Public Debt of the United States.

United States pledged that the appropriation should paying the said annuity, towards the further renot be changed viz:

demption or purchase of the debt of the United 1st. The additional duties laid by the act, en- States, existing on the 3d March, 1795, including titled "An act for raising a further sum of money loans for the reimbusement thereof, until the said by additional duties on certain articles imported, debt shall completely reimbursed or redeemed. and for other purposes,” passed 3d March, 1797, And the application of this surplus is left to their are solely appropriated—first, for the payment of discretion, provided that the purchases thus to be the principal of the then existing foreign debt; made, shall be at the lowest price, either by open secondly, for the payment of the principal of the purchases, or by receiving sealed proposals; and debt then due by the United States to the Bank shall not be made at a higher rate than the marof the United States.

ket price, or value of the debt. 2d. So much of the duties on tonnage and mer- So far as relates to the appropriations not vestchandise, as may be necessary, is appropriated for ed in the Sinking Fund, no provision, other than the payment of the loans obtained from the Bank what results from the appropriations themselves, of the United States.

has been madę, directing or even authorizing the 3d. So much of the surplus of the duties on application of the moneys appropriated, or, in tonnage and merchandise, beyond the permanent other words, authorizing the expense. The only appropriations, as may be necessary, is appropri- exception is that of the additional duties of 1791. ated for discharging the two eight per cent. loans, in relation to which, the provision that they shall authorized by the laws of July 16th, 1798, and of be solely appropriated for a certain object may be May 7th, 1800, according to the terms and con- considered as an injunction to apply their amount, ditions of such loans.

if it can be ascertained, to that object; and a dif41h. The additional duties laid by the act, en- ficulty would even rise, as to the manner in which titled "An act to lay additional duties on certain that amount could be applied. The law of 3d of articles imported," passed 13th May, 1800, are March, 1795, having provided that all payments solely appropriated for the discharge of the in- of the principal of the debt shall be made under terest and principal of the debts of the United the direction of the Commissioners of the SinkStates, theretofore contracted during the year 1800. ing Fund; and that which appropriates those ad

Finally, in relation to the interest on any part ditional duties having omitted to vest their proof the public debt, other than the six, per cent. ceeds in the said Commissioners. and deferred stock, as much of the duties on ton- III. Operation of the preceding prorisions. nage and merchandise as may be necessary, is 1st. The effect of the four first appropriations in appropriated, and the Commissioners of the Sink- favor of the Commissioners of the Sinking Fund, is, ing Fund are authorized to borrow, annually, at present, simply an annual payment out of the with the approbation of the President of the duties on tonnage and merchandise, of a sum, United States, one million of dollars, at a rate not which, together with the bank dividends, shall be exceeding six per cent. and to be reimbursed with equal to the eight per cent. annuity on the six per in one year from the time of each loan, in antici-cent. and deferred stocks, for the discharge of the pation of the said duties, to be applied to the pay- said annuity; and those provisions will continue ment of the interest on the public debt.

to operate only in that manner until after the reII. Of the manner of applying the moneys ap- demption of the six per cent. stock in 1818, or, unpropriated.

til after the whole amount of the interest accruing So far as relates to funds vested in the Com-on the principal of public debt discharged, other missioners of the Sinking Fund, the law contains than the six per cent. and deferred stocks, shall two distinct provisions; one, specifying the funds exceed the amount of the eight per cent. annuity vested in the manner already stated; the other on the six per cent. stock. In the last case, só designating, and, in one instance, absolutely di- much of the duties on tonnage and merchandise recting the manner in which the funds thus vested as shall be equal to the surplus of such interest beshall be applied: and in this the law is similar to yond the said annuity, and, after the redemption all others which relate to the expenditure of pub- of the six per cent. stock, in 1818, the whole of the lic money, and which must also include the two interest accruing on the debt thus discharged, indistinct provisions, of authorizing the expense, cluding therein the said six per cent. stock, shall and of appropriating the money necessary to de- be applicable to the discharge of any other part of fray the same. The preceding provisions are only the public debt, existing on the 3d March, 1795. appropriation clauses, designating, and, in rela- which shall then remain unpaid. But those two tion to the Sinking Fund, vesting certain funds events are too remole to be now taken into conapplicable to the payment of the debt. The man- sideration. The eight per cent. annuity on the ner in which the fund vested in the Commissioners deferred and six per cent. stocks, to be thus paid of the Sinking Fund shall be applied, is provided annually, amounts to $3,350,362 1, of which, $70. as follows. They are directed

040 at the rate of eight per cent. dividend on the 1st. To pay, annually, the eight per cent. an- bank shares, are paid out of the said dividends; nuity on the six per cent. and deferred stocks; and the balance of $3,280,022 1, out of the duties and in this respect, no discretion is left with them on tonnage and merchandise. the injunction being absolute.

2d. The proceeds of the sales of lands, and of 20. To cause to be applied all such surplus of old debts recovered, the amount of which is unthe Sinking Fund as may at any time exist, after I certain, and has been estimated as yielding on an

Public Debt of the United States.

average of ihe eight succeeding years, an annual pears by the statement A, hereunto annexed, that, sum of $ 400,000, must be annually applied to the instead of a surplus, those books exhibit a defipayment or purchase of any part of the public ciency of $930.128 64 on the aggregate revenue, debt, excepting only the eight per cent. loans and from the establishment of the present Governnavy six per cent.stocks, neither of which existed ment to the close of the year 1790, resulting from at the time of passing, or is embraced by the pro- the appropriations charged to the revenue, having, visions of the law of 3d March, 1795: and, under during that period, exceeded, by that sum, the topresent circumstances, these proceeds will natural-tal amount of revenue, whether collected' or outly be applied to the reimbursement of the Dutch standing, as it stands entered on those books. debt, so far as they can operate towards that object; From that very result, I am strongly inclined to but, as the instalments due on that debt amount suspect that some entries have been made or omitannually for this and the five ensuing years, to a ted, on erroneous principles ; but, it is not less sum which varies from $920,000 to 2,220,000, and evident that, for the present, this appropriation of which averages, for each of the said six years, al surplusses cannot be resorted to, in order to cover most $1,600.000 a year, it is evident that that ap- the deficiency stated in the preceding item. propriation is inadequate for that object.

4th. The proceeds of the additional duties laid From thence it results that, for the faithful dis- March, 1797, the only remaining resource for that charge of about three-fourths of the Dutch debt, object, not only are not by law vested in the no other provision is made, exclusively of the au- Sinking Fund, but no steps whatever have yet thorities to borrow or to sell bank shares, except been taken to ascertain their annual amount; and, that which may result from the surplusses of reve- although it may be practicable, hereafter, to do it, nue, or from the additional duties laid by the act so far as they consisi of specific duties, the amount of 3d March, 1797; that no provision, until the of that part which consists of a two and a half Dutch debt shall have been discharged, nor, after per cent. additional duty on certain cotton goods, its payment, any other but the above-mentioned specified in the law, could not, without a total proceeds of lands and old debts, is made for the alteration in the manner in which duties are aspurchase and redemption of any other of the debts certained, by the officers of customs, be distinexisting on the 3d March, 1795, or embraced by guished from the proceeds of the duties on other its provisions, (and which consist of the five and goods paying the same rate of duty ad valorem. half, four and half, three, and 1796 six per cent. The total amount, however, even if it could be asstocks) except the above-mentioned surplusses of certained, cannot be estimated at a greater annual revenue; and that, for the redemption of the two sum than $500,000, and this, added to the pro eight per cent. loans, and navy six per cent. stocks, ceeds of lands and old debts, would fall far short no efficient provision has been made; the general of the sum annually wanted to pay the instalappropriation of the acts authorizing the two eight ments of the Dutch debt. Those instalments have, per cent. loans, being discretionary and not im- heretofore, been paid out of the duties on tonnage perative; and that of the act of the 13th May, and merchandise, generally, and charged to the 1800, being rendered nugatory so far as relates to revenue of the year in which they were paid, the principal, by being applicable to the payment without paying any attention to the complex and of any part of the interest of the public debi. inefficient provision made by law. It does not

3d. The amount of the sums which, by virtue require any comment to prove, that provisions of the appropriation of the surplusses of revenue, which leave no option between an irregular and should vest in the Commissioners of the Sinking unauthorized mode of payment, and a failure in Fund, has never yet been ascertained; and several the public engagements, are eminently defective, difficulties occur in attempting to determine the The appropriations made subsequent to the 3d true construction of the law, by which to fix that of March, 1795, which are not vested in the Comamount. It is uncertain whether, by the law of missioners of the Sinking Fund, are also liable to the 3d March, 1795, the surplusses of the years the general objection, that, for want of that inpreceding that year are vested; whether it was vestiture, and not being made in the nature of a intended, by that law, to vest in the sinking fund contract with the creditors, they are not permathe surplus of each calendar year, in which such nently inviolable, but like any other ordinary law, surplus did exist, without making any deduction) may, without any breach of faith, be repealed at for the years where the appropriations exceeded the will of the Legislature, and afford, therefore, the revenue, or, only the real aggregate amount no security for the eventual discharge of the debt. of surplusses, deducting the deficiencies for those The appropriation of the surplusses of the revenue, years, from the surplusses of revenue for the years though vested in the Commissioners of the Sinkwhere the same did exist; whether the proceeds ing Fund, is substantially liable to the same obof loans should be included in the revenue; andjection: for, as only the surplus of revenue, bewhether the payments on account of the principal yond all the appropriations charged to the same, is of the debt should be charged to that revenue. It applicable to the payment of the debt, nothing does not appear that an uniform construction has more is necessary to defeat that provision, than prevailed in this department in relation to the two large appropriations for other objects. last points. Taking, however, the accounts as Not only are those provisions for the public debt they now stand on the Treasury books, and which, difficult to be executed, uncertain in their amount, until a minute investigation shall have taken place, dependent on the will of the Legislature, and, at are the only evidences of those surplusses, it ap-1 all events, inadequate to the object; but, it is ul

7th Con. 2d Ses.—40

Public Debt of the United States.

timately a matter of discretion with the Secretary have proven altogether inefficient, and do not seem of the Treasury, to carry them into effect, even in to have produced any other effect, than that of the case of surplusses ascertained and vested in rendering still more complex, a system in its nathe Sinking Fund.

ture sufficiently intricate.' The heavy instalments All payments must be made out of moneys in of the Dutch debt are, in the meanwhile, becomthe Treasury. An appropriation authorizing and ing due, and require an immediate and efficient directing the annual payment of a certain sum, provision: the exorbitant interest paid on the eight as in the case of the eight per cent. annuity, on the per cent. loans, both of which are irredeemable six per cent. and deferred stocks, must be satisfied till the year 1809, renders it necessary that such each year out of those moneys. An appropria- measures should be adopted as may at least insure tion, designating, for a certain object, all moneys the certainty of their reimbursement, as soon as, arising from a certain source, as in the case of the by their terms, Government may do it; and both proceeds of the Western lands, and of old debts, with a view to that object, and on account of their is equally efficient, as those moneys cannot be being at all times demandable, it is of importance applied to any other object. But the other ap- that the temporary loans obtained from the Bank propriations for the redemption of the public debt, of the United States should be discharged as soon are neither accompanied with an imperative as the situation of the Treasury will permit it. clause directing their application, nor, the 1797 Nothing more seems necessary for those several additional duties excepted, bottomed on a distinct objects than to make for the debts, which are insource of revenue, solely applicable to that object; tended to be discharged, as adequate a provision and they rest, in common with all the appropria- as is made by the act of 3d March, 1795, for the tions for the civil, military, and naval expenses payment of the eight per cent. annuity on the six of Government, partly on moneys in the Treasury, per cent. and deferred stocks; by vesting in the and principally on the outstanding uncollected Commissioners of the Sinking Fund, in addition to revenue. The aggregate of all these several kinds the other funds already vested in them, such anof appropriations uniformly exceeds the moneys nual sum, to be out of the duties on tonnage and in the Treasury, and it remains always optional merchandise, as will be equal to the proposed rewith the Secretary of the Treasury which of them demption, and by directing the Commissioners to he will satisfy; and where the law does not di- apply the same to the redemption of such debts. rect, in express terms, the payment of a debt, it is This provision will be determinate in its amount, left to his discretion whether he shall pay it or not. simple in its execution, certain in its effect; it will

The object of the law of the 20 March, 1769, neither derange nor alter a single existing approseems to have been to make an efficient provision priation or payment in relation to the sinking for the gradual reimbursement of the six per cent. fund, for which the public faith is pledged, but will and deferred stocks, by payment of eight per cent. leave to all the other uncertain funds of that fund, a year, and to pave the way for a future, though and especially to the surplusses of the revenue, distant payment of the foreign debt, by giving to their legitimate operation. the sinkingfund the unascertained resources which The annual sum of $7,300,000 was designated might be derived from the sales of lands, and from in the report made by this department to Conthe surplusses of revenue, and after the respective gress, at the commencement of this session, as apredemption of the six per cent. and deferred stocks, plicable to the payment of both principal and in 1818 and 1824, a sum equal to the interest ac- interest of the public debt. The interest and the cruing on the debt thus redeemed.

eight per cent. annuity on the six per cent and This last fund being too distant, and the other deferred stocks, amount, for the present year, to too uncertain, to rest, upon either, the payment of $5,228.000; which would leave something less the foreign debt, the same act contemplated either than $2,100,000 applicable to the redemption of its conversion into a domestic debt, redeemable at the principal of all the other debts. of this sum it will, but not demandable at certain fixed periods, may be estimated that about $900,000 are produced or its redemption by the proceeds of the sales of a by the proceeds of lands, and of the additiona? stock of the same nature It might have been un- duties of 1797. The actual additional appropria. safe at that time, and in the then existing situation tion, on the principles of that report, would do of the revenue, to have attempted more. But al- exceed $1,800,000. though the proposition for thus converting the In proposing that sum, I was guided, not by any foreign debt, was accepted for that portion which abstract or arbitrary principles, but by the amous remained due to the Government of France, and which was actually wanted during the present two millions of dollars in a domestic five and half and the two ensuing years, in order to meet toe and four and half per cent. stock, which remains payments on account of the Dutch debt. It is unredeemed, were thus substituted to an equal necessary, for those three years, to provide to tha: amount of foreign debt, the plan was rejected by amount; and as, in the ordinary course of thing the Dutch creditors; and from recent information the receipts in the Treasury must be effected by obtained in that quarter, no expectation remains recent events, to a much greater extent during tee of its being accepted underany modification what- iwo ensuing years than afterwards, it appeared ever. The appropriations madesince 1795, instead that, if it was intended to make an impression on of being, by an investiture in the sinking fund, en- the debt, no reason could be alleged why the prografted on the plan then commenced, have been vision necessary for these two arduous years made in a detached and unconnected manner, should not be extended to the full redemption of Public Debt of the United States. the whole debt, or at least to the reimbursement of $7,300,000 would be applicable both to the payof every part which was not effectually provided ment of the debt, and temporary loans, and of the for by the law of the 3d of March, 1795. The demands arising under treaties. ability of the United States, with iheir present If the revenues should exceed the sum at which revenues, to apply annually that sum to that ob- they bave been rated, the $7,300,000 would be ject, rests on the correctness of the estimates applied exclusively to the payment of the debt annexed to the report. These will not be affected proper; and both the temporary loans and deby the repeal of the internal taxes, provided that mands payable to foreign nations, might be disthe retrenchments made in the expenditure shall charged out of the surplus moneys thus received bave been equal to the annual sum of $650,000, in the Treasury. By adopting that mode, we for which credit was taken in the estimate of would be safe under every ordinary contingency; revenue on account of those taxes. But in order the only difference which would result from a to run no risk on that ground, I would suggest greater or less revenue than has been estimated, the propriety of a modification in the manner of being, that the ultimate redemption of the debt making the appropriation, which will effectually would be accelerated or retarded in the same proguard us, should the annual amount of the net portion. receipts in the Treasury be more affected by the Having answered the inquiry proposed in your restoration of peace than has been expected. letter with as much precision as the subject seems

It will be recollected that, on the principles of to admit, permit me to suggest some other arthat report, provision was made, independent of rangements, which, though of less magnitude, are the permanent revenues, to meet ihe probable de- not altogether unimportant. mands which might arise under the convention The inconvenience of paying the large instalwith France, or the sixth article of the treaty with ments of the Dutch debt, which fall due this and Great Britain. The resources, estimated at three the ensuing years, is much increased by the oblimillions of dollars, which were suggested as suffi- gation of discharging them abroad, both on accient, for the present, to discharge those eventual count of the injury arising from such considerademands, were the surplus of specie in the Treas- ble portion of the circulating capital of the Uniury, an eventual sale of the bank shares belong. ted States being thus drawn abroad, and of the ing to the United States, the arrearages of the difficulty and risk which attach to the purchase direct tax, and the proceeds of duties on the of so large an amount of remittances. Although stamps. The deficiency arising from the repeal those difficulties must be met, if they cannot be of those duties will be more than balanced by the obviated, it seems proper to adopt every measure arrears which shall remain outstanding on the in- which may diminish them. The plan contemternal duties, on the 30th day of June, and which plated by the act of the 3d March, 1795, of conwill not fall short of one million of dollars; and verting that debt into a domestic debt, has heretothe amount of specie in the Treasury was greater fore been found impracticable, and, from the latest by $500,000, on the first day of January last, than advices, the event of peace absolutely precludes had been estimated : for, it is proper here to state any expectation of its being carried into effect. that that specie which, on the first day of April, It is, however, possible, though very doubtful, that 1801, amounted only to $1,794,044 85, had in the terms of payınent of a part of that debt may creased, on the 31st December last, to the sum of be extended by reloans, so as to equalize, on the $3,089,761 78.

eight ensuing years, the payments which fall Those estimated three millions may therefore principally on this and the four succeeding years. be safely relied on in addition to the permanent Should that operation be effected so as to reduce revenues; and the modification which I would the annual payments in Holland from two milsuggest, consists in making the payment of the lions of dollars to one million, the other million eventual demands which may become due to for- might be applied with more advantage in the payeign nations, conditionally payable out of the pro- ment of the loan obtained from the bank, or of posed appropriation of $7,300,000 for the debt, any other part of the debt payable and held in with a proviso that both those demands, and the America. For this purpose it would be necestemporary loans, might be paid out of other mon- sary to give an express authority to the Commiseys, if the situation of the Treasury should per- sioners of the Sinking Fund, and, in order to enmit it. The effect of this modification would ble them to transact, in the most advantageous be, eventually, to draw the three millions re- manner, both that and every other business relaserved, to assist the current revenues, if these live to that debt, it would be eligible to give them should fall short of the estimates.

a power, if they shall find it necessary, to employ If the receipts of the Treasury should be equal a special agent in Holland. The usefulness of to the sums at which they have been rated, the that arrangement had been some years ago sugeffect of the appropriation would be precisely that gested by this department, and its necessity is now exhibited in the report, namely, thai it would be much increased by the increased exteni of the applied to the payment of the public debt, includ- payments and transactions in Holland thereto. ing therein the loans obtained from the bank; and The difficulty and risks attaching to the purthat the demands which may become payable chases of remittances, which can only be obtained foreign nations would be discharged out of the at a distance from the Treasury Department, and reserved three millions. If those receipts should without any immediate control of any officer of fall short of the estimated sum, the appropriation the Government, may not perhaps be obviated by Public Debt of the United States.

any means.

If it shall be found practicable to of the Commissioners of the Sinking Fund, it treat for that object with one of the banks, mak- would be desirable to obtain a previous express ing a fixed allowance for every uncertain varia- authorization from Congress. tion in the rate of exchange, and loss in the pur- I have the honor to be, respectfully, sir, your chase of bills, it will be considered a beneficial obedient servant, ALBERT GALLATIN. operation to the United States. But although Hon John RANDOLPH, Jr., this may be considered as fairly within the power Chairman of Committee of Ways and Means.

A. An account of Balances of Revenue and Income, as the same are now exhibited on the books of the Treasury

of the United States.


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Stated from the records of this office. * Fractions of cents omitted throughout the table. Treasury DEPARTMENT, REGISTER'S OFFICE, March 31, 1802.


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