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this we have a remarkable example in 1795, when, In the same year, the president was authorised to as stated by Mr Gallatin, “it borrowed eight hun borrow five million of dollars, upon terms the most dred thousand dollars in six per cent stock, at par, advantageous to the United States, to be applied to and as cash, from the bank of the United States, making up deficiencies in 'appropriations, and to which seems to have produced only seven hundred defray the expenses of raising, equipping and calland twenty thousand dollars in specie.” This was ing into actual service, the militia, volunteers, and paying a premium of 11 per cent, besides six per cent regular troops. Eight per centum was allowed for interest. In 1796, it opened books for subscription this loan, and the whole sum was obtained. to a loan of five millions, at six per cent, of which it In 1800, three million five hundred thousand dolobtained only eighty thousand. Advances made by lars were authorised to be borrowed on terms the the bank of the United States, in anticipation of the most advantageous to the United States: but only revenue, and intended to be temporary, remained one million four hundred and eighty-two thousand, unpaid for a much longer period than the bank con- could be obtained at eight per cent per annum. templated, or the government desired; and at length We have already alluded to the abortive attempt the government was obliged to sell part of its bank made in 1796 to borrow five millions at 6 per cent, stock, to satisfy the claims of the institution. of which only 80,000 could be obtained.

In this period, many changes were made in the The effect of these different transactions was such, form of the public debt. It consisted originally, as that on the ist of January 1801, the debt of the we have seen above, of certain amounts due to United States was as follows: France, Holland and Spain; and of certain amounts due to domestic creditors, for which certificates Foreign debt,

10,419,000 00 were issued, of six per cent, deferred six per cent, Domestic debt, viz.old six per cent and three per cent stocks. At the same time, when and deferred stock,

37,947,458 20 the act was passed for funding the domestic debt, Three per cent stock,

19,093,902 21 the president was authorised to borrow twelve mil Five and a half

per cent,

1,847,500 00 lions of dollars, solely for the purpose of discharge Four and a half,

176,000 00 ing the arrears of interest, and the instalments Six per cent (of 1796),

80,000 00 of the principal of the foreign debt. Under this Navy six per cent,

711,700,00 act, moneys were borrowed in Holland, by which Eight per cent,

6,481,700 00 the Spanish debt, amounting with interest to Temporary loans from U. S. Bank, $259,083 05, was discharged in 1792 and 1793, and bank of New York,

3,440,000 00 and upwards of eight millions of dollars paid on Old unfunded debt,

2,840,790 39 account of the principal and interest of the French debt, in 1791 and the three subsequent years.

83,038,050 80 It being very inconvenient to the government to Deduct payments made by the remit the sums required in Europe to pay the inter- treasury on account of subsequent est and instalments of the principal of the foreign years,

1,037,883 44 debt, an attempt was made in 1795 to commute this .debt for stock, the interest and principal of which

82,000,167 36 should be payable in the United States. As an inducement to the foreign creditors to accede to this On that day, the public debt was greater than on arrangement, they were offered a half per cent ad. the first day of any other year, from the adoption of ditional interest. The French alone accepted the the constitution to the year 1814 inclusive, exceptoffer; and, in consequence, certificates for $176,000, ing in 1804, when the debt was increased by the of four and a half per cent stock, and $1,848,900 of purchase of Louisiana. five and a half per cent stock were issued. The last During the whole of this period, the revenue from portion of the French debt having been in this way the customs was gradually increasing, as may be commuted, Holland was from the year 1795 re seen by inspection of the table of receipts, at the garded as the only foreign creditor of the United end of this article. In 1792, the customs yielded States. The sum originally due to her having been $3,443,070. In 1800, upwards of $9,000,000. The increased by moneys borrowed to discharge the revenue from internal taxes, which was $200,000 Spanish and great part of the French debt, the in 1792, amounted to $800,000 in 1800, besides upwhole amount owing to Holland on the 1st of Jan. wards of $700,000 derived in that year from the uary 1796, was 11,939,000 dollars, bearing an in- new direct tax. Yet, owing to the succession of terest of four and of four and a half per centum. difficulties encountered by the government, the pubMany years elapsed before this debt was completely lic debt, funded and unfunded, was greater by about extinguished.

six millions, than it was at the adoption of the conIn 1798, the president was authorised to receive stitution. into the public service such armed vessels as might The whole amount paid into the treasury, from be offered on credit by any persons, for which cer 1792 to 1802 inclusive, on account of the internal tificates of stock bearing an interest of six per cent taxes laid previously to 1800, was 6,105,097 dollars. should be issued. In this way the Navy six per The greatest amount that accrued in any one year cents were created. They amounted in 1799 to was in 1801, being 989,533 dollars 29 cents, and ac711,700 dollars.

cruing from the following objects:

From spirits distilled within the

ferred six per cent, and the three per cent stocks, United States,

$ 178,659 21 of which, according to the provisions of the law of From stills,

257,070 03 1790, no more than eight per cent could be reFrom refined sugar,

76,539 65 deemed annually, into a common six per cent stock, From sales by auction,

66,122 84 redeemable at the pleasure of the United States. From licenses to retailers,

69,173 74 An act was passed in accordance with these views, From carriages,

73,926 21 in 1807: and some of the public creditors accepted From stamps,

268,041 46 the terms proposed. In consequence, certificates

were issued for $6,294,051 of a new stock called ex$989,041 61 changed six per cents, the same being in lieu of old

six per cent and deferred stocks: and certificates to The greatest amount received on account of these the amount of 1,859,850 dollars, were issued for taxes, was in 1801, being $1,048,033. Small sums, another new stock called converted six per cent; on account of these taxes, continued to be received one hundred dollars of this new six per cent stock, at the treasury for many years after the acts impos- being given in exchange for 153 dollars 99 cents of ing them were repealed.

the old three per cent stock. The duty on spirits was, at first, from 9 to 30 Though a debt of $15,000,000 was incurred by the cents a gallon, according to the proof or strength; purchase of Louisiana, the sum total of the public and 60 cents a gallon on the capacity of a still, used debt was reduced during Mr. Jefferson's adminisin a town. These duties were subjected to several tration, from $82,000,000 to less than $57,000,000. modifications. The duty on retailers of wine and This reduction was owing in part to the character spirituous liquors was five dollars each. In 1794, of the times: but it would be injustice not to ascribe the duty on a coach was ten dollars; on a chariot, it in part to the character of the man, and to the prineight dollars; on a phaeton or coachee, six dollars; ciples of his administration. on any other four-wheel, and on every two-wheel top In the first years of Mr. Madison's term of office, carriage, two dollars; on every other two-wheel car. circumstances rendered it practicable to pursue the riage, one dollar. By an act of 1796, the duties were same policy: and on the first of January 1312, increased about 50 per cent. The duty on refined the public debt was as follows: sugar was two cents a pound. On sales by auction, from a quarter to a half per cent. The stamp du Six per cent and deferred stock, $17,066,941 98 ties were laid on bank notes, legal documents, bills

Three per cent,

16,157,890 04 of lading, &c. and were various in amount.

Six per cent of 1796,

80,000 00 By the time Mr. Jefferson entered into office, most

Louisiana six per cent,

11,250,000 00 of the difficulties the new government had to en Converted six per cent,

565,318 41 counter, had been surmounted. This rendered it Old unfunded debt,

33,884 33 practicable to make some desired changes in the American claims assumed by Lousystem of finance, and on the 6th of April 1802, an isiana convention,

57,946 55 act was passed repealing the internal taxes from the 30th of June of that year. On the 29th of

$45,211,981 31 the same month an act was passed appropriating Deduct payments by the treasury 7,500,000 dollars to the Sinking Fund. From that on account of subsequent years, 176,857 61 time to the breaking out of the war with Great Britain, in June 1812, the Sinking Fund was efficient.

$45,035,123 70 On the purchase of Louisiana, the United States agreed to pay 15,000,000 dollars; 3,750,000 dollars The five and a half per cent stock, the four and to be paid to our own merchants for their claims a half per cent, the Navy six per cent, the eight of a certain description on the French government, per cent, and the exchange six per cent of 1807, had and the remainder, being 11,250,000, to be paid in been completely reimbursed: and the other destock at six per cent. To carry into effect this nominations of stock greatly reduced in amount. agreement, stock to that amount was issued, in The payments made on account of the principal of pursuance of an act of congress passed November the debt from April 1st 1801 to January 1st 1812, 10th 1803, and made payable to the assignees of the amounted, according to the treasury statements, to French government. By the same act the sum of 46,022,810 dollars. The sums received from 1801 700,000 annually, was added to the Sinking Fund, to 1811 inclusive, which were applicable to the payto pay the interest on the stock.

ment of the interest and principal of the public This was the only new debt incurred during the debt, amounted to about 90,000,000 dollars. Duradministration of Jefferson.

ing the period in which the government paid this In 1806, the secretary of the treasury said, “ all sum, no additional taxes of any importance were the species of debt, on which the entire appropria- imposed, except a duty of cwo and a half per cent tion of 8,000,000 dollars could operate, would be on goods imported, paying ad valorem duties, to reimbursed previous to 1809.” To promote the defray the expenses of the war with Tripoli, and of rapid discharge of the remaining debt, he proposed, intercourse with the other Barbary powers, and if it should meet the approbation of the public which was called “the Mediterranean Fund.” This creditors, to convert the old six per cent, the de- duty was to have ceased in three months after the

Vol. XVIII.- Part II.

3 R

per cent.

termination of the war with Tripoli: but was con- $3,000,000, but the sums obtained were so small, tinued by various acts of congress until 1815. that only 8252,801, of new six per cent stock was

When the war of 1812 commenced, the annual issued in consequence. interest on the public debt did not exceed two mil For less than 44 inillions paid into the treasury lion dollars. The income of government in 1811, in the form of loans, during the war, and part of exceeded fourteen million dollars, and all its ex this in bank notes 20 per cent below par, it was penditures in that year, independent of what was necessary to issue upwards of 50 millions of stock. paid on account of the public debt, and of the army As a further aid to carrying on the war, emiss. and navy, did not amount to 1,800,000 dollars. ions were made of treasury notes, bearing an Yet a war of only two years and eight months, pro- interest of five and two-fifths per centum, reimduced very serious financial embarrassments, some bursable one year after the day on which they were of the consequences of which were felt by the na issued, and receivable in payment for duties, taxes, tion for a long period.

and public lands. In 1812, authority was given to In anticipation of the declaration of war, congress, issue notes of this description, to the amount of by an act of March 14th, 1812, authorised the bor- $5,000,000: in 1813, to the amount of $10,000,000; rowing of 11,000,000 dollars, at an interest of six and in 1814, to the amount of $20,500,000, making

Under this act there was obtained in in the aggregate, 835,500,005, of which $28, 318,400, the course of the year 1812, the sum of $10,184,700. were actually issued, and passed at a great depreOf this sum $2,150,000 were obtained of certain ciation. banks on special contract, 1,350,000 being made Immediately on the declaration of war, one hun. repayable in 1813, 750,000 in 1814, and 50,000 in dred per cent was added to the duties on imports 1817. For the residue, being 8,034,700 dollars, and tonnage, but the commerce of the country six per cent stock was issued, redeemable after the being restricted by belligerent operations, the Ist of January 1825. About one half of this last revenue from the customs for the whole of 1812, sum was obtained from banks, and the residue (six months of which were months of peace) from individuals.

amounted to less than nine million dollars.

In 1813, On the 8th of January 1813, a further sum of this revenue rose to upwards of thirteen millions: sixteen millions was authorised to be borrowed. but in 1814, in consequence of the blockade of our This was obtained by contract, and principally from coast, it sunk to less than six millions. individuals, at the rate of eighty-eight dollars in From a report of the committee of ways and the hundred, viz. for every eighty-eight dollars means, it would appear as if congress depended paid in money, a certificate of stock for one hun on bank credits as a means of carrying on the war! dred dollars was to be issued; or what is the same, However this may have been, it is certain that even for every hundred dollars which the United States the first steps towards raising a revenue by internal received, they were to issue a certificate of stock taxation, were not taken until July and August 1813: for $113 63 cents. The amount of stock issued for when acts were passed, to take effect from the this loan of sixteen millions, was 18,109,377, making first of January 1814, imposing a duty of from ten a bonus of 2, 109,377 to the lenders.

to twenty-four dollars each, on retailers of wine, By an act of August 20, 1813, a further loan of spirits, and foreign merchandize: a duty on stills, seven millions and a half was authorised, and was of 108 cents per gallon per year: a duty of from obtained by issuing stock for 113 dollars 31 cents, one dollar to twenty dollars on carriages: a duty of for every hundred dollars received. Under this 4 cents a pound on refined sugar; a duty of from act, stock to the amount of 8,498,583 dollars, was one quarter of one per cent, to one per cent on issued, making a premium or bonus to the lenders sales by auction; and a stamp duty, varying from of 998,583 dollars.

one cent to fifty dollars, according to the importOn the 29th of March 1814, authority was given to ance of the document for which the stamp might borrow 25,000,000 dollars; but the whole sum could be used. The sums which accrued from these taxes not be obtained. On the 4th of April, the secre in the year 1814, exceeded three millions of dollars: tary of the treasury issued his invitations for a loan but the sums actually paid into the treasury, fell of ten millions, as part of the 25 millions: and on short of 1,700,000 dollars. the 25th of July, further invitations for a loan of In the same year, a direct tax of 3 millions was six millions. The whole sum obtained by virtue of laid; which, within the year, brought into the Treathis act, was only $12,551,511 87, for which, stock sury 2,219,447 dollars. But the whole revenue of to the amount of $15,661,881 was issued. For government during the years 1812, 13, and 14, nearly $12,300,000 of money received, stock was from customs, internal taxes, direct tax, the public issued at the rate of $125 for $100 paid in, making lands, and every other source, except loans and a nominal bonus to the lenders of $3,110,306, in the Treasury notes, amounted to hardly 36 millions, or aggregate. As much of this loan was paid into 12 millions for each year. the treasury in bank notes, which were many per The policy of carrying on the war by means of

par, and as the interest and principal loans, cannot be said to have been an unwise one: have been paid in a more valuable medium, it is but what ought to have been an essential point in probable that the real bonus has not amounted to this policy, viz. the drawing on the real resources less than five millions.

of the country to an extent sufficient to support the On the 14th of November, in the same year, an credit of government was neglected too long. act was passed to authorise the borrowing of Under any circumstances, it would have been neces

cent below

sary to pay a high premium on loans, for our of one dollar a ton, on pis, bar, slit, and rolled countrymen had little to lend, much of their in- iron, manufactured in the country, one dollar and a vested capital having been rendered unproductive half a ton on iron castings, one cent a pound on by the events of the war, and much of their floating nails, five cents a pound on wax candles, three cents capital taking a direction towards manufactures: a pound on tallow candles, eight per cent ad valorem but the principles of the financial policy which on hats, caps, and umbrellas, three per cent on paper, were adopted, would, in the course of a few months, fifty per cent on playing and visiting cards, six per have rendered it impossible to borrow money on cent on saddles and bridles, beer, ale, and porter, any terms. Fifty per cent was, indeed, added 10 twenty per cent on manufactures of tobacco, five per the duty on retailers, in December 1814: a duty of cent on boots and leather: two dollars a piece on gold 20 cents a gallon was imposed on distihed spirits: watches, one dollar on silver watches, and a tax on the duty on carriages was greatly increased: one household furniture, from one dollar to one hun. per cent was added to the duty on auctions: and a dred dollars, according to a graduated scale of direct tax of six millions was laid for 1815: but any valuation. person who candidly considers the events of the In consequence of this act, the amount received following years, will probably be convinced, that, from internal taxes, during the year 1815, was inwithout an increase of revenue from the customs, creased to 4,600,000 dollars, and there being a it would have been impossible for government to small increase in the customs, the whole revenue support its credit. Even so late as December 1814, of the government, for the year, independent of it appeared to be the wish of some of the leading what was derived from loans and treasury notes, men in the administration, instead of depending on was a little less than 15,700,000 dollars. It being the real resources of the country, to depend on a found impracticable, or deemed inexpedient, imbank they proposed to form, with a nominal capital mediately to reduce the army and navy to the peace of fifty millions, made up principally of public stock establishment, the charges on government were and treasury notes, all, then, much below par. very heavy in this period, and the outstanding

Peace was providentially restored in an early claims which were daily brought in, occasioned part of 1815. On the first of January of that year, much embarrassment. At the end of the year, the the debt of government, funded and unfunded, stood, ascertained debt, was upwards of 123 millions. according to the Treasury books, at 99,824,410 If hostile operations had been continued to this dollars, and there were outstanding claims against time, the confusion would have been inextricable: it to the amount of 30 or 40 millions more. On but the return of peace rendered it practicable to the 20th of February the ascertained debt was 108 resort to all those expedients for changing the form millions. As the means of satisfying, or rather of of debt, and deferring the day of payment, which deferring satisfaction of some of these claims, an act constitute so great a part of the modern art of was passed on the 24th of February 1814, under financiering. The officers of the 'Treasury had free the authority of which, Treasury notes to the ad- scope for exercising their abilities in this way, for ditional amount of 7,815,391 dollars, were issued. the various acts we have mentioned authorising It was provided that such of the notes of this new loans, and two others, one passed December 21st emission, as were of a less denomination than one 1824, for a loan of six millions, and another on the hundred dollars, should bear no interest : but might 9th of January 1815, for another loan of equal be funded at seven per cent and that such as were of amount, together with the acts respecting Treasury the denomination of one hundred dollars and up. notes, gave them authority to borrow to almost any wards, should bear an interest of five and two-fifths extent, and in almost every form, in which borrowper cent aud might be funded at a rate of six per ing would seem possible. cent interest.

With so much skill did they exert those powers As a means of absorbing part of the outstanding of financial melamorphosis which the funding and treasury notes, issued under the authority of the Treasury note system gave them, that, though the different acts of 1812, 13, and 14, invitations were bona fide revenue of government for the whole year, given for a loan of $18,452,000, subscriptions to had been only 15,700,000 dollars, and though the which might be made in any treasury notes issued charges of government for the same period amounted previous to the third of March 1815, the day of to upwards of 39 millions,—there was, according the passage of this act. In this way, were created to the published statements, a balance in the Treathree new denominations of stock; but which still sury, on the last day of the year, of upwards of left at the end of the year, between seventeen and thirteen million dollars! eighteen millions of treasury notes unfunded, and This balance was, unfortunately, not such as a debt of upwards of one million dollars, obtained could be immediately applied where it was most as a temporary loan, unsatisfied.

wanted. Five months before the conclusion of the In the acts passed during the war for raising a war, all the banks south and west of New England, revenue by internal taxation, it was provided that excepting the old bank at Nashville, had suspended the taxes should not be repealed till one year after specie payments.

On the return of peace, the the cessation of hostilities. But it was found neces- banks in the principal cities could have resumed sary, as will be shown hereafter, to continue these payments in specie without making any great sataxes for nearly three years after the return of crifices, for they had in this interval added little to peace: and, in addition, it was deemed expedient on their issues. If the government had been free the 1st of April 1815, to pass an act imposing a duty from embarrassment, it might, by refusing to re

ceive the notes of any but specie-paying banks in invidious distinction as well between the debtors as discharge of duties, have induced the principal in the creditors of the public, in many cases exceeding stitutions to pursue the course which sound prin- 20 per cent on the amount of their debts and claims ciples dictated. But the credit of government was respectively.” even worse than that of the banks: and from policy This writer, in speaking of “millions of surplus or from necessity, it connived at the continued sus revenue,” has special reference to the year 1816. pension of specie payments, a suspension which, it It was in that year or the second year after the war, was originally understood, was not to be prolonged that the increased issues of paper were most effi. beyond the close of the war. Under these circum- cient in bringing both the government and the stances, the banks naturally began to increase their people into a state of apparently very great prosissues, and produced that appearance of prosperity perity. The prices of nearly every kind of property which is one of the first effects of a plentiful emiss. being raised many per cent, most men supposed ion of paper money. From the great variety of their riches to be increased in proportion. The circulating medium, and the inequality of its value, importation and consumption of foreign commosome inconvenience was suffered, but no small dities, were in a ratio to the supposed increase of number of men found this evil more than com- the ability of people to pay for them: and the reve. pensated by the rise in the price of real estate, and nue from the customs alone, amounted in this year, ihe briskness of nearly every description of business. to the enormous sum of thirty-six millions, being If the merchant at Pittsburgh was forced to give nearly five times as much as had been derived from ten per cent to have his western notes exchanged the same source in 1815. The internal taxes, in for paper current in Philadelphia, he knew how to the same year, produced upwards of five millions, compensate himself by putting on his goods an ad. the direct tax more than four millions, and the ditional price, equivalent to the difference in the public lands more than 1,700,000, making the currencies. Labouring men, in many cases, sus whole revenue for the year 1816, upwards of forlytained a real loss, from their employers paying seven millions. The revenue of this one year, ex. them in notes of inferior value: but they vented all ceeded the total amount of the national debt on the their indignation on the innocent exchange brokers. first of January 1812. Men of business could calculate the par of exchange, At the end of the year, the balance in the trea. and regulate their transactions accordingly. The sury was upwards of twenty-two millions: but such time when they were to suffer, by the necessary re was the nature of the money of which it was com. action of the system, and the consequent fall in the posed, that the Secretary of the treasury found it price of real estate, and of nearly every other necessary to borrow 500,000 dollars from the bank description of property, had not yet arrived. of the United States, in anticipation of the com

The condition of the government was very dif- mencement of regular operations by that instituferent. It could not increase its charges for duties tion, to pay the quarterly interest on the public and taxes in each port and in each place, in pro- debt, due at Boston on the first of January 1817. portion to the depreciation of the currency. The The public debt was, on that day, according to amount of each duty and each tax was determined the Treasury statement, greater than on the first of by general laws, and was nominally the same January 1816: but this was owing to seven millions throughout the country, whatever might be the of five per cent stock having been issued as subdifference in the currencies. The greater part of scription to the bank of the United States : and iis receipts were in places where the currency was owing to upwards of five millions of stock, issued below par: and it was compelled to make many of to satisfy certain claimants to land in Mississippi, its payments, in places where nothing was current being then first introduced into the schedule. This but specie, or paper exchangeable for specie on de- stock, which was issued under authority of an act mand. It profited in one way, as we shall show of 1814, bore no interest, and the principal was hereafter, by the abundance of circulating medium: made reimbursable out of the proceeds of the sales but this profit would have been reduced to little or of public lands in Mississippi. The old debt had, pothing, if it had paid the common premium of during the year, been reduced upwards of eleven exchange. To use the larguage of a writer of that millions, but, through the subscription to the bank day, “'T'he public treasury exhibited a phenomenon of the United States, and the including of the ir finance. Many millions of surplus revenue, with Mississippi stock in the general statement, the as many different values as there were offices of total appeared to be increased. collection, constantly accumulating at those ports The public debt on the first of January 1817, of entry where it was least valuable, and applicable when it was greatest according to the published only where it was collected, while the great mass statements, consisted of the following items :of the public debt. and expenditures was at those Six per cent and deferred stock, $6,532,355 08 places where least available; even the quarterly in Three per cent stock,

16,158,1 80 79 terest on the public debt, due where the currency Six per cent (of 1796),

80,000 00 was the most valuable, could not be discharged, Louisiana, six per cent,

10,923, 500 00 but by the evidence of a new debt, in the form of Exchanged six per cent,

2,984,746 72 seven per cent treasury notes--thus creating an Six per cent stock of 1812,

7,810,500 99

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