of the requisitions, do not appear from any docu- simmons, a member from Pennsylvania, offered an amendment to the original resolution, greatly enlarging the catalogue of enumerated articles. 60"Among those," he said, "which were contained in the list, he wished to subjoin to that in possession of the committee, were some calculated to encourage the productions of our country, and protect our infant manufactures, besides others tending to operate as sumptuary restrictions upon articles which are often termed those of luxury." Mr Madison having consented to subjoin the amendment proposed by Mr Fitzsimmons to the original resolution, it was received by the committee; but in proceeding to fill up the blanks with the sum taxable on each article, it was soon perceived that gentlemen had viewed the subject in very different lights. The tax on many articles was believed to press more heavily on some than on others; it was supposed, also, to favour the products of particular states; and no inconsiderable degree of watchfulness was discovered, lest those which were more populous, and whose manufactures were in greater progress, should lay protecting duties whereby the industry of one part of the Union would be encouraged by premiums laid on the industry of another part. It has been impressively remarked by Dr Seybert, "that it was the conviction that it was absolutely necessary that the power to regulate and control our intercourse with foreign nations, should be confided to congress alone, which principally induced the people of the United States to call the convention to revise the articles of confederation." But, strong as the desire was to enter into commercial treaties with foreign nations, to countervail the navigation laws of Great Britain, and the monopolizing edicts of other governments, and to substitute commercial regulations of a general nature for the partial and conflicting regulations of the different states, it is not likely that the present Federal Constitution would have been adopted, if the adequate revenue for satisfying the demands of the public creditors could have been raised under the old articles of confederation. To protect persons and property within its own limits, and to regulate intercourse between its own citizens, each state government found itself quite competent. The articles of confederation which had carried them successfully through one war, might be supposed sufficient to carry them through other wars, if others should occur. The evils which resulted from inadequate revenue and the want of a proper regulation of intercourse with foreign nations, concurred in inducing the call of the Federal Convention, and the adoption of the new constitution. As constituting the vital spring without which the action of government could not long be continued, the subject of revenue was, says Judge Marshall, taken up in the house of representatives, in the first congress under the new constitution, as 'soon as it could be introduced. The qualification of the members was succeeded by a motion for the house to resolve itself into a committee of the whole on the state of the union: and in that committee a resolution was moved declaring the opinion that certain duties ought to be levied on goods, wares, and merchandise, imported into the United States: and on the tonnage of vessels. This resolution was introduced by Mr. Madison of Virginia in a short speech, in which he adverted to the numerous claims upon the justice of government, and to the impotency which prevented the late congress of the United States from carrying into effect what was considered the dictate of justice and policy. As it was deemed important to complete a temporary system in time to embrace the spring importations, Mr. Madison presented the scheme of impost which had been recommended by the former congress, and had already received the approbation of a majority of the states; to which he added a general proposition from himself, for a duty on tonnage. By this scheme, specific duties were imposed on certain enumerated articles; and an ad valorem duty on those not enumerated. Mr Fitz After much discussion the bill was passed. Towards the close of the session, a report on a petition which had been presented at an early period by the creditors of the public residing in Pennsylvania, was taken up in the House of Representatives. Many considerations rendered a postponement of this interesting subject necessary. But, two resolutions were passed, the one declaring "that the House considered an adequate provision for the support of the public credit as a matter of high importance to the national honour and prosperity;" and the other directing "the secretary of the treasury to prepare a plan for that purpose, and to report the same to the House at its next meeting." On the 29th of September, congress adjourned to the first Monday in January 1790. Early in this second session, the secretary of the treasury made a report on public credit, with a plan for funding the domestic debt. He estimated the amount of the public debt as follows: The foreign debt (due to France, Holland, and Spain) Amount of the principal, Arrears of interest, to the 31st of Dec. 1789, The domestic debt, viz. The principal of the liquidated part, bearing an interest of six per centum, The arrears of interest to the 31st of December 1790, The unliquidated part of the domestic debt, which consisted chiefly of the continental bills of credit, $10,070,307 00 1,640,071 62 11,710,378 62 $27,383,917 74 13,030,168 20 40,414,085 94 was not ascertained, and was estimated at The aggregate of the sums abovementioned, consisting of the foreign and domestic debts, constituted the debts of the United States, and together amounted to Of which there had been redeem. 2,000,000 00 ed by purchase, with the surplus moneys in the treasury, $54,124,464 56 The amount of the debt of the individual states, which the secretary proposed should be assumed by the Union, was not ascertained: he estimated it at $25,000,000, principal and interest. Amount of the debts of the United States as above, $54,124,564 56 Of the debt proposed to be assumed on account of the several states, Estimated amount of debt in 1790, 25,000,000 00 $79,124,464 56 After a long and animated discussion, a bill was passed, towards the close of the session, for funding the domestic debt of the United States, and assuming $21,500,000 of the debts due by the several states. The continental money was to be funded at the rate of one hundred dollars in the said bills for one dollar in specie. The certificates issued by the register of the treasury, the paymaster-general, &c. were to be funded at their nominal value. For every hundred dollars subscribed, new certificates were ordered to be issued, purporting that the United States owed the holder thereof $66 663 cents, bearing an interest of six per cent, payable quarterly; and certificates purporting that the United States owed the holder thereof $33 33 cents, at six per cent interest, the payment of which interest should not commence till after the year 1800. For the arrears of interest, it was ordered that certificates should be issued bearing an interest of three per cent. In this way were constituted what are known as the old six per cent, deferred six per cent, and three per cent stocks. The assumed debt of the several states was funded by issuing six per cent certificates, for four-ninths of the amount; deferred six per cent certificates for two-ninths; and three per cent certificates for the remaining three-ninths. To enable the government to pay the interest of the debt thus funded, an augmentation was made in 1790, of the duties on imported wines, spirits and coffee; and in the following session a duty was imposed on stills and domestic spirits. As many who were then holders of soldiers' certificates and other evidences of debt, due by the old government, had purchased them at one-eighth or one-tenth of their nominal value, the terms offered by the new government must be regarded as having been very favourable. The public creditors were not slow in accepting the offer, and by the 31st of December 1794, there had been funded, In six per cents, Deferred, Three per cents, $29,046,730 62 14,523,365 45 19,484,840 68 63,054,936 75 Leaving for domestic debt, unre 2,265,022 57 deemed, 60,789,914 18 by computation, exclusive of temporary loans, and of the amount due to the Bank of the United States, on account of subscription to the stock of 'that institution. During the administration of Washington and John Adams, every possible effort was made to reduce the amount of the public debt. The duties on imports were either increased or arranged in a new form, by seven different acts, between the 10th of August 1790 and the 13th of March 1800. The duties on stills and domestic spirits were also increased, or arranged in a new form by three different acts. To these were added, at different times, duties on auctions, on retailers of wines and spirits, duties on stamps, on refined sugar, on snuff, and on carriages; and, finally, in 1798, a direct tax of two millions was imposed on real estate. By an act of 1790, only $600,000 of the revenue derived from the permanent duties were reserved for defraying the proper expenses of government. All the rest was appropriated to the payment of the interest of the public debt, and for the redemption of the principal. In subsequent years it was found necessary to increase the appropriation for defraying the proper expenses of government; but, whenever this was done, additions were made to the duties on imported goods, or to the internal taxes, to keep the sinking fund unimpaired. Not-. withstanding these efforts, the sinking fund did not become effective in reducing the amount of the public debt, till the year 1801; for, though between the first of January 1791, and the first of January 1800, old debts were paid to the amount of $8,164,232 84, new debts were, in the same period contracted, of the amount of $10,786, 100. The war with the Indians; the insurrection in western Pennsylvania, which it cost the government $1,250,000 to suppress; the transactions with Algiers, which cost $1,500,000; the still greater expenses incurred in the disputes with France, in 1798 and 1799, and the compensation of upwards of $2,600,000 which it was found necessary to allow to British creditors, for losses occasioned by legal impediments to the collection of debts, contracted prior to the peace of 1783, were so many extraordinary occasions of expense, which rendered an increase of the public debt in this period unavoidable. During nearly the whole of this time, our financial affairs were more or less embarrassed. Money was, to the merchant, worth much more than the legal rate of interest; and as there was little loanable capital in the country, the difficulty the government found in borrowing was considerable. of this we have a remarkable example in 1795, when, as stated by Mr Gallatin," it borrowed eight hundred thousand dollars in six per cent stock, at par, and as cash, from the bank of the United States, which seems to have produced only seven hundred and twenty thousand dollars in specie." This was paying a premium of 11 per cent, besides six per cent interest. In 1796, it opened books for subscription to a loan of five millions, at six per cent, of which it obtained only eighty thousand. Advances made by the bank of the United States, in anticipation of the revenue, and intended to be temporary, remained unpaid for a much longer period than the bank contemplated, or the government desired; and at length the government was obliged to sell part of its bank stock, to satisfy the claims of the institution. In this period, many changes were made in the form of the public debt. It consisted originally, as we have seen above, of certain amounts due to France, Holland and Spain; and of certain amounts due to domestic creditors, for which certificates were issued, of six per cent, deferred six per cent, and three per cent stocks. At the same time, when the act was passed for funding the domestic debt, the president was authorised to borrow twelve millions of dollars, solely for the purpose of discharging the arrears of interest, and the instalments of the principal of the foreign debt. Under this act, moneys were borrowed in Holland, by which the Spanish debt, amounting with interest to $259,083 05, was discharged in 1792 and 1793, and upwards of eight millions of dollars paid on account of the principal and interest of the French debt, in 1791 and the three subsequent years. It being very inconvenient to the government to remit the sums required in Europe to pay the interest and instalments of the principal of the foreign debt, an attempt was made in 1795 to commute this debt for stock, the interest and principal of which should be payable in the United States. As an inducement to the foreign creditors to accede to this arrangement, they were offered a half per cent additional interest. The French alone accepted the offer; and, in consequence, certificates for $176,000, of four and a half per cent stock, and $1,848,900 of five and a half per cent stock were issued. The last portion of the French debt having been in this way commuted, Holland was from the year 1795 regarded as the only foreign creditor of the United States. The sum originally due to her having been increased by moneys borrowed to discharge the Spanish and great part of the French debt, the whole amount owing to Holland on the 1st of January 1796, was 11,939,000 dollars, bearing an interest of four and of four and a half per centum. Many years elapsed before this debt was completely extinguished. In 1798, the president was authorised to receive into the public service such armed vessels as might be offered on credit by any persons, for which certificates of stock bearing an interest of six per cent should be issued. In this way the Navy six per cents were created. They amounted in 1799 to 711,700 dollars. In the same year, the president was authorised to borrow five million of dollars, upon terms the most advantageous to the United States, to be applied to making up deficiencies in appropriations, and to defray the expenses of raising, equipping and calling into actual service, the militia, volunteers, and regular troops. Eight per centum was allowed for this loan, and the whole sum was obtained. In 1800, three million five hundred thousand dollars were authorised to be borrowed on terms the most advantageous to the United States: but only one million four hundred and eighty-two thousand, could be obtained at eight per cent per annum. We have already alluded to the abortive attempt made in 1796 to borrow five millions at 6 per cent, of which only 80,000 could be obtained. The effect of these different transactions was such, that on the 1st of January 1801, the debt of the United States was as follows: On that day, the public debt was greater than on the first day of any other year, from the adoption of the constitution to the year 1814 inclusive, excepting in 1804, when the debt was increased by the purchase of Louisiana. During the whole of this period, the revenue from the customs was gradually increasing, as may be seen by inspection of the table of receipts, at the end of this article. In 1792, the customs yielded $3,443,070. In 1800, upwards of $9,000,000. The revenue from internal taxes, which was $200,000 in 1792, amounted to $800,000 in 1800, besides upwards of $700,000 derived in that year from the new direct tax. Yet, owing to the succession of difficulties encountered by the government, the public debt, funded and unfunded, was greater by about six millions, than it was at the adoption of the constitution. The whole amount paid into the treasury, from 1792 to 1802 inclusive, on account of the internal taxes laid previously to 1800, was 6,105,097 dollars. The greatest amount that accrued in any one year was in 1801, being 989,533 dollars 29 cents, and accruing from the following objects: The greatest amount received on account of these taxes, was in 1801, being $1,048,033. Small sums, on account of these taxes, continued to be received at the treasury for many years after the acts imposing them were repealed. The duty on spirits was, at first, from 9 to 30 cents a gallon, according to the proof or strength; and 60 cents a gallon on the capacity of a still, used in a town. These duties were subjected to several modifications. The duty on retailers of wine and spirituous liquors was five dollars each. In 1794, the duty on a coach was ten dollars; on a chariot, eight dollars; on a phaeton or coachee, six dollars; on any other four-wheel, and on every two-wheel top carriage, two dollars; on every other two-wheel carriage, one dollar. By an act of 1796, the duties were increased about 50 per cent. The duty on refined sugar was two cents a pound. On sales by auction, from a quarter to a half per cent. The stamp duties were laid on bank notes, legal documents, bills of lading, &c. and were various in amount. By the time Mr. Jefferson entered into office, most of the difficulties the new government had to encounter, had been surmounted. This rendered it practicable to make some desired changes in the system of finance, and on the 6th of April 1802, an act was passed repealing the internal taxes from the 30th of June of that year. On the 29th of the same month an act was passed appropriating 7,500,000 dollars to the Sinking Fund. From that time to the breaking out of the war with Great Britain, in June 1812, the Sinking Fund was efficient. On the purchase of Louisiana, the United States agreed to pay 15,000,000 dollars; 3,750,000 dollars to be paid to our own merchants for their claims of a certain description on the French government, and the remainder, being 11,250,000, to be paid in stock at six per cent. To carry into effect this agreement, stock to that amount was issued, in pursuance of an act of congress passed November 10th 1803, and made payable to the assignees of the French government. By the same act the sum of 700,000 annually, was added to the Sinking Fund, to pay the interest on the stock. This was the only new debt incurred during the administration of Jefferson. In 1806, the secretary of the treasury said, “all the species of debt, on which the entire appropriation of 8,000,000 dollars could operate, would be reimbursed previous to 1809." To promote the rapid discharge of the remaining debt, he proposed, if it should meet the approbation of the public creditors, to convert the old six per cent, the deVOL. XVIII.—PART II. ferred six per cent, and the three per cent stocks, of which, according to the provisions of the law of 1790, no more than eight per cent could be redeemed annually, into a common six per cent stock, redeemable at the pleasure of the United States. An act was passed in accordance with these views, in 1807: and some of the public creditors accepted the terms proposed. In consequence, certificates were issued for $6,294,051 of a new stock called exchanged six per cents, the same being in lieu of old six per cent and deferred stocks: and certificates to the amount of 1,859,850 dollars, were issued for another new stock called converted six per cent; one hundred dollars of this new six per cent stock, being given in exchange for 153 dollars 99 cents of the old three per cent stock. Though a debt of $15,000,000 was incurred by the purchase of Louisiana, the sum total of the public debt was reduced during Mr. Jefferson's administration, from $82,000,000 to less than $57,000,000. This reduction was owing in part to the character of the times: but it would be injustice not to ascribe it in part to the character of the man, and to the principles of his administration. In the first years of Mr. Madison's term of office, circumstances rendered it practicable to pursue the same policy: and on the first of January 1312, the public debt was as follows: Six per cent and deferred stock, $17,066,941 98 Three per cent, 16,157,890 04 80,000 00 11,250,000 00 Six per cent of 1796, Old unfunded debt, American claims assumed by Louisiana convention, Deduct payments by the treasury on account of subsequent years, 565,318 41 33,884 33 57,946 55 $45,211,981 31 176,857 61 $45,035,123 70 The five and a half per cent stock, the four and a half per cent, the Navy six per cent, the eight per cent, and the exchange six per cent of 1807, had been completely reimbursed: and the other denominations of stock greatly reduced in amount. The payments made on account of the principal of the debt from April 1st 1801 to January 1st 1812, amounted, according to the treasury statements, to 46,022,810 dollars. The sums received from 1801 to 1811 inclusive, which were applicable to the payment of the interest and principal of the public debt, amounted to about 99,000,000 dollars. During the period in which the government paid this sum, no additional taxes of any importance were imposed, except a duty of two and a half per cent on goods imported, paying ad valorem duties, to defray the expenses of the war with Tripoli, and of intercourse with the other Barbary powers, and which was called "the Mediterranean Fund." This duty was to have ceased in three months after the 3 R termination of the war with Tripoli: but was continued by various acts of congress until 1815. When the war of 1812 commenced, the annual interest on the public debt did not exceed two million dollars. The income of government in 1811, exceeded fourteen million dollars, and all its expenditures in that year, independent of what was paid on account of the public debt, and of the army and navy, did not amount to 1,800,000 dollars. Yet a war of only two years and eight months, produced very serious financial embarrassments, some of the consequences of which were felt by the nation for a long period. In anticipation of the declaration of war, congress, by an act of March 14th, 1812, authorised the borrowing of 11,000,000 dollars, at an interest of six per cent. Under this act there was obtained in the course of the year 1812, the sum of $10,184,700. Of this sum $2,150,000 were obtained of certain banks on special contract, 1,350,000 being made repayable in 1813, 750,000 in 1814, and 50,000 in 1817. For the residue, being 8,034,700 dollars, six per cent stock was issued, redeemable after the 1st of January 1825. About one half of this last sum was obtained from banks, and the residue from individuals. On the 8th of January 1813, a further sum of sixteen millions was authorised to be borrowed. This was obtained by contract, and principally from individuals, at the rate of eighty-eight dollars in the hundred, viz. for every eighty-eight dollars paid in money, a certificate of stock for one hundred dollars was to be issued; or what is the same, for every hundred dollars which the United States received, they were to issue a certificate of stock for $113 63 cents. The amount of stock issued for this loan of sixteen millions, was 18,109,377, making a bonus of 2,109,377 to the lenders. By an act of August 2d, 1813, a further loan of seven millions and a half was authorised, and was obtained by issuing stock for 113 dollars 31 cents, for every hundred dollars received. Under this act, stock to the amount of 8,498,583 dollars, was issued, making a premium or bonus to the lenders of 998,583 dollars. On the 29th of March 1814, authority was given to borrow 25,000,000 dollars; but the whole sum could not be obtained. On the 4th of April, the secretary of the treasury issued his invitations for a loan of ten millions, as part of the 25 millions: and on the 25th of July, further invitations for a loan of six millions. The whole sum obtained by virtue of this act, was only $12,551,511 87, for which, stock to the amount of $15,661,881 was issued. For nearly $12,300,000 of money received, stock was issued at the rate of $125 for $100 paid in, making a nominal bonus to the lenders of $3,110,306, in the aggregate. As much of this loan was paid into the treasury in bank notes, which were many per cent below par, and as the interest and principal have been paid in a more valuable medium, it is probable that the real bonus has not amounted to less than five millions. On the 14th of November, in the same year, an act was passed to authorise the borrowing of $3,000,000, but the sums obtained were so small, that only $252,801, of new six per cent stock was issued in consequence. For less than 44 millions paid into the treasury in the form of loans, during the war, and part of this in bank notes 20 per cent below par, it was necessary to issue upwards of 50 millions of stock. As a further aid to carrying on the war, emissions were made of treasury notes, bearing an interest of five and two fifths per centum, reimbursable one year after the day on which they were issued, and receivable in payment for duties, taxes, and public lands. In 1812, authority was given to issue notes of this description, to the amount of $5,000,000: in 1813, to the amount of $10,000,000; and in 1814, to the amount of $20,500,000, making in the aggregate, $35,500,000, of which $28,318,400, were actually issued, and passed at a great depreciation. Immediately on the declaration of war, one hundred per cent was added to the duties on imports and tonnage, but the commerce of the country being restricted by belligerent operations, the revenue from the customs for the whole of 1812, (six months of which were months of peace) amounted to less than nine million dollars. In 1813, this revenue rose to upwards of thirteen millions: but in 1814, in consequence of the blockade of our coast, it sunk to less than six millions. From a report of the committee of ways and means, it would appear as if congress depended on bank credits as a means of carrying on the war! However this may have been, it is certain that even the first steps towards raising a revenue by internal taxation, were not taken until July and August 1813: when acts were passed, to take effect from the first of January 1814, imposing a duty of from ten to twenty-four dollars each, on retailers of wine, spirits, and foreign merchandize: a duty on stills, of 108 cents per gallon per year: a duty of from one dollar to twenty dollars on carriages: a duty of 4 cents a pound on refined sugar; a duty of from one quarter of one per cent, to one per cent on sales by auction; and a stamp duty, varying from one cent to fifty dollars, according to the importance of the document for which the stamp might be used. The sums which accrued from these taxes in the year 1814, exceeded three millions of dollars: but the sums actually paid into the treasury, fell short of 1,700,000 dollars. In the same year, a direct tax of 3 millions was laid; which, within the year, brought into the Treasury 2,219,447 dollars. But the whole revenue of government during the years 1812, 13, and 14, from customs, internal taxes, direct tax, the public lands, and every other source, except loans and Treasury notes, amounted to hardly 36 millions, or 12 millions for each year. The policy of carrying on the war by means of loans, cannot be said to have been an unwise one: but what ought to have been an essential point in this policy, viz. the drawing on the real resources of the country to an extent sufficient to support the credit of government was neglected too long. Under any circumstances, it would have been neces |