[No. 90, of Vol. lII.]
READ IN THE HOUSE OP REPRESENTATIVES, TLB. 7, 1792,
Treajury Department, February 6th, 1792,
Sir,
I HAVE the honor to fend herewith a Report on the fnbje&
•f the Public Debt, pursuant to the order of the House of Repre
sentatives the lft of November, 1791, and to subsequent refer
ences therein mentioned ; and to be, with perfect refpeft,
Sir, your most obedient, and raoft humble fei vant.
To the hfflvora'btc the Speaker
ef the House of Representatives.
Treasury Department, Jan. 1792.
PURSUANT to the Order of the ffoufi oj Representatives of the firfl of
November, 1791, directing the Secretary of the Trerfury, * 4 to re
port to the House the amount to the Loans
propofedby the AH making Provision for tht Public Debt, as welt in
the debts oj the refpeftive States as in the Domejlic debt of the United
States, and of the Parts which remain unfubfcribed, together with
such Measures a t are, in his Opinion, expedient to be taken on the
Sub] eft : the said Secretary reffeftfully submits the following
REPORT.
"'HE whole amount of the domestic debt of the United
JL States, principal and intercft, which has been subscribed
to the loan proposed concerning that debt, by the ast intituled,
41 An ast tnaking provision for the debt of the United States," ac
cording to the statement herewith transmitted, marked A. and
/übjeft to the observations accompanying that ftatmenr, is
vhich pursuant to the terms of that ast has been
converted into stock, bearing an immediate in
terest of 6 per cent, per annum - - 1 4j i 77>450. 43
Stock bearing the like interest from the ift of
Jan. 1801
sfock bearing an immediate interest of 3 per cent.
pe-. annum
Makingtogethec
©f which there stands to the credit of the Trus
tees of the finking fund, in consequence of pur
chases of the public debt, made under their di
rection, the sum of . dols.
The unfubfcribed residue of the said debt, ac
cordingto the statements herewith transmitted,
marked B. and C. and fubjcft to the obfcrva
fions accompanying the statement C. appears
to amount to . . dofc. 10,616,604. 6$
Confjfting of registered debt, principal and in
terest _
JJnfublcribed stock on the books of the commif
(ioners of loans for New-Jersey, Pennfyiva
nial and IVlaryJand, principal and interest
Credits on the books of the Treasury, for which no
certificates have iJTucd, principal and interest
Qutftanding or floating evidences of debt, eftima
»ed per ftatemcnt C. at
Making together
Concerning which some farther arrangement is nccrtfarv.
1 he gieatfft part ot the registered debt, hitherto unfuiifcribed,
uownrd, by (he citizens of foreign countries, moll, ifnot all of
whom appear now disposed to embrace the terms held out by the
atl above mentioned ; extensive orders having been received from
those creditors, to fubferibe to the loan, after the lime for re
viving fubferiptions had elapsed.
A confidence part of the outrtanding or floa-ing debt, con
*lU of loan-office certificates issued between the fir ft of Septem
er'. 1 777 i and thefirft of March, 1778, bearing interest on the
nominal lum. Many of the holders of this species of debt have
come in upon the terms of the ast, but others have hitherto de
c.inea it ; /Hedging, that the special nature of their contract gives
a peculiarity to their cafe, and renders the commutation propo
not 10 fair an equivalent to them, as in other instances. They
° l^e h as had, towards them, a compulsory
k ru ruling the temporary payment of interest, unless
t ev Ihould change their old for now certificate, e(Tentially vary
ing the nature of their contrast.
A resolution of Congress of the tenth of September, 1777, fti
pulati-s in favor of this class of creditors, interest upon the nominal,
»nucad ot thereof principal of their debt, until that principal be dj
ar g*d. This certainly renders their contra£l of a nature more
eneficial than ihat of other creditors ; but they are at the fame
time liable to be diverted of the extra-benefit it gives the n, by a
payment of their specie-dues ; and it may beobferved, that they
ave aanally enjoyed, and by accepting the terms offered to them,
were enabled to reahfe, advantages superior to other creditors.
cy have been paid interest by bills on France from the tenth
September, 1777, to the firtt of March, 1782, while other credi
tors received their interest in. depreciated bills of the old cmiflions ;
an tie terms of the loan proposed put it in th ir power to realise
t. e eneht of interest on the nominal amount of their refpe&ive
ts, at rates from 6. 20-ioodths. nearly to 10. 47-ioodths.
percent, on their real or Ipccie capital down to the last of De
cember, 1790.
It does not therefore appear to have been an unreasonable ex
oe at ion, that they, as readily as any other defcripiion of pub
ic creditors, would have acquiesced in a measure, calculated for
- f a " omniof ! alio V government, under circumstances, in
-e pett to which, it has been demonstrated by subsequent events
t at the accommodation deftred was confident with the best in
n j ptiblic creditors. A large proportion of the parties
intere edl have indeed viewed the matter in this light, and have
•em raced the proportion. It is probable, that the progreji of
t lings will (atisfy the remainder, that it is equally their interest to
r f 'i 3 ' r opportunity be afForded. But it is, never
-1 C f C^ S> l^ m k^ vcs only to judge, how far the equivalent pro
po e 1% in their cafe, a reasonable and fair one ; how far any
crcumllances in tneir claim ma> suggest reasons for moderation
on t eir part ; or how far any other motiv-s, public or private,
011? ){to induce an acceptance. And the principles of good faith
require, that their election should befiee.
*- )a ground, the complaint which regards the withholding
• < ri tetnwotaiy paymeot of interest, except on the onditi«» of a
A NATIONAL PAPER, PUBLISHED WEDNESDAYS AND SATURDAYS BY JOHN FENNO, No. 6 9 , HIGH-STREET, PHILADELPHIA.
ALEXANDER HAMILTON,
Secretary ef the Treasury„
Dollars 31,797,481. 22
*°»53 l »303
dols. 31,797,481. 22
6>?95.5i5- »6
3,697,466. 14
dols. 10,616,604. 65
Wednesday, March 7, 1792.
surrender of the old certificates for new ones importing a eontraft
lubftantially different, appears to the S-cretarv not destitute of
foundation. He presumes, that the operation of that provision,
in the particular cafe was not adverted to ; or, that an exception
would have heen introduced as mod consonant with the general
Ipirit and defignof the act. Accordingly the farther measures
which will be submitted, will contemplate a method of obviating
the objection in question.
From the confutation, that an extension of the time for re
ceiving fubferiptions udoii the terms of the ast making provision
or ihe debt of the United States, isdefired by a large proportion
ot the non-fubferibnig creditors; and from the farther confider
at ion, that lufficient experience has not yet been had of the pro
dutfcivenefs ot a considerable branch of the revenues which have
been eftabliQied, to afford the light necessary to the final arrange
ment—it is, in the judgment of the Secretary, advifeable, tore
new the piopofition for a loan in the domestic debt, on the fame
terms with the one which has been closed, and to allow time for
receiving fubferiptions to if unuJ'the last day of September next,
inclulively ; making provision tor the temporary payment of in
terest to such who may not think fit to subscribe, tor the year
1 79 2 > of the like nature with that which was made in the fame
cafe tor the year 1791 —except as to the holders of loan-office cer
tificates, issued between the firft of September, 1777, and the firft
of March, 1778 ; in refpeft to whom it is submitted as proper to
drfpenfe with the obligation of exchanging their old certificates
for new. as the condition of their receiving interest in capacity of
non-fubferibers ; and to allow them, w'.thout such exchange, to
receive the fame interest, both for the years 1791 and 1792, as if
they had fubferibed to the firft loan. It will not be materially
difficult, so to regulate the operation at the treasury as to avoid in
the particular cafe, that danger of imposition by counterfeits,
which was the motive to thegeneral provision for an exchange of
certificates.
11. The amount of the fubferiptions in the debts of the ref
pe&ive States, within the limits of the sum aflumed in each, ap
pears by the ftatrment marked D. to be dollars 17,072,334.
39-ioodths, fubjeft to the observations accompanying that llaie
ment. Consequently the difference between th aggregate of the
sums fubferibed and the aggregate of the sums aflumed, in dollars
45427,665. 61-ioodtbs.
7.088,727. 79
This difference is to be attributed to several causes, the princi
pal of which are the following : First, That the sums afTumed in
l efpeel to certain States exceeded the a&ual amount of their ex
iting debts. Second, That in various instances, a part of the ex
iting debt was in a form which excluded it from being received,
without contravening paiticular provisions of the law ; as in the
cafe of certificates iffucd alter the firft day of January, 1790, in
lieu of certificates which had been iflued prior to that period,
wnich was reported upon by the Secretary on the twenty-fifth day
of February last. Third, Ignorance of, or inattention to the li
mitation of time for receiving fubferiptions. It appears, that a
number of persons loft the opportunity of fubferibing from the
one o» the other of these causes.
1 >«3'>3 6 4- 76
A ftrongdefire that a farther opportunity maybe afforded for
fubferiptions in the debts of the States, has been manifefted by
the individuals interested. And the States of Rhode-Island and
New-Hampshire, have by the public a6ls referred to the Secretary,
indicated a fiinilar desire. The affording of such farther opportu
nity, may either be reftri&ed within the limit, as to amount,
which is contemplated by the ast itfelf, or may receive an exten
sion which will embrace the residuary debts of the States.
1 he firft may be considered as nothing more than giving full
effect to a measure already adopted.
1 he last appears to have in its favor all the leading inducements
to what has been already done. The embarrafTments which
might arise from confli&ing systems of finance, are not entirely
obviated. The efficacious command of the national resources for
national exigencies, is not unequivocally secured. Theequalizing
of the condition of the citizens of every (late, and exonerating
those of the states mod indebted, from partial burthens which
would press upon them in consequence of exertions iu a common
cause, is not completely fulfilled, until the entire debt of every
state, contracted in relation to the w*r, is embraced on one gene
ral and comprehensive plan. The inconvenience to the United
States, of difbui thening the states 4 which arc still encumbered with
considerable debts, would bear no proportion to the inconveni
ence which they would feel, if left to struggle with those debts,
unaided.
15 674. 62
107,648. 63
More general contentment, therefore, in the public mind, may
be expected to attend such an exoneration, than the reveife; in
proportion as the experience of actual inconvenience would be
greatei, though only applicable to parts, in the one than in the
other cafe.
With regard to states, parts only of the debts of which have
been aflTumed, and in proportions ftiort of those, which have pre
vailed, in favor of other states, and short also of what would have
resulted from a due apportionment of the entire sum afTumed ; the
claim to a further aflumption is founded on confederations of
equal justice, as relative to the meafuie itfelf, considered in a se
parate and independent light.
But there is a further reason of material weight for an immedi
ate general assumption. Mpnicd men, as well foreigners as citi
zens, through the expeftatibn of an eventual aflumption, or that in
some shape or other a substantial provision will be made for the
unaflutned residue of the state debts, will be induced to speculate
in the purchase of them. In proportion as the event is unfeitled,
or uncertain, the price of the article will be low, and the present
proprietors will be under disadvantage in the sale. The joss to
them in favor of the purchasers is to be regarded as an evil; and
as far as it is conne&cd with a transfer to foreigners, at an under
value, it will be a national evil. By whatever authority an ulti
mate provision may be made, there will be an absolute loss to the
community eqnal to the amount of such under-value.
It may appear an obje&ion to the measure, that it will require
an establishment of additional funds by the government ot the
United States. But this does not seem to be a necelfary confc
quence. The piobability is, that without a fupplementarv as
sumption, an equal, or very nearly equal augmentation of funds
will be rcquifite to provide for greater balances in lavor of certain
dates, which would be proportionally duninifhed by such af
umption. The destination, not the quantum of the fund, will
therefore be the chief diftin&ion between the two cases.
It may also appear an objection to a total aflumption, that the
magnitude of the object is net ascertained with precision. It is
not certainly known, what sum is due in each state ; nor has it
been poflible to acquire the information, owing to different causes.
But though precise data are deficient, there arc materials which
will serve as guides. From the, returns received at the trcafury,
357
[Whole No. 29 B.]
I a (lifted by information in oilier ways, it miv he ftited without
danger of mater,al error-Tbat the remaining debt, of the llaie.
I over and above the funis already fubferibed, will not exceed the
amount, fpecfied in the Bate,nent D. acro.npauyi.ig this report-
And that, including the sums already fubferibed, thelotal amount
° ;i , H, * matc b'provided for, in the event of a general assumption.
will not exceed dols. 25,403,362. 71 which would couftitute an
addition of dols 3,903,36*. 71 to the Aim of 5i,500,000 dollar*,
already aliumed.
./{-Id » total assumption be deemed eligible, it may still be
advifeable to alfign a determinate sum for each state, that the uc
molt limit of the operation may be pre-eftablilhed ; and it is nt
celiary ,n order to the certainty of a due provision in prop-r time
ul'aff re A° U i', d r r ß '" * on the .Jdfi
lums ailumec}, till after the year 1792.
It will occur, that provision has been made, for paying to each
state, m trull for ,u non-fubicrib.ng creditors, an interest u P on the
difference between the sum..(Filmed (or such fta.e, and that aftu
been fubfenbed ' '° WhSt W ° uM h ' VC bcen T a y ,b 'e> if it had
j" ' h n 'wrll 1 °f ' fanhcr "Gumption, either within the limits al
ready eltabhlhed, or commensurate with the remaining deb's of
the states; It IS conceived, that it will not be incompatible with
the provilion just mentioned, to retain, at the end ot each quarter
during the progress of the farther fubfer, pt.on, out of the money
d.rested to be paid to each state, ihe sum corresponding with the
interest upon so much ol its debts as {hall have been fubferibed to
that period, paying the overplus it any, to the state. An abfo.
lute (ufpenfion of that payment does not appear confident with
the nature of the ftipulatior., included in that provision ; for though
the money to be paid to a state be expr.fsly a trull for the non.
uotcriblng creditors ; yet as it cannot be certain beforehand, that
they will cleft to change their condition, the possibility of it will
not juilify a lufpenfion of payment to the state, which might opc.
rate as a suspension of payment to the creditors themselves.
A farther objeaion to such a suspension results from the idea,
'hat the provision in question appears to have a secondary obje6l;
namely, as a p edge for fecurin; a provision for whatever balance
may be found due to a state on the general fettlemenL of accounts.
The payment direded to be made to a state, is, " to continue until
there Ihall be a fettlemcnt of accounts between the Uni:ed States
and the individual ftdtcs ; and in cafe a balance Ihould then appear
in favor of a state, until provision (hall be made for the said ba
lance."
This secondary operation as a pledge or security (confidently
with the intent of the funding ast) can only b.: superseded in fa
vor of the primary objedf, a provision for the creditors ; and as far as
may be necessary to admit thorn to an etf;dual participation or
it. But as whatever money may be paid to a state, is to be paid
over to its creditors, proportional deductions may, with proprie
ty, be made from the debts of those creditors who may hweafier
lubfcribe; so as that the United States may not have to pay twice
for the fdine purpose.
If it (hall be judged expedient, either to open again, or extend
the aflumption, it will be necefTary to vary the dcfcriptinn of the
debts, which may be lubfcribed, so as to comprehend all those,
which have relation to services or supplies during the war, under
such refttiftions as arc requtfite to guaid against abuse.
In the original proposition for an assumption of the (late debts,
and in the suggestions now made on ibc fame fubjeii, the Sccie
taty has contemplated, aod still contemplates, as a material part
of the plan, an cffr&ual proviflon for the ! ;of the vacant lands
of the United States. He has considered tbn refourci-, as all im
portant mean of finking a part of the debt, and facilitating ulti,
mate arrangements concerning the residue. If fupplementarjr
funds (hall be rendered necessary, by an additional aflfiini|jtion #
the provilion will most conveniently be made at the next feflW
of Congress, when the produftivenefsof the exilling revenues, and
the exicnt of the sum to be provided for, will be better ascer
tained.
There is a part of the public debt of the United States, which
is a cause of some perplexity to the treasury. It is not compre
hended within the existing provision for the foreign debt which
is confined to loans made abroad ; and it is queftiouable, whether
it is to be regarded as a portion of the domcftic debt. It is not
only due lojoreignerj, but the interest upon it is payable, by ex
press stipulation, in a foreign country ; whence it becomes a mat
ter of doubt, whether it be at all contemplated by the ad making
provision for the debt of the United States. The part alluded to, ,
is that which is due to certain foreign officers who served the
United States during the late war. In consequence of a resolution
of Congress, directing their inter ft to be paid to them in France,
the ceitificates which were issued to them fpecify, that " in pur
suance of and compliance with a certain resolution of Congress of
the third day of February, 1784, the laid inteieft is to be paid, an
nually, at the house of Monf. lc\Grand, banker in Paris." Interest
has accoidinglv been paid to them at Pans, down to the 31 ft of
December, 1788, by virtue of a special resolution of Congress of
the 20th of August in that year, fmce which period, no payment
has been made.
It has been heretofore suggested as the op : nion of the Secretary,
that it would be expedient to cause the whole of this dcfcriptioa
of debt to be paid off; among other ieafons, because it bears an
inteieft at fix per centum per annum, payable abroad, and can be
discharged with a saving. The other reasons alluded to are of a
nature both weighty and delicate, and too obvious, it is presumed,
to need a fpecification. Some recent circumftanccs have served to
strengthen the inducements to the m afure. But if it should,
finally, be deemed unadvifeable, it is necessary, at least, that pro*
vision (hould be made for the interest, wh ch is now suspended,
under the doubt that has been stated, and from the want of autho
rity to remit it pursuant to the contra#.
The amount of this debt, with the arrears of intcreft to the end
of the year 1791, is dols. 220,646. 81.
IV. The ad making provision for trie debt of tho United States,
has ;«ppropria'ed the proceeds of the western lands as a fund for
the discharge of the public debt. And the a£fc making provifioa
ior ttie redu&ion ot the public debt, has appropriated all the sur
plus of the duties on imports and tonnage, to the e»rd of the year
1790, to the purpose of purchasing the debt at the market price,
and has authorjfed the President to borrow the further sum ot
two millions of dollars tor the fame objefct. >
These measures f:rve to indicate the intention of the legiflaturc,
as early and as fait as to provide for the cxtinguilhroent
of the existing debt.
In puriuatice of 1 hat intention, it appears advifeable, that a sys
tematic plan should be begun for the creation «nd eftabhflimeot
a finking fund.
(to be cowti NWEq.j