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REPORTS

SECRETARY OF THE TREASURY
A

' r m m f

UNITED STATES,

IN OBEDIENCE TO THE ACT OF MAY 10, 1800,
" SUPPLEMENTARY TO THE ACT, ENTITLED 'AN ACT TO ESTABLISH THE TREASURY DEPARTMENT.1

TO WHICH ARE PREFIXED

T H E R E P O R T S O F ALEXANDER HAMILTON,

PUBLIC CREDIT, A NATIONAL BANK, MANUFACTURES,
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THE ESTABTLISH^EIfr^F* A'MSNT. .'
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V O L . I.

WASHINGTON:
P R I N T E D BY BLAIR & RIVES,




1837.

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/

T H E N E W YORK
PUBLIC LIBRARY
ABTOR,LENOX A D
M
TILDE* 'UN0AT10N9.
1907

t a b l e

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k

of

c o n t e n t s

*
^Report
J ^ Report
J. Report
^^Report
^wieport
^Report
Report
'J IT7

Mr.
by
Mr.
by
by Mr.
by Mr.
by M r .
by M r .
by Mr.

January,

17.90

FAG<?.
3

-

December,

1790

54

-

December,
May,

1791

78

1791

133

-

January,

1795

157

-

December,

1801

216

H a m i l t o n on Public Credit

-

H a m i l t o n on a National B a n k H a m i l t o n on M a n u f a c t u r e s
H a m i l t o n on Establishing a Mintt
H a m i l t o n on Public Credit
Gallatin on the F i n a n c e s
Gallatin on the F i n a n c e s

-

V, Report by Mr. Gallatin on the F i n a n c e s
Report by Mr. 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 Mr. Gallatin on the F i n a n c e s

252

1303

262

November,

1804

285

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^ R e p o r t by M r . Gallatin on the Finance*

1802

October,

-

-}• Report by M r . Gallatin on the F i n a n c e s

December,

-

Report by M r . Gallatin on the F i n a n c e s

December,

1305

297

-

December,

1806

331

-

November,

1807

35G

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December,
June,

1808

373

1809

391
398

-

Report by Mr. Gallatin on the F i n a n c e s
^ R e p o r t by Mr. Gallatin on the Finance?
Report by M r . Gallatin on the F i n a n c e s

-

December,

1S09

-

December,

1810

421

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

November,

1811

443

-

468

the F i u a n c e s

December,
June,

1812

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

1813

488

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

December,

1813

499

December,

1814

523

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

<0

VOL.

I.—1

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REPORTS
or THE

SECRETARY OF THE TREASURY OF THE UNITED ST.

REPORT

ON PUBLIC

CREDIT.

JANUARY, 1790.

'

,
Secretary of the Treasury, in obedience to the resolution of the Hou<e
of Representatives of the twenty-first day of September last, has, during- the
, recess of Congress, applied himself to the consideration of a proper plal for
; the support of the public credit, with all the attention which was due to the
: authority ot the House, and to the magnitude of the object
In the discharge of this duty, he has felt, in no small degree, the anxieties which naturally flow from a just estimate of the difficulty of the task
trom a well-founded diffidence of his own qualifications for executing it
with success, and from a deep and solemn conviction of the momentous nature ot the truth contained in the resolution under which his investigations
have been conducted, « That an adequate provision for the support of the
public credit is a matter of high importance to the honor and prosperity
1
F
y
of the United States."
With an ardent desire that his well-meant endeavors may be conducive
to the real advantage of the nation, and with the utmost deference to the
superior judgment of the House, he now respectfully submits the result of
his inquiries and reflections to their indulgent construction
In the opinion of the Secretary, the wisdom of the House, in giving
their explicit sanction to the proposition which has been stated, cannot bin
be applauded by all who will seriously consider and trace, through their
obvious consequences, these plain and undeniable truths :
That exigencies are to be expected to occur, in the affairs of nations, in
which there will be a necessity for borrowing;
That loans in times of public danger, especially from foreign war, are
found an indispensable resource, even to the wealthiest of them ;
And that in a country which, like this, is possessed of little active wealth
or, in other words, little moneyed capital, the necessity for that resource must'
in such emergencies, be proportionably urgent.
And as, on the one hand, the necessity for borrowing in particular emergencies cannot be doubted, so, on the other, it is equally evident, that, to be
able to borrow upon good terms, it is essential that the credit of a nation
should be well established.
For, when the credit of a country is in any degree questionable, it never
jails to give an extravagant premium, in one shape or another, upon all the
loans it has occasion to make. Nor does the evil end here; the same disadvantage must be sustained upon whatever is to be bought on terms of future
payment.



10

REPORTS OF THE

[1790.

From this constant necessity of borrowing and buying dear, it is easy to
conceive how immensely the expenses of a nation, in a course of time, will
be augmented by an unsound state of the public credit.
T o attempt to enumerate the complicated variety of mischiefs in the
whole system of the social economy, which proceed from a neglect of the
maxims that uphold public credit, and justify the solicitude manifested by
the House on this point, would be an improper intrusion on their time and
patience.
In so strong a light, nevertheless, do they appear to the Secretary, that,
on their due observance at the present critical juncture, materially depends,
in his judgment, the individual and aggregate prosperity of the citizens of
the United Slates; their relief from the embarrassments they now experience ; their character as a people ; the cause of good government.
If the maintenance of public credit, then, be truly so important, the next
inquiry which suggests itself is, by what means it is to be effected. T h e
ready answer to which question is, by good faith, by a punctual performance of contracts. States, like individuals, who observe their engagements,
are respected and trusted; while the reverse is the fate of those who pursue
an opposite conduct.
Every breach of the public engagements, whether from choice or necessity, is, in different degrees, hurtful to public credit. When such a necessity does truly exist, the evils of it are only to be palliated by a scrupulous
attention, on the part of the Government, to carry the violation no further
than the necessity absolutely requires, and to manifest, if the nature of the
case admit of it, a sincere disposition to make reparation whenever circumstances shall permit. But, with every possible mitigation, credit must suffer,
and numerous mischiefs ensue. It is, therefore, highly important, when an
appearance of necessity seems to press upon the public councils, that they
should examine well its reality, and be perfectly assured that there is no
method of escaping from it, before they yield to its suggestions. For,
though it cannot safely be affirmed that occasions have hrvpt oYistPd nr




1?'90.]

»

*

SECRETARY OF THE TREASURY".

5

to the obligation. There is, indeed, reason to regret that it lias not hitherto
been kept; that the necessities of the war, conspiring with inexperience in
the subjects of finance, produced direct infractions; and that the subsequent
period has been a continued scene of negative violation, or non-compliance.
But a diminution of this regret arises f rom the reflection that the last seven
years have exhibited an earnest and uniform effort on the part of the Government of the Union to retrieve the national credit, by doing justice to the
creditors of the nation; and that the embarrassments of a defective constitution, which defeated this laudable effort, have ceased.
From this evidence of a favorable disposition given by the former Government, the institution of a new one, clothed with powers competent to calling forth the resources of the community, has excited correspondent expectations. A general belief accordingly prevails, that the credit of the United
States will quickly be established 011 the firm foundation of an effectual provision for the existing debt. T h e influence which this has had at home, is
witnessed by the rapid increase that has taken place in the market value of
the public securities. From January to November, they rose thirty-three
and a third per cent.; and from that period to this time, they have risen fifty
per cent, more; and the intelligence from abroad announces effects proportionably favorable to our national credit and consequence.
It cannot but merit particular attention, that, among ourselves, the mostenlightened friends of good government are those whose expectations are the
highest.
To justify and preserve their confidence; to promote the increasing respectability of the American name; to answer the calls of justice; to restore
landed property to its due value; to furnish new resources both to agriculture and commerce; to cement more closely the union of the States ; to add
to their security against foreign attack; to establish public order on the basis
of an upright and liberal policy—these are the great and invaluable ends
to be secured by a proper and adequate provision, at the present period, for
the support of public credit.
To this provision we are invited, not only by the general considerations
which have been noticed, but by others of a more particular nature. It will
procure to every class of the community some important advantages, and remove some no less important disadvantages.
The advantage to the public creditors from the increased value of that
part of their property which constitutes the public debt, needs no explanation.
^
•—
But there is a consequence of this, less obvious, though not less true, in
which every other citizen is interested. It is a well known fact, that in
countries in which the national debt is properly funded, and an object of
established confidence, it answers most of the purposes of money. Transfers
of stock or public debt are there equivalent to payments in specie; or, in
other words, stock, in the principal transactions of business, passes current
as specie. T h e same thing would, in all probability, happen here under
the like circumstances.
The benefits of this are various and obvious :
First. Trade is extended by it, because there is a larger capital to carry
it on, and the merchant can, at the same time, afford to trade for smaller
profits; as his stock, which, when unemployed, brings him in an interest
&om the Government, serves him also as money when he has a call for it
fn his commercial operations.




10

REPORTS OF THE

[1790.

Secondly. Agriculture and manufactures are also promoted by it; for the
like reason, that more capital can be commanded to be employed in both ;
and because the merchant, whose enterprise in foreign trade gives to them
activity and extension, has greater means for enterprise.
Thirdly. The interest of money will be lowered by it ; for this is always
in a ratio to the quantity of money, and to the quickness of circulation.
This circumstance will enable both the public and individuals to borrow on
easier and cheaper terms.
And from the combination of these effects, additional aids willbe furnished
to labor, to industry, and to arts of every kind. But these good effects of
a public debt are only to be looked for, when, by being well funded, it has
acquired an adequate and stable value; till then, it has rather a contrary tendency. The fluctuation and insecurity incident to it in an unfunded'state,
render it a mere commodity, and a precarious one. As such. beino- only an
object of occasional and particular speculation, all the money applied to it
is so much diverted from the more useful channels of circulation, for which
the thing itself affords no substitute; so that,in fact, one serious inconvenience of an unfunded debt is, that it contributes to the scarcity of money
I his distinction, which has been little if at all attended to,'is of the greatest
moment; it involves a question immediately interesting to every part of the
community which is no other than this: whether the public debt,by a proor whpfhpp lH1 , t r l l e P r r , p l C S ' S h a U b e eri e n d e r e d a
money;
Z w i U t ,„ & l e f t aS, U
k n £ provided for in such a manner
as will wound those principles and destroy confidence, it shall be suffered to
tbe
u ^ industry! * ^
^
°f °"r Cash
The effect which the funding of the public debt, on ri-ht principles would

tl.e representations c o n t i n u a l l y r e c e i v e d t o T Z t T ^ ^ ' ,
lands there will command no prTce w t c h mat n r K ,I " " ^ j * C r e ? U e d '
an
total sacrifice. This decrease in the vSue of h n T o l h i
^
^
to be attributed to the scarcity of money conseauen ^ ' T F ^ m e ? n i e '
what ver
an augmentation of the moneyed c a p X f T ? n "
f
produces
tional effect in raisin* that vahiP t !
I country, must have a propordebt
m this respect, has K
m
l
n
^
<
y
e most decisive
Britain.
.
experience in Great
in
r l y
they had occasion to
ffhStir,
diminished. As .he s ^ e c ^ Z m ^
'here is reason to believe that siirh Af ih

feel

tenefit
"»
increase
p t and better s
T
«'»> when
L C ^ V V ^
^
• ° , t h e f a c i l l t y of loans.
P

t W
d
<"'<-'>" require some time to W
''|
instantaneous. It
f °"'
S
"> "'tech to it that fixed c o n f i S f w h T c h l f ' ° C k U s n a , u r « 1 le™>> «'»>
»ev. Ye. the late rapid rise o f ? h e p T , M c ' S S ! " S
^
^
1 uuiit securities encourages an expecta-




1?'90.]

SECRETARY OF THE TREASURY". 5

tion that the progress of stock to the desirable point will be much more
expeditious than could have been foreseen. And as, in the mean time, it
will be increasing in value, there is room to conclude that it will, from the
outset, answer many of the purposes in contemplation. Particularly it seems
to be probable, that from creditors who are not themselves necessitous, it
will early meet with a ready reception in payment of debts, at its current
price.
Having now taken a concise view of the inducements to a proper provision for the public debt, the next inquiry which presents itself is, what
ought to be the nature of such a provision 1 This requires some preliminary
discussions.
It is agreed on all hands, that that part of the debt which has been contracted abroad, and is denominated the foreign debt, ought to be provided
for according to the precise terms of the contracts relating to it. T h e discussions which can arise, therefore, will have reference "essentially to the
domestic part of it, or to that which has been contracted at home. * It is to
be regretted that there is not the same unanimity of sentiment on this part,
as on the other.
The Secretary has too much deference for the opinions of every part of
the community not to have observed one, which has more than once made
its appearance in the public prints, and which is occasionally to be met
with in conversation. It involves this question, whether a discrimination
ought not to be made between original holders of the public securities, and
present possessors by purchase? Those who advocate a discrimination
are for making a full provision for the securities of the former at their
nominal value ; but contend that the latter ought to receive no more than
the cost to them, and the interest. And the idea is sometimes suggested of
making good the difference to the primitive possessor.
In favor of this scheme, it is alleged that it would be unreasonable to pay
twenty shillings in the pound, to one who had not given more for it than
three or four. And it is added, that it would be hard to aggravate the misfortune of the first owner, who, probably through necessity, parted with
his property at so great a loss, by obliging him to contribute to the profit
ol the person who had speculated on his distresses.
The Secretary, after the most mature reflection on the force of this argument, is induced to reject the doctrine it contains, as equally unjust and
impolitic; as highly injurious, even to the original holders of public securities ; as ruinous to public credit.
It is inconsistent with justice, because, in the first place, it is a breach of
contract, a violation of the rights of a fair purchaser.
The nature of the contract, in its origin, is, that the public will pay the
sum expressed in the security, to the first holder or his assignee. T h e intent in making the security assignable, is, that the proprietor may be able
to make use of his property, by selling it for as much as it may be worth in
the market, and that the buyer may be safe in the purchase.
Every buyer, therefore, stands exactly in the place of the seller, has the
same right with him to the identical sum expressed in the security, and,
having acquired that right by fair purchase, and in conformity to the
original agreement and intention of the Government, his claim cannot be
disputed, without manifest injustice.
That he is to be considered as a fair purchaser, results from this: whatever
necessity the seller may have been under, was occasioned by the Government




10

REPORTS OF THE

[1790.

'a not making a proper provision for its debts. The buyer had no agency
'n it, and therefore ought not to suffer. He is not even chargeable with
I laving taken an undue advantage. He paid what the commodity was
worth in the market, and took the risks of reimbursement upon himself.
<ie ol course gave a fair equivalent, and ought to reap the benefit of his
hazard ; a hazard which was far from inconsiderable, and which, perhaps,
turned on little less than a revolution in government.
That the case of those who parted with their securities from necessity is
' i m r d one > cannot be denied ; but, whatever complaint of injury, or claim
<1 redress, they may have, respects the Government solely. They have not
only nothing to object to the persons who relieved their necessities, by
giving them the current price of their property, but they are even under
: ui implied condition to contribute to the reimbursement of those persons,
hey knew that, by the terms of the contract with themselves, the public
mm S l V ° i f y ? t 0 t h ? e 10 w h o m lhG Y s h ™ l d ^ n v e y their title, the
s ' l s h ' f t o t b c I )a,d , 10 t h e m ' ; i n d th:it » a s citizens of the United
their
u^
ThZ K ti
P r ° P ° r t i o n of-the contribution for that purle a
[ h c y taCltl e t
had an on inn tl|
y
W to do ; and. if they
C0 l
n o t W1 th m i r i t o r
o d faith
xv 1 i o u tt t ,t e
,
l
2 f !
'
,
^ y
> r e ^ i s c to do it,
!
consent of those to whom they sold £ °
^ l d f S S 0 l d from necessity, it does not
T
Ti a l ° f t h e m ' h m a y w e l 1 b e supposed
6 hCr thr0llg 1 W a n t
.
t
° f oo^dence in an eventual
T T t S ° f S ° m e P r 0 f i t a b i e peculation. How
H* S
t t ! " b e d r « d f r 0 m e a c h o t h e r * How shall
Stained for hf« I
?V C™> t h a t t h e m o n e y w h i c h the original holder
fol O

W \ L M £

i r
provS^

w T h

t l
r Z ,

fthG

,

made ? C v X l l h bo k n T
T
Ins 11loney in some other w w L
by having a r o h S it ia the
receive theirTu U ^ o u n t ' ? P?nH T
how shall it
determined w l ^
breach of contract 3 d n o t do n £
eluded a compensat on tothe i f
- a
d
v
a

pr0vision which
shall be
n ' ' lf ? e p U r c h a s e r h a d ^ y e d
* * b e m 0 b e t t e r N a t i o n than
V ^ T ? ' t h o u ? h b e should now
thin s
f ' °f ^
2
^ known,
l d l S c r i m i n ^ i o n , independent of the
t0
^
P««hasers ; and, if it inn
t
^
* *

f

th
received by them f J o m t h e ^ ^ S l S S S S ?
* sec™lir placcd t h e
a* an indemnity for their first £
ll t ?
^ with others,
which they have endeavorS toTecnl h i l . ^ * d f p n v e d o f t h e indemnity
7 S provide
Uuestious of this sort o n V ^ f
°
" t an arrangement?
th
and demonstrate the ininstipp
omselves
without
subtile calculations of equity3 ateScted f i m T 1 " ^ 0 1 1 ' 6 V e n 011 t h e
The difficulties, too, of J e ^ T ^ t Z i f U & i l 0 a o f contract.
Which would have even t h e 1 C h S f . < ^ ° f a p l a n f o r that purpose
•
It may well be doubted w h e Z r Z « ± ^ y > ™ u i d b e fo"nd
immense.
replete with such absurd as well W e S l
' i n s m ™ n t a b l e , and
even a r J K
consequences, as to disgust
^ e S t the proposers of ^the rmeasure. r ^
r ^
- notice t h e




1790.]

SECRETARY OP THE TREASURY.

9

them to retain those bought by him, till the discrimination should take
place; the other, to have parted with those bought by him, within a month
past, at nine shillings. T h e former, who had had most confidence in the
Government, would, in this case, only receive at the rate of three shillings,
and the interest; while the latter, who had had less confidence, would
receive, for what cost him the same money, at the rate of nine shillings:
and his representative, standing in his place, would be entitled to a like rate.
^ The impolicy of a discrimination results from two considerations: one,
that it proceeds upon a principle destructive of that quality of the public
debt, or the stock of the nation, which is essential to its capacity for answering the purposes of money—that is, the security of transfer; the other, that,
as well on this account, as because it includes a breach of faith, it renders
property in the funds less valuable, consequently induces lenders to demand
a higher premium for what they lend, and produces every other inconvenience of a bad state of public credit.
It will be perceived, at first sight, that the transferable quality of stock is
essential to its operation as money, and that this depends on the idea of
complete security to the transferee, and a firm persuasion that no distinction
can, in any circumstances, be made between him and the original proprietor.
The precedent of an invasion of this fundamental principle would, of
course, tend to deprive the community of an advantage with which no
temporary saving could bear the least comparison.
And it will as readily be perceived that the same cause would operate a
diminution of the value of stock in the hands of the first as well as of every
other holder. T h e price which any man who should incline to purchase
wonld be willing to give for it, would be in a compound ratio to the immediate profit it afforded, and the chance of the continuance of his profit. If
there was supposed to be any hazard of the latter, the risk would be taken
mto the calculation, and either there would be no purchase at all, or it
would be at a proportionably less price.
For this diminution of the value of stock, every person who should be
about to lend to the Government would demand compensation, and would
add, to the actual difference between the nominal and the market value, an
equivalent for the chance of greater decrease; which, in a precarious state
of public credit, is always to be taken into the account. Every compensation of this sort, it is evident, would l>e an absolute loss to the Government.
In the preceding discussion of the impolicy of a discrimination, the injurious tendency of it to those who continue to be the holders of the securities they received from the Government has been explained.
Nothing
need be added on this head, except that this is an additional and interesting
i'ght in which the injustice of the measure may be seen. It wonld not only
divest present proprietors, by purchase, of the rights they had acquired
under the sanction of public faith, but it would depreciate the property of
the remaining original holders. It is equally unnecessary to add any thing
to what has been already said, to demonstrate the fatal influence which the
principle of discrimination would have on the public credit.
But. there is still a point in view, in which it will appear perhaps even
more exceptionable than in either of the former. It would be repugnant
to an express provision of the constitution of the United States. This provision is, that "all debts contracted, and engagements entered into, before
the adoption of that constitution, shall be as Valid against the United States
under it a s u n d e r the confederation;" which amounts to a constitutional




10

REPORTS OF THE

[1790.

ratification of the contracts respecting the debt in the state in which they
existed under the confederation: and. resorting to that standard, there can
be no doubt that the rights of assignees and original holders must be considered as equal. In exploding thus fully the principle of discrimination,
the Secretary is happy in reflecting that he is only the advocate of what
has been already sanctioned by the formal and express authority of the
Government of the Union, in these emphatic terms: " T h e remaining class
of creditors," say Congress, in their circular address to the States, of the
26th of April, 1783, "is composed partly of such of our fellow-citizens as
originally lent to the public the use of their funds, or have since manifested
most confidence in their country by receiving transfers from the lenders;
and partly of those whose property has been either advanced or assumed'
for the public service. To discriminate the merits of these several descriptions of creditors would be a task equally unnecessary and invidious If
the voice of humanity plead more loudly in favor of some than of others
the voice ot policy, no less than of justice, pleads in favor of all A wise
nation will never permit those who relieve the wants of their countrv or
who rely most on its faith, its firmness, and its resources, when either of
them is distrusted, to suffer by the event."
The Secretary, concluding that a discrimination between the different
classes of creditors of the United State* cannot, with propriety be made
K e e i f them T n T ano her description of public bcreditors-those of the
T ^ t0 e P ^ t e d *
—
between h e m and
States, individually. The Secretary, after mature reflection on this no i t
entertains a full conviction that an assumption of the debts of the pan.cuhr
U
0
w m ,5e a y l e a sn ri e n V a n d ^ l l k e P r 0 v i s i 0 n l o r t h e m a s f o r those of the u l n r
t a
[.
™e u t
sound policy and substantial justice.
it would, in the opinion of the Secretarv contribntP in a n o, •

be more conveniently and effectually made by o n e z e n e r * ^ ? * ™ " T *
one authority, than by different nhns nrimLt £ e »eral plan, issuing from
mir'tV* 1 ^ 7
diere can be no ^mperit?<m^or ^
'
laSt; t h e r e
must be such a competition. The consequences nf Vhif 1
,
the
caution on both s.des, mi ff ht be n t e X X r ^ U t
'
latest
and confusion. Particular brand es ofndnsTrv f T ' a , n d , t h e n c e c ° l l i s i 0 1 1
The most productiveobjectsof r e f P n „ . I l 7 , , g h t a l s ° b e °PP«*sed by
must be wholly engrossed bv one Z l l T l n o t ™ ™ r o u s - E i t h ^ these
the provisions by t l Z t h e v or Z h t l l t t ^
^
efficacy of
&V6 1 C C 0 u r s e t o
m different modes, which m ^ L
the same objects,
yond what they c o u ^d p r o b a t a ^ ^
"pon them be
requisite to avoiding it w o K ^ n l t h e L t
> J o t h a PP™, the caution
fuU benefit
of each object. The dange r o f S S f e S S ^ S
^
f excess would
impose restraints very imfriendlvto Z , * ? ?
be apt to
sources which are the most co^enient a n d ^ i 6 C T ™ l } d * those rereco rsc
to others less eligible in themselve and^ 1
^ ^
«
n reeab,e t0
The difficulty of an effectual command
?
the community,
separate provisions for the debt m v Z
public resources, in case of
I, «'o»ld
=




1?'90.]

SECRETARY OF THE TREASURY".

5

considerations, would, in some instances, have recourse to different objectsin others, to the same objects, in different degrees, for procuring the funds
ot which they stood in need. It is easv to conceive how this diversity
would affect the aggregate revenue of the country. By the supposition, articles which yielded a full supply in some States, would yield nothing, or an
insufficient product, in others. And hence the public revenue would not
derive the full benefit of those articles from State regulations: neither could
the deficiencies be made good by those of the Union. It is a provision of
the national constitution, that "all duties, imposts, and excises shall be
uniform throughout the United States." And, as the General Government would be under a necessity, from motives of policy, of paying regard
to the duty which may have been previously imposed upon any article,
though but in a single State, it would be constrained either to refrain wholly
from any further imposition upon such article, where it had been already
rated as high as was proper, or to confine itself to the difference between the
existing rate and what the article would reasonably bear. T h u s the preoccupancy of an article by a single State, would tend to arrest or abridge
the impositions of the Union on that article. And as it is supposable that
a great variety of articles might be placed in this situation, by dissimilar arrangements of the particular States, it is evident that the aggregate revenue
of the country would be likely to be very materially contracted by the plan
of separate provisions.
If all the public creditors receive their dues from one source, distributed
with an equal hand, their interests will be the same ; and, having the same
interests, they will unite in the support of the fiscal arrangements of the
Government; as these, too, can be made with more convenience where
there is no competition. These circumstances combined, will insure to the
revenue laws a more ready and more satisfactory execution.
If, on the contrary, there are distinct provisions, there will be distinct
interests, drawing different ways. That union and concert of views among
the creditors, which in every Government is of great importance to their
security, and to that of public credit, will not only not exist, but will be
likely to give place to mutual jealousy and opposition ; and from this cause,
the operation of the systems which may be adopted both by the particular
States and by the Union, with relation to their respective debts, will be in
danger of being counteracted.
There are several reasons which render it probable that the situation of
the State creditors would be worse than that of the creditors of the Union,
if there be not a national assumption of the State debts. Of these it will be
sufficient to mention two: one, that a principal branch of revenue is exclusively vested in the Union ; the other, that a State must always be checked
m the imposition of taxes on articles of consumption, from the want of power
to extend the same regulation to the other States, and from the tendency of
partial duties to injure its industry and commerce. Should the State creditors
stand upon a less eligible footing than the others, it is unnatural to expect
they would see with pleasure a provision for them. T h e influence which
their dissatisfaction might have, could not but operate injuriously, both for
the creditors and the credit of the United States. Hence it is even the
interest of the creditors of the Union, that those of the individual States
should be comprehended in a general provision. Any attempt to secure to
l e
^ / ° . r m e r either exclusive or peculiar advantages, would materially hazard
their interests. Neither would it be just that one class of thp public creditors

should be more favored than the other. T h e objects for which both descrip

10

REPORTS OF THE

[1790.

lions of the debt were contracted, are in the main the same. Indeed, a great
part of the particular debts of the States has arisen from assumptions by them
011 account of the Union ; and it is most equitable that there should be the
same measure of retribution for all. There is an oojecuon, uowever, to an
ot
lor an. l nere
objection, however, io
assumption of the State debts, which deserves particular notice : it may
bo supposed that it would increase the difficulty of an equitable settlement
between them and the United States.
The principles of that settlement, whenever they shall be discussed, will
require all the moderation and wisdom of the Government. In the opinion
of the Secretary, that discussion, till further lights are obtained, would be
premature. All, therefore, which he would now think advisable on the
point in question, would be, that the amount of the debts assumed and provided for should be charged to the respective States, to abide an eventual
arrangement. This the United States, as assignees to the creditors, would
have an indisputable right to do. But as it might be a satisfaction to the
1 louse to have before them some plan for the liquidation of accounts between
the Union and its members, which, including the assumption of the State
debts, would consist with equity, the Secretary will submit, in this place,
such thoughts on the subject as have occurred to his own mind, or been
suggested to him, most compatible, in his judgment, with the end proposed.
Let each State be charged with all the money advanced to it out of the
I reasury of the United States, liquidated according to the specie value at
the tune ot each advance, with interest at six per cent.
Let it also be charged with the amount, in specie value, of all its securities which shall be assumed, with the interest upon them, to the time when
interest shall become payable by the United States.
Let it be credited for all moneys paid, and articles furnished to the United
States and tor all other expenditures during the war, either towards ueneral
o part.cular defence, whether authorized or unauthorized by the United
States; the whole liquidated to specie value, and bearing an interest of six
M
t h e sereral

a ^ s s t

^ I l l ' s i T h i i T t

rut

rb U P l dr

" , et 0y

° "' "

*

,
"

a o w 1,1 t h c l r e
«s»™s of
le I W u r y 0f lhc U n i t e d

'

the reState,

d
T r r t i cre td let o r s t h se
>
of this
r
the Union. E l d l l i s b e Z ^
> °me debtors, to
attended with
venience to t h e t l n i t f i
toT?!!
*^
pa
them from, the particular St^tra it n
> ' ' i a l a r ' c e s to, than to receive
1
the former by a
K
^
^
f
^
"
practicable to effect
the debts of debtor States^ to the credh nf p J> »transfer of the amount of
by which the fink apporionment^shaI h ^ T ^ j
^io
Thls
whilst
would destroy the balances d u e f r o m t h l J
^
>
Increase
to the latter: these to be prov ded for t th "
those due
S t
interest, but not,to be transferable T h V & v ^
f f ' a t a ^asonable
depend on a
T t




1?'90.]

SECRETARY OF THE TREASURY".

5

should bo too great, the arrangement may be impracticable, without unduly
increasing the debt of the United States. But it is not likely that this would
be the case. It is also to be remarked, that though this second process might
not, upon the principle of apportionment, bring the thing to the point aimed
at. yet it may approach so nearly to it as to avoid essentially the embarrassment of having considerable balances to collect from any of the States.
The whole of this arrangement to be under the superintendence of
commissioners, vested with equitable discretion and final authority. The
operation of the plan is exemplified in schedule A.
The general principle of it seems to be equitable, for it appears difficult
to conceive a good reason why the expenses for the particular defence of a
part, in a common war, should not be a common charge, as well as those
incurred professedly for the general defence. The defence of each part is
that of the whole ; and unless all the expenditures are brought into a common mass, the tendency must be to add to the calamities suffered, by being
the most exposed to the ravages of war, an increase of burdens. This plan
seems to be susceptible of no objection which does not belong to every other
that proceeds on the idea of a final adjustment of accounts. 0 The diffieulty
of settling a ratio is common to all. This must probably either be sought
for in the proportions of the requisitions during the war, or ip the decision
of commissioners appointed with plenary power. The rule prescribed in
the constitution with regard to representation and direct taxes, would evidently not be applicable to the situation of parties, during- the period in
question. The existing debt of the United States is excluded from the computation, as it ought to be, because it will be provided/or out of a general
fund. The only discussion of a preliminary kind which remains, relates
to the distinctions of the debt into principal and interest. It is well known
that the arrears of the latter bear a large proportion to the amount of the
former. The immediate payment of these arrears is evidently impracticable ;
and a question arises—what ought to be done with them?
There is good reason to conclude, that th^ impressions of many are more
favorable to the claim of the principal, thai? to that of the interest; at least so
far as to produce an opinion that an inferior provision might suffice for the
latter.
But, to the Secretary, this opinion does not appear to be well founded. His
investigations of the"subject have led him to a conclusion that the arrears
of interest have pretensions at least equal to the principal.
The liquidated debt, traced to its origin, falls under two principal discriminations : one relating to loans, the other to services performed aud
articles supplied. The part arising from loans was at first made payable at
fixed periods, which have long since elapsed, with an early option to lenders,
either to receive back their money at the expiration of those periods, or to
continue it at interest, till the whole amount of continental bills circulating
should not exceed the sum in circulation at the time of each loan. This contingency, in the sense of the contract, never happened; and the presumption
is, that the creditors preferred continuing their money indefinitely at interest, to receiving it in a depreciated and depreciating state.
The other parts of it were chiefly for objects which ought to have been
paid for at the time—that is, when the sendees were performed, or the supplies furnished; and were not accompanied with any contract for interest.
But by different acts of Government and administration, concurred in by
the creditors, these parts of the debt have been converted into a capital,

bearing an interest of six per cent, per annum, but without any definite


[1790.

REPORTS OF THE

10

criod of redemption. A portion of the loan office debt has been exchanged for new securities of that import; and the whole of it seems to
have acquired that character after the expiration of the periods prefixed for
repayment. If this view of the subject be a just one, the capital of the debt
of the United States may be considered in the light of an annuity at the rate
of six per cent, per annum, redeemable at the pleasure of the Government, by payment of the principal; for it seems to be a clear position, that
when a Government contracts a debt payable with interest, without any precise time being stipulated or understood for payment of the capital, that time
is a matter of pure discretion with the Government, which is at liberty to ,
consult its own convenience respecting it, taking care to pay the interest
with punctuality.
"Wherefore, as long as the United States should pay the interest of their debt
as it accrued, their creditors would have no right to demand the principal.
But with regard to the arrears of interest, the case is different. These are
now due, and those to whom they are due have a right to claim immediate
payment. To say that it would be impracticable to comply, would not vary
the nature of the right. Nor can this idea of impracticability be honorably carried further than to justify the proposition of a new contract, upon
the basis of a commutation of that right for an equivalent. This equivalent,
loo, ought to be tv real and fair one. And what other fair equivalent can be
imagined for the detention of money, but a reasonable interest ? Or what can
be the standard of that interest, but the market rate, or the rate which the
Government pays in ordinary cases?
From this view of the matter, which appears to be the accurate and true
one, it will follow, thut the arrears of interest are entitled to an equal provision with the principal of the debt.
The result of the foregoing discussions is this: That there ought to be
no discrimination between the original holders of the debt, and present possessors by purchase; that it is expedient there should be an assumption
of the State debts by the Union, and that the arrears of interest should be
provided for on an equal footing with the principal
The next inquiry in order, towards determining the nature of a proper
P r 0

^ V r e T ? t S l h e ^ a m " m 0 f t h e debt > a n d Represent rates of interest.
The debt of the Union is distinguishable into foreign and domestic.
I he foreign debt, as stated in schedule B, amounts to,
Bearing an interest of four, and partly a n interest of 8 1 0 ) 0 7 0 : 3 0 7 0 0
five per cent.
Arrears of interest to the last of December, 1789

-

1,640,071 62

Making together T h e domestic debt may be. snbdivided into liquidated
and unliquidated; principal and interest
The Principal o f t h e i i q i l l d a t e d
M
schedule C, amounts to
.
.
.
.
Bearing an interest of six per cent
8
S
te
^ the end nof r1790,3 amountt a to d i n
T o
r

Making together .



.

. schedule D, to
.

.

.

- > 7 ^ 0 1 177 71
* 3
"
13j030)168

20

m ^ S S H i

1?'90.]

SECRETARY OF THE TREASURY".

5

This includes all that has been paid in indents, (except what has come
into the Treasury of the United States,) which, in the opinion of the Secretary, can be considered in no other light than as interest due.
The unliquidated part of the domestic debt, which consists chiefly of
the continental bills of credit, is not ascertained, but may be estimated at
2,000,000 dollars.
These several sums constitute the whole of the debt of the United States,
amounting together to $54,124,464 56. T h a t of the individual States is not
equally well ascertained. T h e schedule E shows the extent to which it
has been ascertained, by returns pursuant to the order of the House of the
21st September last; but this not comprehending all the States, the residue
must be estimated from less authentic information. T h e Secretary, however, presumes that the total amount may be safely stated at 25 millions of
dollars, principal and interest. T h e present rate of interest of the State
debts is, in general, the same with that of the domestic debt of the Union.
On the supposition that the arrears of interest ought to be provided for
on the same terms with the principal, the annual amount of the interest,
which, at the existing rates, would be payable on the entire mass of the
public debt, would b e On the foreign debt, computing the interest on the principal as it stands,
and allowing four per cent, on the arrears of interest
$542,599 66
On the domestic debt, including that of the States
4,044,845 15
Making together

-

-

-

-

-

$4,587,444 81

T h e interesting problem now occurs : Is it in the power of the United
States, consistently with those prudential considerations which ought not
to be overlooked, to make a provision equal to the purpose of funding the
whole debt, at the rates of interest which it now bears, in addition to the sum
which will be necessary for the current service of the Government ?
The Secretary will not say that such a provision would exceed the abilities
of the country ; but he is clearly of opinion, that to make it would require
the extension of taxation to a degree, and to objects, which the true interest
of the public creditors forbids. It is therefore to be hoped, and even to be
expected, that they will cheerfully concur in such modifications of their
claims, on fair and equitable principles, as will facilitate to the Government
an arrangement substantial, durable, and satisfactory to the community.
The importance of the last characteristic will strike every discerning mind.
No plan, however flattering in appearance, to which it did not belong,
could be truly entitled to confidence.
It will not be forgotten, that exigencies may, ere long, arise, which would
call for resources greatly beyond what is now deemed sufficient for the current service; and that, should the faculties of the country be exhausted, or
even strained, to provide for the public debt, there could be less reliance on
the sacredness of the provision. But while the Secretary yields to the force
of these considerations, he does not lose sight of those fundamental principles
of good faith, which dictate that every practicable exertion ought to be
made, scrupulously to fulfil the engagements of the Government; that no
change in the rights of its creditors ought to be attempted, without their
voluntary consent: and that this consent ought to be voluntary in fact, as
well as in name. Consequently, that every proposal of a change ought to
he in the shape of an appeal to their reason and to their interest; not to



10

REPORTS OF THE

[1790.

their necessities. To this end, it is requisite that a fair equivalent should
I o ottered for what may be asked to be given up, and unquestionable security for the remainder. Without this, an alteration, consistently with the
credit and honor of the nation, would be impracticable.
It remains to see what can be proposed in conformity to these views.
It has been remarked, that the capital of the debt of the Union is to be
viewed in the light of an annuity at the rate of six per cent, per annum,
redeemable at the pleasure of the Government, by payment of the principal.
And it will not be required that the arrears of interest should be considered
in a more favorable light. The same character, in general, may be applied
to the debts of the individual States.
This view of the subject admits, that the United States would have it in
their power to avail themselves of any fall in the market rate of interest
for reducing that of the debt.
This property of the debt is favorable to the public ; unfavorable to the
creditor; and may facilitate an arrangement for the reduction of interest,
upon thc basis of a fair equivalent.
Probabilities are always a rational ground of contract. The Secretary
conceives that there is good reason to believe, if effectual measures are
taken to establish public crcdit, that the Government rate of interest in the
United States will, in a very short time, fall at least as low as five per cent.;
and that in a period not exceeding twenty years, it will sink still lower,
probably to four. There are two principal causes which will be likely to
produce this effect: one, the low rate of interest in Europe ; the other, the
increase of the moneyed capital of the nation, by the funding of the public
debt.
^ From three to four per cent, is deemed good interest in several parts of
Europe. Even less is deemed so, in some places; and it is on the decline ; the increasing plenty of money continually tending to lower it. It
is presumable that no country will be able to borrow of foreigners upoii
better terms than the United States, because none can, perhaps, afford so
good security. Our situation exposes us less than that of any oilier nation
to those casualties which are the chief causes of expense ; our incumbrances,
in proportion to our real means, are less, though these cannot immediately
be brought so readily into action ; and our progress in resources from the
early tfate of the country, and the immense tracts of unsettled territory,
must necessarily exceed that of any other. T h e advantages of this situationi hava already engaged the attention of the European money-lenders,
,he D u c h
i
' a n d a s t h e y become better understood,
cash o V n r Z
^ T , n f l u T e ' l ] e n c e : a s l a r § e a ^ p o r t i o n of the
cash of Europe as may be wanted, will be, in a certain senVe, in our market
A n d t b i S Wl11 u a t u r a
^ c L T o f l k f ' T f
% have the effect of a
t n
2 n d T h l L ^ 7 t t T F f )r l U0O s ol n ideetG d t 0 t h G l e v e l o i t h e P l a c e s which
U t
hi
Resent rate
'
" g >™ch nearer to" it than our

moneyed capital o f , he n a t i o
seventy millions of dollars. But
interest acquires c o n J w
-ion. I, ,s we,, known . h a



n T w E &
S
™
°f,hef
pr0per f
dl
the n r o h S / , „ S
" " " ? ot .
t a t S S ^ r ® 1,1 t h e
^ n ^

1?'90.]

SECRETARY OF THE TREASURY".

5

cility, be borrowed, on good security, at five per cent., and not unfrequentiy even at less.
The most enlightened of the public creditors will be most sensible of the
justness of this view of the subject, and of the propriety of the use which
will be made of it. The Secretary, in pursuance of it, will assume, as a
probability sufficiently great to be a ground of calculation, both on the part
of the Government and of its creditors, that the interest of money in the
United States wiU, in five years, fall to five per cent., and in twenty, to four.
The probability, in the mind of the Secretary, is rather that the fall may
be more rapid and more considerable; but he prefers a mean, as most likely to engage the assent of the creditors, and more equitable in itself; because
it is predicated on probabilities, which may err on one side as well as on
the other.
Premising these things, the Secretary submits to the House the expediency
of proposing a loan, to the full amount of the debt, as well of the particular
States as of the Union, upon the following terms:
First. That, for every hundred dollars subscribed, payable in the debt,
(as well interest as principal,) the subscriber be entitled, at his option, either
to have two-thirds funded at an annuity or yearly interest of six per cent.,
redeemable at the pleasure of the Government, by payment of the principal,
and to receive the other third in lands in the western territory, at the rate
of twenty cents per acre. Or, to have the whole sum funded at an annuity or yearly interest of four per cent., irredeemable by any payment exceeding five dollars per annum, on account both of principal and interest,
and to receive, as a compensation for the reduction of interest, fifteen dollars
and eighty cents, payable in lands, as in the preceding case. Or, to have
sixty-six dollars and two-thirds of a dollar funded immediately, at an annuity
or yearly interest of six per cent., irredeemable by any payment exceeding
four dollars and two-thirds of a dollar per annum, on account both of principal and interest; and to have, at the end often years, twenty-six dollars and
eighty-eight cents, funded at the like interest and rate of redemption. Or,
to have an annuity for the remainder of life, upon the contingency of living
to a given age, not less distant than ten years, computing interest at four per
cent. Or, to have an annuity for the remainder of life, upon the contingency
of the survivership of the youngest of two persons, computing interest in this
case also at four per cent.
In addition to the foregoing loan, payable wholly in the debt, the Secretary would propose that one should be opened for teu millions of dollars, on
the following plan:
That, for every hundred dollars subscribed, payable one half in specie, and
the other half in debt, (as well principal as interest.) the subscriber be entitled to an annuity or yearly interest of five per cent., irredeemable by any
payment exceeding six dollars per annum, on account both of principal and
interest.
The principles and operation of these different plans may now require explanation.
The first is simply a proposition for paying one-third of the debt in land,
and funding the other two-thirds at the existing rate of interest, and upon
the same terms of redemption to which it is at present subject.
Here is no conjecture, no calculation of probabilities. The creditor is
offered the advantage of making his interest principal, and he is asked to faVOL. I . — 2




10

REPORTS OF THE

[1790.

cilitutc to the Government an effectual provision for his demands by accepting a third part of them in land, at a fair valuation.
The general price at which the western lands have been heretofore sold,
has been a dollar per acre in public securities; but, at the time the principal
purchases were made, these securities were worth in the market less than
three shillings in the pound. The nominal price, therefore, would not be
the proper standard, under present circumstances; nor would the precise
specie value then given be a just rule: because, as the payments were to be
made by instalments, and the securities were, at the times of the purchases,
extremely low, the probability of a moderate rise must be presumed to have
been taken into the jiccount.
Twenty cents, therefore, seems to bear an equitable proportion to the two
considerations of value at the time and likelihood of increase.
It will be understood that, upon this plan, the public retains the advantage of availing itself of any fall in the market rate of interest, for reducing
that upon the debt; which is perfectly just, as no present sacrifice, either in
the quantum of the principal, or in the rate of interest, is required from the
creditor.
The inducement to the measure is, the payment of one-third of the debt in
land. The second plan is grounded upon the supposition that interest, in
five years, will fall to five per cent.; in fifteen more, to four. As the capital
remains entire, but bearing an interest of four per cent, only, compensation
is to be made to the creditor for the interest of two per cent, per annum for
five years, and of one per cent, per annum for fifteen years, to commence at
the distance of five years. The present value of these t'wo sums or annuities,
computed according to the terms of the supposition, is. by strict calculation,
fifteen dollars andseven hundred and ninetv-two thousandth parts of a dollar:
a traction less than the sum proposed.
The inducement to the measure here, is the reduction of interest to a rate
more within the compass ol a convenient provision, and the rpayment of the
compensation in lands.
•
nnn!1,6 ^ T T 1 8 1° tlhf l u d m d u a L are > the accommodation afforded to the
0f
( UIV
^ i n s U d d t t H p of interestVfall, eitherE moreA L E N T ; t h e chance aeven of
R P , ? E
1
gain, should the rate f F
speedily, or in
neater

aem mere would be, in each case, an absolute profit to the creditor

As his

a
'!' e H k e S n l , p 0 S i i 0 n
successive fall in
creditor. One hundred ffw h supposition offers an equivalent to the
?
years, or five p e r c e n t f o r fift '
" " " e s t of six per cent, for five
s a, d
»?
(t&
tffiSto^syrI' :
P e r cent.,
is
ital of SI 22, B I O T A S ^ r ^ . n
, 1 '' t h e
U » cap>
four
converted into a capital
a
I
cent., which,
equal to $81, 6738166 p a S g taed r a t e o f " " " e s t of six per cent., is

six per cent, per a n n u m , " i l u n t a t h e T ^ • / ? ' 0 1 7 2 P arls > wI >ich, at
parts, the sum to be funded at the evnir^H
r°u 1 y e " s ' 1 0 ® 2 6 . 8 7 5 5
»u ai tne expiration of that period. It ought, how


1?'90.]

SECRETARY OF THE TREASURY".

5

ever, to be acknowledged that this calculation does not make allowance for
the principle of redemption, which the plan itself includes; upon which
principle, the equivalent in a capital of six per cent, would be, by strict calculation, $87, 50766 parts.
But there are two considerations which induce the Secretary to thinkthat the one proposed would operate more equitably than this: one is, that
it may not be very early in the power of the United States to avail themselves of the right of redemption reserved in the plan; the other is, that with
regard to the part to be funded at the end of ten years, the principle of redemption is suspended during that time, and the full interest of six percent,
goes on improving at the same rate; which, for the last five years, will ex- ,
ceed the market rate of interest, according to the supposition.
The equivalent is regulated in this plan,by the circumstance of fixing the
rate of interest higher than it is supposed it will continue to be in the
market, permitting only a gradual discharge of the debt, in an established
proportion, and consequently preventing advantage being taken of any decrease of interest below the stipulated rate.
Thus the true value of eighty-one dollars and sixty-seven cents, the capital proposed, considered as a perpetuity, and bearing six per cent, interest,
when the market rate of interest was five per cent., would be a small fraction
more than ninety-eight dollars; when it was four per cent., would be one
hundred and twenty-two dollars and fifty-one cents. But the proposed capital being subject to gradual redemption, it is evident that its value, in each
case, would be somewhat less. Yet from this may be perceived the manner
in which a less capital, at a fixed rate of interest, becomes an equivalent for
a greater capital, at a rate liable to variation and diminution.
It is presumable that those creditors who do not entertain a favorable
opinion of property in western lands will give a preference to this last mode
of modelling the debt. The Secretary is sincere in affirming, that, in his
opinion, it will be likely to prove, to the full, as beneficial to the creditors,
as a provision for his debt upon its present terms.
It is not intended, in either case, to oblige the Government to redeem, in
the proportion specified, but to secure to it the right of doing so, to avoid
the inconvenience of a perpetuity.
The fourth and fifth plans abandon the supposition which is the basis of
the two preceding ones, and offer only four per cent, throughout.
The reason of this is, that the payment being deferred, there will be an
accumulation of compound interest, in the intermediate period, against the
public, which, without a very provident administration, would turn to its
detriment. And the suspension of the burden would be too apt to beget a
relaxation of efforts in the mean time. T h e measure, therefore, its object
being temporary accommodation, could only be advisable upon a moderate
rate of interest".
With regard to individuals, the inducement will be sufficient at four per
cent. There is no disposition of money, in private loans, making allowance
for the usual delays and casualties, which would be equally beneficial as a
future provision.
A hundred dollars advanced upon the life of a person of eleven years old,
would produce an annuity* of—




* See Schedule F.

10

REPORTS OF THE

[1790.
Dolls.

Parts.

If commencing at twenty-one. of
JO 346
If commencing at thirty one, of
0790c
If commencing at forty-one, of
^
If commencing at fifty-one, of , 7b ^ ?
The same sum advanced upon the chance of the survivership of the
youngest of two lives, one of the persons being twenty-five, the other thirty
years old, would produce, if the youngest of the two should survive, an
annuity* for the remainder of life, of twenty-three dollars five hundred and
fifty-six parts.
From these instances may readily be discerned the advantages which
these deferred annuities afford, for securing a comfortable provision for the
evening of life, or for wives who survive their husbands.
The°sixth plan also relinquishes the supposition which is the foundation
of the second and third, and offers a higher rate of interest, upon similar
terms of redemption, for the consideration of the payment of one-half of
the loan in specie. This is a plan highly advantageous to the creditors who
may be able to make that payment, while the specie itself could be applied
in purchases of the debt, upon term* which would fully indemnify the public for the increased, interest.
It is not improbable that foreign holders of the domestic debt may embrace this as a desirable arrangement.
As an auxiliary expedient, and by way of experiment, the Secretary
would propose a loan upon the principles of a tontine,t—
To consist of six classes, composed respectively of peisons of the following ages:
First class, of those of 20 years and under.
Second class, of those above 20, and not exceeding 30.
Third class, of those above 30, and not exceeding 40.
Fourth class, of those above 40, and not exceeding 50.
Fifth class, of those above 50, and not exceeding GO.
Sixth class, of those above 60.
Each share to be two hundred dollars; the number of shares, in each class,
to be indefinite. Persons to be at liberty to subscribe on their own lives or
on those of others nominated by them.
The annuity upon a share in the first class, to be - $8 40
Upon a share in the second
- 8 65
Upon a share in the third
- 9 00
Upon a share in the fourth
- 9 65
Upon a share in the
fifth
.
- 10 70
Upon a share in the sixth
- 12 80
The annuities of those who die, to be equally divided amono- the survives, until four-fifths shall be dead, when the principle of survivership shall
cease, and each annuitant thenceforth enjoy his dividend as a several annuity
during the life upon which it shall depend.
These annuities are calculated on the best life in each class and at a
rate of interest of four per cent., with some deductions in favor of the pubC
;L ' 1 ° f a d v a n t a f s w h l c h these circumstances present, the cessation of
the right of survivorship on the death of four-fifths of the annuitants, will
5
be no inconsiderable addition.




* S e e Table, Schedule G.
t See Table, Schedule H .

1?'90.]

SECRETARY OF THE TREASURY".

5

The inducements to individuals are, a competent interest for their money
from the outset, secured for life, and the prospect of continual increase, and
even of large profit to those whose fortune it is to survive their associates.
It will have appeared that, in all the proposed loans, the Secretary has
contemplated the putting the interest upon the same footing with the principal. That on the debt of the United States, he would have computed to the
last of the present year; that on the debt of the particular States, to the last
of the year 1791: the reason for which distinction will be seen hereafter.
In order to keep up a due circulation of money, it will be expedient that
the interest of the debt should be paid quarter-yearly. This regulation will
at the same time conduce to the advantage of the public creditors, giving
them, in fact, by the anticipation of payment, a higher rate of interest;
which mav, with propriety, be taken into the estimate of the compensation
to be made to them. Six per cent, per annum, paid in this mode, will truly
be worth six dollars, and one hundred and thirty-five thousandth parts of a
dollar, computing the market interest at the same rate.
The Secretary thinks it advisable to hold out various propositions, all of
them compatible with the public interest, because it is, in his opinion, of
the greatest consequence that the debt should, with the consent of the creditors, be remoulded into such a shape as will bring the expenditure of the
nation to a level with its income. Till this shall be accomplished, the
finances of the United States will never wear a proper countenance. Arrears of interest, continually accruing, will be as continual a monument,
either of inability or of ill faith, and will not cease to have an evil influence
on public credit. In nothing are appearances of greater moment than in
whatever regards credit. Opinion is the soul of it; and this is affected by appearances. as well as realities! By offering an option to the creditors between
a number ofplans, the change meditated wi 1 be more likely to be accomplish
ed. Different tempers will be governed by different views of the subject.
But while the Secretary would endeavor to effect a change in the form of
the debt by new loans, in order to render it more susceptible of an adequate
provision, he would not think it proper to aim at. procuring the concurrence
of the creditors by operating upon their necessities.
Hence, whatever surplus^of revenue might remain, after satisfying the interest of the new loans and the demand for the current service, ought to be
divided among these creditors, if any, who may not think fit to subscribe
to them. But°for this purpose, under the circumstance of depending propositions, a temporary appropriation will be most advisable ; and the sum
must be limited to four per cent., as the revenues will only be calculated to
produce in that proportion to the entire debt.
The Secretary confides, for the success of the propositions to be made, on
the goodness of the reasons upon which they rest; on the fairness of the
equi valent to be offered in each case; on the discernment of the creditors of
their true interest; and on their disposition to facilitate the arrangements ot
the Government, and to render them satisfactory to the community.
The remaining part of the task to be performed is, to take a view of the
means of providing for the debt, according to the modification of it which is
proposed.
On this point the Secretary premises, that, in his opinion, the funds to
be established ought, for the present, to be confined to the existing debt of
the United States"; as well because a progressive augmentation of the revenue will be most convenient, as because the consent of the State creditors is
necessary to the assumption contemplated; and though the obtaming of that




10

[1790.

REPORTS OF THE

consent may lx>. inferred with great assurance, from their obvious interest to
give it, yet, till it shall be obtained, an actual provision for the debt would
be premature. Taxes could not, with propriety, be laid for an object which
depended on such a contingency.
\11 that ought now to be done respecting it, is to put the matter in an effectual train tor a future provision. For which purpose the Secretary will,
m the course of this report, submit such propositions as appear to him advisable.
The Secretary now proceeds to a consideration of the necessary funds.
It has been stated that the debt of the United States consists of the foreign
debt, amounting, with arrears of interest, to
- $11,710,378 62
And the domestic debt, amounting, with like arrears,
computed to the end of the year 1790, to
- 42,414,085 94
Making together

-

- $54,124,464 56

The interest on the domestic debt is computed to the end of this year, because the details of carrying any plan into execution will exhaust the year.
The annual interest of the foreign debt has been stated at
$542,599 66
And the interest on the domestic debt, at four per cent.,
would amount to
1,696.563 43
Making together

-

-

$2,239,163 09

Thus, to pay the interest of the foreign debt, and to pay four per cent, on
the whole of the domestic debt, principal and interest, forming a new capital,
will require a yearly income of $2,239,163 09, the sum which, in the opinion of the Secretary, ought now to be provided, in addition to what the
current service will require.
For, though the rate of interest proposed by the third plan exceeds four
per cent, on the whole debt, and the annuities on the tontine will also exceed four per cent, on the sums which may be subscribed; yet, as the actual
provision for a part is in the former case suspended, as measures for reducing the debt, by purchases, may be advantageously pursued, and as the
payment ol the deferred annuities will of course be postponed, four per cent
oil the whole will be a sufficient provision.
With regard to the instalments of the foreign debt: these, in the opinion of
the Secretary, ought to be paid by new loans abroad. Could funds be conveniently spared from other exigencies, for paying them, the United States
couldI ill bear the dram of cash at the present juncture, which the measure
would be likely to occasion.
But to the sum which has been stated for payment of the interest must be
added a provision for the current service. This the Secretary estimates at
six hundred thousand dollars,* making, with theamount o f t i ^ S ^ w o
millions eight hundred and thirty-nine thousand one hundred and sixty !l ire
y
dollars and nine cents.
This sum may, in the opinion of the Secretary, be obtained from the r e sent duties on imports and tonnage, with the additions which, S o o t any
possible disadvantage either to trade or agriculture, may be made on w i n ^
.pints, (including those distilled within the United State,,) t e a f a n d ^ o f f S




• See Schedule I.

1?'90.]

SECRETARY OF THE TREASURY".

5

The Secretary conceives that it will be sound policy to carry the duties
upon articles of this kind as high as will be consistent with the practicability
of a safe collection. This will lessen the necessity both of having recourse
to direct taxation, and of accumulating duties where they would be more
inconvenient to trade, and upon objects which are more to be regarded as
necessaries of life.
That the articles which have been enumerated will, belter than most
others, bear high duties, can hardly be a question. They are all of them,
in reality, luxuries, (the greatest part of them foreign luxuries;) some of
them, in the excess in which they are used, pernicious luxuries. And there
is, perhaps, none of them which is not consumed in so great abundance as
may justly denominate it a source of national extravagance and impoverishment. The consumption of ardent spirits, particularly, no doubt very
much on account of their cheapness, is carried to an extreme which is truly
to be regretted,7 as well in regard to the health and the morals, as to the
O
economy of the community.
^
Should the increase of duties tend to a decrease of the consumption of
those articles, the effect would be, in every respect, desirable. T h e saving
which it would occasion would leave individuals more at their ease, and
promote a more favorable balance of trade. As for as this decrease might
he applicable to distilled spirits, it would encourage the substitution of cider
and malt liquors, benefit agriculture, and open a new and productive source
of revenue.
It is not, however, probable, that this decrease would be in a degree which
would frustrate the expected benefit to the revenue from raising the duties.
Experience has shown that luxuries of every kind lay the strongest hold
on the attachments of mankind, which, especially when confirmed by habit,
are not easily alienated from them.
The same fact affords a security to the merchant that he is not likely to
be prejudiced by considerable duties on such articles. They will usually
command a proportional price. The chief things in this view to be attended
to are, that the terms of payment be so regulated as not to require inconvenient advances, and that the mode of collection be secure.
To other reasons which plead for carrying the duties upon the articles
which have been mentioned to as great an extent as they will well bear,
may be added these: that they are of a nature, from their extensive consumption, to be very productive, and are amongst the most difficult objects
of illicit introduction.
.
Invited by so many motives to make the best use of the resource which
these articles afford, the essential inquiry is, in what mode can the duties
upon them be most effectually collected ?
With regard to such of them as will be brought from abroad, a duty on
importation recommends itself "try two leading considerations ; one is, that,
meeting the object at its first entrance into the country, the collection is
drawn to a point, and so far simplified ; the other is. that it avoids the possibility of interference between the regulations of the United States and
those of the particular States.
But a duty, the precautions for the collection of which should terminate
with the landing of the goods, as is essentially the case in the existing system, could not. with safety, be carried to the extent which is contemplated.
In that system, the evasion of the duties depends, as it were, on a single
risk. T o land the jroods in defiance of the vigilance of the officers of the
customs, is almost the sole difficulty. No future pursuit is materially to be



10

REPORTS OF THE

[1790.

apprehended. And where the inducement is equivalent to the risk, there
will be found too many who are willing to run it. Consequently, there will
be extensive frauds on the revenue, against which the utmost rigor of penal
laws has proved, as often as it has been tried, an ineffectual guard.
The only expedient which has been discovered for conciliating high duties
with a safe collection, is the establishment of a second, or interior scrutiny.
Hy pursuing the article from its importation into the hands of the dealers
in it, the risk of detection is so greatly enhanced, that few, in comparison,
will venture to incur it. Indeed, every dealer, who is not himself the
fraudulent importer, then becomes, in some sort, a sentinel upon him.
The introduction of a system founded on this principle, in some shape or
other, is, in the opinion of the Secretary, essential to the efficacy of every
attempt to render the revenues of the United States equal to their exigencies,
their safety, their prosperity, their honor.
Nor is it less essential to the interest of the honest and fair trader. It
might even be added, that every individual citizen, besides his share in the
general weal, has a particular interest in it. The practice of smugglingnever
fails to have one of two effects, and sometimes unites them both. Either the
smuggler undersells the fair trader, as, by saving the duty, he can afford to
do, and makes it a charge upon him—or he sells at the increased price occasioned by the duty, and defrauds every man who buys of him of his share
of what the public ought to receive: for it is evident that the loss falls ultimately upon the citizens, who must be charged with other taxes to make
good the deficiency, and supply the wants of the State.
The Secretary will not presume that the plan which he shall submit to the
consideration ot the House is the best that could be devised ; but it is the
one which has appeared to him freest from objections of any that has occurred, of equal efficacy. He acknowledges, too, that it is susceptible of improvement, by other precautions in favor of the revenue, which he did not
think it expedient to add. The chief outlines of the plan are not original:
but it is no ill recommendation of it that it has been tried with success.
The Secretary accordingly proposes—
That the duties heretofore laid upon wines, distilled spirits, teas, and
coffee, should, after the last day of May next, cease: and'that,' instead of
them, the following duties be laid :
Upon every gallon of Madeira wine, of the quality of London particular,
thirty-five cents.
Upon every gallon of other Madeira wine, thirty cents.
Upon every gallon of Sherry, twenty-five cents!
I pon every gallon of other wine, twenty cents.
Upon every gallon of distilled spirits, more than ten per cent, below proof,
according to Dicas's hydrometer, twenty cents
Upon every gallon of those spirits, under five, and not more than ten per
cent below proof, according to the same hydrometer, twenty-one cents
Lpon every gallon of those spirits of proof, and not more than five" ner
cent, below proof; according to the same hydrometer, twenty-two cents
Upon every gallon of those spirits above proof, but not exceeding twenty
per cent., according to the same hydrometer, twenty-five cent.
Lpon every gallon of those spirits more than twenty, and not more than
forty per cent, above proof, according to the same h J r o m e ^ t h 7 Z c ^ l
Upon every gallon of those spirits more than forty per cent above P
nroof
according to the same hydrometer, forty cents
'
Lpon every pound of Hyson tea, forty cents.



1?'90.]

SECRETARY OF THE TREASURY".

5

Upon every pound of other green tea, twenty-four cents.
Upon every pound of Souchong and other black teas, except Bohea, twenty cents.
Upon every pound of Bohea tea, twelve cents.
Upon every pound of coffee, five cents.
That upon spirits distilled within the United States, from molasses, sugar,
or other foreign materials, there be paid—
Upon every gallon of those spirits more than ten per cent, below proof,
according to Dicas's hydrometer, eleven cents.
Upon every gallon of those spirits under five, and not more than ten per
cent, below proof, according to the same hydrometer, twelve cents.
Upon every gallon of those spirits of proof, and not more than five per
cent, below proof, according to "the same hydrometer, thirteen cents.
Upon every gallon of those spirits above proof, but not exceeding twenty
per cent., according to the same hvdrometer, fifteen cents.
Upon every gallon of those spirits more than twenty, and not more than
forty per cent, above proof, according to the same hydrometer, twenty cents.
Upon every gallon of those spirits more than forty per ccnt. above proof,
according to the same hydrometer, thirty cents.
That upon spirits distilled within the United States, in any city, town,
or village, from materials of the growth or production of the United States,
there be paid—
"
Upon every gallon of those spirits more than ten per cent, below proof,
according to Dicas's hvdrometer, nine cents.
Upon every gallon of'those spirits under five, and not more than ten per
cent, below proof, according to the same hydrometer, ten cents.
Upon every gallon of those spirits of proof, and not more than five per
cent, below proof, according to the same hydrometer, eleven cents.
Upon every gallon of those spirits above proof, but not exceeding twenty
per cent., according to the same hydrometer, thirteen cents.
Upon every gallon of those spirits more than twenty, and not more than
forty per cent, above proof, according to the same hydrometer, seventeen
cents.
Upon every gallon of those spirits more than forty per cent, above proof,
according to the same hydrometer, twenty-five cents.
That upon all stills employed in distilling spirits from materials of the
growth or production of the United States, in any other place than a city,
town, or village, there be paid the yearly sum of sixty cents, for every gallon,
English wine measure, of the capacity of each still, including its head.
The Secretary does not distribute the duties on teas into different classes,
as has been done in the impost act of the last session; because this distribution depends on considerations of commercial policy, not of revenue. It is
sufficient, therefore, for him, to remark, that the rates above specified are
proposed with reference to the lowest class.
The Secretary, conceiving that he could not convey an accurate idea of
the plan contemplated by him, for the collection of these duties, in any mode
so effectual as by the draught of a bill for the purpose, begs leave respectfully
to refer the House to that which will be found annexed to this report, relatively to the article of distilled spirits; and which, for the better explanation of some of its parts, is accompanied with marginal remarks.
It would be the intention of the Secretary, that the duty on wines should
be collected upon precisely the same plan with that on imported spirits.



10

REPORTS OF THE

[1790.

But with regard to teas and coffee, the Secretary is inclined to think
that it will be expedient, till experience shall evince the propriety of going
further, to exclude the ordinary right of the officers to visit and inspect the
places in which those articles may be kept. The other precautions, without
this, will atlord, though not complete, considerable security.
It will not escape the observation of the House, that the Secretary, in the
plan submitted, has taken the most scrupulous care that those citizens upon
whom it is immediately to operate, be secured from every species of injury by the misconduct of the officers to be employed. There are not only
strong guards against their being guilty of abuses of authority; they are not
only punishable, criminally, for any they may commit, and made answerable
1 1 damages, to individuals,"for whatever prejudices these may sustain by their
1
acts or neglects; but even where seizures are made with probable cause, if
there be an acquittal of the articles seized, a compensation to the proprietors for the injury their property may suffer, and even for its detention, is to
be made out of the public treasury.
So solicitous, indeed, has the Secretary been to obviate every appearance
of hardship, that he has even included a compensation to the dealers for
their agency in aid of the revenue.
With all these precautions to manifest a spirit of moderation and justice on
the part of the Government; and when it is considered that the object of
the proposed system is the firm csablishment of public credit; that on this
depend the character, security, and prosperity of the nation ; that advantages
in every light important may be expected to result from it; that the immediate operation of it will be upon an enlightened class of citizens, zealously
devoted to good government, and to a liberal and enlarged policy; and
that it is peculiarly the interest of the virtuous part of them to co-operate in
whatever will restrain the spirit of illicit traffic; there will be perceived to exist
the justest ground of confidence that the plan, if eligible in itself, will experience the cheerful and prompt acquiescence of the "community.
The Secretary computes the nett product of the duties proposed in this
report, at about one million seven hundred and three thousand four hundred
dollars, according to the estimate in schedule K, which, if near the truth,
will, together, with the probable product of the duties on imports and tonnage, complete the sum required.
But it will readily occur, that, in so unexplored a field, there must be a
considerable degree of uncertainty in the data; and that, on this account, it
will be prudent to have an auxiliary resource for the first year in which the
interest will become payable, that there may be no possibility of disappointment to the public creditors, ere there may be an opportunity of providing
for any deficiency which the experiment may discover. This will accordingly be attended to.
The proper appropriation of the funds provided, and to be provided,
seems next to offer itself to consideration.
On this head the Secretary would propose, that the duties on distilled
spirits should be applied, in the first instance, to the payment of the interest
ot the foreign debt.
That, reserving out of the residue of those duties an annual sum of six
hundred thousand dollars for the current service of the United States the
surplus together with the product of the other duties, be applied to the payment ot the interest on the new loan, by an appropriation co extensive with
the duration of the debt.



1?'90.]

SECRETARY OF THE TREASURY".

5

And that, if any part of the debt should remain unsubscribed, the excess
of the revenue be divided among the creditors of the unsubscribed part, by a
temporary disposition ; with a limitation, however, to four per cent.
It will hardly have been unnoticed that the Secretary has been thus far
silent on the subject of the Post Office. T h e reason is, that he has had in
view the application of the revenue arising from that source to the purpose
of a sinking fund. T h e Postmaster General gives it as his opinion, that the
immediate product of it, upon a proper arrangement, would probably be not.
less than one hundred thousand dollars. And from its nature, with good
management, it must be a growing, and will be likely to become a considerable fund. The Postmaster General is now engaged in preparing a plan
which will be the foundation of a proposition for a new arrangement of the
establishment. This, and some other points relative to the subject referred
to the Secretary, he begs leave to reserve for a future report.
Persuaded, as the Secretary is, that the proper funding of the present debt
will render it a national blessing, yet he is so far from acceding to the position in the latitude in which it is sometimes laid down, that " public debts
are public benefits"—a position inviting to prodigality, and liable to dangerous abuse—that he ardently wishes to see it incorporated, as a fundamental
maxim in the system of public credit of the United States, that the creation
of debt should always be accompanied with the means of extinguishment,
rhis he regards as the true secret for rendering public credit immortal. And
he presumes that it is difficult to conceive a situation in which there may
not be an adherence to the maxim. At least, he feels an unfeigned solicitude that this may be attempted by the United States, and that they may
commence their measures for the establishment of credit with the observance of it.
Under this impression, the Secretary proposes that the nett product of
the Post Office, to a sum not exceeding one million of dollars, be vested in
commissioners, to consist of the Vice President of the United States, or
President of the Senate, the Speaker of the House of Representatives, the
J-jhief Justice, Secretary of the Treasury, and Attorney General of the
United States, for the time being, in trust; to be applied by them, or any
three of them, to the discharge of the existing public debt, either by purchases of stock in the market, or by payments on account of the principal,
as shall appear to them most advisable, in conformity to public engagements ; to continue so vested, until the whole of the debt shall be discharged.
As an additional expedient for effecting a reduction of the debt, and for
other purposes which will be mentioned,^ the Secretary would further proP^se that the same commissioners be authorized, with the approbation of
Resident of the United States, to borrow, on their credit, a sum not exceding twelve millions of dollars, to be applied—
5 irst. To the payments of the interest and instalments of the foreign
^ht, to the end of the present year, which will require $3,491,923 and 46
Secondly. T o the payment of any deficiency which may happen in the
i'toduct of the funds provided for paying the interest of the domestic debt.
1 hirdly. T o the effecting a change in "the form of such part of the foreign
ei)t a s
bears an interest of five per cent. It is conceived that, for this purl° se ' a »ew loan, at a lower interest, may be combined with other exper t s . The remainder of this part of the debt, after paying the instalments
which will accrue in the course of 1790, will be $3,88S,888 and 81 cents.



10

REPORTS OF THE

[1790.

Fourthly To the purchase of the public debt at the price it shall bear in
the market, while it continues below its true value. This measure which
would be, in the opinion of the Secretary, highly dishonorable to the Government, if it were to precede a provision for funding the debt, would become altogether unexceptionable after that had been made. Its effect would
be in favor of the public creditors, as it would tend to raise the value ot
stock; and all the difference between its true value and the actual price
would be so much clear gain to the public. The payment ot foreign^ntere t on the capital to be borrowed for this purpose, should that be a necessary consequence, would not, in the judgment of the Secretary, be a good
objection to the measure. The saving by the operation would be, itself, a
sufficient indemnity; and the employment of that capital, in a country
situated like this, would much more than compensate for it. Besides, if the
Government does not undertake this operation, the same inconvenience
which the objection in question supposes, would happen in another way,
with a circumstance of aggravation. As long at least as the debt shall continue
below its proper value, it will be an object of speculation to foreigners, who
will not only receive the interest upon what they purchase, and remit it
abroad, as in the case of the loan, but will reap the additional profit of the
difference in value. By the Government's entering into competition with
them, it will not only reap a part of the profit itself, but will contract the
extent, and lessen the extra profit of foreign purchasers. That competition
will accelerate the rise of stockj and whatever greater rate this obliges
foreigners to pay for what they purchase, is so much clear saving to the nation. In the opinion of the Secretary, and contrary to an idea which is not
without patrons, it ought to be the policy of the Government to raise the
value of stock to its true standard, as fast as possible. When it arrives to
that point, foreign speculations (which, till then, must be deemed pernicious
further than as they serve to bring it to that point,) will become beneficial.
Their money, laid out in this country upon our agriculture, commerce, and
manufactures, will produce much more to us than the income they will receive from it.
The Secretary contemplates the application of this money through the
medium of a national bank; for which, with the permission of the House,
he will submit a plan in the course of the session.
The Secretary now proceeds, in the last place, to offer to the consideration of the House his ideas of the steps which ought, at the present session,
to be taken towards the assumption of the State debts.
These are, briefly, that concurrent resolutions of the two Houses, with the
approbation of the President, be entered into, declaring, in substance—
That the United States do assume, and will, at the first session in the year
1791, provide, on the same terms with the present debt of the United
States, for all such part of the debts of the respective States, or any of
them, as shall, prior to the first day of January, in the said year 1791,
subscribed towards a loan to the United States, upon the'principles of either
of the plans which shall have been adopted by them, for obtaining a reloan of their present debt.
Provided, that the provision to be made as aforesaid, shall be suspended,
with respect to the debt of any State which may have exchanged the securities of the United States for others issued by itself, until the whole of the
said securities shall eitherbe re-exchanged or surrendered to the United States



1?'90.]

SECRETARY OF THE TREASURY".

5

And provided, also, that the interest upon the debt assumed be computed
to the end of the year 1791; and that the interest to be paid by the United
States commence on the first day of January, 1792.
That the a m o u n t of the debt of each State, so assumed and provided for,
be charged to such State in account with the United States, upon the same
principles upon which it shall be lent to the United States.
That subscriptions be opened for receiving loans of the said debts, at the
same times and places, and under the like regulations, as shall have been
prescribed in relation to the debt of the United States.
The Secretary has now completed the objects which he proposed ta himself to comprise in the present report. He has, for the most part, omitted
details, as well to avoid fatiguing the attention of the House, as because
more time would have been desirable even to digest the general principles
of the plan. If these should be found right, the particular modifications
will readily suggest themselves in the progress of the work.
The Secretary, in the views which have directed his pursuit of the subject,
has been influenced, in the first place, by the consideration that his duty,
from the very terms of the resolution of the House, obliged him to propose
what appeared to him an adequate provision for the support of the public
credit, adapted, at the same time, to the real circumstances of the United
States; and, in the next, by the reflection that measures which will not bear
the test of future unbiassed examination, can neither be productive of individual reputation, nor (which is of much greater consequence) public honor
°F Deeply impressed, as the Secretary is, with a full and deliberate conviction that the establishment of public credit, upon the basis of a satisfactory
provision for the public debt, is, under the present circumstances of this
country, the true desideratum towards relief from individual and nat onal
embarrassments; that, without it, these embarrassments will be likely to
press still more severely upon the community ; he cannot but indulge an
anxious wish that an effectual plan for that purpose may during the present
session, be the result of the united wisdom of the Legislature
He is fully convinced that it is of the greatest importance that no fort er
delay should attend the making of the requisite provision ; not only because
it will give abetter impression of the good faith of the country and will
bring earlier relief to the creditors, (both which circumstances aie of great
moment to public credit,) but because the advantages to the community,
from raising stock, as speedily as possible, to its natural value, will be incomparably greater than any'that can result from its continuance below that
standard. No profit which could be derived from purchases in the market,
on account of the Government, to any practicable extent, would be an
equivalent for the loss which would be sustained by the purchases of
foreigners at a l o w v a l u e - n o t to repeat that governmental P ^ h a s e , to
he honorable, ought to be preceded by a provision. Delay, by disseminating
doubt, would sink the price of stock; and as the temptation to foreign speculations. from the lowness of the price, would be too great to be neglected,
millions would probably be lost to the United States.
A l l w h i c h is h u m b l y — e d .

^

JJ^JJJLTON,

Secretary of the
TREASURY DEPARTMENT,




January

9,

1790.

Treasury.

SCHEDULE A.
SUPPOSITITIOUS

STATEMENT
Balances due to the
States, respectively.

States.

N e w Hampshire
Massachusetts
Rhode Island
Connecticut
N e w York
N e w Jersey
Pennsylvania
Delaware
.
Maryland
.
Virginia
N o r t h Carolina
South Carolina
Georgia
.

Ratio.

-

.
.

.
.

3
8
1
5
6
4
8
1
6
10

5
.

.

5
3
65

$57,500
180,000
20,000
110,000
135,000
72,500
170,000
30,000
110,000
187,500
90,000
87,500
50,000

00
00
00
00
00
00
00
00
00
00
00
00
00

1 , 3 0 0 , 0 0 0 00

of accounts between the United Slates and individual
Proportion of each
State of the a g g i e gate of those balances, according
to the ratio.

Balances against
certain States.

00
00
00
00
00
00
00
00
00
00
00
00
00

$ 2 , 5 0 0 00

1 , 3 0 0 , 0 0 0 00

6 5 , 0 0 0 00

Balances in favor o f certain
Slates.

&G0,000
160,000
20,000
100,000
120,000
80,000
160,000
20,000
120,000
200,000
100,000
100.000
GO,000

Proportion of each Ultimate balances
in favor of cerSlate in the agtain Slates, &c.
gregate of the
balances against
certain Stales.

10.C00 00
10,COO CO

S3,COO
8,000
1,0C0
5,000
6,000
4,000
8,000
1,000
6,000
10,000
5,000
5,000
3,000

65,0C0 00

6 5 , 0 0 0 00

$ 2 0 , 0 0 0 CO
10,000 00
15,000 00
7 , 5 0 0 00
lO.OCO
12,500
10,000
12,500
10,000

States.

00
00
00
00
00

00
00
00
00
00
00
00
00
00
00
00
00
00

$500
28,000
1,000
15,000
21,000

00
00
00
00
00

18,000 00
11,000 00

9 4 , 5 0 0 00

EXPLANATION.
T h e first c o l u m n supposes a ratio according lo the present rule of representation.
T h e second column exhibits the balances w h i c h , on the principles of the statement suggested, are supposed lo be due to the several States.
T h e third c o l u m n s h o w s the apportionment o f the aggregate of those balances, according to the ratio g i v e n a m o n g the States.
T h e fourth column s h o w s the balances against s o m e States, in consequence of this apportionment.
T h e fifth c o l u m n s h o w s the balances in favor of s o m e States, in consequence of the s a m e apportionment.
T h i s completes the first process proposed.
T h e second process proposed is illustrated by the sixth and s e v e n t h columns.
T h FRASER
Digitized for e sixth column s h o w s the share of each State, a c c o r d i n g to the ratio g i v e n in the amount of the balances against the debtor States.
T h e s e v e n t h c o l u m n s h o w s the ultimate balances in favor of certain States, c rediting them for their proportions of the balances due from the debtor States.


to
©

1?'90.]

SECRETARY OF THE TREASURY".

5

S C H E D U L E B.
A GENERAL
STATEMENT
of the foreign loans ; showing, in abstract, the capital s?t?ns borrowed, and the arrearages of interest, to
the 31s* of December, 17S9.
CAPITAL

SUMS

BORROWED.

Of the roval French treasury, on interest
at 5 per cent.
In Holland, guarantied by the French court,
at 4 per cent. -

24,000,000
10,000,000

Litres
34,000,000 $6,296,290 00
174,011 00
Of the royal Spanish treasury, at 5 percent.
Lenders in Holland:
- 5,000.000
First loan, 5 per cent.
- 2,000.000
Second loan, 4 per cent.
- 1.000.000
Third loan, 5 per cent.
- 1,000.000
Fourth loan, 5 per cent.
Florins

9,000,000
Capital

Arrearages

3,600,000 00
$10,070,307 00

of interest to 31 st December, 17S9.
ON T H E

FRENCH

LOAN.

1~89, January 1.—Five years' interest on the
6,000.000 livres, at five per cent.
$277,777 77
September 3.—Six years' interest on the
18,000,000, at five per cent. - 999.999 96
November 5.—Four years' interest on
the 10,000,000, at four per cent.
- 296,296 00
ON T H E

SPANISH

,

LOAN,

Arrearages on the Spanish loan of $174,011, to
2lst March, 1782, at five per cent. - 5,093 27
March 21st, seven years' interest on ditto
- 60,904 62
y
Total

1,040,071 62
$11,710,378 62

NOTE.—There were certain parts of the capital of the Dutch guarantied
an of 10,000,000 florins, and of the French loan of 18,000,000 hvres.
which became due at the following periods, and remain unpaid, viz:
lo

1787 \ Se Pt- 3, first payment
J Nov. 5, first ditto
1788 \ ^ept. 3, second ditto
I Nov. 5, second ditto



of the 18,000,000, 1,500,000
of the 10,000,000, 1,000,000
of the 18,000,000 J h
of the 10,000,000 $

$277,777 77
185,185 19
462 g62

%

10

REPORTS OF THE

[1790.

$ Sept. 3, third payment of the 18,000,000 J t h e
" | Nov. 5, third * ditto of the 10,000,000

17g9

$462,962 96

same>

$1,388,988 88
TREASURY

DEPARTMENT,

Register's

Office, 31 st Dec., 1789.
JOSEPH

NOURSE,

Register.

T o the arrearage of interest to 31st December, 1789, above
stated, amounting to
-$1,640,071 62
Add one year's interest, from 1st January to 31st December, •
1789, on 186,427 dollars and 69 cents, being the amount
of principal sum due to foreign officers employed in the
service of the United States, which interest is annually
payable at the house of Monsieur Grand, banker, at Paris,
at six per cent. 11,1S5 66
Arrearages of interest to 31st December, 17S9

-

- $1,651,257 28

The above addition was adverted to after the conclusion of the report;
but as it makes no material difference, an alteration in consequence of it is
deemed unnecessary.
ALEXANDER

HAMILTON,

Secretary of the

Treasury.

SCHEDULE C.
ABSTRACT

of the liquidated and loan-office debt of the United States,
on the 3d March, 1789.
Dolls.

9Qths.

Registered debt
4 ^ 8 , 4 6 2 78
Credits given to sundries on the Treasury books, by virtue
of special acts of Congress, which are not yet put on the
funded debt
187,57S 65
Certificates issued by commissioner of army accounts, deducting those which have been cancelled and registered 7,967.109 73
Certificates issued by the commissioners of the five departments, deducting those which have been cancelled and
registered
903,574 59
Certificates issued by the late State commissioners, deducting those which have been cancelled and registered
- 3,291 156 37
Loan-office certificates issued in 1781, and "expressed as
'
specie value, deducting those which have been cancelled
and registered .
_
112.704 15
Loan-office certificates, old emissions, reduced to specie
value, agreeably to the scale made by Congress, by taking
the medium of the loans made in each month, viz: three
millions seven hundred and eighty-seven thousand nine
hundred dollars loaned to 1st September. 1777, equal
t0
3,787,900 00



1?'90.]

5

SECRETARY OF THE TREASURY".
Dolls.

$3,459,000. between 1st September, 1777,
" and 1st March, 1778
$59,830,212. between 1st March, 1778,
and the close of the loan offices
-

9Otks.

§2,538,572 00
5,146,330 00
11,472,802 00

Deduct specie amount cancelled and registered -

365,983 15
11,106,818 75

Foreign officers, amount to their credit, the interest whereof is payable at the house of Mons. Grand, banker, at
Paris, and included in the estimate of foreign iuterest -

186,427 69
28,343,833 21

From which deduct this sum received into the Treasury,
on account of lands and other property, and cancelled
Leaves the amount of the domestic debt -

960,915 41
$27,383,917 74

On the certificates issued between the 1st September. 1777. and 1st March,
1778, interest is payable on the nominal sum, (being $3,459,000,) although
the specie value of the principal is only $>2,53S,572.
REGISTER'S OFFICE,

March 3, 1789.

J O S E P H NOURSE,
TREASURY

„ •,
Register.

DEPARTMENT,

Register's Office, January 1, 1790.
The above estimate was formed to the expiration of the late Government.
Some variation hath since taken place in the several parts, without making
any material alteration in the aggregate amount of the domestic debt. 1 his
arises from a daily exchange, at the Treasury, of loan-office and final settlement certificates, for Treasury certificates given as evidences ot the registered debt, whereby the increase of the latter is carried on in proportion
to the cancelment of the former.
„ •,
J O S E P H NOURSE, Register.

S C H E D U L E D.
AN ESTIMATE
of all the interest which will accrue on the domestic
debt of the United States, from its formation to the 31*/ December, 1790 ;
of such partial payments as have been made on account thereof ; ana oj
the balance which will remain to be provided for, to pay up the interest
fully to that period.
The total amount of interest arising on the l o a n - o f f i c e debt, from the opening of the several offices in 1776 to 31st December, 1790 $9 ; 534,478 00
YOL I . — 3




10

REPORTS OF THE

[1790.

Thc total amount of interest arising on the army debt,
from the several periods of its drawing interest to dlst
December, 1790
- .
" .
: $5>I0°'009 0 0
The total amount of interest arising on certificates issued
by the thirteen State commissioners, estimated at
- ^,140,/yy uu
The total amount of interest arising on certificates issued
by the commissioners, for the commissary's, quartermasters, marine clothing, aud hospital departments, estimated at
'3'>338 00
The total amount of interest arising on the debt registered
at the Treasury, estimated at 366,64b 00
The total amount of interest on debts entered in the Treasury books, but for which certificates have not .been issued by the Register, so as to become a part of the registered debt, estimated at
83,936 00
Total

$17,974,296 00

From ibis total amount of interest the following deductions are to be made, viz:
So much paid on the loan-office debt in
old emissions, equal to
$372,368 30
In new emission, as specie
39,433 49
In bills of exchange, as specie 1,663,992 00
So much paid by the several States in indents, paid into the Treasury on account of their quotas on the existing requisitions of the late Congress
- 2.244,231 31
So much paid by the State of New Jersey
to their own citizens on the domestic
debt, not included in the schedule of
taxes 424,442 22
So much paid by the State of South Carolina, being two years' interest on
$222,465/5, the amount of certificates
issued to the line of that State, at six
per cent., is 26,695 73
Total amount of interest paid Deduct three years' interest, estimated in
the foregoing, on $960,915 42, being
so much of the capital of thc domestic
debt received in payment for lands, and
other public property Total amount of deductions

-

>

4,771,163 05

172,964 75
4,944,127 80

Leaves a balance of thirteen million and thirty thousand
one hundred and sixty-eight dollars and twenty cents,
which will accrue on the domestic debt, and for which
provision is to be made to pay the interest fully up to
.
.
.$13,030,168 20
the 31st December, 1790



5

SECRETARY OF THE TREASURY".

1?'90.]

It is to be observed, that, as the certificates which have been issued for
the principal of a debt of more than twenty-seven millions of dollars, are,
in themselves, exceedingly numerous, and that as those several certificates
bear an interest from different periods, it has not been practicable to form a
statement of arrearages, but by ascertaining, in the most accurate manner,
the different periods of time from which the several parts of the domestic debt
bear interest, and therefrom calculating the interest to December 31, 1790.
TREASURY

DEPARTMENT,

Register's

Office, Dec. 31, 1789.
J O S E P H NOURSE,

Register.

S C H E D U L E E.
ABSTRACT
of the public debt of the States under-mentioned,
agreeably
to statements transmitted in pursuance of the resolution of the House of
Representatives, of the 2\st of September, 1789.
MASSACHUSETTS.

Principal, with interest to 1st
£
s. d.
of November, 1789
- 1,548,040 7 9 lawful.
Due to sundries, for which no
certificates have yet been is.
.
20,000 0 0
sned
Total 1,568,040 7

^

^

9, at 65. p. dol 5,226,801 29

CONNECTICUT.

Principal bearing interest from
February 1, 1789 To which ought to be added for
balance of State bills emitted
in the year 1780, bearing an
interest at 5 per cent, to the
1st March, 1785. estimated at
Total

560,404 0

0

24,948 0

0

585,352 0

0, at 6s. p. dol. 1,951,173 33^

NEW YORK.

Principal and interest computed to 1st day of Jan., 1790 1,032,616 2
From which ought to be deducted, for amount of principal and interest of continental securities loaned to
the State, in pursuance of
their act of 18th of April,
1786, estimated at - 565,586 0
Leaves for State debt proper NEW JERSEY.

Principal unredeemed



467,030 2

0

0
0, at 85. p. dol 1,167,575 25
„ ,

-

, . _

0 0

/-on

ee,

295,755 4 ll,at7s.6d.p.doJ./88,6S0 6 5 |

[1790.

REPORTS OF THE
VIRGINIA.
£
d.
Principal of domestic debt
- 1,003.396 17 1
Principal of foreign debt, with
40,826 1 1
interest to 1st. of Jan., 1790

Dollars. Cts.
Total 1,104,222 18 2. at 6*. p. dol. 3,680.743 02$
SOUTH CAROLINA.

Principal of domestic debt
- 1,069,652 2 4
Indents of interest on ditto in
^\
circulation
71.325 7 2
Foreign debt, principal and interest, due to the 1st January, 1789 115,810 0 1
Total 1,256,787

9 7,at4s.§J.p.dol5.386,232 05
Total

$18,201,205 60$

It will I;J observed, that the period to which interest is calculated on the
debts above mentioned, is only specified with accuracy on the statements
which have been transmitted from Massachusetts, Connecticut, and New
York. From the best information which the Secretary .can obtain, he presumes that, in the statement made of the debt of New Jersey, interest has
I eon calculated to the 31st day of December, 17S8; that, on the debt of Virginia, interest has been calculated to the 31st day of December, 1788 : on
that of South Carolina, to the 1st day of April, 1790.
From the States of New Hampshire, Pennsylvania, Delaware, Maryland,
North Carolina, and Georgia, no accounts of their respective State debts
have been forwarded.
The Secretary is, however, of opinion, from the result of inquiries made by him, that the State debt of New Hampshire
may be estimated at about
$300,000
That the State debt proper of Pennsylvania (that is, exclusive of their assumption of the continental debt) at about
- 2,200,000
And that of Maryland at
.
.
800,000
From C.:c above statement and estimates, the amount of principal and interest (exclusive of Delaware, North Carolina, Georgia, and Rhode Island)
appears to be about twenty-one millions and a half; but as the debts of the
last four States ore not included in the above sum, and it is possible that a
greater arrearage of interest may be due on the State debts than is at present
ascertained, the aggregate of the principal and interest may be computed at
about twenty-five millions of dollars.
ALEXANDER HAMILTON,
Secretary of the Treasury.
COMMONWEALTH OF MASSACHUSETTS.
A statement of the debt of the Commonwealth of Massachusetts as it respects the notes issued by the several Treasurers, to the 1st of November. 1/89.
November 1,1789, exclusive of half-pay notes 


- £1,403,459 16 11

SECRETARY OF THE TREASURY.
Notes issued to widows and orphan children of the deceased ofiicers of the late continental army, for the
seven years' half pay, agreeable to resolves of Congress
Interest on the foregoing notes since
October 1, 1781
-"
£579,660 < 4
3
Of which has been paid
443,326 7 4

£8,246 I I 10

Interest remaining due November 1, 17S9

136,333 19

-

-

0

£1,548,040

7

9

1:0,000

0

0

"Remains due on the books of the committee for settling
with the late continental army, to the widows and
orphan children of deceased ofiicers of said army,
and to officers and soldiers for their services, about

N. B.—By an act of the Legislature, one-third part of the revenue of
excise is appropriated to pay the exigencies of Government, and the other
two-third parts for the payment of interest of the notes, v/hich pays about
one-quarter part of the interest; the other three quarters arc provided for.
TREASURY OFFICE,

Boston, October 31, 1789.
A L E X A N D E R

HODGDON,

Treasurer.

Compared with the original in the office of the Secretary o f the Treasury.
WILLIAM
DUER.

S T A T E OF CONNECTICUT.
A statement of the public debt of the. State of Connecticut, (is it stood
November 1, 1789.
Notes issued to the Connecticut line, payable June 1,1782,
1783,
1784,
1785,
1786,
1787,
1788,
17S9,
Notes dated February, 1781, issued per act of Assembly,
November, 17S0
"
"
Notes of various dates, issued per act of Assembly, May,
1781 Notes dated June 1, 1781, issued per act of Assembly, for
~
t remounting dragoons Notes of various dates, issued per act of Assembly, May,
1783 Notes issued per act of May, 1789, for old notes reloaned




£2,334 13
2,339 13
3,252 12
42,309 6
28,189 6
28,448 5
21,593 0
20,097 5
b

\
1
1}
6|
4}
7}
^
°¥

33,947 11
°
41,841
180,890

b
1

560,404 18

J

0
9|

10

[1790.

REPORTS OF THE

Notes issued per particular acts of Assembly, payable out
of the civil list funds bob 11 4
Certificates for interest, &c., issued on the State debt, up
to February 1, 1789, and remaining unpaid November
1,1789
19,140 3 9f
Balance of orders unpaid, drawn by Oliver Wolcott, Esq.,
payable out of the Is. tax, granted in January, 1783 692 8 10
Balance of State bills which were emitted in March, June,
and July, 1780, with the interest at 5 per cent., to 1st
March, 1785, estimated at
- 24,948 9 1
There are a number of pay table orders drawn oil former taxes; the
amount, supposed not great, cannot be ascertained.
There is also outstanding a sum of old emissions of paper, issued before
the war—the amount not known.
Account of loan-office and final settlement certificates in the Treasury of
the State of Connecticut.
Loan-office certificates Final settlement certificates

-

-

-

- £

442 19
2,151 17

7
1

£2,594 16

8

Amount of interest certificates that were issued upon the
evidence of the United States debt, received by the Treasurer of the State of Connecticut, for taxes and impost
duties, and delivered to William Imlay, esquire, continental loan officer, from January 9, 1786, to November
1. 1789
.
.
.
.
.
.
£33,996 15

$

Compared with the original in the office of the Secretary of the T r e a s u r y .

A statement of the funds provided for the payment of the principal
interest of the public debt of the Slate of Connecticut.

and

Balances of taxes laid for the payment of interest on the State debt, and the
first three classes of army notes, as appears from the Treasury books, November 1, 1789, being the balance of fifteen taxes, including abatements,
collecting fees, &c.
. £40,489 14 10
Balance of excise and impost bonds payable, including collecting fees, &c.
. '
.
.
0.070 15 2
A tax of fourpence on the pound, laid on the list, 1788.
amounting to £1,462,860 10s. 1 Id., for the payment of
interest on the State debt, and the balance of three first
classes of the State notes; the nett avails estimated at - 20,266 14 4
A tax of eightpence on the pound, on the same list, laid for
the payment of the balance of State bills, orders on 2s 6c/
and Is. taxes, and part of the principal of the State debt •
the nett avails estimated at
.
.
- 40 533 8 8
Excise for the payment of interest on the State debt, &c
'
estimated at
.
.
- '
5^00 0 0



39

SECRETARY OF THE TREASURY.

The first article in the above statement of funds will probably, upon settlement of those old taxes, fall greatly short of the sum set down ; to say
how much, is merely conjectural. There will also be a loss upon the excise
and impost bonds. "The excise for the current year is very uncertain.
^

R A L P H

POMEROY,

Comptroller.
COMPTROLLER'S OFFICE, IS/

December,

1789.

S T A T E OF N E W YORK.
A statement of the debt of the Stale of New

York.

The following species of certificates, &c. have been issued by the Slate,
and are still unredeemed, viz :
Interest to Jan.
Principal sura,
specie value.

Certificates for money loaned pursuant to
£111
resolutions of the 4th day of April, 1778
For ditto, pursuant to a law of the 30th
741
June, 1780 904
For horses purchased iti the year 1780
For depreciation of pay to the army,
54.520
dated 3lst July, 1780
For pay of the year 1781, to ditto, dated
17,972
1st January, 1782 For pensions "to widows of military officers 8,104
42,871
For pay of levies, militia, &c. &c.
For other certificates received on loan,
pursuant to a law 18th April, 1786 - 523,848
Four-fifths of the interest due on those
105,669
received on loan
25,897
For claims on forfeited estates Bills of credit called new emission, emitted pursuant to a law passed the 30th
3.612
June, 1780, bearing interest Ditto, emitted pursuant to resolutions of
Congress and Convention of this State,
1.047
reduced to specie value

13

1st, 1790.

3

£ 7 8 14

5

422 10
515 8
1

7

4

8.626 14
3,647 4
18,220 5

6
IS
4
5

25,669 17

1
S
10

16

0

0

114,058

5

4

3,884 12

3

0

£785.300 14

1,174

7 £206,297J5__0

There are lar^e demands against forfeited estates, unliquidated, and others liquidated, for which no certificates
have yet issued, to the amount of
- £41,017 12 5
There are no funds especially provided for redeeming
the aforesaid certificates, except the following, viz :
The arrears of old taxes may probably produce about - 10,000
Q-uitrents about
"
" , 20,000 , ,
Fifteen townships of new lands, of 375,000 acres, ordered to be sold (by
a law passed 25th February, 1789,) and are now surveying.
GERARD BANCKER,
Treasurer of the State of New York.
INEW Y O U K
_ ,
„
, November 3 0 , 1 7 8 9 .
Compared with the original in the office of the Secretary of the Treasury



10

[1790.

REPORTS OF THE

In account of continental securities now in the Treasury of the State
of Neio York.
Principal.

Interest, Jan. 1 si>
1790.

Certificates issued by William Barber £352,471 13 1 £105,741 9 11
Certificates issued by loan offices in this
State
.
.
.
.
277.448 16 4
83/234 12 11
Certificates issued by John Pierce. Burrall Denning, Bindon and Fox
- 299,614 4 5
89,884 5 4
Interest facilities
2,502 14 8
£932,037

8

6 £278,860

S

2

Of the abovemrntioned loan office and Barber's certificates, the sum of
£470,649 17s.
was received in on loan by the State in 1786, and onefifth of the interest that was due thereon to the 31st December, 1784, then
paid, and certificates for the remaining four-fifths issued, payable in one
year; of which certificates three-fourths remain unredeemed, as represented
m the former part of this statement.
GERARD BANCKER,
Treasurer of the State of New York.
N E W Y O R K , November 3 0 , 17S9.
Compared with thc original in the office of thc Secretary of the Treasury.

•1 a account of certificates due from the United States to the inhabitants
of the State of New Jersey, which draw interest at the Treasury.
1st. Continental loan-office certificates £420,511 0 10 £25,230 13
2d. Certificates issued by John Pierce,
comm'r, for arrears of pay, &c. - 147,118 15 21
8,S27 2
3d. Certificates by Benjamin Tompson,
commissioner .. 344,237 11 2
20,654 5
£911,867

7

2 j £54,712

COMMUTATION.

4th. Certificates issued by John Pierce,
commissioner, and given to the
officers of the late Jersey line, for
their commutation
' . £66,899
STATE

2

6

DEBT.

1st. Certificates given to the officers and
soldiers of the late Jersey line, for
the depreciation of their pay, of
which there was outstanding October 1, 1786
.
_



99)526

n

4

0

3
6
0
9

1?'90.]

SECRETARY OF THE TREASURY".

2d. Certificates given by the commissioners in the several counties for
militia pay, of which there was outstanding, October 1st, 1786
£55 ; 365 17
3d. Ditto given by Silas Condict, commissioner
-121.521 8
4th. Ditto given by the Treasurer and
Auditor for demands against confiscated estates - 32,020 2
5th. Ditto issued by the Auditor for militia pay 821 4

7h
7
9
71

Annual interest of State debt

309,255
13,500

4 11
0 0

295.755

Paid into the Treasury since Oct., 1786

5

4 11

-

£17,745

6

3£

Compared with the original in the office of the Secretary of the Treasury.

Abstract of the public debts due from the Slate of

Virginia.

On interest f Army debt for pay and depreciation of the
at 6 npr j
officers and soldiers
£936,830 7
F
) Loan-office debt
- 119,382 7
cent
[ Certificates issued for the paper money funded
7.183 2
1'alance due to foreign creditors, including interest, (at six
Per cent.,) to the 1st of January, 1790, on £9,415 0 2,
part of the said balance, for which warrants have not
been drawn by the creditors 40,826 1
JOHN P E N D L E T O N ,
A uditor of Public Accounts.
V I R G I N I A , Auditors
Office, November 20, 1789.

6
4
3

1

Compared with the original in the office of the Secretary of the Treasury.

rhe Auditor General reports the following statement of the debt due by
the State of South Carolina, viz:
PRINCIPAL

INDENTS.

Balance issued from the Treasury of the State aforesaid,
and yet remaining to be issued on the 1st Oct., 1789 £1,069,652

2

4i

Canc
Ri
elled by
»al. of bonds for confiscated property £79,985 10
'urchases of bonds unsettled for
- 12,910 0 0
balance of amercements
7.713 4 6
«a ance for bonds for public property
35.065 10 6
balance of lands granted to 1st November, 1789
- 42,568 1 7%
-

6

S

Balance still to be cancelled,



Sterling

178,242

891,409 15

8|

10

[1 7 9 0 .

REPORTS OF THE
SPECIAL I N D E N T S .

, , •
a
Amount issued and to be issued
Deduct for so much received into the Treasury

- £440.368 0 0
qaq'042 12 9i
- ob.,,0^ la

Balance in circulation, and yet to be issued

1,325^7^2}

Agreeably to a report of the Committee of Ways and Means, the debts
due to the State for the arrears of taxes, &c, are sufficient to cancel the
above balance.
FOREIGN DEBT.
4

Amount due to sundry pel-sons
\
. Balance of interest due 1st January, 1789 £29,558 4 l l T
Deduct for so much paid
J. S. Cripps, agent - £4,949 5
Balance paid to such creditors as were here, or
their attorneys
- 2,043 16 10
6,993 2 2 i
22,565
Principal and balance due 1st January, 1789
Funds appropriated by the

2 9

115,810

0 1

Legislature.

-£10,000
Out of the taxes payable 1st April, 1790 Interest on the paper medium to 1st May, 1791 - 12,750
Balance of bonds given for confiscated property, payable in
specie
1,610
The sums due, and that shall become due, for amercements, in specie
8,371
Balance of bonds given for duties payable by instalments - 6,240
Bonds for duties due prior to 1st January, 17S8, not installed
233
A tax of a quarter of a dollar per head, per annum, on all
negroes, mustizoes, and mulattoes, for ten years, from
February, 1791, the number computed to be about
100,000, which will amount to
58,333
Sterling
Charleston,
30/A November, 1789.

0 0
0 0
17
16 6
14 3
3 41

6 S

97,539

AUDITOR'S OFFICE,

fcompared




v"
<J. McCALL, Treasurer.) .

with the original in the office of the Secretary of the Treasury

J

5

S E C R E T A R Y O F T H E TREASURY".

1?'90.]

SCHEDULE F .

23.453
20.376
19.415
18.826
18.457
18.280
18.188
18.258
18.383
18.617
10.346
10.414
10,519
10.608
10.727
1(5.818
10.939
11.065
11.195
11.352
11.515
11.687
11.846
12.028
12.253
12.462
12.682
12.913
13.155
13.385
13.629
13.884
14.190
14.547
14.827
15.157
15.512
15.896
16.301
16.783




31
32
33
34
35
36
37
38
39
40
31
32
33
34
35
36
37
38
3!)
40
41
42
43
44
45
46
47
48
49

42.625
37.365
35.775
34.970
34.660
34.619
34.767
35.235
35.830
37.006
18.803
19.072
19.382
19.704
20.088
20.489
20.911
21.354
21.821
22.313
22.836
23.386
23.987
24.719
25.396
26.128
26.902
27.749
28.647

41
42
43
44
45
46
47
48
49
50
41
42
43
44
45
46
47
48
49
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50

Annuity.

84.522
74.936
72.440
71.697
71.840
72.584
73.752
75.720
78.025
81.960
37.286
38.162
39.249
40.493
41.638
42.957
44.358
45.888
47.519
49.415
47.038
44.770
42.534
40.460
38.510
36.572
34.726
32.967
31.329
29.643
28.073
26.580
25.161
23.812
22.483
21.217
20.023
18.886
17.806

Age when entitled.

21
22
23
24
25
26
27
28
29
30
21
22
23
21
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50

Annuity.

Age when entitled.

Annuity.

Age when entitled.

Age when entitled.

TABLE showing the annuity which a person of a given age would be
entitled to during life, from the time he should arrive at a given age,
upon the present payment of a hundred dollars, computing interest at
four per cent.

Annuity.

50
50
50
50
50
50
50
50
50

174.11
143.14
128.46
117.64
108.95
101.60
95.210
89.971
85.238

50
50
50
50
50
50
50
50
50

75.500
73.058
70.246
66.279
63.151
60.1-29
57.258
54.520
51.907

10

[1790.

REPORTS OF THE
S C H E D U L E

G.

TABLE showing what annuity would be enjoyed by the surviver of any
two persons, of certain ages, for the remainder of life, after thc
determination of thc life in expectation, upon the present payment of
one hundred dollars, computing interest at four per cent, per annum,
and the duration of life according to Dr. Bailey's tables.
ibe

U5
c
tc

a
P
o

55

a
p
V
JB

V
V

M

Annuity
of '
surviver.

O)

'
,

Annuity
of
surviver.

Annuity
of
surviver.

28.555
26.001
23.4%

*

o

o

o
to

•

<

<

10

10
15
20
25
30
35
40
45
50
55
60
65
70

28.248
2(5.392
24.545
22.716
20.920
19.168
17.464
15.847
14.263
12.782
11.237
10.099
8.905

15
20
25
30
35
40
45
50
55
60
65
70

28.169
26.198
24.219
22.276
20.376
18.528
16.750
15.053
12.968
11.948
10.553
9.270

15

0)

"5

CM

fU
°

a>
2

to

t>
be
<5

20

20
25
30
35
40
45
50
55
60
65
70

28.169
26.041
23.923
21.753
19.825
17.876
16.018
14.261
12.620
11.100
9.707

25
30
35
40
45
50
55
60
65
70

27.816
25.556
23.331
21.159
19.047
17.030
15.117
13.331
11.689
10.173

45

25

21.061
30

45

18.130
16.529
14.484
12.600
10.894
50

35

40

28.993
26.164
23.381
20.702
18.172
15.820
13.666
11.724
29.673
26.469
23.337
§0.354
17.604
15.060
12.799

55

60
65
70

To find the annuity upon the survivorship of the youngest of any two
lives expressed m this table, look for the respective ages under their respeetive heads, and opposite the number which corresponds with the nge
of the eldest will be seen the annuity required.




1?'90.]

SECRETARY OF THE TREASURY".
S C H E D U L E

5

H.

TABLE fara tontine of six classes, the number of lives in each class
being indefinite, calculated on a payment of two hundred dollars by
each subscriber, and at a rate of interest of four per cent. The computation on the best life in each class, and on the supposition that the
subscribers to each class will not be less than the respective numbers
specified m the first column.
A n n u i t y dividends at successive periods during the probable continuance

z.
>g
—

of life.

£

o £
£ "
3 ^

Ages.

3

75
64
54
44
34

'•A

1
21
31
41
51
61

lo
to
to
to
to
to

20
30
40
50
G
O
70

Whilst
all are in
life.

8.426
8.676
9.046
9.650
10.714
12.802

A t the
A t the
At the
A t the A t the
A t the
A t the
expiraexpiraexpira- expira- expira- expira- expiration of
tion of
tion of tion o f tion o f tion o f tion o f
10 years. 20 year?. 30 years. •10 years. 50 years. 60 years.
70 years.
9.722
10.272
11.102
12.488
15.175
20.518

11.490
12.606
14.366
17.608
26.020
71.80-2

14.012
18.054 2 5 . 2 7 8
16.314 2 3 . 1 1 0 3 9 . 6 1 8
2 0 . 3 5 4 3 4 . 8 9 0 122.282
3 0 . 3 2 8 106.150
91.068

42.130
138.666

126.290

This table, which is calculated on so small a number of persons, will
^rve to show the greatness of the advantage to fortunate survivers, in case
ot
a numerous subscription.

S C H E D U L E

I.

General estimate for the services of the current
M list, as per No. 1
; v ar Department, No. 2
•Military pensions, No. 3

-

-

-

year.
$254,892 73
155,537 72
9(3.979 72
$507,410 17

t0
v u an
necessary provisions for the foreign department, and
er arrau
>0
.
g e m e n t s which may be found requisite, it appeared advisable
st a e 1
. * i' the report, to which this is annexed, a sum of six hundred thousand dollars for the current service.
T R E A S U R Y D E P A R T M E N T , January 5th, 1 7 9 0 .

No. 1.
Estimate of the expenditure for the civil list of the United States,
,1
the present establishment, for the year 1790.

on

the
compensation to the President of the United States
* n at of the Yice President
.
.
.
.
^«ipensation to the Chief Justice dispensation to each of the five associate judges, $3,500 each

00
00
00
00




$25,000
5,000
4.000
17,500

10

[1790.

REPORTS OF THE
S C H E D U L E

G.

to

te
<

i 10

15
I 'JO
| 25
30
35
40
45
50
55

(0
<
65
70

15
i 20
< 25
30
35
40
45
50
55

60
65
70

<
3
28.248
26.392
24.545
22.716
20.920
19.168
17.464
15.847
14.263
12.782
11.237
10.099
8.905
28.169
26.198
24.219
22.276
20.376
18.528
16.750
15.053
12.968
11.948
10.553
9.270

28.169
26.041
23.923
21.753
19.825
17.876
16.018
14.261

28.555

to
u
20

20

Annuity
of
surviver.

25
30
35
40
45
50
55
(X)
00
65
70
25
30
35
40
45
50
55

60
65
70

26.001
23.496

21.061
30

12.600

15
50
55
60
65
70

50

12.620

50
55
60
65
70

55

55
60
65
70

10.894

11.100
9.707
27.816
25.556
23.331
21.159
19.047
17.030
15.117
13.331
11.689
10.173

45

18.-/30
16.529
14.484

Age of the eldest.

Annuity
of
surviver.

Annuitv
of '
surviver.

Age of the youngest.

TABLE showing what annuity would be enjoyed by the surviver of any
two persons, of certain ages, for the remainder of life, after the
determination of the life in expectation, upon the present payment of
one hundred dollars, computing interest at four per cent, per annum,
and the duration of life according to Dr. Halley's tables.

35

28.993
26.164
23.381
20.702
18.172
15.820
13.666
11.724

60

40

29.673
26.469
23.337
20.354
17.604
15.060
12.799

eo

65
70

65

65
70

70

70

To find the annuity upon the survivership of the youngest of any two
uvea; expressed m this table, look for the respective ages mider their respective heads, and opposite the number which corresponds with the oge
of the eldest will be seen the annuity required.




1?'90.]

SECRETARY OF THE TREASURY".
S C H E D U L E

5

H.

TABLE for a tontine of six classes, the number of lives in each class
being indefinite, calculated on a payment of two hundred dollars by
each subscriber ana at a rate of interest of four per cent. The computation on the best life in each class, and on the supposition that the
subscribers to each class will not be less than the respective numbers
specified in the first column.
A n n u i t y dividends at successive periods during the probable continuance
ot life.
Aare.s.

1
21
31
41
51
61

to
to
to
to
to
to

20
30
40
50
<;o
70

Whilst
all are in
life.

8.42G
8.676
<>.016
a . 650
10.714
12.802

At the
A t the
At the
expiraexpira- expiration of
tion of
tion of
10 years. 20 years. 30 years.

9.722
10.272
11.102
12.488
15.175
20.518

11.490
12.606
14.366
17.608

26.020

A t the A t the
A t the
At the
expira- expira- expira- expiration o f tion of tion of tion of
10 years. 50 years. 60 years 70 years.

14.012 18.051 2 5 . 2 7 8 4 2 . 1 3 0
16.314 2 3 . 1 1 0 3 9 . 6 1 8 13S.666
2 0 . 3 5 4 34.890 122.282
30.328 106.150
91.068

126.390

71.802

This table, which is calculated on so small a number of persons, will
serve to show the greatness of the advantage to fortunate survivers, in case
a numerous subscription.

S C H E D U L E

I.

General estimate for the services of the current year.
Civil hst, as per No. 1
.
.
.
.
$254,892 73
VVar Department, No. 2
.
.
.
.
.
155,537 72
Military pensions, No. 3
.
96.979 72
§507,410 17
^

an eye to the necessary provisions for the foreign department, and
ot
'f
her arrangements which may be found requisite,
0 state in
the report, to which this is annexed, a sum of six hundred thousand dollars for the current service.
T R E A S U R Y D E P A R T M E N T , January 5th, 1 7 9 0 .
No. 1.
Estimate of the expenditure for the civil list of the United States,
the present establishment, for the year 1790.
£or the compensation to the President of the United States $25,000
ihat of the Yice President
5,000
Compensation to the Chief Justice 4.000
Compensation to each of the five associate judges, $3,500 each
17^500



on
00
00
00
00

10

[1790.

REPORTS OF THE

T o the judges of the following
District of Maine
New Hampshire
Massachusetts
Connecticut
New York
New Jersey
Pennsylvania
Delaware
Maryland
Virginia
Kemucky
South Carolina
Georgia Attorney General
-

districts, viz:
-

-

-

-

-

$J^OO
1,000
1,200
1=000
1,500
I,000
1,000
800
1,500
1,800
1,000
1,800
1,500
1,500

00
00
00
00
00
00

00
00
00
00
00
00
00
00

Compensation to the members of Congress, estimating the attendance of the whole number
for six months, viz:
Speaker of the House of Representatives, at
twelve dollars per day - 2.190 00
Eighty members, at six dollars per day
- 87,600 00
Travelling expenses computed
- 15,000 00
To the Secretary of the Senate, one year's salary
Additional allowance, estimated for six months,
at two dollars per day
.
.
.

1,500 00
365 00
1,865

Principal clerk to the Secretary of the Senate,
for the same time, at three dollars per day
Engrossing clerk to the Secretary of the Senate,
estimated for the same time, at two dollars per
day Chaplain to the Senate, estimated for six months,
at five hundred dollars per annum Compensation to the door-keeper of the Senate,
for the same time, at three dollars per day
Messenger to the Senate, for the same time, at
two dollars per day Clerk of the House of Representatives,
for one year's salary
- 1,500 00
Additional allowance for six months,
at two dollars per day
365 00
Principal clerk in the office of ditto, estimated for
same time, at three dollars per day Engrossing clerk for same time, estimated at two
dollars per day
.
.
.
Chaplain to the House of Representatives, estimated for same time, at 500 dollars per annum Sergeant-at-arms, estimated for same time, at four
dollars per day



547 50
365 00
250 00
547 50
365 00

1,865 00
547 50
355 00
250 00
730 00

1790.]

SECRETARY OF THE TREASURY.

47

i

W
T
Doorkeeper for same time, at three dollars per day
Assistant doorkeeper for do. at two dollars per day

$547 50
365 00
$6,745 00
183,100 00

Treasury
Department.
Secretary of the Treasury
Assistant of the Secretary of the Treasury
Five clerks, at $500 per annum each Messenger and office keeper Comptroller of the Treasury .
Principal clerk to Comptroller of the Treasury
Jour clerks, at $500 each
treasurer
Principal clerk to Treasurer Auditor of the Treasury
Principal clerk to Auditor of the Treasury
1 welve clerks to Auditor of Treasury, who, besides the current business under the new Government, has the settlement of the accounts
which arose under the confederation, in the
quartermaster, commissary, clothing, hospital,
and marine departments, and ordnance stores,
and also the accounts of the secret and commercial committees of Congress, at $500 each
Register of the Treasury
Une clerk on the books of the public creditors,
called funded debt at the Treasury, transfers, &c.
Ul1e
clerk in the office of the Register, employed
^ e accounts of interest arising on
the domestic debt
ne cler
k on the principal books of the Treasury
^ journalizing and posting into the leger
Onp
^
c|
erK in copying fair statements of the pub,IC a c c °unts and other transcripts, as required,
irom the Treasury books
1
e clerk in keeping the accounts of the regisf o r shi s
S S1?ned a n d s e a I e d '
P ' transmita to the collectors of the customs at the several
coll '
® duplicates of registers issued by the
Rectors; keeping the accounts of the transfers
f Vessels > and other business of record arising
i n f r m i e a c t f o r registering of vessels, regulatt h l - e c o a s t i n g trade, and other purposes
TtoeW

m e n t i
t

?

n e d

"

"

"

-

and I i ° n t h e o l d accounts of the Treasury.
ia books and accounts of the thirteen late
Mess ' c o m m i s s i ° n e r s , at $500 each ^senger and office keeper to the Comptroller's,
Auditor's, and Register's offices



$3,500 00
l'sOO 00
2.500 00
150 00
2.000 00
800 00
2.000 00
2000 00
600 00
1,500 00
600 00

6,000 00
1,250 00
500 00
500 00
500 00
208,950 00
500 00

500

00

1,000 00
150 00
2,150 00

10

[1790.

REPORTS OF THE

Department of State.
Secretory of that department
Chief clerk
Three clerks, at $500 each
Messenger and otfice keeper
Department of War.
Secretary of that department
Chief clerk
Two clerks, at $500 each
Messenger and office keeper
-

$3,500 JJJJ
1^0 0
I5U uu
3,000 JJO
^00 0<0
1,000 00
150 00

Government of the Western Territory.
The Governor, for his salary as such, and for discharging the duties of superintendent of Indian
affairs in the northern department
2.000 00
The Secretary of the Western Territory
750 00
The three judges, at $800 each
"2,400 00

$5,950

00

4,750

00

5.150

00

Officers employed, to settle the accounts between the United
States and individual States.
Three commissioners of the General Board, at
$2,250 per annum
6,750 00
Chief clerk
600 00
Four clerks, at $400 each
1,600 00
Messenger and office keeper
150 00
Paymaster General, and commissioner of army
accounts
1.250 00
Eight clerks, at $500 each
4^000 00
One clerk, at
400 00
One clerk, at
.
.
.
450 00
15,200
Pensions granted by the late Government.
Isaac Van Vert, i A pension of $200 per annum )
John Paulding, < to each, pursuant to an act v
600 00
David Williams, ( of Congress of 3d Nov. 1780 )
Dominique L'Eglize, per act of 8th August, 17S2
120 00
Joseph Traversie, per act of 8th August, 1782 120 00
Youngest children of the late Maj. Gen. Warren,
per act of 1st July, 1780
I
450 00
Eldest son of Major Gen. Warren, per act of 8th
April, 1777, estimated at
.
000 00
Youngest son of General Mercer, per act of Sth
April, 1777, estimated at
700 00
James McKenzie, ( per act of 10th Sept. 1783, en- )
Joseph Brussels, < titled to a pension of $40 (
120 00
John Jordan,
( each per annum
\
Elizabeth Bergen, per act 21st August, 1781
53 33
Joseph D. Beauleau, per act 5th August, 1782 100 00
Richard Gridley, per acts 17th November, 1775,
and 26th February, 1781
.
.
444 40
Lieut. Col. Touzard, per act 27th October, 1778
360 00



3,667 73

1?'90.]

SECRETARY OF THE TREASURY".

5

For incidental and contingent expenses relative to the civil
list establishment.
Under this head are comprehended firewood, stationery,
together with printing work, and all other contingent expenses for the two Houses of Congress, rent and office expenses of the several departments; viz: Treasury, State,
War, and of the General Board of Commissioners, and Paymaster General.
Congress estimated at
Treasury Department:

„

J? ent .
~
Contingencies of the Secretary's office
Comptroller's Contingencies of the Auditor's
Register's
Treasurer's -

-

.
_
-

500
500
400
200
200
200

&5.000 00

00
00
00
00
00
00
2 , 0 0 0 CO

Contingencies of the War Department
Department of State Board of Commissioners
Paymaster and Commissioner
of Army Accounts -

600 00
500 00
500 00
425 00
2,025 00
$254,892 73

This estimate corresponds with the existing provisions; but it will probacy receive additions from others in the course of the session. In particular, it will be observed, that there is no article respecting the salaries of
foreign ministers, their allowances not having been regulated by law.
Neither does the estimate include those objects which remain to be provided for, in consequence of souie deficiency in the estimate for the services of
'ast year, and also from certain demands on the Treasury, founded on acts
tlle
late Government, which require an appropriation by Congress prevails to their being discharged. These will form an estimate by thems^ves, under the head of '-contingencies."
R E G I S T E R ' S O F F I C E , January 5, 1790.
J O S E P H NOURSE, Register.
\

/

V

No. 2.

Estimate of moneys requisite for the Department

of War for the year 1790.

INFANTRY.
1

*
'
<
?
1

Brigadier General, with the pay of Lieut. Col.
Commandant, for 12 months, at $50 00 - $600
Majors, for 12 months
- 45 00 - f,080
^aptains,
.
- 35 00 - 2,940
lieutenants,
- 30 00 - 2,520
£ns,£ns>
"
- 20 00 - 1,920
Paymaster,
.
- 10 00 120

VOL. I
. — 4


00
00
00
00
00
00

10

[17 9 0 .

REPORTS OF THE
1
1
1
4

Adjutant,
for 12 months, at
Quartermaster,
Surffpon
Surgeon's Mates,
2 8 Sei eants
*
<
•
28 Corporals,
14 Musicians,
490 Privates,
-

$10
10
45
30
r
5
5
4

00
00
00
00
no
00
00
00

- $120
i^u
- 540
- 1,440
" 1 680
- 1,680
- 840
-23,520

00
uu
00
00
00
00
00
00

00
00
00
00
00
00
00
00

- 540
- 1,680
- 2,SS0
- 360
- 1,152
- 960
- 480
-11,520

00
00
00
00
00
00
00
00

§39.456 00

ARTILLERY.

1
4
8
1
16
16
8
240

Maior,
for 12 months, at
Captains.
Lieutenants,
Surgeon's Mate,
Sergeants,
Corporals,
Musicians,
Matrosses,
-

45
35
30
30
6
5
5
4

19,572 00

Subsistence.
1
3
11
23
1
5

Brigadier General, for 12 months, at 48 00
Majors,
- 20 00
Captains,
- 12 00
Subalterns,
.
8 00
Surgeon,
. 16 00
Surgeon's Mates,
.
8 00

- 576 00
- 720 00
- 1.5S4 00
- 2,208 00
192 00
- 4S0 00
5.760 00

J$atio7is.
For 840 non-commissioned officers and privates,
one ration per day, each, for 365 days, is
306,600 rations, at 12 cents per ditto -36 792 00
Contingencies, 100 \ 9 4 0

suits

>

at 26

each24,440 00
61.232 00

Quartermaster's

Department.

Transportation, including the transportation of the recruits
to the frontiers, the removal of troops from one station to
another, the transportation of clothing, ordnance, and military stores for the troops on the frontiers, the necessarv
removal of ordnance and military stores, the hire of teams
and pack-horses, the purchase of tents, boats, axes, campkettles, boards, firewood, company books, stationery for
the troops, and all other expenses in the Quartermaster's
department
Hospital Department.
For medicines, instruments, furniture, and stores for an hospital for the frontiers; also, for attendance, when necessary
*t West Point
.



x- m

$

1000 00

1?'90.]

SECRETARY OF THE TREASURY".
Ordnance

5

Department.

For salaries for the store-keepers at the several
deposites, viz:
West Point, )
Virginia,
\ Three, at $40 per month $1,440 00
Springfield, )
Charlestown, one store-keeper, at $100
per annum 100 00
Two assistants, at 15 dollars per month
360 00
One store-keeper at Philadelphia
500 00
One store-keeper at Rhode Island
96 00
One store-keeper at Lancaster
96 00
One store-keeper at Fort Herkimer, $120 P
^
His subsistence,one dollar per week, 52 )
$2,764 00
Rents of buildings
Philadelphia Virginia
West Point
-

for deposites:
.
-

752 66
350 00
400 00

1,502
Laborers at the several deposites
400
Eight artificers at the posts on the frontiers, including armorers, at 5 dollars per month
480
Coopers, armorers, and carpenters employed occasionally at the several arsenals
500
The expense of materials, and constructing twenty
new carriages for cannon and howitzers
- 2,000

66
00
00
00
00
7,646 66

Buildings for arsenals and magazines are highly requisite
in the southern and middle departments, for which, particularly, estimates will be formed.
Contingencies of the War Department,
viz:
uj
gj f | iffs t~
•
5?or maps, hiring expresses, allowance to officers for exfca
-J expenses, printing, loss of stores of all kinds, advertising
£ and apprehending deserters
Contingencies

Total amount, as above

i*

3,000 00

for the War Office, viz:

Office rent, wood, stationery, desks, book-cases, sweeping, &c.
Subsistence due the officers of Colonel Marimis
1
t Willett's regiment, 1782
- 7 8 6 06
C a y d u e to Lieutenant Joseph Wilcox, paymaster
£5 J? t h e regiment lately commanded by Colonel
c~David Humphreys
315 00
subsistence, and forage due the officers apse pointed by the State of Rhode Island, under the
£ act of Congress of the 20th October, 1786
- 1,770 00




'

-

-

600 00

2,871 06
156,137 72

10

[1790.

REPORTS OF THE

Deduct contingencies of the War Office, office rent, wood, stationery, desks, 60c., as above, the same being included with
thc salaries in the civil list estimate
$155,537 72

Summary

of the

foregoing.

Pay of the troops
Subsistence of the troops
Clothing of the troops Quartermaster's Department
Hospital Department
Contingencies of the War Department Contingencies of the War Office
Arrears of pay and subsistence unprovided for
Ordnance Department -

$59,028
42,552
24,440
15,000
1,000
3,000
600
2,871
7,646

-

00
00
00
00
00
00
00
06
66

$156,137 72
WAR OFFICE,

December 29, 1789.
H E N R Y

KNOX,

Secretary for the Department, of War.
No. 3.
Estimate of the annual pensions of the invalids of the United States,
viz: taken from returns in the War Office, dated as follows:
November 28, 1789.—New Hampshire
December 14, 1789.—Massachusetts
December 1, 1789.—Connecticut Decembei 31, 1789.—New York
February 2, 1789.—New Jersey December 10,1789.—Pennsylvania
For 1787.—Virginia
Conjectural.—No returns having been received,
suppose Rhode Island and Delaware nearly
equal to New Hampshire
Maryland nearly equal to Connecticut North Carolina, South Carolina, and Georgia,
near.y equal to New Hampshire, Connecticut,
and Virginia .
.

$3,024
11,166
7,296
15.588
4,357
16,506
9,276

00
00
00
00
06
00
66

3,170 00
7,000 00

1 9 5 %

00

29,766 00
$96,979J2
WAR OFFICE,

December




31,1789.
H.

KNOX,

Secretary for the Department of War.

1?'90.]

5

SECRETARY OF THE TREASURY".
SCHEDULE K.

ESTIMATE
of ike probable product of the funds proposed for funding
the debt, and providing for the current service of the United States, including the present duties on imports and tonnage.
Probable product of the duties on imports and tonnage,
according to the acts of the last session $1,800,000
Including the State of North Carolina, this estimate
may be said to correspond with the statement made
by the Committee of Ways and Means, during the
last session ; which statement the Secretary is inclined to think is as near the truth as can be now
obtained.
In the preceding estimate are comprehended wines,
distilled spirits, teas and colfee, amounting to about
600,000
Which, being deducted, leaves
$1,200,000
From which, deducting five per cent, for expense of
collection- "
60,000
Leaves nett product
PROBABLE

PRODUCT

-

OF D U T I E S

$1,140,000

PROJPOSF.D.

Imported.
1,000,000 gallons of wine, at 20 cents
4,000,000 gallons of distilled spirits, at 20 cents
700,000 pounds Bohea tea, at 12 cents 800,000 pounds Souchong and other black teas,
at 20 pents
100.000 pounds green tea, average at 25 cents
1,600,000 pounds coffee, at 5 cents
Made in the United

$200,000
800.000
84,000
160.000
25.000
80,000

States.

3,500,000 gallons distilled spirits, from foreign materials, at 11 cents
3
,000,000 gallons distilled from materials of the
United States, at 9 cents
-

385.000
270,000
2,004,000

Oeduct for drawbacks and expense of collection, 15
percent. -

-




-

-

-

300,600
1,703,400
$2,843,400

REPORTS OF THE

54

REPORT

ON A N A T I O N A L

BANK.

DECEMBER, 1790.

In obedience to the order of the House of Representatives, of the ninth
day of August last, requiring the Secretary of the Treasury to prepare
and report, on this day, such "further provision as may, in his opinion, be
necessary for establishing the public credit; the said Secretary further
respectfully reports :
That, from a conviction (as suggested in his report No. 1, herewith presented) that a national bank is an institution of primary importance to the
prosperous administration of the finances, and would be of the greatest
utility in the operations connected with the support of the public credit,
his attention has been drawn to devising the plan of such an institution,
upon a scale which will entitle it to the confidence, and be likely to render
it equal to the exigencies, of the public.
Previously to entering upon the detail of this plan, he entreats the indulgence of the House towards some preliminary reflections naturally arising
out of the subject, which he hopes will be deemed neither useless nor out
of place. Public opinion being the ultimate arbiter of every measure of
Government, it can scarcely appear improper, in deference to that, to accompany the origination of any new proposition with explanations, which the
superior information of those to whom it is immediately addressed would
render superfluous.
It is a fact, well understood, that public banks have found admission and
patronage among the principal and most enlightened commercial nations.
They have successively obtained in Italy, Germany, Holland, England, and
France, as well as in the United States. And it is a circumstance which
cannot but have considerable weight, in a candid estimate of their tendency,
that, after an experience of centuries, there exists not a question about their
utility in the countries in which they have been so long established. Theorists and men of business unite in the acknowledgment of it.
Trade and industry, wherever they have been tried, have been indebted to
them for important aid; and Government has been repeatedly under the
greatest obligations to them in dangerous and distressing emergencies. That
of the United States, as well in some of the most critical conjunctures of
the late war, as since the peace, has received assistance from those established among us, with which it could not have dispensed.
W ith this twofold evidence before us, it might be expected that there
would be a perfect union of opinions in their favor. Yet doubts have been
entertained ; jealousies and prejudices have circulated; and though the experiment is every day dissipating them, within the spheres in which effects are
fcest known, yet there are still persons by whom they have not been entirely
renounced. To give a full and accurate view of the subject, would be to



SECRETARY OF THE TREASURY.

55

make a treatise of a report; but there are certain aspects in which it maybe
cursorily exhibited, which may perhaps conduce to a just impression of its
merits. These will involve a comparison of the advantages with the disadvantages, real or supposed, of such institutions.
The following are among the principal advantages of a bank:
First. T h e augmentation of the active or productive capital of a country.
Gold and silver, where they are employed merely as the instruments of exchange and alienation, have been not improperly denominated dead stock;
but when deposited in banks, to become the basis of a paper circulation,
which takes their character and place, as the signs or representatives of
value, they then acquire life, or, in other words, an active and productive
quality. This idea, which appears rather subtile and abstract, in a general
form, maybe made obvious and palpable, by entering into a few particulars.
It is evident, for instance, that the money which a merchant keeps in his
chest, waiting for a favorable opportunity to employ it, produces nothing
till that opportunity arrives. But if, instead of locking it up in this manner,
he either deposites it in a bank, or invests it in the stock of a bank, it yields
a profit during the interval, in which he partakes, or not, according to the
choice he may have made of being a depositor, or a proprietor; and when
any advantageous speculation offers, in order to be able to embrace it, he
has only to withdraw his money, if a depositor, or, if a proprietor, to obtain
a loan from the bank, or to dispose of his stock; an alternative seldom or
never attended with difficulty, when the affairs of the institution are in a
prosperous train. His money, thus deposited or invested, is a fund upon
which himself and others can borrow to a much larger amount. It is a well
established fact, that banks in good credit can circulate a far greater sum
than the actual quantum of their capital in gold and silver. T h e extent of
the possible excess seerns indeterminate; though it has been conjecturally
stated at the proportions of two and three to one. T h i s faculty is produced
in various ways. First—A great proportion of the notes which are
issued and pass current as cash, are indefinitely suspended in circulation,
from the confidence which each holder has, that he can at any moment turn
them into gold and silver. Secondly—Every
loan which a bank makes,
is, in its first shape, a credit given to the borrower on its books, the amount
of which it stands ready to pav, either in its own notes, or in gold or silver,
at his option. But, in "a great number of cases, no actual payment is made
in either. T h e borrower frequently, by a check or order, transfers his
credit to some other person, to whom he has a payment to make; who in
bis turn, is as often content with a similar credit, because he is satisfied that
lie can, whenever he pleases, either convert it into cash, or pass it to some
other hand, as an equivalent for it. And in this manner the credit keeps
circulating, performing in every stage the office of money, till it is extinguished by a discount with some person who has a payment to make to the
hank, to an equal or greater amount. T h u s large sums are lent and paid,
frequently through a variety of hands, without the intervention of a single
piece of coin. Thirdly—There
is always a large quantity of gold and
silver in the repositories of the bank, besides its own stock, which is placed
there with a view partly to its safe-keeping, and partly to the accommodation
of an institution which is itself a source of general accommodation. 1 hese
deposites are of immense consequence in the' operations of a bank. T h o u g h
liable to be re-drawn at any moment, experience proves that the money so
much oftener changes proprietors than place, and that what is drawn out is



56

REPORTS OF THE

N

[1790.

generally so speedily replaced, as to authorize the counting upon the sums
deposited as an effective fund] which, concurring with the stock of the
bank, enables it to extend its loans, and to answer all the demands for coin,
whether in consequence of those loans, or arising from the occasional return
of its notes.
.
. . . .
, ...
,
These different circumstances explain the manner in which the ability of
a bank to circulate a greater sum than its actual capital in coin is acquired.
This, however, must be gradual, and must be preceded by a firm establishment of confidence; a confidence which may be bestowed on the most rational grounds, since the excess in question will always be bottomed 011 good
security of one kind or another. This, every well conducted bank carefully
requires, before it will consent to advance either its money or its credit:
and where there is an auxiliary capital, (as will be the casein the plan hereafter submitted,) which, together with the capital in coin, define the boundary that shall not be exceeded by the engagements of the bank, the security
may, consistently with all the maxims of a reasonable circumspection, be
regarded as complete.
The same circumstances illustrate the truth of the position, that it is one
of the properties of banks to increase the active capital of a country. This,
in other words, is the sum of them: the money of one individual, while he
is waiting for an opportunity to employ it, by being either deposited in the
bank fort safe-keeping, or invested in its stock, is in a condition to administer to the wants of others, without being put out of his own reach when occasion presents. This yields an extra profit, arising from what is paid for
the use of his money by others, when he could noT^tmnserFitiafe~ose-of it.
and keeps the money itself in a state of incessant activity. In the almost
infinite vicissitudes and competitions of mercantile enterprise, there never
can be danger of an intermission of demand, or that the money will remain
for a moment idle in the vaults of the bank. This additional employment
given to money, and the faculty of a bank to lend and circulate a greater
sum than the amount of its stock in coin, are, to all the purposes of tracle and
industry, an absolute increase of capital. Purchases and undertakings, in
general, can be carried on by any given sum of bank paper or credit, as effectually as by an equal sum of gold and silver. And thus, by contributing
to enlarge the mass of industrious and commercial enterprise, banks become
nurseries of national wealth; a consequence as satisfactorily verified bv experience, as it is clearly deducible in theory.
Secondly. Greater facility to the Government in obtaining pecuniary aids,
especially in sudden emergencies. This is another, and an undisputed advantage of public banks; one which, as already remarked, has been realized
in signal instances among ourselves. The reason is obvious: the capitals of a
great number of individuals are, by this operation, collected to a point, and
placcd under one direction. The mass formed by this union, is, in a certain
sense, magnified by the credit attached to it; and while this mass is always
ready, and can at once be put in motion in aid of the Government the interest of the bank to afford that aid, independent of regard to the public
safety and welfare, is a sure pledge for its disposition to go as far in its compliances as can m prudence be desired. There is, in the nature of things, as
will be more particularly noticed in another place, an intimate connexion
J S * 1 ? b e * w e e n t h e Government and the bank of a nation.
Thirdly. The facilitating of the payment of taxes. This advantage is
produced in two ways. Those who are in a situation to have access 10 the



1?'90.]

SECRETARY OF THE TREASURY". 5

bank, can have the assistance of loans, to answer, with punctuality, the public calls upon them. This accommodation has been sensibly felt in the payment of the duties heretofore laid by those who reside where establishments
ot this nature exist, This, however, though an extensive, is not a universal benefit. T h e other way in which the effect here contemplated is produced, and in which the benefit is general, is the increasing of the quantity
of circulating medium, and the quickening of circulation. T h e manner in
which the first happens, has already been traced. T h e last may require
some illustration. When payments are to be made between different places,
having an intercourse of business with each other, if there happen to be no
private bills at market, and there are no bank notes which have a currency
11 both, the consequence is, that coin must be remitted; this is attended
1
with trouble, delay, expense, and risk. If, on the contrary, there are bank
notes current in both places, the transmission of these by the post, or any
other speedy or convenient conveyance, answers the purpose; and these
again, in the alternations of demand, are frequently returned very soon after to the place from whence they were first sent: whence the transportation
and retransportation of the metals are obviated, and a more convenient and
more expeditious medium of payment is substituted. Nor is this a l h j h c
metals, instead of being suspeml^d iWm their usual functions during this
process of vibration from place to place, continue in activity, and administer still to the ordinary circulation, which, of course, is prevented from suff e r i n g either diminution or stagnation.
These circumstances are additional
what, in a practical ssnse, or to the purposes of business, may be
called greater plenty of money. And it is evident, that whatever enhances
he quantity of circulating money, adds to the ease with which every indusUious member of the community may acquire that portion of it of which
> stands in need, and enables him the better to pay his taxes, as well as to
e
supply his other wants. Even where the circulation of the bank paper is
u
ot general, it must still have the same effect, though in a less degree ; for.
atever furnishes additional supplies to the channels of circulation in one
quarter, naturally contributes to keep the streams fuller elsewhere. This
a st Vlev
"
Y °f the subject serves both to illustrate the position that banks
'cna to facilitate the payment of taxes, and to exemplify their utility to busie s ot every kind in which money is an agent.
Jt would be to intrude too much 011 the patience of the House to prothe details of the advantages of banks ; especially as all those which
£ht still be particularized, are readily to be inferred as consequences from
^ose which have been enumerated. Their disadvantages, real or supposed,
; now to be reviewed. T h e most serious of the charges which have been
nought against them are:
tjiat they serve to increase usury;
i hat they tend to prevent other kinds of lending ;
^ hat they furnish temptations to overtrading ;
1
hat they afford aid to ignorant adventurers, who disturb the natural and
knefi c ,al course of t r a d e "
A
nat they give to bankrupt and fraudulent traders a fictitious credit,
"c 1 enables them to maintain false appearances, and to extend their imm / 0 n s ; and, lastly,
hat they have a tendency to banish gold and silver from the country,
be J re i s ? r e a t reason to believe that, on a close and candid survey, it will
iscovered that these charges are either without foundation, or that, as



58

REPORTS OF THE

x

[1790.

far as the evils they suggest have been found to exist, they have proceeded
f r o m other^r partial, oTtemporary causes; are not inherent m the nature
and permanent tendency of such institutions; or are more than counterbid.
This survey shall be had, in the order m
which the charges have been stated. The first of them is—
That banks serve to increase usury.
It is a truth, which ought not to be denied, that the method of conducting
business, which is essential to bank operations, has, among us, m particular
instances, given occasion to usurious transactions. The punctuality m
payments, which they necessarily exact, has sometimes obliged those who
have adventured beyond both their capital and credit, \o procure money at
any price, and, consequently, to resort to usurers for aid.
But experience and practice gradually bring a cure to this evil. A general habit of punctuality among"traders is the natural consequence of the necessity of observing it with the bank; a circumstance which, itself, more than
compensates for any occasional ill which may have sprung from that necessity, in the particular under consideration. As far, therefore, as traders depend
on each other for pecuniary supplies, they can calculate their expectations
with orreater certainty ; and are in proportionably less danger of disappointments, which might compel them to have recourse to so pernicious an expedient as that of borrowing at usury; the mischiefs of which, after a few
examples, naturally inspire great care in all but men of desperate circumstances, to avoid the possibility of being subjected to thenars One, and not
the least of the evils incident to the use of that expedient, if the fact be
known, or even strongly suspected, is, loss of credit with the bank itself.
The directors of a bank, too, though in order to extend its business and
its popularity in the infancy of an institution, they may be tempted to go further in accommodation than the strict rules of prudence will warrant, grow
more circumspect, of course, as its affairs become better established, and as
the evils of too great facility are experimentally demonstrated. They become more attentive to the situation and conduct of those with whom they
deal: they observe more narrowly their operations and pursuits; they economize the credit they give to those of suspicious solidity; they refuse it to those^
whose career is more manifestly hazardous. In a word, in the course of
practice, from the very nature of things, the interest will make it the policy
of a bank to succor the wary and industrious; to discredit the rash and
unthrifty: to discountenance both usurious lenders and u s u r i o u s borrowers.
There is a leading view in which the tendency of banks will be seen to be
to abridge rather than to promote usury. This relates to their property ot
increasing the quantity and quickening the circulation of money. If it b6
evident that usury will prevail or diminish, according to the proportion
which the demand for borrowing bears to the quantity of money at market
to be lent—whatever has the property just mentioned, whether it be in the
shape of paper or coin, by contributing to render the supply more equal to
the demand, must tend to counteract the progress of usury.
But bank lending, it is pretended, is an impediment to other kinds ot
lending; which, by confining the resource of borrowing to a particular class,
leaves the rest of the community more destitute, and therefore more exposed
to the extortions of usurers. As the profits of bank stock exceed the le™1
rate of interest, the possessors of money, it is argued, prefer investing it i n
that article to lending it at this rate ; to which there are the additional motives of a more prompt command of the capital, and of more frequent and



1?'90.]

SECRETARY OF THE TREASURY".

5

exact returns, without trouble or perplexity in the collection. This constitutes the second charge which has been enumerated.
The fact on which this charge rests is not to be admitted without several
qualifications, particularly in reference to the state of things in this country.
First. The great bulk of the stock of a bank will consist of the funds of
men in trade, among ourselves, and moneyed foreigners; the former of whom
could not spare their capitals out of their reach, to be invested in loans for
long periods, on mortgages or personal security; and the latter of whom
would not be willing to be subjected to the casualties, delays, and embarrassments of such a disposition of their money in a distant"country. Secondly. There will always be a considerable proportion of those who are
properly the money-lenders of a country, who, from that spirit of caution
which usually characterizes this description of men, will incline rather to
vest their funds in mortgages on real estate, than in the stock of a bank,
which they are apt to consider as a more precarious security.
These considerations serve, in a material degree, to narrow the foundation
of the objection, as to the point of fact. But there is a more satisfactory
answer to it. T h e effect supposed, as far as it has existence, is temporary.
theth^6^6
^ t a ^ e s J ^ a c e *n
general a n d permanent operation of
The capital of every public bank will, of course, be restricted within a
certain defined limit. It is the province of legislative prudence so to adjust
this limit, that while it will not be too contracted for the demand which the
course of business may create, and for the security which the public ought to
nave for the solidity of the paper which may be issued by the bank, it will still
oe within the compass of the pecuniary resources of the community; so that
a n eas
wf6 may
y practicability of completing the subscriptions to it.
V hen this is once done, the supposed effect of necessity ceases. There is
V
e n no
, longer room for the investment of any additional capital. Stock
niay indeed change hands, by one person selling and another buying ; but
l le
[ money which the buyer takes out of the common mass to purchase the
^ '
seller receives and restores to it. Hence the future surpluses
which may accumulate, must take their natural course, and lending at in- <
merest must go on as if there were no such institution.
It must, indeed, flow in a more copious stream. T h e bank furnishes an
extraordinary supply for borrowers, within its immediate sphere. A larger
W y consequently remains for borrowers elsewhere. In proportion as the
circulation of the bank is extended, there is an augmentation of the aggregate mass of money for answering the aggregate mass of demand. Hence
crater facility in obtaining it for every purpose.
It ought not to escape without a remark, that, as far as the citizens of other
ountries become adventurers in the bank, there is a positive increase of the
F- l t i s t r n e t h a t f r o m t h i s a half-yearly r e n t
back, accruing from the dividends upon the stock. But as this
bahl a r | f e s .^ rorn
employment of the capital by our own citizens, it is proal n
^ i s m o r e t h a n replaced by the profits of that employment. It is
t lat a a r t
du°t
*
P
^ is> m ^ e course of trade, converted into the prolr
. °} country. And it may even prove an incentive, in some cases,
to
en 1
a c ? .?rahon to a country in which thc character of citizen is as easy to be
aS
^ e s t i m a b l e and important. This view of the subject fur&tn 1GS 2* a n s w e r t 0 a n objection which has been deduced from the circumce here taken notice of, namely, the income resulting to foreigners from
isd

a n d S i l v e r o f t h e C0lintr

rawn




10

REPORTS OF THE

[1790.

the part of the stock owned by them, which has been represented as tending: to drain the country of its specie. In this objection, the original investment of the capital, and the constant use of it afterwards, seem both to
have been overlooked.
That banks furnish temptations to overtrading, is the third of the enumerated objections. This must mean, that, by affording additional aid to mercantile enterprise, they induce the merchant sometimes to adventure beyond
the prudent or salutary point. But the very statement of the thing shows
that the subject of the charge is an occasional ill, incident to a general good.
Credit of every kind (as a species of which only can bank lending have the
effect supposed) must be, in different degrees, chargeable with the same inconvenience. It is even applicable to gold and silver, when they abound in
circulation. But would it be wise on this account to decry the precious
metals, to root out credit, or to proscribe the means of that enterprise which
is the main-spring of trade, and a principal source of national wealth, because
it now and then runs into excesses, of which overtrading is one?
If the abuses of a beneficial thing are to determine its condemnation, there
is scarcely a source of public prosperity which will not speedily be closed.
In every case, the evil is to be compared with the good; and in the present
case, such a comparison will issue in this, that the new and increased energies derived to commercial enterprise from the aid of banks, are a source
of general profit and advantage, which greatly outweigh the partial ills of
the overtrading of a few individuals at particular times, or of numbers in
particular conjunctures.
The fourth and fifth charges may be considered together. These relate
to the aid which is sometimes afforded by banks to unskilful adventurers and
fraudulent traders. These charges also have some degree of foundation,
though far less than has been pretended ; and they add to the instances of
partial ills connected with more extensive and overbalancing benefits.
The practice of giving fictitious credit to improper persons, is one of
those evils which experience,guided by interest,speedily corrects. The bank
llselt is in so much jeopardy of being a sufferer by it, that it has the strongest
ol all inducements to be on its guard. It may not only be injured immediately by the delinquencies of the persons to whom such credit is given, but
eventually by the incapacities of others, whom their impositions or failures
may have ruined.
Nor is there much danger of a bank's being betrayed into this error from
want of information. The directors themselves, being, for the most part,
selected from the class of traders, are to be expected to possess individually
an accurate knowledge of the characters and situations of those who come
within that description. And they have, in addition to this, the course of
dealing of the persons themselves with the bank, to assist their judoment,
which is in most cases a good index of the state in which those persons are.
1 he artifices and shifts which those in desperate or declining circumstances
are obliged to employ, to keep up the countenance which the rules of the
bank require, and the train of their connexions, are so many prognostics,
not d.fhcult to be interpreted, of the fate which awaits them. ' Hence, it not
unfrequently happens, that banks are the first to discover the unsoundness
of such characters, and, by withholding credit, to announce to the public
1
that they are not entitled to it.
If banks, in spite of every precaution, are sometimes betrayed into o-iving
a false credit to the persons described, they more frequently enable honest and



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SECRETARY OF THE TREASURY".

5

industrious men, of small, or, perhaps, of no capital, to undertake and prosecute business with advantage to themselves and to the community; and
assist merchants, of both capital and credit, who meet with fortuitous and
unforeseen shocks, which might, without such helps, prove fatal to them
and to others, to make head against their misfortunes, and finally to retrieve
neir affairs; circumstances which form no inconsiderable encomium on
ine utility of banks.
But the last and heaviest charge is still to be examined: this is, that
Banks tend to banish the gold and silver out of the country.
J " 0 ! 0 / t ] l l S o b . i e c t i o n r e s t s "P™ their being an engine of paper
credit which, by furnishing a substitute for the metals, is supposed to promote their exportation. It is an objection which, if it has any foundation,
lies not against banks peculiarly, but against every species of paper credit
m e most common answer given to it is, that the thing supposed is of
utile or no consequence; that it is immaterial what serves the purpose of
money, whether paper or gold and silver; that the effect of both upon industry is the same; and that the intrinsic wealth of a nation is to be meathe
rt, ' n o t
abundance of the precious metals contained in it, but by
ine quantity of the productions of its labor and industry.
1 his answer is not destitute of solidity, though not entirely satisfactory,
" i s certain that the vivification of industry, by a full circulation, with the
fnr n a, p r ° p e r a n d w e U " r % r u l a t e d P a P e r c r e d i t > may more than compensate
lor tne loss of a part of the gold and silver of a nation, if the consequence
oi avoiding that loss should be a scanty or defective circulation.
But the positive and permanent increase or decrease of the precious metais in a country can hardly ever be a matter of indifference. As the commodity taken in lieu of every other, it is a species of the most effective
wealth ; and, as the money of the world, it is of great concern to the State
"at it possess a sufficiency of it to face any demands which the protection
m? e x t e r » a l interests may create.
h i o b j e c t i o n s e e m s t 0 admit of another and a more conclusive answer,
winch controverts the fact itself. A nation that has no mines of its own
mist derive the precious metals from others; generally speaking, in exnange for the products of its labor and industry. T h e quantity it will
possess will, therefore, in the ordinary course of things, be regulated by the
avorable or unfavorable balance of its trade; that is, by the proportion
wee
» I t s abilities to supply foreigners and its wants of them; between
the
am Unt o f
stat f °
, its exportation and that of its importations. Hence, the
tS
lab
J agriculture and manufactures, the quantity and quality of its
or and industry, must, in the main, influence and determine the increase
or decrease of its gold and silver.
b e t I U e t h e i n f e r e n c e seeiT s t 0
the
'
>
he, that well-constituted banks favor
in d i f f r e a S e o f t l i e P r e c > o l ' s metals. It has been shown that they augment,
nt w a s t h e active
einn
y '
capital of a country. This it is which generates
diti ° y m h e n t » . w h i c h animates and expands labor and industry. Every adcout
titv°nf l tl Ch i s m a d e t o
ributing to put in motion a greater quanbv fn
u - t e n d s t 0 c r e a t e a g r e a t e r quantity of the products of both : and,
o f t r a H 1 ^ m ° r e m a t e r i a l s for exportation, conduces to a favorable balance
aae, and, consequently, to the introduction and increase of gold and silver.
cor clasi
3
W
i
° n appears to be drawn from solid premises. There are,
nowever, objections to be made to it.



10

REPORTS OF THE

[1790.

It may be said, that, as bank paper affords a substitute for specie it serves
to counteract that rigorous necessity for the metals, as a medium of circulation. which, in the case of a wrong balance, might restrain, m some degree,
their exportation; and it may be added that, from the same cause, 111 the
same case, it would retard those economical and parsimonious reforms in
the manner of living, which the scarcity of money is calculated to produce,
and which might be necessary to rectify such wrong balance.
There is, perhaps, some truth in both these observations; but they appear
to be of a nature rather to form exceptions to the generality of the conclusion, than to overthrow it. The state of things in which the absolute exigencies of circulation can b3 supposed to resist, with any effect, the urgent
demands for specie which a wrong balance of trade may occasion, presents
an extreme case. And a situation in which a too expensive manner of
living of a community, compared with its means, can stand in need of a
corrective, from distress or necessity, is one which, perhaps, rarely results
but from extraordinary and adventitious causes: such, for example, as a
national revolution, which unsettles all the established habits of the people,
and inflames the appetite for extravagance, by the illusions of an ideal
wealth, engendered by the continual multiplication of a depreciating currency, or some similar cause. There is good reason to believe that, where
the laws are wise and well executed, and the inviolability of property and
contracts maintained, the economy of a people will, in the general course
of things, correspond with its means.
The support of industry is, probably, in every case, of more consequence
towards correcting a wrong balance of trade than any practicable retrenchments in the expenses of families or individuals; and the stagnation of it
would be likely to have more effect in prolonging, than any such savings in
shortening, its continuance. That stagnation is a natural consequence ot
an inadequate medium, which, without the aid of bank circulation, would,
in the cases supposed, be severely felt.
It also deserves notice that, as the circulation of a bank is always in a
compound ratio to the fund upon which it depends, and to the demand for
it, and as that fund is itself affected by the exportation of the metals, there
is no danger of its being overstocked, as in the case of paper issued at the
pleasure of the Government, or of its preventing the consequences of any
unfavorable balance from being sufficiently felt to produce the reforms
alluded to. as far as circumstances may require and admit.
Nothing can be more fallible than the comparisons which have been made
between different countries to illustrate the truth of the position under consideration. The comparative quantity of gold and silver in different countries depends upon an infinite variety of facts and combinations, all of
which ought to be known in order to judge whether the existence or nonexistence of paper currencies has any share in the relative proportions they
contain. The mass and value of the productions of the labor and industry
of each, compared with its wants; the nature of its establishments abroad;
the kind of wars in which it is usually engaged; the relations it bears to the
countries which are the original possessors of those metals; the privileges
it enjoys in their trade; these, and a number of other circumstances, are
all to be taken into the account, and render the investigation too complex
to justify any reliance on the vague and general surmises which have been
hitherto hazarded on the point.



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SECRETARY OF THE TREASURY".

5

In the foregoing discussion, the objection has been considered os applying
to the permanent expulsion and diminution of the metals. Their temporary
exportation, for particular purposes, has not been contemplated. This it
must be confessed, is facilitated by banks, from the faculty banks possess'of
supplying their place. But their utility is in nothing more conspicuous
than in these very cases. They enable the Government to pay its foreign
debts, and to answer any exigencies which the external concerns of the
community may have produced. They enable the merchant to support his
credit, (on which the prosperity of trade depends,) when special circumstances prevent remittances in other modes. They enable him also to prosecute enterprises which ultimately tend to an augmentation of the species
0 wealth in question. It is evident that gold and silver may often be employed m procuring commodities abroad, which, in a circuitous commerce,
replace the original fund, with considerable addition. But it is not to be
interred from this facility given to temporary exportation, that banks, which
are so friendly to trade and industry, are, in their general tendency, inimical
to the increase of the precious metals.
These several views of the subject appear sufficient to impress a full conviction of the utility of banks, and to demonstrate that they are of great
importance, not only in relation to the administration of the finances, but in
general system of the political economy.
The judgment of many concerning them has, no doubt, been perplexed by
le
^interpretation of appearances which were to be ascribed to other
causes. The general devastation of personal property, occasioned by the
late war, naturally produced, on the one hand, a great demand for money,
anct, on the other, a great deficiency of it to answer the demand. Some injudicious laws, which grew out of the public distresses, by impairing confidence, and causing a part of the inadequate sum in the country to be locked
l
P» aggravated the evil. The dissipated habits contracted by many individuals during the war, which, after the peacc, plunged them into expenses beyond their incomes ; the number of adventurers without capital, and, in many
instances, without information, who at that epoch rushed into trade, and
vere obliged to make any sacrifices to support a transient credit; the employment of considerable sums in speculations upon the public debt, which, from
s
unsettled state, was incapable of becoming itself a substitute: all these
n*cuinstances concurring, necessarily led to usurious borrowing, produced
ost of the inconveniences, and were the true cause of most of the appear' ices which, where banks were established, have been by some erroneously
1 aced to their account: a mistake which they might easily have avoided by
r
lll
eir eyes towards places where there were none, and where, nevert h p g
e iess, the same evils would have been perceived to exist, even in a greater
gree than where those institutions had obtained.
1
nese evils have either ceased or been greatly mitigated. Their more
jnplete extinction may be looked for from that additional security to prost
. c h t h e constitution of the United States happily gives ; (a circumanceof prodigious moment in the scale, both of public and private prosperito hp 1 i h e a l t r a c t i o n o f foreign capital, under the auspices of that security,
e employed upon objects, and in enterprises, for which the state of this
c
\vhi i y h 0 p e n s a w i d e a n d i n v i t i n ? field; from the consistency and stability
d e b t i s f a S t acc llirin
and° h
rfUblic
l
g> ^ well in the public opinion at home
ia fact from the
staur
f'
'
augmentation of capital which that circumand the quarter-yearly payment of interest will afford; and from the



10

REPORTS OF THE

[1790.

more copious circulation which will be likely to be created by a well constituted national bank.
,
-, A ,
The establishment of banks in this country seems to be recommended by
reasons of a peculiar nature. Previously to the revolution, circulation was
in a <-reat measure carried on by paper emitted by the several local Governments In Pennsylvania alone, the quantity of it was near a mil ion and a
half of dollars. This auxiliary may be said to be now at an end. And it
is generally supposed that there has been, for some time past, a deficiency
of^circulatinjr medium. How far that deficiency is to be considered as real
or imaginary, is not susceptible of demonstration; but there are circumstances
and appearances, which, in relation to the country at large, countenance the
supposition of its realitv.
The circumstances are, besides the fact just mentioned respecting paper
emissions, the vast tracts of waste land, and the little advanced state of manufactures. The progressive settlement of the former, while it promises ample
retribution in the generation of future resources, diminishes or obstructs,
in the mean time, the active wealth of the country. It not only draws off
a part of the circulating money, and places it in a more passive state, but it
diverts, into its own channels, a portion of that species of labor and industry
which would otherwise be employed in furnishing materials for foreign trade,
and which, by contributing to a favorable balance, would assist the introduction of specie. In the early periods of new settlements, the settlers not
only furnish 110 surplus for exportation, but they consume apart of that which
is produced by the labor of others. The same thing is a cause that manufactures do not advance, or advance slowly. And notwithstanding some
hypotheses to the contrary, there are many things to induce a suspicion
that the precious metals will not abound in any country which has not
mines, or variety of manufactures. They have been sometimes acquired
by the sword ; but the modern system of war has expelled this resource,
and it is one upon which it is to be hoped the United States will never be
inclined to rely.
The appearances alluded to, are, greater prevalency of direct barter in
the more interior districts of the country—which, however, has been for
some time past gradually lessening ; and greater difficulty, generally, in the
advantageous alienation of improved real estate ; which, also, has of late
diminished, but is still seriously felt in different parts of the Union. The
difficulty of getting money, which has been a general complaint, is not
added to the number; because it is the complaint of all times, and one in
which imagination must ever have too great scope to permit an appeal to it.
If the supposition of such a deficiency be in any degree founded, and
some aid to circulation be desirable, it remains to inquire what oudit to be
the nature of that aid.
The emitting of paper money by the authority of Government is wisely
prohibited to the individual States by the national constitution; and the
spirit of that prohibition ought not to be disregarded by the Government of
the United States. Though paper emissions, under a general authority, might
have some advantages not applicable, and be free from some disadvantages
which are applicable, to the like emissions by the States, separately; Vet
they are of a nature so liable to abuse—and, it may even be affirmed, so certain of being abused—that the wisdom of the Government will be shown in
never trusting itself with the use of so seducing and dangerous an expedient,
in times of tranquillity, it might have no ill consequence; it might even



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SECRETARY OF THE TREASURY".

5

perhaps be managed in a way to be productive of good: hut iu great and
trying emergencies, there is almost a moral certainty of its becoming mischievous. T h e stamping of paper is an operation so much easier than the
laying of taxes, that a Government, in the practice of paper emissions, would
rarely fail, in any such emergency, to indulge itself top4ar in the employment of that resource, to avoid as much as possible one less auspicious to
present popularity. If it should not even be carried so far as to be rendered
an absolute bubble, it would at least be likely tp be extended to a degree
which would occasion an inflated and artificial state of things, incompatible
with the regular and prosperous course of the political economy.
Among other material differences between a paper currency, issued by the
mere authority of Government, and one issued by a bank, payable in coin,
is this: that, in the first case, there is po standard to which an appeal can
be made, as to the quantity which will only satisfy, or which will surcharge,
the circulation; in the last, that standard results from the demand. If more
should be issued than is necessary^ will return upon the bank. Its emissions, as elsewhere intimated, must always be in a compound ratio to the
fund and the demand: whence it is evident, that there is a limitation in
the nature of the thing; white the discretion of the Government is the only
measure of the extent of th/s emissions by its own authority.
This consideration further illustrates the danger of emissions of that sort,
and the preference which is due to bank paper.
The payment of thrf interest of the public debt at thirteen different places,
is a weighty reason, peculiar to our immediate situation, for desiring a bank,
circulation. Without a paper, in general currency, equivalent to gold and
silver, a considerable proportion of the specie of the country must always
he suspended from circulation, and left to accumulate, preparatorily to each
day of pay mem; and as often as one approaches, there must in several cases
ho an actual transportation of the metals, at both expense and risk, from their
natural and proper reservoirs, to distant places. This necessity will be felt
ver
y injuriously to the trade of some of the States ; and will embarrass, not
a
little, the operations of the Treasury in those States. It will also obstruct
those negotiations between different parts of the Union, by the instrumentality of Treasury bills, which have alreadv afforded valuable accommodations to trade in general.
Assuming it, then, as a consequence, from what has been said, that a national bank is a desirable institution, two inquiries emerge: Is there no such
mstitution, already in being, which has a claim to that character, and which
supersedes the propriety or necessity of another? If there ba none, what
ar
® the principles upon which one ought to be established ?
There are at present three banks in the United States: that of North
America, established in the city of Philadelphia; that of New York, established in the city of New York; that of Massachusetts, established in the
town of Boston. Of these three, the first is the only one which has at any
time had a direct relation to the Government of the United States.
f The Bank of North America originated in a resolution of Congress of the
p t" May, 1781, founded upon a proposition of the Superintendent of
ynance, which was afterwards carried into execution by an ordinance of
tne 3lst of December following, entitled "An ordinance to incorporate the
subscribers to the Bank of North America."
"he aid afforded to the United States by this institution, during the remaining period of the war, was of essential consequence ; and its conduct
V FRASER
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REPORTS OF THE

[1790.

towards them since the peace, lias not weakened its title to their patronage
and favor. So far, its pretensions to the character m question are respectable; but there are circumstances which militate against them and considerations which indicate the propriety of an establishment on different principles.
The directors of ibis bank, on behalf of their constituents, have since
accepted and acted under a new charter from the State of Pennsylvania,
materially variant from th«ir original one, and which so narrows the founda
tiou of the institution, as to render it an incompetent basis for the extensive
purposes of a national bank.
T h e limit assigned by the ordinance of Congress to the stock of the bank,
is ten millions of dollars. The last charter of Pennsylvania confines it to
two millions. Questions naturally arise, whether there be not a direct repugnancy between two charters so differently circumstanced? and whether
the acceptance of the one, is not to be deemed a virtual surrender of the
other ? But perhaps it is neither advisable nor necessary to attempt a solution of them.
There is nothing in the acts of Congress, which imply an exclusive right
in the institution to which they relate, except during the term of the war.
There is, therefore, nothing, if the public good require it, which prevents
the establishment of another. It may, however, be incidentally remarked,
that in the general opinion of the citizens of the United States, the Bank of
North America has taken the station of a bank of Pennsylvania only. This
is a strong argument for a new institution, or for a renovation of the old, to
restore it to the situation in which it originally stood in the view of the United States.
But, though the ordinance of Congress contains no graniof exclusive privileges, there maybe Toom to allege that the Government of the United
States ought not, in point of candor and equity, to establish any rival or interfering institution, in prejudice of the one already established; especially
as this has, from services rendered, well-founded claims to protection and
regard.
The justice of such an observation ought, within proper bounds, to be admitted. A new establishment of the sort ought not to be made without cogent and sincere reasons of public good. And, in the manner of doing it,
every facility should be given to a"consolidation of the old with the new,
upon terms not injurious to the parties concerned. But there is no ground
to maintain, that, in a case in which the Government has made no condition
restricting its authority, it ought voluntarily to restrict it, through regard to
the interests of a particular institution, when those of the State dictate a
different course; especially, too, after such circumstances have intervened,
as characterize the actual situation of the Bank of North America.
The inducements to a new disposition of the thing are now to be considered The first t ofthem which occurs, is, the at leasrambiguous situation n
>
which the Bank of North America has placed itself, by the acceptance of
its last charter. If this has rendered it the mere bank of a particular State,
liable to dissolution at the expiration of fourteen years, (to which term the
act of that State has restricted its duration,) it would be neither fit nor expedient to accept it as an equivalent for a Bank of the United States
The restriction of its capital also, which, according to the same supposition, cannot be extended beyond two millions of dollars, is a conclusive reason for a different establishment So small a capital promises neither the re


1?'90.]

SECRETARY OF THE TREASURY".

5

quisite aid to Government, nor the requisite security to the community. It
may answer very well the purposes of local accommodation, but is an inadequate foundation for a circulation co-extensive with the United States,
embracing the whole of their revenues, and affecting every individual into
whose hands the paper may come.
And, inadequate as such a capital would be to the essential ends of a national bank, it is liable to be rendered still more so, by that principle of the
constitution of the Bank of North America, contained equally in its old and in
its new charter, which leaves the increase of the actual capital at any time
(now far short of the allowed extent) to the discretion of the directors or
stockholders. It is naturally to be expected that the allurements of an advanced price of stock, and of large dividends, may disincline those who are
interested to an extension of capital, from which they will be apt to fear a
diminution of profits. And from this circumstance, the interest and accommodation of the public, as well individually as collectively, are made
more subordinate to the interest, real or imagined, of the stockholders, than
they ought to be. It is true that, unless the latter be consulted, there can
be no hank, (in the sense at least in which institutions of this kind, worthy
ol confidence, can be established in this country;) but it does not follow
that this is alone to be consulted, or that it even ought to be paramount.
Public utility is more truly the object of public banks, than private profit.
And it is the business of Government to constitute them on such principles,
that while the latter will result in a sufficient degree to afford competent motives to engage in them, the former be not made subservient to it. T o effect
this, a principal object of attention ought to be to give free scope to the
creation of an ample capital; and with this view, fixing the bounds which
are deemed safe and convenient, to leave no discretion either to stop short
them, or to overpass them. T h e want of this precaution in the establishment of the Bank of North America, is a further and an important reason
tor desiring one differently constituted.
There may be room at first sight for a supposition, that as the profits of a
bank will bear a proportion to the extent of its operations, and as for this
reason the interest of the stockholders will not be disadvantageous^ affected
by any necessary augmentations of capital, there is no cause to apprehend
that they will be indisposed to such augmentations. But most men, in
matters of this nature, prefer the certainties they enjoy to probabilities depending on untried experiments; especially when these promise rather that
they will ftot ^ i n j u f e ( j ) than that they will be benefited.
t'rotn the influence of this principle, and a desire of enhancing its profits,
me directors of a bank will be more apt to overstrain its faculties, in an attempt to face the additional demands which the course of business may
create, than to set 011 foot new subscriptions, which may hazard a diminuttou of the profits, and even a temporary reduction of the price of stock.
Banks are among the best expedients for lowering the rate of interest in
a
country; but, to have this effect, their capitals must be completely equal to
< the demands of business, and such as will tend to remove the idea that
m
the accommodations they afford are in any degree favors; an idea very apt
. accompany the parsimonious dispensation of contracted funds. In this, as
ever
y other case, the plenty of the commodity ought to beget a moderat e of the price.
The want of a principle of rotation in the constitution of the Bank of
North America, is another argument for a variation of the establishment



10

REPORTS OF THE

[1790.

Scarcely one of the reasons which militate against this principle in the constitution of a country, is applicable to that of a bank; while there are strong
reasons in favor of it in relation to the one, which do not apply to the other.
T h e knowledge to be derived from experience is the only circumstance
common to both, which pleads against rotation in the directing ofiicers of a
bank.
But the objects of the government of a nation, and those of thegovernment
of a bank, are so widely different, as greatly to weaken the force of that consideration in reference to the latter. Almost every important case of legislation requires, towards a right decision, a general and accurate acquaintance
with the affairs of the State, and habits of thinking seldom acquired but
from a familiarity with public concerns. The administration of a bank, on
the contrary, is regulated by a few simple fixed maxims, the application ot
which is not difficult to any man of judgment, especially if instructed in the
principles of trade. It is, in general, a constant succession of the same details.
But, though this be the case, the idea of the advantages of experience is
not to be slighted. Room ought to be left for the regular transmission of
official information; and, for this purpose, the head of the direction ought to
be excepted from the principle of rotation. With this exception, and with
the aid of the information of the subordinate officers, there can be no danger
of any ill effects frorfi want of experience or knowledge; especially as the periodical exclusion ought not to reach the whole of the directors at one time.
The argument in favor of the principle of rotation is this: that, by-lessening the danger of combinations among the directors, to make the institution
subservient to party views, or to the accommodation, preferably, of any particular set of men, it will render the public confidence more firm, stable,
and unqualified.
When it is considered that the directors of a bank are not elected by the
great body of the community, in which a diversity of views will naturally
prevail at different conjunctures, but by a small and select class of men,
among whom it is far more easy to cultivate a steady adherence to the same
j>ersons and objects, and that those directors have it in their power so immediately to conciliate, by obliging the most influential of this class, it is
easy to perceive that, without the principle of rotation, changes in that body
can rarely happen, but as a concession which they may themselves think it
expedient to make to public opinion.
The continual administration of an institution of this kind, by the same
persons, will never fail, with or without cause, from their conduct, to excite
distrust and discontent. The necessary secrecy of their transactions give'
unlimited scope to imagination to infer that something is or may be wrongAnd this inevitable mystery is a solid reason for inserting in the constitution
of a bank the necessity of K change of men. As neither the mass of the par-,
ties interested, nor the public in general, can be permitted to be witnesses cf
the interior management of the directors, it is reasonable that both should have
that check upon their conduct, and that security against the prevalency of a
partial or pernicious system, which will be produced by the certainty of periodical changes. Such, too, is the delicacy of the credit of a bank, that
every thing which can fortify confidence and repel suspicion, without in
juring its operations, ought carefully to be sought after in its formationA further consideration in favor of a change, is the improper rule by
which the right of voting for directors is regulated in the plan upon which



1?'90.]

SECRETARY OF THE TREASURY".

5

the Bank of North America was originally constituted, namely, a vote for
each share, and the want of a rule in the last charter; unless the silence of
it, on that point, may signify that every stockholder is to have an equal and
a single vote, which would be a rule in a different extreme not less erroneous. It is of importance that a rule should be established on this head,
as it is one of those things which oughtgiot to be left to discretion; and it
is, consequently, of equal importance that the rule should be a proper one.
A vote for each share renders a combination between a few principal
stockholders to monopolize the power and benefits of the bank too easy.
An equal vote to each stockholder, however great or small his interest in
the institution, allows not that degree of weight to large stockholders which
" '
f
ii
-i
it is reasonable they should have, and which, perhaps, their security and
that of the bank require. A prudent mean is to be preferred. A conviction of this has produced a by-law of the corporation of the Bank of North
America, which evidently aims at such a mean. But a reflection arises
here, that a like majority with that which enacted this law, may, at any
moment, repeal it.
The last inducement which shall be mentioned is the want of precautions
t0
guard against a foreign influence insinuating itself into the direction of
the bank. It seems scarcely reconcilable with a due caution, to permit that
any but citizens should be eligible as directors of a national bank, or that
non-resident foreigners should be able to influence the appointment of directors by the votes of their proxies. In the event, however, of an incorporation of the Bank of North America, in the plan it may be necessary to
qualify this principle, so as to leave the right of foreigners, who now hold
shares of its stock, unimpaired; but without the power of transmitting the
privilege in queslion to foreign alienees.
It is to be considered that such a bank is not a mere matter of private
property, but a political machine of the greatest importance to the State.
There are other variations from the constitution of the Bank of North
America, not of inconsiderable moment, which appear desirable,but which
are not of magnitude enough to claim a preliminary discussion. These
will be seen in the plan which will be submitted in the sequel.
it the objections which have been stated to the constitution of the Bank
of North America are admitted to be well founded, they will, nevertheless,
not derogate from the merit of the main design, or ot' the services which
that bank has rendered, or of the benefits which it has produced. The
creation of such an institution, at the time it took place, was a measure
nictated by wisdom. Its utility has been amply evinced by its f r u i t s American independence owes much to it. And it is very conceivable, that
Masons of the moment may have rendered those features in it inexpedient,
which a revision, with a permanent view, suggests as desirable.
The order of the subject leads next to an inquiry into the principles upon
which a national bank ought to lie organized.
The situation of the United States naturally inspires a wish that the form
ot
the institution couid admit of a plurality of branches. But various conaerations discourage from pursuing this idea. T h e complexity of such a
Plan would be apt to inspire doubts, which might deter from adventuring in
And the practicability of a safe and orderly administration, though not
to be abandoned as desperate, cannot be made so manifest in perspective, as
t0
promise the removal of those doubts, or to justify the Government in
anop.ing the idea as an original experiment. T h e most that would seem



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REPORTS OF THE

[ 1700.

advisable, on this point, is, to insert a provision which may lead to it hereafter, if experience shall more clearly demonstrate its utility, and satisfy
those who may have the direction that it may be adopted with safety. It
is certain that it would have some advantages, both peculiar and important.
Besides more general accommodation, it would lessen the danger of a run
upon the bank.
The argument against it is, that each branch must be under a distinct,
though subordinate direction, to which a considerable latitude of discretion must of necessity be intrusted. And as the properly of the whole
institution would be liable for the engagements of each part, that and its
credit would be at stake, upon the prudence of the directors of every part.
T h e mismanagement of either branch might hazard serious disorder in the
whole.
Another wish, dictated by the particular situation of the country, is. that
the bank could be so constituted as to be made an immediate instrument of
loans to the proprietors of land; but this wish also yields to the difficulty of
accomplishing it. Land is alone an unfit fund for a bank circulation. If
the notes issued upon it were not to be payable in coin, on demand, or at a
short date, this would amount to nothing more than a repetition of the
paper emissions, which are now exploded by the general voice. If the
notes are to be payable in coin, the land must first be converted into it by
sale or mortgage. T h e difficulty of effecting the latter, is the very thing
which begets the desire of finding another resource; and the former would
not be practicable on a sudden emergency, but with sacrifices which would
make the cure worse than the disease. Neither is the idea of constituting
the fund partly of coin and partly of land, free from impediments. These
two species of property do not, for the most part, unite in the same hands.
Will the moneyed man consent to enter into a partnership with the landholder, by which the latter will share in the profits which will be made by
the money of the former!
T h e money, it is evident, will be the agent or
efficient cause of the profits ; the land can only be regarded as an additional
security. It is not difficult to foresee that a union, on such terms, will not
readily be formed. If the landholders are to procure the money by sale or
mortgage of a part of their lands, this they can as well do when the stock
consists wholly of money, as if it were to be compounded of money and land.
T o procure for the landholders the assistance of loans, is the'grent desideratum. Supposing other difficulties surmounted, and a fund created composed partly of coin and partly of land, yet the benefit contemplated could
only then be obtained bv the bank's advancing them its notes for the whole,
or part, of the value of the lands they had subscribed to the stock If this
advance was small, the relief aimed at would not be given • if it was lar^e,
the quantity of notes issued would be a cause of distrust, and if received
at all, they would be likely to return speedily upon the bank for payment;
which, after exhausting its coin, might be under the necessity of turning
its lands into money, at any price that could be obtained for them to the
irreparable prejudice of the proprietors.
Considerations of public advantage'suggest a further wish, which is,
that the bank could be established upon principles that would cause the profits of it to redound to the immediate benefit of the State. This is contemplated by many who speak of a national bank, but the idea seems liable to
insuperable objections. T o attach full confidence to an institulion of this
nature, it appears to be an essential ingredient in its structure that it shall be



1?'90.]

SECRETARY OF THE TREASURY".

5

under a private, not a public direction ; under the guidance of individual
interest, not of public policy, which would be supposed to be, and, in certain emergencies, under a feeble or too sanguine administration, would
really be, liable to being too much influenced by public necessity. The suspicion of this would most probably be a canker that would continually corrode the vitals of the credit of the bank, and would be most likely to prove
fatal in those situations in which the public good would require that they
should be most sound and vigorous. It would, indeed, be little less than a
miracle, should the credit of the bank be at the disposal of the Government,
if, in a long scries of time, there was not experienced a calamitous abuse of
it. It is true, that it would be the real interest of the Government not to
abuse it: its genuine policy to husband and cherish it with the most guarded circumspection, as an inestimable treasure. But what Government ever
uniformly consulted its true interests in opposition to the temptations of
momentary exigencies? What nation was ever blessed with a constant
succession of upright and wise administrators?
The keen, steady, and, as it were, magnetic sense of their own interest as
proprietors, in the directors of a bank, pointing invariably to its true pole,
the prosperity of the institution is the only security that can always be
relied upon for a careful and prudent administration. It is, therefore, the
only basis on which an enlightened, unqualified, and permanent confidence
can be expected to be erected and maintained.
The precedents of the banks established in several cities of Europe, (Amsterdam, Hamburgh, and others,) may seem to militate against this position.
Without a precise knowledge of all the peculiarities of their respective constitutions, it is difficult to pronounce how fir this may be the case. That of
Amsterdam, however, which we best know, is rather under a municipal than
« governmental direction. Particular magistrates of the city, not ofiicers of
'he republic, have the management of it. It is also a bank of deposite, not
loan or circulation; consequently, less liable to abuse, as well as less
useful. Its general business consists in receiving money for safe-keeping,
which, if not called for within a certain time, becomes a part of its stock,
and irreclaimable ; but a credit is given for it on the books of the bank,
which, being transferable, answersall the purposes of money.
The directors being magistrates of the city, and the stockholders, in general
> its most influential citizens, it is evident that the principle of private interest must be prevalent in the management of the bank. And it is equally
evident that, from the nature of its operations, that principle is less essential
10
it than to an institution constituted with a view to the accommodation of
the public and individuals, by direct loans and a paper circulation.
As far as may concern the aid of the bank, within the proper limits, a
good Government has nothing more to wish for than it will always possess,
though the management be in the hands of private individuals. As the institution, if rightly constituted, must depend for its renovation, from time to
ttme, on the pleasure of the Government, it will not be likely to feel a disposition to render itself, by its conduct, unworthy of public patronage. The
Government, too, in the administration of its finances, has it in its power to
reciprocate benefits to the bank, of not less importance than those which the
hank affords to the Government, and which, besides, are never unattended
with an immediate and adequate compensation. Independent of these more
Particular considerations, the natural weight and influence of a good Government will always go far towards procuring a compliance with its desires;



10

REPORTS OF THE

[1790.

and as the directors will usually be composed of some of the most d screet,
respectable, and well-informed citizens, it can hardly ever be difficult to
make them sensible of the force of the inducements which ought to stimulate their exertions.
It will not follow, from what has been said, that the State may not be the
holder of a part of the stock of a bank, and, consequently, a sharer in the
profits of it. It will only follow that it ought not to desire any participation
in the direction of it, and, therefore, ought not to own the whole, or a principal part ot' the stock; for. if the mass of the property should belong to the
public, and if the direction of it should be in private hands, this would be
to commit the interests of the State to persons not interested, or not enough
interested in their proper management.
There is one thing, however, which the Government owes to itself and to
the community—at least to all that part of it who are not stockholders—
which is, to reserve to itself a right of ascertaining, as often as may be necessary, the state of the bank; excluding, however, all pretension to control.
This right forms an article in the primitive constitution of the Bank of North
America; and its propriety stands upon the clearest reasons. If the paper
of a bank is to be permitted to insinuate itself into all the revenues and receipts of a country; if it is even to be tolerated as the substitute for gold and
silver in all the transactions of business, it becomes, in either view, a national
concern of the first magnitude. As such, the ordinary rules of prudence require that the Government should possess the means of ascertaining, whenover it thinks fit, that so delicate a trust is executed with fidelity and care.
V right of this nature is not only desirable, as it respects the Government,
but it ought to be equally so to all those concerned in the institution, as an
additional title to public and private confidence, and as a thing which can
only be formidable to practices that imply mismanagement. T h e presumption must always be, that the characters who would be intrusted with the
exercise of this right on behalf of the Government, will not be deficient in
the discretion which it may require; at least, the admitting of this presumption cannot be deemed too great a return of confidence for that very large
portion of it which the Government is required to place in the bank.
Abandoning, therefore, ideas which, however agreeable or desirable, are
neither practicable nor safe, the following plan, for the constitution of a national bank, is respectfully submitted to the consideration of the House.
1. The capital stock of the bank shall not exceed ten millions of dollars,
divided into twenty-five thousand shares, each share being four hundred
dollars; to raise which sum subscriptions shall be opened on the first Monday of April next, and shall continue open until the whole shall be subscribed. Bodies politic as well as individuals may subscribe.
2. The amount of each share shall be payable, one-fourth in ^old and
silver com. and three-fourths in that part of the public debt which, according to the loan proposed by the act making provision for the debt of the
United States, shall bear an accruing interest at the time of payment of six
per centum per annum.
3 . The respective sums subscribed shall be payable in four equal p a r t s , as
well specie as debt m succession, and at the distance of six c a l e n d a r months
from each other; the first payment to be made at the time of subscription.
If there shall he a failure m any subsequent payment, the party failino- shall
ose the benefit of any d.vidend which may have accrued prior to the time
lor making such payment, and during the delay of the same



1?'90.]

SECRETARY OF THE TREASURY".

5

4. The subscribers to the bank, and their successors, shall be incorporated,
and shall so continue until the final redemption of that part of its stock which
shall consist of the public debt.
5. The capacity of the corporation to hold real and personal estate shall
be limited to fifteen millions of dollars, including the amount of its capital or
original stock. T h e lands and tenements which it shall be permitted to
hold, shall be only such as shall be requisite for the immediate accommodation of the institution; and such as shall have been bona fide mortgaged to it
by way of security, or conveyed to it in satisfaction of debts previously contracted, in the usual course of its dealings, or purchased at sales upon judgments which shall have been obtained for such debts.
6. The totality of the debts of the company, whether by bond, bill, note,
or other contract, (credits for deposites excepted, ) shall never exceed the
amount of its capital stock. In case of excess, the directors, under whose
administration it shall happen, shall be liable for it in their private or separate capacities. Those who may have dissented may excuse themselves from
this responsibility by immediately giving notice of the fact, and their dissent, to the President of the United States, and to the stockholders, at a general meeting, to be called by the president of the bank, at their request.
7. The company may sell or demise its lands and tenements, or may sell
the whole or any part of the public debt, whereof its stock shall consistent
shall trade in nothing, except bills of exchange, gold and silver bullion, or
in the sale of goods pledged for money lent; nor shall take more than at the
rate of six per centum per annum, upon its loans or discounts.
8. No loan shall be made by the bank for the use or on account of the Government of the United States', or of either of them, to an amount exceeding
bfty thousand dollars, or of any foreign prince or state, unless previously authorized by a law of the United States.
9. The'stock of the bank shall be transferable, according to such rules as
shall be instituted by the company in that behalf.
10. The affairs of the bank shall be under the management of twenty-five
directors, one of whom shall be the president; and there shall be, on the
first Monday of January, in each year, a choice of directors, by a plurality ol
suffrages of" the stockholders, to serve for a year. T h e directors, at their
first meeting after each election, shall choose one of their number as president.
11. The "number of votes to which each stockholder shall be entitled shall
!)
e according to the number of shares he shall hold, in the proportions following—that is to say: For one share, and not more than two shares, one
v
°te; for every two shares above two, and not exceeding ten, one vote; for
every four shares above ten, and not exceeding thirty, one vote; for every
six shares above thirty, and not exceeding sixty, one vote; for every eight
shares above sixty, and not exceeding one hundred, one vote ; and for every
Jen shares above one hundred, one vote; but no person, co-partnership, or
body politic, shall be entitled to a greater number than thirty votes. And,
a
iter the first election, no share or shares shall confer a right of suffrage,
which shall not have been holden three calendar months previous to the day
election. Stockholders actually resident within the United States, and
"one other, may vote in the elections by proxy.
12. Not more than three-fourths of the directors in office, exclusive of the
president, shall be eligible for the next succeeding year. But the director
who shall be president at the time of an election may always be re-elected.



10

REPORTS OF THE

[1790.

13. None but a stockholder being a citizen of the United States shall be
eligible as a director.
14. Any number of stockholders not less than sixty, who together shall
be proprietors of two hundred shares or upwards, shall have power at any
time to call a general meeting of the stockholders, for purposes relative to
the institution; giving at least six weeks notice in two public gazettes of the
place where the bank is kept, and specifying in such notice the object of the
meeting.
15. In case of the death, resignation, absence from the United States, or
removal of a director by the stockholders, his place may be filled by a new
choice for the remainder of the year.
16. No director shall be entitled to any emolument, unless the same shall
have been allowed by the stockholders at a general meeting. The stockholders shall make such compensation to the President, for his extraordinary
attendance at the bank, as shall appear to them reasonable.
17. Not less than seven directors shall constitute a board for the transaction of business.
18. Every cashier or treasurer, before he enters on the duties of his office,
shall be required to give bond, with two or more sureties, to the satisfaction
of the directors, in a sum not less than twenty thousand dollars, with condition for his good behavior.
19. Half-yearly dividends shall be made of so much of the profits of the
bank, as shall appear to the directors advisable. And once in every three
years, the directors shall lay before the stockholders, at a general meeting,
for their information, an exact and particular statement of the debts which
shall have remained unpaid, after the expiration of the original credit, for
a period of treble the term of that credit, and of the surplus of profit, if any,
after deducting losses and dividends.
20. The bills and notes of the bank originally made payable, or which
shall have become payable on demand in gold and silver coin, shall be receivable in all payments to the United States.
21. The officer at the head of the Treasury Department of the United
States shall be furnished, from time to time, as often as he may require, not
exceeding once a week, with statements of the amount of the capital stock
of the bank, and of the debts due to the same, of the moneys deposited
therein, of the notes in circulation, and of the cashin hand; and shall have a
right to inspect such general accounts in the books of the bank, as shall relate to the said statements; provided that this shall not be construed to implV
a right of inspecting the account of any private individual or individuals
witrt the bank.
22. No similar institution shall be established by any future act of the
tablished
*
continuance of the one hereby proposed to be es; s h a l J, b e fcwfnl fer the directors of the bank to establish offices
wheresoever they shall think tit, within the United States, for the purposes
of discount and deposite only, and upon the same terms and in the same
1x5
™
"J. the bank, and to commit the m a n a g e m e n t
of the said office^and the making of the said discounts, either to a g e n t s
spec ally appomted by them, or to such persons as may be chosen by the
stockholders raiding at the place where any such office shall be, under such
agreements, and subject to such regulations, as they shall deem proper, not
P
P
being contrary to law, or to the constitution of the bank



1?'90.]

SECRETARY OF THE TREASURY".

5

24. And, lastly, the President of the United States shall be authorized to
cause a subscription to be made to the stock of the said company, on behalf
of the United States, to an amount not exceeding two millions of dollars, to
be paid out of the moneys which shall be borrowed by virtue of either of
the acts, the one entitled " An act making provision for the debt of the
United States,"' and the other, entitled " An act making provision for the
reduction of the public debt;" borrowing of the bank an equal sum, to
be applied to the purposes for which the said moneys shall have been procured, reimbursable in ten years by equal annual instalments; or at any time
sooner, or in any greater proportions, that the Government may think fit.
The reasons for the several provisions, contained in the foregoing plan,
have been so far anticipated, and will for the most part be so readily suggested by the nature of those provisions, that any comments which need
further be made will be both few and concise.
The combination of a portion of the public debt, in the formation of the
capital, is the principal thing of which an explanation is requisite. The
chief object of this is to enable the creation of a capital sufficiently large
to be the basis of an extensive circulation, and an adequate security for it.
As has been elsewhere remarked, the original plan of the Bank of North
America contemplated a capital of ten millions of dollars, which is certainly
not too broad a foundation for the extensive operations to which a national
bank is destined. But to collect such a sum in this country in gold and
silver into one depository, may, without hesitation, be pronounced impracticable. Hence the necessity of an auxiliary, which the public debt at
once presents.
This pnrt of the fund will be always ready to come in aid of the specie;
it will more and more command a ready sale, and can therefore expeditiously be turned into coin, if an exigency of the bank should at any time
require it. This quality of prompt convertibility into coin renders it an equivalent for that necessary agent of bank circulation, and distinguishes it from
a hind in land, of which the sale would generally be far less compendious,
and at great disadvantage. T h e quarter-yearly receipts of interest will also
be an actual addition to the specie fund, during the intervals between them
and the half-yearly dividends of profits. T h e objection to combining land
with specie, resulting from their not being generally in possession of the
same persons, does not apply to the debt, which will always be found in
considerable quantity among the moneyed and trading people.
The debt composing part of the capital, besides its collateral effect in
enabling the bank to extend its operations, and consequently to enlarge its
profits, will produce a direct annual revenue of six per centum from the
Government, which will enter into the half yearly dividends received by
the stockholders.
When the present price of the public debt is considered, and the effect
which its conversion into bank stock, incorporated with a specie fund, would
' u all probability have to accelerate its rise to the proper point, it will easily
be discovered that the operation presents, in its outset, a very considerable
advantage to those who may become subscribers ; and from the influence
which that rise would have on the general mass of the debt, a proportional
<>enefit to all the public creditors, and, in a sense which has been more
than once adverted to, to the community at large.
There is an important fact which exemplifies the fitness of the public
debt for a bank fund, and which may serve to remove doubts in some minds



10

REPORTS OF THE

[1790.

on this point: it is this, that the Bank of England, in its first erection, rested
wholly on that foundation. The subscribers to a loan to Government oi
one million two hundred thousand pounds sterling, were incorporated as a
bank, of which the debt created by the loan, and the interest upon it, were
the sole fund. The subsequent augmentations of its capital, which now
amounts to between eleven and twelve millions of pounds sterling, have
been of the same nature.
The confining of the right of the bank to contract debts to the amount
of its capital, is an important precaution, which is not to be found in the
constitution of the Bank of North America, and which, while the fund consists wholly of coin, would be a restriction attended with inconveniences ;
but would be free from any, if the composition of it should be such as is
now proposed. Tl>e restriction exists 111 the establishment of the Bank ot ,
England, and, as a source of security, is worthy of imitation. The consequence of exceeding the limit there, is, that each stockholder is liable for the
excess, in proportion to his interest in the bank. When it is considered that
the directors owe their appointments to the choice of the stockholders, a
responsibility of this kind on the part of the latter does not appear unreasonable ; but, on the other hand, it may be deemed a hardship upon those who
may have dissented from the choice; and there are many among us, whom
it might perhaps discourage from becoming concerned in the institution.
These reasons have induced the placing of the responsibility upon the
directors by whom the limit prescribed should be transgressed.
The interdiction of loans on account of the United States, or of any particular State, beyond the moderate sum specified, or of any foreign power,
will serve as a barrier to executive encroachments, and to combinations
inauspicious to the safety, or contrary to the policy of the Union.
The limitation of the rate of interest is dictated by the consideration, that
different rates prevail in different parts of the Union ; and as the operations
of the bank may extend through the whole, some rule seems to be necessary. There is room for a question, whether the limitation ought not
rather to be to five than to six per cent., as proposed. It may with safety
be taken for granted, that the former rate would yield an ample dividend,
perhaps as much as the latter, by the extension which it would give to business. The natural effect of low interest is to increase trade and industry;
because undertakings of every kind can be prosecuted with greater advantage. This is a truth generally admitted ; but it is requisite"5 to have analyzed the subject in all its relations, to be able to form a just conception of
the extent of that effect. Such an analysis cannot but satisfy an intelligent
mind, that the difference of one per cent, in the rate at which money may
be had, is often capable of making an essential change for the better in the
situation of any country or placet
Every thing, therefore, which tends to lower the rate of interest, is peculiarly worthy of the cares of legislators. And though laws which violently
sink the legal rate of interest greatly below the market level are not to be
commended, because they are not calculated to answer their aim; yet
whatever has a tendency to effect a reduction, without violence to the natural course of things, ought to be attended to and pursued. Banks are among
the means most proper to accomplish this end ; and the moderation of tlie
rate at which their discounts are made is a material ingredient towards it;
with which their own interest, viewed on an enlarged and p e r m a n e n t scale,
does not appear to clash.



1?'90.]

SECRETARY OF THE TREASURY".

5

But, as the most obvious ideas are apt to have greater force than those
which depend on complex and remote combinations, there would be danger
that the persons whose funds must constitute the stock of the bank would
be diffident of the sufficiency of the profits to be expected, if the rate of
loans and discounts were to be placed below the point to which they have
been accustomed; and might, on this account, be indisposed to embarking
in the plan. There is, it is true, one reflection, which, in regard to men actually engaged in trade, ought to be a security against this danger; it is this—
that the accommodations which they might derive in the way of their
business, at a low rate, would more than indemnify them for any difference
in the dividend; supposing even that some diminution of it were to be the
consequence. But, upon the whole, the hazard of contrary reasoning among
the mass of moneyed men is a powerful argument against the experiment.
The institutions of the kind already existing add to the difficulty of making
it. Mature reflection, and a large capital, may, of themselves, lead to the
desired end.
The last thing which requires any explanatory remark is, the authority
proposed to be given to the President to subscribe to the amount of two
millions of dollars on account of the public. T h e main design of this is to
enlarge the specie fund of the bank, and to enable it to give a more early
extension to its operations. Though it is proposed to borrow with one hand
what is lent with the other, yet the disbursement of what is borrowed will
be progressive, and bank notes may be thrown into circulation instead of
the gold and silver. Besides, there is to be an annual reimbursement of a
part of the sum borrowed, which will finally operate as an actual investment
of so much specie. In addition to the inducements to this measure, which
result from the general interest of the Government to enlarge the sphere of
the utility of the bank, there is this more particular consideration, to wit:
that, as far as the dividend on the stock shall exceed the interest paid on the
loan, there is a positive profit.
The Secretary begs leave to conclude with this general observation: that
tf the Bank of North America shall come forward with any propositions
which have for their object the ingrafting upon that institution the characteristics which shall appear to the Legislature necessary to the due extent
and safety bf a national bank, there are, in his judgment, weighty inducements to giving every reasonable facility to the measure. Not only the pretensions of that institution, from its original relation to the Government of
the United States, and from the services it has rendered, are such as to claim
a disposition favorable to it, if those who arc interested in it are willing, on
their part, to place it on a f o o t i n g satisfactory to the Government, and equal
to the purposes of a Bank of the United States, but its co-operation would
Materially accelerate the accomplishment of the great object; and the collision, which might otherwise ariJe. might, in a variety of ways, prove equally
disagreeabie and injurious. T h e incorporation or union here contemplated
m
ay be effected in different modes, under the auspices of an act of the
United States, if it shall be desired by the Bank of North America, upon
terms which shall appear expedient to the Government.
All which is humbly submitted.
A L E X A N D E R HAMILTON,
Secretary of the Treasury.
TREASURY

DEPARTMENT,

December 13, 1790.



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 amount, and bow 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 in 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, 2C6, 288.
Coffee, additional duty on, proposed, 22.
imported and consumed from 1790 to 1798, quantity of, 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,tind how denominated,
152.
Commercial restrictions, effects of, on the revenue in 1807-8, 398, 409.
Commerce, benefited by funding the public debt, 5.
promoted by man u far lures, 90, 104.
how affected by the French and British decrees, 376.
Compensation of officers ot Government in 1790,45.
Connecticut, claim of, in 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,
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, c e n t e r e d , 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 tho years 1799 to ISO2.20a,
281 to 284.
Foreign intercourse, expenses of, from 1801 lo 1805, 325 — See Receipts
and Expenditures.
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 banks, 55.
proportion of, in the United Stales, in 1790, estimated, 141.
1.
Imported articles, nnd the duty on each.—See Merchandise imported.
Imports from Great Britain in 1810, duties accrued on, 456.
a table of duties chargeablo 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 Octobcr 1800, lo 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 R»v*nvr .
Internal improvements, surplus revenue maybe applied 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.
M o l a s ^ f ^ J t e d n n d consumed from 1790 U 1793, quanuty of, 211.
>
See Merchandise imjxjrled.
N.
National bank proposed to be established, 54.
Navy expenses of 1802, estimated, 222.
1803,
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
imported.
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.
essential 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 c o n s o l i d a t i n g 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 1821,354,3^.
amount paid in 1807, 358, 371.

in 1811, 445,461.
from April 1, 1801, to January 1,1812, 463.
amount on JA:maryllS12_146, 464.
—

paidtnli

1814, 534.

j S ^ f f i f f i S S
1795 and 1801,
1 f i 219 244
of'the. pledged for the public debt, 163.
S d T l S O l , 220, 2 4 a
intrusions on the, to be prevented, 221.
sold in 1802, 252, 257.



560

INDEX.

Public lands, sold in 1S03, 262, 274.
1801, 285, 291, 315.
1905, 297, 308.
receipts from, in 1801 to 1905, 31 / .
sold in 1806, 331, 34s.
1807, 356. 368.
1808. 373, 385.
1809.398, 411.
sold from 1800 to 18l0, 421, 432.
sold in 1811,448.
,
tI .
JJO
may be applied as & bounty to soldiers enlisting, 448.
sold in 1M2, 478.
1813, 511.
lbl-1,550.
*
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 1901, 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.
on increase of, proposed, 219, 242, 378, 401, 4 ^ 448, 504from what sources derived, and the amount in 1795, u><, l v '
1801,216„lT
1901 to 1906,31'»




322.
1808,395.
1809, 419.
1810, 438.
1811, 466-

v

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 duty 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

m o r t a l

WgS&SffSV^X

"

Merchandise imported.
Snirits foreign and domestic, additional duties proposed on, £&.
Stamp dutiesexpire 4th March 1803 218 2 2 1 . - ^ /
^ ,
State debts, ought to be assumed bv the Union, 14, 28, 30.
amount of; estimated, So, f b .
provision for liquidating the, 164.

^

Z

&

M

S S S r E S b T l W

S u r p l ^ u f

quantity of, 2 4 , - S ,

to internal improvements, 359.
T.

j
ho lovipd 449. 490.—See Direct taxes.
Taxes, internal, proposed to be l e v i e d , ^ ,
m

- 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 die public debt, 20, 45.
Treasury u
treasury notes, amount authorized in 1812, 469, 492.
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.Merxhandisc imported.




END OF T H E F I R S T VOLVME.