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But, by an act, entitled An act making appropriations for certain purposes therein expressed," passed the same 9th of June, 1794, certain specific sums, amounting together to 1,292,137 dollars 38 cents, are charged upon the proceeds of the revenues, which are created by the five last mentioned acts,, and there is a reservation made out of them of a sum sufficient to pay the interest of whatever moneys may be borrowed pursuant to the act entitled "An act making further provision for the expenses attending the intercourse of the United States with foreign nations," &c. passed the 20th of March, 1794, which sum is pledged for the payment of that interest.
These acts comprehend all the current revenues of the United States. Their product will appear hereafter.
In addition to them a fund will be derived from the sale of the public lands in the Western Territory. And there likewise occur, from time to time, payments into the Treasury on account of old debts; but these are too casual, and of too little magnitude, to be more than cursorily mentioned.
The lands in the Western Territory, of which the government of the United States has acquired the right of soil, are estimated in a report of the late Secretary of State, to amount to 21,000,000 of acres. This quantity, at twenty cents per acre, the price upon former occasions contemplated, would yield a sum of $4,200,000. But it is believed that it would be unsafe to count upon so large a sum. Besides the uncertainty as to the proportion which may be of a saleable quality, and as to the price which may be obtained for it, the boundary line between the United States and the Indians is understood to be unsettled with regard to a large part of the tract on which the computation is made. If it ultimately yields three millions of dollars, it will probably equal every reasonable expectation.
The provisions for funding the debt, and for payment of interest upon it, are comprised in the following acts:
1. "An act making provision for the debt of the United States," passed August 4, 1790.
This act, commonly called the funding act, contains these several provisions, viz.
1st. It reserves out of the proceeds of the duties on imports and tonnage, for the support of the government of the United States, and their common defence, the yearly sum of 600,000 dollars.
2d. It appropriates so much of the same proceeds as should be necessary, to the payment of interest on foreign loans, before that time contracted, or which should afterwards be contracted, for discharging the arrears of interest, and the principal of antecedent foreign loans, to continue so appropriated till the debt created by those loans should be fully discharged.
3d. It authorizes the President to borrow any sum or sums not exceeding $12,000,000, to discharge the arrears of interest upon, and the instalments of the principal of, the foreign debt, due and to grow due; and if to be effected on advantageous terms, to pay off the whole of that debt; and further authorizes him to make such other contracts respecting it as should be found for the interest of the United States, so that no engagement or contract should preclude from reimbursing the sums borrowed within fifteen years after they should be borrowed.
4th. In order to adapt the form of the domestic debt to the then circumstances of the United States, as far as should be found practicable, 66 consistently with good faith and the rights of the creditors, which it truly declares "could only be done by a voluntary loan on their part;" it proposes a loan to the United States, (directing for that purpose books for
subscriptions to be opened at the Treasury, and by Commissioners of Loans in the several States, on the 1st of October, 1790, and to continue for a year,) the sums subscribed to the loan to be paid in certain enumerated evidences of the debt of the United States, upon these terms, viz.
1st. That the interest unpaid on the principal of those evidences, should be computed up to the last of December, 1790.
2d. That for any sum subscribed and paid in the principal of the debt, the subscriber should be entitled to one certificate for a sum equal to twothirds of the sum subscribed, bearing an interest of 6 per cent. per annum, commencing the 1st day of January, 1791, payable quarter yearly, and subject to redemption by payments not exceeding in one year, on account both of principal and interest, eight dollars upon a hundred of the original sum so subscribed and paid; and to another certificate for a sum equal to the remaining third of that sum, which, after the year 1800, should bear a like interest, payable in like manner, and subject to a like rate of redemption. But that the United States, though having a right to redeem in the above-mentioned proportion, should not be obliged to do it.
3d. That for any sum subscribed and paid in the interest of the debt, the subscriber should be entitled to a certificate for a sum equal to the sum subscribed, bearing an interest of 3 per cent. per annum, from the said last day of December, 1790, payable quarter yearly, and redeemable at pleasure, by payment of the principal.
4th. That the new stock created by the said loan should be transferable on the books upon which the credit for it should stand by the proprietor or his attorney; these books to be either those kept for the purpose at the Treasury, or by Commissioners of Loans in the respective States; a mode being provided for the transfer from the books at one place to those at another.
5th. That the interest should be payable wheresoever the credit for the stock should exist, when the payment of interest should become due; except that the dividend of interest for any quarter of a year which should not be demanded before the expiration of a third quarter, should afterwards be demandable only at the Treasury.
6th. That for the regular payment of the interest on the several kinds of stock, to arise from the loan as it should accrue, including that which is deferred, the proceeds of the public revenues, which before that time had been, or during the then session should be provided, after reserving yearly 600,000 dollars for the support of the government of the United States and their common defence, and such sum as should be necessary for payment of interest on the foreign loans before-mentioned, should be, and thereby were, pledged and appropriated till the final redemption of the capital stock.
V. Premising that some of the creditors of the United States might not think fit to become subscribers to the loan, this act declares that "nothing contained in it should be construed in any wise to alter, abridge, or impair, the rights of those creditors of the United States who should not subscribe to the loan, or the contracts, upon which their respective claims are founded, but that the said contracts and rights should remain in full force and virtue." And to obviate all idea of compulsion on the creditors to subscribe, it allows to non-subscribers, during the pendency of the loan, and until the end of the year 1791, a rate per centum on their respective demands, equal to that which is paid to subscribing creditors; on the sole condition, that the evidences of debt holden by them, except those which had
been issued by the Register of the Treasury for the registered debt, should be exchanged for other certificates specifying the specie amount of those in exchange for which they were given, and otherwise of the like tenor with those which had theretofore been issued by the Register of the Treasury for the registered debt; stating, as the grounds of this condition, that some of the certificates then in circulation, had not been liquidated to specie value; that most of them were greatly subject to counterfeit; that counterfeits had actually taken place in numerous instances; and that embarrassment and imposition might attend the payment of interest on these certificates in their then form.
VI. This act likewise proposes another loan to the amount of $21,500,000, payable in the principal and interest, indiscriminately of the evidences of debt of the respective States, according to certain quotas, to be conducted in the same manner, and to be open for the same time, as that in the domestic debt of the United States. The terms of this loan to be
1st. That for any sum subscribed, the subscriber should be entitled to one certificate for a sum equal to four-ninths of the subscribed sum, bearing an interest of six per centum per annum, commencing the 1st day of January, 1791. To another certificate for a sum equal to two-ninths of the said subscribed sum, bearing an interest after the year 1800, of six per centur per annum; and to a third certificate, for a sum equal to three-ninths of the said subscribed sum, bearing an interest of three per centum per annum, commencing on the same first day of January, 1791: the interest in each case to be payable in like manner, and to be subject to the like redemption as that on the correspondent kinds of stock to be created by this the said first mentioned loan. And the stock to be created by this second loan, to be transferable on the same principles, and in the same modes, as that produced by the former.
2d. That for the regular payment of interest on the several kinds of stock to arise from this loan, as it should accrue, including that which is deferred, the proceeds of the public revenues, which, before that time, had been, or during the then session should be provided, after reserving the aforesaid yearly sum of $600,000, the sum necessary for payment of interest on the foreign loans, made and to be made, and the sum necessary for payment of interest on the loan in the domestic debt, should be, and thereby were pledged and appropriated; to continue so pledged and appropriated, until the final redemption of the capital stock.
VII. To secure the due application of these revenues, according to the appropriations, an account of them is directed to be kept, distinct from that of the proceeds of any other revenues, except such as should be raised to make good a deficiency in those; and the faith of the United States is pledged to appropriate additional and permanent funds for satisfying such deficiency.
VIII. The proceeds of the sales of lands in the Western Territory, then belonging, or which thereafter should belong to the United States, are pledged and appropriated for the discharge of the debts which the United States then owed, or by virtue of that act should owe.
There are several collateral and supplementary provisions, which are omitted as immaterial to the intended view of the subject.
II. An act repealing, after the last day of June next, the duties heretofore laid upon distilled spirits, &c., passed the 3d of March, 1791.
The proceeds of the duties laid by this act, are made subject to the same appropriations, and in the same order of priority as those contained in the
funding act; and to secure their due application, an account is directed to be kept of them, distinct from that of any other revenues, except those appropriated by the funding act.
III. An act for raising a further sum of money for the protection of frontiers, &c., passed May 2d, 1792.
This act, which, as has been before noticed, increased permanently the duties on certain imported articles, and laid a temporary additional duty on some others, appropriates primarily the proceeds of the permanent augmentations in the same manner, and to the same purposes, as the antecedent duties were appropriated; that is, in conformity with the funding act.
IV. An act concerning the duties on spirits distilled within the United States, passed May 8th, 1792.
This act, which lowers the duties on spirits distilled within the United States, and on stills, appropriates the proceeds of the reduced duties in the same manner as were the former duties; and to make good whatever deficiency might be occasioned by the reduction of the rates, pledges as a substitute the surplus of the augmented duties laid by the last cited act.
V. An act providing for the payment of the second instalment, due on a loan made of the Bank of the United States, passed June 4th, 1794.
This act, in addition to a provision for paying that second instalment, appropriates so much of the dividends on the stock which the United States hold in the bank, as should be necessary to the payment of interest on the capital of a loan of $2,000,000, had of the bank, pursuant to the 11th section of the act by which it is incorporated. It also fixes the last day of December, in each year, as the annual period for the payment of the successive instalments of that loan.
VI. An act making provision for the payment of the interest on the balances due to certain States, upon a final settlement of accounts between the United States and the individual States; passed May 30th, 1794.
This act directs, that interest shall be allowed and computed on the balances to creditor States, from the last of December, 1789, to the last of December, 1794; which, being placed to their credit respectively, shall bear an interest of three per centum per annum, from the period last mentioned.
It further directs, that the interest on the principal balances, to be funded agreeably to the terms of the act for the settlement of accounts, together with the interest upon the arrears of interest, computed on those balances, and forming a new capital, shall be payable at the offices of the Commissioners of Loans, within the States to which the balances are respectively due, and shall be paid quarter yearly, after the last day of December, 1794, at the same epochs in each year, at which interest is payable on the other parts of the funded debt; to which end, so much of the proceeds of the duties on imports and tonnage as may be necessary, and as were not otherwise previously appropriated, are appropriated; and the faith of the United States is pledged, to provide for any deficiency which may happen by additional and permanent funds.
There are several acts which prolong, from time to time, the subscriptions in the domestic and State debts, on the same terms as by the funding act; those in the domestic debt being continued down to the last day of December, 1794; which acts, together with the acts particularly cited, comprise all those that relate to the funding of the public debt, and the payment of interest thereupon. The result of these acts is exhibited in the tables A, B, C, and D, which show the amount of the foreign debt; that of the funded debt, the probable amount of that which remains unfunded, of what com
posed, and the annual amount of interest upon the different portions of debt, according to contract, and according to the plan of this report.
The provisions for reimbursing and redeeming the public debt, are contained in the following acts, and are as follow, viz:
I. An act making provision for the debt of the United States," passed the 4th of August, 1790.
This act, which is the one that regulates the funding of the debt, by the last section appropriates the proceeds of the sales of lands in the Western Territory, then belonging, or thereafter to belong to the United States, to the sinking or discharging of the debts for which the United States then were, or by virtue of that act should be holden, to be applied solely to that use, until they should be fully satisfied.
II. "An act making provision for the reduction of the public debt," passed August 12th, 1790.
This act, premising that it is desirable, by all just and proper means, to effect a reduction of the public debt, and that the application of the surplus revenue to that object, will not only contr bute to this desirable end, but will be beneficial to the creditors of the United States, by raising the price of their stock, and be productive of considerable saving to the United States, enacts
1st. That the surplus of the duties on imports and tonnage to the end of the year 1790, shall be applied to the purchase of the debt of the United States, at its market price, if not exceeding the par or true value thereof.
2d. That the purchases to be made, shall be conducted under the direction of the President of the Senate, the Chief Justice, the Secretary of State, the Secretary of the Treasury, and the Attorney General; who, or any three of whom, with the approbation of the President, are authorized to cause them to be made, in such manner, and under such regulations, as shall appear to them best calculated to fulfil the intent of this act: Provided, that the same should be made openly, and with due regard to the equal benefit. of the several States.
3d. That the accounts of the application of the fund should be settled as other public accounts, accompanied with returns of the amount of debt purchased at the end of each quarter of a year; and that a full and exact report of the proceedings of the Commissioners should be laid before Congress, within the first fourteen days of each session, including a statement of the disbursements and purchases; specifying the times when, prices at which, and persons of whom, the purchases were made.
4th. That in addition to this fund, the President should be authorized to borrow any sum or sums, not exceeding 2,000,000 of dollars, at an interest not exceeding five per centum, to be applied to purchases of public debt, in like manner, and under the same direction and regulations as the first mentioned fund: Provided, that out of the interest of the debt to be purchased, there should be appropriated annually a sum not exceeding eight per centum of the sums borrowed, towards paying the interest and re-imbursing the principal of these sums.
But to guard against the possibility of a deficiency of means to pay the interest on the debt which was to accrue in the year 1791, authority is given to reserve and apply to that purpose, out of the first mentioned fund, as much as might be necessary to supply the defect of receipts during that year, on account of the duties which should accrue after the year 1790.
III. An act repealing, after the last day of June next, the duties heretofore laid upon distilled spirits, &c. passed the 3d of March, 1791.