CHAPTER VIII. Public debt at the commencement of the present government-Funded, and on what terms-Sinking Fund-Increase or decrease of the debt at different periods-By whom owned in 1803-Amount at the time of the declaration of the late war between the United States and Great-Britain-Its increase since-Amount and terms of the late loans, and issues of Treasury Notes-Sketch of the national debt and sinking fund of Great-Britain. We have before stated, that in April, 1783, the debt of the United States (exclusive of the State debts) was estimated at $42,000,375 and that from that time, to the commencement of the present government, a small part only of the interest of this sum was paid. The attention of the first Congress was early called to the subject of supporting public credit, and of making provision for the payment of the public debt. The first House of Representatives, under the constitution, directed the Secretary of the Treasury, to prepare and report a plan for the support of public credit. The Secretary, in pursuance of such direction, made a report on the subject, the 9th of January, 1790, which afterwards became the basis of the various laws passed by congress for funding and paying the public debt. By this report, the whole debt of the United States, foreign and domestic, liquidated and unliquidated, was estimated at $54,124,464 and 56 cents. The principal of the foreign debt, was Arrears of interest to the last day of December, $10,070,307 The foreign debt consisted of loans from governments and individuals in Europe, as follows, viz. 1789, Jan. 1, 5 yrs. interest on the 6,000,000 277,777 77 999,999 96 296,296 Nov. 5, four years interest on the 10,000,000 at four per cent. The principal of the liquidated domestic debt was $27,383,917 74 The arrears of interest to the end of 1790, 66 $54,124,464 56 The state debts, including interest, were estimated at $25,000,000. In this report, the Secretary recommends to Congress an assumption of the state debts, with like provision for payment as the debts of the union, as a measure of sound policy and substantial justice." If the United States should assume the state debts, the whole debt, to be provided for by the general government, would amount to about seventy-nine millions of dollars, and the annual interest to $4,587,444 and 81 cents, as estimated in the report. It was doubted by the Secretary, whether, in addition to the other expenses of the government, it was in the power of the United States "to make a secure and effectual provision for so large a sum, on the terms of the original contracts." On this subject he says "the interesting problem now occurs: Is it in the power of the United States, consistently with those prudential considerations, which ought not to be overlooked, to make provision equal to the purpose of funding the whole debt, at the rates of interest which it now bears, in addition to the sum which will be necessary for the current service of the government? "The Secretary will not say that such a provision would exceed the abilities of this country; but he is clearly of opinion, that to make it, would require the extension of taxation to a degree, and to objects, which the true interest of the public forbids. It is therefore to be hoped, and even to be expected, that they will cheerfully concur in such modifications of their claims, on fair and equitable principles, as will facilitate to the government an arrangement substantial, durable, and satisfactory to the community. It will not be forgotten, that exigencies may, ere long, arise, which would call for resources, greatly beyond what is now deemed sufficient for the current service; and that, should the faculties of the country be exhausted or even strained to provide for the public debt, there could be less reliance on the sacredness of the provision. "But while the Secretary yields to the force of these considerations, he does not lose sight of those fundamental principles of good faith, which dictate, that every practicable exertion ought to be made, scrupulously to fulfil the engagements of the government; that no change in the rights of its citizens ought to be attempted without their voluntary consent; and that this consent ought to be voluntary in fact, as well as in name. Consequently, that every proposal of a change ought to be in the shape of an appeal to their reason and to their interest; not to their necessities. To this end it is requisite, that a fair equivalent should be offered for what may be asked to be given up, and unquestionable security for the remainder. Without this, an alteration, consistently with the credit and honour of the nation, would be impracticable." With these views, he submits to the consideration of Congress, various plans and propositions for the modification, security, and payment of the domestic debt. The main object of all his propositions was either to lower the rate of interest, or to postpone the payment of the interest, or a part of the sum, to a distant day, with the consent of the creditors themselves. On the 14th of August, 1790, Congress passed" an act making provision for the debt of the United States." This act proposed a loan of the whole of the domestic debt. The terms of the loan were, that two thirds of the principal of the debt subscribed should draw an interest of six per cent. per annum, from and after the first day of January, 1791, and the remaining third of the principal, to draw the same interest, from and after the year 1800; the interest on both to be payable quarter yearly; and that so much of the debt subscribed, as consisted of arrears of interest, should, from and after the first day of January, 1791, bear an interest of three per cent. By the same act, Congress assumed twenty-one and a half millions of the debts of the several states; and the sums assumed were apportioned to each state. This sum was also to be loaned to the Unit. ed States, by the individuals who held certain evidences of state debts, on the following terms. viz. Each subscriber to be entitled to one certificate for the sum equal to four ninths of the sum subscribed, bearing an interest of six per cent. per annum, commencing the first day of January, 1792; to another certificate for a sum equal to two ninths of the sum subscribed, bearing an interest of six per cent. after the year 1800; and to a third certificate, for a sum equal to three ninths of the sum subscribed, bearing an interest of three per cent. from the first day of January, 1792. This act was, at first, limited to one year, but was afterwards extended until the whole of the assumed debt was subscribed, and nearly the whole of the domestic debt of the United States. On the 31st day of December, 1794, the amount of the domestic or original debt of the United States, which was subscribed and funded according to the provisions of law, (including the debt standing to the credit of individual states, being balances found due to them on a final settlement of accounts between them and the United States, and including also, that which, previous to that time, had been purchased by the commissioners of the sinking fund,) was as follows, viz. Six per cent. stock, Three per cent. stock, The amount of funded assumed debt, (including that purchased or redeemed by the commissioners of $20,925,894 39 10,462,947 61 13,394,280 01 |