— ° J4 ' SOP ' H f'l-IH-SrßF.f.l, Pi! I! DfcLFHi A .
[No. 56 of Vol. IV.]
PHILADELPHIA, December 12
REPORT
OF THE
SECRET ART of the TREASURY,
Refpeding the Redemption of the Public Debt
4 and the Reimbursement «f the Loan made
of the Bank of the United States
Trenfunt Department, Nov. 30, I'i) 2
SIR,
I have the honor to transmit herewith a
Report, pursuant to two resolutions of the
House of Representatives, one of the z\Jl in-
Jlant, refpefling the Redemption of the Pub
lic Debt; the other of the 2 idinjlanl, refpe9-
tng the Reimbursement of the Loan made
of the Bank of the United States, pursuant to
the eleventh fedion of the aS by ivhich it is
carporated; and to be, with the mo/l per
fetl rejpeil,
SIR,
Your mojl obedient,
and mojl humble servant,
ALEXANDER HAMILTON,
Secretary of the Treasury,
Th: Honorable the SPEAKER
of the House of Reprefintatives.
In obedience to two Ilefolutions of the
House of Representatives, one of the
%I ft itiftant, dire&ing the Secretary of
the Treasury to report a Plan for the
Redemption of so much of the Public
Debt as by the Ast entitled " An Ast
making Provision for the Debt of the
United States," the United States have
reserved the right to redeem ; the other
of the 22d instant, diredting him to re
port the Plan of a Piovifion for the
R#imhurfement of the Loan made of
the Bank of the United States, pursu
ant to the Xlth fedtion of the Act en
titled " An Adt to Incorporate the
Subscribers to the Bank of the United
States; the said Secretary refpedtfully
submits the following
report.
TH E expediency of taking mea
furej for the regular redemp
tion of the public debt, according to the
right which has been referred to the go
vernment, being wifely predetermined by
the resolution of the Hosfe of Represen
tatives referring the fubjeft to the Secre
tary, nothing remains far him but to en
deavour to fele£t and submit the mod eli
gible means of providing for the execu
tion of that important object.
With this view, the firft enquiry, which
naturally presents itfelf, in, whether the
exiding revenues are or are not adequate
to the purpose ?
*1 he estimates which accompany the re
port of the Secretary of the 14th instant,
will (hew, that during the continuance of
theprefent Indian war, tire appropriations
for mtereft and the demands for the cur
rent service, are likely to exhaust the pro
duct of the exiding revenues ; though
they afford a valuable surplus beyond the
permanent objects of expenditure, which
it is hoped may, ere long, be advantage
ously applied to accelerace the extinguilh
®ent of the debt.
In the mean time, however, and until
the restoration of peace, the employment
«• at resource t ' l ' s way, malt of ne
«Bitybelufpended; and either the bufmefs
redemption mud be dferred, 01 re
course us 11ft; be had to other expedients.
But did no such temporary necessity
or resorting to other expedients exist,
LiV 't would dill be recommend
ed by weighty confiderations.—lt would
a PP ear > in the abftraft, advifeable to leave
the^ surplus of the prelent revenues free,
to be applied to such casual exigencies as
™ay, from time to time occur; to occasional
pilrchafes of the debt when not exhausted
by such exigencies, to the payment of in
hered on any balances which may be found
due to particular states upon the general
wtlemwitdf accounts; and finally, to the
payment of iatereft on the deferred part
lhe debt, when the period for such
payment arrives.
Wednesday, December 12 . , "
There is a reasonable prospect, that if
not diverted, it will be found adequate to
the ttvo la it important pnnpofes.
Relinquilhing, then, the idea of an im
mediate application of the present reven
ues to t!ie objedl in view, it remains to ex
amine what.other modes are in the option
or the Legislature.
Loans, from time to time, equal to the
iums annually and bottomed
on the iame revenues, which are now
ppropnated to pay inferett; upon
j. m ?' offer themselves as one expe
c tent, which may be employed with a de
gree of advantage. As there it a proba
bility of borrowing at a tower rate of in
terelt, a material saving \#uldrefult; and
even this tefource, if none better could
«. ol, £ ht not to fre neg*feed.
But it is obvious, that to rely upon this
rev iree aW would be to do little to
wards the final exoneration of the nation,
lo (top at that point woultf consequently
be neither provident nor fatisfadory.
1 ne interests as well as the expeftat ions
of the Union require something more ef
feaual.
The establishment of additional reven-
the remaining resource. Thii.ifthe
bulmefs is to be undertaken iu eatneft, is
unavoidable : and a full confidence may
reasonably be entertained, that the com
munity will fee with fatisfaftion the em
ployment of those means, which alone can
be HFedtual, for accomplifliing an end, in
itfelf so important, and so much an objedt
of general delite. It cannot fail to be u
niversally felt, that if the end is to be at
tained, the neceflary means mult be em
ployed.
It canonly be expsdted that care be ta
ken to choose such as are iiabie to feyi-cit
dbjedtions, and that in the modifications
of the business in other refpedts, due le
gard be had to the prefsnt and progref
live circumstances of the country.
A (Turning it as the basis of a plan of
redemption, that additional revenues arc
to be provided, the further enquiry di
vides itfelf into the following branches :
I. Shall a revenue by immediately con
ftitated, equal to the full sum, which
may at present be redeemed, according
to the terms of the contrast ?
11. Shall a revenue be conftituted,from
year to year, equal only to the interest
of the fu.u, to be redeemed in each year
—coupling with this operation an annu
al loan,commenfurate with such sum ? Or,
111. Shall a revenue be constituted each
year, so much exceeding the intend of
the sum to He redeemed as to be fufficient,
within a short definite term of time, 10
discharge the principal itfelf; coupling
with this operation also, an annual loan,
equal to the sum to be annually redeemed,
and appropriating the revenue created to
its discharge, within the term which shall
have been predetermined ?
The firft plan, besides being completely
effectual, would be eventually mod
(economical j but coniidering to what a
magnitude the revenues of the United
States have grown in a short period, it is
not easy to pronounce how far the faculty
of paying might not be drained by any
sudden confiderableaugmentation, whete
foever immediately placed while the ra
pid progress of the country in population
and resource feemsto afford a moral cer-
tainty, that the necessary augmentation
may be made witii conveniences by
fucceflive steps, within a moderate term
of time, and invites to temporary and
partial suspensions, as capable of conci
liating the reasonable accommodation of
thecommunity withjthe vigorous profecuti
of the main design. For these and for o
ther reasons which will readily occur,
the course of providing immediately the
intire sum to be redeemed, is conceived
not to be the mod eligible.
The second plan, though much more
efficacious than that of annual loans, bot-
tomed 011 the revenues now appropriated
for the payment of interest on the sums
to be redeemed, does not appear to be
221
efficaciow. The fchcJule A.
*W' % w th -' cfFed of it to the lit of
•n l u^L lß ° 3 ' whe " th:; deferred debt
will betSftie redeemable in the proporti
ons stipulated. Supposing the invellrnrnt
ot the iiitcreft which is each year liberat
ed, together with that which has been,
and will be released by pu,-chafes, pursu
ant to provifinns heretofore made, in th
ru'"chafe of 6 per cent flr, c i c . a
ptlncipal equal to 2,043,837 dollar, and
7 cents would be funk, and a clear
annuity, equal to 459,212 dollars and
82 cents would be created, towards fur
ther redemptions; but the fund then ne
cessary for the future progreflive redemp
t'on oit the debt, according to the right
reserved, would be 1,126,616 dollars and
44 cents, by 667,403 dollars
and 63 cents, the amount of the redeem
'"7 —So!»ifth!n«rar>re effjjftual than
this is certain!-/ dcliiable, and apnears to
be pra&icable.
The la£l of the three plans be£l accords
with the molt accurate view which the Se
cretary has been able to take of the pub
lic interest.
In its application it is of material con
sequence to endeavour to accomplilh theft
two points: I. The complete discharge of
the sums annually redeemable within the
period prefixed, and the reimbursement
within the fame period of all auxiliary
loans which may have been made for that
purpose. H. The confuting by the ex
piration of that period, a clear annual
fund competent to the future redemption
of the debt to the extent of the rijjht re
served.
The period to which it is conceived
the plan ought to refer, is the firft day
i3»12 ; htjai.fc bfrctt, i!>c firft
payment, on account ot the principal of
the dtferred debt, may rightfully be made.
In conformity to these ideas, the fol
lowing plan is mod refpedtfully submit
ted : Premising that the sum redeemable
for the firft year of the 6 per cent (lock,
bearing a present interest, ia computed at
550,000 dollars.
Let an annual fund be constituted, du
ring the present feflion, equal to 103,199
dollars and 6 cents, to begin to accrue
from the firft ofJanuary, 1793. —Let the
sum of 550,000 dollars be borrowed up
on the credit of this annuity, reiinburfe
able within five years, that is by the firft
of January 1799. The sum bo rrowed to
be applied on the firft of January 1794,
P a y me nt on account of the
prineipal of the debt.
The proposed annuity will reimburse
the fuin borrowed with interest by the
firft of January 1799, a "J will be thence
forth free for any further application.
The sum redeemable the second year,
that is on the firft of January 1795, is
computed at 583,000 dollars.
Let an annual fund be constituted du
ring the second feflion after the present,
equal to 109,391 dollars and 60 cents, to
begin to accrue from the fiift of January
1794. Ler the sum of 583,000 dollars be
borrowed Upon the credit of this annuity
reimburfeahle within five years, that is,
by the firft of Janaaiy 1800 ; the sum
borrpwed to be applied on the firft of Ja
nuary 1795, to the second payment on
account of the principal of the debt. The
proposed annuity will reimburse the sum
borrowed with interest by the firit of Ja
-1800, and will be thenceforth free
for any further application.
Tlie sum redeemable the third year,
that is, on the fij-ft of January 1796, is
computed at 617,980 dollars.
I>et an annual fund be constituted dur
ing the third fcffion, after the present,
equal to 115,955 dollars and 17 cents, to
begin to accrue from the lirft of January
1795. Let the l'um of 617,980 dollars
be borrowed upon the credit oi this annu
ity, reimburfeable within five years, that
is, by the firll of January 1801.
The sum borrowed to be applied on the
firft of January 1796, to the third pay
ment on accountoftheprinci; j! jfthedebt.
y
[Whole No. 578.]
ahe proptif L -;! ammiy will reiuiLupfc
the funri borrowed with iuceicft ty the i!t
of January, i3oi.
iHe sum redeemable the fourth year,
that ison the ill of January i 797, is com
puted at 655,058 dollars and 80 cents.
. Let an annual fund be conftitmed dur-
ing Ihe fourth session, after the prefeut,
equal to 1^2,912 dt.llaisand 48 cents ;to
to aeci uc from tli ■ ilt of January,
J Let the sum of 655,058 dollars
and 80 cents, be borrowed upon the cre
dit of this annuity, reimburfeable within
five years ; that is by the i!t of January
I 802. The Aim borrowed to be applied
011 the id of January 1797, to the fourth
payment on account ot the principal of
the debt.
Ihe proposed annuity will reimbuiTe
the sum borrowed with interest by the ift
of January 1802.
Tile turn redeemable the fifth year, that
in on the lit of January I*9B, is comput
ed at 694,362 dollars and 33 cents.
Let an annual fund be conftituttd dur
ing the fifth feflion, after the prcfcnt, e
qual to 152,743 dollars and 12 cents, to
begin to accrue from the ift of January
1797* Let the sum of 694,362 dollars and
33 cents be borrowed upon the credit of
this annuity, reimburfeable within four
years, that is by the 1 (I of January 1802.
The sum borrowed to be applied on the
Ift of January 1798 'he fifth payment
on account of the ptincipal of the debt.
The proposed annuity will reimburfe
the sum borrowed with interest by the ill
of January 1802.
The sum redeemable the fitxh year,that
is on the firft of January 1799 is comput
ed at 756,024 dollars and 7 cents.
Let an annual fund be conliitutcd dur
ing the sixth session, after the prelent,
equal to 197,680 dollars and 20 cents, tu
begin to accrue from the 1 ft January 1798.
Let the sum of 736,024 dollars and 7
cents, be borrowed upon the credit of this
annuity, reimburfeable within three yeats,
that is by the ift of January 1802. The
sum borrowed to be applied on the ill of
January 1799 to G*th payment 011 ac
count of the principal of the debt.
The proposed annuity will reimburse
the sum borrowed with interest by the ift
of January 1802.
The sum redeemable the seventh year,
that is, on the Ift of January 1800, is
computed at 780,185 dollars and 52
cents.
Let an annual fund be constituted dur
ing the seventh session, after the present,
equal to 272,848 dollars and 38 cents, to
begin to accrue from the ill of Januaiy
1799. Let the sum of 780,185 dollars
and 52 cents be borrowed upon the cre
dit of this annuity, reimbursable within
two years, that is, by the ill of January
1802. The sum borrowed to be applied
on the firft of January 180010 the feventli
payment on account of the principal cf
the debt.
The proposed annuity will reimburse
the sum borrowed with interest, by the rfl
of January 1802.
The sum redeemable the eighth year,
that is, on the ill of January, 1801, is com
puted at 826,996 dollars and 65 cents.
Let an annual fund be coallituted dur
ing the eighth session, after the present,
equal to 423,583 dollars and 64 cents, to
begin to accrue from the ift of January
1800. Let th c sum of 826,996 dollars
an<J cents be borrowed upon the credit
of this annuity, reimburfeable within one
year, that is, on the id of January 1802.
The sum borrowed to be applied on the
id of January 1801 to the eighth payment
on account of the principal of the debt.
The proposed annuity will reimbuife
the sum boriowed with interest on the lit
of Janua r v 1802.
The sum redeemable the ninth year,
that is, on the ift of January 1802, is com
puted at 1,126,616 dollars apd 44 cents.
The then existing means for the 'iifcharge
of this sum, arifingfrom the operation ui
the plan, will be
[SiV la ft f>age.~\