Public Debt.



The interest and redeeming annu

ity, exclusive of the sum funded [Communicated to the House of Representatives, Janu.

in favor of certain States, will ary 4, and February 3, 1796.]


$2,274,624 13 Treasury DEPARTMENT, Dec. 31, 1795.

But to reimburse the said balances

to States, there would be necesSir: : Agreeably to what was proposed by the

sary the further sum of

46,901 12 committee of the House of Representatives at the conference with them on the 26th instant, I have

Amounting to

2,321,525 25 now the honor to present a statement of the debts of the United States, with a view of the sums which will be annually requisite for discharging

It is proper, however, to observe that, by a law them.

passed on the 2d of January, 1795, the balances 1st. Of the debts due in Amsterdam and Ant-controllable by the United States, subject to be

due to States are, on certain conditions, not DOF werp, for loans obtained under the late and pre-transferred at any time before the 2d of January, sent Governments. The amount of these loans, exclusive of certain 1797, and that said balances, when so transferred

are subject to reimbursement. premiums with which one of them

is charged, amounted, on the 1st of January, 1795, to thirty Iceptible of calculation at present, and may, with

As the redeeming annuity is therefore unsus millions and five hundred thousand guilders, equal, the interest, amount to $2,321,525 25, this last at the exchange of forty cents per guilder, to

sum is assumed, in the general statement which $12,200,000. The annexed statement, marked A, shows, in

is annexed, as the annual charge upon the redetail, the several loans which constitute this description of debt, the rates of interest payable before stated until the end of the year 1817. Du

The annuity will be necessary for the object thereon, and the sums which, according to existing contracts, are reimbursable in each year. li ring the year 1818, it will decline to $1,862,501 63, is to be observed, however, that the sums stated and will then be liberated by the extinguishment

of the debt: in dollars are calculated at par, or forty cents per 3d. Of the Funded Domestic Debt, bearing inguilder; the sums which may be really necessary terest of six per centum per annum, after the year to effect reimbursements cannot be ascertained,

1800. and will vary, from time to time, according to the

This debt, on the 31st of December, 1794, course of exchange. o24.e of the Domestic Funded Debt, bearing a September, 1795, it had increased by additional

amounted to $14,523,365 45; but on the 30b of present interest of six per centum per annum.

subscriptions to $14,561,934 41. This debt, on the 31st of December, 1794, amounted to $29,046,730 62, but by subscriptions of $929,220 14, which has been placed to the cre

In the capital last mentioned is included the sum under the supplementary funding act, passed on dit of the Sinking Fund, and a sum of $1,172,528, the 28th of January, 1795, it had increased, on the

arising froin balances due to certain States, 30th of September, 1795, to $29,310,856 86. In this last capital is included the sum of Commissioners in their favor.

in consequence of the report of the late Board of $1,167,164 58, which has been purchased or redeemed; the interest of which is vested in the 1st of January, 1801; the first reimbursement of

The interest on this debt will commence on the Commissioners of the Sinking Fund; also the principal is to be made on the 1st of January, stock created by funding the balances due to cer- | 1802; the credit to the Sinking Fund, and the batain States, in consequence of the report of the lances due to certain States, which may remain late Board of Commissioners in their favor; untransferred, are not subject to reimbursement. which balances originally amounted to $2,345,056.

By the act of the last session, providing for the The interest and redeeming annuredemption of the Public Debt, the Commission

ity, exclusive of the balances ers of the Sinking Fund are instructed to com

originally funded in favor of mence the reimbursement of the six per cent.

certain States, will require $1,122,919 78 stock, bearing a present interest on the first of And to redeem the balances origiJanuary ensuing, and to continue the same annu

nally credited to certain States, ally, until the said stock is fully redeemed. The

the further annuity of sum placed to the credit of the Sinking Fund, and the balances standing to the credit of certain Amounting to

1,146,370 34 States, in consequence of the report of the Commissioners in their favor, are, however, excepted It being very uncertain whether any part of the by the law from reimbursement.

balances due to States will remain untransferred The annexed statement, marked B, shows the till the year 1802, and there being important rea annuity necessary to complete the payment of the sons in favor of a reimbursement of the whole stock subscribed on the 30th of September; other debt on uniform principles, the sum last stated is subscriptions, though not to any great amount, I assumed as what will probably be the annual have been, and will continue to be made until the charge upon the revenue. close of the present year.

This annuity will continue from the year 1801

23,450 50

Public Debt.

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to the year 1823; during the year 1824, it will stained no provision for the payment of interest on fall to $924,020 76, and will then be liberated. this debt, except on that part which has been re

4th. Of the Domestic Funded Debt, bearing in- gistered at the Treasury, and then only for a terest at three per centum per annum.

payment on account of interest, equivalent to This debt, on the last day of December, 1794, what would be payable in consequence of a subwas $19,484,840 68; on the 30th of September, scription to the loan. 1795, it had increased by new loans to $19,569,- On the principles which have governed former 909 63.

appropriations, there would be necessary, until The sum purchased or redeemed, and passed to and including the year 1800, the sum of $51,333 22, the credit of the Sinking Fund, was $607,097 27. and after the year 1800, the sum of $71,029 44.

Notwithstanding this debt is redeemable at the As, however, the amount of the Unfunded pleasure of the United States, and though funds Debt is uncertain, and as no principles of the reare, by the act of March 3d, 1795, eventually des- imbursement thereof have been established, the tined for that purpose, yet, as the appropriation is sum last stated is assumed as the annual charge conditional and revokable by Congress, nothing proper to he estimated for this object. more is stated as a charge upon the revenue than 8ih. Of the Domestic Loans, obtained under the the annual interest, being $587,097 28.

authority of the present Government. 5th. Of the Domestic Funded Debt, bearing in- The annexed statement, marked C, shows, in terest at five and one half per centum per annum. detail, the several loans which had been obtained

This debt has lately been created by a subscrip-on the 30th of September, 1795, amounting to tion at the Treasury of that part of the loans ob- $5.700,000. A further sum of $500,000 will be tained from France during the late war, which obtained at the close of the present year, which remained unpaid, and which bore interest at five will increase this description of debt to $6,200,000. per centum per annum, and amounts to $1,848,900. In this sum is included $1,400,000, being the

This species of debt is liable to be increased by amount of instalments which remain unpaid of subscriptions of the debt due in Holland, bearing two millions had of the Bank of the United States, five per cent. interest; but any increase will ope- for an equal sum of the capital stock of the said rate as an equivalent reduction of the foreign bank; according to contract, this loan bears an debt; the interest is payable quarter-yearly, from interest of șix per centum per annum, and is reand after the 1st of January, 1796;

the annual imbursable in instalments of $200,000 at the close sum requisite for this object is $101,689 50. of the years, from 1795 to 1801, inclusive.

6th. Of the Domestic Funded Debt, bearing in- There is also included in the aggregate amount terest at four-and-a-half per centum per annum. before stated, the sum of $1,000,000, borrowed of

This, like the debt last mentioned, has been pro- the Bank of the United States and the Bank of duced by a subscription of a part of the sum New York, for expenses incident to the interdue to France, and arises from the loans which bore course of the United States with foreign nations; an interest of four per centum ; the amount is $400,000 of this loan will fall due in the year 1796, $176,000.

and the remainder at the close of the years 1797, To discharge the interest, there will be requir- 1798, and 1799, in equal instalments of $200,000 ed annually the sum of $7,920.

each. 7th. Of ihe Unfunded Debt, contracted during The other loans, with that to be made at the the late war.

close of the present year, will require provision in This debt is composed of Loan

the course of 1796. Office and final settlement certi

It being evident that these loans, especially ficates, indents of interest, certi

those which will fall due in the course of the enficates of the Register of the

suing year, must be continued by new contracts, Treasury, credits on the pub

the annual interest only is introduced into the lic books, and unliquidated

general statement which is annexed; this interest, claims. The amounts cannot

for reasons woich will be developed in a subsebe precisely ascertained, but, on

quent part of this communication, is calculated at the principles of former esti

six per centum, or $372,000. mates, which cannot be materi

The several sums before stated have been ally erroneous, the principal is

brought into an aggregate view in the annexed stated at

$984,811 09 table, marked D, the last column of which exAnd the arrearages of interest, pri

hibits the sums which are estimated as being neor to 1791, at

398,026 28 cessary to be provided in addition to the ordinary

expenses of Government. Amounting to

1,382,837 37 If a revenue adequate to the payment of the

sums included in this estimate were to be estabAgreeably to the contracts expressed in the cer- lished, the following reductions of the Public Debt tificates of Unfunded Debt, the principals bear an might be effected : interest of six per centum per annum; the arrear- At the close of the year 1809, the whole Foages of interest, prior to the year 1791, on being reign Debt, amo ng to $12,200,000, would be subscribed to the loan opened for the Domestic discharged, and an annuity of $573,632 02, now Debt, become three per cent. stock.

required for the payment of interest, would revert As yet, however, the acts of Congress have con- | to the public.

Public Debt.

At the close of the year 1818, the Funded Do-cient for the employment of any revenges which mestic Debt, bearing a present interest of six per can readily be acquired. It will also appear, from cent., would be discharged. This debt amounts the table marked D, that such an arrangement to $29,310,856 86, the annuity then liberated would leave it in the power of the United States would be $2,321,525 25.

to reimburse the proposed new stock at a favoraAt the close of the year 1824, the funded six ble period, by the application of revenue which per cent. stock, bearing a future interest, amount will then be liberated, in consequence of the fital ing to $14,561,934 41, would also be reimbursed, reimbursement of the six per cent. stock, bearing when a further annuity of $1,146,370 34 would a present interest. be liberated.

The utility of the proposed measure can, I preThe act of the last session provides fully for the sume, receive but little illustration beyond that fulfilment of the two last mentioned objects, by afforded by a naked exhibition of the public enan absolute appropriation of revenue.

gagements. After the reimbursement before mentioned, It is, indeed, very probable that the final pay. there would still remain the following sums of the ment of the Public Debt, instead of being postponexisting debt:

ed by any existing stipulations which forbid re The stock bearing 3 per cent. in

imbursements, will, in fact, be rendered additionterest, being

$19,569,909 63 ally burdensome, if it be not somewhat retarded The stock bearing 55 per cent. in

by those conditions which require repayments at terest

1,848,900 00 fixed periods. The stock bearing 45 per cent. in

The difficulties which are now experienced in terest

176,000 00 respect to the Foreign Debt effectually demonThe capital of the present Unfund

strate the impolicy of unnecessarily contracting ed Debt, with the arrearages of

engagements which cannot be satisfied direcily interest prior to 1791, estimated 1,382,837 37 from the proceeds of the revenue. At no time And the capital existing in loans

will those who negotiate loans for the public be of the Bank of the United States

able to calculate the value of money or the probaand the Bank of New York 6,200,000 00bility of an increase or reduction of the rate of

interest, with greater precision than those who Amounting, in the whole, to 29,177,647 00 lend. At all times must the borrower be exposed

to certain expenses, risks, and embarrassments, for But if a revenue were to be established equal to which no equivalent can be obtained. what will be requisite to satisfy the public en- Among the reasons which recommend a congagements upon the scale of expenditure which mutation of the temporary debt due to the Bank will be necessary in the year 1801, the whole of of the United States, the following deserve notice: the Public Debt might be extinguished, by pay

1st. That this debt was contracted for the very ment or purchase, at or before the close of the beneficial consideration of an equal sum of the year 1824, as also a very considerable additional capital stock of that institution, or, it consists of debt, if any such should arise, out of future con- sums advanced for the public service in anticipatingencies.

tion of the revenue. In these respects, the debts This view of the public engagements will, it is due to the bank may be fairly considered as first presumed, demonstrate to the committee that, in in merit and importance. an attention has not been wanting to secure a the bank to grant such further loans as the public right of reimbursing the debt, fully, if not more exigencies may require, without exposing the than equal, to what the United States can exer- United States to certain expenses which are alcise, and that the unforeseen events which have ways incident to loans had of individuals. lately happened in Europe render it necessary to 3d. That, through the agency of the bank, sales combine some efficacious plan for obtaining loans, of stock can be made to the best possible advanwith any augmentation of the revenue which it tage, and the benefit of any premium which can may now be judged expedient to establish. be obtained be secured to the United States. After a full consideration of different expe

This last consideration is of much importance; dients, it has appeared to me most eligible to pro- for, though the proposed stock might not in the pose a commutation of the whole debt due to the present moment of commercial enterprise, comBank of the United States into a funded domes-mand a premium, yet there can be but little tic stock, bearing interest at six per centum per doubt that it would bear a price considerably annum, 'transferable at the Treasury and Loan above par at no distant period. While, therefore, Offices, respectively, and irredeemable for such a any present exigencies would be supplied on the period as will invite purchases at par.

most favorable terms, a certainty would remain Considering the great capitals which will soon that the real value of the stock would accrue to be demandable, or which are in train of reimburse- the public. I have the honor to be, &c., ment in consequence of the act of the last session,

OLIVER WOLCOTT, Jr. it is evident that, if the proposed new stock were

Secretary of the Treasury. to be declared irredeemable for a period of twen- To the Hon. William Smith, Esq. ty or twenty-five years, still the purchase or redemption of the remaining debt would be suffi- [The tables, being merely details, are omitted.)

, commutation will enable



Public Debt. [Presented to the House of Representatives, February ratio, proportioned to the reduction of capital by 3, 1796.]

reimbursement; while the dividends to be made TREASURY DEPARTMENT, Jan. 26, 1796. at the end of the year, for principal and interest, Sir: The object of this communication is to are represented as increasing by the amount of represent to the Committee of Ways and Means liberated interest; the dividends for the entire that certain additional provisions appear to be year being uniformly eight per centum upon the advisable, in order to a due execution of the act,

original capital. passed during the last session of Congress, enti

Upon this statement, it may be observed, that iled “An act making further provision for the it has been the established practice at the Treasupport of Public Credit, and for the redemption sury and Loan Offices to suspend all transfers for of the Public Debt."

fourteen days preceding the expiration of each The eleventh section of the recited act directs, quarter; that time being found by experience to that the Commissioners of the Sinking Fund shall be indispensably necessary for the purposes cause to be paid, yearly, such sums as, according balancing the books, and calculating the dividends to the right for that purpose reserved, may right- upon the stock held by individual creditors : a view fully be paid for and towards the reimbursement of the annexed table will, however, prove that the or redemption of the debt or stock, bearing or to labor of stating the dividends must be immensely bear an interest of six per centum per annum.

increased, if a distinction between the payments In respect to the stock bearing a present inte-on account of interest and those on account of rest, it was directed that the reimbursement should principal is to be preserved. But the trouble and commence on the first day of January, 1796. expense which would be created in the public Upon the stock which will bear interest after the offices would not be the only or greatest inconveyear 1800, the reimbursement is to continue on nience. Such a system of reimbursement would, the first day of January, 1802.

after a few years, render it necessary to accumuThe sum which may rightfully be paid in

late in the Treasury, and suspend from circulation year, is eight per centum per annum upon the very considerable sums; the effects

of such an original capital, debt, or stock.

accumulation might be inconvenient to comAs the injunctions of the law upon the Com- merce, and could not be materially advantageous missioners of the Sinking Fund are unconditional, to the public. As the rates of the dividends and as permanent funds have been vested and ap



year to year, the true value of propriated, it is conceived that a successive reim- the stock could only be ascertained by intricate bursement annually of the debts before mentioned, calculations, to which many of the creditors would has become an irrevocable stipulation with the be incompetent. Moreover, the rates of the divicreditors. The stock bearing a present interest dends for interest for several of the last years, has, therefore, by the act of the last session, been would, upon small sums, be too inconsiderable to converted from an annuity of six per centum per induce the creditors to a cheerful compliance with annum, for an indefinite period, into an annuity certain forms which have been established with of eight per centum per annum, for a period of reference to the public security, and the responsisomewbat less than twenty-four years, com

bility of the public officers. This last objection mencing with the year 1795.

is very important; as every degree of loss and The stock upon which interest was to com- vexation to the creditors would not fail to produce mence in 1801, is a like annuity from that period. a corresponding injury to the public credit. But a stipulation in the fourth section of the

Notwithstanding it is believed that the powers act, entitled "An act making provision for the granted by the seventeenth section of the act of debt of the United States," requires a quarter the last session might be justifiably construed in yearly payment of interest

, and this stipulation such a manner as would obviate some, if not all remains in force; a distribution of the annuity of the inconveniences which have been stated, yet, eight per centum per annum into four quarter in a matter of importance like the present, the yearly dividends, is therefore necessary to satisfy decision of the Legislature is desirable. It is, the contract with the creditors.

therefore, proposed that the rates of the quarterly If the dividends on the last days of March, dividends, until the final reimbursement of the June, and September, in each year, were to be six per cent. stock, bearing interest at present, and confined to a simple payment of interest upon after the year 1800, be now declared and estathe unredeemed capital, the contract would be blished by law. strictly satisfied; the fourth quarterly dividend, Two propositions are submitted for consideraor that to be made on the last day of December tion: 1st. That, in respect to the stock bearing annually, might, in this case, be calculated at such a present interest, it be declared, that there shall a rate as would complete the sum of eight per be dividends made on the last days of March, centum for each entire year; this appears to have June, and September, from the present year to been the design of the law in contemplating a the year 1818, inclusive, at the rate of one and distinction between the payments on account of one-half per centum upon the original capital ; principal and those on account of interest. that there be dividends made on the 1st days of

The effect of such a distribution of the annuity December, from the present year to the year 1817 of eight per centum is exhibited in the annexed inclusive, at the rate of three and one-half per table, which shows the dividends of interest for centum upon the original capital, and that a divithe first three quarters of a year, in a decreasing I dend be made, on the last day of December, in

Public Debt.

the year 1818, of one dollar eighty-six cents and the stock will, therefore, be hereafter a matter of nine mills per centum, upon the original capital, calculation, depending on the term for which the in full of said stock.

annuity of eight per centum per annum is to conOr, 2d. That, in respect to said stock, bearing tinue. a present interest, the following dividends be esta- guard purchasers against deception, an intiblished, namely: from the present year to the mation of the arrangement which has been year 1806, inclusive, a dividend of one and one- adopted is expressed in the certificates which half per centum on each of the last days of March, have been issued since the commencemeni of the June, and September, upon the original capital; present year. and upon each of the last days of December, It is, however, essential to the preservation of during the said period, a dividend of three and order in the public accounts, and to the security one-half per centum upon the original capital ; of negotiations of this description of stock, that from the year 1807 to the year 1818, inclusive, a all the certificates which may, at any time, be dividend of one per centum on each of the last in a course of transfer, should possess a uniform days of March, June, and September, upon the character and value. That this uniformity will original capital; from the year 1807 to the year in fact be preserved, cannot be rendered sufficient. 1817, inclusive, on each of the last days of Decem- ly certain, unless the whole debt is subject to a ber, a dividend of five per cent., and upon the last regular reimbursement. It is now ascertained, day of December, in the year 1818, a dividend of that a considerable portion of the balances due to three dollars thirty-six cents and nine mills per States will not be transferred within the time centum upon the original capital, in full of said limited by the act of January 2, 1795. Unless, stock.

therefore,'a provision is made for reimbursing If either of these propositions shall be adopted, these balances in their present form, one of two in respect to the stock bearing a present interest, consequences must follow: the United States must it will be proper to establish the same rule for re-hereafter refuse to permit transfers to be made, imbursing the stock upon which interest will com- however pressing the emergencies of the creditor mence after the year 1800.

States may be; or, two new denominations of Either of the plans proposed will admit of an funded stock must be admitted into circulation. easy execution in the public offices, and either of It is conceived that neither the magnitude of these them may be adopted consistently with the public debts, nor any objects of public utility, require engagements. The first proposition would be that the exemption from reimbursement, conmost favorable to an equal and regular circula- tained in the act of the last session, should be contion of the public revenue, and would serve to im- tinued. If, however, the proposition now made press upon the stock the most uniforın value. It should be adopted by Congress, it will be proper is liable, however, in a greater degree than the that an option should be reserved to the States to second, to what may be deemed an objection com- receive or reject, at their pleasure, a reimbursemon to both; namely, that of requiring an ex- ment equivalent to that made on the residue of penditure of money before the time actually sti- the six per cent. stock at the commencement of pulated for payment by the existing contract. the present year. It may, however, be safely The considerations of public utility, which have presumed that ach of the creditor States will been stated, will however, it is presumed, more readily comply with a measure obviously tending than counterbalance the objection.

to produce an accommodation to the Government. It is further proposed, as an amendment to the It is conceived to be a true construction of the act of the last session, that provision be made for law, that the annual reimbursement upon any reimbursing the balances, bearing and to bear in- stock, which may be in a state of transition to, terest at six per centum, due to certain States, or from, the Loan Offices or Treasury respectivewhich were funded in consequence of an act ly, and on that account, not in a state to be inpassed May 21, 1794. These balances, at present, cluded in a dividend at the usual period, may be constitute a part of the domestic funded debt, and lawfully made at the end of the ensuing quarter, unless they shall be reimbursed in course with at the office where the stock may then remain. the residue of said debt, it is apprehended that a This construction is necessary to a due and degree of complexity will be introduced into the regular execution of the law, and is supposed nof public accounts unfavorable to a regular and sa- to be inconsistent with the limitation which fortisfactory administration of the business of the bids the reimbursement of a greater sum thaa Treasury.

eight per centum on account of principal and inIn deciding on the manner of executing the terest in one year. It would be unreasonable if law, it has been judged inexpedient to renew the an act of the creditor were to be construed to certificates in consequence of the annual reim- preclude the right of the public to discharge the bursements. It was indeed doubted, whether the annuity at the regular period. If, however, any operation would be practicable; at any rate, the doubt should exist as to the powers of the Treaexpense to the public, and the trouble which sury upon this point, a Legislative explanation would be produced to the creditors, were deemed will be advisable. insuperable objections. Accordingly the creditors The trusts vested in the Commissioners of the have been notified, that their certificates will not Sinking Fund, in respect to the reimbursement of be recalled, and that transfers will be continued the Public Debt, and for other purposes, are, at upon the original capital stock. The value of present, of high responsibility and importance, and

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