twenty-three years after the redemption in each case was begun ; within which terms they would discharge the whole of the public debt, except the foreign debt, the unsubscribed debt, and the three per cent, stock.
If the redemption of the present six per cent, stock commence the 1st of
January, 1796, and the redeeming fund be commensurate with the whole
of the unredeemed stock, bearing a present interest of six per cent., and
transferable, the revenue set free in the year 1818, for operations upon the
residue of the debt, will be 82,039,391 36.
If the redemption of the deferred debt commence the 1st of January,
1802, when it may rightfully commence, and the redeeming fund be commensurate with the whole of that stock, unredeemed and transferable, the
revenue set free in the year 1824, for operations upon the residue of the
public debt, if any remain, will be 8998,307 02.
The revenue set free by these successive redemptions would be sufficient
to redeem the whole of the present foreign debt in six years ; that is, within
a term of twenty-eight years from the proposed time'for commencing the
redemption, or the 1st January, 1796; and, after extinguishing the foreign
debt, would more than discharge the whole of the balances to creditor States,
and the whole of the unfunded debt in two years more
It the proceeds of the lands in the Western Territory should be equal to
three millions of dollars, and the three per cent, stock can be purchased at an
average of twelve shillings in the pound, that fund would suffice to payoff
the principal ot the three per cent, stock in something more than 25 vears.
nf T ™ t h a t ' ! f t h ; force of the sinking fund be rendered equal, exclusive of the proceeds of the sales of western lands, to the redemption of the
present unredeemed transferable stock, commencing the 1st of January,
Jannnrw 1 8 0 2 n tfoT i ? f \ p r ° S e m "l*™* o f s i x l™ "centum. and the 1st of
S
, ' f
that bearing a future interest of six per centum; audit
InH^
v l t h f 8 a , e s o f w e s t e m , a n <k ^ o u l d prove equal to $3,000,000,
brol, ht
r\te
/ *nto a c t i ™
purchases of three per Vent, stock, at the
I r ^ Z ^ J T ^ J l T l a m e !*fore , h e
the whole of the
fwei
nrTated ^ n V V
^
P n n d ^mestic (the funds appr»
H Motb^ i n f . H ^
, 7 i e * * * adequate in productiveness, and
a
1,ed
A ould
^ A T
PP ') V
be extinguished in thirty years. And there
e V e r i t0 the United S,ate an
W
«
incoL^,435,320 »
a t T
f h a T r S - a , T Pr°V,S,0nS' W h i c h
* proposed, may greatly accelerate
ceeds loluhZ
fJu* C^ S l ^e , odna t a ' l h e Secretary of the Treasury
a ^ e n r to h^m n l
°" d ™
Congress certain propositions, which
to
E
J"™
* adopted to complete OUT sfstem of public
credit. These will be followed by some explanatory remarks.
time than can cOTV^iraUy be jpared




correctness,l oImnm d k « no, e—jrJ»C calculat n v o n l
demanded^ |

1795.]

SECRETARY OF T H E TREASURY. 18
FIRST

PROPOSITION.

That further provision be made, with regard to the yet unsubscribed
debt of the United States, as follows :
1st Further time to be given, until the end of the vear 1795, to subscribe
the same to the loan proposed by die funding act, with liberty to the holders
to subscribe the arrears of interest up to that period, separately from the
principal, reserving that principal on its original footing.
2d. An appropriation to be made for payment of interest on so much of
the principal (excepting loan-office certificates bearing interest on the
nominal value) as at the end of the year 1795 shall remain unsubscribed
for the term of one year, according to the rale or rates stipulated by the'
original coutracts, and for the payment of leu per centum of the arrears of
interest thereupon to the same end of the year 1795. This payment to be
made on the 1st of January, 1796, at the Treasury, where no particular
place of payment is stipulated, and at such place, where there is one.
3d. The specie principal of the loan-office certificates which bear interest
on the nominal value, together with the arrears of interest, to be immediatel y
y
paid off.
SECOND

PROPOSITION.

That provision be made for taking upon loan to the United States, by
subscription at the Treasury, the outstanding and unbarred new emission
>1 s of credit; the sums subscribed to be paid in the principal only of those
>
"ills, and the stock of the new loan to bear an interest of five per cent, per
annum, payable quarter-yearly at the Treasury, and redeemable, at the
pleasure of the United States, by payment of the principal; with a stipulation to pay the same at the expiration of thirty years. The loan to be
'leemed to commence on the 1st of January, 1796, and to rest on funds
permanently pledged, namely, the permanent revenues.
THIRD

PROPOSITION.

That provision be made for converting, by a new loan, the whole of our
present foreign into domestic debt, upon these terms, to wit: that, for any
J u r a subscribed to the new loan, and paid in the principal of the present
loreign debt of the United States, there be allowed, in addition to the interest
now payable upon such principal, the further year 1 ^interest of ^ per centum •
°r> in lieu thereof, at the option of each subscriber, an equivalent sum in
capital stock, bearing an interest of five per cent, per annum. That the whole
interest upon the new loan, including that upon the capital stock to be given
as an equivalent for the additional 1 per cent., shall remain fixed until the
nrst day of January, 1818; at which time, and not sooner, the principal of
le
s^d new loan, including the said capital stock given as an equivalent,
inay and shall be reimbursed, except as to such subscribers as may prefer a
shorter term of reimbursement, who may elect any term not less than fifteen
years. That the permanent revenues shall be and remain firmly pledged for
tnc payment of the said interest, until the reimbursement of the said prinp a i d ( uarter
A h ' i°
l
- y e a r l y ! ^ t h a t of the present funded domestic debt
y Ulat
wW i
'
^ commissioners of the sinking fund be empowered
witn the approbation of the President, to provide, by new loans, for the
reimbursement of any instalment or part of principal of the present foreign



174

REPORTS OF THE

[1795.

debt, or of the loan to be made thereupon as aforesaid, either by direct borrowing, or by sale in the market of certificates of stock, so as the said loan
or the said certificates of stock shall bear an interest not exceeding six per
centum per annum, uud shall be liable to reimbursement within a term not
exceeding twsntj-fottr years. The interest upon the capital reimbursed, i
and, in aid thereof, the permanent revenues, to be pledged for the interest
upon the loans or stock to be made or created by virtue of the said power.
FOURTH

PROPOSITION.

That the temporary duties on imports be made co-extensive in duration
with those now permanent, and be appropriated in like manner; and that
the reservation of $600,U00 annually, out of the duties on imports and
tonnage, for the support of the Government of the United States and their
coinftion defence, be postponed till after the appropriations for the interest
oi the funded debt, foreign and domestic, and for the S I N K I N O F U N D .
FIPTH

PROPOSITION.

That the following provisions be added to those heretofore made for
reimbursing and redeeming the debt of the United States:
1st. To direct, by law, that so much of the surplus of the duties on imports and tonnage, t o the end of the year 1790, as shall remain u n i n v e s t e d
in purchases on the first day of January, 1796, shall be so invested, one
fourth part within the month of April, another fourth part within t h e m o n t h
of July, another fourth part within the month f October, in that year, and
the remainder within the month of January, 1797.
2d. To exonerate the F U N D established by the act entitled « An act supplementary to the act making provision for the debt of the United States," I
passed the 8th May 1792, from the payment of the rate per annum which. '
by the 4th section of the act of the 12th of August, 1790 ent, led - An net
making provis.on for the reduction of the public debt/' is reserved on
a JP n n C , p u a n d V n t c r e s t o f l h e m o n c y s authorized by that act
rr
r
S W^ °T
O
T r C h H S e S 0 f t h e d e b t ' c h n r " i n ? < he interest of the in- *eys
so borrowed upon the revenue from imports Sncf tonnage
3d. i o appropriate to the SAMK F U N D
much of the revenue from ima
0gether
W
an<£™T,F)tal1 accrue
Ck S,
l u\
Z
'

Wl(/l he
0thrT
! virtue
U b

monf

V* ™ constituting the
V
<>/ the foregoimr provisions,
* B V r i l h t h e ' n t r r , ' s t redeemed, to pay the
y of
ght
annua,1
ITh Z A \
, "
**
y paid on account of the princitwl of
L t e r ^ o t f i x ^ e ^ r ^ P C* a* *, , * * , a B n w *
all bear a p r e s e n t
r n
Z T J ^ T ™
? m ' e l u d i n g that which shall s t a n d to
H S,0, erS 0f t h e
iVand to he er^it n
! ; o
fund, and that which shall
the?r f t n b, f h
P * r t l c « l « States, on account of the balances reported in
f r 8ett,in
s Z t Z
fcr°neTS
°
? a c c o u n t s between thTunited
5 T S
until t h e Whole
a
«sitoSf
nd thenceforth until the whole
u n f u n d e d ^ a n d
domestic, funded j

f

t0

th
Bank o 7 t ° h e U n X ! a l ? 3 ^ t ? * ™
* ^ e n d s on the stock of the
t^me to time i t ? ?
^
^
to the United States, reserving, from
tune to time, so much thereof as may be necessary to pay interest oh •that




1795.]

SECRETARY OF THE TREASURY.

175

shall remain unpaid of the loan had of the said bank, pursuant to the 2d
section of the act of incorporation, and also so much of the duties on imports
| and tonnage as, together with those dividends, (deducting what maVbe
necessary to pay interest,) shall be sufficient, from year to year, to pav off
the instalments of the said loan hereafter to grow due, and as, (the said instalments being paid,) together with any other moneys which, on the 1st
day of January, 1802, may belong to the said fund, not otherwise appropriated', shall be sufficient, from year to year, with the interest redeemed
to pay the sums which may of right be annually paid on account of the
principal of such funded stock as, at the expiration of the year 1800, shall
begin to bear an interest of six per cent, per annum—excluding that which
shall stand to the credit of the commissioners of the S I N K I N G F U N D , and
that which shall stand to the credit of particular States on account of the
balances reported in their favor by the commissioners for settling accounts
between the United States and individual States; to continue so appropriated
untii as well the last mentioned stock, as the instalments of the Joan aforesaid, shall be fully redeemed and discharged; and thenceforth until the
whole residue of the present debt of the United States, foreign and domestic,
funded and unfunded, shall be redeemed and discharged.
oth. To continue the appropriation to the SAMK F U N D of the interest of
the stock which shall be redeemed by virtue of the foregoing provisions,
(when the full redemption in each case is completed,) until the W H O L E of the
P R E S E N T D E B T of the United Slates, foreign and domestic, funded and unfunded, shall bo redeemed, by reimbursement, purchase, or otherwise.
6th. To provide for carrying to the SAME F U N D , agreeably to the appropriation iu the funding act, the proceeds of the sales of the lands of the
United States in the Western Territory, to be applied according to the said
appropriation.
7th. To appropriate to the S A M E F U N D , to be employed for the purposes
thereof, all moneys which shall be received for debts due to the United
States antecedent to the present constitution.
8th. To provide that the surpluses of all the current revenues of the
United States, which shall remain at the end of any calendar year, beyond
the amount of the appropriations charged upon them, and which, during the
session of Congress commencing next thereafter, shall not be otherwise specially appropriated or reserved, shall be carried to the F U N D A F O R E S A I D . to
be applied to the purposes thereof.
9th. To provide for paying annually, out of the S A I D F U N D , the sum
which tnay be rightfully paid in each year towards the redemption of the
funded stock, which does or shall bear an interest of six per centum per annum, excluding that which shall stand to the credit of the commissioners of
the sinking fund, and that which shall stand to the credit of particular
States, on account of the balances reported in their favor by the commissioners
settling accounts between the United States and individual States, commencing the redemption of that bearing a present interest on the 1st of
January, 1796, and of that to bear interest after the year 1800, on the 1st
o* January, 1802; and pledging, in the firmest manner, the faith of the United
states, to the creditors thereof, that the S A I D F U N D shall be inviolably applied
to the purpose of redeeming the stock aforesaid, and afterwards to the redemption of the whole of the P R E S E N T D E B T of the United States, foreign
and domestic, funded and unfunded, until the whole shall be fully redeemed



21

REPORTS OF

"TIIE

[1795.

and discharged, and to be vested in the commissioners of the sinking fund,
as property in trust for the creditors, until the redemption of the whole of the
present debt of the United Slates shall be completed.
Provided, always, that whenever THE KI ND shall be more than sufficient
for paying off, as they accrue, the remaining instalments of the said loan had
of the Bank of the United States, and for the complete and final redemption
ot the whole of the aforesaid stock, bearing and to bear an interest of six per
cent., according to the right reserved for that purpose, and also for the payment of the instalments of the present foreign debt, or of such new loans as
may be made thereupon, pursuant to the third proposition, and for the reimbursement, purchase, or redemption of the residue of the present debt of the
I nited States, within the term of thirty years, it shall be lawful for Congress, if at war with any foreign European power, to apply so much of the
excess as they may think fit, the said excess being certified bv the COMMISS I O N E R S OF T H E S I N K I N G F U N D , towards the expenses OFsuch war; excepting always so much of the said excess as may be requisite to fulfil any contract which shall have been entered into by the commissioners of the sinkingiund, pursuant to the powers vested in them; and provided that no
second appropriation of any such rare** shall derogate from the fund once
reserved for the redemption or purchase of the said residue of the debt, within the said term of thirty years.
10th. To provide that all reimbursements of the capital of the public debt,
foreigni and domestic, and of the remaining instalments of the aforesaid loan
of the Bank of the United States, be made under the superintendence of the
Z n Z T ' T ° i t h G , S l ? k , n ? fond, empowering them, with the approbao Z ' a ^ ? l d e n t ° f t , h e L n i t e d S t a t e s > as the instalments of principal bev T T ' li n e c e s s a r y< the sums requisite to pay those instaJL
l t
/ f the ultimate term, for the reimbursement of any loan
b e f f l n ^ e , shall not exceed twenty-four years ; the interest thereof to
b u r s P ^ h u l T f i r e t ; t U p 0 V h e " 1 , e r e s t o f , h e instalments which shall be reimGX< pt t h e , n s t a , m
^
?
™ t a of funded six per cent, stock;
P
rCVenUe f r o m ,mp rtS n n d t o n n a
dc
ficiency?
°
^'10
• ?ood
"
SIXTH

PROPOSITION.

J r l Z ^ t ^ 0 ' I * ™ m m i s s i 0 n e r s o f , h e inking fund, with the
S T e c e s T r v in nnH? ? 1 ' * f r ° m t i m € t 0
sums as may
not exceednur n nn' J P
" ° f ^ r e V " m , e s W a n t e d for the purpose
o
vear from the Z T n f ^ l T m } U ™ G f d o l , a r s > t 0
reimbursed within a
th
«•» interest which shall
1 he interest upon each loan to be defrayed out of the permanent
SEVENTH

revenues-

PROPOSITION.

refined sugar, sales at auction,
convevance o f L ^ ^ T
spirits and wines, and carriages for the
continued to the 1st day of January, 1SO0. and that
t
charged upon this fund

n of
ofdollars nnth
S S L g t h e e , o a e M e s1
f
E
^
*P
of foreign intercourse, *




1795.]

SECRETARY OF THE TREASURY.

177

X
EIGHTH PROPOSITION.
r
I hat in regard lo any sum which shall have remained unexpended upon
any appropriations other than for the payment of the interest of the funded
debt, and for the purposes of the sinking fund, for more than two years after
the end ol the calendar year in which the act of appropriation shall have
been passed, such appropriation shall be deemed to cease and determine,
and the sum unexpended upon it shall be carried to an account to be de
nominated " T H E S U R P L U S FUND." But no appropriation shall be so deemed to have ccascd or determined til! after the year 1795, unless it shall
appear to the Secretary of the Treasury that the'object of such appropriation has been fully satisfied; in which case, it shall be lawful for him to
cause to be carried the unexpended residue thereof to the account aforesaid.

NINTH PROPOSITION.

That provision be made that all priorities heretofore established in the
appropriations for the funded debt, as between the different parts of the said
debt, shall, after the year 1796. cease, with respect to all creditors of the
I nitcd States who do not, before the expiration of the period, signify their
dissent therefrom; and that, thenceforth, with the exception only of the
debts of those creditors who shall so signify their dissent, the revenues
charged with these appropriations shall constitute a common or consolidated
hind, chargeable indiscriminately and without priority.
TENTH PROPOSITION.

That provision be made for calling in all outstanding loan-office certificates, certificates called final settlements, and indents of interest, and for
issuing, in lieu of them, other certificates of equivalent tenor; establishing
'hat all which shall not be presented for exchange within the term of two
years shall be barred.
Remarks upon the first proposition.
The experiment has now been fully tried, and with nearly complete success, of the disposition of the public creditors to accept the terms offered by
'he funding act. Those who still decline have probably made a final election to abide by their original contracts.
It remains to fulfil them. This, the moral obligation of the contracts, the
and peremptory sanction given to them by the present Government, and
the essential maxims of public credit, unite to demand; and, while these
co
gent motives, affecting intimately the permanent character and general interest of the United States, recommend the measure, there is now no longer
an
y momentary inducement from situation to procrastinate.
The present advanced state of the national finances, and the inconsiderable
Magnitude of the still unsubscribed debt, render it of little if any consequence
to obtain upon it the temporary accommodation of deferring the payment
°t a part of the interest accruing according to contract. This motive apart,
and considering the approximation of the period when the payment of interest on the deferred debt is to commence, the chance of benefiting by a fall of
the market rate of interest, incident to a provision for the debt on the terms of
e con
tract, which make it redeemable at pleasure, may be found more adVOL. I . — 1 2



178

[1795.

REPORTS OF " T I I E

vantageous to the Government than the partial postponement of interest
encumbered with an abridgment of the right of redemption.
To those who should not rightly appreciate this circumstance, it might
seem an objection that the provision proposed would place those creditors
who had not consented to accommodate the Government upon a better footing than those who had uo consented.
But a scruple of this kind is overruled by several considerations. 1st. It
is not improbable that a considerable proportion of those who may not have
accepted the terms offered by the funding act, are executors and other trustees, who may have doubted their power to accept.
2d. Giving the fullest force to the fact which is the ground of the objection, it is one of those cases in which the general principles that constitute
the permanent happiness of society give the less meritorious advantages
over the more meritorious. All the creditors had a right to conform, or not.
Those who have not done it have only used their right, and it cannot be
matter of objection or prejudice to them. To delay indefinitely a provision
for their claims, according to contract, is to annihilate the contract.
The complying creditors cannot with propriety complain. They were
informed unequivocally that the proposal of a new loan was referred to
their free choice ; that the rights of those who did not assent would remain
unimpaired ; and compensations were offered in the new contracts for the
surrender of the old. A plea that an ultimate provision was not relied upon
could not be admitted, because it would be to convert a distrust of the faith
of the Government into an argument against its being observed towards
those who had depended upon it.
But the complying creditors actually received valuable considerations for
the modification of their claims, instead of annual provision for thtir interest, which alone their contracts, as they stood previous to the funding act,
required : they have had it secured by adequate funds permanently mortgaged for its payment.
Instead of the stipulated annuity being redeemable at pleasure,*' henever
a fall in the market rate of interest should render it advantageous to payoff
the principal, it has acquired a more fixed character by the relinquishment
of the right of the Government to redeem, except in certain proportions,
and a capacity to increase in capital value, by a declcmion of the market
rate of interest.
Instead of receiving their interest in one payment at the end of a year,
they receive it m quarter-yearly portions, which makes it, in fact. 6.15 per
cent., jn lieu of the stipulated rate of six per ccntum
On the first point it has been argued that, supposing a steady preservation of its faith by the Government, it is indifferent to the
whether
c r e d i t o r

m o r t ^ e d fundi

^

h

™

S

°

f 31121111111111

Provision, or upon that of

This is to substitute theory to fact. As well with regard to a Government as to an individual, there is, in the nature of things, an intrinsic difference tetween the value of a debt bottomed on mortgaged funds, and that of
a debt resting on what is called, in the one ease, and may be called in the
other, personal security . The degree of this difference/and
of the
circumstances on which it depends, may be different m the two cases, but
the reality of its existence can be denied in neither.
Government, being administered by men, is naturally, like individuals,
subject to particular impulses, passions, prejudices, vices-of course, to inconstancy of views and mutability of conduct




s o m e

1795.]

SECRETARY OF TIIE TREASURY.

179

t h i 1 r i n d f P r o P e r t > ' > o f which the essence is contract, must necessarily,
therefore, be more or less valuable, because more or less secure, in proporthal mutability

°r

^

^

^

influence of that

ioronstiicjor

IJ a provision is to be made by a new resolution every year, that resolu6 l
ahvavs<«u«! W a y *
° 5 0 a f f e C l e d b y m o m c n t a r y circumstances, is
If made one* for all, it continues, of course, unless revoked by some positive act, and has for that reason a moral certainty of stability
Hut why, it might be asked, if a disposition unfhithful t6 the public engagements, or unfriendly to public credit, should exist, would it 1101 operate
of one " C e * V '° U o n ° f a P r o v i s i o n
as well as to prevent the making
The two things are widely different. To undo, which is to act. and, in
such a case, to act with violence, requires more enterprise and vigor, and
presupposes greater energy, or a stronger impulse, than not to do, or to forbear to act. This is particularly true where a number of wills is to concur.
Many men, who will not rouse to the effort, or encounter the responsibility
ot doing; mischief by positive nets, will readily enough slide into it by a
negative conduct—that is, by omitting to act. Manv men, merely from
easiness of tem|>er, or want of active fortitude, will suffer evil to take place
which tliey neither desire, nor would themselves commit. Iu collective
bodies, rotes are necessary to ACTION ; absences may produce INACTION. It
olt^n happens that a majority of voices could not be had to a resolution to
undo or reverse a thing once done, which there would not be a majority of
voices to do.
This reasoning acquires tenfold force when applied to a complex Government like ours; that is, to a Government distributed into departments, acting
through different organs, which must concur to give it motion; as, in our
constitution, the House of R E P R E S E N T A T I V E S , the S E N A T E , and the P R E SIDENT.

In delicate and difficult eases, whether to issue in good or ill, a suspension of action is far more natural to such a Government than action.
It can hardly happen that all the branches or parts of it can be infected
at one time with a common passion or disposition manifestly inimical to
justice and the public good, as to prostrate the puhhc credit, by revoking a
given to the creditors. It is far more probable that such a disposition
should at one time possess one part, at another time another part. Possessing either part, it might be sufficient to obstruct a provision which was
to be made. Without possessing all the parts, it could not subvert one which
had been made. The last can scarcely be supposed, except in one of those
extraordinary crises of nations which confound all ordinary calculations.
Hence the value of property in public debt, which rests on specified and
competent funds, firmly pledged for the satisfaction of the creditor, is intrinsically greater, and to a considerable extent, than that of property in public
debt, which depends on annual provision. Hence, too, a creditor to whom
s
<ich a pledge was not stipulated, may be justly said to have received a compensation for the relinquishment of a portion of his interest.
On the second point, it has been observed, with less plausibility, that in
this country, where it would be to the advantage of the creditor to receive
Jus principal rather than a rate of six per cent, interest, the abridgment of
the right of redemption is of no value.



180

REPORTS OF T H E

[1795.

1st. The proposition is not universally true.
It depends on the particular situation of a creditor whether it be his interest to be reimbursed his principal or not. It is believed, owing to the
impunctuality of collections, that in no part of the United States does fair
lending at private interest, upon real security, nett six per cent.
2d. As far as it is true, it does not authorize the inference which is
drawn; because the creditor cannot demand his principal when it suits
him, but must wait till it is convenient to the Government to pay. This
convenience might not exist till there was a fall in the market rate of interest, and then it would not be the interest of the creditor to receive..
Unable to exact the principal when he pleases, it is a material point gained
to be able to arrest the hand of the Government from paying him. when it
is his interest not to receive. It is evident, that whenever the rate of interest, to which he is entitled, shall exceed the market rate, if he cannot be
obliged to receive back his principal, or take the market rate, his stock
must rise in value, in proportion to the difference and the degree of its
duration.
Nor is an idea which has been entertained just, that this advantage is
remote and contingent; to accrue only to those who may be holders at the
time of the fall of interest, at the expense of those who were holders when
the funding act passed ; many of whom, as it is alleged, being obliged to
alienate then or shortly after, suffered loss in the sale from the postponement of a part of their interest, without benefiting by the supposed equiva
lents.
The fairness of an equivalent ought never to be tested by the necessities
of particular individuals. It ought to be estimated by the general principles
of value ; by the natural and real operation of things. Admitting, therefore, the suggestion as to such individuals to be true, it would decide nothing
But it is not true. The permanency of a high rate of interest, and the
possibility of a future rise of the capital above par, by a fall of the market
rate below the stipulated rate, were, to the first holders of stock, circumstances of present value.
Foreigners, especially, whose purchases would necessarily influence the
market, would give higher prices for it on these accounts '
And when to this are added the funding of the new stock, and the payment of the interest quarter-yearly, there is solid ground for entertaining
an opmion that the stock has, from the earliest period, borne a better price
in the market than upon the principle of an annual payment of six per
cent, on the whole capital depending upon an annual provision.
This opinion would be confirmed, if we should take as a guide what
actually happened in one or more of the State,, which made minual proI T ^ Z T P> ^ l rh f m t e r e « U P° n t h e i r debts >
<he stipulated rate of
V t
F u s i o n , the market price of the r stock rarely
exceeded 33^ per centum.
It is probable that greater confidence in the ability and constancy of
X % ° o t t i r r i T n t r ° J thC l n i t e d S t a t o
I-ve given a greater
3
wo^fd L v e l u f„
^ S l t U a t i 0 n - B u t " 18 »ot to be doubted that it
W
% t h Z l f t " n great,uegm' a
effect of that situation.
" T * t0 t h e
amount of unsubscribed
and w,th
™n^l
J * pr0V,ded
thet advantage of a confirmation of
no h a v e
T ^ ^ i f f c S S T i l
to
have been very
apparent, if the whole debt had been provided for on this plan.



1795.]

SECRETARY OF THE TREASURY.

181

These observations serve to render it probable that the creditors, who
have accepted the terms offered by the Government, have not been injured
by the acceptance ; that if they had now an option to change their ground
lor that which is proposed for non-subscribers, it would be an ill-judged
choice in them to do it; and that, upon these, as well as other accounts, they
will have no cause to be dissatisfied with the proposal under consideration.
Let it be added, that, whether the non-subscribers shall fare better or not
by that proposal than the subscribers, it is the interest of all the public creditors, upou principle and precedent, that the public faith should be pre
served towards those non-subscribers.
But, at the same time, every consideration connected with the question
urges that nothing more should be done for non-subscribers thau is positively due to good faith. Accordingly, the proposition contemplates that their
debt shall not be funded, but that provision shall be annually made.
With regard to arrears of interest, a tenth part only is proposed to be
paid on the 1st of January, 1796. At this rate, they would be paid off in
ten years.
In stricUiess, they ought to be immediately discharged. But to have done
this on the whole debt, would have been impracticable: to do it on what
now remains unsubscribed, would not only be unequal, but would, at the
present moment, obstruct arrangements which are conducive to the general
interests of the creditors. The state of the Treasury in succeeding years
will enable Congress to decidc how far the payment can be accelerated.
In the mean time, the creditors have an option to separate these arrears from
the principal, and to fund them at three per cent., as has been done generally with regard to interest. The case of a large arrear of interest, arising
from the inability of a former Government, which is the present case, is
liable to some peculiar considerations.
A difference is made in the special case of the loan-office certificates,
which by contract are entitled to interest of six per cent, on the nominal
principal, redeemable only by payment of the specie principal.
This is too disadvantageous a footing for the Government.
The alternative most convenient at this time, is to pay off the debt, which
is proposed. To elude this contract, would be to sacrifice a very great principle to a very little interest.
The amount will be seen in the statement A.
Remarks on the second proposition.
The certificates, or bills of credit, called new emission money, were emitted pursuant to a resolution of Congress of the 18th of March, 1780, which
directs them to be emitted u p o n the funds of individual States, to bear an
interest of five per centum per annum, payable in specie at the redemption
of the bills; or, at the election of the holder, annually, at the continental
loan offices, in sterling bills drawn by the United States upon their commissioners in Europe, and pledges the faith of the United States for the
payment of the said bills, in case any State on whose funds they should be
emitted should, by the events of war, be rendered incapable to redeem
them; directing, also, an endorsement to be made upon each bill in these
, words: »The United States insure the payment of the within bill, and
will draw bills of exchange for the interest annually, if demanded, according to a resolution of Congress of the 18th of March, 1780."



REPORTS OF " T I I E

182

[1795.

These resolutions, and the endorsement upon the bills, engage the absolute promise of the United States for the payment of the interest indefinitely, and their eventual guaranty of the principal, in case any State on
whose funds the bills should be emitted should, by the events of war, be
rendered incapable to redeem them: which is in effect, though not in form,
an absolute guaranty of the principal; for the United States are bound to
pay the interest perpetually till that is discharged.
Good faith demands that the United States should supply the omissions
of the States which issued the bills, by providing themselves at least for the
interest upon them.
But it is not as easy to pronounce on what terms they ought to be provided for.
On their face, and according to the unrevoked resolutions of Congress,
they are of spccie value eqaal to their nominal amount, and bearing five per
cent, interest.
But it is known that they were issued by different States, at different
values, fixed by previous laics. The true nature of the contract, therefore, in fact, and the true equity of the case, are, from these circumstances,
involved in some question.
A compromise, by a new agreement, seems the best road out of the difficulty.
This is the aim of the proposition, which, it is hoped, will, in the main,
reasonably consult all interests.
There have been special references of this subject to the Secretary, but
he purposely declined a report til! the expiration of the term limited by the
act entitled "An act relative to claims against the UnitpH Sinto. nm Wr«l

Remarks on the third proposition.

r

tt

l' , m i




01 i n

's Kind, and perhaps produce some coll*

1795.]

SECRETARY OF THE TREASURY.

28

teral advantages. Under this idea an experiment is proposed. The proposed augmentation of interest is intended as an indemnification for the expense and hazard of agencies in this country, delays in remittance, inconvenience of distant negotiation, renunciation of the facilities which attend the
receipt of interest at home, risks of loss by exchange, &c., and is calculated
on a liberal scale, in order to induce an acceptance of the proposition.
If, instead of an increase of interest, the option of an equivalent be given
by way of premium, in stock bearing an interest of five per cent., it would
have attractions for certain creditors, and would facilitate the success of the
measure. On strict calculation, the equivalent would be G dollars and 58
cents per 100 dollars of the principal subscribed. It is not perceived that
the interests of the United States could suffer by allowing the alternative.
The fixing of the rate of interest, by postponing the reimbursement to the
year 1818, would also be a powerful inducement. And till the period of
reimbursement arrives, any surplus of the sinking fund which may exist
can be invested in purchases, so as to prevent the progress of the fund being arrested.
It could not be nccessary to observe, cxcept for the sake of dispelling
jealousy or apprehension on the part of the creditors, that, while the plan
is in experiment, and afterwards, with regard to all who do not embrace
it, every thing is to proceed as heretofore, and as the contracts respecting
the debt require.
The auxiliary proposition of giving power to the commissioners of the
sinking fund to remit certificates for sale, is founded upon a belief that this
operation will sometimes be practicable, where direct loans cannot bo
effected, and will be occasionally a more beneficial mode of remittance than
by bills of exchange.
Remark on the fourth proposition.
The object of this proposition is to give moral certainty to the adequateness of the fund for paying the interest upon the debt, and for its ultimate
redemption, making a reasonable allowance for the casualties to which it is
exposed.
Remarks on the fifth proposition.
There is no sentiment which can better deserve the serious attention of
the legislators of a country than the one expressed in the speech of the
President, which indicates the danger to every Government from the progressive accumulation of debt. A tendency to it is, perhaps, the natural
disease of all Governments; and it is not easy to conceivcany thing more
hkely than this to lead to groat and convulsive revolutions of empire.
On the one hand, the exigencies of a nation, creating new causes of expenditure, as well from its own as from the ambition, rapacity, injustice, intemperance, and folly of other nations, proceed in unceasing and rapid succession. Oa the other, there is a general propensity in those who administer the affairs of a Government, founded in the constitution of man, to
shift off the burden from the present to a future day; a propensity which
tnay be expected to b 3 strong in proportion as the form of a State is popular.
To extinguish a debt which exists, and to avoid contracting more, are ideas
always favored by public feeling and opinion; but to pay taxes for the one
or the other purpose, which are the only means of avoiding the evil, is
always, more or less, unpopular. These contradictions are in human nature;



184

REPORTS OF "TIIE

[1795.

and happy, indeed, would be the lot of a country that should ever want men
ready to turn them to the account of their own popularity, or to some other
sinister account.
Hence, it is no uncommon spectacle to see the same men clamoring for
occasions of expense, when they happen to be in unison with the r-re<ent
humor of the community, whether well or ill directed, declaiming against
a public debt, and for the reduction of it as an abstract thesis; yet vehement
against every plan of taxation which is proposed to discharge old debts, or
to avoid new, by defraying the expenses of exigencies as they emerge.
These unhandsome arts throw artificial embarrassment in the way of the
administrators of a Government; and, co operating with the desire which
they themselves are too apt to feel to conciliate public favor, by declining
to lay even necessary burdens, or with the fear of losing it, by imposing
hem with firmness, serve to promote the accumulation of debt, br leaving
that which exists without adequate provision for its reimbursement, and by
preventing the levying, with energy, new taxes, when new occasions of expense occur. 1 he consequence is, that the public debt swells til! its ma?H h ! , r T m M e K 0 r m 0 U S - un , d t l 5 b u r d r n s o i , h c Peof le gradually increase
o d ^ n T h ? becomes intolerable. Of such a stafi o f things, great disernmerit are a natural offspring.n ° f f i y : emulsions and revolutions of GovT " 1 eCO
ernment, r !
nat-;hnerrt^r° ?0rercred
on the public agents of a
WUh P r0V dcm ( o r s
S
n!i i
, '
* W nnd inflexible peSvenmcc
a S , I t T n , e atr
r
if ! ,
r i°tisni and genuine pilicy cannot,
e
States aTthe
» ** b f e r d ™onstrated bv those of the United
W a ' b k t „ E ,nJllKCtKreL , h a n y improving, efficaciously, .he very
c X n t v tffe ^ n n ? , h P y 8 t a D d ^extinguishing, with reasonable
s v S w ] n c l ™ ^ t i H thC C ° U n ^ ' a n d for l a W
foundation of a
e
p r S e n c e t K r X h n l B t " * f r ° m t ha n d
of the usual im*
if possible, may g h .

revenues h " " ilf i i
declsio^and efficacy

sess,0I1

fo o - ^reign affairs
» impelled lo an exiension of the national
d
10
°
<h"
^

. h a T a p p S o n 0 & ^ L d e p e n d o n , h 0 «<«W»l>n.ent of wfee principle, in
beC nK a
of lhe countiy '
°
P " ™ " ™ 1 Pre<*dem >"
U l i,«*>
SUbjecl o f , h c
O i h o a t Z r r T u ^ t t T r ' ^
rnhhc deb., of the
waxim i n S S S y S '
f l " " W ™ * * as a>,.4am*ntal
of debt should a'/icov? be /.(v. " o d " " f l f " '
Stales, thai .he rrcatio"
m , h
(hat this is Ite
" c n cd
vMmtf;
1
7 M i " n' , < " "
itdifficult V Z Z l
{zr:'™*
'
"
'""i >w
M
Which
lere m
rtna to the
» and i 1" °
"
"V
may be attempted by the lln M S.T™ ""," » nf "Jm"<l ™licirade that this
measures f„ r ihe

* It is understood that the Parli»r.,»«. r n
mally adopted, a , a E n d i n g T V k t h e v ^ T * ? * ' * ™ h a s ' w , t h , n , h c
four years,
^ o f e ^ n g u ^ n ^ L
How much S Z ^ j f
i
t
thc
e c n , i o n of t,lis
to the United State, than to a na'mn
important principle *
l^
b
an h d
ff
sourees! Let , h e United States n e m
^ £ ?* ' * ^ ^
wort A ^
'
e , 0 pe Pet
so provident a precaution
« > hcreaiter, that they postponed too Ion?




1795.]

SECRETARY OF THE TREASURY.

185

No opportunity has been lost by the Secretary, as far as he could contribute to the event, to reduce this principle to practice; and important steps
towards it have been, from time to lime, taken by the Legislature.
But much remains to be done to give it full effect. The present state of
things encourages and invites to the consummation of the plan. And the
Secretary, about to leave the office he holds, feels it a peculiar duty to make
a final effort to promote that invaluable end.
This is the object of the 5th proposition, aided by the preliminary provisions of the ith This proposition aims at two principal points: 1. To
constitute a fund sufficient, in every supposable event, for extinguishing the
whole of the present debt of the United States, foreign and domestic, in a
period not exceeding thirty years. 2. To fix its destination unchangeably, by not only appropriating it permanently, under the direction of commissioners, and vesting it in them as properly in trust, but by making its
faithful application a part of the contract with the creditors.
As to the first point: If the temporary duties on imports be rendered permanent, the annual reservation of $600,000 postponed; and if the additional
appropriations which are prcposed be made to the sinking fund, its intended
force will not only be equal to the effect meant to be produced, but it may
be hoped that there is scarcely a casualty which can reasonably be taken
into calculation, foreign war not excepted, which will occasion a deficiency
in the fund.
The whole amount of the duties on imports and tonnage, and upon domestic distilled spirits and stills, estimated now to amount to $6,079,418 58,
besides the dividends on bank stock, and the items which now compose the
sinking fund, will then be appropriated, primarily, to the interest upon the
public debt and to the sinking: fund; which, together, including the deferred
stock, will demand, permanently, from that revenue, $4,373,836 03, little
more than two thirds of the fund from which they arise. An expectation
m^y be indulged that even foreign war, making due allowance for what
will always be practicable through neutral powers, would not occasion a
defalcation in the revenues greater than the difference. This competency
°f the fund is an essential idea. The fulfilment of the object, as far as the
Uncertainty of human affairs will permit, ought to be superior to casualty.
The necessity of a reliance on auxiliary provisions, always precarious in
'hose situations which affect the productiveness of the public revenues, ought
to be, as far as practicable, superseded by the ample nature of the provision.
As to the second point: The intent is to secure, by all the sanctions of
which the subject is susceptible, an inviolable application of the fund, accord,n
g to its destination. No exptxlients more powerful can be devised for this
purpose than to clothe it with the character of private property, and to engage absolutely the faith of the Government, by making tne application of
11
to the object a part of the contract with the creditors.
But is this necessarv ?
Its necessity rests on these cogent reasons : The inviolable application of
an adequate sinking fund is the only practicable security against an excessive
accumulation of debt, and the essential basis of a permanent national credit.
Rxperience has shown, in countries the most attentive to the principles of
eredit, that a simple appropriation of the sinking fund is not a complete barrier against its being diverted, when immediate exigencies press. The causes
which have l>ecn stated with another view, tempt the administrators of Government to lay hold of this resource, rather than resort to new taxes. This




186

REPORTS OF T H E

[1795.

indicates the utility of endeavoring to give, by additional sanctions, inviolability to the fund.
But will those proposed answer the end?
They are the most efficacious that can be imagined, and they arc likely
to be entirely efficacious. They cannot be disregarded without, by breach
of faith and contract, destroying crcdit, and at a juncture, too, when it is
most indispensable. The emergencies which induce a diversion of the
fund are those in which loans, and, consequently, credit, are most needed.
But will it be safe to put the fund so entirely out of the command of the
Government ? May there not be situations in which the command of it may
be requisite to the safety of the State ?
This is not conceivable. The amount of the sinking fund will, in the
situations which create extraordinary demands for money, be always inconsiderable, compared even with a single year's expenditure. The current
revenues of a nation do not in such cases suffice. Plunder or crcdit must
supply the deficiency. The first presupposes a subversion of all social order.
The second will find its best support and greatest efficacy ill adhering
steadily to the principles of such a fund. An annuitv of seven dollars will
pay the interest upon and discharge a capital of one hundred dollars, tearing six per cent, interest, in thirty-three and a third years, nearly. The
situation of a country must be not a little exhausted, if it cannot create
yearly, by new revenues, during the continuance of a foreign war, an Annuity on the above scale sufficient to fund the loans of which it may stand
in need. Ten millions of dollars will, with order and economy, maintain,
in this country, an army of fifty thousand men for a year. Viewing our
geographical position, is there a prospect of any war e x p e n s i v e beyond this
ratio ? If not, an annuity of seven hundred thousand dollars, created each
year of the war, would suffice. But it would be wise, in such an event, to
carry taxation, 1 1 the first instance, to the full extent of the ability of the
1
State, which would proportionably contract the necessity for borrowing,
and consequently, the extent of the annuities necessary for loans.
If a nation can find embarrassment in creating the revenues requisite 00
this scale it must arise from her having reached a stage when, from the
neglect of the principle now inculcated, t h e mass of her debt h a s become so
enormous as to strain her faculties in order to a provision for it.
I he United States are in a situation altogether different An inspection
ol the list of their revenues discovers that they have a lar^e field of resource
unexplored. Their youth, and large tracts of unsettled land, and land in the
infancy of improvement, assure them a great and rapid increase of nieaus.
£ven their actual revenues, without additions, must, with the progress of
the country, considerably increase. And though war niav interrupt, the
,nte r,, tion
; P
k i n g removed by the restoration of r>cacc: their
Pr0d,1CtlVCn
i
T ' sl,*I*nded for a time, must resume its vigorand
g
T h : r ! ! r g H ' e n / ' " m l b e r o f >~ears>a considerable augmentation is certaine n / h n l ™ '! r a e ° f t , i ; S C °I intr >'
therefore, adopt,
future
PnnC,ple Which
±
' J**"*
will ultimately furnish
resources for future exigences, without an increase of burden to the comf e a r l e s s

o f

. J ^ X t i a t b i S \ T i d e a : lt wiU
t * perceivcd that the fun*
debt exisHn P a y i n g t K 7 n f e r C S t ' a n d inking the principal of n portion of tbf
extingubh ^
debt*^11^
' ^
* ^
^



1795.]

SECRETARY OF THE TREASURY.

32

They will then be liberated, and will be ready for any future use, either
| to defray current expenditures, or be the basis of new loans, as circumstances may dictate. And, after a course of time, it is a reasonable presumption that the funds so successively liberated will be adequate to new
exigencies as they occur.
Moreover, the last clause of the proposition authorizes the d e r i v i n g aid
irom the sinking fund for new loans, whenever the state of the fund admits
of it consistently with the accomplishment of its purj>oses ; that is, when it
. H sufficient, 1st. To make good the payments on account of the principal
i
ol the debt as they accrue; 2d. To purchase in the market all that part of
the public debt of which there is no stipulation of payment by instalment,
as the three per cent, stock,) within a period of thirty years.
This, while it secures the extinction of the existing debt within a reasonable term, by preventing too great a proportion of the public revenue
Irom l>eing tied up by the sinking fund, gives due weight to the consideration of providing for future emergencies.
The same consideration has governed in proposing (instead of the appro;
priation of a definite sum out of the revenue from imports and tonnage,
which, in certain years, would be greater than will be permanently necessary) that the sum to be applied out of that revenue shall be so much, from
year to year, as, with the other items of the sinking fund, will suffice for
the object. It has, likewise, influenced in postponing the redemption of
that stock which stands to the credit of certain States, in consequence of
the report of the commissioners for settlement of accounts.
Every system of public credit must assume it as a fundamental priuciple,
that the resources of the country are equal to its probable exigencies; and
'hat it will possess ability to pay the debts which it contracts. If this be
o, there is no cause to hesitate about the inviolable appropriation of funds
to the extinction of an existing debt within no less a term than thirtv
years.
°
Indeed, as before intimated, it cannot be doubted that the resources of a
credit, built upon a foundation so solid as that which is recommended, will
Wore than replace, even in the earliest stages of our affairs, the use of the
additional funds withdrawn from the command of the Government to efe
°t it; and, in the eventual operation, will give a more abundant command
° hinds than it can otherwise have. The successive liberation of the reve>
nues successively pledged, after accomplishing their object, will alTord resources that may almost be said to be inexhaustible.
It should be recollected, too, that the public arrangements may, under a
?reat pressure, anticipate the approaching period of such a liberation, by
"Uerrnediate temporary loans, to be replaced by those funds when they
are free.
This proposition exemplifies, as lo the past, the nature of the maxim
•yhieh has been supposed capable of giving immortality to credit, namely:
•at with the crcalion of debt should be incorporated the means of extinguishment ; which means are two fold : 1. The establishing, at the time
°J contracting a debt, funds for the reimbursement of the principal, as
fellas for the payment of interest, within a determinate period; 2. The
a part of the contract, that the fund so established shall be invi. K »PPlied to tHe object.
1
b e l i e v e d that it would be happy for the United States if Congress
v
°uld adopt this principle as a rule in all future loans—never to be departed



188

[1795.

REPORTS OF T H E

from; and a good evidence of this determination will be to apply it to the
P ast .
,
i
This would be, at the same time, an antidote against what may be pronounced the most plausible objections to the system o { f u n d i n g public debts;
which are, that, by facilitating the means of supporting expense, they encourage to enterprises which produce it; and by furnishing, in credit, a substitute for revenue, likely to be too freely used to avoid the odium of laying
new taxes, they occasion a tendency to run in debt. Though these objections to funding systems, which, giving the greatest possible energy to public credit, are a great source of national security, strength, and prosperity,
are very similar to those which speculative men urge against national and
individual opulence drawn from its abuses ; and though, perhaps, upon a
careful analysis of facts, they would be found to have much less support in
them than is imagined, attributing to those systems effects which are to be
ascribed more truly to the passions of men, and, perhaps, to the genius of
particular Governments; yet, as they are not wholly unfounded, it is desirable to guard, as far as possible, against the dangers which they suppose,
without renouncing the advantages which these systems undoubtedly afford.
It will readily be seen that the maxim of making concurrent provision
for the principal as well as interest, in the act of contracting debt, if, by precedent and habit, it can be rendered a RULE OF ADMINISTRATION, by implicating a greater portion of the revenue in every such operation than
would be requisite for a mere provision for interest, will control proportionably the disposition to defer the burden to futurity, and create a greater
necessity for circumspection in incurring expense.
It is probably the true expedient, for uniting a due regard to the present
accommodation of the community with a due care not to overburden posterity—the full energy of public credit with a salutary restraint upon the
abuses of it.
To this explanation of the general principles of the fifth proposition, it
may be proper to add some brief notes on particular parts of it.
It is proposed that the redemption of the present six per cent, stock shall
commence on the 1st of January, 1796. This t i m e of c o m m e n c e m e n t is
recommended by several reasons: 1. It ought to b e such as t o admit ot
sufficient notice to distant creditors ; 2. It will favor order to date the com
mencement of every new pecuniary operation, where there is an optionand no particular reason to the contrary, with the c o m m e n c e m e n t of the
natural year ; 3. The moment of payment presupposes that the a n n u i t y to
be paid has actually accrued, which will not be the case till the end of the
present year ; 4. The small delay, by not forcing the means, will facilitate
the future execution.
It is a part of the plan to make provision for reimbursing the remaining
instalments of the two million loan had of the Bank of the United States,
pursuant to the act of incorporation. The preceding instalments have been
reimbursed out of the proceeds of foreign loans. This resource cannot, £
future, be relied upon ; and, for such a purpose, it is not as e l i g i b l e as a domestic one, though circumstances have hitherto dictated a'recurrence to it
By making the dividends on the stock auxiliary for this purpose to the reve
line trom taxes, the object is effected with little more than
sum fro*
that revenue; and, m the end, a fund is formed from the dividends, whic1
wnth a small addition, suffices for the redemption of the deferred stock.
these instalments are yearly falling due. and must be paid as they accrue i



h a l f

t h e

1795.]

SECRETARY OF THE TREASURY.

189

it is essential that a provision for them be contemplated in the general
arrangement requisite to the completion of our system of credit. There is
I perhaps no easy alternative to what is proposed, except the sale of the stock;
but, waiving other weighty considerations against such a measure, it is, in
the view of a true economy, liable to the most solid objections.
It is morally certain that the dividends on the stock will increase, and
the value of the capital, from this and collateral causes, more than proportionally. There is no momentary urgency to induce the relinquishment of
, this future advantage. To sell at present, would be to abandon the difference
without necessity. It cannot be expedient in a Government to part with a
capital which, at the time, produces as great or a greater reveuue than can
be realized from the proceeds of a sale, however invested, and which has an
inherent tendency to future augmentation. The measure, too, would be to
renounce or lessen a most convenient resource for forming the redeeming
fund of the deferred stock.
It is proposed to carry the proceeds of the sales of the western lands to
the sinking fund. This is to execute the intention of the funding act.
which has not organized the mode of application; and it has the advantage
of combining in one system all the provisions for extinguishing the debt.
It is proposed that all surpluses of revenue shall, at a certain time, be
carried to the use of the sinking fund. This is to extend and give effect to
a principle which has already received the legislative sanction. It was
necessary to fix a time when the appropriation of the surplus should become
absolute, and that this should be consistent with a due opportunity to provide for the exigencies of the public service. Both these considerations have
been consulted. This measure has, besides, reference to a more speedy
redemption of the debt than it appears prudent to attempt by an absolute
appropriation of more extensive funds: and the legislators of to-day would
be entitled to the lasting gratitude of their country, if they would extend
this auxiliary resource by all the means which are consistent with a due
regard to the present accommodation of their constituents.
It is proposed to authorize the commissioners of the sinking fund to provide, by new loans, for the reimbursement of the instalments which, from
time to time, accrue. This is on the ground that it is essential to the
perfection of the system of redemption, that all the means of ultimate execution should be organized in it, and that there should be no need of future
provisions.
The last clause of the proposition excepts from the operation of that
clause the interest on the six per cent, stock. This is because that interest
is destined to form the accumulations for paying the successive instalments
of the principal of that stock, which increase each year in a ratio to the
interest liberated by each payment.
The statement E exhibits the course of the sinking fund, as proposed to
be established.
Remarks on the sixth proposition.
This will be a useful and important provision. It has reference to a circumstance repeatedly adverted to—the long credits given upon the principal
branches of revenue; from which it happens that though the fund itself,
or the product of the revenue, is more than adequate to an appropriation,
yet the receipts upon it come too slowly into the Treasury to answer the
end, without anticipation by temporary loans. Its propriety depends on



190

REPORTS OF THE

[1795.

the principle, suggested under the hist head, of having all the means of
complete execution organized in the system of public credit.
Remarks on the seventh proposition.
It is a good rule of caution, that no more of the public revenues should
be rendered permanent than is necessary to give moral certainty to the provisions which may be regarded as the pillars of public credit. This idea
will, it is believed, be satisfied by giving permanency to the now temporary
duties on imports. Accordingly, it is only proposed to extend the duties
mentioned in this proposition to the year 1S00, and thence to the end of
the next ensuing session of Congress; which is on the ground that they
ought to be commensurate in duration with the objects which they are to
accomplish, and no more.
It has been already noticed that they are at present chargeable, together
with the temporary duties on imports laid 1 1 the last session, with an appro1
priation of $1,292,137 38, and with the interest of $1,000,000, authorized
to be borrowed with a view to foreign intercourse, having a special eye to
an object very interesting to the commerce and feelings ol the United
States.
This business wants a further arrangement—standing, nt present, upon
a vague and inefficient footing. The reimbursement of the loan is not
adequately provided for; neither is the interest—this being predicated on
funds which, in their present form, would probably expire alter a product
of two years.
According to the fifth proposition, the temporary duties on imports, after
the abovementioncd appropriation of $1,292,137 38 shall have been satisfied, will become permanently charged with the interest on the public debt,
the sinking fund, and the annual reservation of $600,000 for the support
of Government.
If the duties mentioned in the sixth proposition are continued till the 1st
of January, 1800, and the reimbursement of the principal of the loan, as
well as the interest, is referred to them, two good purposes will be answered:
the obtaining the loan will be facilitated, and its complete r e i m b u r s e m e n t
will be effected within the term allotted, without an augmentation of the
permanent debt of the country. This makes allowance for fulfilling the
appropriation for the current service, already charged upon this fund.
It is presumed to be a conclusive reason in favor of the proposition, that
it aims at preventing an increase of permanent debt. If services of this
kind, when the United States are at peace, (at least with civilized powers,)
are made causes of permanent loans, the progress of new debt will easily
exceed the extinction of old.
It appears desirable that there should be a steady effort, as a rule of
administration, not to increase the permanent debt of the country by permanent loans, except when it is inevitable by the existence of a war with
some European power.
The comparative view of revenue and expenditure (statement F) establishes, satisfactorily, that these duties cannot be dispensed with, unless there
be a substitute, if the redemption of the public debt is to be seriiusly entered
upon; and it is believed that there cannot be devised
revenue
more proper in themselves, nor more generally acceptable to the peopleWhatever interested parties may allege, it seems self-evident that there can
hardly be a reasonable question, except as to the best mode of collection


o b j e c t s

o f

1795.]

SECRETARY OF THE TREASURY.

191

The objection that jwrt of them falls on manufactures, has no weight. The
manufactures on which they fall are complete luxuries, and completely established : consequently, fit objects of revenue. The increased duties on
the rival foreign articles, are a full protection to the manufacture. Whatever may be the appearances in the infancy of the tax, it is certain, in principle, that it wilt finally fall on the consumer, as generally as duties on imported commodities.
Remarks on the eighth proposition.
This is to terminate an embarrassment which has been experienced.
Appropriations are frequently made for objects, the extent of which is not
precisely known, or in a degree casual. To leave them indefinite as to
time, is sometimes to tie up, unnecessarily, a portion of the public funds,
which may ultimately not be wanted at all for the purpose of the original
appropriation.
It will do away this inconvenience, and promote perspicuity in the Treasury accounts of appropriations, if an ultimate period is fixed when each
appropriation shall he deemed to have ceased. Should further appropriations appear necessary for the same objects, new estimates can be presented,
and new appropriations inade.
The designating an account with a denomination known in the laws, to
which the surpluses are to be carried, will facilitate future legislative dispositions of the resulting fund. It is, however, essential to the system of
public credit, that this should be with the exceptions contained in the proposition.
Remarks on the ninth proposition.
This proposition is calculated to give simplicity to the public accounts of
slock and revenue, which will conduce to correctness, despatch, and economy. As the revenues are manifestly more than adequate to the claims of all
the creditors, none of them have any interest in the distinctions which
now exist, and which grew out of the course of the business; and the
rights of none of them will be alfectcd, because all who choose may continue on their former grouud, by signifying their dissent to the present plau.
h is, however, presumed there will be no such dissent.
Remarks on the tenth proposition.
It is important to the fiscal calculations, to ascertain positively the exteut
of every portion of the public debt. At present, the amount of these several items of it is deduced from accounts of the late war, of various officers
and offices—in some instances conducted with little order. There is not,
therefore, sufficient certainty. Indeed, it is probable, from the length of time
which has elapsed without their appearing, that the computed amount exceeds the real.
Besides, they are, from their nature, subject to forgeries and counterfeits,
which implies a danger of loss to the public, till their circulation is finally
terminated. The proposition, accordingly, besides the obtaining of better
information, aims at obviating this danger.
Allowing sufficient time for bringing them in to be exchanged for certificates of equivalent tenor; while it is a measure tending to public information and security, it can be liable to no reasonable objection on the part of
the creditors.



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REPORTS OF THE

[1795.

The Secretary of the Treasury has reserved, for the conclusion of this
report, a proposition which appears to him of great importance to the public credit, aud which, after some preliminary observations, will be offered to
consideration. It relates to the right of taxing the public funds, and to
that of sequestering them in time of war.
A proposition on either of those points would have been deemed superfluous, had there never been discussions asserting a right to do the one and
the other, and even the expediency of exercising that right. The negative
of both the pretensions, from the habit of regarding it as incapable of being
disputed, had acquired, in the mind of the Secretary, so much the force of
an axiom, as to have precluded even the mention of the subject in the plan
which he originally submitted for funding the public debt. He should
otherwise have thought it an indispensable duty to suggest, as a matter of
primary consequence to the system of credit contemplated in the plan, the
express renunciation of those pretensions; for they are (as he believes) not
only unwarranted by principle or usage, but subversive of the sound maxims of public credit. A persuasion that this would always be a truth granted in the councils of the United States, is his apology for the omission.
Even now, he should think it useless to depart from his silence on the
point, had not the discussions alluded to created some alarm in places where
all the circumstances are not well understood, which it is the interest of the
country to dispel. The confidence justly to be reposed in the collective
wisdom of this Government forbids the supposition, by one acquainted with
its constitution, that the security of the creditor can need, in this particular,
a further sanction. It is presumed to be impossible that any final act can
ever give so deep a wound to the national interest and character, as to derogate from a principle which may be placed among the most sacred in the
administration of a Government.
Is there a right in the Government to tax its own funds?
The pretence of this right is deduced from the general right of the legislative power to make all the property of the State contributory to its exigencies.
But this right is obviously liable to be restricted by the engagements of
the Government; it cannot be justly exercised in contravention of them;
they must form an exception. It will not be denied that the general right
in question could, and would, be abridged by an express promise not to tax
the funds; this promise, indeed, has not been given in terms, but it has
been given in substance. When an individual lends money to the State,
the State stipulates to repay him the principal lent, with a certain interestor to pay a certain interest indefinitely, till the principal is r e i m b u r s e d ; or
it stipulates something equivalent in another form. In our case, the stipulation is in the second form.
To tax the funds, is manifestly either to take, or to keep back, a portion
of the principal or interest stipulated to be paid.
To do this, on whatever pretext, is not to do what is expressly promised; it is not to pay that precise principal, or that precise interest, which
has been engaged to be paid; it is, therefore, to violate the 1promise given
to the lender.
But is not the stipulation to the lender with a tacit reservation of the
general right of the Legtslature to raise contributions on the p r o p e r t y of the




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SECRETARY OF T H E TREASURY.

193

This cannot lie supposed, because it involves two contradictory things:
an obligation to do, and a right not to do; an obligation to pay a certain
sum, and a right to retain it in the shape of a tax. It is against the rules,
both of law and reason, to admit, by implication, in the construction of a
contract, a principle which goes in destruction of it.
The Government, by such a construction, would be made to say to the
lender: "1 want a sum of money, for a national purpose, which all the citizens ought to contribute proportionablv; but it will be more convenient to
them, and to mc, to borrow the money of you. If you will lend it, I promise you faithfully to allow you a certain rate of interest, while I keep the
money, and to reimburse the principal within a determinate period, except
much of the one and the other as I may think fit to withhold, in the
shape of a tax."
Is such a construction either natural or rational? Does it not, in fact,
nullify the promise, by the reservation of a right not to perform it?
Is it to be presumed, without being expressed, that such can be the understanding of a lender, when he parts with his money to a G o v e r n m e n t ?
The contrary is so much the more presumable, that nothing short of an
express reservation can support the pretension to tax the fund.
It may be replied, that the creditor might be willing to rely upon the equity of the Government not to abuse its right by exacting from him excessive
contributions.
This, if true, docs not obviate the difficulty of supposing the co-existence
of an obligation and a right, destructive the one of the other, in interpreting the sense of a contract, when nothing of the kind is said.
It is possible that a creditor might be willing so to contract; yet it is still
necessary, in order to determine that he has done it, tc find some provisions
or expressions in the contract indicating the intention to render what is
stipulated compatible with what is reserved. B.h * is not probable that an
, } l e . would justly apindividual would be willing to lend upon such
prehend that, in great emergencies, a right, lining no W but the option
of the party possessed of the power, would «Vabu*>d, and that the convemence of laying hold of a fund already p r ^ r e d and at hand, supported by a
claim of right, would be a temptation trapse, not easy to be? resisted. However well disposed to contribute, ir common with his fellow-citizens, on al
the ordinary objects of property ™ome, he would be unwilling to subject
himself to aspecial burden 1P /ne peculiar character of creditor of the State.
He would prefer to e m p l o y s money in other ways; even to lend it to prim o r e ,lke,
vate persons, where it r«g h l
y t 0 e s c a P e t h e h a n d o f t h e fiscal
Power.
I<et the question
tried by another analysis.
Public debt e*n scarcely, in legal phrase, be defined either property m
Possession or in action. It is evidently not the first, till it is reduced to
possession by payment. T o be the second, would suppose a legal power to
compel payment by suit. Does such a power exist ? The true definition
of public debt is a property subsisting in the faith of the Government. Its
essence is promise. Its definite value depends upon the reliance that the
promise will he definitely fulfilled. Can the Government rightfully tax its
promises ? Can it put its faith under contribution? Where or what is the
value of the debt, if such a right exist ?
Suppose the Government to contract with an individual to convey to him
a hundred acres of land, upon the condition of paying a hundred dollars.
VOL. I.—-13



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REPORTS OF THE

[1795.

When he came to pay the hundred dollars and demand his title, could the
Government require of him to pay fifty more as a tax upon the land, before
it would consent to give him the title? Who would not pronounce this to
be a breach of contract—a fraud—which nothing could disguise?
This case is parallel with that under examination; with circumstances
that fortify the right of the lending creditor.
The Government agrees with him, that, for one hundred dollars, which he
delivers to the Government, it will deliver to him, at the end of each year,
six dollars. Here the six dollars to be delivered answer to the land to bt
conveyed: with this stronger ground of right, that the consideration for them
has actually been given and received. Vet, when the creditor comes to demand his six dollars, he is told that he cannot have them, except with the
reservation of one dollar as a tax upon the six; or that he cannot have them,
except upon the condition of returning one dollar as that tax. What is this
but to say that his title to the money in this case, as to the land in the other,
must depend upon his paying, or allowing, a further consideration for it,
not contemplated in the contract? Can there be a doubt that this, also,
would be a breach of contract—a fraud?
The true rule of every case of property, founded on contract with the Government, is this: it must first be reduced into possession, and then it will
become subject, in common with other similar property, to the right of the
Government to raise contributions upon it. It may be said that the Govern
ment may fulfil this principle, by paying the interest with one hand, and
taking back the amount of the tax with the other. But to this the answer is.
that, to comply truly with the rule, the tax must be upon all the money of
the^community, net upon the particular portion of it which is paid to the
public creditors; and h ought, besides, to be so regulated as not lo include
a hen of the tax upon «,he fund. The creditor should lie no otherwise acted
upon, than as every oihtr possessor of money ; and. consequently, the money he receives from the ? u W i c c a n t h e n o n l y l)e a f u s n L e c t c f taxation ;
when it is entirely separated,
thrown, undistinguished, into the common
may. A different practice
id a m o u n t t o a n evasion of the principle contended for, and to oppression. > r e n t ; o r a n n u l t y , l l a b l e before it passes,
or m the act of passing, or at the ^

m e n t

of

f r o m o n e

proprietorto

another, to a deduction, or drawback ^ t h e p E l r * o f t h , p a r t y from whom
it is to pass is an imaginary thing, destitu c
0 f shape and substance.
e m e r S , n t contrflCl
to
°
with an individual, it deposes, as
to the matter of the contract, its constitutional , u t h o r i t v a n d e X c h a n g e s the
character of legislator for that of a moral a g e n t 3 f t ^ S rirf* and
obligations as an individual. Its promises may l^iustlv cmiTideml as excepted out of its power to legislate, unless in aid of th Mn i t l s m theorv,
impossible to reconcile the two ideas of a promise which oUUr*. with a p w «
to make a law which can vary the effect of it. This is the e T e a t principle
that governs the question, and abridges the general r i g h t o f t h e G o v e r n m e n t
to lay taxes, excepting out of it a species of property which subsists only io
r
3
its promise.
There are persons who, admitting the general rule, conceive a distinction
to exist between a tax upon the funds, which must be paid at all e v e n t s , and
a tax upon alienations of them, which will only be paid when they are transferred from one to another. The latter they think justifiable, because it * *
the option of the creditor to avoid the tax, by avoiding the alienation. But
the difference between the two cases is only a difference in die degree of ^



1795.]

SECRETARY OF THE TREASURY.

195

The stock, in its creation, is made transferable. This quality constitutes
a material part of its value, and the existence of it is a part of the contract
with the Government, which has undertaken, itself, to conduct the operation
of transferring by its own officers, and consequently at its own expense. It
is as completely a breach of contract to derogate from this quality, in diminution of the value of stock, by encumbering the transfer with a charge or
tax, as it is to take back, in the same shape, a portion of the principal or
interest. It is obvious, too, that this may be carried so far as essentially to
destroy the transferable capacity. But what is a tax upon transfers, other
than the faculty of taking away from the actual proprietor of stock a portion
of his principal, whenever his "interests or his necessities demand a transfer,
in derogation from the full enjoyment of the right to transfer, and from the
express promise of the Government to pay to him or his alienee? for it is
upon the seller, not upon the buyer, that such a tax wall fall. And where
is the substantial difference, on the ground of contract, between this and a
direct tax upon the fund itself? The value of it is as certainly impaired
by the one as by the other.
But shall the proprietor of money in the funds, then, be exempt from his
proportion of the burdens which other citizens bear?
This will not be the consequence of the principle. As a consumer, of
which his income is the instrument, he will pay his proportion of the taxes
on consumption. As a holder of any other species of property procured by
that income, or otherwise, which is liable to a tax, he must also contribute
his proportion.
But, without undue refinement, the lender of money to the public may
be affirmed to have paid his tax when he lends his money.
Relying upon the engagement of the Government express or implied,
that he will receive what is promised him, without defalcation, he is content with a less interest than he would take if subject to any such defalcation, and especially if it was to be arbitrary as to its extent In this lower
rate of interest he may be truly said to pay his tax, or to purchase an exemption from it.
,.
Here, also, we find what is decisive on the point of expediency.
If the Government had a right to tax its funds, the exercise of that right
would cost much more than it was worth. The money-lender would exact
exorbitant premiums, not only as an indemnification for the use which the
Government might probably make of its right, and which, in practice, would
be likely to be qualified by 'some regard to e q u a l i t y of contribution, but as
an equivalent for insurance against the risk or possibility of a more extensive use. Hence the Government would be likely to pay much more in
Premiums upon its loans, than it would draw back inL taxes; and the former being supposed but equal to the latter, there would be no advantage in
e

Xut n wiUbI! g wrhap«, more safe to affirm that there would be no torrowiug at all t i p such terms. The first precedent of a tax upon the
funds might be expected to compel the Government to an express renunciation o f l h e right m every future loan. Solid capitalists would not be
much inclined to adventure their money upon so precarious a footing as is
implied in a power of taxing their credits.
These reflections lead readily to an estimate of the impressions which
would be produced by the example of an imposition on the funds. Keprded
either as a positive breach of contract, or as a deviation from the sound max


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REPORTS OF THE

[1795.

ims of credit, the effect upon it would be nearly equally fatal. \ \ hatever
misht be excused to a time of revolution, to a defect of means, or to some
extraordinary peculiarity of situation, no excuse would be admitted for a deliberate departure from principles—at a time, too, of national prosperity, in
a flourishing state of the finances, after the foundations of a regular system
had been laid. The departure would argue an incorrectness, an instability,
or a depravity of views, calculated to give a lasting- shock to public credit.
The United States must henceforth tread with the most cautious steps.
A renunciation of the right, in future, might not speedily heal the wound
which an example of its exercise had given. Durable suspicions might
fasten on the wisdom or the integrity of the Government, which might
occasion to it no inconsiderable loss and embarrassment, before a course of
contrary experience would obliterate them.
The right of a Government to sequester or confiscate property, in its
funds, in time of war, involves considerations analogous to those which regard the right of taxing them. Whether the foreigner be, himself, the
original lender, or the proprietor of stock, in its constitution transferable
without discrimination, he stands upon equal ground with the citizen. He
has an equal claim upon the faith of the Government.
In the second case : as the substitute of the original lender, the promise
made attaches immediately upon him. Indeed, the certificates which issue
upon every transfer, and which may be called the public bonds, designate
him as the creditor, and expressly invest him with the correspondent rights.
To sequester or confiscate the stock, is as effectually a breach of the contract to pay, as to absorb it by a tax. It is to annihilate the promise, under
the sanction of which the foreigner became a proprietor.
But, does not the general right of war, to seize and confiscate enemy
property, extend to the property of the citizens of one nation in the funds
of another—the two nations being at war with each other ?
Resorting to principle as the guide, this question may, on solid grounds,
be answered in the negative.
The right to seize and confiscate individual property, in national wars,
excludes all those cases where the individual derives his title from the enemy
sovereign or nation; for the right to property always implies the right to
be protected and secured in the enjoyment of that property : and a nation,
by the very act of permitting the citizen of a foreign country to acquire
property within its territory, whether to lands, funds, or to any other thingtacitly engages to give protection and security to that property, and to allow
him as full eujoyment of it as any other proprietor; an engacrement which
no state of things between the two nations can justly or reasonably affectThough politically right, that, in wars between nations, the property of private persons, which depend on the laws of their own country, or on circumstances foreign to the nation with which their own is at war, should
be subject to seizure and confiscation by the enemy nation; yet it is both
politically and morally wrong that this should extend to property acquired
under the faith of the Government and the laws of that enemy nation.
\ \ hen the Government enters into a contract with the citizen of a foreign
country, it considers him as an individual in a state of nature, and contracts with him as such. It does not contract with him as the member "J
another society.
The contracts, therefore, with him, cannot be affected by his political relations to that society. War, whatever right it may give over his other prop


1795.]

SECRETARY OF THE TREASURY.

197

erty, can give none over that which he derives from those contracts. The
character in which they are made with him, the faith pledged to him personally, virtually exempt it.
This principle, which seems critically correct, would exempt as well the
income as the capital of the property. It protects the use as effectually as
the thing. What, in fact, is property but a fiction, without the beneficial use
of it? In many cases, indeed, the income or annuity is the property itself.
And though general usage may control the principle, it can only be as far
as the usage clearly goes. It must not be extended by analogy.
Some of the most approved publicists, admitting the principle, qualify it
with regard to the income of lands, which they say may be sequestered "to
hinder the remittance of it to the enemy's country."
But the same authority affirms, that a state of war "does not so much as
touch the sums which it owes to the enemy. Every where, in case of a war,
funds credited to the public are exempt from confiscation and seizure
These expressions clearly exclude sequestration as well as confiscation.
The former, no less than the latter, would be inconsistent with the declarations that a State at war does not so much as touch the sums which it
owes to the enemy, and that funds credited to the public are exempt from
seizure. And, on full inquiry, it is believed that the suggestion thus understood is founded in fact.
Usage, then, however it may deviate in other particulars in respect to public funds, concurs with principle in pronouncing that they cannot rightfully be sequestered in time of war.
The usages of war still savor too mtiQh of the ferocious maxims of the
times when war was the chief occupation of man. Eulightened reason
would never have pronounced that the persons or property of foreigners
found in a country at the breaking out of a war between that country and
his own, were liable to any of the rigors which a state of war authorizes
against the persons and goods of an enemy. It would have decreed to them
an inviolable sanctuary in the faith of those permissions and those laws, by
which themselves and their property had come under the jurisdiction
where they were found. It would have rejected the treachery of converting the indulgences, and even rights, of a previous state of amity, into
snares for innocent individuals.
Happily, however, the practice of latter times has left several of those
maxims little more than points of obsolete doctrine. They still retain their
rank in theory ; but usage has introduced so many qualifications, as nearly
to destroy their operation.
This appears from the acknowledgment of writers, from the barrenness
of modern history in examples of the application of those doctrines, from the
opinions known to be generally current in Europe, and from a variety of
articles which are constant formulas in the treaties of the present century.
The United States are every wav interested in the mitigation of the rigor
of the ancient maxims of war. They cannot better demonstate their wisdom, than by their moderation in this respect. Particularly interested in
maintaining, in their greatest purity and energy, the principles of credit, they
cannot too strictly adhere to all the relaxations of those maxims which favor
the rights of creditors. No temporary advantage can compensate for the
evils of a different course of conduct.
Credit, public and private, is of the greatest consequence to every country.
Of this it might be emphatically called the invigorating principle. No well



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x

REPORTS OF THE

[1795.

informed man can cast a retrospective eye over the progress of the United
States, from their infancy to the present period, without being convinced j
that they owe, in a great degree, to the fostering influence of credit, their
present mature growth. This credit has been ot a mixed nature, mercantile
and public, foreign and domestic. Credit abroad was the trunk of our mercantile credit, from which issued ramifications that nourished all the parts
of domestic labor and industry. The bills of credit emitted from time to
time by the different local Governments, which passed current as money, cooperated with that resource. Their united force, quickening the energies 1
and bringing into action the capacities for improvement of a new country,
was highly instrumental in accelerating its growth.
Credit, too, animated and supported by Hie general zeal, had a great
share in accomplishing, without such violent expedients as, generatinguniversal distress, would have endangered the issue, that revolution of which
we are so justly proud, and to which we are so greatly indebted.
Credit, likewise, may no doubt claim a principal agency in that increase
of national and individual welfare since the establishment of the present
Government which is so generally felt and acknowledged, though the true
causes of it are not as generally understood. It is the constant auxiliary of
almost every public operation; has been an indispensable one in those measures by which our frontiers have been defended; and it would not be difficult to demonstrate that, in a recent and delicate instance, it has materially
contributed to the safety of the State.
i
There can be no time, no state of things, in which credit is not essential
to a nation, especially as long as nations in general continue to use it as a
resource in war. It is impossible for a country to contend on equal terms,
or to be secure against the enterprises of other nations, without being able
equally with them to avail itself of this important resource; and to a young
country, with moderate pecuniary capital, and not a very various industry,
it is still more necessary than to countries more advanced in both: a truth
not less weighty for being obvious and frequently noticed.
Public credit has been well defined to be "a faculty to borrow a t pleasure
considerable sums on moderate terms; the art of distributing over a succession of years the extraordinary efforts found indispensable inone; a mean
of accelerating the prompt employment of all the abilities of a nation, and
even of disposing of a part of the overplus of others."
This just and ingenious definition condenses to a point the principal arguments in favor of public credit, and displays its immense importance.
Let any man consult the actual course of our pecuniary operations; and
.et him then say whether credit be not eminently useful. Let him imagine
the expense of a single campaign in a war will, » n-r^f v
nnwer;

distress and oppression which the attempt would occasion to the community.
He cannot but conclude that war, without credit, would be more than a great
calamity—would be rum.
4
But cred'* ;
» •
f
e
t
it is
among
t
h
e
v
e
m
e
n
t
.
0
As a s
u
b
s
t
i
l
agrij
n
culture, mil



1795.]

SECRETARY OF THE TREASURY.

199

The proof of this needs no labored deduction. It is matter of daily experience in the most familiar pursuits. One man wishes 10 take up and cultivate a piece of land ; he purchases upon credit, and, in time, pays the purchase money out of the produce of the soil improved by his labor. Another
sets up in trade; in the credit founded upon a fair character, he seeks, and often finds, the means of becoming at length a wealthy merchant. A third
commences business as a manufacturer or mechanic, with skill, but without
money. It is by credit that he is enabled to procure the tools, the materials,
and even the subsistence of which he stands in need, until his industry has
supplied him with capital; and even then he derives from an established and
increased credit the means of extending his undertakings.
Among the circumstances which recommend credit, and indicate its importance in the whole system of internal exertion and amelioration, it is impossible to pass unnoticed its unquestionable tendency to moderate the rate
of interest—a circumstance of infinite value in all the operations of labor
and industry.
If the individual capital of this country has become more adequate to its
exigencies than formerly, it is because individuals have found new resources
in the public credit—in the funds to which that has given value and activity.
Let public credit be prostrated, and the deficiency "will be greater than before. Public and private credit are closely allied, if not inseparable. There
is perhaps no example of the one being in a flourishing, where the other was
in a bad state. A shock to public credit would, therefore, not only take
away the additional means which it has furnished, but. by the derangements
disorders, distrusts, and false principles, which it would engender an l disseminate, would diminish the antecedent resources of private credit.
The United States possess an immense mass of improvable matter ; the
development of it, continually making, may be said to enlarge the field of
improvement as it progresses; and though the active capital of the country
has, no doubt, considerably increased, it is probable that it does not bear at
present a much greater proportion to the objects of employment than it has
done at any former period. Credit, upon this hypothesis, of every kind,
is nearly as necessary to us now as it ever was. But at least it may be
affirmed with absolute certainty, that, to a country so situated, credit is peculiarly useful and important.
If the United States observe with delicate caution the maxims of credit,
as well towards foreigners as their own citizens, in connexion with the general principles of an upright, stable, and systematic administration, the strong
attractions which they present to foreign capital will be likely to insure
them the command of as much as they may want, in addition to their own,
for every species of internal amelioration.
Can it be doubted that they would derive from this, in a course of time,
advantages incomparably greater than any, however tempting, that could
partially"result from a d i s r e g a r d of those maxims, or from t h e exercise of a
questionable right, which should even appear to derogate from them ?
Credit is an entire thing ; every part of it has the nicest sympathy with
every other part: wound one limb, and the whole tree shrinks and decays.
The security of each creditor is inseparable from the security of all creditors. The boundary between foreigner and citizen would not be deemed a
sufficient barrier against extending the precedent of an invasion of the rights
of the former to the latter. The most judicious and cautious would be most
apt to reason thus, and would only look for stronger shades of apparent ne


200

REPORTS OF THE

[1795.

cessity or expediency to govern the extension. And, in affairs of credit, the
opinion of the judicious and cautious may be expected to prevail. Hence
the Government, by sequestering the property of foreign citizens in the public funds at the commencement of a war, wou ld impair, at least, if not destroy,
that credit which is the best resource iu war.
It is in vain to attempt to disparage credit, by objecting to it its abuses.
What is there not liable to abuse or misuse ? The precious metals, those
great springs of labor and industry, are also the ministers of extravagance,
luxury, and corruption. Commerce, the nurse of agriculture and manufactures, if overdriven, leads to bankruptcy and distress. A fertile soil, the
principal source of human comfort, not unfrequently begets indolence and
effeminacy. Even liberty itself, degenerating into licentiousness, produces
a frightful complication of ills, and works its own destruction.
It is wisdom, in every case, tocherish whateveris useful, and guard against
its abuse. It will be the truest policy of the United States to give all possible energy to public credit, by a firm adherence to its strictest maxims; and
yet to avoid the ills of an excessive employment of it, by true economy
and system in the public expenditures, by steadily cultivating peace, and byusing sincere, efficient, and persevering endeavors to diminish present debts,
prevent the accumulation of new, and secure the discharge, within a reasonable period, of such as it may be at any time matter of necessity to contract.
It will be wise to cultivate and foster private credit, by an exemplary observance of the principles of public credit : and to guard against the misuse of
the former, by a speedy and vigorous administration of justice, and by taking
away every temptation to mn in debt, founded in the hope of evading the
just claims of creditors.
As an honorable evidence of this disposition, and with a view to quiet
the alarms which have been excited, and to silence forever a question which
can never be agitated without serious inconvenience, the Secretary of the
Treasury, in the last place, respectfully submits:
That there be an express renunciation, by law, of all pretension of right
to tax the public funds, or to sequester, at any time, or on any pretext, the
property which foreign citizens may hold therein. '
This will be particularly essential to the success of the plan for converting
the foreign into domestic debt; as the present contracts for the Amsterdam
and Antwerp debt contain an equivalent stipulation, and there is no prospect
that the creditors would consent to a change, but upon the condition of a
like stipulation.
In the commencement of this report, it was the intention to submit some
propositions for the improvement of the several branches of the public revenue ; but it is deemed advisable to reserve this part of the subject for a
future communication.
All which is respectfully submitted.
ALEXANDER HAMILTON,
rr
Secretary of the TreasuryIREASURY

DEPARTMENT,

January 21. 1795.




ST A TEMENT

Amount of
principal of unfunded debt.

Funded domestic debt, exclusive of balances doe to creditor States,
and the amount of said stock which has been purchased or redeemed
on the last day of December, 1791 Funded domestic debt, to the credit of States, in pursuance of the act
of Congress of May 3lst, 1791
Funded domestic debt, purchased and redeemed to the last of December, 1794 -

Dolls. Cts.
_

Dolls. Os.

Deferred stock. Three per cent,
stock.

Dolls.

Cts. Dolls, as.

Total amount.
05
H
O

Doits, as.

23
H
>
H

8,538,228 97

12,275,347 55

38,725,714 53

Kj

2,315,056 00

1,172,528 00

703,516 80

4,221,100 90

O

668,700 38

752,190 61

415,415 66

1,836,306 68

^
S3
S3
j

20,925,894 39

5,994,115 70

17,843,098 85

g

119,808 88

96,444 97

428,715 89

j-J

4,060,417 84

6,090,560 67

29,0-16,730 62

Debt due to foreign officers, for the payment of which, provision has
been made, an 1 which will pass to the credit of the sinking fund:
principal being
.
.
.
.
#186,988 23
intercut from Jan. 1, 1788 to Dec. 3, 1790
2-2,438 58

3,940,608 %

8,120,836 23

Total of funded domestic debt on the last day of December, 1794

13,39-1,280 01

212,462 01

Total of funded assumed debt

10,462,917 61

7,908,374 19

Funded assumed debt, exclusive of what had been purchased or redeemed on the last day of December, 1794 Funded assumed debt, which had been purchased or redeemed on the
last day of December, 1794 -

Registered debt on the books of the Treasury, on which dividends
have been made
-

Six per cent,
stock.

17,912,138 01

Total of funded domestic debt




o
Jtl

of the domestic debt of the United States on December 31*/, 1794.

14,523,365 45

19,484,810 68

63,054,936 75

22,438 58

209,426 81

30,806 95

198,623 30

186,988 23
167,816 40

111,877 60

55,938 80

U3
a

g

S T A T E M E N T A—Continued.

Amount of
principal of unfunded debt.

Dolls.

Cls.

Registered debt on which no dividends have been made
Registered debt on books of loan officers
.
.
.
.
Credit on the books of the Treasury
.
.
.
.
.
Loan-office certificates, bearing interest on a capital of 43,500 dollars, the specie value being no more than
.
.
.
.
Loan-office certificates, bearing interest on the specie value Final settlement certificates, payable to bearer, of all kinds
Indents of interest of all kinds
.
.
.
.
.
Unliquidated claims, as estimated
.
.
.
.
.

27,935
305,859
126,091
83,805
381,269

00
51
00
00
00

Estimated amount of the domestic debt at the close of 1791, and of
the stock which will be produced when the whole debt has been
funded
-

1,184,323 40

COMPTROLLERS

OFFICE,




January

9,

49,231 69
4,391 85
44,920 95

Six per cent.
stock.

Dolls.

Cls.

Deferred stock. T h r e e per cent,
stock.

Dolls.

Cls.

28,154 46
2,929 90
29,947 30

14,077 23
1,464 95
14,973 65

18,623 34
203,906 34
8-1,060 67

9,311 66
101,953 17
42,030 33

2547179 34

127^089 66

29,967,397 80

14,890,204 90

Dolls.

Cls.

17,737 31
3,039 35
11,925 61
7,830
55,051
33,696
83,805
2538,761

00
71
38
00
40

19,967,936 00

T o t a l amount.

Dolls.

Cls.

59,969 00
6,434 20
56,846 59
35,765
360,914
148,787
83,805
610,030

00
'22
38
00
40

64,825,538 70

1795.

OLIVER WOLCOTT, Jr., Comptroller.
«

O
f

B.

Dr.

s
o
Cr.

The Government of France in account current of principal with the United States.
S.

4,009, 197

18

D.
9

4

9

3

0

5

5

0

C

Epoch of November 4th, 1794.
T o balance due to the United States on Sept. 3, 1794,
9,199,091
brought down T o payments at the Treasury from Nov. 4. to 13th,
1794, to be at interest from N o r . 4, when the whole
sum was subject to the order of the French Minister
8181,500 a 18.15 1,000,000
3,199,091

Epoch of November 4Ih, 1794.
By the eighth instalment, due on Nov. 4, 1794, of the
1,000,000
loan of ten millions By account of interest: for a balancc of interest due
on the 4th of Nov. on the remaining part of the
109,751
loan of ten millions • '
Balance due to the United Slates on Nov. 4, 1794,
arising from payments exceeding the interest and
9,090,339
instalments then demandable by France 3,199,091

0

0

0

6

Epoch of December 31 st, 1794
T o balance due to the United States on Nov. 4, 1794,
9,096,339
brought down -

4

Digitized T o balance due to the United States on Dec. 31, 1794, 1,811,959
for FRASER
brought down ;

7



S.

D.

0

0

4

11

0

6

6

5

0

0

16

0

4

6

0

6

16

8

7

10

4

6

1

0

Livret.
EpoeA of Septe mber 24, 1751.
By the eighth instalment, due on Sept. 3, 1794, of the
loan of eighteen millions
.
.
.
. 1,500,000
By account of interest: for a balance of interest due
on the 3d of Sept. on the remaining part of the
303,400
loan of eighteen millions
Balance due to the United States on Sept. 3, 1794,
arising from payments exceeding the interest and
instalments demandable by France lo that period • 9,199,091
4,002,497

Litres.
Epoch of September 3d, 17J1.
T o balance due the United Slates at the close of the
year 1793, exceeding the interest and instalments
then due
.
.
.
.
.
. 9,109,974
T o payments made at the Treasury to May 15, viz:
April 9
$350
May 15
SO,000
119,191
820,350, o 18.15
T o payments at the Treasury on May 90 3c J u n e 4, v i z :
May 90
8699 81
June 4
50,970 00
990,401
$50,899 81 a 18.15
T o payments at the T r e a s u r y from Sept. 3, to Oct. 30,
1<94, at interest from Sept. 3, when the whole sum
was subject to the order of the French Minister,
8979,950 a 18.15 1,500,000

6
10

Epoch of December 31a/, 1794.
By account ol interest: for a balance of interest due
on the 31st of Dec. on the remaining part of the
981,379
loan of six millions Balance due to the United States on Dec. 31, 1794,
arising from payments exceeding the interest and
instalments demandable by France to that period - 1,811,959
9,096,339

Dr.

The Government of France in account current of interest with the United States.

Epoch, of September 3d, 1794.
T o interest on the balance due to the United States at
the close of the year 1793, being 3,109,974 livres 18
sous and 2 deniers, from J a n u a r y 1, 1794, to September 3, following, is eight months and two days,
at 4.706 per cent, per annum, being an average of
the interest payable on the F r e n c h loans when obtained T o interest on 112,121 livres 4 sous 2 deniers, being
payments at the T r e a s u r y to M a y 15, 1794: from
M a y 15, to September 3, is 3 months and 18 days, at
4.706 per cent, p e r a n n u m .
.
.
.
.
T o interest on 280,401 livres 3 sous 1 denier, being
payments at the T r e a s u r y on Mnv 90, and J u n e 4,
1794: from J u n e 4, to September 3, is 2 months and
29 days, at 4.706 per cent, per a n n u m
T o account of principal for the balance of this arct. -

Livres.

&

D.

11

1,582

18

5
4




375,000

0

0

120,000

0

o

0

0

0

17,248
102,751

4
16

0
0

120,000
Epoch of December
1794.
T o interest on the balance of principal d o e to the United States, on November 4th 1794, being 2,096,339
livres 1 nous 6 deniers, f r o m November 4, to Dec. 31,
1794, is I month and 27 days, at 4.706 per cent, per an.
T o account of principal for balance of this account •

D.

2
11

0

S.

5

3,262
303,406

Livres.

6

375,000
Epoch of Nwrmber 4/A, 1794.
T o interest on the balance of principal due to the United States on September 3d, 1794, being 2,199,091
livres 0 sous 6 deniers, from September 3, to Nor
vember 4, 1794, is 2 months, at 4.706 p e r cent, per an.
T o account of principal for balance of this account -

66,748

Epoch of September
1791.
By interest due on September 2d, 1794, on 7,500,000,
remaining of the loan of 18,000,000, at 5 per cent,
per a n n u m
.
.
.
.
.
.

Cr.

0

Epoch of November 4/A, 1794.
By interest due on November 4th, 1794, on 3,000,000,
remaining to that period, of the loan of 10,000,000,
at 4 per cent, per a n n u m
.
.
.
.

0

————————

Epoch of December 3 I d , 1794.
By interest due tm December 31, 1794, on the loan of
6,000,000, at 5 per cent, per a n n u m •
15,f»-X)
284,379

3
16

i

300,000

O

0

300,000
-

RESULT
DR.

ON

JANUARY

1,

1795.

>J>
at

The Government of France in account currcnt with the United Stales, on January 1, 1795.
Livrts.

T o balance due to the United States on January 1,
1795, arising from payments exceeding the interest
and instalments demandable by France to that
period
.
.
.
.
.
.
Balance doe to the French Government on January I,
1795, exclusive of interest oo loans, per credit

By four instalments, of 1,500,000 livres each,on the
loan of 18,000,000, which will be due on the 2d
of September, in the years 1795, 1796, 1797. and
1798, W a r i n g interest from September 3,1794, at
.
.
.
.
5 per cent, per annum
By two instalments, of 1,000,000 livres each, on the
loan of 10,000.000, which will be doe on the 1th
of November, in tne years 1795 and 1796, bearing
interest from the 4th of November, 1794, at 4 per
cent, per annum By six instalments, of 1,000,000 livres each, on the
loan of 6,000,000, which will be due in the years
1797, 1798, 1799, 1800, 1801, and 1802, bearing
interest from January 1, 1795, at 5 per cent, per
annum
.
.
.
.
.
.

19, 188,040

14,000,000

Ltvres.

D.

1,811,959

0

CR.

0

s.

^

n

6,000,000

to
M
O
73
H
-3

2,000,000

It*
P3

6,000,000

14,000,000

-3

w
COMPTROLLER'S O F F I C E ,




January

6, 1 7 9 5 .
OL1VUU

W O L C O T T . JUN.,

Comptroller.

a
S3

C & D.

to
o

o
STA TEMENT

Guilders.

of interest payable in the year 1794, on loans effected for account of the United States, at
and Antwerp.

Guilders.

On 4,000,000
On 1,000,000
On 1,000,000

Guilders.

. F i , v e Pe|r cent, loans effected at Amsterdam—
0
°, f ^ . T ' ^ ' ^f
dated June 11, 1782, at interest
from June I, 1793, to June I, 1794
.
.
.
.
Per contract, dated June 1, 1787, at interest for the same period Per contract dated March 13, 1788, at mterest for the same penod
Effected under the late Government.
^
Per contract, dated February I, 1790, at interest from February 1 1793,
to February 1,1794
.
.
1
Per contract, dated March 2, 1791, at interest from March 1, 1793, lo
March 1, 1794
.
.
.
.
.
.
.
Per contract dated December 14, 1791,at mterest lYom September*!, 1793,
to September I, 1794
.
.
.
_
B
t h c first
I5,oon
' D a < 3 ' n i e n t due on June 1, 1793, on the loan of
5,000,000. per contracts of June 11, 1782, at interest from June I, 1793,
to Jnne 1, 1794
.
.
.
„
Effected under the present Government.

S.

D.

200,000
50,000
50,000

00
00
00

00
00
00

ft!?m i ? ?

6,000,000

On 3,000,000
On 9,500,000
On 6,000,000
On 1,000,000
19,500,000
On 9,000,000
9,000,000
On 3,000,000
On 2,950,000
5,950,000




Foor per cent, loans effected at Amsterdam—
Per contract, dated March 9, 1784, at interest from Ff binary 1. 1793, to
Febtnary I, 1794
.
.
.
.
.
Effected under the late Government.
Per contract, dated December 94,1791, at interest from Jannary 1 1793
to January 1, 1794
.
.
.
.
.
.
Of a loan of 3;000,00®, per contract of August 9, 1792, at interest from
June 1,1789, to Jane 1, 1794
.
.
.
Effected under the i>r«-sent Government.

150,000
125,000
300,000
50,000

80,000
120,000
118,000

00

Rate of exchange per
guilder.

Amsterdam

On 2,050,000
9,050,000

Four and a half per cent, loan effected at Antwerp—
Of a loan of 3,000,000, per contract dated November 30, 1791, firom December 1, 1793, to December 1, 179*. Of this loan 950,000 have been
suppressed Effected under the present Government.
Commission on payment of interest at one per cent.

28,500,000

STATEMENT

Guilders.

of loans effected at Amsterdam

Guilders

1,000,000
1,000,000
5,000,000
3,000,000
2,500,000
6,000,000
1,000,000
3,000,000
15,500,000



(10

00
10

00
00

a 40 cents
do.

531,100 00
5,341 00

1,348,602

10

00

Or dollars

539,441 00

and Antwerp for account of the United States, remaining unpaid on
December 31, 1794.
Amount received.

Guilders.

3,000,000

00

1,335,250
13,352

-

Amount, exclusive of postage, expense* foi advertising, See.

to
Ol
92,250

Five per cent, loans effected at Ams'erdam—
Of the loan of 5,000,000, per contracts of June 11, 1782, at interest from
June 1, 1794
Per contract of June 1,1787, at interest from June 1, 1791
Per contract of March 13, 1788, at interest from June 1, 1794
Effected under the late Government.
Per contract of February 1. 1790, at interest from February 1, 1794
Per contract of March 2, 1791, at interest from March 1, 1791 Per contract of December 14, 1791, at interest from September 1, 1794 Being a reloan of the first instalment due on June 1, 1793, on the loan
of 5,000,000, per contracts of June 11, 1782, at interest from June 1,
1794
;
Per contract of April 10, 1794, at interest from January 1, 1794 Effected under the present Government.
Amount of nve per cent, loans
-

Guilders.

Amount of loans at the
same interest.

Guilders.

3,000,000
1,000,000
1,000,000

C>
*
pa
o
73
pa
H

%
<

c
73
i—i
—-

pa
50
pa
C
O
e:
S3

3,000,000
2,500,000
6,000,000
1,000,000
3,000,000
-

20,500,000

t\D
o
-4

STATEMENTS C <fc D—Continued.
Guilders.

Guilders.

Amount received.

Four per cent, loans effected at Amsterdam—
Percontract of March 9, 1784, at interest from February 1,
1794
T o which add premiums and gratifications which will be
payable on said loan
.
.
.
.
.

9,000,000

9,000,000
3,000,000
9,950,000
5,950,000

9,050,000
9,060,000

Guilders.

9,467,500
3,000,000
9,950,000

cn

-

8,117,500

PE
w
9,050,000
9,050,000

-

Amount at interest.
Amount to be paid

COMPTROLLER'S OFFICE,




5S
W
o
S3
H

467,500

Four and a half per cent, loan effected at Antwerp—
Of a loan of 3,000,000, per contract dated November 30, 1791, at in
teres! from December I, 1794, (of this loan 950,000 have been sup.
pressed)
.
.
.
.
.
.
.
.
Effected under the present Government.
Amount of four and a half per cent, loan

30,500,000

Guilders.
9,000,000

Effected under the late Government.
Per contract of December 94, 1791, at inteiest from January 1, 1794
Of * loan of 3,000,000, per contract «f August 9, 1799, at inteicst froir
J u n e 1,1794
:
Effected under the present Government.
Amount of four per rent, loans, including premiums and gratifications
to amount of 467,500, upon which no interest will be payable, if the
premiums shall be discharged within six months a tier having been

drawn

Amount of loans at the
same interest.

January

6,

30,967,500

1795.

OLIVER

W O L C O T T , Jn.,

Comptroller.

C tSc 1)—Continued.
STA TEMBNT

of one year's interest on the foreign loans effected for account of the United States, as due on the 3 let
of December, 1794.

80,500,000

guilders, amount of five per cent, loans cfleeted at Amsterdam
.
2,050,000 guilders, amount of tour and a half per cent, loan effected at Antwerp
7,950,000 guilders, amount of four per cent, loans effected at Amsterdam •
.

.
.

.
.

.
.

.
.

Guilders

1,0*5,000

to

02,000
318,000

n
o
23
w

30,500,000 amount at interest.
467,500 R^Uders, amount of premiums and gratifications lo be paid on a loan of 2,000,000 guilders.

>

80,967,600 guilders, amount to be paid for loans effected at Amsterdam and Antwerp.

53

Amount<<one ents perinterest on the- Dutch -and Antwerp loans
Which, at 40- year's guilder,is
.
Livres.
s it.
12,188,040 12 9

i

*
balance when obtained h Government a 4.706 per cent, per annum, being an average of interest payable on the French
^ic .
loans
Livres 573,569 3 9
W h i c h , at 18.15 cents p*T ) j T r r ^
Amount of one year's i n t e r s on the foreign loans, as due on the 31st of December, 1794

8574,100 00

678,202 80

.

.

.

.

.

.

.

Total of interest payable annually by the contract existing at the close of the year 1794 -




-

1,100,518 40 a 6 per ct.

SJ
S3

K
>

{M. Interest payable by the existing contract on the debt as it stood on the last day ol December 1794—
f~\r\ six n a r cent, dtrui 1/
_
_
*
. _ _
'
*
On « i v per n a n l stock
829,046,730 62
On the original capital of the debt to foreign officers
.
.
.
186,988 83
829,233,718 85 a6perct. 81,754,023 13
On three per cent, stock
.
.
.
.
.
.
.
19,48-1,8-10 68
On the interest of the capital due to foreign officers to December 31,1790
2^,438 58
19,507,279 26 a 3per ct. 585,218 37
On the unfunded debt, per statement
.
.
.
.
.
1,181,323 40
From which deduct indents of interest which bear no interest
83,805 00
.

o
=

104,102 80

Statement of interest payable on the domestic debt.

Unfunded debt bearing interest

3

to
a
S3

66,031 10
2,405,272 60

to
HO

STATEMENTS C <fc D—Continued.
Statement of interest payable on the domestic debt.
2d. Interest payable after the year 1800, on the principles of the contract existing at the end of 1794—
On the deferred stock existing at the end of 1794, bemg
On the six per cent, stock, as stated above
29,KU,718
19
On the three per cent, stock, as stated above
il^
1
On the unfunded debt, as stated above
»100,518

$871,401 92
r u 5 per cL
85 « 6 per ct. 1,754,083 13
ct
585,218 37
,
^P" '
6(5,031 10
10 a 6 per ct.

4

Total of interest which would be payable after the year 1800 on the whole domestic debt, on the principles of the existing contract at the end of 1794
*
•
3d. Interest which would be payable if the whole domestic debt was subscribed to the l o a n On six per cent, stock
.
*
"
* ,
"
On three per cant, stock
A n n u a l interest till the close of the y»» r 1800
.
.
.
.
Interest on deferred debt, which becomes six per cent, stock after the year 1800

.
.

29,967,397 80 « 6 p e r c t .
19,967,936 00 a 3per ct.
.

14,890,204 9 0 o 6 per ct.

Total interest which would be payable annually after the year 1800, if the whole debt was subscribed




-

S3,276,674 52
1,798,013 86
599,038 08
2,397,081 94
893,412 29
3,290,49-1 23

50
H
^
O
50
-a
(At

o
TJ
H
SB

w

-I
C
O

f
1795.]

SECRETARY OF THE TREASURY.
.

211

E.

View of sinking fund. according to plan proposed in the report.
Present annual amount of sinking fund, supposing the investment of the
residue of the surplus of revenue to the end of 1790, and of the arrears of
interest on the debt to foreign officers, in the purchase of six per cent, stock,
at par, and exonerating the fund from the charge to which it is subject by
the last section of the act making provision for the reduction of the public
debt, viz :
Interest for a y«»r on stock actually purchased and redeemed, to the last of
December, 1794, and carried to the credit of the fund
- $68,225 55
Interest for a year on the principal and arrears of interest, to
the end of 1790, on the debt to foreign officers 11,892 44
Interest for a year on subsequent arrears of interest, not included in the above
.
.
.
.
.
^547 05
Interest for a year on 8411,659 49, being the unexpended
balance of surplus to the end of 1790
24,699 56
$106,364 60
Interest for a year 011 the loan-office certificate, bearing interest on the nominal principal which (those certificates being
paid off as proposed) would accrue to this fund 1,91100
Add this sum, to be appropriated out of the revenue from imports and tonnage, for the redemption of stock bearing a
present interest of six per cent., according to the 5th proposition in the report
.
.
.
.
.
408,134 64
The amount of two per cent, on $25,820,512 20, being the
amount of stock unredeemed, bearing a present interest of
six per cent, exclusive of State balances - $516,410 24
Dividends on bank stock, deducting interest on such instalments of the
loan of the bank as had not accrued in the year 1794
- $62,500 00
Sum to be paid in addition thereto, on the 1st of January,
1796, out of the revenue from imports and tonnage, for
reimbursement of the fourth instalment of the above loan 137,500 00
Amount of annual instalments of $2,000,000, had of the Bank
of the United States, pursuant to the 11th section of the
act of incorporation
.
.
.
.
.
$200,000 00
The surplus of the dividends on bank stock will increase each year
$12,000; the interest, liberated by payment of each annual instalment of
principal, and the sum to be paid out of the revenue, will anuually decrease
ln
the same ratio.
It will be, after the first year—
On the 1st of January, 1797
.
.
.
.
$125,500
On the 1st of January, 1798
.
.
.
.
113,500
Un the 1st of January, 1799
.
.
.
.
101,500
Un the 1st of January, 1800
.
.
.
.
89^500



212

REPORTS OF THE

[1795.

On the 1st of January, 1801
.
.
.
.
$77,600
On the 1st of January, 1802
.
.
.
.
65,500
The yearly average of the sums successively payable out of the revenue
from imports and tonnage, towards reimbursing the two million loan,"
will be
$101,500 00
And the whole loan being discharged on the 1st of January,
1803, the annual dividend on bank stock will be liberated
from the future payment of interest on the loan, and will
thenceforth yield to the sinking fund an annuity liable to
the redemption of the deferred stock
- 152,500 00
Two per centum of $12,478,837 93, the amount of unredeemed stock, which, on the 1st of January, 1801, w\ll
bear interest at six per centum per annum,exclusive of State
balances, and which will be payable on the 1st of January,
1802, is
249,576 75
Yearly interest, which, on the 1st of January, 1801, will begin to accrue to the sinking fund, in the deferred stock
standing to its credit, is $52,319 97. Further sum necessary for payment of the above two per centum - 197.256 78
$249,576 75
This sum of $197,256 78 will, in the year 1802-*03, be
payable out of the revenues from imports and tonnage.
But the yearly dividends on bank slock, free from charge
after the 1st of January, 1803, being
. §152,500 00
The sum thenceforth payable out of the revenues from imports
and tonnage, for payment of said two per centum, will be
44,756 78
Which, together with the yearly interest on deferred stock,
being
52,319 97
Is equal to the amount of redeeming annuity of deferred stock.
being
- $249,576^5
Hence the permanent appropriations out of the revenue from i m p o r t s and
tonnage, for the redemption of the whole of the unredeemed f u n d e d stock,
which now bears, and hereafter will bear, an interest of six per c e n t u m per
annum, exclusive of the stock standing to the credit of certain States, pursuant to the report of the commissioners, is—
.
. €.408134 64
For that bearing a present interest For that bearing a future interest .
. v 44,756 78
Total annual extra appropriation to sinking fund, out of the""
revenues, exclusive of bank dividends .
. $452,891 42
The whole of the stock bearing a present rate of interest will, by this fund,
be redeemed in something less than twenty-three years, and the interest
then set free (to wit) in the year 1818, will be - SI,631,259 72
To which add the further appropriation towards principal,
F
F
as above
.
.
.
4 0 8 1 3 4 64




1795.]

SECRETARY OF THE TREASURY.

213

This annuity, applied to payments or purchases of the foreign debt, on a
calculation of five per cent, interest, would, by the 1st of January, 1824.
extinguish that debt, and yield a surplus of £122.502 29.
The whole of the stock bearing a future interest of six per cent, will, by
the fund to be applied to it as above, be also redeemed in something less
than twemy-three years from the time of commencing the redemption,
that is, by the year 1824; and the interest then set free on that stock will
- $801,050 24
The sum appropriated towards the redemption then also set
free, is
197,256 78
To which add the sum liberated by the redemption of the
present six per cent, stock
.
.
.
.
2,039,394 36
And the interest on $ 13,745,379 35, being the amount of
the foreign debt extinguished as above 638,4S0 58
There .will, therefore, be an annuity of

- $3,676,1SI 96

Thus will the whole of the foreign debt be extinguished by the year 1824,
and the sinking fund will then possess an annuity of - $3,676,181 96
And a sum, in gross, of
122,502 29
Together

- $3,798,684 25

W h i c h , in two years, would more than pay off the whole of the balances
to creditor States, and the whole of the unfunded debt, if not sooner discharged.
So that, supposing the proceeds of the western lands to be sufficient, by
the same time, to redeem the three per cent, stock, the whole of the present
debt of the United States, foreign and domestic, funded and unfunded, may
be redeemed by the operation of the provision proposed by the fifth proposition, by the year 1826; and there would revert to the United States a
yearly revenue of $4,435,320 89.
ALEXANDER HAMILTON.
TREASURY

DEPARTMENT,

January 17, 1795.
Note.—The calculations in this statement would require, to assure their perfect accuracy,
a revision; but it is certain that any errors it may contain will be too inconsiderable to affeci
any important result.




214

[1795.

REPORTS OF THE
F.

COMPARATIVE

V I E W O F A N N U A L C U R R E N T REVENUE A N D EXPEND!TURE.

Current Revenue.
Permanent
Nett duties on imports and tonnage, as ascertained 1793, per account of receipts and
expenditures for that year
- 56,087,546 26
Add product of additional dntics on imports
laid by the acts of the 5th and 7th of June,
1794, computed on the importations of
1793
1,091,872 32

rcrtnut.

87,179,416 58

Deduct for extra drawbacks, which would
become payable after the year 1793, in
consequence of extra importations of certain articles in that year, which were reexported
And amount of temporary duties on imports

1,500,000 00
1,479,626 91
2,979,626 91

Permanent duties on imports and tonnage Duties on spirits distilled within the United
Slates, and upon stills
.
.
.
Nett duties on postage of letters, as ascertained in 1793
Patent fees, as they accrued in the same vear
Dividends of bank stock beyond the interest
payable to the bank in 1793
Add interest of two instalments, which, beiag
paid off, will increase the dividend
-

.

.

4 199 791 67

.
-

-

^qq qqq qq
'
29 722 16
'
po

.
.
-

38,500 00
24,000 00
62,500 00

Total permanent revenue

DuUes on imports, as stated above .
.
Estimated product of duties on snuff manufactured, and sugar refined within the
United States, carriages for the conveyance of persons, licenses for selling wines
and spirits at retail, sales at auction
Total temporary revenue

-

Total annual current revenue




$4 693,CTS 83

.

T ^ ' J X f Z f t *
ji

.

.

-

.

.

.

380 000 00
~
.

.

1 859,626 91
c r.

r>52.300 74

I

1795.]

SECRETARY OF T H E TREASURY.

215

Current expenditure.
Interest on foreign debt, as stated
Deduct interest on instalment* of foreign debt
for 17%, to be paid oat of the proceeds of
foreign loans

£678,102 80
39,622 22
$638,480 58

Interest on funded domestic debt
.
.
.
Interest on unsubscribed debt, computed according to contract
.
.
.
.
.

.

2,339.241 50

.

66,031 10
3,043,753 18

Interest on temporary loans for anticipating the
rereaue
Expenses of the civil department, including
foreign intercourse
Expenses of the military department Including pensions to invalids .
.
.
Expenses of naval department for one year
Expenses of light-house and other establishments for the benefit of navigation .
.

Excess of revenue beyond expenditure

TATM-NY DEPABTMIVT, January 17,1795.

.

1,311,975
85,357
______
.

100,000 00

475,249 53
29
04
_ 1,397,332 33
441,508 80

.

.

24,000 00
-35,481,843 84

.

.

$ 6 ,,5 5 2 ,, 3 0 0 74
1 070 456 90

.

ALEXANDER HAMILTON,
Secretary of the 7Veasury.

R E S U L T IN T H E Y E A R 1796, A C C O R D I N G T O F I F T H P R O P O S I T I O N .
Surplus of revenue brought forward
.
.
.
.
Increased interest on foreign debt
S6].®]
Interest on new emission Ten per cent, of arrears of unfunded interest, including indents
4#, J09
Yearly instalment on account of 1,000,000 loan for foreign intercourse
200,000
Appropriations for sinking fund, viz?
Dividends of bank rtock $62,500 00
Sum payable out of imports and tonnage for redemption of six per cent, stock 408,134 61
Sum payable on the 1st of January, 1796, towards
reimbursing of bank loan
13<,500 00 •

070,456 90
«{
lo
5J
00

608,134 64
928,264 76

Balance, being cxccss of revenue beyond expendiiure

-

-

-

$142,192 14

. h appears, bv statement E that these extra appropriations will, in the progress of the operation, be reduced ; and that, inrloding a provision for the redemption of the deferred debt the
permanent charge on the revenue, (exclusive of bank dividends,) for the sinking fund, will be
no more than $452,891 42.
A
H

i




I N D E X .
A.
Agriculture, the effect of funding the public debt on, 6.
productiveness of, contrasted with manufactures, 78.
promoted by manufactures, 88, 92, 104.
Alloy, proportion of, used in gold and silver coinage, 135, 141.
Why it is used in coinage, 142.
Annuity proposed, as a plan for funding the public debt, 17, 43, 99.
Army expenses of 1802, estimated, 222.
of 1803,
do
253.
of 1804,
do
263.
of 1805,
do
286.
of 1806,
do
298.
from 1st April, 1801, to 31st March, 1805, 326.
of 1807, estimated, 331.
of 1808,
do
358.
paid, 374.
of 1809, estimated, 375, 392.
paid, 399. . (to
J«
from 1802 to 1807,420.
of 1810, estimated, 400.
paid, 421.
of 1811, estimated, 423.
paid, 443, 466.
of 1812, estimated, 444.
paid, 46S, 484.
of 1813. estimated, 470, 489.
paid, 490, 492, 499.
of 1814, estimated, 500.
paid, 523, 532.
of 1815, estimated, 530.
B.
Balances in the Treasury, in 1801,
1802,
1803,
1804,
1805,
1806,
1807,
1808,
1809,
1810,
1811,
1812,
1813,
1814,




223, 224.
255.
263.
287.
298.
332.
357.
374.
391, 399.
422.
443.
468.
488, 499.
525.

554

INDEX.

Bank, plan of a national, proposed, 54, 72.
capital stock, of what amouut, and how composed, 72.
the United States may be a stockholder, 75.
Bank of the United States, a renewal of the charter of; recommended, 3o9.
Bank shares, dividends on, in 1901, 221.
sold, 254.
proceeds of, 317.
Banks, benefits resulting from, 55, 97.
number of, in the United States ill 1790, 65.
objections to, considered, 57.
stock of, how composed, 59.
favor the increase of the precious metals, 61.
tend to lower the rate of interest, 67.
•
_
Bounties considered as a mean of encouraging manufactures, 110, 1.J0.
C.
Claims of American citizens against Prance, amount of, assumed and paid,
264, 266, 288.
Coffee, additional duty on, proposed, 22.
imported and consumed from 1790 to 1798, quantity ol, 241.—See
Merchandise imported
Coins, foreign, comparative value of, 135. 142.
circulation of, to be prohibited, 155.
Coins of the United States, of what to be compow>d,nnd how denominated,
152.
Commercial restrictions, effects of, on the revenue in 1807-8, 398, 409.
Commerce, benefited by funding the pablic debt, 5.
promoted by man u far tu res, 90, 104.
how affected by the French and British decrees, 376.
Compensation of officers ot Government in 1790,45.
Connecticut, claim of, m 1789, 35.
Creditors of the United States, not expedient to discriminate between the
classes of the, 7.
Credit.—See Public Credit.
Customs, where paid, and the amount, from 1st April, 1801, to 31st Marcn,
1805, 319.
,

-

it

^nvds

Debt, amount of interert on the domestic, from 1776 to 1791, 33.
Debt.—See Public Debt.
Debts due to States, to be assumed by the United States, 10, 28.
suppositious account of the, 30.
statement of the, 35.
provision for liquidating, 164.
Direct taxes, collected in 1801, 221.
arrears of, in 1803, 263.
receipts from, in 1801 to 1805, 317.
receipts from, in 1814, 524, 526.
an increase of the. recommended, 531.—See Revenue, *TC-




555

INDEX.

Drawback of duties, considered in reference to the encouragement of manufactures, 114.
amount of, from 1790 to 1799,239.
system of, proposed to be modified, 378.—See Merchandise imported.
Duties, additional, proposed on wines, spirits, teas, and coffee, 22.
Duties on imports, tariff of, proposed to be modified, 218,227.
cost of collecting the, 218, 227.
an increase of, proposed, 219,242, 378, 401, 424,448.
Duties on imports and tonnage, estimated for 1790, 53.
^
for 1795.170.
Duties.—See Internal Duties, Protecting Duties, Imports, Merchandise.
Dutch debt, created in 1790, 166.
amount of, in 1794, 206.
amount of, in 1802, 225.
instalments payable to 1809, 250.
difficulties in remitting instalments of the, 254, <2b0.
amount of the, in 1803,276.
R
Embargo, its effects upon the revenue considered, 377, 503.
Estimates of receipts and expenditures for 1791, 45, 53.
1795,170,18o,2l4.
1801-2, 222.
1802-3, 253.
180a-4. 263.
1804-5, 286.
1805-6, 298.
1806-7, 331.
1807-8, 357.
1808-9, 375.
1809-10, 399.
1810-11, 422.
1811-12,444,448.
1812-13, 469.
1813-14,488, 500.
1814-15, 526, 530.
Exemption of nujeriajs ^ manmawun»
materials for
^
Expenditures.—See Receipts and Expenditures.
Exportation.—Sec Re-exportation.
F

^

<

Finances, ,he effects of a nationalbauk in administering.be, centered, 54.
Finances, state of the. in 1801,
1802,
1803,
1804,
1805,
1806,
1807,
H08,
1809;




21b.
252.
262.
285.
297.
331.
356.
373.
(June,) 391.

556

INDEX.

Finances, state of the, in 1809, (December.) 398.
1810, 421.
1811, 443.
1812,468.
1813, (June,) 48$.
1813, (December,) 499.
1814, 523.
Fisheries, benefited by manufactures, 107.
Florida, imports and exports to and from, for Uio years 1799 to ISO2.20a,
281 to 284.
Foreign intercourse, expenses of, from 1801 to 1805, 325 — See Receipts
and Expenditure*.
Foreign officers, provision made in 1792, for paying certain, 166.
France, claims against, assumed by the United Stales, and paid, 264 6,288.
Frauds on the revenue, how prevented, 23.
Funding system established in 1790, 165.
G.
Gold and silver, amount of, increased by establishing hanks, 55.
proportion of, in the United Stales, in 1790, estimated. 141.
1.
Imported articles, and the duty on each.—See Merchandise imported.
Imports from Great Britain in 1810, duties accrued on, 456.
a table of duties chargeahlo on, in 1801, 227.
Imports, value and quantity of, from 1790 to 1800, 229 to 238.
amount of duties accrued on, from 1790 to 1799, 239.
_
quantity of consumed in the United States from 1790 to
duties accrued on, from October 1800, to October 1802, 259,
duties accrued on, in the years 1802 and 1803, 290.
1801 to 1804,297.302,311.
1804 and 1805, 337.
1805 and 1806,362.
1806 and 1807,379.
1807 and 1808,403.
1808 and 1WJ9, 426.
1809 and 1810, 451.
1810 and 1811, 47S.
1811 and 1812, 505.
1812 and 1 8 1 3 , 5 4 4 . — c h a n
dise imported.
„
Incidental revenues received from 1st April, 1801, to 31st March, lbuo, o
—See Revenue.
Internal duties created in 1794,159,
Internal duties, receipts from in 1800, 218, 243.
cost of collection, 219.
receipts from, in 1801 to 1805,317.
outstanding, amount of in 1803, 263
proposed to be increased, 531.—See Reven?^
Internal improvements, surplus revenue maybe applnxl to, 359.
Inventions and discoveries promote manufactures, 114.



INDEX.

557

L.

I^ands.—See Public Lands.
Laws creating revenue, and providing for the public debt, reviewed 157
Limitation act, passed in 1793, 167.
Loan recommended to supply a deficiency in the receipts. 392, 400 423
448, 471, 491.
'
'
'
'
Loans, foreign, amount of on 31st December, 1789, 31.
I^oans preferred to taxes to meet the exigencies of a war, 377, 401.
Loans, amount received from, in 1810, 443.
1812, 468, 486.
1813, 488, 492. 499, 516.
1814, 524, 527.—See Revenue.
I*oans, term3 on which they were obtained, 441, 491, 492 to 498; 519 to
522, 528 ; 535 to 540.
l»uisiana, provision for the purchase of, 264.
imports and exports to and from, for the years 1796 to 1802,
265, 281 to 284.
M.

Manufactures benefited by funding the public debt, 6.
expediency of encouraging, 78.
advantages of, 85.
encourage emigration, 87.
effects of, on commerce and agriculture, 90.
objections to encouraging, considered, 91, 103, 107.
progress of, in the United States, 102.
necessary to the independence of a country, 106.
sectional jealousies on the subject of, considered, 107.
how to be protected, 109.
materials for. exempted from duty, effect of, 113.
articles of, requiring particular encouragement, 118.
Massachusetts, amount due to, in 1789, 35.
Mediterranean fund, created, and estimated product of the, for 1805, 286.
duties constituting the, cease 1st January, 1809, 356.
a continuation of the, recommended, 378,401,424,448.
annual amount of.—See Merchandise imported, and
Revenue.
Merchandise imported and consumed, from 1790 to 1S00, 237, 241.
(paving ad valorem duties) in 1795 to 1800, 234.
(the quantity re-exported deducted) in 1801, 312.
1
1
1802,270.
1803, 291.
1804, 303.
1805, 338.
1806, 368.
1807, 380.
1808, 404.
re-exported in 1807 and 1808, 409.
imported, (the quantity reexported deducted,) in 1809, 427.




1811', 474.
1812, 506.
1813, 545.

55S

INDEX.

Mint, plan for the establishment of a, 133.
expenses of a, how defrayed, 143, 150.
Molasws^np^rted and" consumed from 1790 U 1793, quantity of, 211.
>
See Merchandise imjxjrled.
N.
National bank proposed to be established, 54.
Navy expenses of 1802, estimated, £22.
1603,
do
253.
1804.
do
263.
1S05,
do
2S6.
1806,
do
298.
from 1st April. 1801, to 31st Maxell, 1S05, 327.
of 1807, estimated, 331.
1808,
do
358.
paid, 374.
1S09, estimated, 375, 392.
paid, 399.
from 1802 to 1807, 420.
of 1810, estimated. 400.
paid, 421.
1811, estimated. 423.
paid, 443, 466.
1812, estimated, 441.
paid, 468, 484.
1813, estimated, 470, 489.
paid, 490, 492, 499.
1814, estimated, 500.
paid, 523, 532.
1815, estimated, 530.
New Jersey, claim of, in 1789, 35.
New York, claim of, in 1789, 35.
Non-importation act, modification of the, proposed. 425.
O.
I
Officers of Government, compensation allowed to the, in 1790, 45.
P.
Paper money, the expediency of emitting, considered, 64.
Passports and clearances, amount of revenue derived from, in 179"
1798, 241—See Merchandise imparted.
Penalties and forfeitures for infractions of the revenue laws, to be districted to informers and custom-house officers, 425.—See Revenue.
Postage of letters, receipts from, in 1901 to 1805, 317.--See Revenue.
Post Office, revenue derived from the, to he applied to the sinking fond,
review of the law establishing the, 159.
Premiums, effect of granting, on agriculture and manufactures, 113.



INDEX.

559

Protecting duties on imports considered as a bounty on domestic fabrics, 109.
the constitutional power to levy considered, 112.
Prohibitions of imports and exports may be resorted to for the encouragement and protection of manufactures, 109.
Public credit, plans for the support of, 3, 157,172.
a national bank necessary to the support of, 54.
essentia! to the prosperity of the nation, 197.
defined, 198.
Public debt, advantages of funding the, 5, 98.
nature of the provisions for funding the, 7,161.
of what it consists, 14, 168, 347.
plans for funding the, 17, 43, 45, 161.
plans for redeeming the, 22, 27, 165.
may constitute a part of the capital of a national bank, 72, 75,
157.
laws relating to the, reviewed, 157.
plan for completing the system for liquidating the, 173.
revenues pledged for the payment of the, 168.
amount of foreigu and domestic, in 1790, 14, 22, 31, 33.
1795, 169, 201 to 210.
1802, 223, 248, 250, 279.
when it may be redeemed, estimated, 172, 225, 251, 354.
amount paid, in 1802, 254.
1803, 264, 276.
1804,288,296.
1805. 299, 310.
from Apr. 1.1801,to March 31,1805,328,329,333.
in 1806, 333, 345.
plan for consolidating the, proposed, 333,347 to 3oo.
amount of the, in 1806, 349.
K
Q94 0 f ; i Q K
estimated amount that maybe paid, m 1809 to 1824,354,3^.
amount paid in 1807, 358, 371.

in 1811, 445,461.
from April 1, 1801, to January 1,1812, 463.
amount on Januan; 1, 1812, 446, 464.
amount paid m 1812, 468,480. ^
1814, 534.
t

t

^

^

T

T

^

J

l

pubbc debt,

j S ^ f f i f f i S S
1795 and 1801,
1 f i 21Q 244
p r ^ S f e of'the. pledged for the publie debt, 163.
S d T l S O l , 220, 246.
intrusions on the, to be prevented, 221.
sold in 1802, 252, 257.



560

INDEX.

Public lands, sold in 1S03, 262, 274.
1904, 285, 291, 315.
1905, 297, 309.
receipts from, in f W l to 1905, 31 / .
sold in 1806, 331, 34*.
1907, 356. 368.
1908. 373, 385.
1809.398, 411.
sold from 1800 to 18(0, 421, 432.
sold in 1811,448.
,
tI .
JJO
may be applied as & bounty to soldiers enlisting, 44b.
sold in 1M2, 478.
1813, 511.
Ibl l, 550.
*
m
Public vessels sold, 222.

I ]

3

|

R.
Receipts and expenditures, estimated for 1790, 45, 53.
1795, 170.
comparative view of the, for 1795, 214.
in 1801, 216.
1802, 252.
1803. 262.
1804,285.
^

from April ' l , 1801, to March 31, 1805, 317 to
330.
'
in 1806, 331.
1807, 356.
1808.373.
1809. 391, 395, 398, 419.
1810, 421, 438.
1811,443. 466.
1812, 468, 482, 486.
1813, 488, 492, 499, 616, 532.
1814, 523, 533.
Re-exportation of foreign merchandise in 1807 and 1908, 409.
Revenue, frauds of the, how to be prevented, 23.
s
plan for increasing the, 24.
laws relating to, reviewed, 157.
for what purposes pledge, 168.
how to be increased in the event of war, 361, 378.
an increase of, proposed, 219, 242, 378, 401, 4 ^ 448, 504from what sources derived, and the amount in 1795,
*
1801,216„lT
1901 to 1805,317,
322.
1808,395.
v
1809, 419.
1810, 438.
1811, 466.




INDEX.

561

Revenue, from what sources derived, and the amount in 1812,482,492.
1813, 492, 516, 518.
1814, 532-3.
See Receipts and expenditures.
S.

Salt imported and exported from 1790 to 1800, 233.
and consumed from 1790 to 1798, quantity of, 241.—See
Merchandise imported.
Salt duly expires 1st January, 1808,356.
a renewal of the, recommended, 449, 490.—See Merchandise
imported.
Sinking fund, plan of a, proposed, 27.
established in 1790, 165, 171.
made permanent in 1792, 166, 169.
operations ofof the, in 1802, 260. 1795, 167, 1/1, -411.
proceedings the, to 1st January,
state of the, in 1806, 346.
in 1810, 440.
in 1813, 498.
South Carolina, claim of, in 1789, 36.
Specie increased by the operation of banks, 55.
Si>ecie payments suspended by banks, 529.
S & 3 mortal
"

WgS&SffSV^X

Merchandise imported.
Saints foreign and domestic, additional duties proposed on, M.
Stampdutiesexpire 4th March 1803 218 2 2 1 . ^ / ^ ,
State debts, ought to be assumed bv the Union, 14, 28, 30.
amount of; estimated, So,
provision for liquidating the, 164.

S ^ i ^ E S SSSrESbTlW
S u r p l ^ u f

quantity of,

24,-S,

to internal improvements, 359.
T.

J Ko l^iHpd 449. 490.—See Direct taxes.
Taxes, internal, proposed to be l e v i e d , ^ ,

- S e e Merchandise >mPorlJ r - f r o m 1 7 9 0 to 1799, 240.
Tonnage, amount of American and foreign, from 17W to ^
^


Tot, i.—36


in 1803, 290.
1804, 302.
1805, 337.
1806, 362.
1807, 379.
1808, 394, 403.

INDEX.
Tonnage, amount of American and foreign, in 1909, 426.
181 li 473.
1812, 805.
1813, 544.
Tontine, proposed as a plan for funding the public debt, 20, 45.
Treasury notes, amount authorized in 1812, 469, 492.
treasury u
1813,492.499,518.
1814, 525. 529, 532, 511-2.
in circulation in 1814, 529.
an increase of the rate of interest on, proposed. 530.
y.
Virginia, claims of, in 1789. 36.
W.
Wines, additional duties proposed on, 22.
imported and consumed, quantity of, from 1790 to 1798, 241.Maxhandisc imported.




E N D OF T H E F I R S T V O L V M E .