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Albert Gallatin, The Writings of Albert Gallatin, vol. 3 [1879]

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Albert Gallatin, The Writings of Albert Gallatin, ed. Henry Adams (Philadelphia: J.B. Lippincott, 1879). 3 vols.

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Vol. 3 contains longer works such as speeches and reports on elections, the finances of the US, public lands, currency and banking, Oregon, the war with Mexico.

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Reprinted 1960 by ANTIQUARIAN PRESS LTD. 303 Fourth Avenue New York 10, N. Y.

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Library of Congress Catalog Card Number: 59-15120

Edition Limited to 750 Copies of which 700 Numbered Copies are For Sale.

This is No. _____

Edition: current; Page: [iii]


  • 1. The Speech of Albert Gallatin, a Representative from the County of Fayette, in the House of Representatives of the General Assembly of Pennsylvania [January 5, 1795], on the important question touching the validity of the elections held in the four western counties of the State on the 14th day of October, 1794. With Notes and an Appendix, containing sundry documents relative to the Western Insurrection . . . . . . page 1
  • 2. A Sketch of the Finances of the United States. By Albert Gallatin. 1796 . . . . . . . . . . . 69
  • 3. Introduction to the Collection of Laws, Treaties, and other Documents having Operation and Respect to the Public Lands. 1810. 207
  • 4. Considerations on the Currency and Banking System of the United States. By Albert Gallatin. 1831 . . . . . . 231
  • 5. Suggestions on the Banks and Currency of the several United States, in reference principally to the Suspension of Specie Payments. By Albert Gallatin. 1841 . . . . . . 365
  • 6. The Oregon Question. By Albert Gallatin. 1846. Appendix. War Expenses . . . . . . . . . . 489
  • 7. Peace with Mexico. By Albert Gallatin. 1847 . . . . 555
  • Appendix. The Gallatin Genealogy . . . . . . . 593
  • Index I. List of the Writings of Albert Gallatin published during his lifetime . . . . . . . 617
  • Index II. Letters written by Albert Gallatin . . . . 623
  • Index III. Letters written to Albert Gallatin . . . . . 630
  • Index IV. Miscellaneous Letters and Papers . . . . . 633
  • General Index . . . . . . . . . . . 635
Edition: current; Page: [iv] Edition: current; Page: [1]


Edition: current; Page: [2] Edition: current; Page: [3]

The subject was introduced upon the motion of Mr. Kelly; the following resolution being offered by him and referred to the consideration of a committee of the whole House.

Resolved, That the elections held during the late insurrection in the counties of Westmoreland, Washington, Fayette, and Allegheny, for members to represent said counties in this House, were unconstitutional, and they are hereby declared void.

Mr. Chairman:—The proposition now before us divides itself into two distinct questions. 1st. Were the inhabitants of the four western counties in a state of insurrection on the second Tuesday of October last, the day of the general election? 2d. Has the House a power to decide on the unconstitutionality of the election?

In order to answer the first question it will be necessary to enter into a detail of the most material facts of the late disturbances; though I should not have supposed it requisite or in point to go any farther back than the unfortunate events of the month of July last past; as, however, the mover of this resolution, with a view, perhaps, of inducing a belief that those events originated in some general combinations of the inhabitants of the western counties, has made a variety of observations on everything which passed in that country on the subject of the excise law from the time of its being enacted, and as the recital he gave and the observations he made, whatever his views might be, had an undoubted tendency to prejudice and inflame the minds of the House on the decision of the main question, I will claim an equal share of indulgence whilst I am obliged, in reply to those observations, to go as far back as the mover himself has gone.

In detailing the leading circumstances of the conduct of the western people, extracted from all the official documents or ascertained facts which are in the possession of the House, or which I Edition: current; Page: [4] have been enabled to procure, I mean not to stand as an advocate for any measure that is in itself reprehensible. I mean not to justify or even to palliate any criminal excesses into which the people, or any part of the people, may have fallen; but I wish to separate facts from opinions, and to divest the picture which has been given to you of those colors which have no other effect but that of obscuring truth.

It is asserted that the opposition to the excise law originated in the western counties with the law itself; that it was at first displayed in the shape of a circulation of opinions and of intemperate resolutions, adopted by meetings and combinations of influential characters; that it soon broke out in acts of violence and excesses, which are justly chargeable to those meetings; and that at last, as a natural consequence of a systematical opposition, not only to the excise law but to government, it terminated in the commission of arson, murder, treason, and an open rebellion against the government of the United States and of Pennsylvania.

That there was a general dislike to the excise law in the western counties cannot certainly be denied; but in answer to the assertion that it originated from an enmity fostered in those counties against the government of the United States itself, it will be sufficient to observe that the aversion to the excise law of the State of Pennsylvania was as strong, and produced as violent effects before the existence of the Constitution of the United States, as the aversion to the late excise law. The acts of violence committed twelve years ago, and which terminated in the expulsion of the State excise officer, cannot be justified, nor can they justify those which have been recently committed; but they show, at least, that whatever opposition existed was directed against the principle of the law itself, and not against the government that enacted it. Permit me to add that the aversion did not arise from a reluctance to pay a share of the public burdens, nor was it confined to the western country alone. The direct taxes imposed by the Legislature of Pennsylvania were lighter on the frontier counties than on the other counties of the State, in proportion to their respective population, though not in proportion to the value of property which Edition: current; Page: [5] their respective inhabitants possessed. Such as they were, they have been paid more punctually by some of the western counties, and as punctually by all of them, as by any other part of the State. This fact will not be denied; its proof is to be found in the yearly official reports made to this House from the year 1785 to the present year. To prove likewise that the aversion to an excise law was not confined to those counties, it will be enough to mention that the excise law of Pennsylvania was merely nominal, so far as related to spirits distilled within her jurisdiction from domestic materials in almost every county of the State. This assertion, if denied, may also be proved, partly from official reports and partly by the evidence of some of the collectors themselves.

We shall find the charge, that the western counties were the first engaged in the circulation of opinions inimical to the excise system, to be equally unfounded. While the excise bill was pending before Congress on the 22d January, 1791, the House of Representatives of this State, upon the motion of two members from the city, adopted, by a large majority, resolutions expressive of their sense on the subject. They not only did so, but, in order that their opinions and the motives of their conduct might be known and circulated, they entered their reasons at large on the minutes of the 2d February, 1791, and in those reasons (which were published in the newspapers) they express their opinion that an excise law was, as it had been denominated by the Congress of 1774, “the horror of all free States,” and that a very large portion of the people would be opposed to it under every possible modification.

Was it more criminal in the inhabitants of the western country than in this House to circulate their opinions? Can a circulation of opinions be called criminal? This doctrine, once adopted, would destroy the privilege, the constitutional privilege, of the citizens to assemble peaceably, to remonstrate, to discuss the measures of government, and to publish their thoughts. We must distinguish between a publication of sentiments and acting. We must distinguish between an opinion merely that this or that measure is wrong, promulgated in any manner whatever by individuals or collections of individuals, and an opinion to which Edition: current; Page: [6] is annexed a declaration that those who give that opinion mean to act in a certain manner or advise others to act. Whether the opinion be right or wrong, as long as it is only an opinion, everybody has a right to express it. To judge whether the determination or recommendation to act is justifiable or not, the nature of the conduct thus avowed, either as the intention of the men or as their advice, must be examined. Upon this principle, then, the resolutions adopted at different times by meetings of certain inhabitants of the western counties must be weighed and judged. I will not hesitate to say that upon this principle all the resolutions adopted by every one of those meetings, except that of Washington on 1791, and that of Pittsburg on the 24th of August, 1792, are perfectly justifiable, whether the opinions which they express be in themselves right or wrong.

The meeting at Pittsburg in September, 1791, is particularly pointed out as chargeable with all the excesses that followed. I was not a member of that meeting; when it took place I was a member of the Legislature, and attended as such at the session held at that very time in this city; nor do the sentiments expressed in the resolutions which were there adopted correspond in many points either with my private opinions or with my public conduct. Yet I find nothing reprehensible in them; nor is there anything criminal or of a dangerous tendency in the measures they proposed: to remonstrate and to correspond with other parts of the State and of the Union with a view to procure the support of concurring petitions, where a coincidence of sentiments existed, seems to have been their only object; and they cannot be blamed if any individuals, whose views might be the same, embraced unjustifiable means in order to attain them.

The meeting held at Washington in 1791, and at Pittsburg on the 24th August, 1792, went farther. The persons assembled not only agreed to remonstrate, but they expressed a determination to hold no communication with, and to treat with contempt, such inhabitants of the western country as would accept offices under the law, and they recommended the same line of conduct to the people at large. I was one of the persons who composed the Pittsburg meeting, and I gave my assent to the resolutions. It might perhaps be said that the principle of those resolutions Edition: current; Page: [7] was not new, as it was at least partially adopted on a former period by a respectable society in this city,—a society that was established during the late war in order to obtain a change of the former constitution of Pennsylvania, and whose members, if I am accurately informed, agreed to accept no offices under the then existing government, and to dissuade others from accepting them. I might say that those resolutions did not originate at Pittsburg, as they were almost a transcript of the resolutions adopted at Washington the preceding year; and I might even add that they were not introduced by me at the meeting. But I wish not to exculpate myself where I feel I have been to blame. The sentiments thus expressed were not illegal or criminal, yet I will freely acknowledge that they were violent, intemperate, and reprehensible. For, by attempting to render the office contemptible, they tended to diminish that respect for the execution of the laws which is essential to the maintenance of a free government; but, whilst I feel regret at the remembrance though no hesitation in this open confession of that my only political sin, let me add that the blame ought to fall where it is deserved. The meeting did not call themselves delegates of the people, but individuals voluntarily assembled. For my own part, I was not sent thither; I was not desired to go by any collection or meeting of individuals whatever. If this may be called a combination, still it was not a combination of the people. Whether, however, those resolutions did produce any acts of violence, in other words, whether they were the cause or the effect of the temper of the people, may best be determined by the following observation. Many acts of violence had been committed before that meeting, and it was immediately preceded by the suppression of the office of inspection in Washington. Eight months elapsed after that meeting without any outrages being committed; nor indeed was the public tranquillity disturbed during the space of fifteen months, except by a nocturnal riot in Fayette County, in which only a few men were concerned, in which only threats were used, and which terminated without any injury to persons or property. It is even acknowledged that the law gained ground during the year 1793. With the events subsequent to that meeting I am but imperfectly acquainted. I came to Philadelphia Edition: current; Page: [8] a short time after it, and continued absent from the western country upon public business for eighteen months. Neither during that period of absence nor after my return to the western country in June last, until the riots had begun, had I the slightest conversation that I can recollect, much less any deliberate conference or correspondence, either directly or indirectly, with any of its inhabitants on the subject of the excise law. I became first acquainted with almost every act of violence committed, either before or since the meeting at Pittsburg, upon reading the report of the Secretary of the Treasury. A few observations may, however, be made tending to show that, however general the dislike to an excise law may have been, a spirit of illegal opposition was neither general nor supported by system or combination, and that the law was, as it has been acknowledged, gaining ground in 1793. It seems that the outrages committed before the month of July, 1794, which terminated in any actual violence offered to persons or property, were all committed by a few men, and were uniformly confined to that neighborhood in which the last riots likewise broke out. It also appears that offices of inspection were continued without interruption till the month of July, 1794, in Allegheny County, from the time of the law being enacted, and in Fayette County from the spring of 1792. An office was also established in Westmoreland County during last summer, and the county of Washington was the only one in which none existed. In the county of Fayette processes issued from the District Court of the United States for this State were served without interruption, in the spring of 1793, upon several distillers, who, it was alleged, had neglected to enter their stills in June, 1792, at the office of inspection, which, it was said, had then been opened in that county. The writs were obeyed, and the distillers entered their appearance at Philadelphia. The greatest obstacle, however, to the law being fully executed arose, perhaps, from the organization of the judiciary system. The distance of the Federal courts rendered prosecutions instituted there difficult and obnoxious. Complaints for private acts of violence could, it is true, be preferred before the State courts; but suits against delinquent distillers, those suits which alone could finally carry the law into effect, were not supposed to be within their Edition: current; Page: [9] cognizance; and upon one occasion, indeed, a prosecution for a cause exclusively within their jurisdiction was instituted in the Federal court; for it appears that the sheriff of Fayette County was indicted there for a supposed neglect in serving the process which had been issued against rioters by the judges of the State court for that county. The judges of the State courts were not, however, deficient in their duty. Whenever a riot or act of outrage had taken place, the charge to the grand jury pointedly urged the duty of finding bills against the offenders; but it was difficult to collect testimony, not only on account of the unwillingness of the people to attend as witnesses, but also for want of knowledge of the perpetrators. A prosecution was instituted by the man who had been abused in serving writs in the case of Johnson; he dropped it on receiving a compensation. In the case of Wilson, which has been much dwelt upon, on account of the circumstances of cruelty that accompanied it, a bill was unanimously found by the grand jury of Allegheny County against the persons supposed to be guilty; and although this prosecution was likewise dropped, as the prosecutor abruptly left the country, I am informed that the armed rioters who carried off one of the witnesses for the Commonwealth, and who were supposed to be the same persons that had committed the original outrage, were for the latter offence prosecuted, convicted, and punished.

Congress, during their last session, removed, however, the difficulties that I have mentioned, and gave to the State courts a concurrent jurisdiction in all cases relative to the excise. A wish might perhaps be innocently indulged that the policy of this measure had undergone a fair experiment; and that, consistently with the general arrangements of general government, the institution of suits could have been restricted to the State courts until it had been practically proved whether, through the medium of their jurisdiction, the law could in future be carried into operation. What would have been the effect in three of the counties I can only conjecture; but I will assert that the experiment would have produced every beneficial consequence that could be expected to flow from it in the county in which I reside, and with the disposition of whose inhabitants I am best acquainted.

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But it was thought necessary that the process should issue from the District Court against distillers who had incurred any penalty before the enacting of the law to which I have just alluded, and who were not consequently regarded as objects of the new regulation. Accordingly, the marshal proceeded to the western counties with thirty-four writs of summons against inhabitants of Fayette County, and six against inhabitants of Allegheny County. He served the writs in Fayette County without interruption, and thence prosecuted his journey to Allegheny County. The distillers of Fayette County who had been thus summoned held a meeting in Uniontown upon the occasion, about three or four days after the destruction of General Neville’s house. I attended that meeting by invitation, together with several other persons who were not distillers. Although the news of the riots and of their fatal effects had reached us, and although it was known that parties of armed men were then assembled in the neighboring counties in order to intercept the inspector of the revenue and the marshal, an idea of combining with the rioters was not even suggested at the meeting; but, on the contrary, it was unanimously agreed that in future the distillers should either abandon their occupation or enter their stills, and that those who had been summoned should immediately evince their submission by entering an appearance to the respective suits; in pursuance of that agreement an express was actually sent to Philadelphia, council was retained, and instructions for a legal and conscientious defence were given; but it seems that the writs were made returnable at a time when no court was sitting; and that this error in point of law was deemed sufficient to vitiate the process, and to supersede the necessity of entering the appearance of the several defendants. Still more forcibly to convey an idea of the feeling and sentiments of the members of the Uniontown meeting, let me add that while they were together they received a letter proposing a general meeting of the four counties; but so predominant was the apprehension that such an assemblage would increase the degree of inflammation and extend its influence to greater numbers; so eager was the hope that the riots would be confined to the spot in which they had originated, and might subside or be quelled without Edition: current; Page: [11] any extraordinary interference, that this proposition, however soothing it may appear to the popular prejudice against the excise, or whatever force it was likely to acquire from the terrors of violence that had been excited, was reluctantly read, and never taken into consideration. Unfortunately, the disposition of the people in that part of the country in which the marshal had the six remaining writs of summons to serve was more inflammable, and accidental causes supplied additional fuel for the flame.

We are told that the first idea of resistance originated upon the serving one of the writs in a harvest-field, amidst a group of reapers who were not perfectly sober, and we learn by the official letter of the State commissioners to the governor, dated the , that the casual assembling of a body of militia at a board of appeals (which was held in the course of the brigade inspector’s duty for executing the Act of Congress that requires a draft of 80,000 men from the militia of the United States) gave, unhappily, the opportunity of employing an armed force in the attack upon the house of General Neville. Example and terror drew numbers into the criminal vortex; the house was attacked and finally destroyed. The view of the first aggressors, thus collected, as it were, by accident, and inflamed by a temporary gust of passion, seems to have been to suppress the office of inspection in Allegheny County, the office of inspection in Washington County having been previously suppressed; and it is not improbable that they might have returned to a sense of duty, or, at least, that they might have been prevented from committing any further outrages, had they not been supported and encouraged by a few influential characters, who, at this juncture, stept forth and publicly avowed an intention of making for themselves, and, if possible, of inducing the whole country to make a common cause with the rioters. To attempt the accomplishment of that purpose, some meetings of the people, collected from a part of the counties of Washington and Allegheny, took place on Mingo Creek; but even at those meetings, held in the centre of the discontented scene, the leaders were disappointed in their expectation of general countenance and support; and the result of their preliminary conferences appeared only in an advertisement Edition: current; Page: [12] calling a meeting of deputies from all the townships of the western counties, in order to take into consideration the situation of the country.

The advertisement was inserted in the newspapers without being signed; and, in fact, except in the neighborhood in which it originated, its authors were not generally known, although it was naturally and universally understood that the late riots would be the subject of discussion at the proposed meeting. In the mean time the leaders, whom I have alluded to, determined, it seems (though it is difficult to trace their real aim), to draw as many of the people into a criminal combination, before the general meeting, as their example or their arts could influence, caused the post to be robbed of the mail, and the discoveries purchased by this act of felony produced a secret consultation, terminating in that circular letter signed by seven persons, which has since been printed in the newspapers, and directed to the colonels of the respective regiments of the militia of Washington County, which required the attendance of the militia at Braddock’s Field, on the day of The day after the letter was circulated, one of the signers wrote a countermand, which is also printed, and in which he avows that the original intention was to attack the garrison at Pittsburg, and to seize upon the military stores. It was, however, too late to stop the people; the notice had been industriously communicated, and a considerable number met at the place of rendezvous on the day appointed. Of those who attended, some knew and meant to carry into effect the original intention; several were actuated by a disposition to prevent mischief; many had been regularly summoned as if for a tour of military duty, and were ignorant of the real cause; a great portion, consisting chiefly of those who were already criminal, entertained a general desire to encourage any kind of riot that could involve more persons in the jeopardy of their own situation; but, after all, the principal mass was composed of citizens who were either attracted by curiosity or impelled by fear. With much hesitation the original design being abandoned by the leaders, it is remarkable that this convention, summoned with the most daring intention, and composed, in part, of the most riotous characters, has left no Edition: current; Page: [13] trace of its transactions but a march to Pittsburg, for which there seemed to be no pretence except parade; no object with the contrivers except a wish to impress the country with an idea of their influence and strength. The same object, indeed, has stimulated them to spread the most exaggerated account of the numbers that were assembled. But on comparing the best information that I could procure, and on recollecting that scarcely any of the people of Westmoreland and Fayette and that very few from the south part of Washington and the east part of Allegheny attended, I estimate the whole body at fifteen hundred, and I cannot think that it exceeded two thousand men. The expulsion of the five citizens from Pittsburg, which took place at the same time, might be influenced by a fear of the body who met at Braddock’s Field, but did not originate with and should not be ascribed to them. Perhaps the measure was partly suggested by private resentment, or, possibly, it may have been proposed to the most violent party as a substitute for the original plan. Viewing the previous and subsequent conduct of the inhabitants of Pittsburg, though it would appear by the only printed paper on the subject that they carried the expulsion into effect themselves, yet there can be no doubt of their having acted under the impression and fear of immediate danger.

Although from the event of the meeting at Braddock’s Field, it may more properly be described as an attempt to form a combination or an attempt to excite an insurrection, than as an existing combination or insurrection, the effects were certainly more pernicious than those which any preceding excess had produced. The flame then, and not till then, spread at a distance. A party of armed men entered the county of Fayette, and, attended by a few inhabitants of that county, proceeded to the house of the deputy inspector for the counties of Westmoreland and Fayette. The officer fled; his house was burnt. With an uniform design, that of suppressing every office of inspection in the survey, another party made an incursion into the county of Bedford, and, assisted also by a few individuals there, seized the officer, treated him with personal abuse, and obliged him to destroy his commission. A short time afterwards, the officer of a neighboring county in Virginia fled for fear of insult, and a riot was committed Edition: current; Page: [14] at the place of his residence by some of the inhabitants of the county, who have since been arrested, although the outrage seems at first to have been ascribed by the governor of Virginia to Pennsylvanians. In another county of the same State, some of the papers of the officer were forcibly taken from him. A great many poles were raised in different places, in some as tokens of sedition, but in many for the sake of indulging what was thought a harmless frolic. Similar symptoms of disaffection broke out within a short time in the counties of Bedford, Cumberland, and Northumberland, in Pennsylvania, and in some parts of Maryland.

In this alarming state of things, under circumstances so unpropitious, the meeting of Parkinson’s Ferry, of the 14th of August, took place. The meeting was partly a true representation of the people, but it was only partly so. For, as there are not in this State any regular township meetings, a few individuals collected in any one township might appoint deputies; and the truth is, that, in almost every case, a minority of the inhabitants of the respective townships did make the appointments. In every township, likewise, in which there were any violent characters, such characters would undoubtedly attend the election, while, on the other hand, moderate men and friends to order were cautious either in attending the election or in suffering themselves to be elected. The robbery of the mail and the reports respecting the Braddock’s Field meeting had, in a great degree, destroyed private confidence, and timid characters were equally afraid of personal insult from the rioters should they thwart their designs, and of the resentment of government should they not oppose them. Such men, therefore, generally chose to stay at home. In Fayette County, likewise, we hesitated whether we would send deputies or not. The change of circumstances which had taken place since the Uniontown meeting of distillers, the expulsion of the officer, the evident symptoms of a restless temper in many of the inhabitants, the danger of the flame spreading, at all events, amongst the whole body, if it was suffered to blaze any longer in our immediate neighborhood, and a hope that we might succeed in allaying the spirit that raged in another part of the country, were considerations so cogent that, Edition: current; Page: [15] prevailing over every personal and local objection, they induced us to send deputies. The object of the meeting, as expressed in general terms in the advertisement, was only to take into consideration the situation of the western country; there was nothing criminal in going thither, though the conduct to be observed there was indeed delicate, liable to danger on the one hand, and to misconstruction on the other. That danger, however, it was the duty of good citizens to encounter and overlook, provided that under circumstances so critical they could be useful either in restoring tranquillity or in preventing the repetition of outrages. It is to be lamented that a sufficient share of this kind of courage was wanting in many: so that the number of friends to order who attended, although considerable, bore no proportion in the representation of some of the counties to the real number of their well-disposed citizens. I do not claim any greater share of political or physical courage than other men, but I did not hesitate to attend the meeting, and perhaps many circumstances concurred to give me sufficient fortitude for the task which did not apply to the situation of others. I knew I was supported by the general sentiments of my own county; as I had no public offices, I was not embarrassed by that popular suspicion against public officers which, during the tumults, was found a great obstacle to the acquisition of the public confidence; hence I conceived that I might be more useful than many more able and equally upright of my fellow-citizens. Probably, too, a reflection on what had passed at the Pittsburg meeting of 1792, accompanied with a due regard for my own character, were amongst the incitements to demonstrate, in a conspicuous manner, by my conduct that, whatever prejudices may have been engendered against me, however mistaken my theoretical opinions may be, I was not unwilling nor incapable to perform my duty as a citizen.

The place of meeting was far from being favorable to the wishes of the well disposed; it was held in the open fields, in the very neighborhood in which resistance had originated, and within a mile of the dwelling-house of McFarland, who had been killed in the second attack on General Neville’s house. The meeting itself consisted of more than two hundred deputies, Edition: current; Page: [16] and was surrounded by a greater number of spectators, most of whom, having been actually engaged in the riots, had no hope except that of being countenanced by the resolutions of the deputies. In this situation (which was so menacing that the commissioners of the United States, in their official report, avow that they thought it inconvenient and hazardous to have an immediate communication with the meeting), it is obvious that the only rational scheme was to prevent the adoption of any criminal resolution, or to obtain a dissolution of the meeting without doing any act. The views of the rioters, or rather of their leaders, may be best discovered by a consideration of their conduct. After some inflammatory speeches, the resolutions, the original of which I have ever since preserved and now hold in my hand, were proposed by Mr. —. Of these the most important runs in the following words: “Resolved, That a standing committee be appointed, to consist of members from each county, to be denominated ‘a committee of public safety,’ whose duty it shall be to call forth the resources of the western country, to repel any hostile attempts that may be made against the rights of the citizen or of the body of the people.” The question was, in fact, whether the western counties should raise the standard of rebellion or not, and the preamble of the next resolution clearly implied an idea that the whole country were concerned, or at least meant to make a common cause with those who had been concerned in the attack of General Neville’s house and in the meeting at Braddock’s Field. I opposed the resolution with those arguments which the moment and the occasion suggested, and which were most likely, in my judgment, to make an impression on the hearers, whether members of the meeting or merely spectators. Yet I confess that under such unfavorable circumstances my greatest hope was that the question should be waived, and, impressed with the belief that the consequence of putting it was too doubtful to be risked, I moved that the resolution should be referred to a committee. My motion was neither supported nor opposed by anybody in an open manner; but fortunately Mr. — himself, either perceiving from that moment that he would not be generally supported, or having already felt (as his subsequent conduct renders more probable) a Edition: current; Page: [17] just sense of his error, and wishing only an opportunity to abandon, without personal danger, the plans which he had before countenanced, offered to withdraw his proposition, provided a committee of sixty should be appointed and have power to call a new meeting of the people or of their deputies. This idea for a substitute was instantly agreed to; and a new resolution, being studiously so modified and worded as to insure its adoption, was accordingly approved by the meeting, and has since been printed. Another of the resolutions which were adopted, and has also been printed, expresses a determination to support the State laws, and to afford protection to the persons and property of individuals. A declaration of this kind was absolutely necessary, since it was essential that individuals should be restored to a state of peace and order, to freedom of speech and to social confidence, in order to pave the way for a general submission to the government and laws. This resolution was but faintly opposed, and even that faint opposition arose merely, I believe, from the thoughtless interruption of a bystander, for almost every man was tired of violence and anarchy. Yet it cannot be dissembled that the meeting, composed and surrounded as it was, would not have had courage sufficient, although it might be the sentiment of the majority, to include in the resolution a determination to submit to the excise law. The original proposition offered by Mr. — expressed a disposition to submit to all the laws of the State and of the United States, except the excise law. For the reasons which I have assigned, it was requisite to preserve the part that related to the State laws; but the only advantageous change that could be obtained as to the objectionable part which related to the laws thus excepted was to expunge it, and to remain entirely silent on the subject of the laws of the United States.

Whilst the meeting were assembled they received intelligence that commissioners appointed by the President to confer with the citizens of the western counties on the subject of the late disturbances had arrived. That paternal measure, by giving courage to those who were well disposed, by fixing those who were wavering, and by giving a hope of pardon for past offences to the rioters themselves, greatly facilitated the adoption of pacific Edition: current; Page: [18] measures; and it was without difficulty agreed that three persons from each county should be appointed (by the members of each county respectively) to meet the commissioners; but it was at first insisted that either the whole meeting, or at least the committee of sixty, should remain assembled, or assemble again within two or three days, in order to receive the report of the conference. The complexion of the general meeting, the place where they were convened, and all those circumstances which have already been mentioned, rendered it, on the contrary, a desirable object that they should not meet again without absolute necessity; and, at all events, that neither they nor the committee of sixty should meet very soon, or in the same place. For time was essentially requisite in order to enable the friends of government to disseminate amongst the body of the people both information and sentiments of moderation, and from time alone might it be expected that those violent passions, which still inflamed so many, would subside; indeed, during the whole course of the transactions that followed, it was, upon every occasion, equally experienced that time alone was sufficient to obtain a progressive restoration of order, and lamented that a sufficient delay could not, from the general situation of affairs, be always obtained. Some address was, however, necessary to find ostensible motives sufficiently strong to induce one body to dissolve, and the other to adjourn to a more distant day and to a well-affected part of the country. Both points were, however, carried with some management; the committee of sixty agreed to meet on the 2d of September at Red-Stone old fort, and the general meeting adjourned without fixing any day for reassembling. It was known that if circumstances rendered it necessary, the committee of sixty might be called sooner, and accordingly, after the conference with the commissioners, and at their request, it was summoned to meet four days previous to the time to which its meeting had been protracted.

All the conferees except one who were appointed by the four counties to meet the commissioners were, I believe, at the time of their appointment, well disposed. The result of the conference is detailed in the report of the commissioners. The conferees declared their own determination to submit to the laws; Edition: current; Page: [19] they approved of the terms offered by the commissioners, declaring that nothing more could be done by the executive; and they promised to recommend a faithful acquiescence to the people at large. To the details mentioned in the report of the commissioners I have but two observations to add: the first, that the verbal account, stated to have been given by the conferees, of the causes of discontent amongst the people were but opinions, and those only the opinions of the individuals who expressed them, and not of the body. The other relates to an account said to contain the reasons of the conferees for approving the proposals of the commissioners, and which is annexed to a printed report of the proceedings of the committee of conference, but is not signed. That account I never saw till after it was printed; which, I believe, was the case likewise with every other conferee except the one who drafted the report. The reasons given in it had not, that I know of, any influence on the determination of any of the conferees, but were, I suppose, such as in the judgment of the author would make most impression upon the people; on that head, I think, however, he was mistaken.

The committee of sixty met at Brownsville (Red-Stone old fort) on the 28th of August. I have already mentioned how that body was composed. Fifty-seven members attended, twenty-three of whom were sent by the county of Washington alone, and thirty by the three counties of Westmoreland, Fayette, and Allegheny; one came from Bedford County, and three from the county of Ohio, in Virginia. The wickedness of a few, perhaps only of one, for one only openly advocated resistance, and the timidity of a majority prevented the terms offered by the commissioners from being fully adopted. The general wish of the members, which was dictated by fear and with difficulty prevented, was to adjourn without doing anything, and to refer the whole business to the people at large. All that could be obtained was a resolve that, in the opinion of the committee, it was the interest of the people to accede to the terms; the question upon it being taken by ballot, and thirty-four voting for the resolution and twenty-three against it. We are informed by one of the official letters of the State commissioners that six of those who voted in the negative did it through a mistake, which Edition: current; Page: [20] would make the votes forty and seventeen. Whether, if the question had been publicly put, or if any question had been put, for making the declarations required by the commissioners in their full extent, either or both of them would have passed in the negative, I believe it to be impossible for any person to conjecture, as no person can calculate what might have been the effect of terror. The fact is that a majority of the committee, through fear, refused taking a question on the last proposition, or to have the other put publicly. Several of the advocates for submission spoke, however, their sentiments in an open manner, and although a few might apprehend personal danger in doing it, yet, as not one of those who spoke was insulted, either then or at any subsequent period, it is from the time of that meeting that we may date the beginning of a free circulation of sentiment throughout the whole country.

A new committee of conference was appointed by the meeting, in order to procure, if possible, some further time for the people to reflect before the question of submission was finally referred to them. The commissioners were not authorized to give a longer time, and they proposed that the declarations required of the committee of sixty should be made by the people themselves, and testified by the individual signatures of the citizens, excepting from the amnesty such persons concerned in the late offences as should not comply. However cogent might be the reasons which induced the commissioners to propose those terms (which were acceded to by the conferees), they operated unfortunately in one point of view; for the amnesty being attached to the individual signatures, the proposal became highly objectionable to a great many well-disposed citizens, as signing would seem to imply a tacit acknowledgment of a previous offence and of a personal want of pardon. It was also, perhaps, a more difficult task to induce violent persons to subscribe assurances of submission than to give a silent vote for it. The individuals who had represented the county of Fayette at Parkinson’s Ferry, having met on the 10th of September, were induced, upon these considerations, to propose to the people merely the question of submission, but at the same time they agreed themselves to the declarations which had been required of the committee of Edition: current; Page: [21] sixty, and annexed to them an address to the people (printed in the Pittsburg gazettes of the 4th and 11th of October), exhorting them to submit. The most remarkable feature of that address (which is arranged in the shape and consists of the arguments that, in the opinion of the members of the committee, were most likely to make an impression upon the people in their present temper) is that the inducements to submission are mostly drawn from a sense of duty, and the motive of fear from an army is hardly appealed to.

The sense of the people was taken on the 11th of September, and it appears, by the report of the commissioners, that in the1 county of Fayette, which contains two thousand eight hundred taxable inhabitants, eight hundred and sixty attended, five hundred and eighty of whom voted for submission, and two hundred and eighty against it; that in the counties of Westmoreland, Washington, and Allegheny, which contain eleven thousand taxable inhabitants, two thousand seven hundred signed the declarations of submission; but that no return was made of the number of persons who attended in these three counties and of the yeas and nays on the question of submission; and that in the returns made to them no opinions were certified that there was so general a submission that an office of inspection would be immediately and safely established; and that, on the contrary, the return of Westmoreland County stated that, from the danger of ill-disposed and lawless persons suddenly assembling and offering violence, the measure would not be immediately safe in that county. The commissioners add that they had received information that in some townships the majority declared for resistance; in some the party for resistance was sufficiently strong to prevent the declarations being made; and in others the majority were intimidated or opposed by a violent minority. But they do not mention the number and names of the townships in which those acts of violence took place, and Edition: current; Page: [22] from the information I have received they were but few. They further say that, “notwithstanding those circumstances, they firmly believed that there was a considerable majority of the inhabitants of the fourth survey who were then disposed to submit to the execution of the laws; at the same time that they conceived it their duty explicitly to declare their opinion that such was the state of things in that survey, that there was no probability that the act for raising a revenue on distilled spirits and stills could at that time be enforced by the usual course of civil authority, and that some more competent force was necessary to cause the laws to be duly executed, and to insure to the officers and well-disposed citizens that protection which it was the duty of government to afford.” Which opinion I know to have been perfectly justifiable from the information and opinions they had received.

Upon the decision of that day (the 11th of September) it is proper to remark that, as it was the last hope of the violent persons, they all attended to a man. On the contrary, the friends to order, some being yet actuated by fear, many resting in a state of apathy, and a very large proportion wanting information or not understanding the importance of the question, did not in general attend. Not one-third part of the inhabitants of Fayette met on that day, and I had a striking proof of what I mention in the district in which I live. No act of violence had ever been committed there either before or during the insurrection. I do not know, and I do not believe, that a single inhabitant ever was concerned in any such act elsewhere, and after the army had entered the country there was not an individual belonging to the district arrested on suspicion or even summoned as a witness. Yet in that district, which contains eight hundred taxable inhabitants, two hundred and twelve only attended on the 11th of September. In the other counties two thousand and seven hundred inhabitants signed the assurances required, which is a greater proportion than the number of those who voted in favor of submission in the county of Fayette, and a great many, for the reasons already mentioned, were willing to give a vote, although they felt a reluctance to sign a formal instrument. This fully justifies the opinion given Edition: current; Page: [23] by the commissioners, that a considerable majority of the inhabitants were disposed to submit. It must also be observed that almost all the characters of any importance amongst the rioters, and who could be considered as leaders, signed the submission, and those who were guilty on that day of acts of violence, or who gave a vote against submission, were, with very few exceptions, amongst the youngest and most ignorant class of the people. This class had but one day to consider the question before them; their means of information in a country in which information can circulate but slowly were few, the channels through which they received it not pure, their prejudices were great, and although arguments had circulated freely for near two weeks, they had not yet reached this deluded description of citizens. All they heard to convince them of their error they heard for the first time on that day. But whatever might be the immediate decision of the people on the 11th of September, the consequences were favorable and decisive. The obstacles then thrown in the way of the submissions were the expiring effort of the party. Abandoned by their leaders and by a large majority of the rioters themselves, who had taken shelter under the amnesty, seeing clearly that they were reduced to an insignificant minority, conscious of their guilt, and afraid of punishment, the few perverse and obstinate at length renounced their wild and pernicious schemes. The certain news of the assembling the militia completed the work, and peace was restored. Although no certified opinions were given the commissioners that offices of inspection could be immediately and safely established, the committee of the townships of Fayette County wrote, on the 17th of September, to the governor of the State, that “they had no doubt of peace being fully reestablished and a perfect submission taking place in that county, provided it was not interrupted by some new acts of violence elsewhere.” They add that “still, however, a certain degree of heat existed as well in Fayette as in the other western counties, and that some time would still be necessary to operate a complete restoration of order and a perfect submission to the laws.” Their ideas in that respect correspond with those of the commissioners; but they differed from them in the opinion that an Edition: current; Page: [24] army was necessary to accomplish those objects, and thought that the allowance of a longer time for reflection would alone be sufficient. Many men of influence and information in the other counties, and some in Fayette, most indeed of those that conversed with the commissioner, who remained in the western country till the 16th of September, were, however, of opinion at that time that the laws could not be executed without the assistance of a military force; but in less than two weeks after the same men had adopted the sentiments of the committee of Fayette. On the same day the same committee, with a view to counteract any combinations that might be set on foot by the violent party, recommended to the people to form associations for the purpose of preserving order and of supporting the civil authority. It was not found necessary to carry even that measure into effect, every danger of violence being immediately after discovered to be at an end.

The report of the commissioners is dated the 24th of September, and is grounded on documents and information received as late as the 16th of the same month. On the 19th the Legislature of the State had passed the Act granting bounties and an additional pay to the volunteers and militia employed in suppressing the insurrection. The President, on the 25th, issued his proclamation (grounded on the report of the commissioners of the preceding day) ordering the actual march of the army. The rendezvous of the Pennsylvania and Jersey militia was at Carlisle. They left that place on their march to the westward on the day of October.

On the of September the town of Pittsburg, by resolutions printed and now before the House, annulled the former resolutions they had adopted for expelling certain citizens, declaring those resolutions to have been the effect of policy, and that they were no longer bound by them. On the 25th of September the grand jury of Washington County, in their answer to the address of Judge Addison, which is printed and has been sent to the House, declared their unanimous concurrence and approbation of the sentiments expressed in the charge, and their opinion that if printed assurances of submission were distributed through the county they would generally be signed. Edition: current; Page: [25] On the 2d of October the members who composed the first meeting at Parkinson’s Ferry, having met at the same place, unanimously agreed to resolutions by which they adopted for themselves the assurances and declarations of submission which had been required by the commissioners; declared that, in their opinion, there was a general disposition in the four counties to submit to all the laws of the United States and a determination to support the civil authority; and also that the principal reasons why the signatures of submission had not been universal were the want of time and information, and, with respect to the greatest number, a consciousness of their innocence and an idea that their signature would imply a sense of their guilt. Those proceedings, which are signed by Alexander Addison, secretary, took place twelve days before the election, and require no comment.

Messrs. Findley and Reddick were appointed by that committee to wait on the President of the United States, in order to represent to him the state of the country. They went accordingly, and I will state to the House what I understood, from a verbal report made by those two gentlemen to a subsequent meeting, to have been the result of the conference. I would wish to be cautious on that head; for I feel that, speaking from memory, and repeating what was merely verbal information, the recital is liable to mistakes. If I commit any mistake, however, it will arise from the sources I have mentioned; nor indeed do I give my statement as positive information, but only as the impression made upon my mind by the relation I heard. I would have been altogether silent on that subject were I not afraid to be accused of omitting a necessary link of the transactions I relate.

Amongst other general observations I am told that the President mentioned that there were two great objects in view in the calling out the militia: the first to show, not only to the inhabitants of the western country but to the Union at large, and, indeed, to foreign nations, both the possibility of a republican government exerting its physical strength in order to enforce the execution of the laws when opposed, and the readiness of the American citizens to make every sacrifice and to encounter every difficulty and danger for the sake of supporting that Edition: current; Page: [26] fundamental principle of government; and the second, to procure a full and complete restoration of order and submission to the laws amongst the insurgents. The first object, the President added, was fully attained, and no doubt could remain, from the success of the experiment, of the practicability of a republican government, although extending over a large territory, supporting itself, even in the case of a disobedience of any part of the body politic. On the second head it was observed, in the first place, that, although the last meeting had given it as their opinion that there was an unanimous disposition to submit to and support the laws, there was no positive, unequivocal, and explicit declaration that offices of inspection would be immediately and safely1 established; in the next place, that whatever might be the grounds of the opinion of the meeting, until the law was Edition: current; Page: [27] actually carried into operation it was only an opinion, and that the general expenses of the campaign being already incurred, and the great sacrifices of individuals being already made, there remained no motive sufficiently strong to induce the magistrate, whose duty it was to enforce the execution of the laws, to run any unnecessary risk by intrusting that care to the exertions of the country itself as long as any doubt might remain of their sincerity or power; the force embodied being fully competent to that object, and so far on their march to the intended spot. The President added, that, as the amnesty which he had once offered through the commissioners had not been universally embraced by the offenders, some atonement for past offences had become necessary. Messrs. Findley and Reddick, in order to give a test of the disposition of the country, wished that a list of the offenders intended to be brought to trial might be sent to the western country, as they knew, from the reformed temper of the people, that those culprits would surrender, or might be apprehended without difficulty. This was declined, for what reasons I have not heard; but I can easily conceive that granting the request would have been improper on a variety of grounds. Permit me to add, although it is not altogether in point, that, in the course of the conversation, the President testified his astonishment that there had been any difficulty in convincing any description of persons, however ignorant they might be, of the propriety and necessity of submitting to the laws, it being a question so simple and self-evident. Messrs. Findley and Reddick, in answer to this remark, having mentioned the same causes that I have before alluded to, and particularly that the most ignorant class had, in fact, but one day to make up their minds, the President observed that it would have been highly grateful to have indulged his wish that the proposals of the commissioners should receive a full and fair examination, so as to be perfectly understood and maturely weighed by the whole body of the people to whom they were addressed, before they were presented for an ultimate decision; but the symptoms which had appeared in other parts of the Union, the season of the year, and the imminent danger of suffering the winter to elapse without an effectual suppression of the disorders, had not permitted Edition: current; Page: [28] him to protract the period for amicable negotiation, or to suffer any further delays in embodying and marching the army.

Messrs. Findley and Reddick, on their return, communicated the circumstances of information, which I have recapitulated, to a meeting of the committee of townships, held at Parkinson’s Ferry on the 24th of October; and, in consequence of this communication, resolutions were adopted expressing the opinion of the meeting that offices of inspection could be immediately and safely established, and that the civil authority could be supported without the assistance of a military force; recommending to offenders to surrender, and declaring their readiness to surrender themselves if there were any suspected persons amongst them, and to assist in bringing others to justice if they refused to give themselves up. During the absence of those two gentlemen the election had been held on the 14th of October, and written assurances of submission had been universally signed throughout the country. In the county of Fayette the people, on the day of the election, appointed several persons for the purpose of providing accommodations and subsistence for the army then approaching. On the same day the inhabitants of the only district of the county where a majority of those who attended on the 11th day of September had declared for resistance, unanimously agreed to sign assurances of submission.

Having thus given a general narrative of the material facts connected with the unfortunate events which we all deplore, I shall not enter into a discussion whether those facts are sufficiently proved to be admitted as legal evidence upon so important a question, but confine myself to an examination how far they justify the assertions on which the resolution before us has been grounded.

The resolution supposes, in the first place, the existence of a general insurrection of the four western counties. I believe it unnecessary to say much more on the idea of the insurrection having originated in a previous general combination founded on the meetings and resolutions that had taken place or had been adopted at different times in the western country. To what I have already said I will only add that, from the meeting of Pittsburg, in August, 1792 (which, as has already been mentioned, Edition: current; Page: [29] was followed by an uninterrupted tranquillity of fifteen months’ continuance), no public meeting, no meeting that ever came to my knowledge, no meeting that ever has been mentioned, either in this House or elsewhere, was held in the western country for the space of near two years, nor, in short, until the late disturbances had actually begun.

By what fact, then, is the supposition of a general insurrection of a majority of the inhabitants of the four western counties to be supported? The attack of General Neville’s house was chiefly owing to accidental causes, and is of a local nature. The conduct of the distillers and people of Fayette County at the time of the marshal serving processes there, and at their subsequent meeting, excludes altogether the idea of previous combination, or of a wish to support the rioters. The meeting at Braddock’s Field includes a greater number of individuals; but the criminal combination seems to have existed only in its promoters; and even supposing, what is not true, that all who attended there were involved in the original crime, that combination will embrace only a part of the counties of Washington and Allegheny. It may be proper here to remark that upon that meeting, undoubtedly the most prominent feature of an insurrection or of a combination to take up arms, there is not before the House one official document, nor even a single unauthenticated paper of any sort, except the two letters which have been mentioned before, and the Pittsburg resolutions.

But it is said (I have heard for the first time the doctrine advanced on this floor, and have heard it with astonishment), it is said that the meeting held at Parkinson’s Ferry on the 14th of August is in itself a proof of a general insurrection. For my part, I never, before this day, thought myself obliged to justify those friends to order who attended the preceding elections or the meeting itself; although I have tried to apologize for the neglect of those who did not. How a meeting whose ostensible object was perfectly innocent, and whose actual conduct, notwithstanding the critical circumstances under which it was held, was in no part criminal, can be given as a proof of an illegal combination, I cannot understand. But the doctrine is not less dangerous than absurd. It goes to support an idea that Edition: current; Page: [30] whenever riots shall take place, or a mob grow dangerous, instead of trying by every means of persuasion to induce the offenders to desist, it is the duty of good citizens to keep aloof, to suffer the whole country, under the dominion of a mob, to become a prey to anarchy, and to risk the event of a general rebellion, rather than attempt to recall to a sense of duty as many of their fellow-citizens as they can.

Not only the object and the conduct of the meeting were unexceptionable, but its effect and consequences were highly favorable. It was that meeting which restored order and internal peace; it was that meeting that first stemmed the torrent, which thenceforth ran in a contrary course. From that moment, though threats were offered, no acts of violence were committed, unless we call by the name of violence the last effort made on the 11th of September, by some of the most ignorant and obdurate, to obstruct the signature of the assurances of submission. At every subsequent meeting the friends of government gradually gained ground. The conferees, with a single exception, approved and promised to recommend the proposals of the commissioners. The meeting of Brownsville, composed as it was, so far from doing anything criminal, went one step farther than the first Parkinson’s Ferry meeting, and by declaring that, in their opinion, it was the interest of the people to adopt the proposals, in fact recommended their adoption. And, in fine,—not to speak of the resolutions adopted afterwards at different times by the inhabitants of Pittsburg, the grand jury of Washington, and the committee of townships of Fayette,—the second and third meetings of Parkinson’s Ferry, composed of the same persons who attended the first, gave full and complete assurances of submission and of the general disposition of the people to support the civil authority. A bare recital of the facts evidently shows that whatever criminal combination existed was partial, local, and accidental; and that whenever the inhabitants of the four western counties combined, or acted in concert, the object and the conduct of their meetings were, at least, innocent, and the consequences highly beneficial.

But the resolution under consideration, proceeding on the same erroneous system of supposition, infers that an insurrection of the Edition: current; Page: [31] four counties existed on the 14th of October, at the time of holding the elections.

The assertion is not supported by a single document, by evidence, or by any species of proof whatever that relates to any fact which occurred subsequent to the 16th of September; and it appears by the report of the commissioners that on that day a considerable majority of the inhabitants were disposed to submit. Every posterior fact is a proof of the complete restoration of order and of that universal submission which had but partially taken place before. Must I once more, in order to prove the truth of my positions, enumerate the recall of the citizens who had been expelled, the answer of the grand jury of Washington, the several declarations and resolutions of the county of Fayette, and the resolutions of the Parkinson’s Ferry meeting of the 2d of October? To these I may add that a proof of the civil authority being fully re-established is to be drawn not only from the general tranquillity of the country, not only from the courts sitting, as customary, without interruption in the four counties, and transacting every kind of business during the month of September, but also from the incontestable evidence of the service of warrants, by which individuals were arrested and even imprisoned, previous to the election, for positive threats or upon suspicion of intention to commit new outrages after the 11th of September. But, whilst I mention this, it is proper that notice should be taken of an objection which may be, and has been, raised on this subject. Why, it is said, were none of the offenders during the insurrection arrested till the army came into the western country? It may be answered, in the first place, that, as the offences had been but local, the objection is but partial, and that if it is at all valid it applies not to the people, but only imputes an unwarrantable negligence to the judicial officers living in the parts where the offences had been committed. But it is in my power to give a more satisfactory and direct answer, and which exculpates the officers as well as the other inhabitants. As early as the first week of September, the time at which the court for Allegheny County sits, some individuals of the grand jury for that county applied to Judge Addison in order to know whether, according to their oath, Edition: current; Page: [32] they ought not to find bills against the offenders in the late riots. Mr. Addison was of opinion that, the Federal and State governments having offered an amnesty upon certain terms, it would be improper for the State courts or inferior officers to interfere until the effect of that offer was ascertained and government had decided and declared who were to be entitled to the amnesty. Not wishing, however, to rely altogether on his own opinion, Mr. Addison consulted the chief justice of the State, then at Pittsburg, on that subject. The chief justice concurred in the opinion of Judge Addison, and the grand juries of the respective counties were accordingly directed not to interfere. It will appear, by the report of the commissioners, that the signed instruments giving assurances of submission were immediately delivered to one of their number, who transmitted them to the seat of government. An ignorance of the names of the signers, and of the latitude that government would give to the amnesty, a general information that the most important characters who had been concerned in the tumults, and were supposed to be the only proper objects of punishment, had signed the list, and a knowledge that some of the first judicial officers of the government of the Union meant to investigate the subject conformable to the instructions which they might receive, concurred to render it equally difficult and improper for the State officers to interfere before the arrival of the army. Many of those who had been supposed to be innocent, or to be sheltered by their submission, are now amongst the prisoners or the proscribed.1 Some of those who, it was thought, might eventually be included amongst them, were not taken up. The general government seems to have acquiesced in the idea, for no instructions were forwarded to the State officers, and the list of offenders that was asked by Messrs. Findley and Reddick was refused. Upon the whole, the arrests that eventually took place seem satisfactorily to show that the causes which I have thus recapitulated, and not Edition: current; Page: [33] a want of strength or willingness in the civil authority, were the real causes why process was not issued against the offenders during the insurrection.

To these considerations must be added another, which, to every candid mind, must carry a conviction of the actual pacific situation of the country after the 11th of September. Not only no outrage took place after that day, but no embodying of men, no combination, no meeting, no preparations of any kind whatever were made or proposed with a view to offer a shadow of resistance to the militia of the United States. After the army was collected and on their march, the people must have known, and indeed perfectly knew, that there was no alternative but to submit to the laws or to oppose their fellow-citizens who came to enforce obedience. If no person either prepared or proposed that preparations should be made to resist the army, does it not clearly follow that the disposition to submit (no matter from what causes) was not merely general but universal?

It is said, however, that although there might not be any actual insurrection at the time of the election, it may at least be fairly supposed that a spirit of insurrection still existed at that period, and in some degree influenced the elections.

Whenever we enter the field of suppositions we abandon the solid ground of proof supported by facts, substituting our opinions, or rather our wishes, for truth and evidence. Is this the foundation upon which the supporters of the measure mean to rest the disfranchisement of fourteen thousand citizens? What inference, however, what conjecture, since the evidence of facts is either wanting or rejected, can give any shadow of probability to that supposition? From the face of the returns it appears that the elections were neither more nor less numerous than, upon an average, they have been in preceding years. No conclusion of any kind can, therefore, be drawn from the number of those who attended, except that the situation of the country was similar to what it had been upon former elections. It is not alleged that any acts were committed upon that occasion that ought, or could, invalidate the elections. On the contrary, we are able to prove, by indisputable evidence, if it is required, that they were fairly conducted, uninfluenced by fear or violence, Edition: current; Page: [34] and perfectly “free and equal.” Does the fate of the elections justify even a suspicion of the prevalence of a spirit inimical to government? The persons elected are, in a great measure, the same who had, upon former occasions, received similar testimonies of the confidence of the people; and many, both of the old and new members, were distinguished amongst the known friends of order and government. Could the people of Allegheny County give a more strong and convincing proof of their disposition than by re-electing for their representative in this House one of the citizens who had been so unjustly expelled during a moment of frenzy,—the son of the inspector of the revenue for that survey? As to another individual, who on that day was elected a member of this House by the county in which he resides, and, without his knowledge at the time, a member of Congress by another district, permit me to say that his double election also shows the sense of the people at large to have been in favor of peace and submission. For, whatever may have been, or now are, the popular clamor and the transient prejudices against him in other parts of the State, it was well known, at least in the western country, that no person had taken a more early, active, or successful part in allaying the flame and opposing the spirit of insurrection. Were the people of Fayette County actuated by a spirit of resistance to the laws when they, in the very act of electing, appointed persons for the purpose of preparing the necessary subsistence for the army?

Here I must take notice of an objection of the most extraordinary nature, made with an intention to invalidate the election of Westmoreland County. It is said that a military force was at that time at Greensburg. That assertion, of which no proof has been offered to the House, rests upon this fact. One of the persons who, as I have mentioned, was arrested after the 11th of September, had been imprisoned in Greensburg for reporting that some of those inhabitants who had refused to submit meant to burn the town, and for having refused to give the reasons he had to spread that report. At the same time, it was thought prudent to raise a few militia as a guard, in case such design did exist. The report was soon found, however, to be totally groundless; while, on the contrary, universal submission evidently Edition: current; Page: [35] prevailed. The militia were, therefore, continued in array for the sole purpose of showing that the county was able, by its own strength, to preserve order, and to suppress every kind of outrage, if outrage was attempted; and now, what was intended as a proof of a disposition and power to support the laws is perverted into a symptom of anarchy by the same gentlemen who accuse us for want of proper spirit in not arresting offenders. It is only necessary to add that such of the militia as attended the election were unarmed. But I wish to remind those gentlemen who tell us of the laws of Great Britain, by which troops are to be withdrawn at a distance from the places of election, and of the law passed last year by the Legislature of this State on the subject of the elections to be held by the enrolled militia and volunteers, that the elections of the county of Allegheny have always been held at Pittsburg, where a Continental garrison has for a number of years been stationed, and where the whole army, under the command of General Wayne, was encamped two years ago, at the time of the general election.

But, sir, I would wish to know, if a spirit of insurrection existed at the time of and influenced the elections, at what period that spirit expired. If it is said that the arrival of the army extinguished it, it must have been owing to the fear and not to any act of the army. If fear was the only cause of submission, the spirit of insurrection, although suppressed in appearance, must be supposed still to exist. Again, taking it for granted that the fear of the army alone quelled the riotous spirit, that fear operated with equal force when the army was in full march as when it had actually entered the country; for it is declared that the terror of their approach was sufficient to subdue the insurgents. If so, I cannot discover what change has taken place in the minds of the people since the election. If the late elections took place under the influence of fear of the army, let me ask, What change can be produced by new elections? Unless, indeed, it is expected they will be influenced—by the presence of the army.1

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From the various lights in which I have now considered the subject, I think myself authorized to conclude that the assertions contained in the resolution offered for the adoption of the House are unsupported by proofs, are contradicted by facts, and cannot even claim the feeble and delusive aid of hypothetical conjecture and doubtful inferences. I confidently repeat that, after the 11th of September, every positive fact and every presumptive proof are in favor of the representatives of the western counties, or, rather, in favor of their constituents.

The resolution itself, in its present shape, is liable to several other objections. Why are the four counties blended in the same resolution? The proclamation of the President did not include the four counties; and if it was necessary to embrace in this question Fayette and Westmoreland, I cannot conceive why Bedford, Cumberland, and Northumberland are excepted. Similar symptoms of disaffection took place in the three last-mentioned counties; and there was not a single act committed in Fayette County that has been called a sign of insurrection that did not likewise occur in Bedford. In both counties, poles were erected; in both counties, the office of inspection was suppressed; in both counties, supposed offenders were arrested only after the arrival of the army and after the election. To this I may add that in Fayette County, where no person was sheltered by an amnesty, as no person had signed the written assurances of submission, only four individuals have been either arrested or proscribed; and two of them have been admitted to bail. But I will repeat the question: Why are the four counties blended in the same resolution? The supposed spirit of insurrection might have an effect upon some of the elections and not upon the others. I cannot see any sufficient reason, but I may perceive the motive. Upon the principle that members cannot vote on the question of the validity of their own elections, it has been publicly avowed that the eleven western members must be deprived altogether of a vote on the present resolution. This principle applied to several counties thus combined in one resolution is unjust and absurd; for, upon that principle, it would be in the power of any number of members, greater than one-fourth of the whole, who should cabal for that purpose, to expel, on any pretext, any Edition: current; Page: [37] number of members less than one-half of the body.1 Supposing, therefore, that the House has any jurisdiction in the case before us, and that the interested members ought not to vote in their own case, the question must be put separately on each county, if any regard is to be paid to the principles of justice and common sense. But, have the House any jurisdiction? This fundamental question remains to be examined.

As the power of deciding the present question is not, in any part of the constitution, expressly vested in this House, it must either be supposed to be inherent, from its nature, in each branch of the Legislature, or it must be derived, indirectly and by implication, from some of the provisions of our social compact.

The power is not inherent in the House, or, in other words, it is not one of those powers which, from our form of government, must necessarily reside in either branch of the Legislature; for the principle of our government is that the judiciary and legislative powers should be kept distinct; that legislative powers alone should be exercised by this House, except where, from reasons of convenience, powers of a different description are expressly delegated. The power claimed with respect to elections is not that of establishing general rules, that is to say, of legislating; but of applying such rules to a special case, that is to say, of judging. I apprehend that the idea of an inherent power in the House arises from the habit of seeing a similar one uniformly exercised by the House of Commons in England, and, indeed, by every legislative branch of every government in the United States. In the latter case, the authority is derived from the express powers that are given by the respective constitutions; in the former, it arises from the nature of the government of Great Britain. In that country, the House of Commons being the only popular branch, the only body by which the people were, either directly or indirectly, represented, it was highly necessary and essential to the preservation of the freedom of choice that no authority not derived from the people, whether Edition: current; Page: [38] effected by the hereditary nobility, the hereditary executive, or the judiciary (who owe their existence to the executive), should be suffered to interfere in the decision of elections. Hence the Commons, supported by the uniform voice of the people, have with success repelled every attempt of the Crown, of the House of Peers, or of the courts of justice, to claim a jurisdiction on that subject; establishing, with inflexible spirit, an exclusive privilege to try every case relative to their own elections. Yet that privilege, necessary to preserve the right of the people to elect from the attacks of those orders which, in that country, form a distinct class from the people, has in some instances been so perverted and abused by corrupt and despotic Houses as to be rendered an engine to destroy or restrain that liberty and purity of elections which it was meant to protect. The case of Wilkes, on the Middlesex election, is too well known to require any comment. And the improper exercise of that species of judiciary power in common instances became so flagrant and so disgraceful that the House of Commons consented to relinquish it, and accordingly, by an Act of Parliament, known by the name of the Grenville Act, the jurisdiction was vested in a committee of the House, the members to be selected by lot and to be bound by a special oath for each specific occasion. Here it is not improper to observe that the supreme will of the Parliament being paramount to any charter or constitution which may be supposed to exist in England, it had the right to vest that jurisdiction wherever it pleased. Such, however, is not the case in the United States; for the Legislatures, having certain and defined powers, regulated by the supreme will of the people as expressed in the respective constitutions, cannot part with or vest elsewhere any authority which the people have thought it best, for their own advantage, to lodge with them. On this principle, the attempts that were made in Pennsylvania under the former constitution, and which have been made in the House of Representatives of the United States under the present constitution, to refer questions of that kind to a select committee, have been constantly rejected; for, by both those constitutions, the power of trying the respective elections was expressly vested in each branch of the Legislature. If the representatives of the people Edition: current; Page: [39] cannot part with any power vested in them by the constitution from which they draw their being, much less can they enlarge their own powers, or assume a jurisdiction which the people have not given to them, or have intrusted to other hands.

Leaving, therefore, the theoretical doctrine of inherent power, let us turn to the constitution itself, and read whether the people have not precluded us from any decision on the question now under discussion by expressly referring it to another tribunal. “Each House” (says the constitution of Pennsylvania, Art. 1, Sect. 12th), “Each House shall judge of the qualifications of its members. Contested elections shall be determined by a committee, to be selected, formed, and regulated in such manner as shall be directed by law.” The Constitution of the United States, the former constitution of Pennsylvania, all the existing constitutions, I believe, of our sister States, have expressly vested in each branch of the Legislature the power of judging of the qualifications, returns, and elections of their respective members. The present constitution of Pennsylvania alone stands an exception to the generality of the theory. The people of Pennsylvania, taught by their own and by the experience of other nations, have not deemed it expedient to intrust to either House the power of judging of the returns and elections of their own members. In order to preserve the freedom and equality of elections; in order to protect the only efficient political right which they have reserved, the right of electing, from the attacks of a corrupt or despotic House (the only ones that could, by our form of government, become dangerous), they have, in the same instrument from which alone the Legislature derives any right to deliberate and act on any subject whatever, declared that the validity of elections shall be tried by a committee, and not by the respective Houses.

In order to evade a positive clause of the constitution, for the sake of carrying a favorite object, it is alleged that the case now under consideration was not foreseen, and is not included in the section I have read. Was that assertion true, it would not follow that it is to be tried by this House, since there is no power inherent in them to judge of elections. But the assertion is warranted neither by the letter nor by the spirit of the constitution. Edition: current; Page: [40] The clause says that contested elections shall be tried by a committee; does a resolution, which declares certain elections to have been unconstitutional and void, contest the validity of those elections, or not? The answer is obvious to the most uninformed and narrow understanding; the question, stated by the resolution, is literally included in the clause of the constitution. If we turn to the minutes of the convention which framed that constitution, we find that the clause, as it stood in the first draft presented for consideration by a committee, was, verbatim, the same with the corresponding clause of the Constitution of the United States. “Each House shall be the judge of the elections, returns, and qualifications of its own members.”1 The convention not inadvertently, but taking that clause under consideration, adopt, in lieu of it, the present one; expressly take from the House the whole power of judging returns and elections, and give it to a committee. Had they meant to take only part of the power, and to vest in a committee a jurisdiction confined to certain cases, they would have defined those cases, and expressed in some manner the authority which they meant upon other occasions to give to the House; but the power by the original clause extended to elections in general, under every possible circumstance and in every possible case, and the present clause, being the only substitute to the one first proposed, includes, therefore, every case comprehended in the original one. Nay, the convention substitute the present section for the provisions relative both to elections and returns as they were first projected. The convention wished not to leave with the House even an opportunity of interfering, in the least degree, on that head, and for fear that, under pretence of judging of returns, there should be an attempt to claim a jurisdiction on the validity of the elections themselves, so that by setting aside a return as informal or false the election itself would, in fact, be set aside, they altogether take from either branch of the Legislature the power of judging of the returns.

Here it may be asked upon what principle the convention Edition: current; Page: [41] left to the House the power of judging of the qualifications of their own members. The answer is obvious: those qualifications were expressly defined by the constitution, and the House in that instance have nothing to do but to examine whether the members returned have those qualifications. The inquiry must depend upon a few facts, and the rules upon which the decision is to be grounded being, therefore, few in number, simple in themselves, and exactly defined by the constitution, the House were competent judges, and there was little danger of the power being abused. But the validity of elections depending upon a variety of facts, the grounds upon which they might be attacked being numerous and unforeseen, and, of course, the rules by which they were to be judged being various, complicated, uncertain, and liable to different constructions, the jurisdiction is taken away on account of the latitude it would have given to the exercise of opinions uncontrolled by special ties or by positive and specific laws, and often biassed by interest, party spirit, and prejudice.

So doubtful were the movers of the resolution as to the jurisdiction of the House, and to the grounds on which the subject was to be treated, that they first presented a proposition declaring that the House, being the judges of the qualifications of its own members (which could not be denied), it should declare the western members to be disqualified. Why?—not because those members were, in fact or in law, personally disqualified or incapable of taking their seats; but, by a new kind of logic, because the country being, according to their general assertion, in a state of insurrection, the electors were thereby disqualified and rendered incapable of electing. As they soon, however, discovered the fallacy of such a position and withdrew their first motion, substituting the resolution now under consideration, it will be sufficient to observe on that head, 1st, that a citizen’s qualifications, being by their nature personal, cannot depend upon the qualifications of others, whether electors or not; 2dly, that the qualifications of members being exactly defined by the constitution, no authority derived from that constitution can either add to or diminish them; and, lastly, that if that construction was given to the constitution, the House might upon Edition: current; Page: [42] the same principle judge every possible case of contested elections, since they might, upon every possible ground of contest, decide that the invalidity of the election disqualified the member elected.

But it is said that the law enacted in conformity to the clause of the constitution has provided only for cases where the election is contested by petitions, signed by a certain number of qualified electors; that, of course, the law does not include a case similar to this, a case of insurrection or invasion, since in neither case petitions would or could be transmitted; and arguing from the supposed absurdity that no remedy should exist for such cases, when the bill of rights has emphatically declared “that elections shall be free and equal,” it is contended that the House must, as guardians of the constitution, adopt the mode proposed by the resolution.

As to any arguments drawn from the clause of the bill of rights, it must be observed, in the first place, that the clause is only a declaratory and general one, which does not give any power, but is, on the contrary, in the nature of a reservation of power; and, in the second place, that the manner in which the people meant that that declaratory clause should be carried into effect is provided for by several clauses of the constitution (such as those which regulate the qualifications of the electors and of the elected, which preclude arrests on the days of elections, &c.), and amongst others by the very clause already dwelt upon, which, as one of the strongest barriers of that sacred principle “that elections shall be free and equal,” expressly forbids the House any interference in deciding questions on their validity, by vesting that power exclusively in a committee.

But it cannot rationally and fairly be said that the present question, similar to the case of an invasion by an enemy or of an actual insurrection, could not have been tried according to the provisions of the law. A clear proof that the regular petitions could be presented is, that a petition, signed by thirty citizens of one of the counties, was actually presented and now lies on the table; and that it was not made the foundation of a trial according to law by a select committee is obviously owing to the neglect of the petitioners, who did not send the certificate required Edition: current; Page: [43] by law that they were qualified electors. After the mistake was discovered, the ingenuity of some gentlemen suggested the idea of a direct interference of the House, without any regard to petitions or select committee, to the provisions of the law or of the constitution.

It is, however, true that the law enacted in conformity to the clause of the constitution has not provided for the trial of elections in cases where they may be contested by individuals who are not qualified electors of the proper county, and that there may be cases in some measure similar to the present, such as actual invasion or insurrection, for which there is no existing remedy by the present law. But it does not thence follow that because there is no existing remedy the House may assume a jurisdiction. This, indeed, would take place in the House of Commons in England, who, having had a right prior and paramount to the Grenville Act, would of course take cognizance of any cases not provided by that Act. But in Pennsylvania it is necessary to distinguish between a case not provided for by the constitution and a case not provided for by law. In the first instance, although it may not be an absolute consequence that the House should claim the power, yet there may be nothing absurd in it. But, whenever there is an express remedy by the constitution, it is as absurd as dangerous to suppose that the Legislature, by neglecting to enact the law which was to modify and effectuate that remedy, or by providing only for certain special cases, should thereupon have a right to assume a jurisdiction over every subject for which they refuse or neglect to provide. Admit this doctrine, and in order to amplify the jurisdiction of each House beyond the portion of delegated authority, it was only requisite to forbear from passing any law on the subject, for then, no remedy being provided for the trial of contested elections, each House might have judged of every case in direct violation of the constitution. The case of an actual invasion, or any other case not yet provided for by law, is similar to that of an unforeseen crime, to the commission of which no punishment has been annexed, and which must remain unpunished until the law shall have enabled the judge to act.

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But the principle of the House having jurisdiction in this case, or in any other case not provided for by the law, will bring us to the same predicament as if no law whatever had been enacted for the trial of contested elections in pursuance to the provisions of the constitution. For, whenever petitions shall not be presented against an election, or, to put the case more strongly but not less truly, whenever the decision of a select committee, on a petition tried according to law, shall be disagreeable to the wishes of a majority of the House, they may, as guardians of the constitution, and in order to preserve the elections free and equal, take up the business, and for any cause, real or supposed, which they shall please to suggest, whether a riot, bribery, the disqualification of electors, or fraud of any kind, they may set aside any election whose fate is obnoxious to party, or whose merits have been prejudged by passion.

To conclude, if this be a question of elections, I may perhaps perceive on this floor prosecutors, but I see no judges. If it is not a question of elections, what is it? It then can be nothing else than a disfranchising, retrospective act. If there exists anywhere a power to disfranchise the citizens of one-sixth part of the State, that power is, undoubtedly, of a legislative nature, and must be exercised by the Legislature and not by a single branch. It is supposed that the clause of the constitution which forbids the passing any ex-post-facto law may be evaded by carrying the measure through the means of a resolution of each House separately, instead of making it the Act of the Legislature. When Shays’ rebellion occurred in Massachusetts, the Legislature of that State passed a law to prevent those concerned from voting at the ensuing election. When the Legislature of this State was in session in last September, and, within less than a month before the election, passed an Act to suppress the western insurrection, why did they not at the same time, as guardians of the constitution, and to preserve the elections free and equal, pass also a law similar to that of Massachusetts, disfranchising the insurgents, and prohibiting an election in the western country? When we see the gentlemen who brought forward those measures, that were thought necessary to quell the insurrection, silent, at the same time, on the doctrine which they originate at present, Edition: current; Page: [45] may it not be conjectured that, in fact, they object to the event of the elections, and not to the elections themselves?

If any precedent were necessary to evince how wantonly a jurisdiction is claimed and meant to be exercised on this question, I might adduce the case of Luzerne County. The contest which, at a former period, gave rise to disturbances in that part of the State is well known. I find, by the minutes of the Assembly of the 27th of October and of the 8th of November, 1787, that messages were received from the supreme executive council mentioning “that since the last session (which had terminated in September) there had been a renewal of the disturbances at Wyoming, some restless spirits having formed a project of forming a new State, to be carried into effect by an armed force; . . . and, as the danger of the State appeared to be pressing, . . . the council recommended it to the General Assembly to adopt effectual measures for enforcing the laws of the State in the county of Luzerne, which they were of opinion could not be done without a permanent force.” Council add that “the expulsion of the commissioners from Wyoming would occasion a delay in the execution of their duty under the late law, &c.” Yet, in that case, where the officers of government had been expelled, where the law was thereby prevented from being executed, where there was a project of forming a new State through the means of an armed force, and where a permanent force was thought necessary to enforce the laws; in that case, where the disturbances had begun before the election and were not composed three weeks after the election, the member elected by that county at the very moment of tumult and insurrection had taken his seat, held it when the message of the executive council was delivered, and no attempt was even made to dispute his election. At that time, too, the Legislature, acting under the former constitution of the State, had full power to decide every case of the kind.

Shall it be said that this is one of those questions on which imperious necessity must oblige the representatives of the people to throw a veil over the constitution, on which the salvation of the country impels them to overleap the constitutional boundaries of their power! Permit me to repel so groundless an idea Edition: current; Page: [46] by a few observations on the policy and probable consequences of adopting the proposed resolution.

I know that at a period when it was necessary to rouse the militia of the United States, and especially of Pennsylvania, who were naturally averse, without evident necessity, to take up arms against their fellow-citizens, it became an indispensable duty to convince them of the importance of the occasion and of the necessity there was of their marching. As a means of diffusing the spirit of indignation and exertion, it was not, perhaps, thought impolitic to suffer, if not to promote, the circulation of every rumor that could operate to the prejudice of the western country. The inhabitants of that country were represented as enemies to any kind of restraint and to every description of government, “as a banditti forgetful of all obligations, human and divine, and intent only on rapine and anarchy,”—in short, as monsters of cruelty. And the prejudices and misrepresentations thus disseminated seem to be the basis of the present proceedings. It is said that harsh measures alone can bring to a sense of their duty the savage inhabitants of the frontier. I have not attempted to conceal or extenuate the excesses committed during the unfortunate disturbance; but I think that, at present at least, it is unnecessary to encourage a belief that the people there are worse than they really are. Without entering into a defence of their character, it will be sufficient to repel the charges of rapine and cruelty. As to the first, it has not the smallest foundation; during the riots, and the whole period when the restraints of law were so much relaxed, not one instance can be produced of plunder or peculation, either by mobs or individuals. The second is supported by the solitary case of Wilson, in the year 1791, which has already been mentioned. It is extremely unjust to draw an inference against the general character of a people from the wickedness of half a dozen individuals, whose conduct was execrated by all, against whom indictments were found by the unanimous opinion of a grand jury, and whose final punishment for the original outrage was only prevented by those adventitious circumstances which I have related. But a direct and convincing proof of the charge of cruelty being groundless can be produced. It is drawn from the conduct of the mobs and of the Edition: current; Page: [47] greatest criminals themselves whilst in the very act of committing their most flagrant outrages. The people who attacked and destroyed General Neville’s house, after having seen their leader and several of their associates killed or wounded, on the very day on which they finally succeeded, treated with humanity and dismissed without injury the soldiers who had defended the house, and even the very man whom they might suppose to have been the cause of McFarland’s death. The same night they had in their possession the marshal himself, and however offensive their behavior towards him might be in other respects, they released him also without any personal injury. I well know that a negative act, if it may be so called, cannot be adduced as a proof of virtue; I do not give it as such, but only to show that, criminal as those people were, they cannot be said, even in their excesses, to have been cruel. Can it be supposed that a mob in England, France, Holland, or in any other part of Europe, would, under similar circumstances, have behaved in the same manner? And why is an attempt made to throw a blemish on that amiable and striking trait of the American character (for those people are Americans),—the horror of shedding human blood? Treat, then, the inhabitants of the western country as Americans and fellow-citizens; and now that their tumults have been suppressed, and their minds restored to reason and a sense of duty, do not, by an indiscriminate punishment, unmerited with respect to the majority, and, with respect to them all, arbitrary and unconstitutional,—do not inflame and disgust where it is your duty to allay and conciliate. Let despotic governments eagerly seize every opportunity which the faults and the temporary folly of any part of the nation may afford them, in order to add new energy to their powers and to justify the arbitrary exercise of a jurisdiction extended to new objects. Such mean and wicked policy is beneath the free governments of America. To amend rather than to punish, to conciliate rather than to exasperate, to strengthen the bonds of union rather than to throw seeds of division, must be the sole design of a government that wishes not its authority to rest upon force and oppression, but knows the confidence and the love of the people to be the only foundation of their existence, the only security for their duration. But Edition: current; Page: [48] if, carried away by the torrent of a popular clamor grounded on temporary prejudices, you attempt to justify by the specious plea of necessity and public good the assumption of extraordinary and illegal powers; if you suffer yourselves to admit common fame and public opinion as legal proofs, beware of the consequences of the doctrine you introduce,—beware how you overset those barriers which alone can protect us and our posterity from the baneful effects of power that deems nothing unlawful which it is able to accomplish, and of passion that deems nothing sacred which it wishes to destroy. Our security depends not more on the independence of our judges than on the impartiality of the popular branch of our courts of justice,—of the juries. At this moment, within the walls of the prison of this city, on a suspicion of having had a share in the insurrection, are confined many unfortunate persons, already prejudged perhaps by prejudice, but only accused, and not condemned. They are to be tried, not in their own county, but at a distance of three hundred miles from their homes, and their fate depends on the verdict, not of a jury of their own vicinage, acquainted with their private character and the whole tenor of their lives, but on men selected from amongst strangers already biassed against them; on men who hear and see your proceedings, whom this discussion must tend to inflame, and whom, should you fatally adopt the measure that is proposed, you will teach the propriety of substituting the dictates of their own passions for the evidence of proved and ascertained facts. It is by the introduction of similar maxims that in that country which for some years has given us so many useful but terrible lessons of the effects of power abused and passions unrestrained; it is by adopting as truth reports grounded only upon the wishes or the fears of the people; it is by making public opinion, common fame, and popular prejudices the test by which they tried the conduct of individuals, that in France ambitious men, covering their views and justifying their means under the specious names of necessity, public good, salvation of the country, have, for the sake of destroying their political enemies and of increasing their own power, shed upon scaffolds and under the cruel mockery of trials the blood of so many thousands of innocent victims.

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I mean not to ascribe improper motives to any member of this House; I believe they all think themselves to be actuated by the most disinterested views; but permit me to doubt whether the minds of some of them are not, unknown to themselves, biassed in some measure by current prejudices and party spirit. Party spirit may appear under more than one shape. If sometimes, assuming the garb of patriotism, it leads individuals into unjustifiable excesses, may it not also, disguised under the cloak of stern justice, hide from its followers those constitutional and legal boundaries which they must pass in order to obey its dictates? However pure the motives of the supporters of this measure, I confidently assert that beyond these walls it will be solely ascribed to the effort of a party meaning to crush their political opponents; that it will be attended with no other consequence than that of inflaming the public mind and reviving those party feuds whose baneful effects have been so sensibly felt by this State at a former period, and which the change of our constitution, mutual concessions, and the general diffusion of more liberal and enlarged views have, within these last years, so happily extinguished. Every well-wisher to the prosperity of Pennsylvania and to the preservation of the Union must be forcibly struck with the danger of former internal dissensions being again revived.

When we consider the various and jarring interests of different parts of the United States, and the necessity of an accommodating spirit in order to conciliate them, we cannot but acknowledge how great an influence the conduct of this State will have on the attainment of that object. The Middle States, but especially Pennsylvania, by her central situation, her commerce, and the manners of her inhabitants, may be looked upon as the bond of union between the Eastern and Southern States. Pennsylvania, too, embraces within her bounds those communications which unite the shores of the Atlantic with the extensive regions watered by the branches of the Ohio and of the Mississippi, and those which border on the Northern lakes. Those communications lie within the limits of those western counties which are the subject of this discussion. These counties have a common interest equally with the citizens of the seaports and with the Edition: current; Page: [50] inhabitants of the remotest parts of the western country; they are the link which unites all the distant members of the community together. I will freely acknowledge that those counties have been uniformly treated with liberality by the government of Pennsylvania. The taxes laid upon them have been apportioned with a due regard to their situation and poverty. Unworthy jealousies have of late subsided, and they have shared, in common with their fellow-citizens, the prosperity of the State, so far as it was in the power of the Legislature to make them participate in the advantages which other parts enjoyed. By still pursuing a similar conduct you will still more endear the government of Pennsylvania to that sequestered country, and make them forget the difference of interests which in many instances does exist, and the barriers which nature has placed between them and the remaining parts of the State. By pursuing a liberal policy towards them you will secure their attachment and preserve the unity of the State. We shall then be enabled, from our weight and moderation, to reconcile the variances of opinion and interests which divide the Union, and to strengthen those bonds of amity and benevolence that can alone insure the existence of the Americans as an united nation. I will not attempt to trace what might be the consequences of an opposite conduct, for there are things which may be felt but which perhaps should not be described. Every reflecting mind will easily foresee what may, after a term of years, be the probable effect of irritating the minds of a people whose direct communication with the sea will lead to a distance of two thousand miles from the seaport of Pennsylvania, who are separated from you by a chain of mountains of more than one hundred miles in breadth, and whose population daily increases beyond every possible calculation.

Whilst I am speaking of the propriety of conciliatory measures, I do not forget that the object of the resolution proposed may perhaps be rather of a personal than of a general nature. If so, if it be the wish to punish not the people but some of their representatives, you may, by virtue of the 13th Section of the first Article of the constitution, expel such as may be disagreeable to you; and although I conceive from the spirit of the Edition: current; Page: [51] constitution that power is to be exercised only in case of the misbehavior of the members as members, yet, since the letter itself does not preclude the idea, I would not, on the present occasion, contest the authority of the House to expel such members as they may suppose to have had a share in the late disturbances. But if such be the object of the House, we will put it in their power to attain their ends without attempting a jurisdiction at best doubtful, at all events arbitrary. Before I explain myself any farther, it is necessary to take notice of another question immediately connected with the present one.

We see by the minutes of the Senate that they have refused to adjourn until new elections should take place in the western counties, although they have since declared the former ones to be void. What may be the intention of this House I know not. Arguments on that head would be unnecessary; and if it be really the object of the Legislature first to get rid of the representation of one-sixth part of the State and then to legislate in that dismembered situation; if it be their intention, in order to strike the western inhabitants with a greater respect for the laws and to induce their future submission, to pass laws that shall bind them, without their having any share in the representative body, I have nothing more to say. But if, for the sake of peace and conciliation, private sacrifices are necessary, I cheerfully will make any that depend upon me; indeed, I need not call them sacrifices,—they will be most agreeable to my own wishes,—for a contested seat in this House, under the present circumstances, cannot be supposed to confer any satisfaction to the possessor. My only motive in taking it or defending it is the duty I owe to my constituents,—to a people who have repeatedly placed their confidence in me, and whom I wished not to desert in their present situation: but if any mode can be devised which will not be hurtful to their interests, it will be eagerly embraced.

If, therefore, this House will waive the principle of the main question, and agree to adjourn until a new election shall take place, I am ready to resign not only my seat in this House, but also the seat in Congress, for which I was chosen at the last election, and which does not depend on any determination of the Legislature of Pennsylvania. If an explicit answer is not given Edition: current; Page: [52] on this subject, it will still be in our power to bring it to a test by a motion of adjournment. Should it be adopted, every patriotic object which the House can have in view may be attained, at the same time that the necessity of establishing an unconstitutional precedent, and of exercising an arbitrary jurisdiction, will be avoided, and the dangerous consequences of the measure now under consideration will be averted.1

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NUMBER I.: Extract of a Letter of Thomas McKean, Chief Justice of Pennsylvania, and General William Irvine, appointed Commissioners by the Governor of Pennsylvania to confer with the Inhabitants of the Western Counties, dated Pittsburg, 22d August, 1794.

“On Monday we endeavored to ascertain the facts that led immediately to the riots in this county on the 16th and 17th of last month, at General Neville’s estate, and the result is as follows. The marshal for the district of Pennsylvania had process to serve upon divers persons residing in the counties of Fayette and Allegheny, and had executed them all (above thirty) without molestation or difficulty, excepting one, which was against a Mr. Shaw; he, or some other person, went to the place where Dr. Beard, the brigade inspector for Washington County, was hearing appeals made by some of the militia of a battalion, who had been called upon for a proportion of the quota of this State of the eighty thousand men, to be in readiness agreeably to an Act of Congress. There were upwards of fifty there with their fire-arms, to whom it was related that the Federal sheriff, as they styled the marshal, had been serving writs in Allegheny County and carrying the people to Philadelphia for not complying with the excise laws, and that he was at General Neville’s house. It was then in the night of the 15th of last month; between thirty and forty flew instantly to their arms and marched towards Mr. Neville’s, about twelve miles distance, where they appeared early next morning. Your excellency has already heard the tragical event.

“It should be added that the delinquents, against whom the marshal had process, told him they would enter their stills and pay him the excise, together with the costs of suit. Major Lennox applauded their prudent conduct, and told them that though he had not authority to comply with their wishes, yet if they would enter their stills with the inspector, and procure his certificate, and send it to Philadelphia, upon payment of the money due with the costs, he was persuaded all further prosecutions would be stayed.

“If this detail is true, it is evident the outrages committed at Mr. Neville’s were not owing to deliberate preconcerted measures, but originated in an unbridled gust of passion, artfully raised among young men who may have been at the time too much heated with strong drink.”—

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“We met accordingly, and conversed together (with the twelve conferees appointed by the Parkinson’s Ferry meeting of the 14th of August) freely for several hours. The supposed grievances were numerous; but they dwelt principally on their being sued in the courts of the United States and compelled to attend trial at the distance of three hundred miles from their places of abode, before judges and jurors who are strangers to them, and by whom the credit due to witnesses entirely unknown could not be properly estimated, and the inability to pay the excise owing to the restrained state of their trade and commerce.”—“Impressed with the idea that the spirit of the people in these counties may be diffused in other counties and States, we have urged the necessity of a speedy termination of this business, and to that end the calling the committee of sixty together at an earlier day than the one fixed upon; though the gentlemen press us to allow time to the people to cool, yet we believe they will gratify us in this request. We are acquainted personally with the committee of twelve, and think them well disposed.”


Resolutions proposed by Mr. — at the Parkinson’s Ferry Meeting of the 14th of August.

1. The same with the first resolution adopted.

2. That a standing committee be appointed to consist of members from each county, to be denominated a committee of public safety, whose duty it shall be to call forth the resources of the western country to repel any hostile attempts that may be made against the rights of the citizen or of the body of the people.

3. That a committee of members be appointed to draft a remonstrance to Congress praying a repeal of the excise law, and that a more equal and less odious tax may be laid, and at the same time giving assurance to the representatives of the people that such tax will be cheerfully paid by the people of these counties, and that the said remonstrance be signed by the chairman of this meeting in behalf of the people whom we represent.

4. Whereas, the motives by which the people of the western country have been actuated in the late unhappy disturbances at Neville’s house, and in the great and general rendezvous of the people at Braddock’s Field, &c., are liable to be misconstrued as well by our fellow-citizens throughout the United States as by their and our public servants, to whom is consigned the administration of the Federal government, therefore, Resolved, that a committee of be appointed to make a fair and candid statement of the whole transaction to the President of the United States, and to the Governors of Pennsylvania and Virginia, and, if it should become necessary, that the said committee do publish to the world a manifesto or declaration, whereby the true motives and principles of the people in this country shall be fairly and fully stated.

5. That we will, with the rest of our fellow-citizens, support the laws and government of the respective States in which we live, and the laws and government of the United States, the excise law, and the taking citizens out of their respective counties only excepted, and therefore we will aid and assist all civil officers in the execution of their respective functions, and endeavor, by every proper means in our power, to bring to justice all offenders in the premises.

Resolutions adopted by the Parkinson’s Ferry Meeting of the 14th of August.

1. Resolved, That taking citizens of the United States from their respective abodes or vicinage, to be tried for real or supposed offences, is a violation of the right of the citizens, is a forced and dangerous construction of the constitution, and ought not under any pretence whatever to be exercised by the judicial authority.

2. That a standing committee, to consist of one member from each township, be appointed for the purposes hereinafter mentioned, viz.:

To draft a remonstrance to Congress praying a repeal of the excise law, at the same time requesting that a more equal and less odious tax may be laid, and giving assurances to the representatives of the people that such tax will be cheerfully paid by the people of these counties.

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To make and publish a statement of the transactions which have lately taken place in this country relative to the excise law, and of the causes which gave rise thereto, and to make a representation to the President on the subject.

To have power to call together a meeting either of a new representation of the people or of the deputies here convened, for the purpose of taking such further measures as the future situation of affairs may require, and, in case of any sudden emergency, to take such temporary measures as they may think necessary.

3. That we will exert ourselves, and that it be earnestly recommended to our fellow-citizens to exert themselves, in support of the municipal laws of the respective States, and especially in preventing any violence or outrage against the property and person of any individual.

4. That a committee, to consist of three members of each county, Edition: current; Page: [58] be appointed to meet any commissioners that have or may be appointed by the government, and to report the result of this conference to the standing committee.


At a meeting of the standing committee of the western counties, held at Brownsville (Redstone, Old Fort), on the 28th and 29th August, 1794,

The report of the committee appointed to confer with the commissioners of government being taken into consideration—Resolved, That, in the opinion of this committee, it is the interest of the people of this country to accede to the proposals made by the commissioners on the part of the United States.

NUMBER IV.: Extract of the declaration unanimously adopted by a meeting of committees from the several townships of the county of Fayette, held at Uniontown, the 10th of September, 1794.

For these reasons and upon these principles, wishing, however, to have it fully understood that from the following declaration no implication is to be drawn of an acknowledgment that we ever have failed, either directly or indirectly, in that duty which every citizen owes to his country, to wit, submission to its laws: We, the committee of townships for the county of Fayette, do not hesitate explicitly to declare “our determination to submit to the laws of the United States and of the State of Pennsylvania, not to oppose either directly or indirectly the execution of the Acts for raising a revenue on distilled spirits and stills, and to support (as far as the laws require) the civil authority in affording the protection due to all officers and citizens; and we do further recommend to our fellow-citizens a perfect and entire acquiescence under the execution of the said Acts, and also that no violence, injuries, or threats be offered to the person or against the property of any officer of the United States, or of the State of Pennsylvania, or citizens complying with the laws.” At the same time we make those explicit and sincere declarations and recommendations, we also candidly and openly declare our intention to persist in every legal and constitutional measure that may tend to obtain a repeal of the excise law, nor shall we think ourselves bound to give it any further support and countenance than what is required by the laws.

N.B.—The words between “ ” are verbatim the transcript of the assurances required by the commissioners of the United States from the committee of Brownsville, and afterwards from the people at large.


At a meeting of the inhabitants of the town of Pittsburg, for the purpose of considering the proscriptions of certain citizens during the late Edition: current; Page: [59] disturbances, in which necessity and policy led to a temporary acquiescence on the part of the town—

It was unanimously resolved, That the said citizens were unjustly exiled, and the said proscriptions are no longer regarded by the inhabitants of the town of Pittsburg, and that this resolution be published for the purpose of communicating these sentiments to those who were the subjects of the proscriptions.

By order,
A. Tannehill, Chairman.


Answer of the grand jury of Washington County, on September 25, to Judge Addison’s charge, in which they express their unanimous concurrence in and approbation of the sentiments contained in said charge, is printed in the Pittsburg Gazette of the 4th of October, but no copy could be procured for insertion here.

NUMBER VII.: Resolutions of the delegates of townships of the 14th of August, assembled at Parkinson’s Ferry on the 2d of October, agreeable to the notice in the Pittsburg Gazette.

Resolved, That it is the unanimous opinion of this meeting that if the signature of the submission be not universal, it is not so much owing to any existing disposition to oppose the laws, as to a want of time and information to operate a correspondent sentiment; and with respect to the greatest number, a prevailing consciousness of their having had no concern in any outrage, and an idea that their signature would imply a sense of guilt.

Resolved, unanimously, That we will submit to the laws of the United States; that we will not, directly or indirectly, oppose the execution of the Acts for raising a revenue on distilled spirits and stills; that we will support, so far as the law requires, the civil authority in affording the protection to all officers and to the citizens, reserving at the same time our constitutional right of petition and remonstrance.

Resolved, unanimously, That William Findley, of Westmoreland County, and David Redick, of Washington County, be appointed commissioners to wait on the President of the United States and the Governor of Pennsylvania, and to explain to government the present state of this country, and detail such circumstances as may enable the President to judge whether an armed force be now necessary to support the civil authority in these counties.

Resolved, unanimously, That the secretary transmit a copy of these resolutions by post to the President of the United States and to the Governor of Pennsylvania, and have them printed in the Pittsburg Gazette.

Alexander Addison, Sec.
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At a meeting of the committees of townships of the four western counties of Pennsylvania, and of sundry other citizens, held at Parkinson’s Ferry the 24th of October, 1794—

The following resolutions were unanimously adopted, viz.:

1st. Resolved, That in our opinion the civil authority is now fully competent to enforce the laws and to punish both past and future offences, inasmuch as the people at large are determined to support every description of civil officers in the legal discharge of their duty.

2d. Resolved, That in our opinion all persons who may be charged or suspected with having committed any offence against the United States or the State during the late disturbances (and who have not entitled themselves to the benefits of the Act of oblivion) ought immediately to surrender themselves to the civil authority, in order to stand their trial; that if there be any such persons amongst us, they are ready to surrender themselves accordingly; and that we will unite in giving our assistance to bring to justice such offenders as shall not surrender.

3d. Resolved, That in our opinion offices of inspection may be immediately opened in the respective counties of this survey without any danger of violence being offered to any of the officers, and that the distillers are willing and ready to enter their stills.

Messrs. William Findley, David Redick, Ephraim Douglass, and Thomas Morton were then appointed to wait on the President of the United States with the foregoing resolutions.

James Edgar, Chairman.
Albert Gallatin, Secretary.

NUMBER IX.: Extracts of the minutes of the House of Representatives of Pennsylvania.

December 16, 1794. A motion was made by Mr. Kelly, seconded by Mr. Barton, and read, as follows, viz.:

Whereas, It is declared, by the fifth Section of the ninth Article of the constitution of this Commonwealth, as one of the great and essential principles of liberty and free government, that elections shall be free and equal. And whereas, A majority of the inhabitants of the counties of Westmoreland, Washington, Fayette, and Allegheny were in a state of insurrection and opposition to the government and laws of this Commonwealth on the second Tuesday in October last, the time appointed by the constitution for choosing Representatives in the General Assembly of this Edition: current; Page: [61] State, to the terror of those who were friends to government and good order residing in the counties aforesaid. And whereas, It is directed by the constitution that each House shall judge of the qualifications of its members; therefore,

Resolved, That the persons chosen at the last general election, held for the counties of Westmoreland, Washington, Fayette, and Allegheny, to represent the said counties in the House of Representatives of this State, are not duly qualified for said office.

December 20, 1794. Agreeably to the order of the day, the motion made by Mr. Kelly, seconded by Mr. Barton, December 16, relative to the ineligibility of the persons elected to represent the counties of Westmoreland, Washington, Fayette, and Allegheny in the House of Representatives, was read the second time.

And the resolution contained therein being under consideration, viz.:

Resolved, That the persons chosen at the last general election, held for the counties of Westmoreland, Washington, Fayette, and Allegheny, to represent the aforesaid counties in the House of Representatives of this State, are not duly qualified for said office.

A motion was made by Mr. Kelly, seconded by Mr. Barton,

To postpone the consideration of the said resolution, in order to introduce the following in lieu thereof, viz.:

Resolved, That the elections held during the late insurrection in the counties of Westmoreland, Washington, Fayette, and Allegheny, for members to represent said counties in this House, were unconstitutional, and they are hereby declared void.

On the question, “Will the House agree to postpone for the purpose aforesaid?” it was determined in the affirmative.

January 9, 1795. On the question, “Will the House agree to the following resolution? viz.:”

Resolved, That the Legislature of this Commonwealth will adjourn on Thursday next, to meet again on the first Tuesday of February next.

It was determined in the negative. Yeas 37, nays 38.

The House proceeded to consider the resolution on the subject of the elections held during the late insurrection in the counties of Westmoreland, Washington, Fayette, and Allegheny, reported by the committee of the whole yesterday.

A motion was made by Mr. Gallatin, seconded by Mr. Nagle,

To postpone the consideration of the said resolution, in order to introduce the following in lieu thereof, viz.:

Whereas, It appears to this House that during the month of July last past the laws of the United States were opposed in the counties of Washington and Allegheny, in this State, and the execution of said laws obstructed by combinations too powerful to be suppressed by the ordinary course of law proceedings or by the powers vested in the marshal of that district; inasmuch as several lawless bodies of armed men did at sundry Edition: current; Page: [62] times assemble in the county of Allegheny aforesaid and commit various acts of riot and arson, and more particularly attacked the house of John Neville, Esq., inspector of the revenue for the fourth survey of the district of Pennsylvania, and after firing upon and wounding sundry persons employed in protecting and defending the said house, set fire to and totally destroyed the same.

That the spirit of opposition to the revenue law of the United States soon after pervaded other parts of the fourth survey of Pennsylvania (which consists of the counties of Westmoreland, Washington, Fayette, Allegheny, and Bedford), inasmuch as all the offices of inspection established therein were violently suppressed.

That commissioners having been appointed, respectively, by the President of the United States and by the Governor of this State, in order to induce the inhabitants of the fourth survey aforesaid to submit peaceably to the laws, the assurances of submission required of the inhabitants aforesaid by said commissioners were not so general as to justify an opinion that offices of inspection could have been safely established there on the 11th day of September last past. And the said commissioners of the United States did give it as their opinion, that on the 16th day of September last past there was a considerable majority of the inhabitants of the fourth survey aforesaid who were disposed to submit to the execution of the laws, but that such was the state of things in the survey that there was no probability that the revenue law of Congress could at that time be enforced by the usual course of law; so that a more competent force was necessary to cause the laws to be duly executed, and to insure protection to the officers and well-disposed citizens.

And that, in consequence of that information, it became necessary for the President of the United States to cause to be embodied a large number of the militia of the United States, and to order the same to march into the fourth survey aforesaid, in order to aid the civil authority in causing the laws to be duly executed, in re-establishing order and peace, and in affording protection to the officers and citizens.

And whereas, It also appears to this House that a majority of the inhabitants of the fourth survey aforesaid did not at any time enter into a general combination against the execution of the laws of the United States.

That the meetings composed of delegates of the respective townships of the said survey never entered into any criminal resolution or combination; but, on the contrary, contributed by degrees to restore peace and order.

That no acts of violence were committed in the said survey after the 11th day of September last past, nor did any combinations, meetings, or preparations take place tending to oppose future resistance to the laws of the United States and to the militia then on their march to the said survey.

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That from and after the 14th day of August last there was a gradual restoration of order and submission to the laws, as appears by the assurances of submission expressed by individual signatures or otherwise previous to the 16th of September aforesaid; by the answer of the grand jury of the county of Washington to the charge of the judge of the court for said county, delivered at the September court; and by resolutions adopted by the committee of townships for the county of Fayette on the 10th and 17th days of September; and by the resolutions adopted by the committees of townships for the counties of Westmoreland, Washington, Fayette, and Allegheny, on the 2d of October last past; which resolutions expressed their disposition to submit to the laws of the United States and to support the civil authority, and their opinion that the people at large were disposed to do the same; as also by resolutions adopted by the people of the county of Fayette on the day of the late general election, the object of which was to provide for the accommodation of the militia of the United States, then on their march to the fourth survey aforesaid.

And whereas, There are no proofs whatever before the House either that the people of the fourth survey, or any of them, were in a state of insurrection on the day of the late general election, nor that any undue influence was used or acts of violence committed on the said day in any of the counties composing the said survey, nor that the late insurrection, riots, and opposition to the laws of the United States had any effect upon the said late general election.

And whereas, It is represented to this House by the representatives of the counties composing the fourth survey aforesaid that they are able to prove by evidence that the late general elections held in the said counties were fairly conducted, uninfluenced by fear or violence, and perfectly free and equal.

And whereas, The House wish to have full information upon those facts, in order that they may thereupon take such constitutional measures as to them will appear best.

Resolved, That in the opinion of this House it is proper for them to institute an inquiry on the subject of the late general elections held in the counties of Westmoreland, Washington, Fayette, and Allegheny, in order to ascertain whether the inhabitants of the said counties, or any of them, were in a state of insurrection at the time of holding the said elections; and whether the late insurrection in the fourth survey of Pennsylvania had any effect on the said elections in the said counties.

Resolved, That a committee be appointed to devise and report to this House a plan of the manner in which the said inquiry should be conducted, with power to summon evidences on the said subject.

On the question, “Will the House agree to postpone for the purpose aforesaid?”

It was determined in the negative.

The original question recurring, the previous question thereon was Edition: current; Page: [64] called for. And on the previous question being put, viz., “Shall the main question be now put?” it was determined in the affirmative. Yeas 44, nays 29.

Whereupon the eleven members of the counties of Westmoreland, Washington, Fayette, and Allegheny withdrew.

And then the main question, viz., “Resolved, That the elections held during the late insurrection in the counties of Westmoreland, Washington, Fayette, and Allegheny, to represent said counties in this House, were unconstitutional, and they are hereby declared void,” being put,

It was determined in the affirmative. Yeas 43, nays 20.

NUMBER X.: Extract of the minutes of the Senate of Pennsylvania.

January 2, 1795. Moved that the consideration of the following resolution, which is the order of the day, viz., “Resolved, That the Senate will proceed to consider and determine whether the elections held in the districts composed of the counties of Allegheny, Washington, Westmoreland, and Fayette during the insurrection in those counties ought to be admitted as constitutional and valid,” be postponed, in order to take into consideration the following resolution, to wit:

Resolved, That it is necessary for the Senate to inquire,

First. Whether the Senate have any jurisdiction in the case of elections, and in what manner it can be exercised?

Second. Whether the inhabitants of the counties of Westmoreland, Washington, Fayette, and Allegheny, or a majority of them, were in a state of insurrection at the time of holding the late general election (and if so) what was the nature of the same, and its effects upon the said election?

And that be assigned to hear evidence on the subject of said insurrection.

The question on postponing for the said purpose was put, and carried in the negative.

January 3. The following resolution, as reported by the committee of the whole, viz.,

Resolved, That the elections of Senators held in the counties of Washington, Allegheny, Westmoreland, and Fayette during the late insurrection were not constitutional, and therefore not valid,” being under consideration,

It was moved that the further consideration of the resolution be postponed, in order to take the evidence of the State commissioners and to bring forward testimony of persons who were present at the election in Westmoreland County. And the question on postponing for said purpose, being put, was carried in the negative.

It was then moved that,

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Whereas, A resolution is now before the Senate which, if carried, will deprive the counties of Washington, Allegheny, Fayette, and Westmoreland of any representation in the Senate of this Commonwealth. And whereas, It would be highly improper that a partial representation should legislate for the whole State; therefore,

Resolved, That the Senate will, so soon as the said resolution is carried, adjourn to such time as will give the said four western counties an opportunity of holding elections and returning members in the stead of those now deprived of their seats, if the House of Representatives shall concur in such adjournment.

The question being put, it passed in the negative.

The question being afterwards put on the following motion, viz.:

Resolved, That, in taking the votes of the Senate on the resolution relative to the validity of the elections from the four western counties, the clerk be directed not to call the names of the members of those counties, as their representative characters are involved in the said resolution.

It passed in the affirmative.

And the original question, viz.:

Resolved, That the elections of Senators held in the counties of Washington, Allegheny, Westmoreland, and Fayette during the late insurrection were not constitutional, and therefore not valid,” again recurring,

It passed in the affirmative.

NUMBER XI.: Reasons of the vote of the subscribers on the question of the validity of the elections held in the counties of Westmoreland, Washington, Fayette, and Allegheny.

We are of opinion that the resolution adopted by the Senate is unjust, unconstitutional, and impolitic.


Because the documents upon which the decision is grounded were not legal evidence; inasmuch as they consisted only of written, vague, hearsay, and newspaper information, and it was in the power of the Senate to procure oral, direct, and positive evidence.

Because the documents produced to support the resolutions do not contain any facts subsequent to the fifteenth day of September, which was near one month previous to the election; nor does it appear by the said documents, or by any of the alleged facts therein contained, either that all the four western counties ever were declared to be in a state of insurrection, or that the majority of the inhabitants thereof ever were concerned in any insurrection, criminal combination, or illegal opposition against the laws of the Union.

Because every act of the people, or of any part of the people, of the Edition: current; Page: [66] western counties subsequent to the fifteenth day of September evinces a restoration of order and an universal determination to submit to the laws and to support the civil authority.

Because no testimony was adduced to prove that the spirit of the late insurrection had any effect on the elections; but, on the contrary, the Senators representing those counties offered to prove by evidence that the said elections were fairly conducted, and perfectly free and equal.

Because the Senate, by a positive vote, refused to hear the evidence of the commissioners appointed by the State to confer with the citizens of the western country, and also the evidence of persons (known friends to order and good government) who were present at the election of one of the said counties. And

Because there was not a single act (that might be construed as a sign of insurrection, opposition, or combination) committed in two of the western counties which did not also take place in other counties of this State; and yet the counties of Westmoreland and Fayette are included in the decision of the Senate, while those others were not even hinted at.


Because the constitution expressly declares that contested elections shall be tried by a select committee, and not by the Senate, and expressly restrains the jurisdiction of either branch of the Legislature to judging the qualifications of their members. And

Because, if this was not to be considered as a case of contested elections, it could only be a retrospective disfranchising act,—an act which was expressly forbidden by that clause of the constitution which declares that no ex-post-facto law shall be made, and which, if it could be enacted by any authority whatever, should have been the act of the Legislature, and not of a single branch.


Because there was no apparent necessity for, or advantage resulting from, the measure; but, on the contrary, at a time when the inhabitants of the western country, who might have been deluded into criminal excesses, were brought to a sense of their duty, and when the whole body of the people of Pennsylvania had manifested their determination to support the laws and Constitution of the United States, we conceived it the duty of the Legislature to conciliate, and not inflame, the minds of the citizens.

Because, by ordering special elections, in the middle of winter and at a short notice, in a country the population of which is widely scattered, any change that may take place in the representation can only be the effect of a particular party ever watchful to their own interest; and there is, therefore, a danger that the good citizens of the western counties may, for the term of four years, be unfairly and partially represented. And

Because, the Senate having refused to adjourn until new elections shall have taken place, laws passed whilst one-sixth part of the State is unrepresented Edition: current; Page: [67] may not be thought binding by those citizens who had no share in the enacting of the same; and the measure will, at least, tend to diminish that respect and obedience to the laws and government which it is so essentially necessary, under the present circumstances, to encourage and inculcate.

These, with many other reasons, have influenced our vote.

And we trust we have discharged that duty which we owe to our country and our consciences by voting and protesting against a measure which we think may be of the most pernicious and destructive consequences.

(Signed) William Hepburne,
John Kean,
Thomas Johnston,
George Wilson.

The preceding reasons of dissent were not suffered by the majority of the Senate to appear on the minutes.


The eleven members of the House and the four Senators who were deprived of their seats by virtue of the preceding resolutions have all been re-elected, except one Senator (Mr. Moore), who declined serving.

the end.
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  • Of the Revenues of the United States . . . . . page 9 [73]
  • Duties on Tonnage and Imports. . . . . . . 15 [76]
  • Internal Duties . . . . . . . . . . 28 [85]
  • Duties on Postage . . . . . . . . . 47 [96]
  • Dividends on Bank Stock . . . . . . . . ibid [97]
  • Of the Expenses of the United States . . . . . 49 [98]
  • Receipts and Expenditures to the 1st of January, 1796 . . ibid [98]
  • Of Appropriations . . . . . . . . . 67 [109]
  • Present and Permanent Expenses of the Union . . . 82 [118]
  • Of the Debts of the United States . . . . . . 87 [121]
  • Origin, Progress, and Present State of the Public Debt . . ibid [121]
  • Effects of the Public Debt, and Resources Applicable to its Redemption . . . . . . . . . . 123 [143]
    • No. I. Census of the Inhabitants of the Union.
    • II. Revenue from Duties on Imports and Tonnage.
    • III. Abstract of the Exports for Six Years.
    • IV. to VIII. Internal Duties.
    • IX. Duties on Postage.
    • X. Receipts and Expenditures to 1st January, 1796.
    • XI. Sinking Fund.
    • XII. & XIII. Domestic and Foreign Funds.
    • XIV. Receipts and Expenditures for 1796.
    • XV. Assumption of State Debts.
    • XVI. Statement of the French debt and of its extinction.
    • XVII. Statement of the Dutch debt after 1796.
    • (A) General view of Receipts and Expenditures to the 1st of January, 1796.
    • (B) Comparative view of the public debts on the first days of January, 1790 and 1796, respectively.
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The Editor of the following pages conceives it his duty to inform the public that they have been published in the absence of their Author; he has, however, paid particular care to the examination of the proof-sheets, and trusts that the work will be accurate and correct.

He also conceives it his duty to suggest that the Author is in no shape concerned in the emoluments of the publication. The copyright was generously bestowed upon the Editor, and it is entirely for his benefit and at his expense that these sheets are presented to the world.

The Editor.
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Congress, by the Constitution of the United States, have power to lay and collect taxes, duties, imposts, and excises, subject, however, to the following restrictions: 1st. All duties, imposts, and excises must be uniform throughout the United States. 2d. No capitation or other direct tax can be laid, unless the same be apportioned among the several States according to their respective numbers, which numbers are determined by adding to the whole number of free persons three-fifths of all slaves. An enumeration of the inhabitants of the Union has accordingly been made in the year 1791 (see statement No. 1), and a new one is directed, by the Constitution, to be made within every subsequent term of ten years. 3d. No tax or duty can be laid on articles exported from any State; from whence it seems to result that, whenever an internal duty is laid upon the manufacture of any article, it must not extend beyond the home consumption of that article, and an equivalent drawback must be allowed on its exportation.

The power of laying duties on tonnage and imports belongs exclusively to the government of the Union. The several States are also precluded from laying duties on exports; they have within their respective jurisdictions a concurrent power with Congress to lay any internal taxes, duties, and excises. But they seem to be virtually precluded from laying duties Edition: current; Page: [74] upon the manufacturers of any article, the consumption of which they may wish to tax; for as they cannot lay any duty on the importation, within the State, of any article, a tax upon their own manufacture would have no other tendency but to destroy it. Whenever, therefore, a State shall resort to duties upon consumable commodities, they must be laid not on the manufacturers, but on the retailers or consumers of the commodity.

The United States have, heretofore, raised a revenue by those duties and taxes only which they have conceived to fall within the description of indirect taxes. A controversy, indeed, has taken place on the subject of a tax laid upon the owner of every carriage used for the conveyance of persons, which, by some, was deemed to be a direct tax. One of the most important consequences flowing from the principle of a Constitution binding the different branches of government has been, in some instances, not a limitation of the powers of government, but a transfer of those powers from the legislative to the judiciary department. For the judges have exercised in all doubtful cases the authority to explain the Constitution, as they explain the laws, and to decide, even in cases of taxation, whether a law was constitutional or not, valid or a dead letter. Their decision on the carriage-tax, which was brought before them by the refusal of an individual to pay, accorded with the opinion of the Legislature. A less vague expression than that of “direct” might have been used in the Constitution; as it now stands, it is difficult to affix to it any precise and determinate meaning. The word, in itself, does not express a positive or absolute qualification, but only the relation of a subject to another. The Constitution mentions only one of the subjects, but does not say in relation to what other subject taxes are to be considered as direct. The direct tax is that which falls directly,—but upon what? On the person who pays it? On the article taxed? On that general fund intended to be taxed? The Constitution is silent on that head. Nor has the word any general acceptation or technical meaning. It is used, by different writers, and even by the same writers, in different parts of their writings, in a variety of senses, according to that view of the subject they were taking.

The most generally received opinion, however, is, that by Edition: current; Page: [75] direct taxes in the Constitution, those are meant which are raised on the capital or revenue of the people; by indirect, such as are raised on their expense. As that opinion is in itself rational, and conformable to the decision which has taken place on the subject of the carriage-tax, and as it appears important, for the sake of preventing future controversies, which may be not more fatal to the revenue than to the tranquillity of the Union, that a fixed interpretation should be generally adopted, it will not be improper to corroborate it by quoting the author from whom the idea seems to have been borrowed. Dr. Smith (Wealth of Nations, Book v., Chap. 2) says: “The private revenue of individuals arises ultimately from three different sources,—rent, profit, and wages. Every tax must finally be paid from some one or other of those three different sorts of revenue, or from all of them indifferently.” After having treated separately of those taxes which it is intended should fall upon some one or other of the different sorts of revenue, he continues: “The taxes which it is intended should fall indifferently upon every different species of revenue, are capitation taxes and taxes upon consumable commodities. These must be paid indifferently from whatever revenue the contributors may possess.” And, after having treated of capitation taxes, he finally says: “The impossibility of taxing the people in proportion to their revenue by any capitation seems to have given occasion to the invention of taxes upon consumable commodities. The State, not knowing how to tax directly and proportionably the revenue of its subjects, endeavors to tax it indirectly by taxing their expense, which it is supposed will in most cases be nearly in proportion to their revenue. Their expense is taxed by taxing the consumable commodities upon which it is laid out.” The remarkable coincidence of the clause of the Constitution with this passage in using the word “capitation” as a generic expression, including the different species of direct taxes, an acceptation of the word peculiar, it is believed, to Dr. Smith, leaves little doubt that the framers of the one had the other in view at the time, and that they, as well as he, by direct taxes, meant those paid directly from and falling immediately on the revenue; and by indirect, those which are paid indirectly out of the revenue Edition: current; Page: [76] by falling immediately upon the expense. It has, indeed, been held by some that “direct taxes” meant solely that tax which is laid upon the whole property or revenue of persons, to the exclusion of any tax which may be laid upon any species of property or revenue. An opinion equally unsupported by the vulgar or any appropriate sense of the word itself, and contradictory to the very clause of the Constitution, which, instead of admitting only one kind of direct tax, expressly recognizes several species by using the words “capitation or other direct tax,” and “direct taxes.”

Should those considerations be thought correct, it results that all taxes laid upon property which commonly afford a revenue to the owner (whether such property be in itself productive or not) in proportion to its value, are direct; a class which will include taxes upon lands, houses, stock, and labor; all of which, therefore, must, when laid, be apportioned among the States according to the rule prescribed by the Constitution.

The present revenues of the United States arise from

1st. External duties on tonnage and imports.

2d. Internal duties on domestic distilled spirits, on snuff and refined sugar manufactured within the United States, on sales at auction, on retailers of wines and foreign spirits, and on carriages used for the conveyance of persons.

3d. Postage of letters.

4th. Dividends on the shares owned by the United States in the stock of the Bank of the United States.


The statement No. II. exhibits the yearly amount from the establishment of the present government to the first day of January, 1795, of the revenue arising from those duties, of the deductions for drawbacks, bounties, and expenses of collection, of the actual receipts in the Treasury, and of the balances outstanding. The accounts for the year 1795 are not yet published, but the actual receipts, on account of those duties, amounted for that year to dollars 5,588,96126/100. The total amount of receipts from the first of August, 1789, when the duties were first laid, to the first of January, 1796, is dollars 22,755,99882/100.

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The duties on tonnage are, upon vessels of the United States, six cents, and upon foreign vessels fifty cents per ton. The tonnage of American vessels entered into the United States (including coasting and fishing vessels) amounted, in the year 1790, to 486,890 tons; in the year 1792, to 567,698 tons; in the year 1794, to 745,595 tons. The tonnage of foreign vessels during the same years amounted respectively to 250,746, 244,278, and 84,521 tons; of which Great Britain owned in the same years respectively 216,914, 206,065, and 37,058 tons. The amount of duties has decreased in proportion to the increase of the American tonnage. In 1792 they amounted to near 160,000 dollars; in 1794 they hardly exceeded 80,000. The great diminution of foreign tonnage being chiefly owing to the present European war, it is probable that it will again increase on the return of peace; and those duties may, therefore, be fairly stated as a permanent revenue of dollars 100,000.

Having mentioned the American tonnage entered in the United States and paying duty, it is proper to add that that amount includes the repeated voyages, in each year, of all vessels employed in a foreign trade; and that the actual American tonnage, at the close of the year 1794, was 628,618 tons; 438,863 whereof were employed in the foreign trade, 162,579 in the coasting trade, and 27,176 in the whale and cod fisheries: which, at the rate of six men for every hundred tons employed in the foreign and coasting trade, and of twelve men for every hundred tons employed in the fisheries, would make an aggregate of near forty thousand seamen. It must, however, be observed that this account of tonnage includes a great number of American vessels detained in foreign countries, and that a considerable deduction in the amount both of vessels and of seamen, which, for want of proper materials, cannot be calculated, has been the consequence of the depredations committed on our commerce by the belligerent, or rather by one of the belligerent, powers.

The duties on imports constitute by far the greater proportion of the whole amount of the revenues of the Union; they have been increased from time to time to their present rate, and the last law for that purpose being in operation only from the first of July, 1794, the accounts for that year and the receipts for Edition: current; Page: [78] the year 1795 do not afford sufficient data whereupon to ground a correct estimate of the permanent revenue to be derived from that source. As all the duties paid on any article are repaid upon the re-exportation of the same, except one per centum on the amount of the said duties, the greatest difficulty in forming an estimate arises from the unusually large quantities of West India produce which have lately been imported into the United States. The duties which have been either paid or secured on the whole quantity constitute a part of the receipts of the Treasury, or of the gross amount of revenue exhibited in the official statements, although a large proportion must be repaid, in the shape of drawbacks, upon the re-exportation of whatever has been imported beyond the demand of the country. Until better materials can be obtained, the following estimate, calculated on what, from a comparison of the importations and re-exportations for the four last years, appears to be the present average rate of the annual consumption of the dutied articles, is offered, less as an accurate statement than as an attempt to class the different branches of this revenue:

1 Spirits distilled within the United States from molasses pay a double duty, viz., an impost of three cents on each gallon of molasses imported, and an internal duty or excise of ten cents on each gallon of spirits distilled. Both are repaid on the exportation of the article. Three cents of the drawback paid on each gallon exported are, therefore, a deduction of the gross amount of the duties paid on the importation of molasses, and the remaining ten cents are a deduction of the gross amount of the excise.
Carriages, and glass manufactures, other than those of black bottles and window-glass, valued at 300,000 dollars, and paying a duty of 20 per cent., ad valorem 60,000
All brass, copper, steel, iron, tin, pewter, leather, and starch manufactures; china, earthen, and stone ware, window-glass; millinery and perfumes; plate and jewelry; clocks and watches; carpeting; hats and caps; stockings; gloves; buttons; buckles; saddlers’ and upholsterers’ trimmings; paper-hanging; sheathing- and cartridge-paper; cabinet-ware; painters’ colors; medicinal drugs; oil, fruit, and groceries, not otherwise enumerated: valued at 5,300,000 dollars, and paying a duty of 15 per cent., ad valorem 795,000
All linen or cotton manufactures, either printed, stained, or colored; nankeens; wood manufactures: valued at 3,600,000 dollars, and paying a duty of 12½ per cent., ad valorem 450,000
All articles not otherwise enumerated, and consisting chiefly of linen and cotton manufactures, neither printed, stained, or colored; velvets and velverets; silk, woollen, and paper manufactures; clothing ready-made; brushes; canes; saddles; black glass bottles; lampblack; anchors, hinges; locks, hoes, anvils, and vises: valued at 10,700,000 dollars, and paying a duty of 10 per cent., ad valorem 1,070,000
N.B.—Books, clothes, furniture, and tools of persons migrating to America; philosophical apparatus imported for the use of any seminary of learning; bullion; copper, old pewter, and tin in pigs; brass and iron wire; wool; wood; dyeing drugs and woods; furs and hides; lapis calaminaris; plaster of Paris; saltpetre and sulphur, are duty free.
Wine, 1,800,000 gallons, paying either a specific duty of 20 to 50 cents per gallon, or 40 per cent., ad valorem 480,000
Spirituous liquors, 5,100,000 gallons, paying 25 to 46 cents per gallon 1,450,000
Molasses, 3,500,000 gallons, paying 3 cents per gallon, would amount to 105,000 dollars; but from this sum must be deducted the drawbacks allowed upon the exportation of domestic distilled spirits, which, on the estimated quantity of 266,667 gallons exported, amount to 8000 dollars,1 and leave 97,000
Beer, ale, and porter, 250,000 gallons, at 8 cents per gallon 20,000
Tea, 2,520,000 pounds, paying from 10 to 50 cents per pound 310,000
Coffee, 3,000,000 lbs., at 5 cents per pound 150,000
Sugar, 24,000,000 lbs., paying from 1½ to 9 cents per lb. 390,000
Indigo, cocoa, pepper, pimento, and cotton, paying respectively a duty of 25, 8, 6, 4, and 3 cents per lb. 100,000
Salt, 2,950,000 bushels (estimating the bushel at 56 lbs.), at 12 cents a bushel, would amount to 354,000 dollars; but from this sum must be deducted the drawback allowed upon the exportation of salted fish and provisions, which, as hereafter explained, may be estimated at 84,000 dollars, and leaves 270,000
Lead and lead manufactures; steel unwrought; spikes and nails; the last of which articles pays 2 cents, and the others 1 cent. per lb. 70,000
Hemp and cordage; the first of which articles pays 1 dollar, and the other from 1 dollar 80 cents to 4 dollars per quintal 100,000
All the other articles paying specific duties, viz.: cheese at 7 cents, soap and candles at 2 cents, snuff at 22 cents, and manufactured tobacco at 10 cents a lb.; boots at 75, and shoes at 10 to 25, cents a pair; playing-cards at 25 cents per pack; wool and cotton cards at 50 cents a dozen; coal at 5 cents per bushel, and Glauber salts at 2 dollars per quintal 43,000
Additional duties paid on articles imported in foreign vessels, various, but not exceeding 10 per cent. upon the usual duty on such articles 75,000
Making altogether for duties on imports 5,930,000
To which sum, adding the duties on tonnage as per above 100,000
Gives for the gross amount of duties on tonnage and imports 6,030,000

From which gross amount must be deducted the expenses paid out of the same, in order to obtain the net revenue. These, Edition: current; Page: [81] strictly speaking, are only the expenses of collection charged to the revenue, and amounting to 220,000 dollars, which, therefore, leaves a net revenue of 5,810,000 dollars. But as there are some bounties to the fisheries, which, although in fact they are expenditures, are not paid out of the Treasury, but are discharged by the collectors of customs, it has been usual to deduct them also from the gross amount of revenue, instead of charging them as an expenditure to the net revenue. Exclusively of the bounties of 18 cents per barrel of pickled fish, and of 15 cents per barrel of salted provisions, exported, which may be considered merely as a drawback of the duty upon the salt used in preserving the same (which bounties, on our present rate of exportation of those articles, may be estimated at 34,000 dollars), an allowance from one to two dollars and an half per ton is made to vessels employed in the cod fisheries, in lieu of drawback upon the exportation of dried fish. Those allowances amount to about 90,000 dollars, and as the quantity of dried fish exported does not exceed 400,000 quintals, a drawback of the actual duties paid on the salt used in preserving the same would not exceed 50,000 dollars,1 and the remaining 40,000 dollars are not a drawback, but an actual bounty upon the fisheries. This last sum deducted from the above-stated sum of 5,810,000 dollars leaves for the net revenue, on the principles upon which it is usually settled at the Treasury, 5,770,000 dollars.

The expenses of collection, payable out of the revenue, and consisting of salaries and commissions, have been stated at 220,000 dollars; but to these must be added the amount of fees paid by individuals, which are not charged to the revenue. These may be estimated at 80,000 dollars, which, added to the above sum of 220,000 dollars, form an aggregate of 300,000 dollars for the total expense of collecting the duties on imports and tonnage. That sum of 300,000 dollars upon a gross revenue of dollars 6,110,000 (by adding the 80,000 dollars fees to the Edition: current; Page: [82] sum of 6,030,000 dollars herebefore stated as the total amount of gross revenue on tonnage and imports) makes the expense of collection something less than 5 per cent. on the gross sum paid by the people.

The duty on salt is the only one amongst those above mentioned which seems to have been objected to. It is not at present very heavily felt, and may even be deemed moderate when compared to the revenue raised on the same object in some other countries. Yet it is proper to observe that it is already higher in proportion to the value of the article than that paid upon any other, and that whatever impediment may exist in the way of its repeal, from the difficulty of finding a substitute for a tax already established, it would be equally unjust and impolitic to raise this above its present rate. So far as the article is consumed by man, it is a species of poll-tax, which falls equally upon every one, whether poor or rich; so far as it is consumed by cattle, it is a tax upon agriculture, and would prove pernicious was it ever increased so high as to check its use.

An examination of the importations for four years past affords satisfactory proofs that, notwithstanding the gradual increase of duties, they have been faithfully paid, and that the frauds so usually committed upon the fair trader and the public in countries where a large revenue is derived from customs have been comparatively few in the United States. The whole amount of fines and forfeitures incurred for a period of five years and an half for breaches of the laws of a revenue, which during the same time has produced to the Treasury a net sum of seventeen millions of dollars, does not much exceed 9000 dollars. There seems to be but one exception to that general conclusion. From a view of the importation of teas, it would seem that the consumption of hyson tea (after the proper deductions for re-exportation) in the years 1793 and 1794 was but one-half of the consumption of the years 1791 and 1792. The temptation offered by the high duty and by the small bulk of the article points out the true remedy, viz., a decrease of the duty.

The produce of duties on consumption naturally increases with population, and it might, on first view, be inferred that if Edition: current; Page: [83] the last doubles in the United States every 23 or 24 years, the first must receive a gradual proportionate increase of about three per cent. a year. Upon the same principle, it might be expected that those duties which in 1796 are supposed to produce a net revenue of 5,800,000 dollars would in the year 1801 yield about 6,700,000 dollars, or an increase of near 16 per cent. Some obvious considerations will, however, show the fallacy of that calculation.

The exports of the United States, in articles of their own growth or manufacture, are greater, in proportion to their population, than those of any other nation. After every deduction for re-exportation of imported articles, and for the extraordinary prices lately obtained for provisions, they may be valued at twenty millions of dollars at least. Those of France, with a population seven times as great as that of America, did not exceed, exclusively of the produce of their colonies, forty millions of dollars. There is good reason to believe that those of the actual growth or manufacture of Great Britain, with a population treble of ours, a superior industry, and an immense capital, although sometimes rated higher, cannot exceed fifty millions of dollars. The cause is well known to be the physical situation of the United States. Possessed of more land, in proportion to their numbers, than any European nation, their labor has been, in general, more advantageously applied to the cultivation of those lands, and to the raising large quantities of the produce of land, than it would have been to the manufactures. As, however, every further increase of population in many of the States diminishes the relative quantity of land and of produce raised, and promotes the establishment of manufactures, our exports of raw materials, our importations of those articles we can manufacture, and the revenue raised upon those articles, although all of them gradually augmenting, will, unless favored by accidental causes, increase in a ratio less than our population. Thus, although our numbers have doubled between the years 1770 and 1793, the quantity of exports is supposed to have increased only about fifty per cent. during the same period. A view of the exports of articles of our own growth or manufacture for the last six years showeth that upon an average, although Edition: current; Page: [84] the demand never was so great, the quantity exported has been nearly stationary. (See Statement No. III.)

The natural causes which may thus check the increase of our exports and of our revenue upon importations will not, however, diminish the progress of our wealth, and of our capacity of raising a proportionably large revenue from any other source. But another consideration, of greater importance for the present, must be attended to. The value of the exports of the two years 1794 and 1795 was 80,000,000 of dollars, and of the two years 1791 and 1792 did not amount to 40 millions. That prodigious augmentation cannot be viewed as permanent, unless owing to an increase of the quantity of articles of our own growth or manufactures that were exported. But it has already been stated that that quantity has received but a trifling addition, if any, since the former period. That increase is due to mere temporary causes, the first arising from an advanced price of perhaps forty per cent. upon the total amount of our exports beyond their usual value; the second, from our having become the carriers of a large proportion of the produce of some of the West India Islands. Those two items, both of which are owing to the present European war, constitute nearly one-half of the value of our exports for the two last years. A view of the statement No. III. will show that the total amount of our re-exportations of imported articles for those two years exceeded 25 millions of dollars. The profit made upon those articles, of which we have thus become the venders and the carriers, and the whole of the advanced price upon articles of our own growth, have been to us a sudden acquisition of wealth. Whilst it lasts we are enabled to pay for a larger quantity of foreign luxuries, we import more, we consume more, and the revenue receives a temporary increase. The return of peace, as it will diminish our profits, the value of our exports, and our ability of paying, will also diminish our consumption, our importation, and our revenue. It is not within the reach of calculation to conjecture how powerfully that cause will operate; but it is highly probable that for some years it will at least counterbalance, if it does not exceed, any increase to be derived from the gradual augmentation of our population.

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The duties on domestic distilled spirits, which when first laid, in the year 1791, were eleven cents per gallon upon spirits manufactured from foreign materials (molasses), and nine cents upon those manufactured from domestic materials (grain and fruit), are now ten and seven cents respectively upon the lowest proof of the two species, and rise as high as twenty-five and eighteen cents upon the highest proof. Country distillers, employed in distilling spirits from domestic materials, have the option to pay the above-mentioned duty, or to pay either a yearly duty of fifty-four cents or a monthly duty of ten cents for every gallon of the capacity of their stills.

The statement No. IV. exhibits the yearly amount of the revenue arising from those duties, so far as the accounts have been settled at the Treasury. The accounts for the half year 1791 and the year 1792 are settled for all the States,1 Pennsylvania and Kentucky excepted. For the subsequent years they are but very imperfectly settled, and that document throws no other light on the subject but by accurately stating the actual receipts in the Treasury and the drawbacks obtained for exportation. It thereby appears that the total sums paid by the supervisors, from the first of January, 1792, to the first of January, 1795, amount to dollars 820,73813/100, and that the total amount of drawbacks paid during the same period upon the exportation of domestic distilled spirits amounted to dollars 268,12188/100; deducting from this last sum that part of the drawbacks which is repaid on account of the duty upon the importation of the molasses (viz., three cents per gallon), will leave dollars 208,49642/100 for the part of the drawbacks paid on account of the duty raised on the distillation itself. This last sum subtracted Edition: current; Page: [86] from the dollars 820,73813/100 paid by the supervisors leaves, for the net receipts in the Treasury from that duty, dollars 612,24171/100 for a period of three years, or something more than 200,000 dollars a year. The payments made in the Treasury by the supervisors for the year 1795 were dollars 337,25536/100. But from that sum must be deducted the drawbacks, estimated at dollars, 26,66667/100; the balance, consisting of about 310,000 dollars, includes the receipts on account, not only of the duties on distilled spirits, but also of all the other internal duties. These last are stated to have produced for the year ending on the 30th September, 1795, a gross revenue of dollars 170,000; but what proportion of the same had actually been paid in the Treasury before the 1st of January, 1796, and should therefore be deducted from the above 310,000 dollars in order to obtain the true receipts on account of distilled spirits for the year 1795, is not ascertained. The statement No. V., grounded partly on settled accounts and partly on estimates, showeth the yearly gross amount of the duties, after deducting the drawbacks which accrued from the 1st of July, 1791, to the 1st July, 1795, upon spirits distilled in cities, towns, and villages, and those distilled in the country. These last may, without any material error, be reckoned as being the amount of spirits distilled from domestic materials, the first as the amount of spirits distilled from foreign materials.

It thence appears that the yearly gross amount of duties upon domestic spirits distilled from foreign materials (continental rum) has decreased from 223,000 to 109,000 dollars; or that the consumption of that article has, within a period of four years, diminished from about two millions of gallons a year to about one million of gallons only. That decrease is owing to the situation of the West India Islands, from whence the molasses were usually imported. The average annual quantity imported in the year 1790 and 1791 was nearly 6,650,000 gallons. The quantity imported in the year 1794 did not amount to 3,500,000 gallons. It is impossible to form any conjecture on the future situation of the French West India colonies, and, of course, on the future extent of the manufacture in America. Whatever it may be, the revenue will not be affected by that circumstance, Edition: current; Page: [87] and it will produce no material change in the quantity of spirits consumed. Whilst the consumption of home-made rum was decreasing by one million of gallons, the importation and consumption of foreign spirits increased to an equal amount, viz., from 4,100,000 gallons, the average annual consumption of the years 1790, 1791, and 1792, to 5,100,000 gallons, the present average annual consumption. It is proper to add that this branch of the revenue appears to have been overrated before the duty was laid; as the estimate was predicated on a supposed consumption of 3,500,000 gallons, whilst it appears that notwithstanding the very great importations of molasses in the years 1790 and 1791, the quantity distilled for consumption during the year ending on the first of July, 1792, did not amount to 2,100,000 gallons.

The gross amount of duties upon spirits distilled from domestic materials for the year ending on the 1st of July, 1792, was only 66,000 dollars. The open opposition in one quarter, and the general unpopularity of the tax almost everywhere, prevented an early and complete organization. It has not yet extended to the States of Kentucky and Tennessee, and is susceptible of a further increase in the State of North Carolina and in some parts of South Carolina. It never was carried into full operation in any part of the State of Pennsylvania till very lately, and the advanced price of grain has generally checked the distillery. Yet the statement exhibits an amount of gross revenue of 160,000 dollars for the year ending on the 1st of July, 1795. The increase it may receive from its general extension and complete organization may be estimated at 30,000 dollars more. The gross amount, therefore, of the revenue arising from the duties on spirits distilled both from foreign and domestic materials will be stated at 299,000 dollars (although for the year ending on the 1st of July, 1795, it was only 269,000), from which must be deducted the expenses of collection.

The statement No. VI. exhibits in detail the gross amount of the revenue derived from the duties on spirits distilled both from foreign and domestic materials, for the year ending on the last day of June, 1795, the deductions to be made for the expenses of collection and the net revenue remaining. The gross Edition: current; Page: [88] revenue stated as per above at 269,000 dollars, the expenses at 70,000 dollars, or 26 per cent. on the gross amount of revenue, and the net revenue at 199,000 dollars. There are no materials from whence the expenses of collection for the preceding years can be accurately calculated. Those for that year are grounded upon an official statement laid before Congress during the last session. It appeared by that document that all the internal duties are collected by 16 supervisors, 22 inspectors, 236 collectors (14 of whom are also officers of the revenue of impost and tonnage), and 63 auxiliary officers,—in all 337; and that the whole amount of expenses of collection, calculated on the actual gross amount of revenue for the year ending on the last of June, 1795 (except in the case of spirits distilled from domestic materials, the duties whereon are estimated at 218,000 dollars instead of 160,000), is nearly 85,000 dollars. Deducting from this sum the compensations now allowed by law for the collection of the five other internal duties and the additional expense of collecting the extra sixty thousand dollars estimated in the document beyond the actual amount of the revenue on domestic distilled spirits, leaves the amount of expenses as above stated, viz., 70,000 dollars. Should the revenue receive the increase above mentioned of 30,000 dollars on spirits distilled from domestic materials, the expenses of collection would amount to 76,000 dollars on the gross revenue heretofore stated of 299,000 dollars, that is to say, 25⅓ per cent., and leave a net revenue of dollars 223,000.

Those calculations are made as if the duties on spirits were collected alone, a mode which is adopted to show the true situation of that revenue considered in itself, and also because it is a permanent one, whilst the other five new duties are temporary, and will expire in 1801. The compensation now allowed by law for the collection of these does not exceed 4 per cent. upon the whole; but it is believed that, were they collected alone and independent of those on spirits, the expense would be about 7½ per cent. A part, therefore, of the present expense of collecting all the internal duties may be viewed as common to both classes; as each, separately, would cost more to collect than they now do. Taking this into consideration, and, on the other hand, adding to the expenses those of the office of the commissioner of the revenue Edition: current; Page: [89] which are not included in the above aggregate, would reduce the present expense of collecting the duties on domestic spirits to about 24½ per cent. instead of 25⅓ per cent. on the gross revenue.

The duty upon spirits distilled from domestic materials, being collected upon a very large number of manufactures scattered over an extensive and, in a great degree, thinly-settled country, costs much more than that which is raised on spirits distilled from molasses; this last manufacture being carried on by a few individuals on a large scale, and almost solely in a few seaports. From a comparison of the revenue collected in Rhode Island and Massachusetts, whose distilleries, especially in the first-mentioned State, are almost exclusively employed in the distillation of molasses, with the expense attending the collection of the same, it results that the total expense of collecting the gross revenue of 109,000 dollars raised on spirits distilled from foreign materials amounts to 16,000, that is to say, to 14½ per cent., and leaves a net revenue of 93,000 dollars. The expense of collecting the gross revenue raised upon spirits distilled from domestic materials amounts, therefore, for the year ending on the last of June, 1795, to 54,000 dollars on the gross sum of 160,000, that is to say, to near 34 per cent., leaving a net revenue of 106,000 dollars; and, on the supposition of the contemplated increase of 30,000 dollars, may amount to 60,000 dollars upon the gross sum of 190,000, that is to say, to 31½ per cent., leaving a net revenue of 130,000 dollars, which, added to the net revenue of 93,000 on spirits distilled from foreign materials, form the above-stated aggregate of 223,000 dollars. If the expense of collecting the duties on spirits distilled from domestic materials is contemplated, as connected with that of collecting all the other internal duties, it will appear to be, upon the principles of the calculation of the last paragraph, something more than 30 per cent instead of 31½.

It requires no argument to show that a tax the collection of which costs more than 30 per cent. is a bad one, and no doubt could remain of the propriety of repealing it and substituting any other in its stead, was it not viewed as connected with the impost upon imported spirits. It must be recollected that the Edition: current; Page: [90] revenue derived from these amounts to near one million and a half of dollars; and there can be no doubt that it would be, in some degree, affected by a total exoneration of the tax now paid on the domestic manufacture. It may therefore be more advisable, under the present circumstances, to modify the most exceptionable part of the law,—that which relates to spirits distilled from domestic materials. The most eligible mode of doing it that has been suggested is to lay a moderate monthly or yearly duty on stills, proportionate to their capacity, repealing altogether the option now given by law to pay in proportion to the quantity distilled. It is believed that the following valuable purposes will be answered by that change. The difficulty of discovering the quantity of spirits manufactured naturally causes evasions of the duty equally injurious to the revenue, to the fair trader, and to the morals of the people. A premium, indeed, seems to be offered by the present law to those who shall violate their oaths; a temptation perhaps too strong to be always resisted by all the individuals of the numerous class of people to whom it is presented. To prevent those evasions it becomes necessary to create a number of officers proportionate to the extent of territory, to the number of manufacturers, and to the duties to be performed by those officers; to invest them with extensive powers, and to subject the manufacturer to a vexatious but necessary inquisition. But it is very easy to know whether a man does distil or not, however difficult it may be to find out what quantity of spirits he does distil. The number of officers need, therefore, be comparatively few; the duties and the time employed by those whom it will be necessary to keep will be considerably lessened. Every distiller feels interested that the duty be paid by all; on the present plan he can by no means check the frauds committed by others; on the plan proposed he will contribute to secure the public against them. In every point of view the expense of collection will be diminished: evasions of the duty will become almost impossible, and the distiller, after having paid for his license, will be liberated from the visits of the officers and from the duty now imposed on all, however inconvenient to many, of keeping correct books and accounts. The only objection to the adoption of this mode (which is now before Congress) Edition: current; Page: [91] is a fear of its being unequal. It will fall more heavily upon small stills, which are commonly owned by men of less capital and used in less advantageous situations. This, however, may be remedied by making the duty something less, in proportion to their capacity, upon stills under a certain dimension. It may be further observed that, however improper and dangerous it may be for government to pass laws with a view of giving a certain direction to industry and capital, it cannot be doubted that the effects of a provision which tended gradually and without any injury to the property now vested in that species of property to diminish the immense number of small distilleries would prove favorable to the general wealth and to the morals of the community. The same quantity of labor produces perhaps a double quantity of spirits in large than in small distilleries; and if these may sometimes fall under the favorable denomination of family manufactures, that advantage is more than counterbalanced by their becoming the tippling-houses of every neighborhood where they prevail. Such provision in this last point of view, a desire of checking the consumption of spirits, would prove far more effectual than a high duty. Six millions two hundred thousand gallons of spirits distilled, either in the United States or abroad, from foreign materials, and near four millions of gallons1 distilled from grain and fruit, offer the enormous and lamentable aggregate of ten millions of gallons of spirits annually consumed by the inhabitants of the United States. This consumption has not received any decrease from the high duty of 25 cents per gallon laid on the lowest proof of imported spirits; and it must be well remembered that the object of government in laying these and other duties on spirits was not to check the use, but to raise money; and that if experience was to show that they become prohibitory and diminish the consumption, an attempt to lower them, in order to encourage that consumption and to increase the revenue, would probably follow.

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The duty upon retailers of wines and foreign spirits consists of five dollars a year for a license to retail either, and must be paid by all persons (other than tavern-keepers and apothecaries) selling wines in less quantities than thirty gallons, or spirits in less quantities than twenty gallons. Its produce for the year ending on the last of September, 1795, is stated at 54,731 dollars; but, on account of sundry imperfect statements, may be fairly estimated at 60,000 dollars, the expenses of collection at 2½ per cent., or 1500 dollars, and the net revenue at dollars 58,500.

The object of a duty upon the retailers of any article of consumption which is already taxed is to increase that tax; but, by dividing it, to diminish the temptation of smuggling and the evasions of the duty. The duties upon the importation of wines and spirits amount to nearly 2,000,000 dollars. The 60,000 dollars added by way of license make only an additional three per cent. on the duty, not one per cent. on the article. It does not seem that so trifling an addition, less than one cent. per gallon upon articles which pay at least twenty-five, could possibly encourage smuggling. As the duty upon licenses falls in a very unequal manner, being indiscriminately paid by all retailers, whether they sell much or little, and operates partly as a tax upon consumption and partly as a premium to large retailers, it appears that the sum which it now yields would be more justly and as conveniently raised upon the importation of the article. This revenue, however, may be rendered more productive by increasing its rate in such a manner as to equalize the duty.

The duty upon sales at auction, which varies from a quarter to a half per cent., is stated to have yielded, for the same year, 31,290 dollars, and, on account of imperfect statements, may be estimated at 35,000 dollars, the expenses of collection at two and a half per cent., or 875 dollars, the net revenue at about dollars 34,000. This duty falls almost entirely upon the same articles which pay a duty upon importation, with this difference, that the one falls equally upon the consumer, and the other, in the most unequal manner, on the importer or some other dealer who Edition: current; Page: [93] finds himself compelled to raise money. Its productiveness must chiefly depend on the fidelity of the auctioneers themselves, and the most trifling addition to the duty paid on importation would supply its room.

The duty of two cents per pound upon sugar refined within the United States is stated to have yielded, for the same year, 33,812 dollars; but on account of imperfect statements may be estimated, after deducting drawbacks, at 40,000 dollars, the expenses of collection at 5 per cent., or 2000 dollars, and the net revenue at dolls. 38,000. The manufacturers, assisted by the high duty upon the importation of the article, supply the whole consumption of the United States.

The tax upon snuff manufactured within the United States was first laid on the quantity manufactured, at the rate of eight cents per pound, and during the six months ending on the last day of March, 1795, while it remained in that shape, is stated to have yielded only 2400 dollars; in which account, however, are not included the returns for the first survey of Pennsylvania and for the State of Delaware, which pay about one-half of the duty. From the first of April, 1795, the tax has been laid on the mills employed in the manufacture, and is stated, for the six following months, to have produced 7112 dollars; but on account of deficient statements may be estimated for one year at about 20,000 dollars. But during the same period the drawbacks allowed, at the rate of six cents per pound, seem to have exceeded the amount of gross revenue. From the first of April, 1795, to the 23d of February, 1796, there were exported from the port of Philadelphia alone 237,000 lbs., and, from the shipments then going on, there is little doubt that the quantity exported from that port for the whole year, ending on the first of April, 1796, amounted to 350,000 lbs.; the drawbacks whereon would form a sum of 21,000 dollars. The exportation Edition: current; Page: [94] from the other ports is not published, but it would probably swell the sum beyond 25,000 dollars. The quantity exported was even increasing, for of the above 237,000 lbs. only 75,000 were exported during the first six months, and 162,000 during the five last. In fact, snuff was manufactured for exportation for the sake of the drawback, which operated as a bounty. An alteration in a revenue law, which thus drained the Treasury instead of yielding a revenue, became necessary. The difficulty of rendering the duty equal, on account of the great difference in the relative situation and powers of the mills, the consequent complaints of the small manufacturers, the necessity of allowing a drawback upon the exportation of an article both of the growth and of the manufacture of the United States,1 the impossibility of fixing a drawback on the quantity of the article proportionate to the duty laid on the machinery employed in manufacturing that article, together with the evasions stated to have taken place by hand-mills employed in vaults, where the noise could not be heard, determined Congress, during last session, to suspend the law for one year. As the suspension may continue, and as, unless an entirely new plan is proposed and adopted, this duty cannot yield anything, it cannot at present be counted amongst the productive branches of revenue.

The yearly duty upon carriages used for the conveyance of persons, which at first was from one to ten dollars, according to the species of carriages, is stated to have yielded for the year 1794-1795 the sum of 41,400 dollars. But some returns are not included in that statement; the controversy occasioned by the tax has probably rendered it less productive, and the duties Edition: current; Page: [95] have been increased about 50 per cent. during the last session of Congress. The produce of this duty may therefore be stated at 60,000 dollars, the expenses of collection at 3000 dollars, or 5 per cent., and the net revenue at dollars 57,000.

The controversy just alluded to has already been mentioned. This tax differs from others upon consumable commodities, 1stly, in that it is not paid once for all, but yearly, being laid on the use and not on the consumption properly so called; and, 2dly, because it is paid immediately by the person on whom it finally falls, instead of falling upon him indirectly through the medium of a tax upon the manufacturer,—circumstances which give it the appearance of a direct tax. If, however, the principles upon which a definition of direct taxes has been attempted are correct, this tax will be found to be indirect, as it falls altogether upon an article of expense and not of revenue. For in the only instance where a carriage affords a revenue to the owner, viz., when it is kept for hire, the tax is not paid by him, but by those who consume, who use, who hire the carriage. In that it essentially differs from a tax upon houses, which it has been thought in some particulars to resemble. A house, indeed, is not a productive article in itself; it is an object of expense and not of revenue to him who enjoys it; but it is not less an article of revenue to the owner; and as, except in a few particular cases, the demand for houses regulates the rent and cannot be affected by the tax, this almost universally actually falls upon the owner and not upon the tenant, upon the revenue and not upon the expense. The duty upon stills, proposed as a substitute in toto for that upon spirits distilled, might, perhaps, upon a first view, be deemed a direct tax, as falling upon a productive article; but in this case the still is only used as the means of ascertaining the quantum of duty, and the tax does not fall on the profits of the distiller, on his revenue, but on the consumer of the spirits distilled, on his expense. A tax upon all articles of visible property, assessed in proportion to its value, or to the rent derived from it, and which would include stills, would, however, it seems, be a direct tax. A want of precision in the expression itself, and the difficulty of distinguishing, in all cases, articles of revenue from articles of expense, render it, however, Edition: current; Page: [96] perhaps impossible always to ascertain whether a tax is direct or not; and it will be more prudent in practice to raise, as direct and indirect taxes respectively, only such as clearly come within that denomination under which the Legislature of the Union shall class them, and to leave those of a doubtful nature to the individual States.

The statement No. VII. exhibits a view of all the internal duties for the year 1794-1795; the gross revenue amounting to 425,700 dollars, the expense of collection to 76,650 dollars, or 18 per cent., and the net revenue to 349,050 dollars.

The statement No. VIII. exhibits a view of the same revenue, according to its probable productiveness hereafter. The gross revenue is there stated at 494,000 dollars, the expenses of collection at 83,375 dollars, or 17 per cent., and the net revenue at 410,625 dollars. The permanent revenue from internal duties will, therefore, be estimated at . . . dollars 410,000


The statement No. IX., which exhibits a view of this branch of the revenue, requires no explanation. The gross amount is yearly increasing, and the greatest part of the surplus is commonly appropriated in extending the benefits of the institution through those parts where a scattered population could not support the expense. It still leaves a net revenue of about dollars 30,000. The expenses of institution cannot be considered as charges of collection; they are not a tax upon the people, but only the payment of a highly beneficial and necessary public undertaking for which the community should have to pay, whether it was done by individuals or government. In this particular this revenue essentially differs from what is raised by taxes, and for this reason has not been classed with the internal duties.

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The United States hold five thousand shares of the stock of the Bank of the United States, which have cost them, at 400 dollars a share, a sum of 2,000,000 dollars. This sum they borrowed from the bank itself at the rate of six per cent. a year, and had on the 1st of January, 1795, discharged 600,000 dollars of that loan. But, as they were enabled to make that payment only by contracting new loans, the actual revenue under this head consists only of the difference between the interest paid by government upon the loan and the dividend received upon the bank stock, which, at the average rate of a dividend of 8 per cent. a year, might be estimated at about 40,000 dollars a year. As, however, in the account of expenditures, the whole amount of yearly interest payable on that, as well as on all other loans, will be charged, this branch of revenue is here set down at its nominal amount of dollars 160,000.


Duties on imports and tonnage 5,810,000
Internal duties 410,000
Postage of letters 30,000
Dividend on bank stock 160,000
Total Dolls. 6,410,000
But if the 40,000 dollars, bounties to fisheries, are deducted from the amount of duties on imports and tonnage, these will be reduced to 5,770,000 dollars, and the total amount of net revenue will then be Dolls. 6,370,000
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Of the Receipts and Expenditures to the 1st January, 1796.

In order to have a distinct and comprehensive view of the expenditures of the Union, it is necessary to consider at once, and without any reference either to the different funds or to the places where the moneys may have been received or paid, the whole of the disbursements and consequently of the receipts of the United States. The statement No. X. exhibits a view of those receipts and disbursements from the establishment of the present government to the 1st of January, 1796, distinguishing those under each year, except for the years 1789, 1790, and 1791, which, in the official documents, are generally blended together. The receipts are arranged under the following heads, viz.:

1. Moneys arising from balances of accounts which originated under the late government.

2. Revenue arranged under the different heads mentioned in the preceding section.

3. Incidental, consisting of sundry items which cannot properly be considered as a permanent revenue, viz., fines and forfeitures for crimes,1 fees on patents, sales of arms, and profits on sundry bills of exchange drawn for moneys remitted from America to Holland, and from Holland to America and to France.

4. Loans, distinguishing those effected in Amsterdan and Antwerp from those obtained in America, and, amongst these last, those obtained in anticipation of the revenues from all others.

The expenditures are arranged under the different heads of Edition: current; Page: [99] current expenditure, interest on the public debt, reduction of the public debt, and reimbursement of loans and subscription to the Bank of the United States; the current expenditure being classed under the heads of civil list, pensions and grants, military establishment, intercourse with foreign nations, and sundries, which last item, besides miscellaneous and contingent expenses, includes those attending the light-houses and the mint establishment. The statement marked (A) exhibits at one view the general results both of the receipts and expenditures.

It results from that document that, during the period of six years and a half, the expenditures have exceeded those receipts which arose from the revenues (including therein incidental receipts) of the present government by a sum of dols. 3,228,96118/100. For during that time the aggregate of loans amounted to dollars 19,503,20437/100, which, added to dollars 162,63929/1001 received on account of balances due to the late government, form a total of dollars 19,665,84366/100; whilst, on the other hand, the moneys applied to the reduction of the public debt amounted only to dollars 13,922,92433/100, which, added to 2,000,000 dolls. subscribed to the Bank of the United States, and to dollars 513,95815/100 balance remaining in cash on first of January, 1796, form a total of only dollars 16,436,88248/100; the difference between which sum and the above-stated sum of dollars 19,665,84366/100, received upon loans and old accounts, is equal to the above-mentioned excess of expenditures, viz., dollars 3,228,96118/100. Or the aggregate of receipts arising from revenues and incidental sources amounts during that period to dols. 24,347,95686/100, which sum is less than the total of current expenditures, including therein the interest and charges upon the public debt, amounting for the same period to dollars 27,576,9184/100, by the same above-stated sum of dollars 3,228,96118/100.

It must, however, be observed that this account includes only the moneys actually received in and paid out of the Treasury in Edition: current; Page: [100] America or the hands of the bankers of the United States in Holland. In order to have a correct view of the expense, it is necessary to take into consideration not only the quantity, but also the application, of the moneys stated, under the head of “reduction of public debt,” to have been applied to the purchase of that debt, as not only the nominal amount of the debt thus purchased is much larger, but even its real value exceeds the moneys thus applied.

The statement No. XI. exhibits a view of those purchases as made by the commissioners of the sinking fund. The total amount of moneys applied to purchases by them was dollars 1,618,9364/100; the nominal amount of the different species of stock purchased by them, dollars 2,307,66171/100; the real value of the said stock, estimating the six per cent. stock at par, the deferred stock at 75 per cent., and the three per cent. stock at 60 per cent., dollars 1,880,92135/100; which last sum exceeds the amount of moneys applied to purchases by dollars 261,98531/100; which reduces the excess of expenditures beyond receipts to dollars 2,966,97587/100.

Several other considerations of less importance, but which might, however, affect in some degree that result, are omitted here; but those of a general nature will be taken notice of either in the course of this section or when the subject of the debts of the United States comes under view; and those which relate merely to details will be found, in the shape of notes, annexed to the statement No. X.

A deficiency caused by an excess of expenditures over the receipts must always be supplied by new loans, and create an increase of debt. It is commonly owing to the extraordinary expenses which attend a war, and although not the unavoidable, has with most nations been the usual result of every one in which they have been engaged during the present century. Great Britain and France, either unable or unwilling to draw from their subjects a revenue equal to the prodigious waste of money which attends modern wars, have uniformly supplied by loans the greatest part of that expense and raised taxes only to the amount of the interest of those loans. Such a system, managed with ability and supported by prosperity, may last for a Edition: current; Page: [101] long period of time. Its ruin may be accelerated by a general convulsion, or by any of those extraordinary events which considerably diminish the general resources, the commerce, the wealth, the annual income of a nation; but its natural existence seems to be limited only by the ability of raising a revenue in taxes equal to the interest payable upon the debt. But it has been unusual to see a nation so improvident as to suffer in times of peace and prosperity its expenses to exceed its revenue and its debt to increase. In France, where the prodigality and mismanagement of the government, united to an injudicious selection of taxes and to the exemptions claimed by some classes of the nation, had indeed produced such an effect, the consequences are but too well known.

There is, however, some apology to be made for the United States. A government in its infancy, with a heavy weight of debts, cannot, without oppression, raise at once from the people the same amount of taxes which, if laid gradually, would not be thought burdensome. It is, however, their duty under such circumstances to proportionate their expenses to their ability; and this was the case during the first years of the existence of the present government; for it will appear from the statement No. X. that no deficiency of revenue took place till the year 1792. It may also, perhaps, be said that, although we have not been engaged in the European war, the circumstances of that war and some domestic occurrences have necessarily involved us in some extroradinary expenses. Amongst these are usually reckoned the increase of the military establishment due to the Indian war, the naval armament, the fortifications of our harbors, the treaty with Algiers, and the expedition of the militia employed to suppress the western insurrection. It must, however, be remarked that the increase of the military establishment and the naval armament have not been considered by government itself as an extraordinary, but as a permanent, object of expense; for, notwithstanding the discontinuance of those causes which served as a pretence for both objects, the same number of effective men has been retained in the land service, and nearly the same annual expense is necessary to support our present naval establishment. The total expense of the naval Edition: current; Page: [102] armament incurred before the year 1796 amounts to 470,000 dollars; that of the fortifications only to 120,000; the moneys were voted in March, 1794, and by far the greatest part expended only in 1795. The expenses attending the conclusion of the treaty with Algiers are not yet fully ascertained, but may be estimated at 800,000 dollars; the money was voted, also, in March, 1794; a very inconsiderable part, if any, was raised before 1795, no part paid to Algiers till the latter part of the same year, and the payment not completed till 1796. It is, therefore, evident that the plea of urgency, so far as relates to those various objects, cannot avail; that a sufficient time elapsed between the originating of the expense and the application of the moneys to have raised an adequate revenue. Three hundred thousand dollars were appropriated in the same month (March, 1794) for the purpose of replenishing the public stores and magazines, making repairs, &c.; but it does not clearly appear from the official documents how much of that sum has been expended, or at what periods. The accounts of the militia employed to suppress the western insurrection are not yet published; but there were appropriated for that purpose by Congress 1,122,569 dollars for the expedition itself, and 100,682 dollars for the detachment of militia stationed there for some months after the return of the main army; both sums amounting together to 1,223,251 dollars. This, or at least the first-mentioned sum, is the only article which seems properly to fall under the head of extraordinary expenses. It was unforeseen, and, allowing it to have been necessary to that extent, must from its urgency have been incurred before a revenue could be raised to discharge it.

It is difficult to ascertain whether any of those expenses, permanent or extraordinary, might have been avoided; whether, although perhaps all in some degree useful, they were all necessary; for the decision of the question must, more than any other, depend upon opinion. In the opinion of the writer of these sheets, there are some which were unnecessary. Without laying any great stress upon what savings might have been made in the civil list and in some of the annuities and grants, which could not, at all events, amount to a very large sum, since the annual Edition: current; Page: [103] expense for both items is but about 450,000 dollars; without taking into view the 90,000 dollars already expended upon the mint establishment, without any apparent advantages having been derived from it, it will be sufficient to attend to some of the most important objects.

First. It will be demonstrated in the next section, which treats of the debts of the Union, that out of the sum of near 21,800,000 dollars, in debts of the individual States and balances due to the same, which have been assumed and funded by the Union, near 10,200,000 dollars have been assumed beyond the sums in those debts and balances, which it would have been necessary to fund in order to place the accounts of the Union and of the individual States in the same relative situation in which they now stand. The interest actually paid out of the Treasury upon that excess (exclusively of 700,000 dollars interest accrued and not paid, but funded, upon the balances due to the several States; which item makes an increase of debt instead of an article of expense), together with two per cent. paid on part of the principal on the 1st of January, 1796, amounts to dollars 1,198,2025/100; which are an unnecessary expense, arising from an unnecessary assumption of debt, and which must continue till the debt itself is discharged.

Secondly. It is highly probable that the protection of the frontiers might have been effected with a less number of men, and the men in service supported with less expense; what might have been saved on this head cannot be calculated; the following data may, however, assist in forming some idea of it. The troops of the United States engaged on the frontiers, from the peace of 1783 to the year 1790, a period during which the inhabitants were as effectually protected as they have been since, did not exceed eight hundred men. When what has been called the Indian war began, the hostilities of the Indians were not greater than they had been before; they consisted of that petty warfare so cruel and distressing to the frontiers, but always experienced, both in peace and in war, from those tribes which are not nearly enclosed by the settlements, and which could be checked only by the possession of the posts on the Lakes. The number of soldiers had been previously nominally increased to Edition: current; Page: [104] twelve hundred men in April, 1790, and to two thousand one hundred in March, 1791. Another nominal increase took place in March, 1792, after General St. Clair’s defeat, which should have raised the army to 5200 men. A farther addition of near 800 artillerists was made in May, 1794. But it appears that the number of effective men never much exceeded three thousand. The annual expense, including the Indian Department, averaged 220,000 dollars during the three years 1789, 1790, and 1791 (which includes about 100,000 dollars extraordinary expense of General Harmar’s campaign in 1790, and a part of the expenses of the campaign of 1791, under General St. Clair). The annual expense during the years 1792 and 1793 exceeded 1,100,000 dollars, and during the years 1794 and 1795 (after deducting fortifications, expenses relative to the western insurrection, and extraordinary purchases of arms, &c.) averaged 1,750,000 dollars. The number of troops actually employed has increased in the ratio of four to one from the year 1790 to 1795; the expense in the ratio of eight to one.

Thirdly. The naval armament, which, on its present plan, seems to be rather an object of parade than of real utility, has already cost 470,000 dollars. To complete the six frigates first intended to be built would, according to the last estimate of the Secretary of War, have cost 1,142,160 dollars, manning and provisions not included. Whether it is proper for the United States at present to create a navy is a question equally delicate and important; but it would seem that, if it is to be determined in the affirmative, the same sum which is necessary for beginning six frigates and finishing three might have been more usefully applied in laying the foundation for a real navy by the purchases of timber, materials, &c., and by preparing all those things which time alone can procure.

Fourthly. The call of about 15,000 militia and the expenditure of twelve hundred thousand dollars for the purpose of suppressing mobs and riots committed but partially in a country which contains only 70,000 souls, must have been grounded upon mistaken ideas of the views, union, and strength of those concerned, and upon misrepresentations of the sentiments of a great proportion of the people there. It is believed that it will Edition: current; Page: [105] be admitted by every candid man employed in the expedition who had tolerable means of information that one-fifth part of the men and of the money were sufficient to obtain every ostensible object of the expedition.1

Whether, however, all or any of those expenses were necessary or not, it is certain that all of them might and should have been defrayed by raising a revenue coequal to the expense. It sometimes happens that, notwithstanding the care of the Legislature, a revenue will prove deficient, will yield less than had been expected: this, upon an average, has not been the case of the United States. Although all the internal duties have always fallen short of the sums expected from them, those upon imports have uniformly yielded considerably more than the estimate. But in many instances, although the object of expense was immediate, the revenue did not begin till some months after, and the intermediate expense must be supplied by an anticipation of the revenue.

The first and most undeniable evil which arises from anticipations is the additional expense caused by the interest to be paid for them. The total amount of interest paid for domestic loans for the year 1795, exclusively of that incurred for the subscription to the bank stock, was near 150,000 dollars; and to this must be added the premiums which must at times be paid in order to obtain the loans. Thus, eight hundred thousand dollars in six per cent. stock were borrowed in 1795, at par and as cash, from the Bank of the United States, for the purpose of completing the treaty with Algiers, which, it seems, have produced only 720,000 dollars in specie. If it be allowed, and there is no reason to doubt it, that no better mode of obtaining the money could be adopted, nothing can prove in a stronger manner the necessity of raising a revenue instead of recurring to loans. To give ten per cent. premium, and six per cent. interest on the nominal sum borrowed, in times of peace and unexampled prosperity, is equally ruinous and absurd.

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It has been supposed by some that this was the only consequence of anticipating; and it has been urged that, provided a revenue originated at the same time with an object of expense, although that revenue did not become immediately productive (on account, as an instance, of the credits given to importers), yet, as a debt was contracted to government by those importers from the moment of importation, it might be set off against the anticipation made by government. Thus, although it be allowed that the receipts arising from revenues had fallen short of the expenses at the end of the year 1795 by a sum of three millions of dollars, and had caused an anticipation, a debt to an equal amount; yet it is insisted that the nominal revenue to the same date had exceeded the expenditure; that the bonds due by the merchants for the imposts, and which (after the deductions to which they were liable for drawbacks) may be estimated at four or five millions of dollars, were more than sufficient to counterbalance that anticipation. Supposing that those bonds were to be considered as a credit in favor of the public, and to be contrasted with the increase of debt, it still would be fallacious to contrast them with the expenditures. Whatever the nominal revenue may be, by whatever name it be called, it is not less evident that the expenses of one year can be defrayed only out of the actual receipts of the same year. Thus that part of the nominal revenue of 1795 which is not paid in the Treasury during that year, which consists of bonds payable in 1796, constitutes, in fact, the actual revenue, not of 1795, but of 1796. It cannot be applied to pay any part of the expenses of 1795; it cannot be applied to repay the anticipations made in 1795; it is barely sufficient to defray the current expenses of 1796; it is the revenue of 1796. Whenever a permanent expense is incurred, beginning with the first of January of one year, if the revenue appropriated to discharge the same does not become productive, does not bring money to the Treasury till the following year, a debt equal to the expense of that object for one year must be incurred; and it never can be discharged out of that revenue till after the expense itself has ceased. Thus, if an individual, in the year 1795, increases his revenue by an annuity of one hundred pounds, but payable only from the year 1796, Edition: current; Page: [107] and chooses at the same time to increase his expense to the same amount from the beginning of 1795, he must necessarily incur a debt of one hundred pounds, which debt, as long as he continues the same expense, never can be paid out of the annuity.

Should a self-evident truth have required additional proof, this received one during the last session of Congress. Anticipations had been obtained from the Bank of the United States to the amount of 3,800,000 dollars. The bank—and this may serve as a lesson to the friends of anticipations—requested that the whole should be paid to them during the year 1796. The money was due; they had a right to ask for it; they stood in need of it. Although the demand of the whole amount at once was unexpected, and was made at a time when it was well known that government could neither borrow the money in Europe nor raise it at once by taxes, yet it was necessary to pay it or to proclaim our inability. An assignment on that nominal revenue of 1795, which is represented as a debt due to government, would not do. That revenue, receivable in 1796, must pay the expenses of that year. The Legislature, in order not to be guilty of a breach of faith, in order to discharge the anticipations, were obliged not only to create a six per cent. stock irredeemable for twenty-four years, but to direct that one-half of that stock, and the whole of the shares held by the United States in the bank, should be sold at whatever price could be obtained.

Again; the idea that the bonds due by the importers are a credit in favor of the public, to be set off against any debt that may have been incurred by government, will, upon investigation, prove to be groundless. The debts due by the United States are due by the people of the United States, and can be discharged only out of the purse of the people of the United States. To whom are the bonds given by importers due? To the United States, to the people of the United States. True, and thence it is inferred that they should be deducted from the debt due by them. But by whom are those bonds due? By the importers? No; they are due by the consumers, by the people of the United States; and until those consumers, until the people of the United States shall have discharged them, shall actually have paid the Edition: current; Page: [108] amount of the duty to the importer and enabled him to pay the amount of his bond in the Treasury; until, in a word, the moneys are paid either to the collectors or to the Treasury, no part of the debt due by the people of the United States can be considered as discharged.

The account stands thus:

The people of the United States Dr.
1st. The amount of the debt of the Union, say dollars 80,000,000
2d. The duties they owe to government 5,000,000
Cr. By the bonds due to government, dollars 5,000,000
The balance due by the people of the United States is still 80,000,000

The only credit to be given is that part of the duties which, although not yet in the Treasury, has actually been paid by the people to the collectors. This sum cannot be taken under consideration when speaking merely of receipts and expenditures, but shall be credited when a calculation is made of the debts of the United States.

From these considerations, it follows that the duties accrued but not yet due to government are only a nominal account, ascertaining the amount and securing the payment of the moneys which shall actually be paid hereafter by the people; that any expense incurred in one year beyond the actual receipts of that year must necessarily be supplied by loans, and that the increase of debt thereby caused is not less real whether those loans are obtained for a longer or shorter period, whether they go by the name of funded debt or of anticipations. To conclude in the words of a justly celebrated writer, “In Great Britain the annual land and malt taxes are regularly anticipated every year. . . . The Bank of England generally advances, at an interest which since the revolution has varied from eight to three per cent., the sums for which those taxes are granted. . . . The only considerable Edition: current; Page: [109] branch of the public revenue which yet remains unmortgaged is thus regularly spent before it comes in. Like an improvident spendthrift, whose pressing occasions will not allow him to wait for the regular payment of his revenue, the state is in the constant practice of borrowing of its own factors and agents, and of paying interest for the use of its own money.”

Smith’s Wealth of Nations, Book v. Chap. 3d.


It is declared by the Constitution of the United States that “no money shall be drawn from the Treasury but in consequence of appropriations made by law.” Two things constitute the appropriation: 1st, the sum of money fixed for a certain expenditure; 2d, the fund out of which the money is to be paid. The executive officers can neither change the appropriation by applying money to an expense (although the object of that expense should have been authorized by law) for which no appropriation has been made, nor spend upon an authorized object of expense more than the sum appropriated, nor even that sum, unless the fund out of which it is payable is productive to that amount. Funds are classed and distinguished in relation either to receipts or to expenditures.

The general receipts of the United States have been divided into two classes: the moneys obtained upon loan in Holland, commonly denominated the foreign fund, and the moneys obtained in America, whether arising from taxes or loans, designated by the name of domestic fund. The statements No. XII. and XIII. are an abstract of the yearly receipts and disbursements already contained in the statement No. X., but distinguishing them, under each of those two funds, from the establishment of the present government to the 1st of January, 1796. The foreign fund was exclusively appropriated to pay, 1st, the interest due on the foreign debt before the year 1791; 2d, the instalment of the principal of the foreign debt and of the loan contracted in order to pay for the bank stock of the United Edition: current; Page: [110] States as the said instalments became due; 3d, the principal and interest of a debt due to certain foreign officers; and, 4thly, certain purchases of the domestic debt made by the commissioners of the sinking fund.1 The domestic fund was appropriated to discharge the interest due on the public debt after the year 1790, the current expenditures, the domestic loans obtained in anticipation of the revenues, certain unfunded debts contracted under the late government, and part of the purchases of domestic debt made by the commissioners of the sinking fund.

It appears by the statement that on the last day of December, 1792, there was a balance in favor of the foreign fund of dollars 3,453,9929/100; that is to say, the moneys received from foreign loans to that day exceeded, by that sum, the expenses for which they were exclusively appropriated. On the same day there was a balance against the domestic fund of dollars 856,30826/100; that is to say, that the expenses, to the discharge of which this fund was appropriated, had exceeded, by that sum, the actual receipts arising from the revenues, which constituted that fund. The balance of dollars 3,453,9929/100 in favor of the foreign fund consisted of the following items: 1st, dollars 1,814,23932/100 yet unexpended and in the hands of our bankers in Holland; 2d, dollars 783,44451/100 also unexpended, but in America, and constituting the whole balance of cash in the Treasury on that day; and, 3dly, dollars 856,30826/100 applied to cover the deficiency of the domestic fund; that is to say, that not only the whole of the moneys in hand, whether in Holland or in the Treasury, arose from foreign loans, but that more than 850,000 dollars, arising from the same source, had been actually expended and applied to discharge a class of expenditures for which they were not appropriated. It was this transaction which gave rise to the following motion, made in the House of Representatives Edition: current; Page: [111] in February, 1793, viz.: “Resolved, That the Secretary of the Treasury has violated the law passed the 4th of August, 1790, making appropriations of certain moneys authorized to be borrowed by the same law, in the following particulars, to wit: 1st, by applying a certain portion of the principal borrowed to the payment of the interest falling due upon that principal, which was not authorized by that or any other law, &c.” Although it is now demonstrated by the official statements (from which the statements No. XII. and XIII. are abstracted) that that resolution was strictly and literally true, it was at that time negatived by a large majority.

That transaction, however, was, to a certain degree, rather a want of form than a substantial violation of the appropriation law, and arose from this circumstance. It has been mentioned that a part of the domestic fund, as well as a part of the foreign fund, was appropriated to the making certain purchases of the domestic debt, and together constituted the sinking fund. The part of the domestic fund appropriated for that purpose consisted of the surplus of the nominal revenue arising from duties on imports and tonnage, to the end of the year 1790, beyond the specific appropriations charged to the same. But as that surplus consisted almost entirely of that part of the nominal revenue of 1790, which was payable only in 1791 and 1792, which constituted in fact a part of the receipt or actual revenue of those years, and was necessary to discharge the expenses and especially the interest on the public debt payable in 1791 (since a part of the nominal revenue of 1791, being receivable only in 1792, could not be applied to discharge the expenses of 1791), it was enacted by a law that “such reservations should be made of the said surplus as might be necessary to make good the payment of interest payable in 1791, in case of deficiency in the amount of the receipts into the Treasury during that year on account of duties on imports and tonnage accruing after the year 1790.” Thus that surplus, which was found to consist of dollars 1,374,65640/100, was applicable either to purchases of the debt or to payment of the interest due in 1791. But the foreign fund, a part of which might be united to the said surplus in constituting the sinking fund, was in no case to be united or substituted to Edition: current; Page: [112] that surplus in the other application to which this was liable, viz., the payment of interest due in 1791. The contingency foreseen by the Act of Congress took place; the receipts during 1791 on account of the duties accruing that year were not sufficient to discharge the current expenses and the interest payable that year, and a part of the surplus above mentioned became necessary for that purpose, and was applied to that object to a certain amount. But no more than dollars 416,88575/100 of that surplus were employed in that manner, the remaining dollars 957,77065/100 having been applied to the sinking fund, to purchases of the domestic debt. The deficiency of dollars 856,30826/100 in the domestic fund which arose, in the year 1792, from that cause, was supplied by borrowing the same from the foreign fund. The surplus of revenue of 1790 which was applicable, either to pay the interest on the public debt or to purchases of the principal, was applied to this last purpose, and the foreign fund, which was solely applicable to redeem only the principal, was applied to pay the interest. Although the word “applied” is used, it must be observed that so far as the moneys arising from foreign loans and from the said surplus were at the same time in the Treasury, as they were not kept apart, but constituted an aggregate mass, any application of those moneys might have been carried to the account of either of the two funds, and that the illegality of the act did not there consist in expending the moneys wrongfully, but in carrying the expenditure to a wrong account. It appears, however, that some part of the application of the surplus of 1790 to the sinking fund was not merely a matter of account, but an actual expenditure; for 350,000 dollars had actually been vested in the sinking fund before any moneys arising from foreign loans had been received in the Treasury. Upon the whole, the transaction was illegal, but no otherwise criminal than as it was illegal. If there was any blame due for having begun the purchases of public debt before moneys had been drawn from Holland, and when, therefore, they must be paid out of moneys which, it was well known, were wanting for another purpose, on the other hand, the result of the purchases made at that period was useful by accelerating the raising of the price of stock to its nominal value.

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From the end of the year 1792 to the end of the year 1795, although the gross amount of receipts has fallen short of the gross amount of expenses, yet as the deficiency has been supplied by anticipations, by domestic loans, which make part of the domestic fund, this fund has been enabled by degrees to repay the foreign fund; but even to the first of January, 1796, almost the whole of the moneys in hand, stated as balance of cash in the Treasury, has consisted of moneys belonging to this last-mentioned fund and arising from foreign loans.

Considering the funds in relation to the expenditures, they may at present be viewed as being three in number,—the sinking, the surplus, and the general fund.

The sinking fund till the month of March, 1795, consisted of, 1stly, the surplus of the revenue of 1790, of which dollars 957,77065/100 have actually been received by the commissioners.

2dly. Part of the moneys arising from foreign loans, of which dollars 434,90189/100 have actually been received by the commissioners.

3dly. The interest payable on the different species of stock purchased by the commissioners, which is still paid to them, and by them was, till March, 1795, applied to new purchases.

4thly. The interest upon any species of domestic debt which, through any means whatever, had been discharged by the United States.

The two principal items under this head are, 1st, the debt heretofore due to foreign officers, which has been partly discharged out of the moneys arising from foreign loans, and the balance of which is considered as being already paid, the moneys now in the Treasury which arise from foreign loans being appropriated for its payment; and, 2d, the certificates of domestic debt paid by the State of Pennsylvania for a tract of land (situate on the Lake Erie, including Presquisle, and commonly called “the Triangle”) purchased by that State from the United States, under the late government. It does not appear from the official statements how a sum of dollars 34,75322/100, which, in addition to these two last items, is also vested in the sinking fund, has been redeemed. It is, however, presumable that a part may have been paid by some individuals in discharge of old debts, and that a Edition: current; Page: [114] part, being commutation for half-pay granted to the officers of the late army, has been returned by them in order to become entitled to a pension.

The general view of the receipts, purchases, and situation of that sinking fund to that epoch are exhibited in the statement No. XI. The interest payable yearly to the commissioners from all those sources amounted, before the 1st of January, 1796, to dollars 88,24279/100, and after the year 1800 will amount to dollars 143,99599/100.

By an Act passed the 3d of March, 1795, all payments of the principal of any part of the public debt are to be made by the sinking fund; there have been vested in the commissioners of the same, in addition to the interest already payable to them:

Firstly, the excess of the dividends accruing on the bank stock belonging to the United States, over the interest annually payable on any part remaining unpaid, of the loan of 2,000,000 dollars contracted for the purpose of paying the purchase-money of the said bank stock; secondly, so much of the duties on tonnage, imports, and spirits distilled within the United States as, together with the dividends aforesaid and the interest payable to the commissioners on the principal of the public debt already redeemed, or which shall be hereafter reimbursed, will be sufficient to reimburse yearly so much as may be rightfully reimbursed on the principal of that part of the domestic debt which bears an interest of six per cent., excluding that part which shall stand to the credit of the commissioners;1 thirdly, all moneys received on account of debts due to the United States by reason of any matter prior to their present Constitution; fourthly, the net proceeds of the sales of lands belonging to the United States; fifthly, all surpluses of the revenues of the United States remaining at the end of any calendar year beyond the amount of appropriations charged on the same, and not otherwise appropriated during the session of Congress next thereafter.

The sums vested under the two first heads are of course appropriated Edition: current; Page: [115] to the redemption of the six per cent. and deferred stocks, which thereby are converted from a perpetual six per cent. annuity into an eight per cent. annuity for twenty-three years or thereabout;1 the other sums to the reimbursement of all the other debts of the Union; and the whole of the said moneys or funds is vested in the commissioners until the final redemption of the whole of the public debt, the three per cent. stock excepted, be completed.

The general fund, which embraces all the revenues, except such sums as are specifically appropriated to the sinking fund, is charged with all expenses other than those relating to the payment of the principal of any part of the public debt.

Whenever, at the end of two years after the expiration of the calendar year in which any specific appropriation shall have been made, it shall happen that the sum thus appropriated is larger than the sum actually expended for that object, the excess (except when the appropriation is for payment of interest or principal of the public debt) is, by virtue of an Act passed in March, 1795, to be carried to a new account, to be denominated “the surplus fund.” Although the appropriations may exceed the expenses, and the differences or excesses may thus be carried to the account of that fund, it is evident that it will be merely nominal so long as the expenses shall exceed the receipts.

The general fund is in fact subdivided into as many distinct funds or accounts as there are specific appropriations. A detail of these, which presents a number of balances of unsatisfied appropriations, would be useless. It will be sufficient to remark that the appropriations relative to the payment of interest on public debt are permanent, and cannot, therefore, be altered without an Act of the Legislature, and that those which relate to the civil list and military establishment are made from year to year, and require, therefore, once a year the consent of every branch of the Legislature to be renewed. This is the defensive control retained by each branch, and which may, at all times, enable Edition: current; Page: [116] either to check, by that power over the purse, any dangerous encroachment or attempt to encroach of any of the others. There is nothing, however, in the Constitution which prevents Congress from making permanent appropriations in relation to the civil list; but, in order to guard against any possible danger from a standing army, it is expressly provided by that Constitution that no appropriation of money to that use shall be for a longer term than two years.

The appropriations heretofore made for the military establishment have been subdivided into a number of separate heads, making specific and distinct appropriations for the pay of the army, for its subsistence, for clothing, for the ordnance department, for the quartermaster department, for the Indian department, for the defensive protection of the frontiers, and for the several other heads of service; and it was supposed that the moneys thus distinctly appropriated were respectively applied to the specific objects for which they were appropriated. It, however, appears, by a letter of the Secretary of the Treasury of May, 1796, that by far the greatest part of the expenditures for the military department are found by experience to be unsusceptible of that particular distribution which is observed in the issues of moneys appropriated for other objects; and that appropriations for military purposes ought to be considered as general grants of such sums as the public service is found to require, to be issued according to exigencies and applied and accounted for pursuant to law.

It would seem that if those appropriations are considered by the Treasury Department as general, of which grants, to be issued according to exigencies, that or some other executive department is to judge, and if, therefore, the moneys specifically appropriated to one head of service are applied to another head, they are not applied and accounted for pursuant, but contrary, to law. Such a mode is undoubtedly liable to great abuses; it deceives the Legislature, who, when appropriating one hundred thousand dollars for the defensive protection of the frontiers, did not think that the Treasury would assume a power to apply them to the quartermaster or any other department. It deprives the Legislature from any control, not only over the distribution Edition: current; Page: [117] of the moneys amongst the several heads of service, but even over the total sum to be expended. For the million and a half of dollars appropriated for the annual support of six thousand men, the nominal establishment, may be spent in the same time, and in fact has actually been expended within fourteen months for the 3500 men who constituted the effective establishment. The same abuse has, for a considerable time, prevailed in England, where it has, at several periods, been taken notice of, and did lately produce a motion of impeachment against the Ministers.

On the other hand, it is impossible for the Legislature to foresee, in all its details, the necessary application of moneys, and a reasonable discretion should be allowed to the proper executive department. The most proper way would perhaps be not to enter into so many details, not to make specific appropriations for every distinct head of service, but to divide the general appropriation under a few general heads only, allowing thereby a sufficient latitude to the executive officers of government, but confining them strictly, in the expenditure under each of those general heads, to the sum appropriated by law.

Another irregularity has once taken place upon an extraordinary occasion. Although the President of the United States was authorized to call out the militia in order to suppress insurrections, no moneys were appropriated for that service. When the western insurrection took place, until Congress had covered the expenditures of the expedition by an appropriation made only on the 31st of December, 1794, the expenses were defrayed out of the moneys appropriated for the military establishment. Yet even the principle by which the specific appropriations for the several objects of the military establishment have been considered as a general grant for the whole could not authorize the application of a part of that grant to the expenses of that expedition. No farther discretion has been claimed by virtue of that principle than that of indistinctly applying the whole sum appropriated by law to any of the objects enumerated and specified under distinct heads in the law itself. But, as the militia called out to suppress an insurrection make no part of the military establishment, the expenses attending such a call were not amongst the various objects enumerated in the law making Edition: current; Page: [118] appropriations for the military establishment; the only item applicable to militia being expressly confined to the defensive protection of the frontiers. The moneys drawn from the Treasury on that occasion were paid out of a fund appropriated for other and distinct purposes; they were not drawn agreeable to the Constitution, in consequence of any appropriation made by law. It might be a defect in the law authorizing the expense not to have provided the means; but that defect should have been remedied by the only competent authority, by convening Congress. The necessity of the measure may in the mind of the Executive have superseded every other consideration. The popularity of the transaction may have thrown a veil over its illegality. But it should by no means be drawn hereafter as a precedent.

Of the Present Expenses of the United States.

The estimate No. XIV. exhibits the probable receipts and expenditures of the United States for the year 1796. The receipts arising from other sources than loans, and amounting to dollars 6,398,24279/100, differ from the estimate of the permanent revenues of the Union given in the preceding section, and there rated at 6,370,000 dollars, because, 1st, the internal duties are rated in the estimate of permanent revenues at 410,000 dollars, on account of a supposed increase, which, however, will be but partly felt during the present year; and they are therefore rated at only 350,000 dollars in the estimate No. XIV.; and, 2dly, to the receipts of the present year are added dollars 88,24279/100, being the interest now payable to the commissioners of the sinking fund upon that part of the domestic debt heretofore redeemed; this interest constitutes in reality no part of the revenues of the Union, being only a diminution of expenditure; but it must be added to the receipts, the interest payable on the domestic debt being, in the estimate of expenditures, calculated as if no part had yet been redeemed.

The expenditures are calculated upon the appropriations made by Congress during the last session, with the addition of a Edition: current; Page: [119] balance remaining unexpended for fortifications from last year, and which will probably be expended during the course of 1796. They amount (exclusively of the five millions of dollars which fall due this year upon the domestic loans and the debt due in Holland, and which are provided for by a new loan to the same amount) to dollars 7,069,3123/100, leaving a deficiency of dollars 671,06924/100 to be supplied by new anticipations. It must be observed that in those expenditures is included the payment to be made in part of the principal of the six per cent. stock, and amounting to dollars 640,73333/100. Whence it results that the public debt will not probably increase much during the year 1796; the only material changes which will take place being to substitute a debt of five millions of dollars, irredeemable for a number of years, to a debt of the same amount, but consisting of anticipations and instalments now due, and to contract a new debt of about 700,000 dollars, whilst an old one (being part of the six per cent. stock) to nearly the same amount shall be paid off.

As the estimate No. XIV. contains several extraordinary expenses applicable to the year 1796, the following is added as being nearly the amount of the permanent expenses of the Union on their present scale:

1st. Civil list Dollars 460,000
2d. Annuities, grants, and military pensions 120,000
3d. Military establishment, viz.:
Army, including fortifications 1,150,000
Naval armament; the annual expense of pay and subsistence of the officers and seamen of three frigates is estimated by the Secretary at War at 226,000 dollars, and including repairs, ammunition, extraordinaries, cannot be rated under 300,000
4th. Indian department, including annuities payable to several tribes, charges of trade, treaties and presents 100,000
5th. Intercourse with foreign nations; the ordinary expenses for the year 1796 are dollars 60,000, and the permanent expenditure, including that relating to the Barbary powers, may be rated at 100,000
6th. Sundries, viz.: Mint establishment, 40,000 dollars; light-houses, 30,000; miscellaneous and contingent, 50,000 120,000
7th. Interest and charges on the public debt, viz.:
Interest and charges on foreign debt 543,441
Ditto on funded and unfunded domestic debt, including the annual reimbursement of the six per cent. stock 3,082,6969/100
Ditto on the new loan of five millions of dollars 300,000
Ditto on 1,600,000 dollars remaining unpaid on the loans due to the banks 96,000
Ditto on 700,000 dollars to be anticipated in 1796 and 1797 42,000
Making for the whole amount of interest and charges on public debts 4,051,00625/100
The whole permanent expense appears, therefore, to be Dollars 6,401,00625/100
From which deducting the interest now payable to the sinking fund, viz. 88,24279/100
Leaves for the true amount of permanent expenses Dollars 6,312,76346/100

The permanent revenue has in the preceding section been rated at 6,370,000 dollars (after paying the bounties to the fisheries), and exceeds the above estimate of permanent expenditure by a sum of about 60,000 dollars. But the expenses of the year 1797 will be greater than the estimate by a sum of 80,000 dollars, being a premium which falls due that year on Edition: current; Page: [121] the Dutch debt; and from and after the year 1800 the expenses will be increased by the annuity of eight per cent., payable from that period upon the deferred stock.

That annuity (including in the amount of deferred stock the unfunded as well as the funded part of the debt), after deducting dollars 55,75320/100, the interest payable on that part of the deferred stock heretofore redeemed and vested in the sinking fund, amounts to dollars 1,116,87873/100. From whence it results that from and after the year 1800 there will be an additional annual expense of more than eleven hundred thousand dollars, which must be provided for by additional revenues. Nor must it be forgotten that the sum of 50,000 dollars, set down in the above estimate for contingencies, will not be sufficient to discharge any of those extraordinary expenses which unforeseen circumstances may occasion, and which in some shape or other have taken place every year under the present government. It is, however, to be hoped that a sum sufficient to provide for those contingencies may, by economy and reductions, be in future saved upon the naval and military establishments.


Origin, Progress, and Present State of the Debt.

From the beginning of the Revolution, which gave birth to the United States, till the year 1781, they were united by no other tie than common danger, and the authority of Congress had no other foundation than common consent. Yet this body, supported only by common opinion, proclaimed the independence, levied armies, borrowed moneys, and carried on the war. The Articles of Confederation, adopted in 1781, did not give them any efficient power; for although they were authorized by that instrument to make requisitions of money from the Edition: current; Page: [122] several States, yet they were not vested with any coercive power to raise money either from delinquent States or from individuals. How far the United States, had they even had a government clothed with sufficient authority, might have been able to carry on the war without contracting a debt is a matter of doubt. For not only they must recur to extraordinary resources in order to oppose the formidable enemy they had to encounter, but it is well known that the beginning of a revolution was a most unfavorable moment to raise any considerable taxes. The expenses of the war were defrayed by paper money, by advances made by the several States, and by loans contracted by Congress.

The paper money was issued by Congress for the purpose either of discharging contracts or of purchasing supplies. When issued for the last purpose, it is evident that it could not buy more than it was worth. But whenever it was issued in order to pay debts contracted before, and had depreciated in its value from the time when the contract was entered into, the difference was lost by the creditor and gained by the Union. In the case, however, of the pay of the army, the several States, on the recommendation of Congress, made up the difference to the officers and soldiers according to a certain scale of depreciation. This army depreciation, therefore, whether actually paid by the States, or whether, as was mostly the case, discharged only by creating a stock bearing interest, was amongst the advances made by the several States. The whole of the paper, for whatever purpose issued, was finally redeemed either by taxes or by loans. When redeemed by taxes, as those were exclusively raised by the several States, it became one of the advances made by them. But, however redeemed, the depreciation of the paper from the time of its issuing to its final redemption operated as a tax upon the people, and defrayed a part of the expenses of the war. For, even where it was redeemed by loans, Congress declared the Union to be indebted not for the nominal amount, but for the real value of the paper at the time it was lent to the public; which value was fixed also by a scale of depreciation and rather in favor of the creditor, as the paper was in no case valued at less than forty for one. A part of the Edition: current; Page: [123] paper remained unredeemed at the close of the war, and has been funded, at the rate of one hundred for one, under the present government. It is hardly necessary to add that those arbitrary measures, which operated in so unequal and unjust a manner, can be justified only by the necessity of the case.

The advances made by the several States, exclusively of the army depreciation and of paper money, consisted chiefly of supplies in kind and of the pay of the militia respectively employed by them; the regular army being principally paid by the United States. Those advances were defrayed by the several States, either by taxes or by contracting debts. The sums advanced by each, and the proportion those sums respectively bore to the debts contracted by each, varied with their situation during the war, their resources, and their exertions. It was necessary, in order to apportion that burden, to calculate the advances made by each, and to adopt some uniform rule that should fix the proportion that each should have paid. The rule adopted by the Articles of Confederation, viz., a valuation of all the cultivated lands and houses, was difficult in practice and never carried into effect. The rule according to which the accounts have been finally adjusted is the census of the inhabitants of the United States made in 1791, which has operated in an unequal manner, since the increase of population of the different States has been very unequal since the termination of the war. What part of those advances should have been considered as a debt of the Union will be taken into consideration when the measures adopted on that subject by the present government are examined. The total amount of the advances actually made by the several States, as fixed by the final settlement of accounts, is not known, it having been thought prudent not to publish it; nor has the proportion of those advances, which at the close of the war consisted in debts, been ascertained.

The depreciation of the paper money and that part of the advances made by the several States, which did not consist of debts, were, in fact, the only taxes raised upon the people during the war. The other expenses were defrayed either by individuals who advanced their capital or their services—and this constituted the domestic debt of the United States and of the individual Edition: current; Page: [124] States—or by loans obtained in Europe, which constituted the foreign debt of the United States.1

The domestic debt contracted by the United States consisted of the debt due to the army [for arrearages of pay and for five years’ pay given to the officers in commutation of the half-pay for life which had been promised to them], of supplies of different species purchased on credit, of loans (chiefly in paper money) obtained in America, and of the remnant of paper money yet in circulation. The principal exceeded thirty millions of dollars; the arrearages of interest to the 1st of January, 1784, might be estimated at five millions and a half of dollars; the principal and interest at about thirty-five millions and a half of dollars.

The foreign debt, almost solely due to France, amounted to about six millions and a half of dollars. The whole of the debt, foreign and domestic, to about forty-two millions of dollars.

From the 1st of January, 1784, to the 1st of January, 1790, the principal of the domestic debt was reduced by sales of land, which amounted to about 1,100,000 dollars; but, in the mean while, the interest accrued was near ten millions of dollars, of which about six millions remained unpaid.

During the same period the greatest part of the interest on the foreign debt accumulated to an amount of about 1,700,000 dollars; and a new debt was contracted in Holland of 3,600,000 dollars. The whole debt, foreign and domestic, increased, therefore, during those six years by a sum exceeding ten millions of dollars.

It must, however, be observed that, for a part of the interest on the domestic debt stated as unpaid, a new species of certificates, called “Indents,” had been issued by Congress, which, being accepted by the creditors, seems to have discharged the Union from any further claims on that head. For those indents became thereby a charge against the several States, and would have been absorbed in requisitions, had not the adoption of the present government, by putting an end to those requisitions, rendered it an act of justice to provide for the outstanding indents.

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On the increase of debt which took place during those six years it may be also remarked that the convention which framed the present Constitution, having published it in 1787, and its final adoption having become exceedingly probable in the beginning of 1788, the several States were from that time still more remiss in paying their requisitions, and that the first Congress under the new Constitution having met in March, 1789, it could not be expected that they should raise sufficient revenues during that year. The years 1788 and 1789 may, therefore, be considered as that period between the two governments during which nothing could be done towards the payment of the debt. Finally, although during that period the government of the Union was altogether inefficient, that of the several States was sufficiently strong to enable many of them to discharge considerable parts of their individual debts.

The preceding estimates of the debt are far from being correct, and are meant merely to give a general idea of its origin and progress till the 1st of January, 1790, viz., ten months after the present government was in operation. The following is a statement of the debts of the Union on that day:

The foreign debt consisted of three items, viz.: the debt due to France, the debt due to Spain, and the debt due to Holland.

The principal of the French debt, together with the arrears of interest to the 31st December, 1789, amounted, as appears by the statement No. XVI., to dollars 7,895,30030/100.

The principal of the Spanish debt amounted to dollars 174,011; the arrears of interest to the 31st December, 1789, to dollars 67,67095/100, making altogether dollars 241,68195/100.

The principal of the Dutch debt amounted to 3,600,000 dollars; but, exclusively of the yearly interest payable on the same, there were a number of premiums and gratifications, payable at different periods, on one of the loans. Those premiums, which amounted to 657,500 guilders, equal to 263,000 dollars, have sometimes been considered as an additional interest, sometimes as part of the principal. Viewing them as principal, their value, as they did not bear any interest, must be estimated upon the principle of an irregular short annuity. Calculating them according to the several periods at which they were respectively Edition: current; Page: [126] payable, and at the rate of six per cent. compound interest, they were worth dollars 171,17577/100; and the whole amount of the Dutch debt was therefore dollars 3,771,17577/100.

Those three items, which constituted the foreign debt, formed an aggregate of dols. 11,908,1582/100.

The apparent amount of the principal of the domestic debt was dollars 29,158,76429/100, and that of the arrears of interest to the 1st of January, 1790, might be estimated at nearly dollars1 11,493,85844/100, making altogether 40,652,62273/100 dollars. But from that sum must be deducted, 1stly, the debt due to foreign officers, amounting, with arrears of interest, to dollars 209,42681/100, which will be stated hereafter; and, 2dly, a sum of dollars 186,39347/100, consisting of debts due to the United States and recovered after the year 1789, but arising from contracts made under the late government [as stated under the heads of “debt paid by Pennsylvania,” and “sundry debts redeemed,” in the view of the sinking fund, No. XI.]. This reduces the principal of the domestic debt to dollars 28,858,18065/100, and the arrears of interest to dollars 11,398,62180/100, making altogether dollars 40,256,80245/100.

The principal of the debt due to foreign officers amounted to dollars 186,98823/100, the arrears of interest to the 1st of January, 1790, to dollars 11,21929/100, making altogether dols. 198,31794/100.

There were besides several arrears and claims against the late government, which have since been discharged in specie at the Treasury. The whole amount of these paid before the 1st of January, 1796, as nearly as may be distinguished from the official statements, and including (upon those which might bear Edition: current; Page: [127] interest) interest to the respective dates of payment, is dollars 450,39552/100.

All those different sums which constituted the whole of the debt (both foreign and domestic) of the United States on the 1st of January, 1790, make an aggregate of dollars 52,813,67393/100.

No opposition was made in the first Congress, that met under the present government, to provide for payment of interest upon all those species of debt, except so far as related to the domestic debt. The length of time that had elapsed since the debt had been contracted without any efficient measure being taken either to discharge interest or principal, had sunk its market price to about one-eighth part of its nominal value. That depreciation, compared to that of the paper money, had impressed upon many a belief that it might be discharged in the same manner as the paper; that is to say, by not paying it. A great number of the original holders, of the soldiers who had performed the actual services, of the citizens who had actually furnished the supplies, had, many from necessity and some from want of confidence, sold the evidences of the debt at that low price. Sympathy for these, and the unpopularity that attached to the purchasers, created a strong difference of opinion as to the measures to be taken on that head. Two propositions, one of which, by directing a new settlement of accounts, aimed to annihilate the greatest part of the debt, and the other went on the ground of paying to the purchasers only the real value they had given, and to the original holders the difference between that and the nominal value of the debt, were both rejected by a large majority. It was finally agreed to refund all the arrears of interest, including the indents in circulation, at three per cent., and the principal (including the outstanding paper money at the rate of one hundred for one) at six per cent.; suspending, however, for ten years the payment of interest upon one-third of the principal, and, in exchange for that suspension, attaching to the debt a condition which was supposed to enhance its value; that is to say, limiting the power which the public had to pay the whole of the principal whenever they pleased to only eight per cent. in each year, including both principal and interest upon the original capital. Thus the principal of the domestic debt was divided Edition: current; Page: [128] into two species, both bearing six per cent. interest, both convertible at the pleasure of Congress into an annuity of eight per cent. and of about 23 years, and irredeemable in any other way; but one (which has generally preserved the denomination of six per cent. stock, and which, consisting of two-thirds of the whole, amounted to dollars 19,242,15742/100) bearing interest from the 1st of January, 1791, and the other (known under the name of deferred stock, and amounting to dollars 9,616,02323/100) bearing interest only from after the year 1800. As the interest began to be paid only in the year 1791, that which accrued during the year 1790 created a farther increase of debt of 1,680,000 dollars, and swelled the amount of arrears, funded at the rate of three per cent., to dollars 13,078,62180/100.1 The arrears upon the debt due to foreign officers were discharged in specie instead of being funded.

But although the measures which related to the domestic debt were adopted by a very large majority, and seem, so far as can be judged from the rapid appreciation of the debt even prior to its being funded, to have been supported in a great degree by public opinion; another proposition, made in relation to the debts due by the individual States, met with a much stronger opposition, and was even in the first instance rejected by the House of Representatives. It has already been stated that the advances made by the several States had varied according to their respective circumstances, and that their accounts had not been settled at the time of the adoption of the present government. Supposing those advances to be ascertained and those accounts to be adjusted, a difficulty would arise as to the mode of making a final and satisfactory settlement. For the adjustment of accounts would only show that some States had advanced more and some others less than their quota or proportion; that these, who might be called “debtor States,” were indebted to the Edition: current; Page: [129] other States in certain sums. But the difficulty was, how to oblige those debtor States to pay to the others; the power of making requisitions from the States having ceased with the Articles of Confederation, and Congress being bound by the present Constitution to raise no taxes except either in an uniform way or in proportion to the population of the respective States. The only mode that seemed practicable was for the Union to pay to the creditor States at least such balances as would be found due to them, or even so much more as should, as far as possible, equalize the accounts without increasing too much the debt; and that payment might be made either by funding those balances in favor of the States themselves, or by assuming a certain proportion of the debts owing to individuals by those creditor States. But it was unexpectedly proposed, without waiting for the adjustment of the accounts, without knowing which of the States had really advanced more than their proportion, without examining whether the debts they then owed arose from the greatness of their exertions during the war, or from their remissness in paying taxes; it was proposed that the Union should at once, indiscriminately, assume the payment of all the debts then due by the several States in their individual capacity. A measure so little expected, even by the creditors of those States, that the evidences of the debts of some of them had not appreciated in value since the establishment of the present government, although, as has been remarked, the expectation that the proper debt of the Union must be paid had raised the market price of the evidences of that debt to four times what it was when the Constitution was adopted.

This proposition was finally adopted, with the following modifications: First. Instead of funding the arrears of interest at 3 per cent. and the principal at 6 per cent., one-third of the whole of both the principal and arrears of interest to the 1st of January, 1792, was funded at three per cent.; two-thirds of the remaining two-thirds were funded at 6 per cent., bearing interest from the year 1792, and the other third of the said two-thirds was funded also at 6 per cent., bearing interest from after the year 1800. Secondly. The interest for the year 1791 was not paid, as it was on the domestic debt, but funded; and the interest on Edition: current; Page: [130] three and six per cent. stocks paid only from the year 1792, that is to say, one year later than upon the domestic debt. Thirdly. The total amount of the debts of the individual States, and the proportion of the debts of each State to be thus funded, were limited to a certain sum fixed at random, each State trying to make the best possible bargain. The sums actually funded by virtue of that assumption amount to dollars 18,271,81474/100; which have produced dollars 8,120,83623/100 6 per cent. stock, dollars 4,060,41784/100 deferred stock, and dollars 6,090,56067/100 3 per cent. stock.

It was provided at the same time that the sums thus assumed for each State should respectively be charged to those States in their accounts, and that the balances which upon a final settlement should be found due to the creditor States should be funded in their favor. The accounts have accordingly been settled by three commissioners vested by law with full and conclusive powers to that effect. Those commissioners have declared the aggregate of the balances due to certain States, including interest to the 1st of January, 1790, to amount to dollars 3,517,584; and the aggregate of balances due by certain other States to amount also to the same sum. The balances thus due to certain States have been funded in their favor, and have produced 2,345,056 dollars in six per cent. stock, and 1,172,528 dollars in deferred stock. The interest which accrued on the six per cent. stock from the 1st of January, 1790, to the first of January, 1795, amounting to dollars 703,51680/100, was not paid, but funded at three per cent. The six per cent. and deferred stocks, created both by the assumption and by the funding of balances, were, like those produced by the domestic debt, declared to be convertible into an annuity of 8 per cent. and of 23 years and some months, and irredeemably in any other way.

Two reasons seem to have influenced the measure of assuming the State debts before a settlement of accounts had taken place: firstly, the impatience of those States who labored under a heavy weight of debt, and who seem to have been apprehensive either that they might not be found creditor to so large an amount as the sums assumed for them, or that if they did not Edition: current; Page: [131] obtain immediate relief justice might afterwards be denied to them; secondly, an idea that government would be strengthened by rendering all the creditors of the individual States dependent upon the Union. And to these was added a suggestion that it was more easy for the general government than for the several States to discharge those debts.

The States, however, who had the largest debts to pay were found in the issue to be the greatest creditor States, and would therefore have experienced the same relief had they waited till a final settlement had taken place. Experience has also shown that the additional debt laid upon the Union by the assumption, so far from strengthening government, has created more discontent and more uneasiness than any other measure; and this not only on account of the additional taxes which have thereby been rendered necessary, but chiefly because a fear did thence arise that there were some influential characters whose wish was to increase and perpetuate the debt, and because, from a variety of circumstances, suspicions have been entertained that private interest and speculation were amongst the most powerful causes of the measure. Finally, although it may, upon a superficial view, have appeared a matter of indifference whether the money necessary to discharge that debt was raised from the people of the United States by the general government or by the individual States, yet the difficulty experienced by the government of the Union to increase their revenue by any internal duties, the rapid progress heretofore made by several States in redeeming their debts, and the present situation of those States whose debts (on account of their being found debtor States) would not have been assumed, clearly prove that a considerable part of the additional debt thus assumed by the Union would have probably, had no assumption taken place, been discharged by this time by the exertions of the individual States. What that additional debt amounts to will now be shown.

In order to form a correct idea of the effect of the measure, it is necessary to ascertain exactly, first, what is the present relative situation of the accounts of the States; and, secondly, how much debt it would have been necessary to assume or to fund after the settlement of accounts in order not perfectly to equalize Edition: current; Page: [132] the accounts, but to bring them exactly to the same situation in which they now are.

First. By funding the aggregate of balances which have been found due to the creditor States, and at the same time by not recovering from the debtor States the balances due by them, it is true that the different States have been put on a more equal footing than they were before; but the accounts are not yet finally settled, and there are now new balances due from and to certain States. For, although by funding the balances the debt due to the creditor States may appear to have been paid, yet, as that debt was due to them not by the Union, but by the debtor States only, and as the debt is thus paid not by the debtor States, but by the Union, the creditor States and those States which owed little or nothing are made (as part of the Union) to pay themselves a part of the debt. Thus their aggregate of funded balances must be considered as a tax laid upon the Union, as a charge to be paid by the several States, and therefore to be credited to them respectively in the same manner as other advances made by them have been. Dividing that aggregate amongst the several States in proportion to their Federal numbers as ascertained by the census of 1791, the quota thus falling on each State being respectively carried to the credit of each and compared with the balance which was before due by or to each State, will ascertain the balance now due by or to each State. By that process, which is exhibited in the 3d, 4th, 5th, 6th, and 7th columns of the statement No. XV., it appears that the aggregate of balances respectively due to and from certain States now amounts to dollars 2,450,39090/100; and it must be recollected that in order to come to that result the United States have assumed and funded a debt of dollars 22,492,88827/100.

Secondly. A process nearly similar to the one just now mentioned will show what balances should have been found against or in favor of the several States if no assumption had taken place. The effect of the assumption on the accounts and on the final balances returned by the commissioners has been to debit each State respectively with the amount assumed for that State, and to credit each State with the proportion or quota of that State (the said proportion being determined by the federal numbers Edition: current; Page: [133] of the State) of the aggregate sum assumed by the Union. As both the federal numbers of and the sum assumed for each State are known, the amount of the debit and credit created by the assumption against and for each State is also ascertained, and nothing more is necessary in order to find what result should have taken place had there been no assumption than to take away from the accounts (or, which is the same thing, from the result of those accounts as expressed by the balances returned by the commissioners) the debit and credit thus ascertained. The 2d, 8th, 9th, and 10th columns of the statement No. XV. exhibit the details of that process, from whence it appears that the aggregate of the balances which would have been found due to or from the several States had no assumption taken place amounts to dollars 8,047,30041/100. The next step is to find how much it would then have been necessary either to assume or to fund in order to reduce that aggregate of balances to the sum of dollars 2,450,39090/100, which has been stated to be the true amount of balances now due to and from the several States. Another process, nearly similar to the preceding, and which is exhibited in the 11th, 12th, 13th, and 14th columns of the statement No. XV., showeth that in order to obtain that result it would have been necessary to assume State debts, or to fund balances in favor of the creditor States, as might have best suited their convenience, only to the amount of dollars 11,609,25969/100, instead of the dollars 22,492,88827/100 which have been assumed and funded. Thus, had the United States waited to assume State debts till the accounts had been finally settled, instead of assuming at random before a settlement had taken place, the very same result which now exists might have been effected, the accounts of the Union with the individual States might have been placed in the same relative situation in which they now stand by assuming eleven millions instead of twenty-two. The additional and unnecessary debt created by that fatal measure amounts, therefore, to dollars 10,883,62858/100.1

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It will further appear, from an inspection of the same statement No. XV., that those States which labored under the heaviest burden of debts would have in a great degree been relieved; for the amount which in that case should have been respectively assumed for the States of Massachusetts, Rhode Island, Connecticut, and South Carolina is dols. 3,843,57374/100, 299,89247/100, 1,528,04258/100, and 4,603,85386/100; on the other hand, the States of Pennsylvania and Maryland, for which about 1,300,000 dollars have been assumed, would have been placed in a better relative situation had that plan, by which nothing would have been assumed for them, taken place; and they were so far able and willing to pay their own debts that they gave more to their creditors than was offered to them by Congress. The same ability and willingness existed in New York, for which about 1,200,000 dollars were assumed, and which was, in the issue, found to be a debtor State to the amount of more than 1,700,000 dollars.

The debt having thus been funded, it became important, chiefly on account of the speculations of foreigners, to raise its price as soon as possible to its nominal value. This was accelerated by the establishment of the sinking fund and of the bank. The purchases made by the commissioners of the sinking fund, partly with moneys borrowed in Europe and partly with the domestic revenues, as stated in statement No. XI., have already been mentioned.

The nominal capital of the bank incorporated by Congress in 1791 consisted of ten millions of dollars, two millions of which were subscribed by the United States, but borrowed by them from the bank itself at an interest of six per cent. and payable in ten yearly instalments of two hundred thousand dollars each. Of the remaining eight millions subscribed by individuals, only one-fourth part was payable in cash, and the other three-fourths in six per cent. stock. Thus a demand was created for six millions of dollars in that species of stock, which, added to one million of dollars in different species purchased in the same year (1791) by the commissioners of the sinking fund, was sufficient to raise the price of the whole debt, consisting of six per cent. stock, to its nominal value. It operated farther, indeed, than Edition: current; Page: [135] was desirable; for private speculators, excited by the rapidity of the appreciation, launched with so little caution in the business that, after an artificial rise had taken place through their means, the stock within less than two months sunk again from 25 per cent. advance to its nominal value.

The establishment of the bank was also beneficial in some other points of view. The accommodations which government receives from that institution in almost all its financial operations are not only useful when resorted to with moderation, but under our present system and in our situation may be deemed necessary. Nor can any person doubt that, like all other banks, this is of great commercial utility, by bringing into circulation moneys which otherwise would remain inactive, and especially by increasing the rapidity of the circulation. Banks, indeed, are perhaps still more useful for this purpose in America than in Europe. There the different nations may be considered as one great commercial people, who can easily relieve each other’s temporary wants of money; whilst here the sudden drains of specie, to which we are as liable as any other commercial nation, to which we are perhaps, on account of our extensive trade to the East Indies, more exposed than most of them, cannot, by reason of our great distance, be replaced within any short period from the redundance in any quarter of Europe.

The assistance to be received from the bank may, however, be abused both by government and by individuals; and it has certainly been abused by government. Instead of raising sufficient revenues, or abstaining from expenses, they have, as has already been observed, recurred too freely to loans and anticipations; have, in some instances, paid too dear for them; and now, from the demand made by the bank of the whole of the debt due them by the public, they find themselves in the same situation with an individual who has too freely made use of discounts and from whom they are suddenly withdrawn. The fear of those abuses, an apprehension, which perhaps has in some degree and in some instances been justified, that the bank might become a political engine in the hands of government, and a conviction with many that Congress had not, by the Constitution, a power to incorporate any public bodies, created a Edition: current; Page: [136] serious opposition to this measure, and has left many enemies to the institution.

Until the year 1795 no other provision was made for the redemption of the domestic debt (including therein the assumed debt) than that of the occasional purchases by the commissioners of the sinking fund. By an Act passed in that year the six per cent. and deferred stock have both been converted into short annuities of eight per cent., beginning from the year 1795 for the six per cent., and from the year 1801 for the deferred stock; and the faith of the Union is now pledged to pay those eight per cent., which will extinguish the six per cent. debt in the year 1818, and the deferred debt in the year 1824. The first payment of dollars 515,97272/100 on the six per cent. stock was accordingly made on the 1st of January. This sum added to dollars 2,307,66171/100 in different species of stock redeemed by purchases makes an aggregate of dollars 2,823,63445/100 extinguished on the domestic and assumed debt, and left the amount of six per cent. stock, on the 1st of January, 1796, dollars 28,284,26029/100, that of deferred stock dollars 13,960,98463/100, and that of three per cent. stock dollars 19,360,83864/100, making altogether dollars1 61,606,08356/100.

Of the debt due to foreign officers, dollars 122,33342/100 have been paid out of moneys borrowed in Europe, leaving the amount of that debt on the 1st of January, 1796, dollars 75,98452/100.

The debt to France may be considered as extinguished. The greatest part, viz., dollars 5,870,40030/100, have been paid with moneys borrowed in Holland; and that part of the debt which was not yet demandable has been commuted into two new species of domestic stock, bearing interest at 5½ and 4½ per cent., and redeemable at pleasure. The inconvenience experienced by the United States in being obliged to pay in Europe the interest and instalments of the principal of the whole of the foreign debt induced them, in 1795, to offer to the holders of that debt to exchange it for a species of stock redeemable at the pleasure of Edition: current; Page: [137] government, and payable, both principal and interest, in America, but bearing respectively one-half per cent. interest more than the debt then due. France was the only foreign creditor who accepted that proposal. The amount of 5½ per cent. stock thereby created is 1,848,900 dollars, and that of 4½ per cent. stock 176,000 dollars. The statement No. XVI. exhibits the situation of that debt on the 1st of January, 1790, and the manner in which it has been extinguished.

The Spanish debt, amounting to dollars 241,68195/100, one million two hundred thousand dollars of the principal of the debt contracted by the late government in Holland, 124,000 dollars of the premiums due on the same debt, and 600,000 dollars of the debt due to the bank for the subscription to the bank stock, have also been paid out of moneys borrowed in Holland. Those sums, together with the dollars 450,39552/100 unfunded debts heretofore stated, have been discharged in specie, constitute the whole of the payments made by the present government before the 1st of January, 1796, in part of the principal of the public debt.

The balance of the principal of the old debt due to Holland amounts to 2,400,000 dollars; the premiums still due on the same to 139,000 dollars, which, calculated on the same principle of a short, irregular annuity above mentioned, are worth dollars 104,40019/100. These two sums added to 9,400,000 dollars, which have been borrowed by the present government in Amsterdam and Antwerp, constitute the present foreign debt, amounting, on the 1st of January, 1796, to dollars 11,904,40019/100.

That debt bears an interest that varies from 4 to 5 per cent., and is payable by instalments, as appears in detail by the statement No. XVII.

The debts contracted by the present government in America consisted on the 1st of January, 1796, of 3,800,000 dollars in anticipations, 1,400,000 dollars still due on the bank stock loan, and 1,000,000 dollars borrowed to defray the expenses attending the intercourse with foreign nations and principally applied to the purpose of effecting a treaty with Algiers. These sums, amounting altogether to 6,200,000 dollars, were all due to the Bank of the United States, excepting only 200,000 dollars due to the Bank of New York. Out of this sum, 4,600,000 dollars (to Edition: current; Page: [138] wit, the 3,800,000 dollars anticipations, 400,000 dollars part of the bank stock loan and making the two instalments due thereon for the year 1795 and 1796, and 400,000 dollars part of the million of dollars loan obtained for foreign intercourse) were demandable during the year 1796, and the remaining 1,600,000 were payable after that year in five yearly instalments, the three first of 400,000 dollars, and the two last of 200,000 dollars each. The Bank of the United States having demanded the payment of the 4,400,000 which were due to them and payable in the year 1796, Congress were obliged, in order to provide for the payment of that debt, and also of the 200,000 dollars due to the Bank of New York, and of an instalment of 400,000 dollars on the Holland debt, which fell due during the year 1796, to open the five million dollars loan which has been mentioned in the preceding section. By the terms of that loan they offer to give, for the moneys borrowed, a stock bearing six per cent. interest and irredeemable for 24 years. Whether this loan will be filled, or whether it will be necessary for the commissioners of the sinking fund to sell a part of that stock under par or a part of the bank stock belonging to the United States, according to the powers vested in them for that purpose, is not ascertained.

The statement marked (B) exhibits two comparative views of the public debt on the first days of January, 1790 and 1796, respectively.

The first is grounded upon a supposition that the State debts assumed by the Union (including therein the balances funded in favor of the creditor States) were actually debts due by the United States. The nominal amount of the debt is stated, on the first of January, 1790 (after deducting the cash in hand on that day, and the old debts due to the Union, which have been since recovered), at dollars 72,613,25463/100, and on the first of January, 1796 (after making a similar deduction for the cash in the Treasury or in the hands of the collectors and for the bank stock belonging to the United States), at dollars 78,697,41012/100, and the increase of debt during those six years at dollars 6,084,15549/100.

This increase of debt arises, 1stly, from the excess of expenditures over the revenues received; and, 2dly, from such Edition: current; Page: [139] parts of the interest accrued on the debt since the 1st of January, 1790, as have been funded instead of being paid.

The excess of expenditures beyond the revenues received has been stated at dollars 3,228,96119/100, but is liable to the following deductions:

First. The excess of the nominal amount of the stock purchased by the commissioners of the sinking fund beyond the amount of moneys applied to purchases, which excess amounts to dollars 688,72567/100. (See statement No. XI.)

Secondly. The premiums paid on the old Dutch debt, which are not set down in the account of expenditures as a payment in part of the principal, but as one of the annual charges on the debt. It has already been stated that, calculating those premiums on the principle of a short annuity, they were worth on the first of January, 1790, dollars 171,17577/100, and on the first of January, 1796, dollars 104,40019/100. The difference between those two sums is dollars 66,77558/100, and must be considered as a reduction of the debt.

Thirdly. The moneys which, although not yet regularly passed in the accounts of the Treasury, had actually been collected from the people on the 1st of January, 1796, being then either informally paid in the Treasury or in the hands of the collectors, are also an actual payment by the people, and must be considered, when contrasted with the public debt, as a set-off, being either cash in hand or a real debt due to the public by the collectors. The amount of moneys in that situation on the 1st of January, 1796, may be estimated at about 600,000 dollars.

These three sums, amounting together to dollars 1,355,50125/100, which, deducted from the sum of dollars 3,228,96119/100, hereabove stated as the excess of the expenditures beyond the revenues received, leaves dollars 1,873,45994/100.

The interest which has accrued during those six years without being paid, and has been funded, consists of three items:

1st. The interest upon the proper domestic debt which remained unpaid during the year 1790, and, being funded at three per cent., created an increase of debt equal thereto, and which has been before estimated at 1,680,000 dollars.

2dly. The interest upon the assumed debt which remained Edition: current; Page: [140] unpaid during the years 1790 and 1791, and, being also funded (one-third at three per cent., four-ninths at six per cent., and two-ninth parts also at six per cent., but in deferred stock), has created an increase of debt equal thereto. As the principal and interest of that debt were blended together when funded, it is only by estimation that the principal and interest accruing thereon can be valued. Supposing, which is thought not to be far from the truth, that five-sixths of the assumption consisted of principal, two years’ interest on that principal (which, on that supposition, would amount to dollars 15,226,48957/100) would be equal to dollars 1,827,17875/100.

3dly. The interest which accrued for five years upon the balances funded in favor of the creditor States, viz., from the 1st of January, 1790, to the 1st of January, 1795, has also been funded at three per cent. instead of being paid, and has created another increase of debt amounting to dollars 703,51680/100.

These three items amount together to dollars 4,210,69555/100, which being added to the above-stated sum of dollars 1,873,45994/100 (being the excess of expenditures over the revenues, after making the proper deduction) give for the whole increase of debt dollars 6,084,15549/100, the same sum which is stated in the first view of the statement (B).

This view of the subject being grounded on a supposition that the debts assumed for the different States and the balances funded in favor of certain States were proper debts of the Union, no account is taken of the balances due by the debtor States, which, if due on the 1st of January, 1796, were also due on the 1st day of January, 1790. If, however, those balances, together with interest from after the year 1789, ever happen to be recovered from the debtor States, then the interest paid by those States upon those balances will be an equal set-off against the increase of debt arising from the interest funded upon the balances of the creditor States, and above stated in the third item of increase of debt arising from interest unpaid.

For the same reason it would be improper to take into consideration the effect which would have resulted upon the settlement of the accounts of the States, had the interest which accrued upon the assumed debt during the year 1790 and 1791 been paid Edition: current; Page: [141] instead of being funded. It is true that that interest (which has been stated as the 2d item of increase of debt arising from interest unpaid) was charged to the several States, being part of the assumption in the settlement of accounts, and therefore changed the result which otherwise would have taken place in the final balances if it had not been charged. But it would have been equally just to charge that interest to the several States in case it had been paid in specie by the Union instead of being funded. For, in fact, it should not have been charged to the several States; for the commissioners appointed to settle the accounts were directed by law to strike the balance due to each State on the 31st of December, 1789, by calculating the interest to that day upon the respective debits and credits of the accounts of the said States. The provision which at the same time directed that the whole of the debts respectively assumed for the several States, and therefore including interest thereon to the 31st of December, 1791, should be charged to the said States, was perfectedly contradictory to the general law, and has rendered the whole transaction irregular and the final settlement incorrect.

In order, however, to give every possible view of the subject, the effect produced upon the final balances found in favor of and against certain States, by having charged to the said States respectively the interest accrued on the assumed debts during the years 1790 and 1791, is exhibited in the last columns of the statement No. XV. From thence it appears that if that interest had not been charged, the aggregate of the balances due to the creditor States and which would have been funded would have amounted to dols. 3,904,35133/100 (still upon the same supposition that the interest for those two years amounted, as hereabove estimated, to dollars 1,827,17875/100), instead of 3,517,584 dollars, which have been returned by the commissioners; making, therefore, a difference of dollars 386,76733/100.

Upon that increase of debt it is proper to remark that, the present government having been organized only in 1789, it might have been found difficult, especially after the assumption of the State debts had been agreed upon, to provide at once a revenue sufficient to pay the interest upon the whole debt, which accounts for the non-payment and consequent funding of a part Edition: current; Page: [142] of that which fell due during the years 1790 and 1791. Although it was practicable to pay a part of it with that surplus of the revenue of 1790 which was applied to purchases of the public debt, the propriety of having preferred this last application is not disputed. Yet when taking an account of the progress of the debt, as whatever part has been redeemed is a deduction from its present amount, and as no part of the principal would have been redeemed had the whole interest for 1790 and 1791 been paid, it is evident that, in order to have a correct idea of the whole, the increase of debt which arises from that non-payment must be taken into consideration.

If, instead of taking the nominal amount of the debts, their supposed real value is estimated, it will be found that, estimating the six per cent. and deferred1 stocks at par, the three per cent. stock at sixty per cent. (or 12 shillings in the pound), and the bank stock belonging to the United States at 25 per cent. advance, the increase of debt upon this view of the subject is only dollars 4,591,86919/100.

The second view of the subject, as exhibited in the statement (B), is grounded upon the principle already established, that the State debts were not due by the Union, and that it would have been sufficient, for the sake of equalizing the accounts between the different States, to assume an aggregate of only dollars 11,609,25969/100; which last sum is therefore stated as the only part of the State debts and balances in favor of the creditor States actually due by the Union on the 1st day of January, 1790. The nominal amount of the whole debt on that day is upon that principle only dollars 64,260,29433/100; and the nominal increase of debt during the six years amounts to dollars 14,437,11579/100.

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Effects of the Public Debt, and Resources applicable to its Extinguishment.

Almost all the expenses of government, but especially that species which most usually engenders a public debt, viz., the expenses of war, are a destruction of the capital employed to defray them. The labor of the men employed in the public service, had it been applied in the pursuits of private industry, would not only have supported them, but probably afforded them some reward beyond mere sustenance, and therefore would have produced an excess beyond their consumption, an addition to the national wealth, an increase of the capital of the community. The whole of their labor, however useful and necessary it may be, being totally unproductive, not only the community is deprived of that increase of capital which otherwise would have taken place, but their consumption, together with all that waste which necessarily attends the most economically managed war, must be supplied out of the resources of the community at large, out of some capital which is annihilated by being applied to that purpose. This evil, an evil of the first magnitude, is the consequence of the expenditure itself, and not of the means by which that expenditure is discharged. The capital, whether it has been raised by taxes or by loans, is destroyed on account of its being applied to an unproductive purpose; and that destruction of capital is to be charged to the object of expense, to the war, and not to the public debt which is commonly contracted for supplying the expense, for procuring the capital thus devoted to destruction. In that point of view, the only evil which arises from a habit of recurring to loans is that, by facilitating the means of raising capital, it tends to enlarge the scale of expenses, it encourages unnecessary ones; it thus indirectly promotes a greater destruction of capital than would otherwise have taken place.

If it was possible, however, to defray the expenses of a war by applying thereto a capital which would at all events have been consumed, it is evident that such a mode would in a great degree repair the evils occasioned by the war. This effect is produced to a certain extent by taxes, which always fall in part upon such parts of the revenue of the nation as would have been Edition: current; Page: [144] consumed in as unproductive a way as the expenses of the war itself. But loans uniformly are supplied not by a revenue which would have been expended, but by a capital which was before that time employed to some useful and productive purposes. To support a war, to defray any kind of public expense by taxes, is to do it by the resources of economy, by retrenching the consumption of individuals, the consumption of the nation. To defray it by loans is the mode of the spendthrift; it is irretrievably to destroy the principal rather than to diminish our immediate consumption and enjoyments. But this evil is the consequence of contracting and not of funding a debt.

When the first measures of the present government in relation to the public debt were adopted, seven years had elapsed since the conclusion of the war. It was that war which had consumed the capital of the nation; it was during, or at least in consequence of, that war that the debt had been contracted. The most sensible evils which usually accompany a public debt had preceded by many years the provisions made for the American debt; they were already in a great measure cured by the exertions of private industry. The funding of the debt was therefore attended with no immediate evil, except that arising from the taxes necessary to pay the interest. But was that measure productive of any positive good?

It has been said that it had created a large productive capital which did not exist before. How this could have been effected does not appear. The owners of the debt have in their possession certificates, bonds given by the community, but if they are richer than they were before they had obtained that security for a regular payment of interest, the community who gave the bonds are certainly the poorer. If those certificates of debt are a capital more to the holders, they are a capital less to the debtors; and the nation is exactly, in that point of view, in the same situation in which they were before; with this difference, however, that the taxes necessary to pay the interest tend in part to prevent an accumulation of capital, fall perhaps in some degree upon the necessaries of the industrious part of the community, to a certain extent oppress and impoverish the nation, are paid but in part out of a revenue which would at all events have been consumed, Edition: current; Page: [145] whilst their whole amount is consumed by the holders of the debt. There is no more capital created by those certificates, by those bonds, than would be created if a number of individuals were, in consequence of any contract, to be indebted to other members of the community and to give them their bonds to an amount equal to that of the public debt. If a holder of the public debt sells his certificates to another member of the community, he acquires indeed a capital, but he does not create it. The purchaser must pay it with a capital previously existing in the country. A public debt does not increase the existing amount of cultivated lands, of houses, of consumable commodities; it makes not the smallest addition either to the wealth or to the annual labor of a nation. It does not appear that it can in any way be an additional national capital, unless it be supposed to operate, like money, as the means of facilitating exchanges; unless it be supposed to supply the place of a circulating medium.

Supposing that to be the case, it would not be to a larger amount than the demand of the country for that medium; and as the amount of the debt is much greater than the quantity of circulating specie required, it follows that only a part of it could be employed to that purpose, and that whenever a greater part was put in circulation than was required by the actual demand, its price would sink, and it could no longer answer the very purpose to which it was designed. In fact, the paper money of the banks and the increase of circulation they produce are in general fully sufficient for the demands of the country. Whenever, from some sudden drains of specie, or from that most common evil in America, “over-trading,” a greater demand for specie takes place, one of the first effects is to sink the price of the public debt. So far from adding to the capital of a nation, it would seem that a nation must have a large capital in order to support the price of a public debt, in order to give to that price that fixture which is an essential requisite to render it a proper substitute for a circulating medium. It is well known that that part of the capital of the Bank of the United States which consists of public stock does not answer to that institution the purpose of a capital in specie, of a circulating medium; Edition: current; Page: [146] that it does not enable them to increase their discounts. Although the evidences of the debt may occasionally and when at a fixed price answer the purposes of money, yet generally, and whenever variations take place in that price, it becomes an article of barter, an object of speculation, calls for, instead of giving, additional supplies of money, and is well known upon many occasions to have caused some of the greatest distresses which the mercantile world has experienced.

But although the funding of the American debt neither could nor did create any additional capital, yet it became the means of drawing to America a foreign capital to a large amount. It may be seen by the statement (B) that the foreign debt properly so called, that is to say, the debt immediately consisting of moneys borrowed abroad, and upon which the interest must be paid in Europe, amounts at this time to about the same sum which it did when the present government was established. But very large sums in the present domestic debt of the United States are owned by foreigners residing in Europe. The two millions of dollars, five and half and four and half per cent. stocks, created in order to extinguish the debt due to France, are principally held by foreigners. A large amount of the original domestic debt was purchased by citizens of Holland before it had raised to its nominal value; and from that time it has been usual for merchants to make remittances to Europe in public stock. The government of the United States alone have remitted during the year 1795 near one million and a half of dollars in six per cent stock. Thus America has received from foreigners a capital of several millions of dollars, which has appeared in the light of a great acquisition of wealth, which has had some dazzling temporary effect, but which has been an acquisition of wealth to the speculators in stock alone, and not to the nation. For the nation owes to foreigners those millions; the nation must yearly pay to Europe the interest of those millions, and it cannot get rid of the payment of that interest and of the taxes necessary to pay it until it shall have returned to Europe not only the capital received by America, but a capital equal to the nominal amount of the public stock purchased by Europe.

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If it be insisted that the sales of stock to Europeans, being nothing more than a certain mode of borrowing money in Europe, are advantageous to America, since we have so much demand for capital and can employ it in so profitable a way, still two circumstances must concur in rendering borrowing useful,—a low rate of interest and a proper application of the capital borrowed. The rate of interest, as it depends upon the price obtained for the stock, is uncertain. Yet it must be recollected that the purchases by foreigners began at a very early period, and that during the six years that have elapsed since the funding system was proposed, the six per cent. stock has not been at par or above par more than eighteen months, viz., from the latter end of July, 1791, to the beginning of January, 1793. The probability is that we pay from 7 to 8 per cent. on the capital which we have thus borrowed. Had, however, the whole of that capital been applied to productive purposes, it would have enabled the nation to pay the interest, high as it was, and perhaps to make some profit. But it cannot be denied that a small proportion, indeed, has been so applied as to increase the cultivation and improvement of lands, the erection of manufactures, the annual income of the nation. Acquired suddenly by individuals, that capital has been applied in the same manner as every other sudden acquisition of wealth; it has enabled those individuals to consume, to spend more, and they have consumed and spent extravagantly. Taking in the great number of elegant houses which have been built within a few years in all the large cities, and which, however convenient to the inhabitants, afford no additional revenue to the nation, it may be asserted that the greater part of the capital thus drawn from Europe for purchases of stock has been actually consumed, without leaving in its stead any other productive capital, and that as the nation still owes the whole, it has been impoverished even by the only consequence of the funding system that has made any temporary addition to the apparent wealth of the country. That wealth is, in a great degree, consumed and destroyed, and the whole debt remains to be paid. Still it is not astonishing that those who have been thus enabled to consume that capital should not have attended much to the manner Edition: current; Page: [148] in which it was to be replaced and repaid by the nation, and should have finally persuaded themselves and many others that the funding of the debt was a real and permanent increase of the national capital, a national acquisition of wealth.

Let it not be supposed that any of those reflections are intended to convey a censure on that part of the funding system which provided for the payment of the interest of the proper debt of the United States. They are designed merely to show that the propriety of that measure must have depended solely on its justice. Whether the debt had been funded on the plan of discrimination in favor of the original holders of those who had performed the services, or, as has been the case, in favor of the purchasers of certificates, the general effects would have been nearly the same; and unless the American government had chosen to forfeit every claim to common honesty, it must necessarily provide for discharging the principal or paying the interest to one or the other of two descriptions of persons.

Whatever difference of opinion may heretofore have existed on that subject, on the propriety of paying those who had purchased the debt so much under its value, it now exists no more, it has ceased with the cause; for all the present owners have, or may be supposed to have, purchased the debt at the market price, which, since it has been funded, has been obtained for it. The solemn obligations, superadded by the present government to those contracted before, never can be set aside without the most flagrant and pernicious breach of public faith and of national morality.

If the public debt is not an additional national capital, no other disadvantage can result from its extinction except the increase of taxes necessary for that purpose, and the annual loss which will be suffered by replacing to Europe the capital borrowed there, either under the denomination of foreign debt or by the sales of domestic debt. So far as the taxes necessary for that purpose will check consumption, the capital to be thus repaid abroad will be supplied by economy, and its payment will in no shape whatever impoverish the country. So far as those taxes will fall, not on that portion of the annual revenue which would have been consumed, but on that part which would have Edition: current; Page: [149] been saved and have become an addition to the permanent wealth of the nation, so far the progress of the country will, in a certain degree, be checked by the withdrawing and paying the capital due to Europe. To do this too suddenly would certainly be injurious to the community. But any evil that may arise from a gradual extinction of the debt, from a gradual repayment of the capital borrowed in Europe, will be more than counterbalanced by the natural progress of America, will free us from the payment of interest upon that capital, and will, at the same time, strengthen the bonds of our Union and give additional vigor and respectability to the nation.

It may have been supposed by some that the debt, by rendering the creditors dependent on government, gave it an additional stability. But it should be recollected that although an artificial interest is thereby created, which may at times give an useful support, it may at some future period lend its assistance to bad measures and to a bad administration. So far as that interest is artificial, so far as it is distinct from the general interest, it may perhaps act against that general interest and become as pernicious as it is supposed to have been useful. At all events, who can doubt that the jealousies, the apprehensions, the discontents excited by the public debt have been more injurious to our domestic peace, have gone farther to weaken our real union, than any other internal cause? It is a lamentable truth that the Americans, although bound together by a stronger government, are less united in sentiment than they were eight years ago. Every source of discontent, every permanent cause of taxation which can be removed, adds to the strength of the Union and to the stability of its government.

But, in regard to our strength and consequent respectability and independence in relation to other nations, as speedy an extinction of the debt as circumstances will admit becomes indispensable. As there is not the smallest probability that we ever shall be involved in any war except in self-defence, and as the exhausted situation of all the European nations seems to warrant, at the conclusion of the present war, a continuance of peace for at least ten or twelve years, we should by all means improve that period to discharge the heaviest part of our debt. It requires Edition: current; Page: [150] no argument to prove, it is a self-evident truth, that, in a political point of view at least, every nation is enfeebled by a public debt. Spain, once the first power of Europe,—Spain, with her extensive and rich possessions, Holland, notwithstanding her immense commerce, still feel the effects of the debts they began to contract two centuries ago, and their present political weakness stands as a monument of the unavoidable consequences of that fatal system. Yet what are those instances when compared with that of France, where the public debt, although once discharged by the assistance of a national bankruptcy, has at last overwhelmed government itself! The debt of Great Britain, which began at a later period than that of any of those three nations, has not yet produced such visible effects. The unexampled prosperity of that country has heretofore been sufficient to support its strength and to increase its wealth, notwithstanding the weight of that burden. Yet the revenue now necessary to discharge the interest annually payable on that debt and to support the peace establishment of that nation, that is to say, the annual revenue now raised by taxes in Great Britain, would, if unencumbered, discharge the yearly expenses even of the war in which she is now engaged.

The sum necessary to pay the annuity and interest on the debt of the United States constitutes more than two-thirds of their yearly expenditure; and it is presumable that we would not be much exposed to the wanton attacks, depredations, or insults of any nation was it not known that our revenue and resources are palsied by an annual defalcation of five millions of dollars. It does not seem that any possible object of expense, without even excepting the creation of a navy, can be so eminently useful in adding to our external security and respectability as that which, by paying the principal of our debt, will give us the command of an unimpaired revenue, and enable us to dispose, if necessary, of all our resources.

A circumstance which seems to render this still more requisite in America, is the difficulty for the United States of raising moneys by loans, except in time of profound peace. It is well known that the great demand for capital in America, the usual high market rate for interest, the peculiar circumstances of the Edition: current; Page: [151] country, render it nearly impossible to borrow any large sums at home; and experience has lately proved that the circumstance of an European war, even though we ourselves were not engaged, was sufficient to prevent us from any farther loan in Europe. Hence it results that as we cannot in case of any emergency put much reliance on that resource, we should during our state of peace and prosperity hasten to disencumber our domestic resources. We have, indeed, severely felt the obligation of repaying during the present European war the anticipation at home and the instalments of the foreign debt abroad. We have thereby been compelled to borrow on the most disadvantageous terms, to contract the obligation of paying an interest of at least six per cent. for 24 years, and to remit to Europe stock purchased at par, and which will probably sell there under its nominal value. These considerations, supported, it is believed, by the general opinion of the people of America, forcibly point out the necessity of an immediate recourse to our domestic resources, of an immediate increase of revenue.

It has already been shown that our present receipts are hardly adequate to our present expenditure; in fact, that we have heretofore made only a nominal provision for paying the principal of any part of our debt. For although (supposing the present receipts to be equal to the present rate of expenditure) it may be said that we have provided for the yearly payment of 2 per cent. on the principal of our six per cent. debt bearing a present interest, yet we have not made any provision whatever for the payment of the annuity payable after the year 1800 on the deferred stock. Indeed, the interest (exclusively of the additional 2 per cent.) payable on this stock exceeds the yearly payment of 2 per cent. upon the six per cent. stock; and the fact is that our present revenue is not even sufficient to pay after the year 1800 the interest on our debt. Our faith is now pledged to pay from after that year an annuity of 8 per cent. upon both stocks; and whatever difference of opinion may exist upon the extinguishment of other parts of the debt, it is necessary to increase our revenue from after that year by a sum sufficient to discharge that annuity, which has already been stated at about 1,100,000 dollars.

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This increase will enable the United States to extinguish the whole of the six per cent. stock by the year 1818, and the whole of the deferred stock by the year 1824. No farther provision seems necessary on that part of the debt, which amounts to about forty-two millions of dollars, except the very important one to find the additional revenue of 1,100,000 dollars.

The parts of the debt which will remain unprovided for are:

1st. The foreign debt, which on the 1st of January, 1796, consisted of about twelve millions of dollars, but which, by the payment of the instalment that falls due during the year 1796, and has been provided for by the five million loan, will be reduced to about 11,600,000 dollars.

2dly. The five and a half per cent. and four and a half per cent. stocks, amounting to about 2,000,000 dollars.

3dly. The instalments due after the year 1796 to the bank, and not provided for by the five million loan, amounting to 1,600,000 dollars.

4thly. The anticipations necessary during the years 1796 and 1797 (exclusively of the loans that may be requisite to pay any part of the principal of the debt), estimated at 800,000 dollars.

5thly. The new five million loan, which, being irredeemable for twenty-three years, cannot be extinguished except by purchases.

6thly. The three per cent. stock, amounting to about 19,300,000 dollars, which, on account of its low rate of interest, is not susceptible of any extinguishment, except by purchases or by a new modification of the debt.

Those different sums somewhat exceed forty millions of dollars; but the four first items, which seem alone to be the object of redemption by an application of revenue, amount altogether to sixteen millions of dollars. They are all, the five and half per cent. and four and half per cent. stocks excepted, payable by instalments due before the year 1810; and although the amount of the yearly payable instalments is not equal every year, yet as some of the Dutch loans may, according to the terms of the contract, be discharged by government as much earlier as they please, the total sum to be paid each year may be so equalized and modified Edition: current; Page: [153] as to render the discharge of the whole practicable before the year 1810, with an uniform revenue. It is proposed to make provision for that payment during that period by an additional revenue, and as it is not possible that any new revenue, even if raised by Congress at their next session, can be productive before the year 1798, the term proposed for the redemption of those sixteen millions will be twelve years from the first of January, 1798, to the first of January, 1810.

The interest payable on those sixteen millions may, when calculating the revenue necessary to discharge the principal, be estimated at an average of about five per cent. A debt of sixteen millions, bearing an interest of five per cent., will be discharged in twelve years by a revenue somewhat exceeding one million of dollars. But as the eleven hundred thousand dollars necessary to pay the annuity on the deferred stock will not be wanted till the year 1801 for that purpose, and, if raised from the year 1798, may in the mean while be applied to discharge three millions and a half of the debt of sixteen millions; this, being thus reduced to twelve millions and a half, will be discharged in twelve years by a revenue of about 800,000 dollars. This sum added to the 1,100,000 dollars, which are at all events necessary to pay the annuity on the deferred stock, form an aggregate of 1,900,000 dollars, the revenue necessary to be raised for twelve years.

Through the means of that revenue not only sixteen millions of the debt shall have been redeemed, but an annuity equal to about 780,000 dollars, the interest payable thereon, will be liberated and form an actual addition to our present revenue. If during the same period the resources to be derived from the lands of the United States, which will next be taken under consideration, are applied to the three per cent. stock so as to liberate an annuity of 320,000 dollars, these two sums will be sufficient to pay the annuity on the deferred stock, and the whole of the additional revenue of 1,900,000 dollars may cease after the year 1809. On the other hand, if only the 1,100,000 dollars are raised from the year 1801, that additional revenue must continue till the year 1824. The difference between raising what must at all events be raised, to wit, 1,100,000 dollars, only from Edition: current; Page: [154] after the year 1800, putting off the increase of taxes and revenue to the last moment, and raising 1,900,000 dollars from the year 1798, consists in the difference between taxes of 1,100,000 dollars for twenty-four years and taxes of 1,900,000 dollars for twelve years; or (as 1,100,000 dollars must by both plans be raised for twelve years) it consists in the difference between immediate taxes of 800,000 dollars for twelve years and taxes of 1,100,000 dollars also for twelve years, but beginning twelve years hence. Supposing the country to be so fast progressing in prosperity that 1,100,000 dollars of taxes will not be more heavy twelve years hence than 800,000 dollars now are, still the sole advantage which arises from a postponement is present enjoyment, and putting off a burden which must necessarily come at that time. The loss is manifest; for although the same burden must then be borne, the debt remains unpaid. Should we not raise that revenue at present, to a momentary relief we shall have sacrificed sixteen millions of dollars, we shall have lost the present time, we shall have lost an almost certain period of peace and prosperity; and although we cannot command future events, we shall have to encounter them at that time as unprovided and as enfeebled as we now are.

Independent of any additional revenue to be raised by taxes, the lands of the United States will afford another resource. Those now at the disposal of Congress do not amount to ten millions of acres; but the quantity might be enlarged without any difficulty was there any real demand for more. Lands are so much more valuable to us than to the Indians, that whenever they are actually wanted we may afford to pay for them a much higher price than they ever do ask. The actual demand, which must regulate the price that may be obtained by Congress for the lands belonging to the public, is determined itself by the increase of population and by the direction of emigrations. Lands of good quality and in actual demand for settlers will fetch about four dollars per acre, payable in about five years by instalments. If sold upon shorter terms of credit, or in large tracts, the persons who settle the lands and can afford to give the highest price are generally excluded from the competition, and the lands will only bring such a price as will leave to the purchaser Edition: current; Page: [155] (who is to sell again to settlers) the usual profit upon capital employed in similar speculations. Should the lands be sold before there is an actual demand by settlers, they will bring a price proportionably less as the prospect of settlement may be farther distant. Congress have directed their lands to be sold partly in small and partly in large tracts; one half of the purchase-money to be paid at the time of sale, and the other half within one year after; no lands to be sold under two dollars per acre. The credit is so short that the class of people who usually begin settlements will be nearly altogether excluded. The provision which fixes the price at two dollars at least will exclude, to a certain degree, the speculators. And the sales will probably fall short of the actual yearly demand for settlers and be confined to the very best tracts.

About ten thousand families migrate every year to the westward of the Alleghany Mountains. Although all of them cannot purchase lands, all of them increase the demand for land, as they enable those who can purchase to cultivate more and therefore to purchase more. Of those ten thousand families, three-fourths at least will be fixed in the States of Tennessee, Kentucky, Virginia, and Pennsylvania, and in those parts of the North-West Territory already ceded by the United States and by Virginia. The yearly migration to the lands of the United States will be probably about 2600 families; the yearly actual demand for lands may vary from 500,000 to one million of acres. Although various circumstances render it impossible to form any tolerably correct conjecture on the amount of sales, it is not probable that, on the plan which has been adopted, they will upon an average exceed 250,000 acres, yielding a revenue of 500,000 dollars. The first year, on account of the great demand for the valuable low lands on the Ohio and other rivers, will perhaps be more productive than the succeeding ones.

The lands may be applied in two ways to the payment of the debt, either indirectly or immediately: indirectly, by selling the lands for the best price that can be obtained, and applying the moneys to the redemption of the debt; immediately, by inducing the holders of some species of debt to exchange it for Edition: current; Page: [156] lands, by making the price of lands payable in certificates of debt of that species. By the first mode it is probable that a higher price will be obtained for the lands, as they will only be sold from time to time as they rise in value, and as some advantages must be given to the holders of the debt to induce them to make the exchange. But, on the other hand, the second mode will secure a proper application of the proceeds of the land; the land itself will pay the debt without coming into the Treasury in the shape of money, which, upon the first emergency, might be applied to some other purposes. Another peculiar advantage would arise if the land was immediately applied to the extinguishment of the debt bearing an interest of three per cent. Was a redemption of this debt to be attempted by purchases, it would necessarily raise its price beyond its usual market price and beyond what it is supposed to be really worth. It would, therefore, require so much larger a sum for its redemption. Supposing that stock to be worth sixty per cent. upon its nominal value when six per cent. stock is at par, the 19,300,000 dollars now existing are worth only something more than eleven millions and a half of dollars. But although the lands should bring that money, it would undoubtedly require a greater sum to purchase the whole of the stock. A variety of plans might be formed for a commutation of that stock into lands. The following sketch is offered merely to show in what manner the operation might be effected.

Let the lands, after they shall have been surveyed, be divided into ten large lots of 960,000 acres each, as equal in quality and value as the nature of the case will admit; and each of the said large lots be subdivided into townships, and these into tracts of 640 acres. Let then a subscription be opened for the sale of the large lots successively, beginning with the most valuable; each purchaser to subscribe for at least a tract of 640 acres; the price of the subscription to be two dollars per acre, with interest at the rate of three per cent. a year from the time of the sale, payable in any species of stock of the United States at its nominal value; with liberty to the purchaser to discharge the debt in specie at the rate of one dollar and a half per acre; one-tenth part of the purchase-money to be paid at the time of the subscription, Edition: current; Page: [157] and the remainder part in nine yearly instalments, or sooner, at the option of the purchaser: possession of the land to be given immediately, but the land to remain mortgaged in security for the purchase-money. As soon as the subscription to one of the large lots is filled, let the subscribers draw lot for their respective shares, under such modifications as will secure to subscribers for one township, or quarter of a township, the whole in one tract.

The most weighty objection against this plan is, perhaps, the lottery and speculation to which it will give rise; yet it will be found difficult to devise any plan for the sale of lands and for the redemption of the public debt which will not, in some degree, be liable to the same objection. The number of acres, price, interest, time of payment, &c., in the above have been inserted merely for the sake of conveying clearer ideas; but they should be considered as blanks that can be filled only upon an investigation of all the details of the subject.

The advantages for the public, supposing the whole of the subscription to be filled, would be the certainty of the redemption of the whole debt bearing an interest of three per cent. and an immediate liberation of the annuity of 580,000 dollars necessary to pay the interest thereon, since the interest payable for the land would always be equal to the interest payable on the three per cent. stock in circulation.1 This sum might, therefore, be applied in part of the additional revenue of 800,000 dollars wanted to extinguish the debt of sixteen millions; I say of the 800,000 dollars, for it could not be applied in part of the 1,100,000 dollars necessary to pay the annuity on the deferred stock, the faith of the Union being pledged to discharge that annuity out of the revenues of the Union, and to apply, in addition to it, the proceeds of the public lands towards the extinguishment of the public debt. Thus, if that subscription was to be filled, the lands would in twelve years extinguish both the debt bearing three per cent. interest and a great part of the Edition: current; Page: [158] above-mentioned sixteen millions of dollars; it being necessary to add (for that purpose and exclusively of the 1,100,000 dollars requisite to pay the annuity on the deferred stock) only a yearly revenue of 220,000 dollars for those twelve years. Those advantages would more than counterbalance to the public the advantages offered to the subscribers by the low rate of the lands.

The advantages to subscribers would be obvious. The average price of lands equal in situation and quality, but either settled or capable of being immediately settled, is now four dollars per acre. In all probability ten years, and at farthest fifteen, will settle the whole of the ten millions of acres offered for sale, or at least will raise the whole of it to what may be called the settlement price, an average of four dollars per acre. A part might now be sold above that price; a great proportion of the lands will attain it within a shorter period than ten years; the most remote situation will be worth it at the expiration of that time. And this must take place, according to the natural course of events, by the natural increase of population, without giving any farther trouble of management to the purchasers than that of selling the lands again to actual settlers. Those amongst the purchasers who will become settlers will affix that price to the land as soon as they improve it; and at the price they give will be enabled to pay three-fourths of the purchase-money out of the proceeds of the land itself. The land may therefore be considered as being, upon an average, worth four dollars per acre within eight years after the time of purchase; which, discounted at the rate of six per cent. compound interest, is equal to about two dollars and a half at the time of purchase. For this the subscribers will give, at most, one dollar and a half, bearing, in fact, only four per cent. interest, payable in nine years, and not worth much more than one dollar and a quarter at the time of purchase.

Although the success of a plan something similar to this may not be complete, yet so far as it will succeed, so far the extinguishment of the debt bearing an interest of three per cent. will be promoted, and so far the amount of the additional revenue necessary for the payment of the annuity on the deferred stock, Edition: current; Page: [159] and for the extinguishment of the above-mentioned debt of sixteen millions of dollars, may be diminished. The sources from which that additional revenue, whatever its amount may be, can be derived remain to be examined; still recollecting that at least 1,100,000 dollars must necessarily be raised, and that the ability of the United States to raise the highest required sum, viz., 1,900,000 dollars, cannot be denied.

This revenue may be raised either by indirect or direct taxes. A difficulty, inherent in the Constitution, will always render a recurrence to direct taxation the last resort of the general government. For, it being provided that such taxes shall be apportioned among the several States according to their respective population, those States who have a less extent of territory in proportion to their numbers will think themselves aggrieved by a species of tax which must reach their lands, not in the ratio of their value, but in that of the whole number of inhabitants.

Labor being the only source of wealth, the annual quantity and produce of labor was the best general rule which could be established for fixing the respective ability of paying taxes in the several States. Nor does it appear that any better criterion could have been adopted, in order to ascertain that annual produce of labor, than the number of inhabitants, making the same allowance with the Constitution by estimating the net produce of the labor of five slaves (after deducting that part necessary for their sustenance) equal to the net produce of the labor of three freemen. Yet that general rule, like all others, is liable to some exceptions. The labor of the same number of men may, according to the differences in the nature of their employment, in their skill and industry, in the government under which they live, in the quantity of active capital existing in the country, and in several other circumstances, vary in different countries. The labor of the inhabitants of Great Britain is certainly far more productive than the labor of the inhabitants of Poland, who are at least equal in number. It does not, however, appear that the differences existing in the respective circumstances of the several States are so great as to render the operation of the rule more unequal than the operation of most indirect taxes. Their government is similar, and the most sensible Edition: current; Page: [160] difference is, that the Southern States have a larger capital in land, and the Northern States have both more industry and a larger circulating capital. Hence it results that a tax merely on lands might perhaps bear more heavily on the landholders of the North than on those of the South; not but that a tract of land, without reference to its size, is usually equally productive in both places when cultivated by an equal number of persons; but because there is a less proportion of the inhabitants employed in the cultivation of land to the North than to the South. The operation of a tax merely on land might therefore be unequal on that description of persons in the several States, but not on the States themselves. A direct tax upon the whole property, although perhaps liable to still greater objections, would not, in that point of view, be unequal either on the States or on any particular description of people. And it is worthy of remark that, whatever inequality may result from the operation of direct taxes proceeding from the difference in the nature of the capital and in the application of the labor in the different States, as great a one, but operating in the very reverse, must result from indirect taxes on consumable commodities imported into the Union. For, if taxes on land, laid according to the rule prescribed by the Constitution, bear more heavily in some one quarter because the proportion of persons employed in the cultivation of lands is less there than in other parts of the Union, on the other hand the proportion of persons employed in manufactures in the same place must be greater.

The consumption, therefore, of imported manufactures, and the amount of duties paid on that consumption, will be proportionably less. If a land tax presses harder upon the landholders of the North, it is because the proportion of cultivators is less and that of manufacturers is greater than to the South. If the proportion of manufacturers is less to the South, the people there must consume a greater quantity of foreign goods and pay a larger proportion of the impost. By combining the two modes of taxation, a more equal effect will probably be produced than can be by either singly. This opinion is confirmed by the experience of all other nations; it is not believed that any instance can be adduced of a nation raising any considerable revenue Edition: current; Page: [161] without having resorted to direct taxation, to land taxes. Nor have these, when laid judiciously and with moderation, ever been complained of as unequal or oppressive. It is, however, proper to examine what additional resources can be derived from indirect taxes.

The duties upon importations are, of all others, those which seem best adapted to our situation. As we import more and manufacture less, in proportion to our consumption, than almost any other country, the impost must necessarily be far more productive than any internal duties on our own manufactures. The collection of the impost, being confined to a few seaports, requires but few officers and a small expense. The merchant is liable to no vexation from the officers except at the time of landing the goods and on board of his vessel; and he is always a man of sufficient information to understand thoroughly the duties required of him by the law, and to repel any attempt by the officer to oppress. In those particulars the manufacturers who pay internal duties are generally placed in a worse situation, for the act of manufacturing not being, like that of landing goods, the work of a day, but that of the whole year, it is necessary, in order to know the quantity manufactured, that the workshop of the manufacturer should be perpetually opened to the inquisitorial inspection of the collector. Nor must it be forgotten that, in America, the few extensive manufactures are carried on by a great number of persons, many of whom,1 from their situation in life, may often involuntarily omit some of the numerous duties prescribed by the most complex of all revenue laws, and are also more exposed to the oppressions of subaltern officers. Although few manufactures are yet carried on upon a large scale in the United States, yet a great proportion of the most essentially necessary articles are made at home, and the greater part of the importations may justly be termed luxuries, and are amongst the most proper objects of taxation. Thus the impost, at the same time that it possesses the same general advantages with other taxes upon consumption, is free of the most weighty inconveniences which may be objected to the other species; it is, in our present Edition: current; Page: [162] situation, of all others the most productive, the cheapest to collect, the least vexatious, and in general the least oppressive.

This resource has, therefore, been resorted to and carried already pretty generally as far as its own limits will permit. For there is a certain rate of duty beyond which the high temptation offered to smuggling or a diminution of consumption must necessarily decrease the revenue. It cannot be said that the present duties have, upon all those articles which are fit objects of taxation, been carried to the utmost extent of which they are susceptible. Perhaps a judicious selection may be made amongst the most bulky of those articles which now pay ten per cent. ad valorem, and the duty increased to the same rate paid upon printed cotton goods, viz., twelve and a half per cent perhaps sugar, which is now thought to pay the lowest duty amongst those articles charged with specific duties, might, without oppression, as it can without danger, be taxed half a cent. higher; perhaps some of the articles which now pay duties ad valorem might be classed amongst those paying specific duties, so as to be made to contribute something more to the revenue; perhaps the system is susceptible of some farther improvements. But it will be generally allowed that there would be a great risk of diminishing, instead of increasing, the revenue was any considerable extension of the impost to be attempted, and that it would be a large computation to suppose that 300,000 additional dollars could be raised in that manner. Yet it may be safely predicted that, unless recourse be had to direct taxes, the unavoidable consequence will be an undue and dangerous augmentation of the present duties on importation, amongst which the most oppressive, viz., an increase of that upon salt, is already contemplated.

The next class of indirect taxes are the internal duties on the use or consumption of consumable articles. The only tax which has been suggested, in addition to that on carriages, upon the use of anything is one upon horses; but it must be remembered that, in order to be an indirect tax, it should be confined to saddle-horses.1 For the horses employed in agriculture or in Edition: current; Page: [163] the transportation of merchandise are not an object of expense, but a productive capital, an object of revenue, an object of direct taxation only. It is presumable that a tax confined to saddle-horses would be difficult in its execution, liable to be evaded, and very unproductive.

The little success which taxes upon consumption, laid on the manufactures, have heretofore met with does not seem to afford much encouragement for similar attempts in future. Men who are earnestly wishing to derive new revenues from internal sources and by indirect taxes have not been able to suggest, in addition to those already liable to the excise, more than two American manufactures productive enough to be proper objects of taxation, that of leather and that of hats.

The manufacture of leather is, without doubt, one of the most extensive in the United States. It is presumed that a duty of ten per cent. on that article might, if duly collected, yield about 500,000 dollars. It is liable to two weighty objections: it is a tax which would, at least in the first instance, fall with nearly equal weight on every individual; it is properly a tax upon labor, always oppressive in its first operation, and the final effect of which cannot be calculated. In the next place, it does not seem practicable to raise the duty in any other mode than upon the tanner himself; and the manufacture in many parts of the Middle and almost universally in the Southern States is a family one, carried on by every planter and farmer. Its collection would therefore be expensive, and a great proportion of the duty evaded.

A tax upon hats would be less unequal and more easily collected; but, on the other hand, far less productive. It is believed that a duty of ten per cent. on this article would not in practice yield more than 100,000 dollars.

The last tax of indirect taxes includes all the duties laid upon a variety of transactions in life, which are commonly taxed by the operation of licenses or of stamps.1 Amongst these, law Edition: current; Page: [164] proceedings, transfers of property, and contracts or obligations for money are the most usual objects of taxation. Taxes upon law proceedings may deservedly be ranked amongst the most unequal, unjust, and oppressive. Those upon contracts in general, although always to a certain degree unequal, are, perhaps, liable to less objections than most other indirect taxes. Yet in America they could not, without injustice, be extended to all species of contracts. Transfers of all real property especially are so much more frequent in those parts of the Union which are newly settled, that a stamp duty upon them would be in proportion not to the wealth, but to the poverty, of the contributors. A necessity of limiting the number of species of contracts to be taxed would diminish the productiveness and increase the expense of collection; and as in mere contracts for money the only penalty attached to the omission of taking out a stamp depends on the subject-matter of the contract becoming a subject of discussion in a court of justice, the confidence of the parties in one another will sometimes, and their negligence often, tend to diminish the revenue. From those causes this class of duties has not been supposed to be likely to produce more than 150,000 dollars at most, and would not probably yield above 100,000.

It therefore appears that the only new indirect taxes that can be resorted to are an addition to the impost, an excise on leather and hats, and a stamp duty; all of which would not yield above one million of dollars, and would therefore fall short of the revenue wanted.1 Yet could a sufficient sum be raised by those means, the people of the United States may decide which would Edition: current; Page: [165] be most oppressive, these including an additional duty on salt, or a direct tax. The objection arising from a supposed inequality has already been noticed, and it must be farther observed that if some States have stronger objections against that species of taxation than others, they are generally those which have been mostly relieved, by the assumption of the State debts, from the heaviest individual burden. Had not that assumption taken place, the Union, indeed, might have proceeded to the extinguishment of their proper debt without wanting additional revenues and without resorting to direct taxation. But those States who were oppressed under the weight of their own debts must, in that case, have raised a larger revenue than will now be their proportion of a general tax. After having urged, as the most powerful argument in favor of the assumption, that it would liberate the resources of each State from local demands and enable the Union to use them all, it would seem unfair, at present, to refuse to the general government the command of the most productive internal branch of revenue. In fact, the very objections against that assumption which have been so much insisted upon must lose a great part of their strength if an adequate revenue is raised. They are mostly grounded upon the increase of the general debt and the greater difficulty for the Union effectually to command all the resources of the country. Give the Union that command, prove that its ability of paying the principal of the debt is not impaired by having assumed the State debts, and the measure will stand almost justified.

How far the lands belonging to the United States, the additional resources to be derived from indirect taxes, and the savings which may be effected in our present rate of expenditure, may reduce the amount of revenue to be raised by a direct tax, cannot be ascertained. But it cannot be supposed that even a tax of 1,600,000 dollars could be oppressive in the smallest degree. From the year 1785 to the year 1790, at a time when the situation of the United States was less prosperous than now, when their population, the quantity of cultivated land and of circulating capital, the annual income of the people, and their consequent ability to pay, may fairly be stated as inferior to what they now are, a tax was raised in Pennsylvania without oppression Edition: current; Page: [166] and paid with punctuality, the amount of which was nearly equal to the present proportion of that State of a Federal tax of 1,600,000 dollars.1 Perhaps it would not be amiss, in order to insure the greatest possible economy, to make all the payments of the interest and principal of the public debts out of the duties on imports, appropriating the surplus of those duties, the internal existing duties, and the new taxes, to the discharge of all the current expenditures, and especially of the military and naval establishments.

A direct tax imposed by the Union may be laid either uniformly on the same species of property in all the States, or upon that species in each State which has usually been directly taxed there. In favor of the last mode it may be said that it will altogether remove the inequality apprehended from a land tax, and, above all, that it will better accommodate to the habits and prejudices of each State. This last argument carries so much weight with it that the House of Representatives have directed the Secretary of the Treasury to prepare a plan upon that principle, to be laid before them at the ensuing session. The materials which will then be collected may enable Congress to form a final determination on the subject; and it is not the intention of this sketch to anticipate, by any remarks on details, the deliberations which must then take place. Yet, opinions having been expressed here upon most species of taxation, a general remark will also be added on the comparative merits of the two modes of laying direct taxes, without any reference to the local causes which may influence a final decision.

A direct tax is laid upon property in proportion either to its capital value or to the revenue it affords. It is, therefore, necessary not only to collect the tax, but previously to assess it; in other words, to estimate the value of the property or of the income derived from it. The collection of the tax itself is everywhere cheaper than that of any other tax, because the officers employed may always be temporary ones, there being no necessity, Edition: current; Page: [167] as in the case of indirect taxes, to keep a watch over the contributors. It costs less to collect in England and in France than any other species of tax. Even in Pennsylvania, where the system was complained of on account of its being expensive, the charges of collection were but five per cent. But the assessment must necessarily increase to a certain degree the expense, and this will vary according to the species of property taxed. Real property, being of a permanent nature, may be valued once in five or ten years without any great inequality resulting therefrom. The assessment of England, which, it is true, is now very unequal, has stood for near a century without variation. Personal property, perpetually shifting, requires a yearly valuation. But it is not only in the article of expenses in collecting that direct taxes upon real property possess a great comparative advantage. In order to assess, to estimate the capital or the income of an individual, that capital, that income, must be known. His real property is visible and can always be estimated with certainty. But the greatest part of his personal property may with propriety be denominated invisible. His capital employed in commerce, the debts which are due to him (from which must be deducted those he owes), his money, and even his stock in goods, must either be assessed according to his own declaration, or be estimated in an arbitrary manner. And when the tax is laid upon the revenue and not upon the capital of persons, when the profits of their industry are also to be calculated, it may truly be asserted that, was it not for the permanence of the vexations of excises, the most odious of these would be less oppressive, unequal, and unjust than a direct tax levied in that manner. Experience justifies those assertions. In England, where direct taxes fall almost exclusively upon lands and houses, they never have given cause to any just reason of complaint. In France, the taxes called personal, taille and capitation, which were laid with a regard to the conditions of persons, and assessed according to a conjectural proportion of fortunes, industry, and professions, were equally oppressive to the contributors and injurious to the nation. Although there are some species of personal property which may be estimated and taxed in a more certain and less arbitrary manner than others, yet it may be laid down as a general Edition: current; Page: [168] rule, liable only to local exceptions, that lands and houses are the proper objects of direct taxation, that almost every other species of property must be reached indirectly by taxes on consumption.

To conclude: the resources to which it appears that the Union should resort are those of the most general nature, leaving all the lesser, all the local subjects of taxation, to the individual States. There are at present but two species of wealth of a general nature in the United States, viz., lands and capital employed in commerce. It has already been stated that in proportion to our population we were one of the first commercial nations. It cannot be denied that we are by far the first agricultural nation. It must be acknowledged that we are not yet a manufacturing nation. Our capital in commerce is great; our capital in lands is immense; it can hardly be said that we yet have any capital in manufactures. Taxes must be raised from that fund which can afford to pay; taxes must be laid, even in the first instance, where capital does exist. The impost is productive, because our commerce is extensive; every effort, in our present situation, to raise a considerable revenue from our manufactures will prove abortive, because there is no capital there to pay it; because the income drawn from those manufactures which are proper objects of taxation is yet inconsiderable. The same taxes upon consumption, which in manufacturing countries are raised by excises, are in America very properly raised by impost.1 When the impost is carried as far as prudence will dictate, the great source of taxes upon consumption may, in this country, be considered as nearly exhausted, and the other general species of American capital, the other great branch of national revenue, lands, must be resorted to; must be made to contribute by direct taxation.

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No. I.: Schedule of the Population of the United States in 1791.

States. Free Persons. Slaves. Total. Federal Number. Tenths.
Vermont 85,523 16 85,539 85,532 6
New Hampshire 141,727 158 141,885 141,821 8
Massachusetts 475,327 none 475,327 475,327 0
Rhode Island 67,877 948 68,825 68,445 8
Connecticut 235,182 2,764 237,946 236,840 4
New York 318,796 21,324 340,120 331,590 4
New Jersey 172,716 11,423 184,139 179,569 8
Pennsylvania 430,636 3,737 434,373 432,878 2
Delaware 50,207 8,887 59,094 55,539 2
Maryland 216,692 103,036 319,728 278,513 6
Virginia 454,983 292,627 747,610 630,559 2
Kentucky 61,247 12,430 73,677 68,705 0
North Carolina 293,179 100,572 393,751 353,522 2
South Carolina 141,979 107,094 249,073 206,235 4
Georgia 53,284 29,264 82,548 70,842 4
Tennessee 32,274 3,417 35,691 34,324 2
Total 3,231,629 697,697 3,929,326 3,650,247 2

The population of the North-West Territory, which is not included in the above, was not supposed to exceed, in 1791, a few thousand souls.

Of the 3,231,629 free persons, 3,173,922 were white, the 57,707 others were free negroes and persons of color.

The direct taxes and representation are in proportion to the federal numbers, which last are found by adding three-fifths of the slaves to the number of free persons.

Edition: current; Page: [170]

No. II.: Statement of the Revenue arising from Duties on Imports and Tonnage.

From the 1st of August, 1789, to 31st December, 1791. Dols. Cts. Dols. Cts.
Gross amount of duties:
On imports 6,494,225 42
On tonnage 375,323 28½
Fines and forfeitures 4,234 95½
6,873,783 66
Deduct, viz.:
Drawbacks on merchandise exported 69,805 85
Bounties on salt fish and provisions 29,682 31
Expenses of collection 239,541 03½
Expenses of prosecution 490 62½
339,519 82
Net amount of duties 6,534,263 84
Overpaid by collectors 42 09½
Receipts in the Treasury 4,399,472 99
Balance to be accounted for, viz.:
Paid in Treasury, but not yet stated 86,025 42
In hands of collectors 220,518 25
Duties outstanding 1,828,289 28
2,134,832 95
6,534,305 94 6,534,305 93½
1792. Dols. Cts. Dols. Cts.
Gross amount of duties:
On imports 4,938,074 65
On tonnage 157,365 25
Fines and forfeitures 479 61
5,095,919 51
Deduct, viz.:
Drawbacks on merchandise exported 137,861 57
Bounties on salt fish and provisions 44,772 17
Expenses of collection 161,754 79
Expenses of prosecution 178 15
344,566 68
Net amount of duties 4,751,352 83
Balance from last year 2,134,832 95
Overpaid by collectors 391
Receipts in the Treasury (including drawbacks on spirits charged to that revenue) 3,579,499 06½
Balance to be accounted for, viz.:
Paid in Treasury, but not yet stated 44,905 96
In hands of collectors 364,548 84
Duties outstanding 2,897,623 0
3,307,077 80
6,886,576 86½ 6,886,576 86½
1793. Dols. Cts. Dols. Cts.
Gross amount of duties:
On imports 6,598,445 31
On tonnage 120,608 82
Fines and forfeitures 1,931 49
6,720,985 62
Deduct, viz.:
Drawbacks on merchandise exported 279,809 83
Bounties on salt fish and provisions 16,731 16
Allowances to fisheries 72,965 32
Expenses of collection 188,362 13
Expenses of prosecution 552 89
558,421 33
Net amount of duties 6,162,564 29
Balance from last year 3,307,077 80
Overpaid by collectors 322 30
Receipts in the Treasury (including drawbacks on spirits) 4,344,358 26
Balance to be accounted for, viz.:
Paid in Treasury, but not yet stated 45,886 94
In hands of collectors 462,906 51
Duties outstanding 4,616,812 68
5,125,606 13
9,469,964 39 9,469,964 39
(a) This sum liable to great deductions by drawbacks.
1794. Dols. Cts. Dols. Cts.
Gross amount of duties:
On imports 8,588,382 98
On tonnage 80,113 38
Fines and forfeitures 2,699 27
8,671,195 63
Deduct, viz.:
Drawbacks on merchandise exported 1,615,574 44
Bounties on salt fish and provisions 13,767 85
Allowances to fisheries 93,768 91
Expenses of collection 221,090 23
Expenses of prosecution 1,038 37 1,945,239 80
Net amount of duties 6,725,955 83
Balance from last year 5,125,606 13
Receipts in the Treasury (including drawbacks on spirits) 4,843,707 25
Repayments to collectors 19 30
Balance to be accounted for, viz.:
Paid in Treasury, but not yet stated 113,447 98
In hands of collectors 664,446 87
Duties outstanding(a) 6,229,940 56
7,007,835 41
11,851,561 96 11,851,561 96
Edition: current; Page: [172]

No. III.: Abstract of the most Important Exports of the United States for Six Years, respectively ending on the 30th September of each Year.

Articles of the Growth or Manufacture of the United States.
(a) The exportations ending the 30th September, 1790, are for thirteen months and a half.
(b) These are reduced to round numbers, some articles, which make part of the whole, being estimated.
(c) These are bushels of potatoes and bushels and bunches of onions.
(d) These articles are also imported in large quantities, and the exportations of the quantities of the growth of the United States are not distinguished from those which had been imported. The following are the quantities imported.
Years ending on 30th September. 1790.(a) 1791. 1792. 1793. 1794. 1795.
Pot and pearl ashes, tons 8,598 6,354 7,824 6,167 7,191 4,980
Lumber thousand feet uncertain. 50,134 60,647 65,846 34,342 40,736
Timber tons uncertain. 13,775 19,391 21,838 5,709 9,043
Timber pieces uncertain. 38,680 18,374 12,272 6,122 14,223
Staves, shing’s, hoops, thsd 105,641 104,688 103,397 112,851 56,164 72,373
Shooks and casks, number 54,919 42,329 48,860 44,807 66,344 93,514
Masts and spars number uncertain. 5,430 1,591 5,052 1,286 4,056
Flaxseed casks 40,019 58,492 52,381 51,708 38,620 58,752
Fish, dried quintals 378,721 383,237 364,899 372,825 418,907 400,818
Fish, pickled barrels 36,840 57,424 48,277 45,440 36,809 55,999
Oil, whale & oth. fish, gals. uncertain. 447,323 436,423 512,780 970,628 810,524
Oil, spermaceti gals. uncertain. 134,595 63,383 140,056 82,493 80,856
Whalebone pounds 121,281 124,829 154,407 202,620 313,467 410,664
Spermaceti candles, boxes uncertain. 4,560 3,938 5,874 5,162 5,998
Wheat bushels 1,124,458 1,018,339 853,790 1,450,575 696,797 141,273
Other gr. and pulse, bushels 1,268,058 2,046,419 2,291,465 1,354,570 1,726,648 2,187,831
Flour barrels 724,623 619,687 824,464 1,074,639 828,405 687,369
Meal barrels 99,973 101,313 73,252 97,815 53,782 108,191
Bread barrels 75,667 100,279 80,986 76,653 68,479 71,331
Crackers kegs uncertain. 15,346 37,645 43,306 40,916 37,462
Rice tierces 100,845 uncertain. 141,762 134,611 uncertain. 138,526
Beef, pork, lard barrels (b)73,000 (b)94,000 (b)120,000 (b)120,000 (b)156,000 (b)201,000
Butter firkins 8,379 16,670 11,761 9,190 36,932 28,389
Cheese cwt. 1,447 1,299 1,259 1,462 15,769 23,431
Potatoes and onions, bush. uncertain. 64,683 131,841 (c)289,747 (c)786,192 (c)695,559
Horned cattle number 5,406 4,627 4,551 3,728 3,495 2,510
Horses and mules number 8,865 7,419 6,757 5,718 3,445 4,052
Other live-stock number 15,362 27,180 33,444 21,998 14,990 11,416
Hides number 230 704 1,602 978 35,146 27,865
Leather pounds 22,698 5,424 19,536 uncertain. 746,853 1,819,224
Tallow pounds 200,020 317,195 152,622 309,366 130,012 49,515
Tallow candles boxes uncertain. 2,745 3,997 9,857 20,381 28,695
Boots and shoes pair 5,862 7,528 9,254 16,269 99,009 (b)160,000
Furs and skins number uncertain. 4,406 21,442 27,446 38,776 79,296
Furs and skins packages uncertain. 889 1,758 1,123 1,329 1,196
Furs and skins pounds uncertain. 49,011 163,067 426,318 uncertain. 24,903
Ginseng pounds 29,208 42,310 71,550 22,232 17,460
Ginseng packages 813 13 189 327
Iron tons 3,755 4,553 3,633 2,879 2,926 3,572
Naval stores barrels 121,929 uncertain. 146,909 114,971 uncertain. 132,866
Spirits gallons 370,371 513,987 948,115 665,522 274,401 685,167
Tobacco hogsheads 118,460 uncertain. 112,428 59,947 uncertain. 61,050
Snuff and tobacco, pounds 15,350 96,811 127,916 173,343 56,785 149,699
Wax pounds 231,158 226,810 299,598 273,073 330,871 312,845
Wax candles boxes uncertain. 533 357 66 179 792
(d)Indigo casks 462} uncert. 2,097
(d)Indigo pounds 612,119 uncertain. 858,996 690,989} 666,926
(d)Cotton pounds 189,316 138,328
(d)Cotton bags 2,027 2,438 7,222 20,921
Edition: current; Page: [173]
Years ending on last Dec. 1790. 1791. 1792. 1793. 1794.
Indigo pounds 33,186 51,867 12,777 298,673 544,173
Cotton pounds 97,357 260,011 530,743 2,630,239 2,450,673
Exportation of the most Important Articles not of the Growth of the United States.
Years ending on Sept. 30. 1790. 1791. 1792. 1793. 1794. 1795.
Coffee hhds., tierces, barrels, and bags } 17,773 30,657 89,617
Coffee pounds 254,752 962,977 2,136,742 10,764,549 22,762,575 21,596,379
Cocoa pounds 10,632 8,322 6,000 (b)200,000 1,141,802 525,432
Sugar (oth. than loaf) pounds 33,358 74,504 1,176,156 4,539,809 17,563,811 (b)22,000,000
Pimento and pepper pounds uncertain. 142,193 351,675 128,616 60,959 543,664
Merchandise packages 1,439 1,701 4,136 5,451
Merchandise val. in dolls. 2,815,600 2,879,198
Nankeens pieces uncertain. 7,072 12,340 10,972 40,742 186,526

No. IV.: Revenue arising from Duties on Domestic Distilled Spirits and Stills so far as the Accounts have been settled at the Treasury.

From 1st July to 31st December, 1791. Dolls. Cts. Dolls. Cts.
Gross amount of duties, abatements deducted 171,819 17
Deduct expenses of collection 8,797 65
Net amount of duties 163,021 52
Balances due to supervisors on 31st December, 1791. 1,575 93
Balance to be accounted for, viz.:
In hands of collectors 18,655 71
Outstanding duties 145,941 74
164,597 45 164,597 45

N.B.—Pennsylvania and Kentucky not included.

Edition: current; Page: [174]
1792. Dolls. Cts. Dolls. Cts.
Gross amount of duties, abatements deducted 457,334 79
Deduct, viz.:
Drawbacks on spirits exported 136,428 21½
Expenses of collection 41,266 94
177,695 15½
Net amount of duties 279,639 63½
Payment by Pennsylvania (accounts unsettled) 1,594 95
Balances due to supervisors on 31st December, 1792 651 58
Balance from last year 164,597 45
Receipts in the Treasury, drawbacks deducted 72,514 59½
Balance to be accounted for, viz.:
In Treasury, but not yet stated 5,979 92
In hands of collectors 158,871 37
Outstanding duties 207,541 80
372,393 09
Balances due to supervisors on 31st December, 1791 1,575 93
446,483 61½ 446,483 61½

N.B.—Pennsylvania and Kentucky not included, but a partial payment of dollars 159495/100 made by Pennsylvania.

1793. Dolls. Cts. Dolls. Cts.
Gross amount of duties, abatements deducted 284,986 25
Fines and forfeitures 16 49
285,002 74
Deduct, viz.:
Drawbacks on spirits exported 89,051 70
Expenses of collection 34,883 25
Expenses of prosecutions 312 60
124,247 55
Net amount of duties 160,755 19
Payment by Pennsylvania (accounts unsettled) 6,000 00
Balances due to supervisors 31st December, 1793 827 20
Balance from last year 372,393 09
Receipts in Treasury, drawbacks deducted 248,654 00
Balance to be accounted for, viz.:
Paid in Treasury, but not yet stated 3,154 04
In hands of collectors 127,953 44
Outstanding duties 159,562 42
290,669 90
Balances due to supervisors 31st December, 1792. 651 58
539,975 48 539,975 48

N.B.—Pennsylvania and Kentucky not included, but partial payment of dollars 6000 made by Pennsylvania; New Jersey and North Carolina settled only to 31st March, 1793, and Virginia to 30th June, 1793.

Edition: current; Page: [175]
1794. Dols. Cts. Dols. Cts.
Gross amount of duties on spirits and stills, abatements deducted 120,241 21
Deduct, viz.:
Drawbacks on spirits exported 42,641 97
Expenses of collection 20,883 26
63,525 23
Net amount of duties 56,715 98
Payment by Pennsylvania (accounts unsettled) 500 00
Balances due to supervisors 31st of December, 1794 313 35
Balance from last year 290,669 90
Amount of duties for carriage tax, tax on sales at auction, and licenses on retailers of wines and spirits in South Carolina 6,055 88
Receipts in Treasury, drawbacks deducted 231,447 65
Balance to be accounted for, viz.:
Paid in Treasury, but not yet stated 200 00
In hands of collectors 5,346 49
Outstanding duties 116,433 77
121,980 26
Balances due to supervisors 31st December, 1793 827 20
354,255 11 354,255 11

N.B.—Pennsylvania, Kentucky, New Jersey, North Carolina, Virginia, Delaware, and Maryland not included; but a partial payment of 500 dollars made by Pennsylvania. New York settled only to 30th June, 1794, and Rhode Island to 30th September, 1794. But dollars 24,53130/100, part of the receipts in Treasury for this year, have been paid by Delaware, Maryland, New York, and Rhode Island, which are not credited to the supervisors, and may arise either from the duties here stated as outstanding or from those accrued during the periods not included in the account.

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No. V.: Gross Amount of Duties upon Stills and Spirits Distilled within the United States for Four Years Respectively, ending on the Last Days of June, 1792, 1793, 1794, and 1795.

Duties upon Spirits Distilled in Cities, Towns, and Villages.
Apparent Gross Amount of Duties. Deduct for Drawbacks. Gross Amount of Duties.
Settled Accounts. Estimated Amount Unsettled Accounts. Total Amount.
Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts.
1791-1792 330,940 90 330,940 90 107,193 60 223,747 30
1792-1793 277,455 43 5,052 01 282,507 44 68,501 31 214,006 13
1793-1794 195,035 66 5,108 89 200,144 55 32,801 52 167,343 03
1794-1795 113,114 24 22,552 43 135,666 67 26,666 67 109,000 00

Note.—The drawbacks are, in the above, the amount paid by the collectors in each calendar year; those for 1795 being estimated. In statement No. IV. the whole amount of drawbacks is charged to this revenue; but in this statement only that part which properly belongs to it, viz., 11 cents for the first year and 10 cents for the others, the remaining 3 cents per gallon being in fact a drawback of the duty paid on the importation of molasses.

Duties upon Spirits Distilled in the Country.
Settled Accounts. Estimated Amount for Unsettled Accounts. Gross Amount.
Dols. Cts. Dols. Cts. Dols. Cts.
1791-1792 60,690 73 5,798 46 66,489 19
1792-1793 123,487 84 10,705 73 134,193 57
1793-1794 80,884 04 63,424 92 144,308 96
1794-1795 11,531 92 148,468 08 160,000 00
Edition: current; Page: [177]

No. VI.: Estimate of the net amount of Duties upon Stills and Spirits distilled within the United States for the year ending on the last day of June, 1795.

(b) One quarterly return estimated.
(d) One half-yearly return estimated.
(c) Three quarterly returns estimated.
(e) Estimated from partial statements.
(f) Estimated, being the sum accrued in each of those States during the last year, the accounts of which have been settled.
(a) That district includes Kentucky and the North-West Territory.
Districts.Gross Amount of Duties. Expenses of Collection.
Town Distilleries.Country Distilleries.
Dols. Cts. Dols. Cts. Dols.
New Hampshire 159 91 1,050
Massachusetts (b) 82,651 74 (d) 32 93 12,000
Rhode Island 32,449 76 2,700
Connecticut 4,354 13 1,060 37 1,900
Vermont 415 96 940
New York 5,884 68 2,356 38 3,600
New Jersey 59 88 (d) 10,167 18 2,090
Pennsylvania (c) 2,700 40 (e) 56,200 01 9,320
Delaware (d) 1,192 04 890
Maryland 5,426 82 (f) 10,159 13 5,900
Virginia 87 29 (f) 54,869 09 14,680
(a)Ohio 1,200
North Carolina 35 57 (f) 13,701 10 7,790
South Carolina 2,016 40 7,541 30 4,500
Georgia (d) 2,149 60 1,440
Total 135,666 67 160,000 00 70,000
Deduct for drawbacks 26,666 67
Town distilleries 109,000 00
Country distilleries 160,000 00
Gross amount 269,000 00
Expenses of collection 70,000 00
Net amount 199,000 00
Edition: current; Page: [178]

No. VII.: Estimate of all the Internal Duties for one year, ending on the last day of June, 1795.

Apparent Gross Amount. Drawbacks. Gross Amount. Expenses of Collection. Net Amount.
Dols. Dols. Dols. Dols. Dols.
City distilleries 135,667 26,667 109,000 16,000 93,000
Country distilleries 160,000 160,000 54,000 106,000
Licenses to retailers 55,000 55,000 1,375 53,625
Sales at auction 31,000 31,000 775 30,225
Refined sugar 34,000 300 33,700 1,700 32,000
Snuff 20,000 25,000 700
Carriages 42,000 42,000 2,100 39,900
430,700 354,750
Deduct for excess of expenses on snuff tax beyond its proceeds 5,000 5,700
Total 477,667 51,967 425,700 76,650 349,050

No. VIII.: Estimate of the annual revenue to be hereafter derived from all the Internal Duties.

Gross Amount. Expenses of Collection. Net Amount.
Dols. Dols. Dols.
City distilleries 109,000 16,000 93,000
Country distilleries 190,000 60,000 130,000
Licenses to retailers 60,000 1,500 58,500
Sales at auction 35,000 875 34,125
Refined sugar 40,000 2,000 38,000
Carriages 60,000 3,000 57,000
Total 494,000 83,375 410,625
Edition: current; Page: [179]

No. IX.: Statement of the Revenue arising from the Postage of Letters.

Gross Amount of Postage.Expenses of Transportation, Compensation, &c.Net Amount of Revenue.Payment made to the Treasury.
Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts.
1st of October, 1789, to 30th June, 1791 71,295 93 67,113 66 4,182 27
1st of July, 1791, to 31st December, 1792 92,988 40 76,586 60 16,401 80
1793 103,883 19 74,161 03 29,722 16 11,020 51
1794 129,185 87 95,397 53 33,788 34 29,478 49
Total 397,353 39 313,258 82 84,094 57 40,499 00
Balance due by postmasters on 31st December, 1794 43,595 57
Net amount of revenue 84,094 57
Edition: current; Page: [180]

No. X.: Statement of the Receipts and Expenditure, or Disbursements, from the Establishment of the present Government, in March, 1789, to the 1st day of January, 1796, including all the Receipts and Payments, whether made in Europe or America.

From the establishment of the present government to 31st December, 1791.
Receipts. Dols. Cts. Dols. Cts.
Balances due on account of late government, viz.:
Balance unexpended in hands of commissioners in Holland 132,475 31
Balances paid on sundry accounts 11,001 11
143,476 42
Revenues, viz.:
Duties on imports and tonnage 4,399,472 99
Incidental, viz.:
Fines and forfeitures for crimes 311 00
Arms and ammunition sold government France 8,962 00
Profits on sundries, viz.:
Interest on notes of sundry persons 17 54
On a remittance from Philadelphia to New York 6 28
On guilders 894,443 11 5 drawn from Holland to America, sold for dols. 361,391 34, and at 40 cts. were worth dols. 357,777 42 3,613 92
On livres 15,513,104 3 2 remitted from Holland to France, which, at 1815/100 cents per livre, are dols. 2,815,628 40, and cost only guilders 6,463,793 8, which, at 40 cents, are dollars 2,585,517 36 230,111 4
On 100,000 guilders remitted from America to Holland, at 40 cents per guilder are dols. 40,000, and cost only dols. 35,087 71 4,912 29
238,661 07
247,934 07
Loans, viz.:
Domestic loans contracted in anticipation of the revenues 246,608 81
Carried forward 246,608 81 4,790,883 48
Brought forward 246,608 81 4,790,883 48
Loans, continued, viz.:
Foreign loans effected in Amsterdam and Antwerp, viz.:
1790, February, at 5 per cent. interest and 4½ per cent. charges, Amsterdam 1,200,000
1791, March, at 5 per cent. and 4 per cent. charges, Amsterdam 1,000,000
— November, at 4½ per cent. and 4 per cent. charges, Antwerp. 820,000
— December, at 5 per cent. and 4 per cent. charges, Amsterdam 2,400,000
5,666,608 81
10,457,492 29
(a) This statement differs from the general statement marked (A) in three particulars, viz.:
1st. The repayments of moneys are not set down amongst the receipts of the statement (A), but are deducted from the expenditures of the proper department.
2d. The cents and half cents coined at the mint are not set down amongst the receipts of the statement (A), but deducted from the expenditures relative to that establishment.
3d. In this statement the whole amount of dividends received upon the bank stock, and the whole amount of interest paid upon the bank stock loans, are set down; but in the statement (A) the excess only of the dividends beyond the interest paid on that loan is set down amongst the receipts.
The general and final balance of the statement (A) is right; but, on account of this mode being adopted (in order to show the actual receipts and expenditures), the balance at the end of each year would be different in the two statements.
(b) As the unfunded debts incurred under the late government and paid in specie are not always distinguished in the official statements from the other miscellaneous expenses, it is possible that some of the items belonging to those two heads are not properly arranged in this statement. This applies especially to the accounts of the year 1795; but on the whole no great difference can result from any mistakes on that head. Perhaps, also, a part of the sums set under this head as old debts paid consisted of interest accrued since the year 1789, and should have been charged to that head.
(c) As the accounts of moneys paid and received in Holland are blended together for the years 1789, 1790, 1791, 1792, and 1793, in the yearly official statements, the balances of moneys remaining in the hands of the commissioners in Holland at the end of the years 1791 and 1792 may not be quite accurate; they are partly abstracted and partly deduced from other occasional public statements. As the balance at the end of 1793 agrees with that of the official statements, no real difference can result from any mistake there.
Expenditures. Dols. Cts. Dols. Cts.
Civil list, viz.:
Compensation to President United States 72,150 00
Expenses incurred for his temporary accommodation in 1789 and 1790 13,667 83
85,827 83
Compensation of the Vice-President 14,000 00
Judiciary Department, including judges, attornies, marshals, clerks, and jurors 79,491 48
Legislative Department, including clerks, officers, and contingent expenses 364,559 08
Public offices, viz.:
Treasury Department 80,720 47
Department of State 12,459 37
Department of War 17,388 72
Commissioners for settling the accounts of the several States 22,384 11
Commissioners of loans 13,658 66
146,611 33
Government of the Territories, viz.:
North-West Territory 10,042 67
South-West Territory 6,187 90
16,230 57
706,720 29
Carried forward 706,720 29
Brought forward 706,720 29
Pensions, Annuities, and Grants, viz.:
Pensions to military invalids 175,813 88
Annuities and grants to sundry persons 13,102 96
188,916 84
Military Establishment, viz.:
Army, viz.:
Moneys advanced to the Secretary at War, Paymaster-General, and commissioner of army accounts(a) 373,441 50
Moneys advanced to contractors for the supply of the army on Western frontiers 181,000 00
Moneys advanced to contractors for clothing 59,767 17
Moneys advanced sundry supplies in several places 6,580 95
Moneys advanced for rent and purchase of West Point 12,014 41
632,804 03
Indian Department 27,000 00
Intercourse with foreign nations, viz.:
Moneys advanced for the support of ministers abroad 1,733 33
Recognition of treaty with Morocco 13,000 00
14,733 33
Sundries, viz.:
Light-houses, beacons, buoys, and public piers 22,591 94
Enumeration of inhabitants of United States 20,590 71
Other contingent and miscellaneous expenses 7,752 44
50,935 09
Interest on public debt, viz.:
On domestic temporary loans 2,598 12
On domestic debt for the year 1791 1,140,177 20
On foreign debt, viz.: Dols. Cts.
On the French debt for 1790, livres 1,606,703 5 4
for 1791, 1,622,291 13 4
3,228,994 18 8
586,062 57
On the Dutch debt for 1790, guilders 348,818 10 0
for 1791, 555,680 7 8
361,799 55
947,862 12
2,090,637 44
Charges on public debt, viz.:
Premium on the old guilders 2,000,000 loan paid in 1791 36,000 00
Charges on the four loans effected in Amsterdam and Antwerp, as per above receipts 222,800 00
258,800 00
Carried forward 3,970,547 02
Brought forward 3,970,547 02
Payment in part of principal of public debt, viz.:
On the French debt, including arrears of interest previous to the year 1790 remitted from Holland, livres 12,333,486 12 10 2,238,527 83
Reimbursement of domestic temporary loans 246,608 81
Paid to the commissioners of the sinking fund [being part of the surplus of the revenue of 1790], and applied by them in purchases of domestic debt 699,984 23
Unfunded debts incurred under the late government and paid in specie (including dollars 20,000 for supplies furnished by France in the West Indies, and not included in the general account of the French debt)(b) 298,479 94
3,483,600 81
Balance to accounted for next year, viz.:
In Treasury of America, viz.:
Balance in cash per official statement 973,905 65
Moneys repaid by Olney & Nourse 857 83
974,763 48
In hands of commissioners in Holland, guilders 5,071,452 9(c) 2,028,580 98
3,003,344 46
10,457,492 29
Receipts of 1792. Dols. Cts. Dols. Cts.
Balance from last year, viz.
Cash in Treasury and Holland, as per above 3,003,344 46
Overcharged to Treasurer in his accounts 10
Repayment by the Secretary at War of part of the moneys advanced to him the preceding year for the military establishment(a) 2,304 38
3,005,648 94
Balances paid on accounts which originated under the late government 4,702 82
Revenues, viz.:
Duties on imports and tonnage 3,579,499 06½
Duties on stills and domestic distilled spirits 72,514 59½
Dividend on bank shares belonging to the United States(a) 40,000 00
3,692,013 66
Carried forward 6,702,365 42
Brought forward 6,702,365 42
Incidental, viz.:
Fines and forfeitures for crimes 118 00
Arms sold to State of South Carolina 4,240 00
Profits on bills of exchange, viz.:
On guilders 1,351,109 13 1 drawn from Holland to America sold for dollars 545,902 89, and at 40 cts. were worth dols. 540,443 86 5,459 03
On livres 8,679,901 11 2 remitted from Holland to France, which, at 1815/100 per livre, are dols. 1,575,402 13, and cost only 3,616,625 13 guilders, which, at 40 cts., are dols. 1,446,650 26 128,751 87
134,210 90
138,568 90
Loans, viz.:
Domestic loan contracted to pay the subscription to the bank 2,000,000 00
Domestic loans in anticipation of revenues 556,595 56
Foreign loans effected in Amsterdam, viz.:
1791, December, at 4 per cent. interest and 5½ per cent. charges 1,200,000 00
1792, August, at 4 per cent. interest and 5 per cent. charges 1,180,000 00
2,380,000 00
4,936,595 56
11,777,529 88
(d) The whole of the arrears of interest on the debt due to foreign officers is here stated as paid. It is, however, probable that a part is still due, but that a larger amount of the principal has been discharged than is stated. But this cannot alter the balance which remains unpaid. The payments of principal are not distinguished in the official statements from those of interest upon this debt.
(i) These 4000 dollars paid on account to General La Fayette are charged both here and in the general view of expenditures marked (A) to the account of payments made to foreign officers, but in the statement of debts marked (B) they are placed under the head of “Unfunded debts paid in specie.”
Expenditures. Dols. Cts. Dols. Cts.
Civil list, viz.:
Compensation of the President of the United States 22,500 00
Compensation of the Vice-President 5,340 00
Judiciary Department 62,161 54
Legislative Department 144,805 30
Public offices, viz.:
Treasury Department 60,679 90
Department of State 8,097 61
Department of War 9,190 90
Carried forward 77,968 41 234,306 84
Brought forward 77,968 41 234,306 84
Civil list, continued, viz.:
Public offices, continued, viz.:
Commissioners for settling the accounts of the several States 12,799 75
Commissioners of loans 32,396 74
123,164 90
Government of the Territories, viz.:
North-West Territory 4,972 22
South-West Territory 5,375 90
10,348 12
368,319 86
Pensions, Annuities, and Grants, viz.:
Pensions to military invalids 109,243 15
Annuities and grants to sundry persons 5,597 72
114,840 87
Military establishment, viz.:
Moneys advanced to the accountant of the War Department 329,595 56
Moneys advanced to the Treasurer for pay of the army and sundry other expenses 303,240 00
Moneys advanced to Quartermaster-General’s Department 120,939 25
Moneys advanced to the contractors for the supply of the army on Western frontiers 126,760 67
Moneys advanced for clothing of the army 160,889 14
Moneys advanced for supplies in several places 47,704 34
Moneys advanced for rifles 3,792 00
1,092,920 96
Indian Department 13,648 85
Intercourse with foreign nations 78,766 67
Sundries, viz.:
Mint establishment 7,000 00
Light-houses, beacons, piers, &c. 38,976 36
Enumeration of inhabitants of United States 22,904 69
Other contingent and miscellaneous expenses 5,951 96
74,833 01
Interest on public debt, viz.:
On domestic loans(a) 31,972 00
On domestic debt 2,373,611 28
Deduct paid to commissioners of sinking fund 60,561 46
2,313,049 82
On debt due to foreign officers; three years’ interest, for the years 1790, 1791, and 1792(d) 33,657 87
On foreign debt, viz.:
On French debt 233,111 54
On Holland and Antwerp debt, including commission 436,247 54
669,359 08
3,048,038 77
Carried forward 4,791,368 99
Brought forward 4,791,368 99
Charges on the two loans effected this year at Amsterdam 125,000 00
Payments in part of principal of public debt, viz.:
On the French debt, viz.:
Remitted livres 8,679,901-11 2 from Holland to France 1,575,402 13
Payments by the Treasury in America 202,152 29
1,777,554 42
On the debt due to foreign officers, viz.:
Remitted guilders 105,000 from Holland to France 42,000 00
Payments by the Treasury in America 18,354 79
60,354 79
(i)Advance to General La Fayette (remitted from Holland) 4,000 00
64,354 79
Deduct 3 years’ interest per above 33,657 87
30,696 92
Paid to the commissioners of the sinking fund and applied to purchases of domestic debt, viz.:
Surplus of revenue of 1790 257,786 42
Interest on stock vested in said fund as per above 60,561 46
Unfunded debts incurred under the late government and paid in specie, including a balance of account to France, not included in the general account of the French debt(b) 136,877 84
2,263,477 06
Subscription to the bank stock of the United States 2,000,000 00
Balance to be accounted for next year, viz.:
In Treasury of America 783,444 51
(c)In hands of commissioners in Holland, guilders 4,535,598 5 13 1,814,239 32
2,597,683 83
11,777,529 88
Receipts of 1793. Dols. Cts. Dols. Cts.
Balance from last year 2,597,683 83
Balances paid on accounts which originated under the late government 8,448 58
Revenues, viz.:
Duties on imports and tonnage 4,344,358 26
Duties on stills and domestic distilled spirits 248,654 00
Duties on the postage of letters 11,020 51
Dividend on bank shares belonging to the United States(a) 152,500 00
4,756,532 77
Incidental, viz.:
Fees on letters patent 660 00
Cents and half cents coined at the mint(a) 1,281 79
Profits on bills of exchange, viz.:
On guilders 2,909,067 18 2 drawn from Holland to America sold for dollars 1,197,272 01, and at 40 cents were worth dollars 1,163,627 16 33,644 85
On guilders 91,913 15 drawn from Amsterdam to Antwerp cost only guilders 88,941 9, difference is in dollars 1,188 92
On dollars 268,033 62 remitted to Spain from Holland cost guilders 615,307 11 3, which, at 40 cents, are dollars 246,123 02 21,910 59
On guilders 536,565 4 remitted to Holland from America at 40 cents are dollars 214,626 08, and cost dollars 213,669 30 10,956 18
67,701 14
69,642 93
Loans, viz.:
Domestic loan in anticipation of revenues 600,000 00
Foreign loan effected at Amsterdam at 5 per cent. interest, being a re-loan of an instalment due this year 400,000 00
1,000,000 00
8,432,308 11
Expenditures of 1793. Dols. Cts. Dols. Cts.
Civil list, viz.:
Compensation of the President of the United States 27,500 00
Compensation of the Vice-President 5,000 00
Judiciary Department 54,020 54
Legislative Department 97,481 22
Public offices, viz.:
Treasury Department 65,454 87
Department of State 7,930 12
War Department 11,470 95
Commissioners to settle the accounts of the several States 9,327 27
Commissioners of loans 46,580 24
140,763 45
Government of the Territories, viz.:
North-West Territory 4,462 50
South-West Territory 5,035 58
9,498 08
334,263 29
Pensions, Annuities, and Grants, viz.:
Pensions to military invalids 80,087 81
Annuities and grants to sundry persons 5,329 51
85,417 32
Military establishment, viz.:
Moneys advanced to the Treasurer 449,434 04
Quartermaster-General 160,045 00
Contractors for the supply of the Western army 190,000 00
Clothing of the army 111,550 02
Agent for supplies in Philadelphia 74,000 00
Supplies furnished in Georgia and South-West Territory 116,286 91
Supplies furnished in several other places 28,933 11
1,130,249 08
Indian Department(a) 27,282 83
Intercourse with foreign nations 89,500 00
Sundries, viz.:
Mint establishment(a) 18,648 28
Light-houses, piers, &c. 12,061 68
Enumeration of inhabitants of United States 881 88
Other contingent and miscellaneous expenses 4,645 61
36,237 45
Interest on public debt, viz.:
On domestic loans(a) 132,753 41
On domestic debt 2,079,105 76
Deduct paid to commissioners of sinking fund 73,906 09
2,005,199 67
Carried forward 2,137,953 08 1,692,949 97
Brought forward 2,137,953 08 1,692,949 97
Interest on public debt, continued, viz.:
On foreign debt, viz.:
On French debt 165,616 23
On Holland and Antwerp debt 527,284 98
On Spanish debt, arrears from 1st January, 1790 26,351 67
719,252 88
2,857,205 96
Charges on foreign debt, viz.:
Premium on the old guilders 2,000,000 loan due this year 40,000 00
Commissions, brokerage, charges for sundries by the bankers of the United States in Holland 17,948 28
57,948 28
Payments in part of the principal of the public debt, viz.:
On domestic loans, viz.:
First instalment of the bank stock loan 200,000 00
Reimbursement of anticipations 556,595 56
756,595 56
On the foreign debt, viz.:
First instalment of Dutch debt 400,000 00
On the French debt (paid in America) 1,172,265 09
On the Spanish debt remitted from Holland including dollars 67,670 95 arrears of interest accrued before the year 1790 241,681 95
1,813,947 04
On the debt due to foreign officers paid in America 39,000 47
Paid to the commissioners of the sinking fund, and applied to purchases of domestic debt, viz.:
Moneys arising from foreign loans 334,901 89
Interest on stock vested in said fund 73,906 09
408,807 98
Unfunded debts incurred under the late government (b) 7,120 29
3,025,471 34
Balance to be accounted for next year, viz.:
In Treasury of America 753,661 69
In hands of commissioners in Holland, guilders 87,677 3 8 35,070 87
788,732 56
8,432,308 11
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Receipts of 1794. Dols. Cts. Dols. Cts.
Balance from last year, viz.:
Cash in Treasury and Holland, as per above 788,732 56
Repayment of moneys advanced in 1793 to the Indian department (a) 12,942 77
801,675 33
Balances paid on accounts which originated under the late government 693 50
Revenues, viz.:
Duties on imports and tonnage 4,843,707 25
Duties on stills and domestic distilled spirits 231,447 65
Duties on postage of letters 29,478 49
Dividend on bank shares (a) 157,500 00
5,262,133 39
Incidental, viz.:
Fees on letters patent 570 00
Cents and half cents coined at the mint (a) 9,593 21
10,163 21
Loans, viz.:
Domestic loan obtained from the Bank of New York in order to defray certain expenditures relative to the intercourse with foreign nations 200,000 00
Other domestic loans in anticipation of revenues 3,200,000 00
Foreign loan effected at Amsterdam in January, 1794, at 5 per cent. interest and 4½ per cent. charges 1,200,000 00
4,600,000 00
10,674,665 43
(f) This balance in the hands of the commissioners in Holland is stated in the official statements at guilders 730,373 17 4, being guilders 209,089 8 less than the balance here stated. The difference arises from a sum of guilders 1,705,974 8 being stated in the said official statements as drawn by the Secretary of the Treasury, whilst only guilders 1,496,885 are stated here, in conformity to the state of the Treasury in America. The difference is charged here to the accounts of the commissioners for the year 1795.
(e) Although this grant was made on account of a transaction which took place under the late government, it was not a debt of that government. The moneys for which General Greene was security had been actually paid by Congress to the persons to whom government was indebted, but was not applied by these persons to discharge that debt contracted by them for which the general had become security.
(g) The yearly official statements of receipts and expenditures not being yet published, this statement is abstracted from a partial statement of the Secretary of the Treasury, and from the Treasurer’s accounts.
This balance is deducted as follows, viz.: Guilders.
The balance in the hands of commissioners in Holland at the end of 1794 was 939,463 5 4
The remittances made to Holland during 1795 were:
Six per cent. stock (supposing the same will sell at par there), dollars 660,000, make 1,650,000 0 0
Sugar and coffee, the amount not stated; but the moneys paid, either for the whole or on account of that shipment in America, were dollars 127,500. What the West India produce or the six per cent. stock will sell for in Holland is not ascertained, but supposing also the sugar and coffee to bring the same money they cost, will make 318,750 0 0
N.B.—Perhaps a larger amount of West India produce was shipped than was paid for, and this would then leave a balance in the hands of the commissioners; but then that surplus was due in America on the 1st of January, 1796, and should so far decrease the balance stated in the Treasury.
Balance stated as deficient in Holland 6,211 2 12
Guilders 2,914,424 8 0
The payments to be made in Holland during 1795 are:Guilders.
Bills drawn by the Secretary of the Treasury amounted altogether, for 1794 and 1795, to guilders 1,737,334 8, of which 1,496,885 are accounted for in 1794, leaving 240,449 8 0
The payments to be made in Holland for one year’s interest on the debt, one instalment of the principal, the premium and commissions are stated by the Secretary of the Treasury at guilders 2,580,802 10, to which adding one year’s interest, with commission on the Antwerp debt, not paid for 1794, and equal to guilders 93,172 10 2,673,975 0 0
Guilders 2,914,424 8 0

N.B.—This supposes the interest, which fell due on the 1st of January, 1796, in Holland, to be paid, it being interest of the year 1795.
Expenditures of 1794. Dols. Cts. Dols. Cts.
Civil list, viz.:
Compensation of President of United States 24,000 00
Compensation of Vice-President 5,000 00
Judiciary Department 60,454 16
Legislative Department (a) 209,602 19
Public offices, viz.:
Treasury Department 61,779 48
Department of State 9,776 82
War Department 13,479 18
Commissioners to settle accounts of the several States 160 08
Commissioners of loans 36,110 72
121,306 28
Carried forward 420,362 63
Brought forward 420,362 63
Civil list, continued, viz.:
Government of the Territories, viz.:
North-West Territory 6,486 84
South-West Territory 5,150 00
11,636 84
431,999 47
Pensions, Annuities, and Grants, viz.:
Pensions due to military invalids 81,399 24
Annuities and grants to sundry persons 6,417 72
Grant to indemnify General Greene’s estate(c) 27,504 15
115,321 11
Military establishment, viz.:
Moneys advanced to the Treasurer 930,661 93
Quartermaster-General 232,100 00
Contractors for supply of the army 360,026 00
Clothing of the army 109,597 31
Distilled spirits purchased for army 13,033 33
Supplies in Georgia, South-West Territory, &c. 217,637 24
Supplies by agent in Philadelphia 320,000 00
2,183,055 81
Moneys advanced to the quartermaster-general of the militia employed to suppress the Western insurrection and for supplies to the same(a) 265,344 90
Military supplies 148,647 22
Fortifications of harbors(a) 42,049 66
Naval armament 61,408 97
2,700,506 56
Indian Department 13,042 46
Intercourse with foreign nations, viz.:
Moneys advanced for the support of ministers abroad 74,995 00
Extraordinary expenses 56,408 51
131,403 51
Sundries, viz.:
Mint establishment(a) 32,746 33
Light-houses, &c. 37,496 36
Relief to the inhabitants of San Domingo 15,000 00
Miscellaneous and contingent 19,174 99
104,417 68
Interest on the public debt, viz.:
On domestic loans(a) 150,694 44
On domestic debt 2,455,856 60
Deduct paid to commissioners of sinking fund 72,840 76
2,383,015 84
Carried forward 2,533,710 28 3,496,690 79
Brought forward 2,533,710 28 3,496,690 79
Interest on the public debt, continued, viz.:
On foreign debt, viz.:
On French debt 144,292 50
On Holland debt. (the interest on Antwerp debt not paid) 602,271 87
746,564 37
3,280,274 65
Charges on foreign loan obtained this year (including dollars 62 20 for copies) 54,062 20
Payments in part of the principal of the public debt, viz.:
On domestic loans, viz.:
2d instalment of the bank stock loan 200,000 00
Reimbursement of anticipations 1,100,000 00
1,300,000 00
On foreign debt, viz.:
2d instalment of the Dutch debt 400,000 00
On the French debt (paid in America 380,700 31
780,708 31
On the debt due to foreign officers (paid in America) 44,752 35
Applied to purchases of domestic debt by sinking fund, viz.:
Moneys arising from foreign insurance 100,000 00
Interest on stock vested in said fund 72,840 76
172,840 76
Unfunded debts incurred under the late government(b) 3,855 86
2,302,149 28
Losses on sundries, viz.:
On balance of account between Amsterdam and Antwerp 197 49½
On guilders 1,990,000 remitted to Holland from America cost dollars 818,778 32, and at 40 cents are 796,000 00 22,778 32
22,975 81½
Deduct profits on guilders 1,496,885 drawn to America from Holland sold for dollars 607,95072, and at 40 cents were dollars 598,754 9,196 78
13,779 03½
Balance to be accounted for next year, viz.:
In Treasury of America 1,151,924 17
(f)In hands of commissioners in Holland guilders 939,463 5 4 375,785 30½
1,527,709 47½
10,674,665 43
Receipts of 1795. Dols. Cts. Dols. Cts.
Balance from last year, viz.:
Cash in Treasury and Holland as per above 1,527,709 47½
Repayment moneys advanced in 1794, viz.:
To civil list for legislative department(a) 7,528 93
To military establishment(a) 11,336 60
18,865 53
1,546,575 00½
Balances paid on accounts which originated under the late government 5,317 96
Revenues, viz.:
Duties on imports and tonnage (deducting drawbacks for domestic spirits exported) 5,588,961 26
Internal duties (including drawbacks for domestic distilled spirits exported) 337,255 36
Duties on postage of letters 22,400 00
Dividend on bank shares(a) 160,000 00
Incidental, viz.: 6,108,616 62
Fees on letters patent 600 00
Interest till 30th September, 1795, on 660,000 dollars in six per cent. stock purchased from the Bank of United States and remitted to Holland 27,300 00
Deduct loss upon the said stock, which cost, including 22,500 dollars interest repaid to the bank, dollars 682,873.33, and supposing the same to have sold at par in Holland, is a loss of 22,873 33
4,426 67
Interest till 30th June, 1795, on 800,000 dollars, six per cent. stock, obtained as a loan from the Bank of the United States, having been rated at par and being the loan here below mentioned 24,000 00
Profits on guilders 240,449 8 drawn to America from Holland, sold for dollars 96,424 00, and at 40 cents were dollars 96,179 76 244 24
29,270 91
Loans, viz.:
Domestic loan obtained from the Bank of the United States, in six per cent. stock at par, in order to defray certain expenditures relative to intercourse with foreign nations 800,000 00
Other domestic loans in anticipation of revenue 2,500,000 00
3,300,000 00
10,989,780 50½
Expenditures of 1795. Dols. Cts. Dols. Cts.
Civil list 359,762 29
Pensions to military invalids 68,673 22
Annuities and grants to sundry persons 2,970 20
Army, militia, military supplies, Indian Department 2,433,837 28
Fortifications of harbors 81,885 13
Naval armament 410,562 03
Diplomatic Department 15,005 00
Extraordinary expenses of the intercourse with foreign nations 897,680 12
Mint establishment 22,400 00
Light-houses, &c. 29,861 30
Miscellaneous and contingent expenses 46,825 41
Interest on public debt, viz.:
On domestic loans(a) 243,099 99
On domestic debt 2,727,959 07
Deduct paid to sinking fund 534,927 91
2,193,031 16
On foreign debt, viz.:
On French debt 152,413 38
On Dutch debt (including that on Antwerp debt for 1794) 617,110 00
769,523 38
3,205,654 53
Charges on public debt, viz.:
Premium on the old guilder 2,000,000 loan due this year 48,000 00
Commissions on the payment of the instalment and premium 4,480 00
52,480 00
Payments in part of the principal of the public debt, viz.:
Third instalment of bank stock loan 200,000 00
Reimbursement of anticipations 1,400,000 00
Third instalment of the Dutch debt 400,000 00
On French debt (paid in America) 301,352 66
On the debt due to foreign officers 11,883 68
On the domestic debt by the sinking fund, viz.:
Interest on stock vested in said fund to April, 1795 18,955 19
Two per cent. paid on 6 per cent. stock 515,972 72
534,927 91
Unfunded debts incurred under the late government(b) 61 59
2,848,225 84
Balance to be accounted for next year, viz.:
In Treasury of America 516,442 61
(b)Deduct estimated deficient in Holland guilders 6,211 2 12 2,484 45
513,958 15½
10,989,780 50½(e) (g) (h)
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No. XI.: A View of the Sinking Fund to April, 1795.

Years. Purchases.
Moneys Expended. Stock Purchased.
Surplus of the Revenue of 1790. Foreign Loans. Interest Fund. Total. Six per Cent. Deferred. Three per Cent. Total.
Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts.
1790-1791 699,922 47 5 51 699,927 98 311,123 44 510,619 76 309,621 56 1,131,364 76
1792 257,786 42 25,969 96 283,756 38 127,828 13 159,881 91 91,454 50 379,164 54
1793 334,901 89 76,842 75 411,744 64 299,060 02 137,280 96 72,324 04 508,665 02
1794 61 76 100,000 00 85,832 91 185,894 67 143,150 83 64,216 89 38,460 53 245,828 25
1795 37,612 37 37,612 37 26,654 22 15,984 92 42,639 14
Total 957,770 65 434,901 89 226,263 50 1,618,936 04 907,816 64 887,984 44 511,860 63 2,307,661 71
Present Situation of the Fund.
Six per Cent. Deferred. Three per Cent. Total.
Purchases per above 907,816 64 887,984 44 511,860 63 2,307,661 71
Debt due to foreign officers considered as paid, and for the amount of which certificates are issued in favor of the fund 186,988 23 22,438 58 209,426 81
Debt paid by the State of Pennsylvania for a tract of land on Lake Erie containing 202,187 acres, purchased by Pennsylvania from the United States, under the late government, at 75 cents per acre 59,544 85 29,772 43 62,322 97 151,640 25
Sundry debts redeemed, but not explained in the official statements, supposed to arise from old debts recovered or commutation returned 12,814 86 11,463 27 10,475 09 34,753 22
Whole amount of stock vested in sinking fund 1,167,164 58 929,220 14 607,097 27 2,703,481 99
Edition: current; Page: [198]

No. XII.: Receipts and Expenditures of the Domestic Fund.

To the 31st December, 1791.
Dols. Cts. Dols. Cts.
Receipts, viz.:
Balances of old accounts 11,001 11
Revenues 4,399,472 99
Incidental 5,247 11
Domestic loans 246,608 81
Expenditures, viz.: 4,662,330 02
Civil list, pensions and grants, military establishment, intercourse with foreign nations, sundries 1,621,109 58
Interest on public debt, viz.:
In part of Dutch debt for 1790 40,000 00
On domestic loans 2,598 12
On public debt for 1791 1,656,895 28
1,699,493 40
Reduction of public debt, viz.:
Sinking fund 699,984 23
Unfunded debts 298,479 94
Domestic loans 246,608 81
1,245,072 98
Balance in favor of the fund 96,654 06
4,662,330 02
For the year 1792.
Dols. Cts. Dols. Cts.
Receipts, viz.:
Balance from last year 96,654 06
Overcharged in Treasurer’s accounts 10
Balances of old accounts 4,702 82
Revenues 3,692,013 66
Incidental 6,662 38
Domestic loans 2,556,595 56
Balance deficient 856,308 26
Expenditures, viz.: 7,212,936 84
Civil list, pensions, and grants, military establishment, intercourse with foreign nations, sundries 1,743,330 22
Interest on public debt (that to foreign officers excepted) 3,014,380 90
Reduction of public debt, viz.:
Sinking fund 318,347 88
Unfunded debts 136,877 84
455,225 72
Subscription to the bank stock 2,000,000 00
7,212,936 84
From 1st of January, 1793, to 1st January, 1796.
Dols. Cts. Dols. Cts.
Receipts, viz.:
Balances of old accounts 14,460 05
Revenues 16,127,282 78
Incidental and repayments 68,513 30
Domestic loans 7,300,000 00
Carried forward 23,510,256 13
Receipts, brought forward 23,510,256 13
Expenditures, viz.:
Balance deficient from last year 856,308 26
Civil list, pensions, and grants, military establishment, intercourse with foreign nations, sundries 9,554,102 74
Interest on public debt 9,334,434 59
Reduction of public debt, viz.:
Domestic loans 3,056,595 56
Unfunded debts 11,037 74
Sinking fund 165,702 04
Two per cent. on six per cent. stock 515,972 72
3,749,308 06
Balance in favor of fund on 1st January, 1796 16,102 48
23,510,256 13

No. XIII.: Receipts and Expenditures of the Foreign Fund.

To 31st December, 1791. Dols. Cts. Dols. Cts.
Receipts, viz.:
Balance in Holland 132,475 31
Arms and ammunition sold to France 8,962 00
Foreign loans 5,420,000 00
Profits on bills of exchange 233,724 96
Expenditures, viz.:
Interest on foreign debt for 1790. 391,144 04
Charges on foreign debt 258,800 00
Paid in part of the French debt 2,238,527 83
Balance in favor of the fund, viz.:
In Holland 2,028,580 98
In Treasury of America 878,109 42
2,906,690 40
5,795,162 27 5,795,162 27
For the year 1792. Dols. Cts. Dols. Cts.
Receipts, viz.:
Balance from last year 2,906,690 40
Foreign loans 2,380,000 00
Profits on bills of exchauge 134,210 90
Expenditures, viz.:
Charges on foreign debt 125,000 00
Paid in part of the French debt 1,777,554 42
Paid in part of the debt due to foreign officers, including interest 64,354 79
Balance in favor of the fund, viz.:
In Holland 1,814,239 32
In Treasury of America 783,444 51
Applied to domestic expenses 856,308 26
3,453,992 09
5,420,901 30 5,420,901 30
Edition: current; Page: [200]
From the 1st of January, 1793, to the 1st of January, 1796.
Dols. Cts. Dols. Cts.
Receipts, viz.:
Balance from last year 3,453,992 09
Foreign loans 1,600,000 00
Profits on bills of exchange, &c. 58,593 02
Expenditures, viz.:
Interest on Spanish debt for 1790 8,700 55
Charges on foreign debt 164,490 48
Payments on the French debt 1,854,318 06
Payments on the Dutch debt 1,200,000 00
Payments on the Spanish debt 241,681 95
Payments on the debt due to foreign officers 95,636 50
Payments on the bank stock loan 600,000 00
Payments to the sinking fund 434,901 89
Relief of the inhabitants of St. Domingo 15,000 00
Balance in favor of the fund, viz.:
In Treasury of America 500,348 13
Deduct deficient in Holland 2,484 45
497,855 68
5,112,585 11 5,112,585 11

No. XIV.: Estimate of the Receipts and Expenditures for 1796.

Dols. Cts. Dols. Cts.
Receipts, viz.:
Duties on imports and tonnage 5,770,000 00
Internal duties 350,000 00
Duties on postage 30,000 00
Dividends on bank stock 160,000 00
Interest on stock vested in sinking fund 88,242 79
Moneys to be raised by 5 million loan 5,000,000 00
Deficient, to be provided by anticipation 671,069 24
Expenditures as per appropriations, viz.:
Civil list, including deficiencies of 1795 506,871 12
Annities to sundry persons 3,157 73
Grant to indem. General Greene’s estate 55,000 00
Military pensions 114,259 00
Army and fortifications 1,171,790 84
Naval armament 301,917 82
Indian Department 71,000 00
Intercourse with foreign nations (including treaties) 512,672 06
Light-houses 32,000 00
Carried forward 2,768,668 57 12,069,312 03
Brought forward 2,768,668 57 12,069,312 03
Mint establishment, including deficiencies of 1795 61,864 00
Establishment of trading-houses with Indians 150,000 00
Miscellaneous and contingent expenses 36,672 09
Interest and charges on public debt, viz.:
On foreign debt 563,641 00
On domestic debt, including annuity on 6 per cent. stock 3,018,232 03
Two per cent. on balance due to several States for 1795 46,901 12
Interest on unfunded debt 51,333 22
On domestic loans and anticipations 372,000 00
4,052,107 37
Payment of public debt, provided for by the five million loan, viz.:
Anticipations 3,800,000 00
Two instalments on bank stock loan 400,000 00
First instalment of 800,000 dollars loan 200,000 00
Due to Bank of New York 200,000 00
Fourth instalment on Dutch debt 400,000 00
5,000,000 00
12,069,312 03 12,069,312 03
Edition: current; Page: [202]

No. XV.: Statement relative to the assumption of the State Debts.

States. Federal number of inhabitants of the several States. Sums assumed by the Union in State debts of the respective States. Balances found for and against the several States by the commissioners appointed to settle the accounts. Proportion of each State of the aggregate of the balances due to certain States and funded in their favor by the Union. Balances now due to and from the several States by reason of the balances found due to certain States by the commissioners having been funded. Proportion of each State of the aggregate sum assumed by the Union in State debts. Balances which would have been found due to and from the several States by the commissioners had no assumption of State debts taken place before the settlement of accounts. Sums in State debts, which, had no assumption taken place before the settlement of accounts, it would have been necessary to assume in order to render the aggregate of the ultimate balances due to and from the several States equal to the aggregate of the balances now due to and from the several States. Proportion of each State of the aggregate sum which it would have been necessary to assume per the preceding column. Ultimate balances which would have been due to and from the several States had no assumption taken place before the settlement of accounts, but had the sums mentioned in the last column but one been respectively assumed for certain States after the settlement of accounts. Sums to be respectively deducted from the sums originally assumed for each State; supposing the interest accrued during 1790 and 1791 upon the State debts assumed for the said States had not been charged to the said States in the settlement of the accounts of the States. Proportion of each State in the aggregate of the sums to be deducted from the original assumption, according to the supposition of the preceding column. Balances which would have been found for and against the several States, supposing the interest accrued during 1790 and 1791 upon the State debts originally assumed for the said States had not been charged to the said States in the settlement of accounts.
Numbers. In favor of States. Against States. Due to Due by In favor of Against Due to Due by
Tenths. Dols. Cts. Dols. Dols. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts.
New Hampshire 141,821 8 282,595 51 75,055 141,307 34 141,307 34 734,008 85 376,358 34 466,363 75 90,005 41 28,259 55 73,400 89 29,913 66
Massachusetts 475,327 0 3,981,733 05 1,248,801 473,602 76 473,602 76 2,460,088 81 2,770,445 24 3,843,573 74 1,563,055 06 489,926 56 398,173 31 246,008 88 1,400,965 43
Rhode Island 68,445 8 200,000 00 299,611 68,197 51 68,197 51 354,246 12 145,364 88 299,892 47 225,075 69 70,548 10 20,000 00 35,424 61 284,186 39
Connecticut 236,840 4 1,600,000 00 619,121 235,981 27 235,981 27 1,225,784 39 993,336 61 1,528,042 58 778,820 87 244,114 90 160,000 00 122,578 44 656,542 56
New York 331,590 4 1,183,716 69 2,074,846 330,387 56 1,744,458 44 1,716,169 78 2,607,299 09 1,090,394 72 1,516,904 37 118,371 67 171,616 98 2,128,091 31
New Jersey 179,569 8 695,202 70 49,030 178,918 42 178,918 42 929,376 32 185,143 63 220,264 60 590,493 46 185,085 24 69,520 27 92,937 63 25,612 64
Pennsylvania 432,878 2 777,983 48 76,709 431,307 95 354,598 95 2,240,392 02 1,539,117 54 1,423,467 35 115,650 19 77,798 35 224,039 20 222,949 85
Delaware 55,539 2 59,161 65 612,428 55,337 73 557,090 27 287,447 09 840,712 44 182,633 91 658,078 53 5,916 26 28,744 71 635,256 45
Maryland 278,513 6 517,491 08 151,640 277,503 30 125,863 30 1,441,467 01 1,075,615 93 915,858 12 159,757 81 51,749 11 144,146 70 244,037 59
Virginia and Kentucky 699,264 2 2,934,416 00 100,879 696,727 64 595,848 64 3,619,091 77 785,554 77 793,148 61 2,299,445 32 720,741 94 293,441 60 361,909 18 169,346 58
North Carolina 353,522 2 1,793,803 85 501,082 352,239 81 148,842 19 1,829,679 38 536,957 53 261,176 69 1,162,514 78 364,380 56 179,380 39 182,967 94 504,669 55
South Carolina 206,235 4 3,999,651 73 1,205,978 205,487 29 205,487 29 1,067,386 03 4,138,243 70 4,603,853 86 678,180 04 212,569 88 399,965 17 106,738 60 1,499,204 57
Georgia 70,842 4 246,030 73 19,988 70,585 42 70,585 42 366,649 90 100,631 17 59,307 14 232,956 62 73,018 31 24,603 07 36,664 99 7,926 08
Total 3,530,390 4 18,271,787 47 3,517,584 3,517,584 3,517,584 00 2,450,390 90 2,450,390 90 18,271,787 47 8,047,390 43 8,047,390 43 11,609,259 69 11,609,259 69 2,450,390 90 2,450,390 90 1,827,178 75 1,827,178 75 3,904,351 33 3,904,351 33


Pennsylvania has been found a debtor State for Dols. 76,709 00
Which sum subtracted from the sum she must pay as her proportion of the aggregate of the balances funded by the Union in favor of certain States, viz. 431,307 95
Leaves a balance now due to Pennsylvania of 354,598 95
Pennsylvania, by the settlement of accounts by the commissioners, has been credited for her proportion of the aggregate of the assumption, viz. 2,240,392 02
And has been charged with the amount assumed for her, viz. 777,983 48
She has, therefore, been credited with the difference, viz. 1,462,408 54
Which credit would not have existed had not the assumption taken place, and added, therefore, to the balance found due against her, viz. 76,709 00
Gives the balance which would have appeared against that State had no assumption taken place, viz. 1,539,117 54
Had no assumption taken place before the settlement of accounts, a balance would have been found against Pennsylvania of 1,539,117 54
Had then an assumption of dollars 11,609,259 69 taken place for the States, and in the proportions of this statement, nothing being assumed for Pennsylvania, the above stated balance subtracted from the sum she must pay as her proportion of the dollars 11,609,259 69 thus assumed, viz. 1,423,467 35
Would have left an ultimate balance due by that State of 115,650 19
Edition: current; Page: [a] Edition: current; Page: [203]

No. XVI.: Statement of the Debt due to France and of its extinction.

The United States Dr. to France. Livres. Livres. Dols. Cts.
To debt due on the 31st of December, 1789, viz.:
Loan of 18,000,000 livres bearing an interest of 5 per cent. from the 3d September, 1783, payable in 12 equal annual payments, the first of which became due on the 3d September, 1787 18,000,000
Loan of 6,000,000 livres bearing an interest of 5 per cent. from the 1st of January, 1784, payable in 6 equal annual payments, the first of which became due on the 1st January, 1797 6,000,000
Loan of 10,000,000 livres bearing an interest of 4 per cent. from the 5th of November, 1781, payable in ten equal annual payments, the first of which became due on the 1st of November, 1787 10,000,000
Balance of an account for supplies furnished 134,065 7 6
34,134,065 7 6
Debt due to the farmers-general of France upon a contract made the 3d of June, 1777 1,000,000 0 0
Deduct, viz.:
Remittance by the late government 153,229 5 7
Supplies furnished during the late war to the marine of France, under the agency of John Walker, consul-general 448,471 14 8
601,701 0 3
398,298 19 9
Total principal 34,532,364 7 3
Interest which fell due before the year 1790 on the above livres 34,134,065 7 6 10,441,895 8 7
Deduct remittances by the late government 1,600,000 0 0
8,841,895 8 7
Interest which fell due before the year 1790 on the above 398,298 19 9 126,017 7 6
Arrears of interest 8,967,912 16 1
Total due on the 31st of December, 1789 43,500,277 3 4} 7,895,300 30
at 18 15-100 cents.}
To interest which fell due on the above principal sum of 34,134,065 7 6 after the year 1789, viz., during the year 1790 1,606,703 5 4
1791 1,622,291 13 4
1792 1,284,361 2 2
1793 912,486 2 2
1794 795,000 0 0
1795 760,083 6 7
6,980,925 9 7
To interest on the above principal sum of 398,298 19 9 from the 1st of January, 1790, to the 1st of January, 1794 79,659 16 0
To interest which fell due after the year 1789 7,060,585 5 7
1,281,496 20
Livres 50,560,862 8 11
Dollars 9,176,796 50
Edition: current; Page: [204]
The United States in account with France, Cr.
Livers. Dols. Cts.
By payments in Europe, viz.:
1790. } Bills exchange remitted to France from Amsterdam 6,463,793 8
1791. }
1792. Bills exchange remitted to France from Amsterdam and Antwerp 3,616,625 13
Guilders 10,080,419 1 produced 24,193,005 14 4
Which 10,080,419 1 guilders, at 40 cents, are dols. 4,032,167 62
By profits and losses on the above remittances, viz.:
The above liv. 24,193,005 14 4, at 18 15-100 cents, are dols. 4,391,030 53
And cost, as per above, only 4,032,167 62
Difference gained 358,862 91
By payments in America, viz.:
1791. By the Department of War for arms, ammunition, &c., delivered dols. 8,962 00
1792. By the Treasury of the United States dols. 435,263 83
1793. By the Treasury of the United States 1,337,881 32
1794. By the Treasury of the United States 524,992 81
1795. By the Treasury of the United States 453,766 04
2,751,904 00
2,760,866 00
Which dollars 2,760,866, at 18 15-100 cents, are 15,211,382 18 0
By certificates of funded domestic debt issued in favor of Jas. Swan, agent of the French government, viz.:
1795. By stock bearing interest at 5½ per cent. from 1st January, 1796 dols. 1,848,900 00
By stock bearing interest at 4½ per cent. from 1st January, 1796 176,000 00
2,024,900 00
Which dollars 2,024,900 at 18 15-100 cents, are 11,156,473 16 7
Livres 50,560,862 8 11 9,176,796 53
Edition: current; Page: [205]

No. XVII.: Statement of the Dutch Debt after 1796, showing the yearly payments due thereon.

Years. Instalments which cannot be paid before the years on which they fall due. Instalments which may be paid before the years on which they fall due. Premiums and Gratifications. Commissions. Total.
At 5 per ct. int. At 4 per ct. int. At 5 per ct. int. 4½ per ct. int.
Dols. Dols. Dols. Dols. Dols. Dols. Dols.
1797 400,000 80,000 4,800 484,800
1798 80,000 800 80,800
1799 160,000 1,600 161,600
1800 160,000 240,000 4,000 404,000
1801 160,000 100,000 240,000 4,000 5,040 509,040
1802 160,000 100,000 920,000 240,000 5,000 14,250 1,439,250
1803 480,000 580,000 920,000 240,000 6,000 22,260 2,248,260
1804 580,000 920,000 240,000 7,000 17,470 1,764,470
1805 240,000 580,000 680,000 100,000 8,000 16,080 1,624,080
1806 240,000 560,000 680,000 9,000 14,890 1,503,890
1807 240,000 680,000 20,000 9,400 949,400
1808 240,000 2,400 242,400
1809 240,000 2,400 242,400
Total 2,800,000 3,180,000 4,600,000 820,000 139,000 115,390 11,654,390

Note.—The principal of the debt (exclusively of the premiums, gratifications, and commissions) due after 1796 is 11,400,000 dollars, to which adding the instalment of 400,000 dollars, payable in 1796, makes the whole principal due on the 1st January, 1796, dollars 11,800,000.

Edition: current; Page: [206]

(A.): A General View of the Receipts and Expenditures of the United States, from the Establishment of the Present Government, in 1789, to the 1st of January, 1796.

1789 to 1791. 1792. 1793. 1794. 1795.
Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts.
Balances of Accounts which originated under the late Government, viz.:
Cash in hands of commissioners in Holland 132,475 31 132,475 31
Other balances paid at different periods 11,001 11 4,702 82 8,448 58 693 50 5,317 97 30,163 98
Revenues, viz.: 162,639 29
Duties on imports and tonnage 4,399,472 99 3,579,499 06½ 4,344,358 26 4,843,707 25 5,588,961 26 22,755,998 82½
Internal duties 72,514 59½ 248,654 00 231,447 65 337,255 36 889,871 60½
Postage of letters 11,020 51 29,478 49 22,400 00 62,899 00
Excess of dividends on bank stock over interest payable on bank stock loan 8,028 00 38,500 00 55,500 00 66,233 34 168,261 34
Incidental, viz.: 23,877,030 77
Fines and forfeitures for crimes 311 00 118 00 429 00
Fees on patents 660 00 570 00 600 00 1,830 00
Sales of arms 8,962 00 4,240 00 13,202 00
Profits on remittances, &c. 238,661 7 134,210 90 67,701 14½ 28,670 91 469,244 02½
Mistake in Treasurer’s accounts 10 10
Loans, viz.: 484,705 12½
Foreign loans in Amsterdam and Antwerp 5,420,000 00 2,380,000 00 400,000 00 1,200,000 00 9,400,000 00
Domestic loans obtained in anticipation of revenues 246,608 81 556,595 56 600,000 00 3,200,000 00 2,500,000 00 7,103,204 37
Other domestic loans 2,000,000 00 200,000 00 800,000 00 3,000,000 00
19,503,204 37
Total of Receipts for each Year 10,457,492 29 8,739,909 4 5,719,342 49½ 9,761,396 89 9,349,438 84 44,027,579 55½
1789 to 1791. 1792. 1793. 1794. 1795.
Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts. Dols. Cts.
Civil List 706,720 29 368,319 86 334,263 29 431,999 47 352,233 36 2,193,536 27
Pensions, Annuities, and Grants, viz.:
Pensions to military invalids 175,813 88 109,243 15 80,087 81 81,399 24 68,673 22 515,217 30
Annuities and grants 13,102 96 5,597 72 5,329 51 33,921 87 2,970 20 60,922 26
Military Establishment, viz.: 576,139 [Editor: illegible number]
{ Army and militia, magazines, &c. 630,499 65 1,092,920 96 1,130,249 08 2,597,047 93 2,442,612 31 7,941,361 30
{ Indian Department 127,000 00 13,648 85 14,340 06 13,042 46
Fortifications 42,049 66 81,773 50 123,823 16
Naval armament 61,408 97 410,562 03 471,971 00
Intercourse with Foreign Nations, viz.: 8,537,155 46
Diplomatic Department 1,733 33 78,766 67 89,500 00 74,995 00 15,005 00 260,000 00
Extraordinary expenses 13,000 00 56,408 51 897,680 12 967,088 63
Sundries, viz.: 1,227,088 63
Light-houses and navigation 22,591 94 38,976 36 12,061 68 37,496 36 29,861 30 140,987 64
Mint establishment 7,000 00 17,366 49 23,153 12 22,400 00 69,919 61
Contingent and miscellaneous 28,343 15 28,856 65 5,527 49 34,174 99 46,825 41 143,727 09
Interest and Charges on Public Debt, viz.: 354,634 94
Interest on foreign debt 947,862 12 669,359 08 719,252 88 746,564 37 769,523 38 3,852,561 83
Interest on domestic debt 1,140,177 20 2,313,049 82 2,005,199 67 2,383,015 84 2,193,031 16 10,034,473 69
Interest on debt due to foreign officers 33,657 87 33,657 87
Interest on domestic loans 2,598 12 18,753 41 48,694 44 149,333 33 219,379 30
Commissions and brokerage in Holland 222,800 00 125,000 00 17,948 28 54,062 20 4,480 00 424,290 48
Premiums paid on the old Dutch loan 36,000 00 40,000 00 48,000 00 124,000 00
Principal of the Public Debt, including Arrears of Interest to 31st December, 1789, viz.: 14,688,363 17
Payments on the French debt 2,238,527 83 1,777,554 42 1,172,265 09 380,700 31 301,352 66 5,870,400 31
Payments on the debt due in Holland 400,000 00 400,000 00 400,000 00 1,200,000 00
Payments on the Spanish debt 241,681 95 241,681 95
Applied to purchases of the domestic debt 699,984 23 318,347 88 408,807 98 172,840 76 18,955 19 1,618,936 4
Payment of two per cent. on six per cent. stock 515,972 72 515,972 72
Payments on debt due to foreign officers 30,696 92 39,000 47 44,752 35 11,883 68 126,333 42
Reimbursement of anticipations 246,608 81 556,595 56 1,100,000 00 1,400,000 00 3,303,204 37
Reimbursement of other domestic loans 200,000 00 200,000 00 200,000 00 600,000 00
Unfunded debts paid in specie 298,479 94 136,877 84 7,120 29 3,855 86 61 59 446,395 52
13,922,924 33
Subscription to the Bank Stock of the United States 2,000,000 00 2,000,000 00
Losses on remittances 13,779 03½ 13,779 03½
Total of Expenditures for each Year 7,451,843 45 9,147,874 05 7,515,350 99 9,035,362 74½ 10,363,190 16 43,513,621 39½
Balance in cash on 1st January, 1796 513,958 15½
44,027,579 55
Dols. Cts.
Balances of accounts which originated under the late government, as per Receipts 162,639 29
Loans effected during the above period 19,503,204 37
19,665,843 66
Principal of public debt paid during the above period 13,922,924 33
Subscription to the bank stock of the United States 2,000,000 00
Balance in cash on 1st January, 1796 513,958 15
Excess of Expenditures beyond the Revenues received 3,228,961 18
19,665,843 66
Edition: current; Page: [207]

(B.): A View of the Public Debt on the first days of January, 1790 and 1796, respectively.

Principal. Annual Charge.
Foreign Debt, viz.: Dols. Cts. Dols. Cts.
Loans effected in Holland under the late government, viz.:
Principal remaining unpaid 2,400,000 00
Premiums and gratifications amounting to 139,000 dollars, bearing no interest, and worth, discounting the same at 6 per cent. compound interest 104,400 19
2,504,400 19
Loans effected in Amsterdam and Antwerp under the present government 9,400,000 00
11,904,400 19 559,641 00
Debt due to Foreign Officers 75,984 52
Six per Cent. Deferred. Three per Cent.
Domestic Debt, viz.: Dols. Cts. Dols. Cts. Dols. Cts.
Domestic debt (proper) funded has produced 18,844,964 63 9,328,988 57 12,775,832 16
Assumed debt 8,120,836 23 4,060,417 84 6,090,560 67
Balances funded in favor of the creditor States 2,345,056 00 1,172,528 00 703,516 80
Whole amount of funded domestic debt 29,310,856 86 14,561,934 41 19,569,909 63
Unfunded debt, which, if subscribed, will produce 656,540 73 328,270 36 398,026 28
29,967,397 59 14,890,204 77 19,967,935 91
Deduct, viz.:
Vested in the sinking fund, either by purchases or otherwise, before the 1st January, 1796 2,703,481 99
Two per cent. paid on 1st January, 1796, upon that part of the 6 per cent. stock belonging to individuals 515,972 72
3,219,454 71 1,683,137 30 929,220 14 607,097 27
28,284,260 29 13,960,984 63 19,360,838 64
The whole domestic debt, funded and unfunded, consisted of Six, per cent. stock, now converted into an 8 per cent. annuity on the original stock 28,284,260 29 2,304,018 64
Deferred stock, converted into an 8 per cent. annuity from after the year 1800 13,960,984 63
Three per cent. stock 19,360,838 64 580,825 16
Five and half per cent. stock 1,848,900 00 101,689 50
Four and half per cent. stock 176,000 00 7,920 00
Domestic Loans, viz.:
Balance due on the loan obtained to pay the subscription to the stock of the Bank of the United States 1,400,000 00
Loans obtained to defray the extraordinary expenses attending the intercourse with foreign nations 1,000,000 00
Loans obtained in anticipation of the revenues 3,800,000 00
6,200,000 00 372,000 00
Whole amount of the principal and annual charge on public debt on 1st January, 1796 81,811,368 27 3,926,094 30
Annual charge on deferred stock after the year 1800 1,116,878 77
Whole amount of the annual charge on the public debt after the year 1800 5,042,973 07


On a supposition that the State debts assumed by the Union, including therein the balances funded in favor of the creditor States, were actually debts due by the United States.
Foreign Debt, viz.: Dols. Cts.
French debt, as per statement No. XVI. 7,895,300 30
Debt due in Holland, viz.:
Principal of the loans effected under the late government 3,600,000 00
Premiums and gratifications on said loans, amounting to 263,000 dollars, bearing no interest, payable at different periods, and worth, discounting the same at the rate of six per cent. 171,175 77
3,771,175 77
Spanish debt, including arrears of interest 241,681 95
11,908,158 02
Debt due to Foreign Officers, including interest for the year 1789 198,317 94
Unfunded Debts discharged in specie before the 1st of January, 1796 450,395 52
Domestic Debt proper, viz.: Dols. Cts.
Principal 29,158,764 29
Interest, viz.:
Interest to 1st January, 1791 13,173,858 44
Deduct interest accrued during 1790, estimated at 1,680,000 00
11,493,858 44
Six per Cent. Stock.Deferred Stock.Three per Cent. Stock.
Which debt of Dols. 40,652,622 73
Dols. Cts. Dols. Cts. Dols. Cts.
Has produced in funded debt 39,269,785 36 18,844,964 63 9,328,988 57 11,095,832 16
Leaving unfunded on 1st January, 1796 1,382,837 37 656,540 73 328,270 36 398,026 28
40,652,622 73 19,501,505 36 9,657,258 93 11,493,858 44
From which deduct the sums vested in the sinking fund, other than those arising from purchases, the same consisting of the debt due to foreign officers and already stated, and of debts redeemed under the late government, although paid after 1789 395,820 28 259,347 94 41,235 70 95,236 64
19,242,157 42 9,616,023 23 11,398,621 80
Assumed Debt, viz.:
Sum assumed for the several States, including interest to 31st December, 1791 18,271,814 74 40,256,802 45
Deduct interest accrued during 1790 and 1791, estimated at 1,827,178 75
16,444,636 99 7,308,756 78 3,654,378 12 5,481,501 09
Balances funded in favor of the creditor States 3,517,584 00 2,345,056 00 1,172,528 00
19,962,219 99
Total of the Public Debt on 1st January, 1790 72,775,893 92
Whole amount of public debt on 1st January, 1790 Dols. Cts.
Deduct, viz.: 72,775,893 92
Balance in hands of commissioners in Holland on 1st January, 1790 } 132,475 31
Old debt paid in specie before 1796 30,163 98
162,639 29
72,613,254 63
Increase of Debt from 1790 to 1796 6,084,155 49
78,697,410 12
Whole amount of debt on 1st January, 1796 81,811,368 27
Deduct, viz.:
Balance in cash on 1st January, 1796 513,958 15
Moneys collected in part of revenue, but not yet passed to the Treasury accounts 600,000 00
Bank stock belonging to the United States 2,000,000 00
3,113,958 15
78,697,410 12
On the principle that the State debts were not proper debts of the Union, and that only such an amount of the same had been assumed (after the settlement of the accounts between the several States and the Union) as would have placed the accounts of the United States with the individual States in the same relative situation on which they now stand, by leaving outstanding the same aggregate amount of the balances due either to or from the several States as now remains outstanding.
Dols. Cts.
Foreign debt, debt due to foreign officers, unfunded debts, and domestic debt proper as per above 52,813,673 93
State debts, or balances in favor of creditor States, which it would have been necessary to assume or fund in order to render the aggregate amount of the ultimate balances for and against the several States equal to their present amount 11,609,259 69
64,422,933 62
Deduct balances arising from accounts which originated under the late government 162,639 29
True amount of debts on 1st January, 1790 64,260,294 33
Increase of debts from 1st January, 1790, to 1st January, 1796 14,437,115 79
Amount of debts on 1st January, 1796, after making the same deduction as in the preceding view for bank stock, cash in Treasury, and moneys actually collected 78,697,410 12
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This collection is divided into two parts: the first embraces such public acts as relate to the title of the United States to the public lands; the second consists of the Resolutions and Acts of Congress respecting the disposal of the lands.

Under the first head are included: 1. Treaties with foreign nations, so far as they relate to the acquisition of territory or to the boundaries of the United States.

2. Cessions of territory to the United States by individual States, members of the Union, and Acts of Congress relative thereto.

3. Treaties with Indian tribes, so far as they relate to the extinguishment of the Indian title to the public lands.

The treaties with foreign nations, by which territory has been acquired or which relate to boundaries, are those of 1783 and 1794 with Great Britain, of 1795 with Spain, and of 1803 with France.

The treaty of peace (of 1783) with Great Britain, which designated the boundaries of the United States, left, however, some unsettled points. The question relative to the true river St. Croix, the eastern boundary of the United States, has been determined in pursuance of the treaty of 1794. That respecting the rights of the two nations over certain islands at or near the mouth of that river has not yet been adjusted. But as the disputed territory in both cases belongs to the State of Massachusetts, neither of those questions affects the public lands of the United States. The same observation applies to certain islands in the river St. Lawrence, which continued to be claimed by Great Britain, and which are presumed to belong to the State of New York. The claims of the two nations to some other islands in the lakes and rivers west of that State have not yet been Edition: current; Page: [210] adjusted. But the principal undecided question arising from that treaty relates to that part of the boundary therein described as a line drawn due west from the most north-western point of the Lake of the Woods to the river Mississippi. It is ascertained that a line drawn in that manner cannot intersect that river, which does not extend as far northward as the latitude of the north-western extremity of the Lake of the Woods. And nothing more was agreed on in that respect by the treaty of 1794 than a mutual engagement to make a survey of the country, and to regulate by negotiation the boundary-line according to justice, mutual convenience, and the intent of the treaty of 1783.

The southern boundary of the United States was, by the same treaty, fixed at the 31st degree of north latitude. But Great Britain, having, by her treaty of the same date with Spain, ceded to that power West Florida, which under the British government extended as far north as the Yasous River, Spain, then in possession of the country between that river and the 31st degree of north latitude, refused at first to deliver it. Yet the title of the United States was indisputable; for their provisional treaty with Great Britain, a public instrument, signed on the 30th of November, 1782, and which was to take effect as soon as peace should be made between Great Britain and France, had already established the 31st degree of latitude as the southern boundary of the said States. Spain, therefore, when receiving Florida from Great Britain, a cession which cannot bear an earlier date than the 20th of January, 1783, the day on which the preliminary articles of her treaty of peace were signed, accepted that province with the boundary thus previously established; the territory lying north of the 31st degree, which might, prior to the 30th November, 1782, have made part of West Florida, having on that day, with the knowledge of Spain, been ceded by Great Britain to the United States. Spain did accordingly acquiesce, after a delay of some years. She made no cession of territory by the treaty of 1795, which simply, and without reserve or exception, recognizes the same boundaries which had been fixed by the treaty of 1783 between the United States and Great Britain.

The United States, by the treaty of 1803 with France, acquired Louisiana without any direct definition of its boundaries, Edition: current; Page: [211] but as fully and in the same manner as it had been acquired by France from Spain, in virtue of the Treaty of San Ildefonso, of the 1st of October, 1800. By this treaty Spain had retroceded Louisiana to France, “with the same extent that it then had in the hands of Spain, and that it had when France possessed it, and such as it should be after the treaties subsequently entered into between Spain and other states.”

By the grant of Louis XIV. to Crozat, dated 14th September, 1712,1 all the country drained by the waters emptying directly or indirectly into the Mississippi is included within the boundaries of Louisiana. The discovery of that river by the French, the general principles adopted by the European nations in relation to the rights of discovery, the publicity of the grant, and the long acquiescence of Spain, establish the claim of the United States to that extent. But the western boundary on the sea-shore, and south of the waters emptying into the Red River, is still a subject of controversy between the two nations; the territory called by Spain “Province of Texas” being claimed by both. The claim of France, now transferred to the United States, extended at least as far west as the bay of St. Bernard, in virtue of the settlement made there by La Salle, in 1685, in the vicinity of the river Guadeloupe, at a time when Spain occupied no part of the territory east of the Rio Norte. That settlement was destroyed, and, notwithstanding the repeated orders of the French government, was not resumed by the local authorities. In the mean while (in 1717), the Spaniards sent some priests among the Indians, and shortly after established a small military post at Adayes, afterwards transferred to Nogodoches, on which rests their claim to the country east of La Salle’s settlement. By an arrangement made in 1806 by the commanding officers in that quarter, it was agreed that for the present the Spaniards should not cross the Sabine, and that the Americans should not extend their settlements as far as that river. And in order to prevent any collisions until the difference should be finally adjusted, instructions have been given that the public lands should not be surveyed west of a meridian passing by Natchitoches.

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East of the Mississippi, the United States claim, by virtue of the treaty of 1803, all the territory south of the 31st degree of north latitude, and extending eastwardly to the small river Perdido, which lies between Mobile and Pensacola, and was, when Louisiana formerly belonged to France, the boundary between that colony and the Spanish province of Florida. That territory, together with the residue of Louisiana east of the Mississippi, was, by the treaty of 1763, ceded by France to Great Britain, who by the same treaty acquired also Spanish Florida. The preliminary articles of that treaty were signed on the 3d day of November, 1762, and on the same day France, by a separate Act,1 ceded to Spain all the residue of Louisiana west of the Mississippi, and including the city and island (so called) of New Orleans. By the treaties of 1783, Great Britain ceded to the United States all that part of the former colony of Louisiana east of the Mississippi which lay north of the 31st degree of north latitude, and to Spain, under the name of West and East Florida, both that part of Louisiana east of the Mississippi which lay south of that parallel of latitude, and the old Spanish province of Florida. The 31st degree of latitude was, by the subsequent treaty of 1795, between the United States and Spain, confirmed as the boundary between the possessions of the two nations. The title of the United States to the territory in question, under the treaties of San Ildefonso and of 1803, is fully established by those facts.

Louisiana was retroceded to France “with the same extent that it then had in the hands of Spain;” and the territory in question, by whatever name Spain chose to call it, was then substantially in her hands.

Louisiana was retroceded “with the same extent that it had when France possessed it;” and not only was that territory part of Louisiana when France possessed it, but she never owned that province a single day without that territory as part of it. For, as has been stated, she ceded on the same day the eastern part of Louisiana to England, and the western part to Spain.

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Louisiana was retroceded “such as it should be after the treaties subsequently entered into between Spain and other states;” and Spain never had, since she acquired Louisiana in 1762, made any treaties relative to Louisiana but that of 1783 with Great Britain, and that of 1795 with the United States; she had entered into no treaty whatever which affected Louisiana west of the Mississippi. This member of the description can therefore only apply to the territory in question east of the Mississippi, and there it has full effect; the territory having been acquired by Spain by her treaty of 1783 with Great Britain, and its boundaries having been finally established by her treaty of 1795 with the United States, “Louisiana, such as it should be,” &c., can only mean, including East Louisiana as restored by the treaty of 1783, but extending no further north than the southern boundary of the United States as recognized by the treaty of 1795.

The spirit of the treaty equally supports the construction necessarily derived from its letter. Spain retrocedes to France the colony which France had ceded in 1762, and she must, therefore, yield all in her possession which France had formerly given up. The cession by France of West Louisiana to Spain was to compensate for the loss of Florida. The cession of East Louisiana to England was to make, together with Florida, an equivalent for Cuba, which, on that condition, was restored to Spain. France ceded the whole for the benefit of Spain, and Spain having recovered Florida by the treaty of 1783, having herself ultimately lost nothing, it is a natural consequence that France, in obtaining a retrocession, should take back all she had lost for the sake of Spain. It is hardly necessary to add that no private explanation between those two nations, made subsequent to the Treaty of San Ildefonso, can affect the right of the United States derived from a public treaty; such supposed explanation not having been communicated to them by France when the treaty of 1803 was concluded, nor even afterwards by Spain when she acquiesced in the acquisition of Louisiana by America.1

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All the Acts of Congress which relate to Louisiana, and, amongst others, those respecting the public lands, have been so expressed as to become immediately applicable to that Territory, whenever possession should be obtained by the President according to the powers vested in him by law to that effect.

All the vacant lands in Louisiana have, by the acquisition of that country, become the property of the United States. But those east of the Mississippi, and contained within the boundaries designated by the treaty of peace with Great Britain, were claimed by individual States; and the title of the United States is, in that respect, principally, if not altogether, derived from cessions made by those States. The documents relative to that branch of the subject have been arranged under two sections,—the first consisting of extracts from the charters and other Acts establishing or affecting the boundaries of the States which made cessions; the other including the Acts of cession to the United States and the Acts of Congress relative thereto. These cessions embrace three distinct tracts of country.

1. The whole territory north of the river Ohio and west of the State of Pennsylvania, extending northwardly to the northern boundary of the United States, and westwardly to the Mississippi, was claimed by Virginia; and that State was in possession of the French settlements of Vincennes and Illinois, which she had occupied and defended during the Revolutionary war. The States of Massachusetts and Connecticut claimed all that part which was within the breadth of their respective charters; and the State of New York had also an indeterminate claim to the country. The United States have obtained cessions from the four States, and thus acquired an indisputable title to the whole. The State of Virginia, amongst other conditions of her Act of cession, made provision for securing the old French settlers in their possessions, and reserved two tracts of land,—one of 150,000 acres, near the rapids of the Ohio, for that portion of her State troops which had reduced the country, and the other, between the rivers Scioto and Little Miami, containing about Edition: current; Page: [215] 3,500,000 acres, to satisfy the bounties in land which she had promised to her troops on the continental establishment. The State of Connecticut reserved a tract on Lake Erie, bounded on the south by the 41st degree of north latitude, and extending westwardly one hundred and twenty miles from the western boundary of the State of Pennsylvania. The cessions of Massachusetts and New York included an insulated tract commonly called “the Triangle,” lying on Lake Erie, west of the State of New York, and north of that of Pennsylvania, and which has since been sold by the United States to Pennsylvania.

2. North Carolina has ceded to the United States all her vacant lands beyond the Alleghany chain of mountains within the breadth of her charter; that is to say, between the 35th degree and 36th degree 30 minutes of north latitude, the last parallel being the southern boundary of the States of Virginia and Kentucky. That territory which now forms the State of Tennessee was, however, subject to a great variety of claims, described in the Act of cession. And Congress has, by the Act of April 18, 1806, ceded to the last-mentioned State the claim of the United States to all the lands east of a line described in the Act, leaving the lands west of that line still liable to satisfy such of the claims secured by the cession from North Carolina as cannot be located in the eastern division.

3. South Carolina and Georgia were the only States which had any claim to the lands lying south of the 35th degree of north latitude. By the cessions from those two States the United States have acquired the title of both to the tract of country now forming the Mississippi Territory, extending from the 31st to the 35th degree of latitude, and bounded on the west by the river Mississippi, and on the east by the river Chatahoochee, and by a line drawn from a place on that river, near the mouth of Uchee Creek, to Nickajack, on the river Tennessee. As a condition of the cession from Georgia, the Indian title to the lands within her present boundaries will be extinguished at the expense of the United States, and she is also entitled to receive 1,250,000 dollars out of the proceeds of the first sales of lands in the ceded territory.

Cessions having thus been obtained from all the States claiming Edition: current; Page: [216] any part of the “public lands,” it is now immaterial, so far as relates to those States, to examine the foundation of their respective titles. But, although the State of Georgia has no longer any immediate interest in the question, certain large claims pretended to be derived from that State, and known by the name of “Yazoo Claims,” render it important for the United States to prove that a considerable portion of the territory thus claimed was not within the boundaries of Georgia nor of any other State at the date of the treaty of peace with Great Britain, and became, therefore, immediately vested in the United States by virtue of that treaty.

The charter of Carolina having been surrendered to the Crown by the proprietors, South Carolina became a regal colony, the boundaries of which might be altered by the Crown according to circumstances. Georgia was accordingly erected into a separate government, and, her charter having been surrendered by the trustees, she also became a regal colony. Her southern boundary was originally the Alatamaha River, and thence westwardly a parallel of latitude passing by the source of that river. The territory between the rivers Alatamaha and St. Mary’s was annexed to it by the King’s proclamation of the 7th October, 1763; and, though not positively expressed by that instrument, it appears by the commission of Governor Wright, dated 20th January, 1764, that the jurisdiction extended to the river Mississippi as far south as the 31st degree of north latitude, which, according to the proclamation, formed the northern boundary of the new British province of West Florida. But, on the representation of the board of trade, the boundaries were altered, and it appears from the second commission of Governor Johnstone, of that province, and from those of the subsequent governors, Eliot and Chester, that West Florida, from the 6th day of June, 1764, and thence as long as it continued under the British government, was bounded on the north by a parallel of latitude passing by the mouth of the river Yasous, or about 32 degrees 30 minutes of north latitude. The jurisdiction of the governors of West Florida did accordingly, in fact, extend to the territory lying between that parallel and the 31st degree, as well as south of this. Lands were granted by them within those boundaries, Edition: current; Page: [217] and, when not subsequently forfeited, continue to be held under that title. That portion of territory (viz., between the 31st degree and about 32 degrees 30 minutes of latitude) appears, therefore, to have been acquired not by any of the States as lying within its boundaries, but by the United States as part of West Florida, and for the benefit of the whole Union. All the documents which could be procured on that subject are inserted in the 2d Section, and amongst them the recital of the second commission of Governor Johnstone, which was very lately obtained, and is now for the first time published.1

The last section of the first part of this collection includes all the articles of treaties with Indian tribes which relate to the extinguishment of their title to the public lands of the United States. Those tribes are in some respects considered as independent communities. They govern themselves without being subject to the laws of the United States, and their right to remain in possession of the lands they occupy, and to sell them only when they please, is recognized. On the other hand, the United States have the exclusive right of pre-emption, and all sales to foreign nations or to individuals, whether citizens or foreigners, are null by law; a provision as necessary for the protection of the Indians as for that of the public domain. This principle is generally acknowledged by themselves, and recognized in several of their treaties. Nor can it be disputed that even if their own right to sell was entire, the United States have that to forbid any one to purchase. The sales to the United States are, however, altogether voluntary, and never made without a compensation Edition: current; Page: [218] more valuable to the Indians than the use of the land which they cede. Nor has, in any instance, the general government attempted to dispose of lands prior to their being purchased from the natives. For although it will appear that a portion of the lands ceded by them, in 1795, by the Greenville Treaty, had been previously sold by Congress to the Ohio Company and to J. C. Symmes, that treaty was only a confirmation of others made in 1784 and subsequent years, which had been violated by the Indians.

The treaties inserted are only such as relate to the public lands of the United States; and those for the purchase of land not ceded by the States to the Union are omitted. In several instances the same land will be found to have been purchased from different tribes, the purchase not being considered complete until all their conflicting claims have been acquired. The Indian title to the following tracts of country has thus, by successive treaties, been completely extinguished.

1. All the lands in the State of Ohio and in the Indiana and Illinois Territories bordering on the river Ohio, extending from the western boundary of Pennsylvania to the mouth of that river, and thence up the Mississippi to the river Illinois. The depth of that tract is not, on an average, less than 120 miles; and it is estimated to contain, exclusively of the Virginia military reservation, more than thirty-two millions of acres, of which more than twenty-four remain at the disposal of the United States.

2. A tract extending along the Mississippi, from the Illinois to the river Ouisconsing, and supposed to contain near twenty millions of acres.

3. A tract in the Michigan Territory, bordering on Lakes Huron, St. Clair, and Erie, estimated to contain about four millions of acres. It is separated from the “Connecticut Reserve” and from the other public lands of the United States by a tract still held by the Indians, extending along Lake Erie from the river Miami of the Lakes to Sandusky Bay.

4. A small triangular tract of 322,000 acres in the northern part of the Mississippi Territory, and in what is called the Great Bend of Tennessee, extending from a point on that river, Edition: current; Page: [219] northwardly, to the southern boundary of the State of Tennessee.

5. The lands in the Mississippi Territory bordering on the river Mississippi, from the mouth of the river Yasous to the 31st degree of latitude, thence extending along that parallel of latitude to the river Mobile, and thence about sixty miles up the branch of that river called “Tombigby.” This tract, having an inconsiderable breadth on the Mississippi, is not estimated to contain more than six millions of acres.

A large tract of country in Upper Louisiana appears also to have been ceded by the Sacs and Foxes, and by the Osages. No other treaties have been made by the United States with Indian tribes west of the Mississippi. It is, however, believed that the Indian title is extinguished to all the lands bordering on the west bank of that river as high up at least as the Missouri, but on what depth is not understood.

The second part of this collection consists of the Acts of Congress for the disposal of the public lands, and those have been arranged under four sections: 1. General provisions. 2. Donations. 3. Special sales north of the Ohio. 4. Adjustment of private claims. But this being a collection, and not a digest, of the laws, and the text of the law having therefore been uniformly preserved, it has not been practicable to follow in the details as methodical an arrangement as would have been desirable.

A considerable part of the country had been successively subject to several foreign powers: the Territories of Michigan, Indiana, and Illinois to France, and then to England; the southern part of the Mississippi Territory first to France, afterwards to England, and finally to Spain; Louisiana to France, and then to Spain. A part of the land was claimed by the inhabitants and others either by right of occupancy or under titles said to be derived from those several governments or from the local authorities. Eight boards of commissioners were instituted by various Acts of Congress for the purpose of investigating those Edition: current; Page: [220] claims, one for each of the Territories of Michigan, Indiana, Illinois, and Louisiana, two for the Mississippi, and two for the Orleans Territory. The rules prescribed by law to the commissioners have varied according to the nature of the claims respectively coming before them. But the object appears uniformly to have been to guard against unfounded or fraudulent claims, to confirm all bona fide claims derived from a legitimate authority, even when the title had not been completed, and to secure in their possessions all the actual settlers who were found on the land when the United States took actual possession of the country where it was situated, though they had only a right of occupancy. In some cases, also, a right of pre-emption has been granted to persons who had occupied lands in the Mississippi Territory subsequent to the time when the United States had taken possession. The commissioners in that Territory were authorized to decide finally on the claims; they have completed their work, and the boards are dissolved. The commissioners for the Territories of Michigan, Indiana, and Illinois were only authorized to investigate the claims and to report their opinion to Congress. Their respective reports have been received, all their confirmations have been ratified by Congress, and the whole business has been completed in Michigan and Indiana. But it remains for Congress to decide on a great number of claims in the Illinois Territory rejected as fraudulent by the commissioners. In the Territories of Orleans and Louisiana, the commissioners have been authorized to decide finally on all claims not exceeding one league square, and to report their opinion to Congress on those of a greater extent or for lead mines. Their reports have not yet been made; but those for Louisiana and the eastern part of the Orleans Territory are expected within a short time.

The laws included under the head of “Donations” are those respecting the bounties in land given to the officers and soldiers of the Revolutionary war, the grants made to the refugees from Canada and Nova Scotia in compensation of their losses and services, certain donations for public purposes in the State of Ohio, and miscellaneous grants made by Congress to the United Brethren, to A. H. Dohrman, to the French inhabitants of Galliopolis, to General La Fayette, to Captains Lewis and Clarke, Edition: current; Page: [221] to Isaac Zane, and to some Indian tribes now residing within the boundaries of the lands to which the Indian title has been extinguished. These, together with the donations to actual settlers above mentioned, with another donation of 100,000 acres to settlers in the tract sold to the “Ohio Company,” and with the reservations for schools and seminaries of learning hereafter noted, include all the lands given by the United States. The laws providing for granting patents to persons entitled to land in the Virginia military reservation, between the rivers Scioto and Little Miami, have also been inserted under this head.

Three tracts of land had been sold by contract prior to the adoption of the present form of government; that is to say: 1. To the State of Pennsylvania, the triangular tract on Lake Erie above mentioned, containing 202,187 acres. 2. To an association called “the Ohio Company,” a tract on the rivers Ohio and Muskingum, originally intended to contain about two millions of acres, but afterwards reduced, at the request of the parties, to 964,285 acres. 3. To John Cleves Symmes and his associates, a tract on the Ohio between the rivers Little and Great Miami, originally supposed to contain one million of acres, but which, by an alteration and then a failure in the contract, has been reduced to 248,540 acres. All those lands were sold at the rate of two-thirds of a dollar an acre, payable in evidences of the public debt of the United States, and a part of the two last tracts was paid for in military land-warrants, each acre in such warrant being received in payment for one acre and a half of land. A right of pre-emption, at the rate of two dollars an acre, has been allowed to persons who had made purchases from J. C. Symmes within the boundaries of his first contract. The laws respecting those subjects, those authorizing the sale of lots at Cincinnati and Shawnee Town, those allowing a right of preemption of 640 acres to George Ash, and of 320 acres to William Wells, and that for the sale of 2560 acres to John James Dufour, are arranged under the head of “Special Sales.”

All the other public lands sold by the United States have been sold under general laws. No more than 121,540 acres had thus been sold prior to the Act of 10th May, 1800, viz.: 72,974 acres at public sale at New York, in the year 1787, for 87,325 Edition: current; Page: [222] dollars, in evidences of the public debt; 43,446 acres at public sale at Pittsburg, in the year 1796, for 100,427 dollars; and 5120 acres at Philadelphia, in the same year, at two dollars an acre. The system now in force was organized by the Act last mentioned, but has received some subsequent modifications. Its general outlines, as it now stands, are as followeth:

1. All the lands are surveyed before they are offered for sale, being actually divided into townships six miles square, and these subdivided into 36 sections one mile square and containing each 640 acres. All the dividing lines, running according to the cardinal points, cut one another at right angles, except where fractional sections are formed by the navigable rivers, or by an Indian boundary-line. The subdividing lines of quarter-sections are not actually surveyed, but the corners, boundaries, and contents of these are designated and ascertained by fixed rules prescribed by law. This branch of the business is conducted under the superintendence of two principal surveyors, who appoint their own deputies. The powers and duties of the first—who is called surveyor-general—extend over all the public lands north of the river Ohio, and over the Territory of Louisiana. The other—known by the name of surveyor of the public lands south of the State of Tennessee—superintends the surveys in the Mississippi and Orleans Territories. Both make returns of the surveys to the proper land office and to the Treasury.

2. The following tracts are excepted from the sales, viz.: 1. One thirty-sixth part of the lands, or a section of 640 acres in each township, is uniformly reserved and given in perpetuity for the support of schools in the township. 2. Seven entire townships, containing each 23,040 acres, viz., two in the State of Ohio, and one in each of the Territories of Michigan, Indiana, Illinois, Mississippi, and Orleans, have been also reserved and given in perpetuity for the support of seminaries of learning. 3. All salt springs and lead mines are also reserved, but may be leased by the President of the United States. Three other sections were formerly reserved in each township for the future disposition of Congress; but this reservation has, since the Act of 26th March, 1804, been discontinued. One section was also reserved in each township within the boundaries of the tracts Edition: current; Page: [223] respectively sold to the Ohio Company and to John Cleves Symmes, and was given in perpetuity for religious purposes; but this reservation has not been extended to any other part of the public lands.

The Mississippi, the Missouri, and the carrying-places between them, the Ohio, and all the navigable rivers and waters leading into either of those three large rivers, or into the river St. Lawrence, or the Gulf of Mexico, remain common highways, and forever free to all the citizens of the United States, without any tax, impost, or duty therefor.

3. All the other public lands not thus excepted are, after the rightful private claims have been ascertained and confirmed, offered for sale at public sale in quarter-sections of 160 acres each, but cannot be sold for less than two dollars an acre. The lands not purchased at public sale may, at any time after, be purchased in quarter-sections at private sale, and at the rate of two dollars an acre, and without paying any fees whatever. The purchase-money, whether the land be bought at public or at private sale, is payable in four equal instalments,—the first within forty days, and the three others within two years, three years, and four years after the date of the purchase. No interest is charged if the payments be punctually made; but it must be paid from the date of the purchase, at the rate of six per cent. a year on each instalment not paid on the day on which it is due. A discount at the rate of eight per cent. a year is allowed for prompt payment, which, if the whole purchase-money be paid at the time of purchasing the land, reduces its price to one dollar and sixty-four cents per acre. Tracts not completely paid for within five years after the date of purchase are offered for sale at public sale for a price not less than the arrears of principal and interest due thereon; if the land cannot be sold for that sum, it reverts to the United States, and the partial payments made therefor are forfeited; if it sells for more, the surplus is returned to the original purchaser.

4. All the lands to which the Indian title has been extinguished are, for the convenience of purchasers, divided into districts, in each of which a land office is established. Ten of these districts are in full operation, viz.: those of Steubenville, Canton, Edition: current; Page: [224] Zanesville, Marietta, Chillicothe, and Cincinnati, in the State of Ohio; those of Vincennes and Jeffersonville, in the Indiana Territory; and those of Nashville (for Madison County, in the Great Bend of the river Tennessee) and Washington (near Natchez) in the Mississippi Territory. The sales have not yet commenced, the surveys not being yet completed, or the private claims not yet being decided upon, in the four districts of Detroit, in the Michigan, of Kaskaskia, in the Illinois, of Mobile, in the Mississippi, and of Opelousas, in the Orleans Territory. None have yet been authorized in the Territory of Louisiana and in the eastern part of the Territory of Orleans. Each land office is under the direction of two officers,—a register, who receives the applications and sells the land, and a receiver of public moneys, who receives the purchase-money, unless the purchaser prefers paying it into the Treasury. Those two officers operate as a check one on the other. Transcripts of the sales and of the payments, together with the original receipts and assignments, are transmitted to the Treasury; and no patent issues till after the calculations have been examined and it has been ascertained that the party has paid the whole purchase-money and interest. The system, as it relates to the accountability of the receivers, is better checked than that of any other branch of the public revenue; but the various and contingent provisions respecting the credits, interest, discount, forfeitures, and other conditions of sale, render it rather complex, and for that reason liable to delays in the final settlement of the accounts of the receivers.

The total quantity of land sold under that system at the several land offices from 1st July, 1800, to 1st July, 1810, and including pre-emption rights in Symmes’s purchase and the Mississippi Territory, amounts to 3,386,000 acres, which have produced 7,062,000 dollars. Of this sum, 4,888,000 dollars have been paid, in specie or evidences of public debt, into the Treasury or into the hands of the receivers of public moneys; the balance is due by the purchasers.

All the laws respecting that branch of the subject are inserted under the head of “General Provisions,” where will also be found the Acts to prevent intrusions on the public lands, which Edition: current; Page: [225] are equally forbidden under various penalties, whether the lands still continue in the possession of the Indians or have been purchased from them. Intrusions subsequent to the 3d March, 1807, work a forfeiture of title or claim, if the intruder had any such, not previously recognized and confirmed by the United States, and the President is authorized to remove such intruders, and to employ, if necessary, military force for that purpose.

An Appendix has been added, which consists principally of various documents connected with the title of the United States, or explanatory of certain extensive claims, either already rejected or requiring a critical investigation. The most important claims of that nature which have come within the knowledge of the Treasury will now be briefly stated.

1. Illinois and Wabash Companies. This is a claim for several millions of acres on those rivers, derived solely from Indian purchases made in 1773 and 1775 by unauthorized individuals. Exclusively of other considerations, such purchases were expressly forbidden by the proclamation of 1763 of the King of England. Yet it has been lately reported that the claimants intended to institute suits for the land.

2. Some large grants by Colonel Wilkins, a former English commanding officer at Illinois. These were also forbidden by the proclamation of 1763, and are recognized by the grantor as null, unless confirmed by his government.

3. A great number of claims in the Illinois Territory reported by the commissioners as fraudulent, and subject to the ultimate decision of Congress.

4. An unlocated township, included in Symmes’s patent, and granted for the support of a seminary of learning, has never been applied to that purpose. Congress has given another township in lieu thereof, and directed that legal steps should be taken to recover the first.

5. The Yazoo claims, so called, embracing about 35 millions of acres in the Mississippi Territory, and derived from a pretended sale by the Legislature of Georgia, but declared null, as fraudulent, by a subsequent Legislature. The evidence, as published by the State of Georgia and by Congress, is inserted in the Appendix, and shows that that transaction, even if considered Edition: current; Page: [226] as a contract, is as such, on acknowledged principles of law and equity, null ab initio; it being in proof that all the members of the Legislature who voted in favor of the sale, that is to say, the agents who pretended to sell the property of their constituents, were, with the exception of a single person, interested in and parties to the purchase. Much litigation must, however, be expected; and orders have lately been given for the removal of certain intruders, some of whom claimed the land under this supposed title.

6. British grants in the Mississippi Territory derived from the Governor of West Florida. These have not been confirmed, unless the claimant had made an actual settlement; but the lands thus claimed have by law been for the present excepted from the sales.

7. Doublehead’s Reserve, so called, is a small tract on the river Tennessee, excepted by a treaty with the Cherokees from a cession of territory made by them. It remains Indian property, and is also claimed by the Chickasaws. The Cherokees, for whose use it was excepted from the general cession, seem to have supposed that they had thereby acquired the right of selling or leasing it to citizens of the United States, who now claim it, and whose removal, as intruders on Indian lands, has been ordered by the President.

8. Bastrop’s claim on the river Washita, in the Territory of Orleans. This is only a contract between the Spanish governor of Louisiana and Baron Bastrop, by which a tract twelve leagues square was promised to him on condition of his settling thereon five hundred families, to each of which four hundred arpens of the land was to be allotted gratis. The execution of the contract was suspended by the Spanish government, and if it be still binding on the United States, it is only the residue of the land, after the families of the settlers shall have been first provided for, which can possibly be claimed. Yet the whole tract is claimed as a fee-simple estate held under a complete title.

9. Maison-rouge’s claim, also on the river Washita, is of the same nature with the preceding. But the contract was approved by the King of Spain, and a certificate was, subsequent to the cession to the United States, obtained from the Spanish officers Edition: current; Page: [227] stating that the conditions had been fulfilled by the claimant. There is no patent in either case; and the assent of the King, which, from its being obtained to the contract with Maisonrouge, seems to have been requisite in large grants, has not been produced for the contract with Bastrop. It may be generally observed that the archives and documents relative to the domain of Louisiana not having been left, in conformity with the treaty, in the possession of the United States, the extent of the powers of the governors or intendants to grant land, beyond the usual concessions to settlers, is not understood, and the difficulty of deciding on the validity of many claims has been greatly increased.

10. Houmas’s claim on the island of New Orleans. This is originally founded on a title to a tract about a league in length, on the left bank of the Mississippi, on a depth of about half a league. The owner, having no timber, asked and obtained from the Spanish governor of Louisiana a back concession as far as the vacant lands extended. The obvious intention of the grant was that it should preserve a breadth equal to that of the tract on the river. But the upper and lower lines of this happening, on account of a bend in the river, not to be parallel, but to diverge, making an angle of 120 degrees, the owners now claim all the land contained between those lines protracted on one hand to Manshak at the mouth of the Iberville, and on the other to the lower extremity of Lake Maurepas; which would include about 120,000 acres of the most valuable vacant land on the island.

11. A permission was granted by a Spanish governor to the inhabitants of Opelousas, in the Territory of Orleans, to cut wood wherever they pleased in the vacant cypress forest, reserving, however, the fee of the soil to the Crown. This grant, from its nature, would seem to be revocable at will, and, if continued unrestricted, will prove equally injurious to the public domain, and ultimately to the settlement itself.

12. Lead mines near Genevieve and other settlements in Louisiana. Two extensive claims of a doubtful nature are laid to some of these. The first derived from Philip Renaut, to whom a grant had been made in 1723 by the local authorities, Edition: current; Page: [228] and who returned to France in 1744, from which time his claim had lain dormant till the year 1807. The power of the officers who made the grant is doubted; and if the charter of the French Western or Mississippi Company was similar to that of Crozat, mines on being abandoned for three years reverted to the Crown. The other rests on an application of St. Vrain Lassus to the Governor of Louisiana for ten thousand acres, to be located on lead mines, salt springs, &c., where and in as many tracts as the applicant might choose. The governor, in February, 1796, writes at the bottom of the petition “Granted.” But no warrant of survey was given nor any attempt made to take up any land during the continuance of the Spanish authorities. The present holder of the supposed grant claims, by virtue of it, and has taken possession of, a number of the most valuable mines belonging to the public.

13. Dubuque’s lead mines in Louisiana, about 500 miles above St. Louis. The claim to these, and including 140,000 acres of land, is derived from a cession by the Indian tribe of Foxes, which appears to have been a mere personal permission to Dubuque to occupy and work mines as long as he pleased. The confirmation by the Spanish governor of Louisiana only grants the petitioner’s request to keep peaceable possession according to the tenor of the Indian permission. There was neither order of survey or patent, but the land is nevertheless claimed as if held under a perfect title.

14. The New Orleans Batture. The documents respecting this claim, which rests on a supposed right of alluvion, were too voluminous for insertion. And exclusively of other considerations, derived from the nature of the Batture, and from the laws of Louisiana, it is sufficient here to observe: 1st. That no title or survey has been produced proving that the land was bounded by the river. 2dly. That that land was converted into a suburb, and all the front lots sold to individuals. 3dly. That if the first purchasers from the Crown had any right to the Batture, this does not appear to have been legally vested in the present claimants. 4thly. That it is incontestably proven that during a period of near forty years, which elapsed between the purchase of the plantation from the Crown and the cession to the United Edition: current; Page: [229] States, the Batture was neither possessed nor claimed by the owners of that plantation, and was during the whole time in the exclusive and undisturbed possession of the public.

Some other vague claims to the public lands have been mentioned, respecting which no documents have been obtained; and it is probable that the reports of the commissioners for the Territories of Louisiana and Orleans will exhibit others as yet unknown.

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This Essay was prepared for the American Quarterly Review of December, 1830. The labor of digesting and condensing several hundred bank returns proved much greater than had been anticipated; and the time was too short for a thorough investigation. They have been now carefully examined, and the general results are, it is believed, as correct as can be expected from the materials on hand. Several transpositions and verbal alterations have also been made; some short explanatory notes have been added; and tabular statements are annexed which could not be inserted in a Review.

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  • Introduction . . . . . . . . . . page 5 [235]
  • Precious metals . . . . . . . . . . 6 [237]
  • Paper money . . . . . . . . . . 19 [253]
  • not convertible into specie . . . . . 20 [254]
  • convertible at will . . . . . . . 28 [263]
  • Banking system of the United States . . . . . 39 [278]
  • Remedies—enlargement of metallic currency . . . . 55 [299]
  • suppression of small notes . . . . . 56 [300]
  • proper valuation of gold coins . . . . . 57 [302]
  • miscellaneous provisions . . . . . . 65 [312]
  • Constitutional powers of Congress . . . . . . 71 [319]
  • Stamp duties . . . . . . . . . 75 [324]
  • Bank of the United States . . . . . . 76 [325]
  • Objections answered . . . . . . . 84 [336]
  • Notes.
    • A. Ratio of gold to silver . . . . . . 93 [347]
    • B. Banks of Scotland . . . . . . . ib. [348]
    • C. Restrictions on private banking . . . . 95 [350]
  • Statements.
    • I. Banks in operation 1st January, 1830 . . 97 [352]
    • II. Situation of banks (ascertained) January 1, 1830 . . . . . . . . 101 [357]
    • III. Capital of other banks January 1, 1830 . 103 [359]
    • IV. Banks which have failed . . . . ib. [360]
    • V. Depreciation of bank-notes during the suspension of specie payments . . . 106 [363]
    • VI. Situation of the United States Bank, 1819 to 1829 . . . . . . . . ib. [363]
    • VII. Distribution of the net circulation of the United States Bank, September, 1830 . ib. [364]
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The framers of the Constitution of the United States were deeply impressed with the still fresh recollection of the baneful effects of a paper money currency on the property and on the moral feeling of the community. It was accordingly provided by our National Charter that no State should coin money, emit bills of credit, make anything but gold and silver coin a tender in payment of debts, or pass any law impairing the obligation of contracts; and the power to coin money and to regulate the value thereof, and of foreign coin, was, by the same instrument, vested exclusively in Congress. As this body has no authority to make anything whatever a tender in payment of private debts, it necessarily follows that nothing but gold and silver coin can be made a legal tender for that purpose, and that Congress cannot authorize the payment in any species of paper currency of any other debts but those due to the United States, or such debts of the United States as may, by special contract, be made payable in such paper. All the engagements previously contracted at home by the United States were expressed in Spanish dollars; all the moneys of account of the several States were estimated and payable in that coin; there might be some uncertainty as to the precise weight of pure silver which it contained; and the essays made at the time may not, for want of proper means, have had all the accuracy of which that process is susceptible. But they were made in good faith; and the Act of Congress of the year 1791, which declared that the dollar of the United States should contain 371¼ grains of pure silver, has irrevocably fixed that quantity as the equivalent of a dollar of account and as the permanent standard of value, according to which all contracts must be performed. The relative legal value Edition: current; Page: [236] of gold and foreign coins to that standard may from time to time be varied, provided that neither shall be so overrated as to authorize the payment of a debt with an amount in such coin of a less actual value than that of the silver to which it may be made to correspond.

The provisions of the Constitution were universally considered as affording a complete security against the danger of paper money. The introduction of the banking system met with a strenuous opposition on various grounds; but it was not apprehended that bank-notes, convertible at will into specie, and which no person could be legally compelled to take in payment, would degenerate into pure paper money, no longer paid at sight in specie. At a later date, although occasional bankruptcies had taken place, and might again be anticipated, there was no apprehension of a general failure of the banks in three-fourths of the States. Still less was it expected; and it was the catastrophe of the year 1814 which first disclosed not only the insecurity of the American banking system, as then existing, but also that when a paper currency, driving away and superseding the use of gold and silver, has insinuated itself through every channel of circulation and become the only medium of exchange, every individual finds himself, in fact, compelled to receive such currency, even when depreciated more than twenty per cent., in the same manner as if it had been made a legal tender. The establishment of the Bank of the United States was recommended by the Treasury, and that institution was incorporated by Congress, for the express and avowed purpose of removing an evil which the difference in the rate of depreciation between the paper currencies of the several States, and even those of different places in the same State, had rendered altogether intolerable. The object in view has been obtained. The resumption of specie payments, which the State banks had been unwilling or unable to effect, took place immediately after that of the United States had commenced its operations. And it has for a number of years supplied the country with a currency safer and, it must at least be allowed, more uniform than that which the State banks could furnish. The question, whether the charter, which expires in a few years, should be renewed, has been brought by Edition: current; Page: [237] the President before Congress, with a suggestion that a national bank, founded upon the credit and revenues of the government, might be advantageously substituted to that now in existence. Reports favorable to the continuance of the present bank have been made by committees of both Houses of Congress. Another report, on the relative value of gold and silver, and intimately connected with the subject of currency, has also been made by the Secretary of the Treasury to the Senate. Availing ourselves of the information afforded by those documents, and particularly of the arguments adduced in Mr. McDuffie’s able report, we intend to examine this important question principally in reference to the currency of the country, considered as the common standard by which the value of all the other commodities is estimated and every contract is performed.

Whatever commodity or species of paper may, by law or general consent, be universally received in any country in exchange of every other commodity and in payment of all debts, is the circulating medium or currency of such country, or, in other words, its common standard of the value of all commodities whatever, and that which regulates the performance of all contracts not specially excepted. It is therefore of primary importance that the commodity or substitute which may be selected for that purpose should be of a value as permanent as practicable, and the same in every part of the same country; and it is also highly desirable that the same circulating medium should be common to all countries connected by commerce. Gold and silver are the only substances which have been, and continue to be, the universal currency of civilized nations. It is not necessary to enumerate the well-known properties which rendered them best fitted for a general medium of exchange. They were used not only as ornaments and objects of luxury, but also for that particular purpose, from the earliest times. We learn from the most ancient and authentic of records that Abraham was rich in cattle, in silver, and in gold; that he purchased a field for as much money as it is worth, and in payment weighed four hundred shekels of silver, current (money) with the merchant. And when we see that nations, differing in language, religion, habits, and on almost every subject susceptible of doubt, have, Edition: current; Page: [238] during a period of near four thousand years, agreed in one respect; and that gold and silver have, uninterruptedly to this day, continued to be the universal currency of the commercial and civilized world, it may safely be inferred that they have also been found superior to any other substance in that permanency of value which is the most necessary attribute of a circulating medium, in its character of the standard that regulates the payment of debts and the performance of contracts.

There is not, however, in nature any perfect or altogether permanent standard of value. There is not a single commodity the relative value of which, as compared to that of all other commodities, is not subject to great and permanent changes as well as to temporary fluctuations. But it will be found that the nature of the demand for precious metals, the comparative regularity of the supply, and especially their much greater durability and intrinsic value than those of any other substance otherwise fitted for a circulating medium, restrain the fluctuations to which their relative value is liable within far narrower limits than is the case with any other commodity which might have been selected for a currency.

It is well known that the discovery of America was followed by a great and permanent change in the price of the precious metals, which reduced it to one-fourth of their previous relative value as compared to all other commodities. This great revolution was due to a simultaneous vast increase of the supply and corresponding reduction in the cost of production of the metals. The American mines of silver do not lie nearer the surface of the earth than those of other countries; the ore rarely yields more silver than one-fourth per cent. of its weight, nor was there at the time any improvement adopted that tended materially to lessen the expense of extracting the silver from the ore.1 The superiority of the silver mines of America appears to consist principally in the magnitude of the beds and the much greater quantity of ore which can accordingly be dug out with the same labor. The annual labor of one miner at the mine of Valenciana, the most fertile of Mexico, was sufficient, Edition: current; Page: [239] in 1803, to extract from the bowels of the earth four hundred quintals of ore, which produced one quintal of silver, and the annual produce of the mine exceeded three millions of dollars in value (about 220,000 lbs. troy weight); whilst at the richest mine of Saxony the annual labor of eleven miners was necessary to extract the ore sufficient to produce a quintal of silver, and the annual produce was less than ninety thousand dollars (about 6200 lbs. troy weight). Although the money-price of mining labor appears to be five times greater in Mexico than Saxony, and notwithstanding the want of fuel and other circumstances which increase the current expenses, the cost of production was still much less at the Mexican than at the Saxon mine, and left a considerable rent to the owner. The Saxon mine, though probably as rich as any that was in operation in Europe prior to the discovery of America, could not, on account of the difference in the rate of wages, be worked if situated in Mexico. It follows that all the American silver mines are superior to it in fertility, though in that respect differing from each other, and gradually decreasing from that of Valenciana down to the poorest, which probably affords no rent to the owner.

The American mines or washings of gold are in the same manner more fertile, or with the same labor produce much greater quantities of pure metal, than those of Europe. But the difference must have been less with respect to gold than to silver mines. The relative value of gold to silver was, before the discovery of America, at the ratio of 11 or 12, and is now at that of 15 or 16 to 1. If the depreciation in the value of silver has been at the rate of 4 to 1, that of gold has been only at the rate of about 3 to 1; and this may afford some reason to think that of the two metals gold is probably the most permanent standard of value. It must be observed that, though wanted for similar purposes, the relative value of gold to silver does not depend on any supposed similarity or connection between the two metals, but is the result of their respective prime cost, which determines the value of each in relation to that of all other commodities.

As the total importation of precious metals from America to Edition: current; Page: [240] Europe had not, prior to the year 1596, exceeded a quantity equal to that contained in eight hundred millions of dollars, and the depreciation was then already at the rate of about 3½ to 1, it is probable that the total amount of gold and silver existing in Europe prior to the discovery of America, though worth then four times as much, did not in quantity exceed that contained in three hundred millions of dollars, money of the present times.

The total amount of gold and silver produced by the mines of America to the year 1803, inclusively, and remaining there or exported to Europe, has been estimated by Humboldt at about five thousand six hundred millions of dollars; and the product of the years 1804-1830 may be estimated at seven hundred and fifty millions. If to this we add one hundred millions, the nearly ascertained product to this time of the mines of Siberia, about four hundred and fifty millions for the African gold-dust and for the product of the mines of Europe (which yielded about three millions a year in the beginning of this century) from the discovery of America to this day, and three hundred millions for the amount existing in Europe prior to the discovery of America, we find a total, not widely differing from the fact, of seven thousand two hundred millions of dollars. It is much more difficult to ascertain the amount which now remains in Europe and America together. The loss by friction and accidents might be estimated, and researches made respecting the total amount which has been exported to countries beyond the Cape of Good Hope; but that which has been actually consumed in gilding, plated ware, and other manufactures of the same character, cannot be correctly ascertained. From the imperfect data within our reach, it may, we think, be affirmed that the amount still existing in Europe and America certainly exceeds four thousand and most probably falls short of five thousand millions of dollars. Of the medium, or four thousand five hundred millions, which we have assumed, it appears that from ⅓ to 2/5 is used as currency, and that the residue consists of plate, jewels, and other manufactured articles. It is known that of the gross amount of seven thousand two hundred millions of dollars, about 1800 millions, or ¼th of the whole in Edition: current; Page: [241] value, and 1/48th in weight, consisted of gold. Of the four thousand five hundred millions, the presumed remaining amount in gold and silver, the proportion of gold is probably greater, on account of the exportation to India and China having been exclusively in silver, and of the greater care in preventing every possible waste in an article so valuable as gold.

In order, therefore, to produce a revolution in the price of gold and silver, such as was caused by that event, mines must be discovered which in thirty or forty years should produce, in addition to the supply required by the increasing demand, thirteen or fourteen thousand millions of dollars, or three times the quantity now existing; and this increased supply must be accompanied with a corresponding reduction in the cost of production. It is obvious that the discovery of one hundred new mines, even superior in magnitude and equal in other respects to that of Valenciana, would only cause mines of inferior fertility to be abandoned, and could produce no greater effect on the price of silver than reducing it to the actual cost of production at the mine of Valenciana. The expense of extracting the silver from ore of a given quality, once brought to the surface of the earth, bears too small a proportion to the whole expense of working a mine to render it possible that any improvement in that process should cause any great reduction in the price of the metal. It does not appear that such reduction can be effected otherwise than either by the discovery of numerous and large beds of ore, much richer in silver than any yet worked, or by a great reduction in the money-price of labor in America. Judging from analogy, the first event, at least to a sufficient extent, is altogether improbable; and the last contingency cannot take place but slowly and gradually. On the other hand, the diminution in the annual supply for the last twenty years, having been exclusively caused by the convulsions attending the revolutions of the new American states, is but temporary; and the successive numerous discoveries of new mines, during the seventeenth and eighteenth centuries, render it highly probable that, after order and security shall have been restored in those states, a similar progress will take place, and continue, as heretofore, to produce an increasing annual supply, corresponding with the Edition: current; Page: [242] increasing demand. This demand, also, being always proportionate to the wealth and prosperity of the civilized world, can increase but gradually. It is, therefore, highly improbable that any new revolution should again occur producing effects in any degree similar to those which followed the discovery of America, or that there should be any other permanent alteration in the price of the precious metals, but such slow and gradual changes as cannot substantially affect the due performance of the great mass of ordinary contracts. Before we examine the temporary fluctuations in price to which both gold and silver are liable, it is necessary to inquire into the nature of the demand for those metals.

Mines, being, like tillable land, private property and of different fertility, the rent of either, as well as the intrinsic value of their respective produce, are regulated by analogous laws. But there is an essential difference between the demand for corn and that for the precious metals. That for corn, or the ordinary article of food, is for an amount in quantity, without much regard to value. That for gold and silver is for an amount in value, and not in quantity. More food is consumed and may be wasted in plentiful years than in those of scarcity. But there is always a certain quantity of corn or other usual article of food determined by population, and which must necessarily be supplied at any price, without any other limits than actual deficiency in the supply or absolute inability to pay the market-price; and in either case a portion of the suffering population must perish. In a country requiring annually at least fifty millions bushels or any other quantity of corn for the necessary subsistence of its inhabitants, there is a most imperative demand for that amount, or a substitute for it; and this must be satisfied if the amount can be procured at all, and at any price, provided the country can by any means pay for it. The demand for corn is, therefore, for a certain quantity regulated by the population, and not for a certain value proportionate to the income, capital, or wealth of the country.

But the demand for gold and silver is either for plate, jewels, and other manufactured articles, such as plated ware, gilding, &c., in which those metals are used, or for currency. It is evident Edition: current; Page: [243] that all or nearly all those objects of demand being, with the exception of currency, articles of luxury, the effective demand for them, including both the wish to possess and the means to pay, must be proportionate to wealth, and therefore for a certain amount in value and not in quantity. No individual can lay out more than a certain portion of his income or capital in plate and jewels. If the price of the precious metals is reduced to one-fourth of what it previously was, as happened during the latter end of the sixteenth century, he will be able with the same income to obtain four times the quantity of plate and gold ornaments which he formerly possessed, because their value remains the same. But the increased cheapness will in a very inconsiderable degree, if at all, have a tendency to increase the amount in value of gold and silver articles which will be used. An individual may be induced, by such great reduction in the price of silver, to substitute silver spoons or forks to those made of inferior metal; but so long as silver spoons or forks are dearer than those of any other metal, he cannot, his income remaining the same, indulge his wish without retrenching his expenses in some other respects and without depriving himself of some other comforts. What is true of every individual in every country is equally so of the aggregate of individuals or of every country. The demand for an increased value of plate, jewels, and other articles manufactured, in whole or in part, of gold or silver, with the exception, perhaps, of a few articles in general use amongst all classes, will everywhere be nearly in proportion to the wealth of each country respectively. And what is nearly correct as regards the demand for manufactures of gold and silver, is strictly true as applied to the demand for those metals for currency.

As a silver dollar, or dollar bank-note, passing from hand to hand, effects in a given time, a year for instance, a great number of payments, the amount of currency wanted in any country is always much less than the gross amount of payments made in currency within the same time. The amount thus wanted is that which is necessary and sufficient for the payment of all such purchases of land, labor, and product of labor (embracing every species of commodities and capital) as are paid with currency. Edition: current; Page: [244] Its value must always, therefore, bear a certain proportion to the aggregate value of the land, labor, and all objects whatever thus paid for with currency. That proportion, as well as that which the value of the annual purchases effected with currency may bear to the value of the whole amount of annual exchanges and purchases of the country, whether effected with currency or by any other means, must vary, and cannot be precisely ascertained. But whatever either of these two ratios may be, the average value of the various objects purchased, which are paid for in currency within a given time, a year for instance, will always require a certain proportionate value of currency. The average value of the objects thus annually paid for determines the total average amount in value of currency which is requisite, and in the case before us the average value of precious metals which is wanted for currency, and for which there is an actual demand for that purpose.

Let it be supposed that the amount of currency wanted in a country is one-tenth part of the whole amount of the annual payments made there in currency, and that the currency consisting exclusively of silver, there are annually in that country one million of bushels of wheat sold and paid for in currency. It is clear that if the relative value of silver to wheat be such in such country that one ounce of silver is the equivalent and common price of a bushel of wheat, one hundred thousand ounces of silver will be necessary and sufficient to effect the payment of all the wheat annually sold and paid for in currency. If on account of a reduction in the cost of its production, or from any other cause, the value of silver, as compared to that of all other commodities, should be reduced to one-half of what it previously was, the value of wheat, as compared with that of all other commodities, silver excepted, remaining the same as before, two hundred thousand ounces of silver would be necessary to effect the payment of the one million of bushels of wheat sold for currency during the year. But although the quantity of silver (or nominal amount of currency) wanted was twice as great as before, the value would remain precisely the same, two hundred thousand having become worth no more than one hundred thousand ounces had previously been. If, instead of this, the value Edition: current; Page: [245] of silver had undergone no change, and either the quantity of wheat, annually sold and paid for in currency, had increased to two millions of bushels, its price remaining the same, or, the quantity thus sold remaining the same, the value of wheat as compared to all other commodities had doubled, as the two hundred thousand ounces of silver, wanted to effect the payments of the sales of wheat, would actually be worth twice as much as the one hundred thousand ounces had been, the value of currency wanted would be twice as great as theretofore.

What is true of the proportionate value of the currency, wanted to effect the payment of the quantity of wheat annually paid for in currency, to the value of that wheat, is equally true of the proportionate value of the currency, wanted to effect the payment of the whole amount of land, labor, and products of labor, annually paid for in currency, to the aggregate value of all those objects. Although the proportion may vary, according to the rapidity of the circulation, and to the means used in order to economize the currency, it is always that aggregate value which determines the value of the currency wanted in any country. Whilst that aggregate value remains the same, any great variation in the amount in quantity of the currency must be due to a change, or cause a change, in its value, as compared with that of all other commodities. Where gold and silver are the only currency, any great and permanent increase in the quantity of those metals used as currency (the aggregate value of the objects annually paid for in currency remaining the same) must be due to a corresponding reduction in the cost of production of gold and silver; which cost, leaving to the owners of mines a greater or less rent according to their fertility, determines the value of those metals as compared with that of all other commodities. Where a paper has been substituted to a metallic currency, any similar considerable increase in its amount must cause a corresponding depreciation in its value, if the aggregate value of the objects, annually paid for in currency, remains the same.

The amount in value of the currency wanted to effect the necessary payments, though but a comparatively small portion, is one of the most important, productive, and necessary portions Edition: current; Page: [246] of the capital of a nation. Its use is substituted to an inconvenient barter or exchange of one commodity for another; it enables every individual to dispose at all times, and with facility, of the whole surplus of the products of his industry, and to purchase with the proceeds any of the products of the industry of others which he may want; it promotes the division of labor, and vivifies the industry of the whole country. But whenever the precious metals used as currency exceed in any country the value wanted to effect the necessary payments, the surplus becomes a dead and unproductive stock; and it will accordingly be either converted into manufactured articles of those metals, or be exported to other countries. If, on the contrary, the currency should consist of an irredeemable paper, having only an artificial and local value, and none whatever either in other countries or for any other purpose, it is evident that any excess in the nominal value of such currency, beyond the actual value sufficient to make the necessary payments, must cause a corresponding depreciation in that nominal value. If fifty-five millions of ounces of pure silver, at its present value as compared with all other commodities, are sufficient on an average to effect all the payments made in the United States in currency, the whole quantity of a paper currency substituted to silver cannot, on an average, whatever its nominal amount may be, exceed in value fifty-five millions of ounces of pure silver, or about seventy-one millions of dollars in our present coin. Whether such currency amounted nominally to seventy-one, one hundred, or one hundred and forty millions of dollars, its value would not, on an average, exceed that of the seventy-one millions of silver dollars wanted to effect the necessary payments; and the paper money would generally depreciate at least in proportion to the excess of its nominal amount beyond seventy-one millions of silver dollars. Having recurred to numbers by way of illustration, it is proper to observe that we do not mean to assert that the total value of currency wanted in any country is a fixed sum. Even when no alteration has taken place in the industry and commerce of a country, the amount of currency may occasionally, to a certain extent, exceed that which is actually wanted without affecting its price. An approximation of Edition: current; Page: [247] the average amount, which always fluctuates within certain limits, is all we pretend to give.

It is obvious that the aggregate value of the annual payments made in currency, which regulates the value of the currency wanted, must itself principally depend on the aggregate value of the land, labor, products of labor, and in short of all the objects which are or may be annually sold or exchanged. The amount of the value of currency wanted, or the demand for currency in every country, depends, therefore, principally on its wealth, but is modified in some degree by the state of society. The wages of labor and the rent of land are in most countries no inconsiderable portion of the objects which must be paid for in money. Countries where slave is generally used instead of free labor, or where, as in the United States, the greater part of the land is occupied and tilled by the owners, or, when rented, let generally on shares, will, therefore, with equal wealth, require a less proportionate amount of currency in value. Less is also wanted in purely agricultural countries, and everywhere by those engaged in agriculture, than in any other profession. As a far greater part of the income of almost every individual is expended on articles of food than on the product of any other one branch of industry, farmers consume a much greater part of the products of their own industry, and they therefore have a less proportionate amount of those products to exchange for the products of the industry of others than any other profession. Barter continues also to be a principal mode of exchange in the country, at least in a great portion of the United States, where the planter and farmer obtain from time to time their supplies from the merchant, and pay him annually with their crop. It may be said generally that, with respect to the state of society, the want and demand for currency increase in proportion to the density of the population, the consequent multiplication and growth of towns, and the division of labor. And these being almost exclusively the result of the increasing growth, prosperity, and wealth of a country, it may be correctly asserted that the demand for currency in any country is generally proportionate to its wealth.

That demand increases in proportion to that of population Edition: current; Page: [248] only in as far as population is a principal element of wealth; and both will increase together, nearly in the same proportion, in a country which in other respects is nearly stationary. But the ratio of the population to the actual amount of currency, which always corresponds nearly with the demand for it, will be found to differ materially in various countries, according to the productiveness of labor, to the accumulated amount of products of labor or capital, and generally to the wealth of each respectively. The perpetual melting of coins makes, indeed, the amount of coinage alone, and without many subsidiary investigations, a very imperfect criterion of the amount of gold and silver coins existing in any country. A much more correct estimate may be made where paper or debased coin, neither of which can be advantageously exported or used for any other purpose, constitute the whole or greatest part of the currency. And resorting to both means, an approximation sufficient for the purpose may be obtained.

We learn from Storch that the paper money of Russia amounted, in 1812-1814, to five hundred and seventy-seven millions of rubles, and the copper currency to about twenty-five millions. Both being depreciated to one-fourth part of their nominal value, were equivalent to one hundred and fifty millions of silver rubles; to which adding the estimated amount of twenty-five millions of silver rubles still in circulation, gives a total of one hundred and seventy-five millions, equal to less than one hundred and thirty-two millions of dollars. The paper circulates almost through the whole empire, from Archangel to Odessa, and from the banks of the Dwina to the confines of Asia. Excluding Riga, Courland, and the Asiatic provinces, the one hundred and thirty-two millions of dollars are the total value of currency for at least thirty-five millions of souls, that is to say, at the rate of less than four dollars a head.

It will hereafter be shown that the amount of currency of the United States did not, in 1829, probably exceed seventy-three millions of dollars, or at the rate of about six dollars a head; a result nearly the same as that of the year 1819. The reasons why the amount is less than might have been inferred, from the Edition: current; Page: [249] extensive commerce of the United States and the wealth of our large cities, have already been briefly indicated.

In France, where great pains have been taken to ascertain the facts, as far as it is practicable, in a country nine-tenths at least of the currency of which consist of the precious metals, the estimates vary, for different years and different amounts of population, from two thousand to two thousand five hundred millions of francs, but only from seventy-two to eighty francs, or from thirteen and a half to fifteen dollars, a head.

The bank-notes of the Bank of England, and of country banks, amounted, in the year 1811, to forty-four and a half millions sterling, and those of Scotland to three millions and a half, equivalent, together, to about forty-four millions specie, to which adding about four millions’ worth of debased silver, gives, on a population of about twelve millions of souls, about £4 sterling, or 19 dollars, a head. In 1829, the amount has been stated to be twenty-two millions in gold, eight millions in silver, and twenty-eight millions in English bank-notes, to which adding four millions of Scotch notes, gives sixty-two millions, or about the same result in proportion to the population; since this, allowing the same rate of increase since 1821 as between 1811 and 1821, must now amount to between fifteen and sixteen millions of souls. But, including the population and the bank-notes of Ireland, we would have a population of about twenty-three millions, and a currency of about sixty-six millions sterling, or, as in France, about fourteen dollars a head.

From these and more imperfect data in relation to other countries, we believe that the total amount of currency in Europe and America may be estimated at two thousand to two thousand three hundred millions of dollars; three-fourths of which consist of the precious metals, and the residue of bank-notes and irredeemable paper money.

The amount in weight or quantity of gold and silver is now fifteen times as great in Europe and America as it was prior to the discovery of the last country. But the three hundred millions previously existing were then worth as much as twelve hundred millions at this time. The increase, so far as it consists only in amount, and has been caused by the reduced cost Edition: current; Page: [250] of production, is, with respect to currency, of no importance whatever. It is quite immaterial to the community whether one thousand ounces of silver will, on an average, purchase one thousand or four thousand given measures or weights of every other commodity. Had not that reduction taken place, four hundred thousand millions of dollars in currency would have answered the same purpose as is now effected by sixteen hundred thousand millions, without any other difference than probably the use of coins of base metal instead of our dimes and half-dimes. But the increase from twelve hundred millions (the present worth of the former three hundred millions) to four thousand five hundred millions is an increase in value, and indicates a corresponding, and, on account of the numerous substitutes for currency introduced by commerce and credit, a still greater proportionate increase of the wealth and prosperity of Europe and America together during the two last centuries. That increase of value has no otherwise contributed to this increased wealth than as far as it has added to the amount of exchangeable commodities; and the same effect would have been produced by a similar increase in any other commodity. The increased wealth and prosperity of Europe and America are the cause, and not the effect, of the increased amount in value of gold and silver which they now possess. The causes of that great increase of wealth are not to be found in the fertility of the mines of America, but in the general progress of knowledge, skill, and every species of industry, in the consequent improvement of governments, laws, and habits in all that constitutes what is called civilization. The influx of precious metals follows in every country, and does not precede the corresponding increase of wealth.

As the regularity of the annual supply of the precious metals is not affected by the seasons, the changes in the amount of that supply had, during the two last centuries, been gradual and hardly sensible from year to year. That which has taken place within the last twenty years has been greater than had been experienced since the first great revolution caused by the discovery of America. The annual supply of the mines of America, Asia, and Europe had reached its highest point in the years 1803-1810, Edition: current; Page: [251] and amounted then to fifty millions of dollars, or to about one and one-fourth per cent. of the whole quantity of precious metals then existing in Europe and America. The convulsions of the former Spanish colonies have, for the last twenty years, reduced the total annual supply to about twenty-seven millions, or to about three-fifths per cent. of the whole amount now existing. A diminution of one-half of the ordinary supply of any other commodity, the demand remaining the same, would have produced a still greater proportionate increase in its price. Continued during twenty years, this diminished supply of the precious metals, whilst the demand is still gradually increasing, cannot but have affected, in some degree, their price; and if prolonged much longer the effect would be visible; but it has been gradual, from year to year imperceptible, and affecting in no sensible manner the performance of contracts. This is obviously due to the comparative small amount of the ordinary supply, which does not exceed one hundredth part of the stock on hand, whilst the annual supply of corn and of most other natural products always exceeds, and that of most manufactured articles often equals, the amount of the old stock. The superior durability and value of the precious metals over every other substance (including even iron, copper, and other metals) fitted for a circulating medium, which produce and preserve the great accumulation of gold and silver, are the principal cause of their great superiority over every other commodity as a permanent standard of value.

For the same reasons, any accidental inequality in the distribution of the precious metals amongst the several countries, in proportion to their respective wants, is promptly and easily repaired; and any extraordinary demand from a particular country met without difficulty or sensibly affecting the price of the metal required. The general supply of stock on hand is always sufficient to meet such demand, and the expenses and charges of transportation are, on account of the greater value of an equal bulk, far less than those of any other commodity, hardly ever exceeding in time of peace one per cent. on the value, even when brought from the most distant countries of the civilized world. During the four years which immediately followed the Edition: current; Page: [252] resumption of specie payments in England, that occurrence caused an extraordinary demand of more than twenty millions sterling in gold, or about twenty-four millions of dollars, a year, being near three times as much as the annual supply of that metal; and this demand was met without any difficulty or sensibly enhancing the price of gold. As the gold coins of France are, by the mint regulations of that country, a little underrated in relation to those of silver, they always command a small premium, varying generally from one-fifth to one-half per cent. This premium never exceeded the last rate during the years of that demand; which is a conclusive proof that it could not at most, and at any time, have enhanced the price of gold more than three-tenths per cent.; since, in that case, the advance would have also taken place in France, whence, in fact, a considerable portion of that demand was supplied. This decisive fact also shows that it is erroneously that the exportation of American gold coins, which commenced in the year 1821, has been ascribed to that extraordinary demand. The exportation has been continued uninterruptedly, after that cause had ceased to operate, and, as will be seen hereafter, is due to the alteration from that epoch in the rate of exchanges.

But it is nevertheless true, that as the value of the various objects exchanged or sold annually in a country, and, what is still more important, as the proportion of that value to the amount of the actual payments which must be made in currency, are both subject to variations, the amount of currency wanted in a country does, exclusively of the gradually increasing demand caused by an increasing prosperity, vary at different times in the same country. That amount ought, therefore, in prosperous seasons, to exceed that which is then necessarily wanted in order to be able to meet the greater demand which at times takes place. There are, in every country, banks, bankers, and great dealers, in whose hands the currency of the country accumulates, to be thence again distributed amongst the members of the community according to their respective wants. Obliged to meet those demands, it is their interest and duty to keep always those reservoirs sufficiently full. In countries where no artificial substitute has rendered the task more difficult, and Edition: current; Page: [253] where specie is the sole or principal currency, although there may be occasional varieties in its value, they are of rare occurrence and restrained within narrow limits, and an actual want of specie is hardly ever known.

The substitution of a paper currency to the precious metals does not appear to be attended with any other substantial advantage than its cheapness; and the actual benefit may be calculated with tolerable accuracy. If in a country which wants and does possess a metallic currency of seventy millions of dollars a paper currency to the same amount should be substituted, the seventy millions in gold and silver, being no longer wanted for that purpose, will be exported, and the returns may be converted into a productive capital, and add an equal amount to the wealth of the country. If the banking system, founded on the principle of a paper currency convertible at will into specie, should be adopted, and notes of a very low denomination be excluded, it will be found that the circulation would consist of about sixty millions in bank-notes and ten millions in silver.1 But in that case the banks, in order to sustain specie payments, must, on an average, have in their vaults about twenty millions in specie. This is believed to be nearly the state of things at this time in the United States, if, according to common usage, we consider bank-notes as constituting the whole of the paper currency. There have been, therefore, on that principle, only forty millions of dollars saved and added to the productive capital of the country. This, at the rate of 5 per cent. a year, may be considered as equal to an additional annual national profit of two millions of dollars. The substitution of bank-notes to a metallic currency produces the same effect as an addition of two millions a year to the exports of the United States, or as a diminution Edition: current; Page: [254] of taxes to the same amount. Being inclined to think that the credits on the books of the banks, called deposits in the United States, constitute to all intents and purposes a part of their currency, we believe that the benefit derived from the banking system is still greater, and is tantamount to an annual national saving, or additional profit, of near five millions of dollars.1 This is certainly an important advantage, provided the system is conducted so as to afford complete security; and it would be altogether free of objection if the banks were only banks of deposit and issued no paper. Barns are certainly a very expensive implement of agriculture. The capital expended on those buildings in the Middle and Northern States is more than the value of one year’s crop of the farms, and causes therefore a deduction of more than 5 per cent. on the annual gross produce of the earth. To dispense with barns would be a greater annual saving than that which arises from the substitution of a paper to a metallic currency. Some favorable seasons occur when the farmer might thresh his wheat on a temporary floor exposed to the weather, and dispense with a barn. Yet, in our climate, every prudent farmer prefers security to a precarious advantage, and would consider it a most wretched economy not to incur the expense necessary for that object. Similar is the economy of that expensive instrument, the precious metals, if the substituted paper currency is insecure. To unite that security, which is derived from a uniform and permanent standard of value, with the acknowledged and considerable saving arising from the substitution, is the difficult problem to be solved in every country that resorts to that cheaper species of circulating medium.

A paper currency is either convertible at will into specie, or redeemable at some future time, or altogether irredeemable. The two last descriptions are excluded by the Constitution of the United States, and require examination only because experience Edition: current; Page: [255] has shown that a currency of the first description may degenerate into one not convertible into specie without, on that account, ceasing to be the only currency of the country. Some persons are yet found who contend for issues of paper money to an indefinite amount, without regard to the fundamental principle that the demand is for value, and that it is impossible to increase the amount of currency beyond certain limits without producing a corresponding depreciation in its value. A recurrence to that principle is sufficient to dissipate the singular illusion under which that opinion is advanced.

We find in a paper laid before the Senate during their last session, that, according to the increase of population since the year 1820, there ought to have been, since that time, a demand for thirty-two millions of acres of the public lands, which, at the present price of 1¼ dollars per acre, would have yielded forfy millions of dollars (or four millions a year), whilst the annual sales amount only to one million, “the reason for which is want of money to purchase.” The remedy proposed in the sequel is an issue of paper money by government, the general benefit of which, according to the writer, would be stupendous. “Were our own government to increase our circulating medium only fifty millions of dollars, income-yielding property would rise two thousand millions of dollars.”

The word “money” is used as synonymous with specie and currency. But as currency is the thing by which everything else is valued, the value of every species of property is expressed in currency. A planter possessed of property which, in usual times, might be sold for one hundred thousand dollars, is accordingly said to be worth one hundred thousand dollars, though he may not at any one time have in his possession one thousand dollars in currency. The word money comes thus to be used as synonymous with wealth, and in that sense of the word we agree with the respectable writer of the paper in question, that the reason why the sales of the public lands have not far exceeded one million of dollars a year has been the want of money, that is to say, of wealth on the part of those who would have wished to purchase. From the other writings of the same author we had concluded that he was in favor of issues of paper money Edition: current; Page: [256] almost to an indefinite amount. But it appears by this paper that he is perfectly aware that a very limited amount of currency is sufficient, since he avers that an additional issue of fifty millions would produce, on the value of the productive property of the country, an effect forty times as great as that issue. This reduces the question to one of quantity, and whether the amount of currency supplied by the banking system now existing is insufficient and ought to be increased by an issue of government paper. As it is the interest of the banks to issue as many notes as can be kept in circulation, and as they are authorized by their charters to issue more than three times the present amount, it is clear that the obligation to pay their notes in specie on demand is the sole reason why that amount is not greater. It is, therefore, absolutely necessary, in order to enlarge it, that the proposed new issue should consist of a government paper money not convertible into specie on demand. It could not, according to the Constitution, be made a legal tender for the payment of debts between individuals, and might only be made receivable in payment of debts due to the United States. It is evident that such paper could not circulate a single day in competition with that of the banks, which is received not only for that purpose, but in payment of all debts, and is at all times convertible into specie. The new paper would be immediately depreciated in proportion to its amount, and produce no other effect than that of lessening the revenue of the United States in the same proportion. It would be much more simple, if that was the object, to reduce the rate of existing taxes; with respect to the public lands, to reduce the price at which they are now sold. We believe that this last measure would be equally just and consistent with sound policy, and that the great change of circumstances which has taken place, and principally the superabundant supply of public lands compared with the effective demand at the present price, imperatively require a reduction of that price. Those lands are the property of the people of the United States at large, and cannot be given gratuitously either to particular individuals or to particular States. But they should not be kept out of market by persevering in a price that was adapted to the time when it was fixed, and no longer accords Edition: current; Page: [257] either with the greatness of the supply or with the wealth of the natural purchasers, of those who want them for their own use, and who may, if the expression is admissible, be considered as the consumers of that commodity.

But supposing, for the sake of argument, that this additional issue of paper by government should not experience any depreciation, and should circulate at the same rate as bank-notes convertible on demand into specie, not the slightest advantage would accrue to the purchaser of public lands or to any other individual. If not depreciated, the same quantity of labor, of wheat, or of any other commodity, will be necessary, and must be given, in order to obtain an equal quantity either of that paper, of bank-notes, or of specie. If depreciated and circulating, the farmer might indeed obtain two dollars of that paper, instead of one in specie, for a bushel of wheat, and the laborer receive one dollar nominal, instead of half a dollar in specie, for a day’s labor. But what benefit would arise to either? Since the farmer would be obliged to pay also a double nominal price for the labor he wanted, and the laborer a similar double price for the farmer’s wheat, and since both would likewise be obliged to give a double price for any article they might want when paid with that paper. This is so simple and obvious, that we are entirely unable to understand on what grounds the contrary doctrine can be sustained. After having tried to discover what was meant by those who pretend to argue in support of excessive issues of paper money, we have found nothing but a repetition of the erroneous assertions on which the famous Law attempted to build the stupendous scheme which bears his name and desolated France in the year 1720. He asserted, 1st, that gold and silver were only the representative or sign of wealth; 2d, that paper might be that sign as well as the precious metals; 3d, that by doubling or trebling the amount of that sign the national wealth would be increased to that amount; 4th, that such increase of the currency would reduce the rate of interest and thereby promote industry. It is hardly necessary to show that those assertions are a series of errors. The precious metals are not merely the sign or representative of wealth; they have an intrinsic value, on account of the cost of their production and of the demand for other uses Edition: current; Page: [258] than currency, and are therefore wealth itself. It is because they have an intrinsic and comparatively stable value that they have become the standard of the value of every other commodity, or, according to Law’s vocabulary, the representative or sign of wealth. A certain quantity of those signs is necessary for a circulating medium; but the quantity used adds nothing more to the wealth of any country than the intrinsic value of that quantity. Paper, having no intrinsic value, never can, whatever its amount may be, add anything directly to the national wealth. Its utility consists in the substitution of a sign of no value for a sign which has an intrinsic value, and which may, on that account, be used advantageously for other purposes than that of a sign. Having performed that office, the increase of paper, beyond the amount of the valuable sign of which it takes the place, neither adds nor produces any wealth. The multiplication of the signs beyond the amount in value wanted can have no other effect than that of depreciating their nominal value, and has none on the rate of interest, which depends, not on the amount of those signs or of currency, but on the proportion between the amount or supply of capital which may be loaned and the demand for that capital. The result of Law’s scheme was a fatal illustration of his doctrines. By a series of arbitrary acts on the part of government, and by connecting some splendid and illusory schemes with the bank, he succeeded in putting in circulation about four hundred and twenty millions of dollars in bank-notes, or more than twice the amount of the currency then wanted in France. This paper was made a legal tender, to the total exclusion of the precious metals. But the laws and all the power of the French government were unequal to the task of sustaining that excess of currency. The price of every species of merchandise naturally rose 100 per cent. Government, with a view probably to prevent a total catastrophe, reduced by a decree the notes to one-half of their nominal value. The bubble burst instantaneously. The whole currency of the country, the four hundred and fifty millions dollars of bank-notes, could not, the next day, have been sold for the value of the paper on which they were printed. They were subsequently funded at the rate of eighty for one. The public creditors, who had been paid in Edition: current; Page: [259] notes, lost one hundred and fifty millions of their capital. Some speculators in shares were enriched; all the actual stockholders were ruined; and the calamity extended to all the industrious and productive part of the community. Since that time banks have not been connected with such gross commercial bubbles. But in England the South Sea scheme and the joint stock companies of the year 1825 were erected on the model of the Mississippi Company of Law; and the Assignats of the French revolution, as well as all the other attempts to substitute an excessive issue of pure paper money to a metallic currency, have been but copies of his bank-notes.

It has been contended by distinguished writers of a very different description that an irredeemable paper currency, not exceeding in its nominal amount that in value which is actually wanted, might be altogether substituted to gold and silver, provided that government should always regulate the issues so as never to exceed or fall short of that amount. The advantage of such paper, over notes convertible on demand in specie, would consist in saving the expense of the gold and silver necessary to pay such notes at the will of the holders, and in protecting the currency against both a panic and the consequences of any great drain of the precious metals from abroad; dangers to both of which notes payable in specie are exposed. It must, in the first place, be observed that the unavoidable effect of an increased or diminished value of the currency, arising from contraction or excess of its amount beyond certain limits, is ultimately to sink or to raise the price of every other commodity. But this change may not affect immediately the price of the commodities or of the labor applied to objects not susceptible of being exported; and that of exportable commodities is often affected by variations in the relative amount of supply and demand, which are altogether foreign to the state of the currency. The wisest government, with the purest views, never has any other means of ascertaining whether the amount of a paper money is too limited or excessive than the price of the precious metals in such paper, because those metals are, of all others, the commodity least liable to variations in its value. The rate of exchanges may occasionally be a more sensitive test, Edition: current; Page: [260] but is in reality a more circuitous and less certain mode of resorting to the same standard of value. Thus government has no means to ascertain whether its issues are too contracted or too large till after the evil has actually taken place; whilst banks, obliged to pay their notes in specie, and skilfully directed, are constantly employed in preventing its occurrence. But supposing government to be endowed with such skill as to be able always to adjust the proper amount of currency,—an amount which, if this is metallic, adjusts itself, and which, by banks properly conducted, may be tolerably well regulated,—there is still an ingredient inherent to paper not convertible on demand in specie which no human skill can control. This is public opinion with respect to future contingencies, and therefore purely conjectural.

It has been asserted that the value of an irredeemable paper money is altogether regulated by its amount, and does not, or at least ought not to, depend on confidence in the solvency of the government by which it is issued. The last assertion may be strictly true, though we believe that, in point of fact, there has hardly been any issue of paper which in its origin was not founded on an explicit or implied promise to redeem it. But, if not depending on confidence in the solvency, the value of the paper will most certainly be affected by the public confidence in the skill, discretion, and probity of government, these being the only guarantees against excessive issues, and experience having but too well proved the natural disposition of every government which ever did issue paper to resort, whenever pressed by its exigencies, to that resource, without regard to amount and consequences. Our principal concern, however, is with paper originally convertible on demand in specie, and which has degenerated into a paper the redemption of which is indefinitely postponed. It is evident that the value of such currency must depend, at least in part, on the probability of its being ever redeemed, or of specie payments being resumed, and of the time when this will take place. And as there lies the danger to which the currency of the United States is exposed, we will illustrate that position by some instances.

The paper money issued by Congress during the war of the Edition: current; Page: [261] American independence experienced no sensible depreciation before the year 1776, and so long as the amount did not exceed nine millions of dollars. A paper currency, equal in value to that sum in gold or silver, could therefore be sustained so long as confidence was preserved. The issues were gradually increased during the ensuing years, and in April, 1778, amounted to thirty millions. A depreciation was the natural consequence; but had the value of the paper depended solely on its amount, the whole quantity in circulation would have still been equal in value to nine millions, and the depreciation should not have been more than 3⅓ to 1; instead of which, it was then at the rate of six dollars in paper for one silver dollar, and the whole amount of the paper in circulation was worth only five millions in silver. It is obvious that the difference was due to lessened confidence. The capture of Burgoyne’s army was followed by the alliance with France, and her becoming a party to the war against England. The result of the war was no longer considered as doubtful, and sanguine expectations were formed of its speedy termination. The paper accordingly rose in value; and in June, 1778, although the issues had been increased to more than forty-five millions, the depreciation was at the rate of only four to one. From the end of April of that year to the month of February, 1779, although the issues had been increased from thirty-five to one hundred and fifteen millions, the average value in silver of the whole amount of paper in circulation exceeded ten millions, and it was at one time nearly thirteen millions, or considerably more than that which could be sustained at the outset of the hostilities. But when it was discovered that the war would be of longer continuance, confidence in the redemption of a paper money, daily increasing in amount, was again suddenly lessened. The depreciation increased from the rate of 6 to that of 30 to 1 in nine months. The average value in silver of the whole amount of paper in circulation from April to September, 1779, was about six millions, and it sunk below five during the end of the year. The total amount of the paper was at that time two hundred millions; and although no further issues took place, and a portion was absorbed by the loan offices and by taxes, the depreciation still increased, and was at the Edition: current; Page: [262] end of the year 1780 at the rate of 80 dollars in paper for 1 in silver. The value in silver of the paper currency was then less than two millions and a half of dollars; and when Congress, in March following, acknowledged the depreciation, and offered to exchange the old for new paper at the rate of 40 for 1, the old sunk in one day to nothing, and the new shared the same fate.

The aggregate of bank-notes of the Bank of England and country banks was nearly the same in the years 1810, 1813, and 1818, being, for each of those years respectively, about forty-six millions, forty-six millions two hundred thousand, and forty-six millions seven hundred thousand pounds sterling; and the value in gold of the aggregate amount of notes was, for each of those years respectively, forty, thirty-five and a half, and forty-five and a half millions. A result nearly similar will be found by comparing periods of years. The average amount of the notes in circulation was about forty-six millions for the years 1810, 1811; forty-five millions two hundred thousand for the years 1812 to 1816; and forty-four millions four hundred thousand for the years 1817 to 1819; and the average value in gold of those notes for each of those periods respectively was forty-one, thirty-six, and forty-three millions. It is obvious that those differences in the respective value in gold of the whole amount of the currency did not depend on its amount, but on the opinion entertained either of the probable increase or contraction of the notes, or of the resumption of the specie payments. Had the depreciation of the notes depended solely on their excess, it would have been nearly the same in the years 1810, 1813, and 1818, when that amount was nearly the same. Reducing into gold the value of the whole currency, no other reason can be assigned but a greater or less degree of confidence why a paper currency worth forty-five and a half millions could be sustained in 1818, whilst no greater value than thirty-five and a half millions circulated in 1813. It is indeed evident that the confidence in the resumption of specie payments must have been greater in 1810, and much greater in 1818, than in 1813; and that, independent of the intrinsic value of the bank-notes, as regulated by their amount, they must, whenever depreciated, Edition: current; Page: [263] acquire some additional value, according to the opinion entertained of their being again converted into specie and of the proximity of that event.

A still more striking instance of the sudden alterations in value to which notes not convertible into specie are liable is to be found in that which took place in England, in the spring of 1815, on the landing of Bonaparte from the island of Elba. The bank-notes had gradually risen in value since the peace, and were not depreciated more than 12½ per cent. in the beginning of March. Towards the end of that month, and within less than a fortnight, the depreciation was 25 per cent., although there had been, during that time, neither additional issues of paper nor exportation of the precious metals. We will quote only one more instance of a similar nature. During the general suspension of specie payments in the United States, the depreciation of the bank-notes varied in the several seaports. Those of the Baltimore banks were at 20 per cent. discount in January, 1815. The treaty of peace was ratified and published in the month of February; and as the suspension of specie payments had not lasted six months, and was caused by the war, a general expectation immediately prevailed that those payments would be forthwith resumed. Accordingly, bank-notes rose everywhere in value and in March the discount on those of Baltimore was only 5 per cent. As that expectation was disappointed, the notes again sunk in value, and in July those of Baltimore were again at a discount of 20 per cent. It is believed that no doubt can remain that a paper currency liable to fluctuations like those, and originating in causes that baffle all calculation, never can, by any skill whatever, be made a stable standard of value.

The paper currency of the United States is of a very different character, and, according to the general acceptation of that term, consists almost exclusively of bank-notes payable on demand in specie. It may, however, be questioned whether there are not other species of paper founded on credit which ought to be considered as making part of the currency, and not merely as substitutes.

There are in England, where incorporated country banks, issuing paper, are as numerous and have been attended with Edition: current; Page: [264] the same advantages and the same evils as our country banks, some extensive districts, highly industrious and prosperous, where no such bank does exist, and where that want is supplied by bills of exchange drawn on London. This is the case in Lancashire, which includes Liverpool and Manchester, and where such bills, drawn at ninety days after date, are endorsed by each successive holder, and circulate through numerous persons before they reach their ultimate destination and are paid by the drawee. It has been contended that these substitutes for currency, and in one respect performing its office, must be considered as forming part of it; and this assertion has been carried so far as to insist that there was in England a circulation of one hundred and fifty millions of dollars in bills of exchange which was of the same character. As this view of the subject would materially affect the result of any inquiry respecting currency, the question must be examined, and extended to private notes and to bank deposits.

It is difficult to distinguish a note on demand drawn by a private individual from a bank-note in countries where every individual is left at liberty to throw such notes in circulation as part of the currency. The discrimination has always been made on the Continent of Europe, where it is not believed that any paper of that description has ever been permitted to be issued by any person or company not specially authorized to that effect. We are not aware that any similar general restriction exists in Great Britain, or that others are to be found there, than the clause, in favor of the Bank of England, which forbids banking associations to consist of more than a limited number of partners, and the late laws forbidding, except in Scotland, the issue of notes under five pounds. The same liberty seems to have originally existed in the United States, but has subsequently been restrained by their several laws to incorporated banks. A solitary exception is to be found in Mr. Stephen Girard’s bank, which was previously established, and which, from his great wealth, skilful caution, and personal character, is justly entitled to as much credit as any chartered bank in the United States. Congress has not, however, passed any law preventing the issue of notes by the corporation of the city of Washington, and there Edition: current; Page: [265] is still a small amount of paper in circulation issued by the State of North Carolina. In every other respect the currency of the United States, so far as it consists of notes, is strictly confined to bank-notes issued by chartered companies.

A bill of exchange, drawn by an individual or individuals who do not issue notes having the character of currency, appears to us to be clearly distinguishable from a bank-note, though it is a substitute, and lessens the amount of currency which would otherwise be required. A payment made in bank-notes is a discharge of the debt, the creditor having no further recourse against the person from whom he has received the notes, unless the bank had previously failed. The bill of exchange does not discharge the debt, the person who receives it having his recourse against the drawer and every preceding endorser, in case the drawee should fail or refuse to pay. But the essential distinction is, that the bills of exchange are only a promise to pay in currency, and that the failure of the drawers, drawees, and endorsers does not in the slightest degree affect the value of the currency itself, or impair that permanent standard of value by which the performance of all contracts is regulated. The case is, however, quite different when the bills are drawn by a bank authorized to issue bank-notes which make part of the currency. We perceive no difference between such drafts, particularly when paid at sight, and either post-notes or ordinary notes. Five-dollar drafts, drawn by the branches of the Bank of the United States on the bank, circulate at this moment in common with the usual five-dollar notes. Similar drafts, varying in amount to suit the convenience of purchasers, are daily drawn by the bank on its offices, and by those offices on each other, or on the bank. Many of those drafts pass through several hands, and circulate several months, in distant parts of the country, before they are presented for payment. The holders of those bills have the same recourse against the bank as the holders of bank-notes. Those bills are of the same character, depend on the same security, and in case of failure would share the same fate with bank-notes. Though not usually included in the amount of the circulation of the bank, we cannot but consider the average amount in actual circulation as making Edition: current; Page: [266] part of the currency of the country. A question somewhat more difficult arises with respect to credits in account current on the books of the banks, commonly designated in the United States by the name of “deposits,” and which may perhaps be more easily solved by reducing it to its most simple form, that is to say, by first considering banks purely of deposit.

That of Hamburg, which still exists, is the most perfect of the kind. It neither issues bank-notes nor discounts notes or bills of exchange, but only receives silver in bars on deposit. For every bar containing a certain weight, called “mare of Cologne” (equivalent to 3608 grains troy weight), of silver of a certain standard,1 the bank gives a credit on its books of 442 lubs Bco. (27 marcs 10 lubs Bco.) money of account. Any person having a credit on the books of the bank may be paid in similar bars at the rate of 444 lubs Bco. for a marc weight of Cologne of silver of the same standard. The difference, which is less than one-half per cent., defrays the expenses of the establishment. All the large payments are effected in Hamburg by checks on the bank, and by a corresponding transfer of the credit on its books from one individual to another. The utility of the establishment consists not only in the greater convenience and rapidity with which the payments are effected, but also in having substituted silver of an uniform standard to a currency which consisted of German coins, varying in standard, weight, and denomination. The aggregate amount of credits on the books of the bank being at all times precisely equal, at the rate above mentioned, to the quantity of silver in its vaults, it would be incomprehensible and, indeed, absurd to suppose that such large capital, having an intrinsic value, should voluntarily be buried in the vaults, unless its representative or the credits on the books of the bank performed every office of currency. It is undeniable that this is the fact in every respect, every payment being effected by transfers of those credits, and their convertibility at any time into a determined weight of pure silver, affording the best possible standard of value. This, indeed, regulates Edition: current; Page: [267] exclusively the value of all the coins, whether in circulation for small payments or brought to market as bullion.

Let it be supposed now that it had been found from long experience that the quantity of silver in the vaults, through all its fluctuations, had never been less than a certain sum, equivalent, for instance, to two millions of dollars. The directors of the establishment might conclude that this amount would under no circumstances whatever be withdrawn, or, in other words, that this sum was the minimum of the currency wanted to effect the payments made in bank. They might, therefore, think themselves justifiable in withdrawing that dormant capital from the vaults and converting it into an active capital, by lending it to individuals. In this case, the amount of credits on the books of the bank would remain the same as if that sum in silver had not been withdrawn from its vaults; and all the payments effected by the transfers of those credits would continue to be made precisely as theretofore. The amount of those credits would therefore continue to be, in every respect, the currency of Hamburg, differing from what it was formerly only in being sustained by a less amount in specie, and depending for its ultimate security on the solidity of those to whom the silver withdrawn from the vaults had been loaned.

What we have stated as a supposititious case actually took place in the Bank of Amsterdam, constituted on nearly the same principles as that of Hamburg; and from which the directors secretly withdrew more than four millions of dollars, which they lent principally to the province of Holland and to the city of Amsterdam. And it is, as is well known, what is always done openly and in perfect good faith by all our banks, as well as by the Bank of England and by that of France. The credits in account current or “deposits” of our banks are also, in their origin and effect, perfectly assimilated to bank-notes. Any person depositing money in the bank, or having any demand whatever upon it, may at his option be paid in notes, or have the amount entered to his credit on the books of the bank. The bank-notes and the deposits rest precisely on the same basis: for immediate payment on the amount of specie in the vaults; for ultimate security on the solidity of the debtors of the bank. Edition: current; Page: [268] In case of a run upon a bank, or of its failure, the security of the holders of notes is lessened in proportion to the amount of deposits due by the bank. We can in no respect whatever perceive the slightest difference between the two; and we cannot, therefore, but consider the aggregate amount of credits payable on demand, standing on the books of the several banks, as being part of the currency of the United States. This, it appears to us, embraces not only bank-notes, but all demands upon banks payable at sight, and including their drafts and acceptances. But in order that such deposits, bills of exchange, or other paper founded on credit should make part of the currency, it seems necessary that they should constitute a demand upon banks that do issue currency, or that, as at Hamburg, a transfer of credit on the books of the bank should be a legal tender. If, in comparing the amount of currency in different countries, we have only included specie and actual issues of paper, it was partly in conformity with received usage, and partly from want of information respecting the amount, in other countries, of the bank credits, which may be considered as perfectly similar to our deposits.

Credit is essential to commerce: but whenever it receives a shock, a commercial revulsion and distress must necessarily ensue. This will always affect the currency to a certain extent, since there must be a greater demand for it in proportion as the resources arising from credit are impaired. But where, as in the United States, the currency itself rests on credit, and the same institutions which issue that currency are those from which accommodations are expected, want of credit is most liable to be mistaken for a want of currency.

Although the causes of such distress, and of a real or presumed scarcity of currency, are of the same nature, they may, as somewhat dissimilar in their immediate effects, be distinguished as external or internal. As the imports and exports of a country are now but rarely effected by the same persons, there are always, in consequence of the commercial intercourse between two countries, creditors and debtors on both sides. It is obviously the interest of both to exchange or sell those debts, when the exporter does not want to import nor the importer to export merchandise. A bill of exchange, drawn from the United Edition: current; Page: [269] States on England, is an obligation on the part of the drawer to exchange, for a sum paid to him in the United States, an equivalent in England. When the credits and debits respectively payable at the same time are nearly equal, the exchange is made on equal terms. In proportion as the debt of the United States to England is greater than that of England to the United States, the demand for bills on England will become greater than the supply; and the drawer will obtain a greater sum in the United States than that which by his bill he obliges himself to pay in England. Whenever the difference becomes so great as to exceed the expense and risk of transporting precious metals to England, those metals will be exported in preference to a remittance in bills. When the commercial transactions between two countries are comparatively small and the stock of gold and silver large, their exportation, particularly in neighboring countries, soon pays the balance and restores the equilibrium. When, as between the United States and England, the respective imports and exports are very large, the balance due may be increased in proportion; and as the stock of the precious metals in the United States is comparatively small, the exchange may remain for years unfavorable, and the precious metals continue to be exported, until the balance is actually paid from the proceeds of the exports generally, or converted, by the sale of American stock, into a debt not immediately demandable. This apparently continued drain was considered, in former times, as an evil of great magnitude; and severe laws were, in most countries, enacted against the exportation of specie. Experience has shown not only that those laws were inefficient, but also that the best, if not only, means to insure a uniform and sufficient supply of any foreign product, when there is no other object in view, is to lay no restraint whatever on its importation and exportation. Commerce, when not interrupted by war or other causes, is always found to supply the amount of precious metals which may be wanted. Numerous striking proofs might be adduced: it is sufficient to recollect that the average rate of exchange on England from the beginning of 1821 to the end of 1829 has been $4.87 per pound sterling (about 9⅗ per cent. premium on nominal par), or 2⅗ per cent. above the true par; Edition: current; Page: [270] that it never was, during the whole of that time, below $4.60, at which rate gold, being underrated by our mint regulations, commences to be exported, and that that period was in no degree remarkable for scarcity of specie.

Being obliged to refer to the rate of exchange, it must be recollected that what is universally meant by par is the promise to pay, in another place, a quantity of pure silver or gold equal in weight to the quantity of pure silver or gold contained in the coins with which the drawer of the bill of exchange is paid. When bills are drawn at long dates and payable at a distant place, the time which elapses between the purchase of the bill from the drawer and its payment by the drawee must be taken into consideration, in order to calculate what would be an equal exchange, as distinguished from the par of exchange. There is no other difficulty but that of ascertaining their respective weights, in order to calculate the par of exchange between countries having the same standard of value, or in which payments are usually made with the same metal. This being the case in the United States and in France, and the French kilogramme being equivalent to about 15,435 grains troy weight, the par of exchange of the United States on France is at the rate of about 5 francs and 34½ centimes for a dollar, since the French franc contains 4½ grammes and the United States dollar 371¼ grains of pure silver. Allowing 1¼ per cent. on account of the 90 days which will usually elapse between the day on which the value of a bill payable 60 days after sight is, in our country, paid to the drawer, and the day on which that bill is paid in the other country by the drawee, it will be found that the equal exchange between the United States and France is, on such bills, at the rate of francs 5.41 if drawn from the United States on France, and at the rate of francs 5.28 for one dollar if drawn from France on the United States.

But if one of the two metals is, by mint regulations, underrated or excluded in one country, whilst the other metal is in the same manner excluded in another country, the usual payments will be made in different metals in those two countries; and the par of exchange between them must then, as is the case between the United States and England, depend on the relative Edition: current; Page: [271] value of gold and silver at the time, and vary with every fluctuation of that relative value. These fluctuations are, however, confined within narrow limits; and the medium par of exchange between the United States and England, deduced from the average premium on gold over silver coins in France, is about $4.75 for one pound sterling, or near 7 per cent. above the nominal par assumed in the usual quotations of exchange. It is in those quotations supposed that one pound sterling is equal to $4.444/9, or, in other words, that one dollar is equal to 4s. 6d. sterling. It is not necessary to investigate whether this presumed equality or par was derived from the intrinsic value of some ancient Spanish dollar, no longer current, or whether it was adopted as convenient for the conversion of most of the currencies of the British colonies into British currency. It is certain that this imaginary par does not even correspond with that which, though erroneously, might be deduced from comparing separately the gold and silver coins of the two countries with each other respectively; since this would be, if comparing gold to gold, about $4.56, and if comparing silver to silver (at the former rate of 62 shillings sterling for one pound troy weight of silver, old British standard), about $4.63 for a pound sterling. The dealers in exchange are at no loss to make their calculations, whatever rate may be assumed as par in the usual quotations; but this puzzles and in various respects misleads those who, without investigation, naturally suppose that what has been assumed as such is the true par of exchange.

The causes of the fluctuations of exchange between distant places in an extensive country, or between different countries, are of the same nature, and may occasion a similar transportation of the precious metals from one place to another. We will hereafter examine how that from one part of the United States to another has been effected by the Bank of the United States. But there is this difference between a commercial distress and presumed scarcity of currency, due to internal causes, whilst the foreign exchanges remain favorable, and a similar distress arising from large foreign debts, and accompanied by an unfavorable rate of exchange, that in the last case there is an exportation of the coins of the country which cannot take place in Edition: current; Page: [272] the first. If the same effects in other respects are nevertheless the same in both cases; if in both the same, and sometimes general, distress equally prevails; if the same difficulty occurs in the payment of debts; if the same complaint is made of want of money, whether specie is exported or not, it is obvious that there must be another cause, besides an actual scarcity of currency, for the real distress which is felt, and that what is called “want of money” is not “want of currency.” It will be found that this cause is universally overtrading, and that the want of money, as it is called, is the want of exchangeable or salable property or commodities, and the want of credit. The man who says that he wants money could at all times obtain it if he had either credit or salable commodities.

Overtrading consists in undertakings or speculations of every possible description which fail altogether, or of which the returns are slower than, under sanguine expectations, had been calculated, or the proceeds of which (too many, tempted by temporary high prices or profits, having embarked in the same branch of business) greatly exceed the demand, and glut the market. A great loss may be experienced by those who have entered into any such undertakings with their own resources; but when resting principally on credit; and pursued at the same time by a great portion of the dealers or men of enterprise, a general impossibility of fulfilling previous engagements takes place, which affects even those who are ultimately solvent. When that mutual confidence which is the sole foundation of credit is once shaken, the capitals that are usually loaned can no longer be obtained, the usual amount of bills of exchange, discounted notes, or other commercial papers founded on credit is lessened, and specie or currency itself becomes comparatively scarce, partly because some is hoarded, principally because a portion of its substitutes is withdrawn from circulation. Yet specie, under those circumstances, acts but a subordinate part its scarcity being the effect, and not the cause, of the evil, and the remedy to this consisting in restoring credit and confidence, which will always procure a sufficient amount of currency, and not in an attempt to increase the quantity of currency, which can produce no substantial benefit until confidence is restored. Edition: current; Page: [273] When it consists of paper founded on credit, any increase is inefficient for remedying the evil, unless it be issued by an institution the credit of which has, in the general wreck, remained unaffected and unimpaired.

The commencement of the year 1793 was, in England, a season of great and universal commercial distress. It had, as usual, been preceded by a period of great apparent prosperity, which had stimulated overtrading; and this had been followed by its unavoidable consequences. More than one hundred country banks failed or suspended their payments; the distress was general, the credit of solvent houses was affected, the usual accommodations which enabled them to have their bills discounted, and to meet the demands against them, were withdrawn, and the complaint of want of money was universal. Under those circumstances, government interfered, and loaned, or offered to loan, to solvent dealers five millions sterling in exchequer bills. The remedy was effectual; the whole amount offered to be loaned was not even applied for; and in a very short time confidence was restored, and every one who was not actually insolvent was able to meet his engagements. But exchequer bills are not currency, but only a promise to pay currency at the end of one year. Government did not lend currency or add a single shilling to its amount. The credit of individuals had received a severe and general shock, and that of government, which was unimpaired, was substituted for private credit. Those who had capital to lend, and would not advance it on private security, or who, in other words, would not discount the bills of individuals, lent that capital, or the currency which was wanted, on public security, or, in other words, discounted the exchequer bills, that is to say, the bills of government. The distress, the pretended want of money, was relieved, not by any additional issues of currency, the amount of which must therefore have been sufficient, but by restoring private confidence and private credit.

It is also evident that what was then effected by government might have been done by the Bank of England, had that institution, more sparing of its resources during the preceding period of prosperity and incautious enterprise, been enabled, when the revulsion took place, to lend its credit to solvent houses, Edition: current; Page: [274] by discounting their bills, and increasing its issues of paper currency. It may be presumed that, having already overstrained its resources, the bank could not have done this without endangering its own credit and running the risk of being unable to pay its own notes, if their amount was increased. But the mode adopted by government, and which proved so efficacious, makes it obvious that, had the bank been enabled, without the aid of the treasury, to relieve the distress, and what was called the want of money, the relief afforded would have been the result much less, if at all, of the enlarged issues of bank-notes, than of the bank lending its credit to those solvent dealers whose credit was impaired.

As a bank cannot increase its discounts without increasing its circulation, the two operations, being in its hands inseparable, are generally confounded. The manner in which the British government afforded relief in the year 1793 conclusively proves that they are essentially distinct, even in a country where the currency consists principally of paper founded on credit, and that the demand always made on banks in times of pressure, for enlarged issues of bank-notes, is not a demand for currency but for credit. Cautious and well-directed banks will always afford great relief in such times, if enabled by the previous prudent administration of their affairs to lend their credit to solvent dealers; which cannot be done without enlarging their issues. If, on the contrary, this has already been done to its utmost extent, if during a period of high prices and great apparent prosperity, the spirit of enterprise, naturally excited by that state of things, and which required then to be checked, has, on the contrary, been stimulated by incautious loans and consequent issues of paper on the part of the banks, the result will be, and has everywhere always been, as fatal as unavoidable. When the revulsion takes place, when, from excessive competition or imprudent speculation, the market becomes glutted with a superabundance of any species of commodity, often in the United States of land itself, or when, from want of skill or any other cause, undertakings have altogether failed, or when the slow returns of such undertakings require years to be realized, and both capital and credit are exhausted; at the very time when Edition: current; Page: [275] the aid of banks would be most wanted, those institutions, prematurely disabled, instead of simultaneously enlarging their issues, and lending their credit to solvent but embarrassed dealers, manufacturers, and farmers, are compelled in self-defence to contract their issues and loans, and thus greatly to aggravate the evil which they had at least neglected to check, if they were not instrumental in its growth.

In countries, therefore, the currency of which consists principally of bank paper, banks will have a beneficial or pernicious influence on credit, and on a currency depending on credit, according to the manner in which they may be administered; useful when their operations, in prosperous times and whilst under their control, are regulated by probity, great discretion, and skill, pernicious when their administration is defective in any of those respects. But in countries where the currency consists wholly or principally of the precious metals, and where bankers lend money or discount bills, but do not issue a paper currency, the two operations are never confounded; and although not exempt from commercial revulsions, these will be of less common occurrence, and have little or no influence on currency itself.1 It may be confidently affirmed that the precious metals, under any circumstances whatever, and amidst all the temporary fluctuations arising from a disproportion between supply and demand, continue to be a more permanent standard of value than any other commodity, or any species of paper resting on an element so variable as credit.

We cannot conceal from ourselves that specie-paying banks are not only exposed to extraordinary drains from abroad, but are also occasionally controlled by moral causes, the effects of which cannot be calculated, nor without great skill and discretion be always prevented. These never affect a metallic currency, which has an intrinsic value, varying less than that of any other commodity, and not at all depending, as paper, on confidence, fear, conjectures, or any of the fluctuations of public opinion. It is equally clear that extraordinary drains of specie, Edition: current; Page: [276] occasionally inconvenient when the currency is purely or principally metallic, may be fatal to one which consists of banknotes convertible at will into specie. Supposing the currency of a country to consist of one hundred millions, a drain of twenty millions from abroad would produce great inconvenience, but not beyond that of contracting the metallic currency to that extent, until commerce had supplied the deficiency. But, if consisting of bank-notes, sustained by twenty millions of specie in the vaults of the banks, the basis being withdrawn, the whole fabric is at once overthrown, and specie payments must be suspended.

One of the most fatal effects of that suspension is the great and unavoidable distress which attends a return to a specie currency, particularly when the suspension has been of long continuance. Whilst this lasts, the loss falls on the creditors; but new contracts are daily made, founded on the existing state of the currency; and should the suspension continue twenty years, as was the case in England, as almost all the contracts in force and not yet executed, at the time when specie payments are resumed, must have been made when the currency was depreciated, the obligation to discharge them in specie is contrary to equity, falls on the debtors, who are always the part of the community less able to bear the burden, and proves more calamitous than the suspension had been. Short in duration as this had been in the United States, the effect was sensibly felt; and to this cause, which also occasioned the failure of a number of new banks, must in a great degree be ascribed the general distress of the years 1818-1819. The relief laws of some of the States, and in England the corn laws, may be traced to the same source. In that country, after so long a suspension of specie payments, the calamity has necessarily been far more extensive and lasting. It is yet felt, and many still seek for remedies worse than the evil, and call for small notes, excessive issues, and all those measures which would necessarily lead again to an inconvertible paper money.

Considerations of this nature may well have suggested to the committee of the House of Representatives the question whether a metallic currency would not, in the United States, have been Edition: current; Page: [277] preferable to one consisting of bank-notes. We would incline to the affirmative if the system was not already established, and if we believed that an attempt to return to a pure metallic currency, which could not, without producing great evils, be carried suddenly into effect, was at all practicable. Were not this the case, we would think that a system of commercial credit founded on deposits, bills of exchange, and other negotiable paper, such as is carried on by the bankers of London, and by all the bankers of the Continent of Europe, neither of whom issues any notes in the shape of currency, would afford to commerce, at least in commercial cities, nearly, if not altogether, the same accommodations and advantages which are found in the present system. Commercial revulsions and numerous failures amongst dealers, as they may occur wherever there has been excessive overtrading, though less frequent, do nevertheless occasionally take place in countries which have only a metallic currency. But their effect is generally confined to the dealers, extending but indirectly and feebly to the community, and never affecting the currency, the standard of value, or the contracts between persons not concerned in the failures. It must be allowed at the same time that in the country, where the system of deposits cannot exist to the same extent as in cities, banks soberly and skilfully administered stimulate industry by the facility which their loans afford to men of enterprise, and that the ability of those banks to make those advances would be much curtailed if altogether precluded from issuing notes.

A very ingenious plan was proposed by Mr. Ricardo, and has since been expounded and defended with great talent by Mr. McCulloch, intended to afford security against the dangers to which every system of paper currency heretofore devised is exposed. It is not applicable to the United States, as it is founded on the exclusion of gold and silver coins, which, by our Constitution, are alone a legal tender. Some plausible objections have been made to it, which, for that reason, it is not necessary to discuss; and we will only give the outline of the plan.

It consists in the total exclusion of a metallic currency, with the exception perhaps of the silver necessary for small payments, in making the notes of the Bank of England a legal tender, and Edition: current; Page: [278] in imposing on that institution the obligation to pay them, on demand, in gold bars of the proper standard. This last provision would be sufficient to prevent any depreciation of the notes, whilst, on the other hand, the gold bars paid by the bank could not, either directly, or by being converted into coin, take their place and add anything to the amount of the currency. Any call on the bank for gold would therefore necessarily lessen that amount, and must also necessarily cease whenever this was somewhat less than the amount in value, which is indispensable in England for the payments in currency. For whenever this point is reached, the notes must be worth at least as much as their nominal value in gold at its ordinary price; and, in the case of unfavorable exchanges, the drain must altogether cease as soon as the currency is sufficiently contracted to have raised its value to a rate corresponding with that of exchange. The inconvenience of that contraction would not, it seems, be greater than if the currency was purely metallic. Supposing forty millions sterling to be the minimum of the absolutely necessary currency under an unfavorable state of foreign exchanges, the community would be protected against the danger of any depreciation in the nominal value of the notes, and the bank, under any circumstances whatever, against a drain that could compel it to suspend its payments, provided the value of the gold bars in its vaults was always equal to the excess of its issues over forty millions. The plan was carried into effect, during a short period, by the Bank of England, and then discontinued, for reasons which have not been explained, and which it would be interesting to understand.

It is well known that the Bank of England, three banks in Scotland, and the Bank of Ireland are the only chartered banking institutions in the United Kingdom. The capital of the Bank of England, amounting now to fourteen millions pounds sterling, has been loaned altogether to government, at an interest of 3 per cent., and is not to be reimbursed till the expiration of the charter. All the other banks of England, commonly called country banks, consist of private copartnerships, without Edition: current; Page: [279] any determined capital, and the members of which are liable to the same responsibilities as any other commercial houses. With the exception of Mr. Girard’s bank, all the banks established in the United States are joint stock companies incorporated by law, with a fixed capital, to the extent of which only the stockholders are generally responsible.1 The business of all those banks consists in receiving money on deposit, in issuing bank-notes, and in discounting notes of hand or bills of exchange. A portion of the capital is sometimes vested in public stocks; but this is not obligatory; and in this they differ essentially from the Bank of England. The capital of this institution, being loaned to government, and not depending on the solidity of the paper discounted, affords a stable guarantee to the holders of notes and to the depositors. The bank can loan to individuals, or advance to government (beyond its capital as above mentioned), nothing but the difference between the aggregate of its notes in circulation, and of the credits in account current on its books, and the amount of specie in its vaults. But the American banks lend to individuals not only that difference, but also the whole amount of their capital, with the exception only of such portion as they may find it convenient but are not obliged to vest in public stocks. It follows that the security of the holders of notes, and of the depositors generally, rests exclusively on the solidity of the paper they have discounted. It might seem, on the other hand, that, as the Bank of England cannot apply its original capital to any immediate use, whilst the American banks may, by curtailing their discounts, call in their capital on any emergency, they might, without risk, put in circulation a greater proportionate amount of notes. But such curtailment can never be made to any considerable extent without causing much distress; and, in point of fact, a large portion of their loans consists of what the merchants consider as permanent accommodation, and, in the country, often rests on real security. This departure from what has been generally deemed the true banking principle must, it is believed, be ascribed to the original disposition of the capital.

Edition: current; Page: [280]

Whenever, therefore, an American bank is in full operation, its debts generally consist, 1st, to the stockholders, of the capital; 2d, to the community, of the notes in circulation and of the credits in account current, commonly called deposits; and its credits, 1st, of discounted notes or bills of exchange and occasionally of public stocks; 2d, of the specie in its vaults and of the notes of, and balances due by, other banks; 3d, of its real estate, either used for banking purposes or taken in payment of debts. Some other incidental items may sometimes be introduced; a part of the capital is occasionally invested in road, canal, and bridge stocks, and the debts, secured on judgments, or bonds and mortgages, are generally distinguished in the official returns of the banks. In order to give a clear view of the subject, we annex an abstract of the situation of the thirty-one chartered banks of Pennsylvania in November, 1829.

1 Deducting so much of their own stock as has been purchased by the banks. For want of materials, a similar deduction has not been made in the subsequent statements.
2 The public stocks are not distinguished from others in the statement of the Bank of Pennsylvania. Those held by the other banks amount to $1,588,000.
Capital1 $12,032,000
Notes in circulation $7,270,000 } 16,028,000
Deposits 8,758,000 }
Surplus funds 1,142,000
Bills discounted $17,526,000
Public stocks2 } 4,620,000
Road, canal, and bridge stocks }
Debts secured on mortgages, &c. }
Real estate 1,310,000
Notes of other banks } 3,338,000
And due by other banks }
Specie 2,408,000

It will be easily perceived, 1st, that what is called the surplus, Edition: current; Page: [281] and sometimes the reserved or contingent fund, is nothing more than that which balances the account, or the difference between the debits and credits of the banks; and that, in order to be enabled to repay, at the expiration of the charter, to the stockholders the full amount of their stock, that fund or difference ought in every sound bank to be sufficient to cover all the bad debts and all the losses which may be incurred on the sale of the various stocks held by it, and of its real estate; 2dly, that the deposits may at any time be converted into bank-notes, and that both ought, in correct language, to be included under the denomination of circulation; 3dly, that the notes of other banks on hand form no part of the circulation, and ought, when considering the banking system as a whole, to be deducted from the amount of the notes in circulation; and that for the same reason, inasmuch as the balances due to other banks by the several banks are included in the deposits, the balances due by such other banks ought also to be deducted from that item, which would reduce the aggregate of those two items in the preceding statement from 16,028,000 to 12,690,000 dollars; 4thly, that the capital is the only item in the account apparently invariable, though it may occasionally be increased by legislative permission, and lessened by purchases of their own stock by the banks; and that all the other items are variable, and do vary according to the operations of the banks; 5thly, that supposing the second and third items of credits to remain the same, the circulation or aggregate of deposits and notes in circulation cannot be either increased or decreased without a corresponding decrease or increase either of the bills discounted, or of the specie, or of both; 6thly, that by limiting by law the amount of the debts due to the banks, as included in the two first items of the credits, to a sum bearing a certain ratio to the capital, and by likewise limiting in a similar manner the gross amount of the notes in circulation, both which limitations are always under the control of the banks, excessive issues may be prevented; 7thly, that if the situation of the banks of Pennsylvania in the aggregate be taken as a proper basis for those limitations, the whole amount of debts due to a bank ought not to exceed twice, nor the gross amount of its notes in circulation Edition: current; Page: [282] two-thirds of, the amount of its capital. But it must not be forgotten that, although those limitations would be useful in checking the amount of loans and issues, the ultimate solvency of a bank always depends on the solidity of the paper it discounts.

The capital of the State banks existing in the year 1790 amounted to about 2,000,000 of dollars. The former Bank of the United States was chartered, in 1791, with a capital of 10,000,000. The charter was not renewed; but in January, 1811, immediately before its expiration, there were in the United States eighty-eight State banks, with a capital of 42,610,000 dollars, making then, together with that of the national bank, a banking capital of near 53,000,000. In June, 1812, war was declared against England; and in August and September, 1814, all the banks south and west of New England suspended their specie payments.

It has always been found difficult to ascertain with precision the causes which in each special case produce an extraordinary drain of specie and compel a bank to suspend its payments. Although it clearly appears that very large and unforeseen advances to government were the immediate cause of the suspension of the payments of the Bank of England in the year 1797, it would seem at this distance of time to have been easy to prevent that occurrence. The bills of exchange from abroad on government or any other floating debt, for the payment of which the bank was required to make those advances, might with facility have been converted into funded debt. And when we find that in less than seven months after the suspension the bank declared, by a solemn resolution, that it was enabled to issue specie, and could with safety resume its accustomed functions if the political circumstances of the country did not render it inexpedient, it is hardly possible to doubt that the suspension, in its origin as well as in its continuance, was a voluntary act on the part of government. Opinions are, however, divided to this day on that subject, and some distinguished English writers ascribe that event to some unaccountable panic. There can be no doubt that there was a great and continued run on the bank for specie prior to the suspension; and what renders the transaction still more inexplicable is that almost immediately, Edition: current; Page: [283] and during some years after the suspension had actually taken place, the bank-notes, though no longer convertible into specie, were at par. The question is not free of difficulty as respects the similar event in the United States.

The following reasons were assigned by the directors of the chartered banks of Philadelphia in an address to their fellow-citizens, dated the 30th of August, 1813:

“From the moment when the rigorous blockade of the ports of the United States prevented the exportation of our produce, foreign supplies could be paid for in specie only, and as the importation of foreign goods in the Eastern States has been very large, it has for many months past occasioned a continual drain from the banks. This trade has been much increased by a trade in British government bills of exchange, which has been extensively carried on, and has caused very large sums to be exported from the United States.

“To meet this great demand for specie, the course of trade did, for a considerable time, enable us to draw large supplies from the Southern States; but the unhappy situation of affairs there having deprived us of that resource, and circumstances having occurred which have in a considerable degree occasioned alarm and distrust, it became a serious consideration whether the banks should continue their exertions to draw within their vaults the specie capital of the country, and thus facilitate the means of exporting it from the United States, or whether they should suspend the payment of specie before their means were exhausted.”

The great drain from the East, alluded to by the Philadelphia banks, is proved by the comparative view of the specie in the vaults of the banks of Massachusetts in June, 1814, immediately before the suspension of payments, and on the same days of the preceding and succeeding years.

This amounted on the 1st of June, 1811, to $1,709,000
This amounted on the 1st of June, 1812, to 3,915,000
This amounted on the 1st of June, 1813, to 6,171,000
This amounted on the 1st of June, 1814, to 7,326,000
This amounted on the 1st of June, 1815, to 3,915,000
This amounted on the 1st of June, 1816, to 1,270,000
Edition: current; Page: [284]

And the fact that a large amount of British government bills was sent to this country from Canada in the years 1812-1814 and sold at 20 and 22 per cent. discount, is corroborated by authentic information from several quarters. Other causes, however, concurred in producing the suspension of specie payments.

1. The circulating capital of the United States, which must supply the loans required in time of war, is concentrated in the large cities, and principally north of the Potomac. The war was unpopular in the Eastern States; they contributed less than from their wealth might have been anticipated; and the burden fell on the Middle States. The proceeds of loans (exclusively of Treasury notes and temporary loans) paid into the Treasury from the commencement of the war to the end of the year 1814 amounted to forty-one millions ten thousand dollars.

Of that sum the Eastern States lent $2,900,000
New York, Pennsylvania, Maryland, and the District of Columbia, } 35,790,000
The Southern and Western States 2,320,000

The floating debt, consisting of outstanding Treasury notes and temporary loans unpaid, amounted, on the 1st of January, 1815, to eleven millions two hundred and fifty thousand dollars, about four-fifths of which were also due to the Middle States. Almost the whole of the large amount advanced to government in those States was loaned by the cities of New York, Philadelphia, and Baltimore, and by the District. The banks made advances beyond their resources, either by their own subscriptions or by enlarging their discounts in favor of the subscribers. They, as well as several wealthy and patriotic citizens, displayed great zeal in sustaining government at a critical moment, and the banks were for that purpose compelled to enlarge their issues.

2. The dissolution of the Bank of the United States deprived the country of a foreign capital of more than seven millions of dollars vested in the stock of that institution, and which was accordingly remitted abroad during the year that preceded the war. At the same time the State banks had taken up a considerable part of the paper formerly discounted by that of the United States. As the amount of this exceeded fifteen millions, Edition: current; Page: [285] their aid in that respect was absolutely necessary in order to prevent the great distress which must have otherwise attended such diminution of the usual accommodations.

3. The creation of new State banks in order to fill the chasm was a natural consequence of the dissolution of the Bank of the United States. And, as is usual under such circumstances, the expectation of great profits gave birth to a much greater number than was wanted. They were extended through the interior parts of the country, created no new capital, and withdrew that which might have been otherwise lent to government, or as profitably employed. From the 1st of January, 1811, to the 1st of January, 1815, not less than one hundred and twenty new banks were chartered and went into operation, with a capital of about forty, and making an addition of near thirty millions of dollars to the banking capital of the country. That increase took place on the eve of and during a war which did nearly annihilate the exports and both the foreign and coasting trade. And, as the salutary regulating power of the Bank of the United States no longer existed, the issues were accordingly increased much beyond what the other circumstances already mentioned rendered necessary. We have obtained returns of the circulation and specie for the latter end of the years 1810, 1814, and 1815, though not all of the same precise date, of a sufficient number of banks to enable us to make an estimate of the whole, which cannot vary essentially from the truth. Our returns of the amount of deposits are too partial for insertion; our authentic returns embrace generally the States of Massachusetts, New Hampshire, Rhode Island, Pennsylvania, Maryland, Virginia, and the District of Columbia, and give the following result:

Capital. Notes in Circulation. Specie.
On or near 1st January, 1811— 50 State banks 24,618,551 13,170,401 5,673,442
1815—120 State banks 45,272,076 23,617,090 11,505,077
1816—134 State banks 47,987,826 31,702,050 8,758,133

Having the amount of the capital and a few general returns of all the other banks, partly guided by analogy and partly by Edition: current; Page: [286] their respective dividends, we annex the following estimate of the whole:

Capital. Notes in Circulation. Specie.
1st January, 1811—Bank of the United States 10,000,000 5,400,000 5,800,000
88 State banks 42,610,601 22,700,000 9,600,000
Total 52,610,601 28,100,000 15,400,000
1815—208 State banks 82,259,590 45,500,000 17,000,000
1816—246 State banks 89,822,422 68,000,000 19,000,000

The unequal distribution of the specie on the 1st of January, 1815, must be recollected.

Capital. Circulation. Specie.
At that time the banks of the four States of Maine, Massachusetts, Rhode Island, and New Hampshire had } $15,690,000 5,320,000 8,200,000
The States of Pennsylvania and Maryland, with the District of Columbia, had } 26,000,000 13,750,000 3,000,000
And all the other States 40,930,000 25,630,000 5,800,000

The increase of issues from forty-five and a half to sixty-eight millions, or of about 50 per cent., within the first fifteen months of the suspension of specie payments, was the natural consequence of that event. We must observe that, where we were obliged to resort to an estimate, the amount of bank-notes is set down rather too low than too high. Yet we are confident that for the three dates we have given the actual amount cannot have exceeded thirty, forty-seven, and seventy millions respectively. This last sum falls very short indeed of the one hundred and ten millions which were supposed to have been put in circulation by the banks, but is quite sufficient to account for the depreciation. It is equal to the present amount of the currency; and as the increase of wealth during the last fourteen years has at least been in the same proportion as that of the population, the amount which could have been wanted at that time may be estimated at about forty-six millions, including both paper and specie. It is therefore clear that the equal amount in bank-notes alone, which had been put in circulation by the State banks before the year 1815, was more than could have been long sustained, preserving at the same time their convertibility into specie. Under those circumstances the alarm caused by the Edition: current; Page: [287] capture of Washington and the threatened attack on Baltimore was sufficient to cause a suspension of specie payments. It took place at that particular crisis, and appears to have originated in Baltimore. The example was immediately followed in Philadelphia and New York; and it is indeed known that an attack was apprehended on both those places, and that some of the banks of Philadelphia had sent their specie to Lancaster.

We have stated all the immediate and remote causes within our knowledge which concurred in producing that event; and although the effects of a longer continuance of the war cannot be conjectured, it is our deliberate opinion that the suspension might have been prevented at the time when it took place had the former Bank of the United States been still in existence. The exaggerated increase of State banks, occasioned by the dissolution of that institution, would not have occurred. That bank would, as before, have restrained within proper bounds and checked their issues; and, through the means of its offices, it would have been in possession of the earliest symptoms of the approaching danger. It would have put the Treasury Department on its guard; both acting in concert would certainly have been able at least to retard the event, and, as the treaty of peace was ratified within less than six months after the suspension took place, that catastrophe would have been altogether avoided.

We have already adverted to the unequivocal symptoms of renewed confidence shown by the rising value of bank-notes which followed the peace. This would have greatly facilitated an immediate resumption of specie payments, always more easy and attended with far less evils when the suspension has been of short duration. The banks did not respond to that appeal made by public opinion; nor is there any evidence of any preparations or disposition on their part to pay their notes in specie until after the Act to incorporate the new Bank of the United States had passed. We are inclined to ascribe this principally to the great difficulty of bringing the various banks in our several commercial cities to that concert which was indispensable. But it cannot be concealed that, in such a situation, the immediate and apparent interest of the banks is in opposition to that of the public. It is well known that the Bank of England, though Edition: current; Page: [288] apparently disposed at first to resume its specie payments, found a continued suspension extremely convenient and profitable; that during that period of twenty years its extraordinary profits, besides raising the usual dividend from 7 to 10 per cent., amounted to thirteen millions of pounds sterling, and that it accordingly threw obstacles in the way of the resumption. The State banks of the United States were only inactive in that respect, and did not impede that desirable event; but they used the advantages incident to the situation in which they were placed; and to what extent their issues were generally increased has already been shown.

It will not be asserted that any reasonable expectation could have been entertained of a voluntary return on the part of the State banks to a sound currency, unless the depreciation had become so great as to induce the community at large to reject their notes. Whether this arose from inability or unwillingness, a remedy was equally necessary. Congress does not appear to have inquired whether they had the right to exercise any immediate control over the issues of those banks; and the question seems to have lain between the establishment of a national bank and an attempt to force the State banks to pay in specie, by the refusal of their notes in payment of debts and duties due to the United States so long as those notes were not on demand discharged in specie. It is clear that such an attempt must have failed altogether during the year that followed the peace, and so long as the expenses of government greatly exceeded its receipts. The bank was chartered in April, 1816, and it must forever remain conjectural whether, if that measure had not been adopted, and after the floating debt and all the arrearages of the war had been paid or funded, and the receipts of the Treasury had become greater than its disbursements, an attempt on the part of the government to collect the revenue and to discharge the public expenses in specie would have compelled the State banks to resume generally specie payments. It cannot, at all events, be doubted that the result was quite uncertain, and that the attempt might have failed at the very outset from the want of any other currency than bank-notes. It is indeed quite probable that in that case the impossibility to collect the revenue Edition: current; Page: [289] might have induced government merely to substitute an issue of its own paper to that of the banks.

It will be found by reference to the report of the Secretary of the Treasury of December, 1815, that his recommendation to establish a national bank was in express terms called “a proposition relating to the national circulating medium,” and was exclusively founded on the necessity of restoring specie payments and the national currency. He states it as a fact, incontestably proved, that the State banks could not at that time be successfully employed to furnish an uniform national currency. He mentions the failure of one attempt to associate them with that view; that another attempt, by their agency in circulating Treasury notes, to overcome the inequalities of the exchange has only been partially successful; that a plan recently proposed, with the design to curtail the issues of bank-notes, to fix the public confidence in the administration of the affairs of the banks, and to give to each bank a legitimate share in the circulation, is not likely to receive the general sanction of the banks; and that a recurrence to the national authority is indispensable for the restoration of a national currency. Such was the contemporaneous and deliberate opinion of the officer of the government who had to struggle against the difficulties of a paper currency not only depreciated, but varying in value from day to day and from place to place.

1It was not till after the organization of the Bank of the United States, in the latter part of January, 1817, that delegates from the banks of New York, Philadelphia, Baltimore, and Virginia assembled in Philadelphia for the purpose of agreeing to a general and simultaneous resumption of specie payments. A compact proposed by the Bank of the United States, acceded to by the State banks, and ratified by the Secretary of the Treasury, was the result of that convention. The State banks engaged to commence and continue specie payments on various conditions relative to the transfer and payment of the public balances on their books to the Bank of the United States, and to the sum Edition: current; Page: [290] which it engaged previously to discount for individuals, or under certain contingencies for the said banks, and also with the express stipulation that the Bank of the United States, upon any emergency which might menace the credit of any of the said banks, would contribute its resources to any reasonable extent in support thereof, confiding in the justice and discretion of the banks respectively to circumscribe their affairs within the just limits indicated by their respective capitals, as soon as the interest and convenience of the community would admit. To that compact, which was carried into complete effect, and to the importation of more than seven millions of dollars in specie from abroad by the Bank of the United States, the community is indebted for the universal restoration of specie payments, and for their having been sustained during the period of great difficulty and of unexampled exportation of specie to China which immediately ensued.

Among the difficulties which the bank had to encounter must be reckoned the effort made to alleviate the distress which always attends the return from a depreciated to a sound currency. The Western States having less capital are in the course of trade generally indebted to the Atlantic seaports. Whether owing to larger purchases of public land than usual, to an excited spirit of enterprise, or to any other cause, it appears that at that time the amount of debts due by the West, either to the East or to government, was unusually large. The several Western offices of the Bank of the United States discounted largely, probably to too great an extent. The Eastern creditors were generally paid, the Western State banks relieved, and the debt transferred to the bank. Thus we find that the issues of the Bank of Kentucky, which in 1816 exceeded one million nine hundred and fifty thousand dollars, were in 1819 reduced to six hundred and seventy thousand dollars. This could not be done without large issues of branch notes or of drafts on the parent bank and the Northern offices, which drained these of their capital.1 Although great curtailments had taken place, near six millions and a half of dollars of the capital of the bank Edition: current; Page: [291] were, in the spring of the year 1819, distributed amongst the interior Western offices, whilst the whole amount allotted to the offices north and east of Philadelphia was less than one million. The proper equilibrium could not be reinstated without a revulsion and an uncommon pressure on the West, in order to lessen the amount of its debt. The attempts to counteract that effect by the creation of a great number of local banks could not but fail, and must have aggravated instead of relieving the evil. The unpopularity which attached to the Bank of the United States when it found itself compelled to enforce the payment of such a large debt, and the attempt to alleviate the distress by relief laws, which, though injudicious, ought not in that state of things to be too severely judged, are well known, and were the natural consequences of the course which had been originally pursued.

The year 1819 having been one of great difficulty, we annex an estimate of the situation of the banks for the latter end of it. The Secretary of the Treasury gave a partial one in his report on currency of the year 1820, to which we have made some additions and corrections from bank returns of a nearer date to the 1st of January, 1820, than he had then obtained. The portion on estimate embraces almost the whole of the banks of Connecticut, New Jersey, New York, and Maryland, Mr. S. Girard’s, about one-half of those of South Carolina, Louisiana, and Alabama, and one-fourth of those of Kentucky. The returns of those of the other States are complete.

1st January, 1820. Capital. Notes in Circulation. Deposits. Specie.
212 ascertained State banks $62,735,842 $26,641,574 $19,444,959 $10,672,263
95 estimated State banks 39,374,769 14,000,000 11,800,000 6,000,000
307 State banks $102,110,611 $40,641,574 $31,244,959 $16,672,263
United States Bank 35,000,000 4,221,770 4,705,511 3,147,977
Total $137,110,611 $44,863,344 $35,950,470 $19,820,240
Edition: current; Page: [292]

It appears from that statement that the amount of notes in circulation was only about one million less than immediately before the suspension of specie payments, whilst on the other hand the amount of specie in the vaults of the banks was nearly two millions greater. But it has been seen that on the 1st of January, 1816, the paper currency amounted to sixty-eight millions. So great a reduction in the issues of the banks could not have been effected without a corresponding diminution of their discounts. Debts contracted during the suspension of specie payments, and whilst the currency was depreciated, became payable at par. The distress, therefore, that took place at that time may be clearly traced to the excessive number of State banks incorporated subsequently to the dissolution of the first Bank of the United States and to their improvident issues. Those of the country banks of Pennsylvania alone amounted, in November, 1816, to $4,756,460, and had been reduced in November, 1819, to $1,318,976. A committee of the Senate of that State, appointed in December, 1819, to inquire into the extent and causes of the present general distress, ascribe it, as we do, to the improvident creation of so many banks, as will appear from the following extract from their report:

“At the following session the subject was renewed with increased ardor, and a bill authorizing the incorporation of forty-one banking institutions, with capitals amounting to upwards of seventeen millions of dollars, was passed by a large majority. This bill was also returned by the governor with additional objections; but two-thirds of both Houses (many members of which were pledged to their constituents to that effect) agreeing on its passage, it became a law on the 21st of March, 1814, and thus was inflicted upon the Commonwealth an evil of a more disastrous nature than has ever been experienced by its citizens. Under this law thirty-seven banks, four of which were established in Philadelphia, actually went into operation.”

The numerous failures which had preceded the year 1819, or have since taken place, have also been principally due to the same causes. We have an account of 165 banks that failed between the 1st of January, 1811, and the 1st of July, 1830. The capital of 129 of these amounted to more than twenty-four Edition: current; Page: [293] millions of dollars stated as having been paid in. The whole amount may be estimated at near thirty millions; and our list may not be complete. The capital of the State banks now existing amounts to about 110 millions. On a total capital of one hundred and forty millions the failures have amounted to thirty, or to more than one-fifth of the whole. Of the actual loss incurred we can give no account. There are instances in which the stockholders, by paying for their shares in their own notes, and afterwards redeeming their notes with the stock in their name, suffered no loss; and this fell exclusively on the holders of bank-notes and depositors. In many cases, where the whole stock has been lost, the holders of notes have nevertheless experienced a partial loss. In the most favorable cases the stockholders lost a considerable portion of their stock; and all the debts will be ultimately paid. But even then there has been a heavy loss on the community, the notes having been generally sold by the holders at a depreciated rate at the time when the failure took place. We believe that the pecuniary loss sustained by the government on the loans raised during the suspension and from bank failures exceeded four millions of dollars.

The active industry of the country has enabled it to recover from that depressed state; and we will now give a view of the situation of the State banks and of that of the United States at the close of the year 1829. We have returns of two hundred and eighty-one State banks, which have a capital of 95,003,557 dollars. Of the forty-eight other banks we have only the capital, amounting to 15,188,711 dollars, and some incomplete returns; and of thirty banks of the State of New York, of which we have complete returns, fourteen only are for the 1st of January, 1830, the sixteen others being for the 1st of January, 1828. This last circumstance makes the amount of specie appear probably one million of dollars less than it actually was at the end of the year 1829. The forty-eight banks of the situation of which we have no return are distributed as follows, viz.:

1 Mr. Girard’s bank, the capital of which is rated at $1,800,000, being the sum on which the stamp duty was formerly paid.
In Connecticut 3
New York 7
In New Jersey 13
Pennsylvania1 1
Delaware 1
Maryland 4
South Carolina 4
Louisiana (branches of) 1
Alabama 1
Ohio (all) 11
Michigan and Florida 2

Estimating these in the same manner as in the preceding statements, we have the following results:

I. For the States of Maine, New Hampshire, Vermont, Massachusetts, and Rhode Island:

Capital $30,812,692
Notes 7,394,566
Deposits 4,203,895
Specie 2,194,768

For the States of Connecticut, New York, and New Jersey:

Capital $26,585,539
Notes 12,737,539
Deposits 14,594,145
Specie 2,841,476

For the States of Pennsylvania, Delaware, Maryland, and the District of Columbia:

Capital $25,566,622
Notes 11,274,086
Deposits 10,850,739
Specie 4,170,592

For the four Southern States:

Capital $17,600,129
Notes 12,183,863
Deposits 6,952,194
Specie 3,046,141
Edition: current; Page: [295]

For the Western States:1

Capital $9,629,286
Notes 4,684,860
Deposits 4,180,146
Specie 2,686,396

II. Distinguishing the cities of Boston, Salem, New York, Philadelphia, Baltimore, Charleston, and New Orleans from the rest.

Seven Cities. Remainder of the United States.
Capital $53,211,605 $56,980,663
Notes 17,144,422 31,130,492
Deposits 23,137,129 17,643,990
Specie 7,258,025 7,681,618

III. Situation of the Bank of the United States on the 1st of November, 1829.

Cr. Dr.
Funded debt $11,717,071 Capital $34,996,270
Notes discounted $32,541,124 Notes in circulation 13,048,984
Domestic bills 7,476,321 Deposits 14,778,809
40,017,445 Balance in transitu from bank and offices on each other 732,082
Foreign account 1,161,001
Due from banks 843,551 Surplus fund, after deducting losses already chargeable to it, including that of Baltimore 2,766,129
Notes of banks 1,531,528
Specie 7,175,274
Real estate 3,876,404 $66,322,274

IV. The progressive improvement of the Bank of the United States, and the talent with which it has been administered, are exhibited in the following comparative view of the principal items of its situation on the first days of November, 1819 and 1830:

November 1, 1819. 1830.
Notes discounted on bank stock $7,759,980 $719,195
Notes discounted on personal security 21,423,622 32,665,035
Domestic bills 1,386,174 7,954,290
Deposits 4,705,512 12,650,752
Specie $3,147,977 $11,436,175
Due to Baring Brothers & Co. 2,333,937
Due from Baring Brothers & Co. 2,778,653
Bank-notes issued 4,221,770 18,004,680
Deduct in transitu 411,659 2,823,135
In actual circulation $3,810,111 $15,181,545

V. The following estimate gives the general result for the end of the year 1829:

1 We have not included in this amount several banks lately chartered, but not in operation on the 1st of January, 1830.
Capital. Notes. Deposits. Specie.
281 banks ascertained $95,003,557 $39,174,914 $32,531,119 $11,989,643
48 banks estimated 15,188,711 9,100,000 8,250,000 2,950,000
3291 $110,192,268 $48,274,914 $40,781,119 $14,939,643
United States Bank 35,000,000 13,048,984 14,778,809 7,175,274
$145,192,268 $61,323,898 $55,559,928 $22,114,917

It will be perceived by the last item of No. IV. that there is always a large amount of the notes of the Bank of the United States, issued and inserted in the usual returns, which are not in actual circulation. They consist of notes received in payment of duties, or otherwise, by other offices than those by which they had been issued, and transmitted back to them. The amount at the end of 1829 is that of the net circulation. On the other hand, the drafts from the bank on offices, and from these on the bank, and on each other, in actual circulation, should, as has been observed, be considered as making part of it. The total annual amount of those drafts is about twenty-four millions of dollars, and they are on an average paid within fifteen days after being issued. The amount always in circulation may, therefore, be estimated at one million, which, added to the thirteen millions of bank-notes, gives fourteen millions for Edition: current; Page: [297] the actual circulation of the bank. We may, therefore, estimate the total amount of the paper currency of the United States on the 1st of January, 1830, at about sixty-two millions and a half.

All the banks receive notes issued by the other institutions, the returns of which, that have been obtained, being incomplete, have not been inserted in the preceding statements. From an examination of a number of these in various sections of the country, and embracing banks with an aggregate capital of more than twenty millions of dollars, we think that the notes of that description make more than one-fifth of the total amount of their issues in those situated north of the Potomac, and about one-eighth in the Southern States. The average of notes of State banks on hand, in the Bank of the United States and its offices, amounted, during the year 1829, to about one million and a half. There is, therefore, always a sum of about nine or ten millions of dollars, or not less than one-seventh part of the whole amount issued, which is not in actual circulation. If the banks did not receive any notes but their own, it would seem that a nearly equal amount of these would be returned upon them, and that the real amount of those in actual circulation should not be estimated at more than fifty-three and a half millions of dollars. We have, however, adopted throughout the usual mode of computation.

If to the amount of notes we add the deposits, we will have a total of either one hundred and eighteen or one hundred and nine millions, according to each of those two modes of computing, for the circulation of all the banks. This is sustained by a sum of twenty-two millions in specie, which makes no part of the circulation. There are no means of ascertaining correctly the portion which consists of the precious metals. The silver coinage of England forms nearly one-seventh part of the whole circulation of that country. At that rate, that of the United States, allowing for the various considerations which may affect the question, cannot be estimated at more than ten millions. It is well known that gold has been altogether excluded by the mint regulations.

We have, therefore, the following results, according to the view of the subject which may be adopted:

Edition: current; Page: [298]
Gross amount of notes issued $62,500,000
Silver coins 10,000,000
Usual mode of computing 1 $72,500,000
And if deposits are included 55,500,000
2 $128,000,000
But if the bank-notes of other banks on hand are deducted, the notes in circulation will be $53,500,000
Silver 10,000,000
3 $63,500,000
And if deposits are included 55,500,000
4 $119,000,000

Which last appears to us the most correct mode of computation.

Although we have freely expressed our opinion that, taking into consideration all the circumstances which belong to the subject, it might have been preferable in the United States to have had nothing but a metallic currency, we are quite aware that this is not at this time the question. We are only to inquire whether any other or better security can be found than that which is afforded by the Bank of the United States against either the partial failures of banks, the want of an uniform currency, or a general suspension of specie payments. The great difficulty arises from the concurrent and perhaps debatable jurisdiction of the general and State governments: and we are to examine not only what are the provisions necessary to attain the object intended, but also by what authority the remedy must be administered.

The essential difference between banking and other commercial business is that merchants rely for the fulfilment of their engagements on their resources, and not on the forbearance of their creditors, whilst the banks always rely not only on their resources, but also on the probability that their creditors will not require payment of their demands. We have already seen that this probability is always increased or lessened in proportion as the issues of the banks are moderate or excessive. One of the most efficient modes to reduce the amount of bank-notes, Edition: current; Page: [299] as compared to the total amount of the currency of the country, consists in the increase of the metallic currency which circulates amongst the people, independent of that which is kept in reserve in the vaults of the banks. It is evident that, inasmuch as only a certain amount of sound currency is wanted and can be sustained, that part which consists of bank-notes must be lessened, and thereby made safer, as the metallic portion is increased. Whenever, also, the specie of the banks is drained by any extraordinary demand whatever, delays and often difficulties may arise in the importation of a supply from abroad; which is, however, the only resource when the circulating metallic currency has nearly disappeared.

We have had an opportunity to witness in France the salutary effects of a currency consisting principally of the precious metals, not only in cases of great national difficulty, but also for the specific purpose of reinstating a bank momentarily endangered by over-issues of paper. But we prefer referring to the evidence of a very able and practical witness, who was also deeply interested in the issue, and we will extract this from the work of another distinguished and practical writer.1

“Of the comparative facility with which the coffers of a bank which has suffered too great a reduction of its reserves by imprudent issues of paper may be replenished out of a circulation consisting in great proportion of coin, notwithstanding a coincident demand for large payments abroad, a strong instance is afforded in the case of the Bank of France in 1817 and 1818. The circumstance is thus stated in Mr. Baring’s evidence in March, 1819. (Vide Report of Lords’ Committee on the Resumption of Cash Payments, page 103.) Speaking of a drain which that bank had experienced, he says:

“ ‘Their bullion was reduced by imprudent issues from one hundred and seventeen millions of francs to thirty-four millions of francs, and has returned, by more prudent and cautious measures, to one hundred millions of francs, at which it stood ten days ago, when I left Paris. This considerable change took place since the first week in November, when the amount of Edition: current; Page: [300] specie in that bank was at its lowest. It must, however, be always recollected that this operation took place in a country every part of the circulation of which is saturated with specie, and therefore no inference can be drawn in favor of the possibility of so rapid an operation in this country, where, owing to the absence of specie in circulation, the supply must entirely come from abroad; for in Paris, though some portions may have come from foreign countries, the great supply must undoubtedly have come through all the various small channels of circulation through that kingdom.’

“Again, in the same evidence, page 105:

“ ‘Q. Has not France, after two years of great scarcity in corn and two years of foreign contribution, been able to contribute a proportion of the precious metals to the wants of Russia and Austria?

“ ‘A. Undoubtedly the precious metals have been supplied from France to Russia and Austria, and shipped, to a considerable amount, to America, notwithstanding the payments to foreign powers, and very large payments for imported corn, whilst at the same time, wine having almost totally failed for several years past, they were deprived of the most essential article of their export.’

“And in reference to these payments in the preceding answer, Mr. Baring states that they

“ ‘Produced no derangement whatever of the circulation of that country (France).’

“It may not be unimportant further to remark that the state of the currency in France ever since the suppression of the assignats appears to be decisive of the great advantages attending a metallic circulation in times of political difficulty and danger. On no one great occasion did her efforts appear to be paralyzed, or even restricted, by any derangement of the currency; and in the two instances of her territory being occupied by an invading army there does not appear to have been any material fluctuation in its value.”

We perceive but two means of enlarging the circulating metallic currency: 1st, the suppression of small notes; 2d, the measures necessary to bring again gold into circulation.

Edition: current; Page: [301]

The first measure is that which, after long experience, a most deliberate investigation, and notwithstanding a strenuous opposition by the parties interested, has been finally adopted and persevered in by the government of Great Britain. By the suppression of all notes of a denomination less than £5 sterling in England, Wales, and Ireland, the amount of the circulating metallic currency has become equal to that of bank-notes of every description. That metallic currency consists of eight millions sterling in silver, which is receivable only in payments not exceeding forty shillings, and of twenty-two millions sterling in gold. This measure has given a better security against fluctuations in the currency and a suspension of specie payments than had been enjoyed during the thirty preceding years. In France, where the Bank of France is alone authorized to issue banknotes, and none of a denomination under five hundred francs, its circulation hardly ever reaches ten millions sterling, or about one-tenth part of the currency of the country. In the United States all the banks issue notes of five dollars. The States of Pennsylvania, Maryland, and Virginia, and perhaps some others, have forbidden the issue of notes of a lower denomination, to the great convenience of the community, and without experiencing any of the evils which had been predicted. We have seen in Pennsylvania the chasm occasioned by that suppression instantaneously filled by silver without the least diminution in the amount of currency. We cannot but earnestly wish that the other States may adopt a similar measure, and put an end to the circulation of the one-, two-, and three-dollar notes, which is of no utility but to the banks. Those small notes are, as a currency, exclusively local, and a public nuisance; and, in case of the failure of any bank, the loss arising from them falls most heavily on the poorest class of the community. We have no other data to estimate the proportion they bear to the whole amount of notes than the returns of the banks of Massachusetts and Maine subsequent to January, 1825, by which it appears that in those States those small notes make one-fifth part of the whole paper currency. But we would wish to go further than this, and, in order to bring gold more generally into circulation, that all notes under the denomination of ten dollars might be suppressed. Edition: current; Page: [302] The five-dollar notes of the Bank of the United States constitute less than one-sixth part of its circulation, and amount in value to two-thirds of that of its ten-dollar notes. From those data, taking into consideration the amount of currency of the States where the small notes do not circulate, and allowing that a portion of the five- would be supplied by ten-dollar notes, the reduction in the amount of the paper currency arising from a suppression of the small notes may be estimated at six, and that produced by the suppression of the five-dollar notes at about seven, millions. Both together would probably lessen the paper currency by one-fifth, and substitute silver and gold coins in lieu thereof.

We have already adverted to the erroneous value assigned to gold coins by the laws which regulate the mint of the United States. The relative value of that metal to silver was, by the law of 1790, fixed at the rate of 15 to 1. In England it was at that time at the rate of 15.2 to 1; and it had in France, after an investigation respecting the market price of both metals, been established at the rate of 15½ to 1, as early as the year 1785. From that to this time gold coins have never been below par in that country, and have generally commanded a premium, varying from one-fifth to one per cent., but which, on an average, has been rather less than one-half per cent. This ratio in all those instances is that of gold to silver coins, but the difference is greater between gold and silver bullion. Whether the expense of coinage is defrayed gratuitously by government or a seigniorage is charged to individuals, coins not debased or deteriorated will almost always command a higher price than bullion containing the same quantity of pure metal, on account of their greater utility and of the cost of coinage. It is only when there is at the same time a redundancy of coin, a scarcity of bullion, and a great demand for plate or other manufactures, that, when the general coinage is sound, coins will be melted, and the price of bullion be equal to that of coins. Should, however, the coinage be deteriorated, new good coins will be melted as soon as they issue from the mint, and there is no remedy but a general recoinage at the public expense. According to the mint laws of England, an ounce of standard gold (containing, Edition: current; Page: [303] like ours, eleven-twelfths pure and one-twelfth alloy) is coined into £3 17s. 10½d. sterling; and, in the present sound state of its gold coinage, the average price of bullion of the same standard may be estimated as 77s.d. No solid reason can be assigned why the actual cost of coinage should not be charged by government. In point of fact, the delay of two months which elapse between the deposit of bullion in the mint of the United States and the delivery of the coins, is nearly equal to a charge of one per cent.; but does not assist in defraying the expenses of the mint, and has the disadvantage of being the same on both metals. When the annual silver coinage of our mint reaches three millions of dollars, the expense may be estimated at 1 per cent. The expense on the same value of gold, no silver being coined, would amount to about one-half per cent. The coinage of six millions, half in silver and half in gold, might be estimated at 1 per cent. on the first and one-fifth per cent. on the gold. It is obvious, indeed, that it is more expensive to coin five silver pieces, worth one dollar each, than one gold piece worth five dollars. A seigniorage at the last-mentioned rate might be advantageously substituted to the present mode, and would only require a moderate constant appropriation, that might enable the mint to pay for the bullion at the time, or at least within ten days of its delivery.

In France, the mint allows 3091 francs for each kilogramme of standard gold. This is coined into gold coins of the nominal value of 3100 francs, being a deduction or seigniorage of less than three-tenths per cent. The mint price of standard silver is 197 francs the kilogramme, which is coined into silver coins of the nominal value of 200 francs; the deduction or seigniorage amounting to 1½ per cent. This is too great, and is, at least in part, the cause of the almost constant premium on gold coins. Whilst the relative value of gold to silver coins is fixed at the rate of 15½ to 1, that of gold to silver bullion is at the rate of 3091 : 197, nearly equal to 15.69 : 1. This last ratio cannot essentially differ from the true average market relative price of the two metals, since the mint has been abundantly supplied with both for the last forty-five years.

But whether we estimate that relative value by deducing it Edition: current; Page: [304] from the premium on the French gold coins, or by assuming that of gold to silver bullion as purchased by the French mint, or at the apparent market rate in England during the three or four last years, which would give respectively the ratios of about 15.6, 15.7, and 15.85 to 1, it is evident that our gold coins are underrated at least 4 per cent. The necessary consequence is the disappearance of gold coins, and their exportation to Europe whenever the exchange will admit of it. According to that regulation, a ten-dollar gold coin, or eagle, contains 270 grains of standard gold; and as the 20 shillings sterling gold coin, or sovereign, contains 123171/623 grains of gold of the same standard, about $4.56 in gold coin of the United States contain a quantity of pure gold equal to that contained in a sovereign. Allowing 1 per cent. for charges and transportation, our gold coins may commence to be exported to England as soon as the exchange rises to $4.61 per pound sterling; which rate corresponds with nearly 3¾ per cent. above the nominal and 3 per cent. below the true par, calculating this at the ratio of near 15.6 to 1, or $4.75 per pound sterling. We find, by the tables of exchange annexed to the report of the Secretary of the Treasury, that, with the exception of the year of the embargo, unless incidentally for a few days, the exchange on London, from 1795 to 1821, never rose to $4.62 per pound sterling, or about 4 per cent. above the nominal par; or, in other words, that during the whole of that period the exchange was constantly favorable to the United States, having never been higher, with the exception aforesaid, than 2 per cent. below the true par. This is the reason why our gold coins, though underrated, were not exported till the year 1821, when the exchange rose from $4.60 to $4.98 per pound sterling, and our gold coins began to be exported, a premium of one-half per cent. upon them being given, when the premium on the nominal par of exchange was 5 per cent., corresponding to an exchange of near $4.67 per pound sterling. From that time to the end of the year 1829 the exchanges have, with few short exceptions, been unfavorable to the United States; and the exportation has continued not only during that period, but also during the last nine months, though the exchange has this year been but little, if any, above the true Edition: current; Page: [305] par. It is perfectly clear that, whilst our gold coins are thus underrated, they will be exported whenever the exchange rises above $4.61 to $4.64 per pound sterling, and that, if rated according to the true or approximate relative value of gold to silver, they would not be exported to England till the exchange had risen to at least $4.80 to $4.83, or more than 1 per cent. above the true par.

If the intention is to exclude the gold coins altogether, it is quite unnecessary to coin gold. If it is intended that they should make part of the circulation, they must be rated at or near their true relative value. Unless this is done, the circulating metallic never can be sufficiently enlarged to insure to the country a sound currency. The question, whether the two metals should circulate simultaneously, has never been made a matter of doubt when there has been no paper currency. Both are then indispensable, gold for large payments and principally for remittances and travellers, and silver for small daily payments. The Secretary of the Treasury correctly states that “if there were no paper medium like that of the Bank of the United States circulating freely in all parts of the Union, and everywhere convertible into the standard at a very moderate discount, gold coins would be almost indispensable. Without them every traveller, even from State to State, and often from one county to another, must encumber himself with silver, or be exposed to vexatious embarrassments and impositions.” A country which wishes to make gold the only standard of value is still compelled to admit a silver coinage for small payments. Where silver is the standard, gold would still be found necessary unless supplied by paper. It is true that so long as five-dollar notes, exchangeable everywhere for specie, do circulate, gold, though rated at its value, will be less in demand, and that many persons will prefer the notes. But even in that case both may at least be permitted to circulate concurrently, leaving to every individual the option of either. At all events, if thus rated, they would assist in filling the vaults of the banks, and thereby throw a larger quantity of silver in circulation.

It has been objected to the simultaneous circulation of the Edition: current; Page: [306] two metals that the fluctuation in their relative price increases the uncertainty of the standard. This is true, but not to the extent which a first view of the subject may suggest, and even to that extent producing so small an effect that it may be altogether neglected.

There are four contingencies which may cause a fluctuation in the relative price of gold and silver, as either may either rise or fall, as compared to the value of all other commodities. Supposing a country where silver is made the only legal tender, it is clear that in two of those contingencies, namely, if the price of gold should rise, or if that of silver should fall, every payment would have still been made in silver if both metals had been a legal tender and the option given to the debtors to pay with either. As the probability of those several contingencies is perfectly equal, it follows that in one-half of the fluctuations which may take place in the relative price of the two metals, it is perfectly immaterial whether one or both are made a legal tender. With respect to the two other contingencies: if the price of silver should rise, that of gold remaining the same as compared to all other commodities, the debtors in the country where both metals were a legal tender would pay in gold, and therefore in perfect conformity with the original contract, whilst in the country where silver alone was a legal tender they would be obliged to pay in that metal, that is to say, to pay a greater value than according to the original contract; and, on the other hand, if the price of gold should fall, that of silver, as compared to all other commodities, remaining the same, the debtors would in the country which admitted only silver as a legal tender be obliged to pay in that metal in conformity with the contract, while in the country where both metals were a legal tender the debtors would pay in gold, that is to say, a sum less than according to the contract. Whatever may be the amount of fluctuation, the stability of the standard of value is not, by adopting only one metal as such, improved to a greater extent than has now been stated. But the fact is, that the fluctuations in the relative price of gold and silver coins are so small in a country where the mint is open to all individuals, and under proper Edition: current; Page: [307] regulations, that, when compared with the variations to which coins issuing from the same mint are liable, they may be altogether disregarded.

It has been sometimes erroneously supposed that governments might alter by their own regulations the actual relative value of the two precious metals. This might be done to a considerable extent if these had no intrinsic value; that is to say, if they could be obtained without capital or labor, or if, whatever the cost of production might be, they were of no utility whatever except for currency. In the first case, governments might attach any value they pleased to either metal, in the same manner as is now done with paper money. In the latter case, there being no other demand except that of governments, the price of either metal might be reduced so low as to compel an abandonment of all the poorer, but not lower than the cost of production at the most fertile mines. But the intrinsic value of the precious metals, combined with the general demand for them, determines their market-price. Governments are among the principal, but not the only, consumers. If the demand for either gold or silver for the purpose of currency was to cease altogether, it would have an effect on the market-price of the metal excluded; but a government which uses both as currency cannot affect their permanent relative value. It may, however, to a certain extent prevent great fluctuations by coining at all times for all individuals who may bring in bullion, allowing always the same regular price, and paying for it without delay, and without any other charge than the actual cost of coining.

It has already been stated that the relative mint-price of gold and silver bullion in France (about 15.7 : 1) is very near the average market-price of those two metals. And by giving always the same regular price for each, government has to a certain degree prevented any great fall in the price of either. It is only during short and extraordinary periods that the fluctuations have been so great as that the gold coins did either fall to the par of silver coins or rise to a premium of one per cent. During by far the greater part of the period of forty-five years which has elapsed since that regulation took place, Edition: current; Page: [308] this premium has fluctuated from one-fifth to one-half per cent.; so that the variations in the relative price of the two metals have, with the few exceptions above mentioned, been less than one-third per cent. And even these would have been less had not, as has already been stated, the silver coins been overrated by charging about one-half per cent. too much on their coinage.

It is believed that there is no mint which issues more faithful and perfect coins than that of the United States. The extreme variation from standard fineness, as determined by the annual assay, does not exceed one-fifth per cent. on the silver coins; on the gold coins it is too small to be appreciated. On a large sum, as delivered from the mint, the weight, if not precisely accurate, would almost uniformly be found to fail in excess. But trivial deviations in weight on single pieces are unavoidable; they rarely exceed one-third per cent. on the heaviest silver, and are less than one-sixth per cent. on the gold coins. If to those unavoidable deviations be added the loss which coins experience by friction, it will be found that they exceed in value the fluctuations in the relative market-price of the gold and silver coins issued under proper mint regulations, and therefore that these are a quantity which may be neglected, and which, in fact, is never taken into consideration at the time of making the contract.

The importance of preserving a permanent standard of value is the leading principle which we have tried to enforce in this paper; and it is for that express purpose that we consider an alteration in the mint regulations, which alone can bring gold into circulation, as absolutely necessary. The rate heretofore adopted had its origin in a mistake, and was not at all intended for the purpose of excluding gold. It did not produce that effect for thirty years, on account of the favorable rate of exchanges. To persist in it, now that experience has shown the evils it produces, and amongst others the undeniable exportation of gold and of gold coins at a time when the exchanges may be three per cent. under the true par, instead of being adherence to the original plan, is an obvious deviation from its avowed object. We are sacrificing reality to a pure shadow when for Edition: current; Page: [309] the sake of an abstraction, and in order to avoid a contingent and doubtful fluctuation of one-half per cent. in the standard of value, we promote, by the total exclusion of gold from circulation, that increase of the paper currency which alone can materially endanger that standard.

But even this objection may be removed by raising the mint-price of gold only to that rate which will render it almost impossible that its legal value should ever be higher than its market-price. We would therefore suggest the adoption, in the relative legal value of the gold and silver coins, of a ratio not much above that of 15.6 : 1, rather than one nearer to the average relative value of the two metals. As the exchange must rise more than one per cent. above the true par derived from the legal relative value which may be adopted before American gold coins can be exported, this would not take place to England until the exchange had risen to at least $4.81 per pound sterling. On the other hand, that ratio being lower than that of the relative value of gold and silver bullion either in England or in France, there would be no danger of the price of the gold falling below that of the silver coins. On the contrary, it is extremely probable that the gold coins would generally, as in France, command a small premium, and be used with great convenience as subsidiary to silver, which would remain, as heretofore, our standard of value. Either of the ratios of 2700 : 173 (equal to about 15.6069 : 1) and of 125 : 8 (equal to 15.625 : 1) would answer that purpose. According to the first, the weight of the eagle would be in standard gold 259.5, and according to the second 259.2, grains. The last ratio is the most simple, and is capable of a definite expression in decimals. The only advantage of the first, the expression of which, though less simple, is, however, perfectly definite, consists in making the corresponding value of the pound sterling almost equal to $4.75 (nearly 4.7505), which would afford much convenience in the calculations of duties and exchange. The corresponding value of the pound sterling, according to the second ratio, would be near $4.75.6. We think that, at all events, the ratio should not exceed that of 675 : 43 (nearly equal to 15.7 : 1), which would give two hundred and fifty-eight grains for the weight of the Edition: current; Page: [310] eagle in standard gold, and about $4.77.8 for the corresponding value of the pound sterling.1

Another consideration may be adduced in favor of the proposed reform of our gold coins. It seems to be well ascertained that the United States contain one of the most extensive deposits of gold that has yet been discovered. It extends from the central parts of Virginia, in a southwest direction, to the State of Alabama. It is said to have yielded the value of near half a million of dollars this year, and it is not improbable that it will ere long afford an annual produce of several millions. It appears but just to afford to those employed in collecting that natural product a certain and the highest home market of which it is susceptible. This cannot be the case so long as gold is only a merchandise for exportation, and will be effected by making it a current coin, and reducing the charge of coinage in the manner which has been before suggested. In every point of view, we consider this last measure, that of enabling the mint to pay immediately for the bullion, and of substituting, to the delay of two months, a small duty on the coinage not higher than its cost, as of no inconsiderable importance.

Great Britain, in adopting gold as the sole standard of value, has found it, however, absolutely necessary to admit silver coins for payments not exceeding forty shillings. This limitation would, it seems, have been sufficient for the object intended. But, whether in order to prevent the exportation, or only the better to assert the adherence to an abstract principle, the new silver coinage has been overrated about nine per cent. by coining the troy pound weight of standard silver into sixty-six instead of sixty-two shillings. This debased coin is attended with the same inconvenience as a paper currency issued by government. There is, on account of the profit, a temptation to issue too much, and no sure means can be found of ascertaining the amount wanted for effecting the payments to which that portion of the currency is applicable. It is worthy of remark that England, from a scrupulous adherence to a single standard, should have actually established two distinct standards of value, Edition: current; Page: [311] one for wholesale and the other for retail transactions. It is obvious that, since a debased coin can be neither profitably exported nor applied to other purposes, any considerable excess, beyond what is actually wanted for effecting small payments, must cause a depreciation. Should government be ever so moderate in its issues, the facility with which that coin may be, not counterfeited, but illegally imitated and put into circulation, must ultimately defeat the object intended. In the mean while, should the excess be such that the retailers of every description, who are obliged to take in payment silver inapplicable to wholesale purchases, could not dispose of the surplus, they must, to indemnify themselves, add something to their prices. We believe this to be already the fact, and that this, like every other depreciated currency, operates as a tax, which affects principally all those who are compelled to purchase everything by retail.

These two measures, suggested for the purpose of enlarging the circulating metallic currency, recommend themselves by their simplicity, and are founded on the beneficial experience of almost every other country. In Europe, England alone has resorted to a single standard, and that nominally, since her silver circulation amounts to eight millions sterling, or to more than one-third of her gold, and almost to one-third of her paper currency. We believe that small notes or tokens circulate no longer anywhere but in Russia, Sweden, and Scotland. The situation of two of those countries is in no wise parallel to that of the United States. Twenty-shilling notes continue to circulate in Scotland; but the solidity of the banking system of that country offers an anomaly which has not been satisfactorily explained. The numerous failures of country banks in England have been sometimes ascribed to their not being incorporated companies, which is disproved by the solidity of the numerous Scotch banks of the same description, and by the repeated failures of our own chartered banks, and sometimes to their not being permitted by law to consist of a sufficient number of partners. But of the twenty-nine banks of Scotland which are not chartered, seventeen are voluntary associations, consisting of from three to nineteen partners, the credit of which is as good Edition: current; Page: [312] as that of the other twelve unincorporated and of the three chartered banks of that country. We believe that, independent of the peculiarities which distinguish the Scotch banking system, its superior stability must be principally ascribed to the persevering but cautious enterprise, to the great frugality, and generally to the habits of that nation.1

It is difficult to devise the more direct means by which the over-issues of banks may be checked. Several of the States have as yet taken no measures to that effect. Many appear to have tried to apply rather penal than preventive remedies. The laws by which it has been attempted to limit either the loans or the issues made by the banks have generally been intended to prevent what never can take place. Amongst more than three hundred banks, either now existing or which have failed, and of which we have returns, we have not found a single one the loans of which amounted, so long as specie payments were in force, to three times, or the issues to twice, the amount of their capital. It is clear that provisions applicable to such improbable contingencies are purely nominal. The statements we have given show that the average amount of notes issued by the State banks does not, taken together, exceed forty-four per cent., nor the aggregate amount of their notes and deposits eighty-one per cent., of their capital. The loans made by those banks, of which we have returns in that respect, amount to 129,815,441, and their aggregate capital to 89,779,557 dollars. Those facts afford sufficient data to form an opinion of the necessary provisions in that respect. The restrictions can only be made in reference to the capital actually paid in, and apply to the amount of loans and issues, which, with the exception of deposits, are the only items that can be always limited by the banks. And the deposits, independent of being voluntary, could not without much inconvenience, both to the banks and their customers, be restricted to a fixed amount. We think that no bank should be permitted to extend its loans, including stocks of every description, and every species of debt in whatever manner secured, beyond twice the amount of its capital. We Edition: current; Page: [313] find provisions to that effect in the laws of Massachusetts and Louisiana. That proportion is forty per cent. greater than that of the banks above mentioned, and greater, as we think, than is consistent with the safety of almost any bank. The aggregate of the loans made and of the stocks owned by the former Bank of the United States never amounted to seventy per cent., nor that of the existing bank to fifty per cent., beyond the amount of their respective capitals. This restriction alone necessarily checks the aggregate amount of the issues and deposits of a bank; which, in that case, never can together exceed the amount of its capital, beyond the specie in its vaults, and the nominal value of its real estate. But we believe that a positive restriction on the issue of notes, so that they never should exceed two-thirds of the capital, would be highly beneficial. The only objection is with respect to country banks, which have not the same proportionate amount of deposits as the city banks, and may on that account claim a greater latitude with respect to notes. But it will be perceived by the following statement, which includes thirty banks of the State of New York that have more than three-fourths of the whole banking capital of the State, and all the chartered banks of Pennsylvania and Massachusetts, that, taking into consideration both notes and deposits, the proportion of these to the capital is far greater in the country than in the city banks. The relative proportions are, in New York and in Pennsylvania as seven to four, and in Massachusetts as three to two. A reduction in the amount of notes to two-thirds of that of the capital would not affect this State, and would still leave in Pennsylvania and New York the proportion of notes and deposits to capital much greater in the country than in the city banks. The circulation of these is, in both States, less than their capital. The restriction proposed would still leave the circulation of the country banks in Pennsylvania of 4,235,000 on a capital of 3,506,000 dollars, and in New York of 6,737,000 on a capital of 4,926,000 dollars.

City. Country.
Specie $747,684 $239,526
Capital 13,450,000 5,702,400
Notes $2,357,678 $2,160,000
Deposits 2,202,092 658,190
Circulation 4,559,770 2,818,190
Specie 1,639,134 775,537
Capital 9,903,930 3,506,403
Notes 3,648,719 3,659,650
Deposits 5,046,183 1,795,266
Circulation 8,694,902 5,454,916
New York,
Specie 1,169,581 390,710
Capital 10,711,200 4,926,153
Notes 3,394,257 4,567,023
Deposits 6,662,174 3,692,326
Circulation 10,056,431 8,259,349

We do not wish, by the preceding observations, to be understood as objecting generally to the extension of the banking system to the country, but only to the indiscriminate establishment of banks without regard to the actual wants and means of the districts which may apply for that purpose. There is a general spirit of enterprise in the United States, to which they are greatly indebted for their rapid growth, and it is difficult to ascertain in all cases to what extent it should be encouraged and when it ought to be checked. The remarks apply particularly to the newly-settled parts of the country, which present a state of things different from that found in any other part of the civilized world, and to which, therefore, even the most generally admitted principles of political economy will not always apply.

Amongst the first emigrants there are but few possessed of much capital, and these, generally employing it in the purchase of land, are soon left without any active resources. The great mass bring nothing with them but their industry and a small stock of cattle and horses. A considerable portion of the annual Edition: current; Page: [315] labor is employed in clearing, enclosing, and preparing the land for cultivation. Those difficulties and all the privations incident to their new situation are encountered with unparalleled spirit and perseverance. Within a very short time our numerous new settlements, which in a few years have extended from the Mohawk to the great Western lakes, and from the Alleghany to the Mississippi and beyond it, afford the spectacle of a large population with the knowledge, the intelligence, and the habits which belong to civilized life, amply supplied with the means of subsistence, but without any other active capital but agricultural products, for which, in many instances, they have no market. It is in this last respect that their situation essentially differs from that of any other country as far advanced in civilization. We might even add that there is, in several ancient settlements of the United States, a less amount of active capital than in the interior parts of many European countries. The national industry, out of the seaports, has, at least till very lately, been exclusively applied to agriculture, and circulating capital will rarely be created out of commercial cities without the assistance of manufactures.

With the greatest abundance of provisions, it is impossible for a new country to purchase what it does not produce unless it has a market for its own products. Specie is a foreign product, and, though one of the most necessary, is not yet always that which is most imperatively required. We may aver from our own knowledge that the western counties of Pennsylvania had not, during more than twenty years after their first settlement, the specie necessary for their own internal trade and usual transactions. The want of communications and the great bulk of their usual products reduced their exports to a most inconsiderable amount. The two indispensable articles of iron and salt, and a few others almost equally necessary, consumed all their resources. The principle, almost universally true, that each country will be naturally supplied with the precious metals according to its wants, did not apply to their situation. Household manufactures supplied the inhabitants with their ordinary clothing, and the internal trade and exchanges were almost exclusively carried on by barter. This effectually checked any Edition: current; Page: [316] advance even in the most necessary manufactures. Every species of business required the utmost caution, as any failure in the performance of engagements in the way of barter became, under the general law of the land, an obligation to pay money, and might involve the party in complete ruin. Under those circumstances even a paper currency, kept within proper bounds, might have proved useful. We know the great difficulties which were encountered by those who first attempted to establish the most necessary manufactures, and that they would have been essentially relieved and some of them saved from ruin by moderate bank loans. Yet there were instances where those difficulties were overcome, and the most successful manufactures of iron and glass were established and prospered prior to the establishment of any bank; but the general progress of the country was extremely slow, and might have been hastened by such institutions soberly administered. It is obvious that in this and other similar cases where there is an actual want of capital, this should, in order to insure success, be obtained from the more wealthy parts of the country, either by subscriptions to local banks or by the establishment of branches of the city banks.

Some of the first settlements in other parts of the country were, for a length of time, in a similar situation. The progress of others, under more favorable circumstances, has been much more rapid. The western parts of the State of New York have always enjoyed a nearer and more accessible market. The acquisition of Louisiana, the invention of steamboats, and the improved communications by land and water, have entirely changed the state of things west of the Alleghany Mountains. Still, and notwithstanding the unparalleled increase of population and the rapid progress in every respect of the new States or settlements, their wealth does not, in any degree, correspond either with that population or with their advances in agriculture. All new colonies, either from Europe to America or from the ancient settlements to the more interior part of America, have, under different modifications, been ever placed in a similar situation. To this must be ascribed the issues of paper money by the several States whilst under the colonial government. This currency, Edition: current; Page: [317] in many instances useful, was, as usual, often carried to excess, and depreciated accordingly. The same causes continue to produce similar effects. The eagerness for country banks is natural, but often mistakes its object. They may be safely established in flourishing towns or villages, either commercial or manufacturing, provided their issues are restrained within proper bounds. It is to the abuse, and not to the use, that we object. The profits of agriculture are so moderate, at least in the Middle States, and the returns so slow, that even loans on mortgages are rarely useful. But when made by banks on notes at sixty days, without any other substantial security than real estate, they never can be relied on as an immediate resource, and, when payment is urged, they almost always prove ruinous to the borrowers, and are often attended with heavy losses to the banks. The example of Pennsylvania has clearly shown that the calamities inflicted by the failures of country banks, established in unfit places, or for want of experience improperly administered, have been still more fatal to the inhabitants of the districts in which they were situated than to the State at large. It is well known that the same observation applies with equal, if not greater, force to other States than Pennsylvania.

The revised statutes of the State of New York, besides several salutary provisions for the bona fide payment of the stock subscribed, to prevent any dividend greater than the actual profits, and generally for the prevention of frauds, contain one of primary importance, adopted also in Maryland and some other States, by which the charter is forfeited whenever the bank refuses or declines to pay on demand its notes or deposits in specie. But the restriction on loans and discounts, which limits their amount to three times that of the capital, is purely nominal, and the responsibility imposed on stockholders, though already adopted in some other States, has been considered as objectionable. As a substitute, and with a laudable intent to protect the community against partial failures, a “safety fund” has since been established by law, consisting of a tax of one-half per cent. on the capital of every bank, and which is applicable to the payment of the notes of any that may fail. This must have a tendency to encourage excessive issues of paper, which could not Edition: current; Page: [318] be sustained if resting only on the credit of the bank by which they are made. But, unacquainted as we are with the reasons alleged in favor of that measure, it appears to us unjust, 1st, by making institutions properly managed responsible for the conduct of others at a great distance, and over which they have no control; 2d, because, on account of the disproportion between the aggregate of the circulation and deposits of the city and country banks respectively, the first are made to pay in the safety fund about twice as much in proportion as the country banks. This will appear evident by referring to the last statement, and does not accord with the principles of a government founded on the equal rights of all.1

One of the most efficient securities afforded by the State laws against improvident issues of notes is to be found in that of Massachusetts, by which banks are obliged to pay interest at the rate of 24 per cent. a year on all notes or deposits which they may neglect or refuse to pay in specie on demand. A similar provision, but at the rate of 12 per cent., has been enacted by the State of Louisiana, and is also inserted in the charter of the Bank of the United States. Another great guarantee against improper management is the obligation to make and publish annual statements of the situation of the banks. The mystery with which it was formerly thought necessary to conceal the operations of those institutions has been one of the most prolific causes of erroneous opinions on that subject, and of mismanagement on their part. It is highly desirable that this measure should be adopted in the States where those returns are not yet made obligatory. The annual statements of the Bank of the United States, and of the banks of all the New England States, of Pennsylvania, Virginia, Georgia, and others, to Congress, and to the States respectively, have in no instance injured any institution that was properly administered. Publicity is, in most cases, one of the best checks which can be devised; it inspires confidence and strengthens credit, whilst concealment begets distrust and often engenders unjust suspicions.

There is still another measure, better calculated perhaps than Edition: current; Page: [319] any other to give complete security against the danger of insolvency. It has been already observed that the original capital of the Bank of England, amounting to more than fourteen millions sterling, has been loaned to government, and, remaining in its hands, affords the best security to the holders of notes and to depositors. The propriety of extending a similar provision to country banks has been strongly urged in England; and the same measure, with respect to our banks generally, has also been suggested. It is quite practicable, and seems unobjectionable, in a country possessed of so large a capital as England, and where the large amount of public debt would enable the banks to comply with the condition without any difficulty. But this might not be practicable here, where the banking capital is much larger than the amount of all other public stocks, and we apprehend that mortgages on real estate must, if such provision becomes general, be resorted to for want of such stocks. We must also refer to our former observations respecting the nature of our banking capital. Should this be permanently vested in mortgages or stocks, the accommodations which the banks afford to individuals might be too much curtailed. If these objections can be removed, the plan proposed would give to the banking system of the United States a solidity, and inspire a confidence, which it cannot otherwise possess.

The constitutional powers of Congress on the subject are the next and principal object of inquiry.

We have already adverted to the provisions of the Constitution, which declare that no State shall either coin money, emit bills of credit, make anything but gold and silver coins a tender in payment of debts, or pass any law impairing the obligation of contracts, and which vest in Congress the exclusive power to coin money and to regulate the value thereof, and of foreign coin. It was obviously the object of the Constitution to consolidate the United States into one nation, so far as regarded all their relations with foreign countries, and that the internal powers of the general government should be applied only to Edition: current; Page: [320] objects necessary for that purpose, or to those few which were deemed essential to the prosperity of the country and to the general convenience of the people of the several States. Amongst the objects thus selected were the power to regulate commerce among the several States, and the control over the monetary system of the country.

This last-mentioned power is, and has ever been, one of primary importance. It is for want of such general power that Germany has always been inundated with coins often debased, and varying from state to state in standard and denomination; the same defect was found in the former United Provinces of the Netherlands; and the banks of deposit of Hamburg and Amsterdam were originally established for the purpose of correcting that evil. Even under the Articles of Confederation, Congress had already the sole and exclusive right and power of regulating the alloy and value of coins struck by their own authority, or by that of the respective States. It was on a most deliberate view of the subject that the same powers were confirmed and enlarged by the Constitution, and the individual States excluded from any participation which might interfere with the controlling power of the general government. With the exception of those which are connected with the foreign relations of the United States, either in war or in peace, there are no powers more expressly and exclusively vested in Congress of a less disputable nature, or of greater general utility, than those on the subject of currency. Arbitrary governments have, at various times, in order to defraud their creditors, debased the coin whilst they preserved its denomination, and thus subverted the standard of value by which the payment of public and private debts and the performance of contracts ought to have been regulated. This flagrant mode of violating public faith has been long proscribed by public opinion. Governments have, in modern times, substituted for the same purpose issues of paper money, gradually increasing in amount and decreasing in value. It was to guard against those evils that the provisions in the Constitution on that subject were intended, and it is the duty, not less than the right, of the United States to carry them into effect.

Edition: current; Page: [321]

The first paragraph of the eighth section of the first article provides that Congress shall have power “to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defence and general welfare of the United States; but all duties, imposts, and excises shall be uniform throughout the United States.”

It has sometimes been vaguely asserted, though, as we believe, never seriously contended, that the words “to provide for the common defence and general welfare” were intended and might be construed as a distinct and specific power given to Congress, or, in other words, that that body was thereby invested with a sweeping power to embrace within its jurisdiction any object whatever which it might deem conducive to the general welfare of the United States. This doctrine is obviously untenable, subversive of every barrier in the Constitution which guards the rights of the States or of the people, expressly contradicted by the tenth amendment, which provides that the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively or to the people, and tantamount to an assertion that there is no Constitution and that Congress is omnipotent. Mr. Jefferson stigmatizes this construction as “a grammatical quibble which has countenanced the general government in a claim of universal power. For (he adds) in the phrase to lay taxes to pay the debts and provide for the general welfare, it is a mere question of syntax whether the two last infinitives are governed by the first, or are distinct and co-ordinate powers; a question unequivocally decided by the exact definition of powers immediately following.”

The words “to provide for the common defence and general welfare of the United States” are as obligatory as any other part of the Constitution; they cannot be expunged, and must be so construed as to be effective. Mr. Jefferson did not deny this, which is indeed undeniable; and he only contended that the words did not convey a distinct power, but were governed by the preceding infinitive; that is to say, that this clause in the Constitution, instead of giving to Congress the three distinct powers, 1st, to lay taxes, &c.; 2dly, to pay the debts; 3dly, to provide Edition: current; Page: [322] for the common defence and general welfare of the United States, gave only that “to lay and collect taxes, duties, imposts, and excises in order to pay the debts and provide for the common defence and general welfare of the United States.” He states the question as one of syntax, susceptible of only two constructions; one which would give, as a distinct, a sweeping power inconsistent with the spirit and other express provisions of the Constitution, and which he accordingly rejects; the other, which he adopts, and which admits, but confines the application of the words “to provide for the general welfare” to the only power given by that clause, viz., that of laying taxes, duties, &c.

This appears to have been the construction universally given to that clause of the Constitution by its framers and contemporaneous expounders. Mr. Hamilton, though widely differing in another respect from Mr. Jefferson in his construction of this clause, agrees with him in limiting the application of the words “to provide for the general welfare” to the express power given by the first sentence of the clause. In his report on manufactures, he contends for the power of Congress to allow bounties for their encouragement, and, after having stated the three qualifications of the power to lay taxes, viz., 1st, that duties, imposts, and excises should be uniform throughout the United States; 2d, that no direct tax should be laid unless in proportion to the census; 3d, that no duty should be laid on exports; he argues on the constitutional question in the following words:

“These three qualifications excepted, the power to raise money is plenary and indefinite, and the objects to which it may be appropriated are no less comprehensive than the payment of the public debts and the providing for the common defence and general welfare. The terms ‘general welfare’ were doubtless intended to signify more than was expressed or imported in those which preceded; otherwise numerous exigencies, incident to the affairs of a nation, would have been left without a provision. The phrase is as comprehensive as any that could have been used, because it was not fit that the constitutional authority of the Union to appropriate its revenues should have been restricted within narrower limits than the ‘general welfare,’ and because Edition: current; Page: [323] this necessarily embraces a vast variety of particulars, which are susceptible neither of specification nor of definition.

“It is, therefore, of necessity left to the discretion of the national Legislature to pronounce upon the objects which concern the general welfare, and for which, under that description, an appropriation of money is requisite and proper. And there seems to be no room for a doubt that whatever concerns the general interests of learning, of agriculture, of manufactures, and of commerce are within the sphere of the national councils, as far as regards an application of money.

“The only qualification of the generality of the phrase in question which seems to be admissible is this, that the object to which an appropriation of money is to be made be general and not local; its operation extending, in fact, or by possibility, throughout the Union, and not being confined to a particular spot.

“No objection ought to arise to this construction from the supposition that it would imply a power to do whatever else should appear to Congress conducive to the general welfare. A power to appropriate money with this latitude, which is granted, too, in express terms, would not carry a power to any other thing not authorized in the Constitution, either expressly or by fair implication.”

Mr. Hamilton insisted that the power to lay and collect taxes and duties implied that of appropriating the money thus raised to any object which Congress might deem conducive to “the general welfare.” But he confines throughout the application of those words to the power given, as he understood it, by the first sentence of the clause. Mr. Jefferson, who agreed with him in that respect, denied altogether that the power to lay taxes implied that of applying the money thus raised to objects conducive to the general welfare. It cannot be objected to this construction, which is the most literal, that the words “for the general welfare” are thereby rendered of no effect. For there are several cases in which the laying a tax or duty does alone effect the object in view, without the aid of an appropriation or of any other distinct act of the Legislature. On that point, however, and on that alone, they differed. But it is foreign to Edition: current; Page: [324] the object now under consideration, and we do not mean to discuss it. All that is necessary for us is that, as admitted by both, the power to lay duties and taxes is vested in Congress, and may be exercised to provide (or in order to provide) for the general welfare of the United States, without any other limitation than the three qualifications specified by the Constitution, and above stated.

It has, indeed, been lately contended by some distinguished citizens that the words “general welfare” referred only to the powers expressly vested in Congress by the Constitution, or, in other words, that the power to lay duties and taxes could not be exercised but for the purpose of carrying into effect some of those specific powers. It seems to us that this, if intended, would have been distinctly expressed, instead of using the words “general welfare.” And, although it is undeniable that a constructive power cannot be legitimately claimed unless necessary and proper for carrying into execution or fairly implied in a power expressly delegated, we do not perceive why it should be necessary in order to justify the exercise of a power expressly given that it should be exercised in reference to another similar power. But we do not mean to discuss this question, which is also foreign to our object. Allowing, for the sake of argument, the validity of the objection, it does not apply to cases where the object in reference to which the duty or tax is laid is clearly embraced within the powers of the general government. Although, because the power to protect manufactures is not expressly vested in Congress, that to lay taxes in order to effect that object should be denied, the power of laying a tax or duty for the purpose of carrying into effect an express provision of the Constitution would still be undeniable.

Congress has the power to lay stamp duties on notes, on bank-notes, and on any description of bank-notes. That power has already been exercised, and the duties may be laid to such an amount and in such a manner as may be necessary to effect the object intended. This object is not merely to provide generally for the general welfare, but to carry into effect, in conformity with the last paragraph of the eighth section of the first article, those several and express provisions of the Constitution which Edition: current; Page: [325] vest in Congress exclusively the control over the monetary system of the United States, and more particularly those which imply the necessity of a uniform currency. The exercise of the power for that object is free of any constitutional objection, provided the duties thus laid shall be uniform and applied to the Bank of the United States as well as to the State banks. The act of laying and collecting the duties, which is expressly granted, is alone efficient to effect the object. As no appropriation of money is wanted for that purpose, the exercise of power which is required is purely that of laying duties, and it is not liable to the objection that to assert that the authority to lay taxes implies that of appropriating the proceeds is a forced construction. It is equally free of any objection derived from any presumed meaning of the words “general welfare,” since the power to lay duties will in this instance be exercised in order to carry into effect several expressed provisions of the Constitution having the same object in view. Congress may, if it deems it proper, lay a stamp duty on small notes, which will put an end to their circulation. It may lay such a duty on all bank-notes as would convert all the banks into banks of discount and deposit only, annihilate the paper currency, and render a bank of the United States unnecessary in reference to that object. But if this last measure should be deemed pernicious, or prove impracticable, Congress must resort to other and milder means of regulating the currency of the country. The Bank of the United States, as has already been shown, was established for that express purpose.

An act incorporating a bank is not an act either to raise or appropriate money. The power to establish the bank cannot in any way be founded on that clause of the Constitution which has reference to the general welfare of the United States. It is sanctioned exclusively by that clause which gives to Congress power to make all laws which shall be necessary and proper for carrying into execution any of the powers vested in the government of the United States. And the first object of inquiry is the meaning of the words “necessary and proper” in that clause.

We are aware that it has at times been suggested that the Edition: current; Page: [326] word “necessary,” in its strict sense, means “that without which the specific power cannot be carried into effect,” and ought to be so construed. If appeal be made to verbal criticism, it may be answered that, if such was the meaning of the word “necessary” in that sentence, the word “proper” would not have been added, since that which is necessary in that strict sense is of necessity proper. This last expression must, therefore, be taken in connection with the first; and since it was contemplated that what was called necessary might be proper or improper, the words “laws necessary and proper” do not appear to have been intended in that most limited sense, which implies absolute impossibility of effecting the object without the law, but to mean such laws as are fairly intended and highly useful and important for that purpose. We believe this to be the fair and to have been the uniform construction of the Constitution, and that indeed without which it could not have been carried into effect. In order to prove that this has ever been deemed the natural and clear construction, we will not resort to the establishment of light-houses, or to other numerous precedents, the authority of which may be disputed. We will appeal to the most general and important law of the United States, such as it was enacted from the first organization of the government under the Constitution, and to a provision in it which, under its various other modifications, has uninterruptedly and without any constitutional objection remained in force to this day.

The laws to lay and collect duties on imports require, and have always required, a variety of oaths, and particularly that of the importers and consignees, with respect to the correctness of the invoices of goods imported, both as to quantity and as to cost or value. Yet this provision, however useful and important, is not so absolutely necessary, in that strict sense of the word, as that the laws could not possibly be carried into effect without it. There are countries, France, for example, where those duties are efficiently collected without the assistance of similar oaths. This may be done at least as effectually by an appraisement of the merchandise as by resorting to the oaths of the parties. In point of fact, there has always been a discretionary power to appraise, which has lately been enlarged. Since Edition: current; Page: [327] it is on that provision and not on the oath that the ultimate reliance for the faithful collection of the duties is placed, those duties might be collected without the assistance of oaths, by substituting in every instance an appraisement or valuation. Oaths are not, therefore, necessary for the collection of duties, in that strict sense which is contended for; they are not that without which the duties could not be collected. The observation indeed applies to various other provisions of the revenue laws. Any one who will give them a perusal will find several implying powers not specially vested in Congress, the necessity of which was not absolute, and without which the object of the law might still have been effected. The oaths and various other provisions have been resorted to as means only highly useful, important, and proper, but not as being of absolute necessity for carrying the law into effect.1

Whenever it becomes the duty of Congress to carry into effect any of the powers expressly defined by the Constitution, it will generally be found that there are several means to effect the object. In that case, and whenever there is an option, each of the means proposed ought not to be successively objected to as not being strictly necessary because other means might be resorted to, since this mode of arguing would defeat the object intended, and prevent the passage of any law for carrying into effect the power which it was the duty of Congress to execute. If every provision of a revenue law was successively opposed on that ground, no efficient revenue law could be passed. In the present case it is proposed to resort either to a stamp duty or to a bank of the United States in order to regulate the currency. Unless some other equally efficient mode can be suggested, this important object will be defeated, if both means are successively rejected as not strictly necessary. But, on the other hand, the means proposed for carrying into effect any special or expressed power vested in Congress should be highly useful and important, Edition: current; Page: [328] having clearly and bona fide that object in view which is the avowed purpose, and not be intended, under color of executing a certain special power, for the purpose of effecting another object.

It was on this ground that the former Bank of the United States was at first opposed. That bank had not been proposed for the express purpose of regulating the currency, but as incident to the powers of regulating commerce, of collecting the revenue, of the safe-keeping of public moneys, and, generally, of carrying on the operations of the Treasury. There had been at that time but three banks established in the United States; their operations were confined within a very narrow sphere; there had been no experience in the United States of the utility of a bank in assisting the operations of government, but that which, during a short time, had been afforded by the Bank of North America, incorporated, in the first instance, by Congress, under the Articles of Confederation. The Bank of the United States was considered by its opponents as not being intended for the purpose alleged, but as having for its object the consolidation of a moneyed aristocracy, and to further the views at that time ascribed to a certain party and to its presumed leader. And the fears then excited respecting that object, and the supposed influence of the bank in promoting it, though long since dissipated, have left recollections and impressions which may still have some effect on public opinion in relation to the constitutional question.

Experience, however, has since confirmed the great utility and importance of a bank of the United States in its connection with the Treasury. The first great advantage derived from it consists in the safe-keeping of the public moneys, securing, in the first instance, the immediate payment of those received by the principal collectors and affording a constant check on all their transactions, and afterwards rendering a defalcation in the moneys once paid, and whilst nominally in the Treasury, absolutely impossible. The next and not less important benefit is to be found in the perfect facility with which all the public payments are made by checks or Treasury drafts, payable at any place where the bank has an office; all those who have demands against government Edition: current; Page: [329] are paid in the place most convenient to them, and the public moneys are transferred through our extensive territory, at a moment’s warning, without any risk or expense, to the places most remote from those of collection, and wherever public exigencies may require. From the year 1791 to this day the operations of the Treasury have, without interruption, been carried on through the medium of banks; during the years 1811 to 1816, through the State banks; before and since, through the Bank of the United States. Every individual who has been at the head of that Department, and, as we believe, every officer connected with it, has been made sensible of the great difficulties that must be encountered without the assistance of those institutions, and of the comparative ease and great additional security to the public with which their public duties are performed through the means of the banks. To insist that the operations of the Treasury may be carried on with equal facility and safety through the aid of the State banks without the interposition of a bank of the United States, would be contrary to fact and experience. That great assistance was received from the State banks, while there was no other, has always been freely and cheerfully acknowledged. But it is impossible, in the nature of things, that the necessary concert could be made to exist between thirty different institutions; and in some instances heavy pecuniary losses, well known at the seat of government, have been experienced. To admit, however, that State banks are necessary for that purpose, is to give up the question. To admit that banks are indispensable for carrying into effect the legitimate operations of government, is to admit that Congress has the power to establish a bank. The general government is not made by the Constitution to depend for carrying into effect powers vested in it on the uncertain aid of institutions created by other authorities and which are not at all under its control. It is expressly authorized to carry those powers into effect by its own means, by passing the laws necessary and proper for that purpose, and in this instance by establishing its own bank, instead of being obliged to resort to those which derive their existence from another source and are under the exclusive control of the different States by which they have been established.

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It must at the same time be acknowledged that, inasmuch as the revenue may be collected and the public moneys may be kept in public chests and transferred to distant places without the assistance of banks, and as all this was once done in the United States, and continues to be done in several countries, without any public bank, it cannot be asserted that those institutions are absolutely necessary for those purposes, if we take the word “necessary” in that strict sense which has been alluded to. All this may be done, though with a greater risk and in a more inconvenient and expensive manner. Public chests might be established, and public receivers, or sub-treasurers, might be appointed, in the same places where there are now offices of the Bank of the United States, and specie might be transported from place to place, as the public service required it, or inland bills of exchange purchased from individuals.1 The superior security and convenience afforded by the bank in the fiscal operations of government may not be considered as sufficient to make its establishment constitutional, in the opinion of those who construe the word “necessary” in that strict sense.

But it is far from being on that ground alone that the question of constitutionality is now placed. It was not at all anticipated, at the time when the former Bank of the United States was first proposed, and when constitutional objections were raised against it, that bank-notes issued by multiplied State banks, gradually superseding the use of gold and silver, would become the general currency of the country. The effect of the few banks then existing had not been felt beyond the three cities where they had been established. The States were forbidden by Edition: current; Page: [331] the Constitution to issue bills of credit; bank-notes are bills of credit to all intents and purposes, and the State could not do through others what it was not authorized to do itself; but the bank-notes, not being issued on the credit of the States, nor guaranteed by them, were not considered as being, under the Constitution, bills of credit emitted by the States. Subsequent events have shown that the notes of State banks, pervading the whole country, might produce the very effect which the Constitution had intended to prevent by prohibiting the emission of bills of credit by any State. The injustice to individuals, the embarrassments of government, the depreciation of the currency, its want of uniformity, the moral necessity imposed on the community either to receive that unsound currency or to suspend every payment, purchase, sale, or other transaction incident to the wants of society, all the evils which followed the suspension of specie payments have been as great, if not greater, than those which might have been inflicted by a paper currency issued under the authority of any State. We have already adverted to the several provisions of the Constitution which gave to Congress the right and imposed on it the duty to provide a remedy; but there is one which deserves special consideration.

Whatever consequences may have attended the suspension of specie payments in Great Britain, there still remained one currency which regulated all the others. All the country bankers were compelled to pay their own notes, if not in specie at least in notes of the Bank of England. These notes were, as a standard of value, substituted for gold; and if the currency of the country was depreciated and fluctuating in value from time to time, it was at the same time uniform throughout the country. There was but one currency for the whole, and every variation in its value was uniform as to places, and at the same moment operated in the same manner everywhere. But the currency of the United States, or, to speak more correctly, of the several States, varied, during the suspension of specie payments, not only from time to time, but at the same time from State to State, and in the same State from place to place. In New England, where those payments were not discontinued, the currency was equal in value to specie; it was at the same time at a discount Edition: current; Page: [332] of seven per cent. in New York and Charleston, of fifteen in Philadelphia, of twenty and twenty-five in Baltimore and Washington, with every other possible variation in other places and States.

The currency of the United States, in which the public and private debts were paid and the public revenue collected, not only was generally depreciated, but was also defective in respect to uniformity. Independent of all the other clauses in the Constitution which relate to that subject, it is specially provided, 1st, that all duties, imposts, and excises shall be uniform throughout the United States; 2d, that representative and direct taxes shall be apportioned among the several States according to their respective numbers, to be determined by the rule therein specified; and that no capitation or other direct tax shall be laid, unless in proportion to the enumeration. Both these provisions were violated whilst the suspension of specie payments continued. It is clear that after the quota of the direct tax of each State had been determined according to the rule prescribed by the Constitution, it was substantially changed by being collected in currencies differing in value in the several States. It is not less clear that the clause which prescribes a uniformity of duties, imposts, and excises was equally violated by collecting every description of indirect duties and taxes in currencies of different value. The only remedy existing at that time was the permission to pay direct and indirect taxes in Treasury notes. But those notes did not pervade every part of the country in the same manner as bank-notes; they were of too high denomination to be used in the payment of almost any internal tax; they were liable also to vary in value in the different States; and they could operate as a remedy only as long as their depreciation was greater than that of the most depreciated notes in circulation.

We will now ask whether, independent of every other consideration, Congress was not authorized and bound to pass the laws necessary and proper for carrying into effect with good faith those provisions of the Constitution? and whether that could or can be done in any other manner than either by reverting to a purely metallic, or by substituting a uniform paper Edition: current; Page: [333] currency to that which had proved so essentially defective in that respect, and which, from its not being subject to one and the same control, is, and forever will be, liable to that defect? The uniformity of duties and taxes of every description, whether internal or external, direct or indirect, is an essential and fundamental principle of the Constitution. It is self-evident that that uniformity cannot be carried into effect without a corresponding uniformity of currency. Without laws to this effect, it is absolutely impossible that the taxes and duties should be uniform, as the Constitution prescribes; such laws are therefore necessary and proper, in the most strict sense of the words. There are but two means of effecting the object, a metallic or a uniform paper currency. Congress has the option of either; and either of the two which may appear the most eligible will be strictly constitutional, because strictly necessary and proper for carrying into effect the object. If a currency exclusively metallic is preferred, the object will be attained by laying prohibitory stamp duties on bank-notes of every description and without exception. If it is deemed more eligible under existing circumstances, instead of subverting the whole banking system of the United States, and depriving the community of the accommodations which bank loans afford, to resort to less harsh means; recourse must be had to such as will insure a currency sound and uniform itself, and at the same time check and regulate that which will continue to constitute the greater part of the currency of the country.

Both those advantages were anticipated in the establishment of the Bank of the United States, and it appears to us that the bank fulfils both those conditions. As respects the past, it is a matter of fact that specie payments were restored and have been maintained through the instrumentality of that institution. It gives a complete guarantee that under any circumstances its notes will preserve the same uniformity which they now possess. Placed under the control of the general government, relying for its existence on the correctness, prudence, and skill with which it shall be administered, perpetually watched and occasionally checked by both the Treasury Department and rival institutions, and without a monopoly, yet with a capital and resources adequate Edition: current; Page: [334] to the object for which it was established, the bank also affords the strongest security which can be given with respect to paper not only for its ultimate solvency, but also for the uninterrupted soundness of its currency. The statements we have given of its progressive and present situation show how far those expectations have heretofore been realized.

Those statements also show that the Bank of the United States, wherever its operations have been extended, has effectually checked excessive issues on the part of the State banks, if not in every instance, certainly in the aggregate. They had been reduced, before the year 1820, from sixty-six to less than forty millions. At that time those of the Bank of the United States fell short of four millions. The increased amount required by the increase of population and wealth during the ten ensuing years has been supplied in a much greater proportion by that bank than by those of the States. With a treble capital, they have added little more than eight millions to their issues. Those of the Bank of the United States were nominally twelve, in reality about eleven, millions greater in November, 1829, than in November, 1819. The whole amount of the paper currency has during those ten years increased about forty-five, and that portion which is issued by the State banks only twenty-two and a half per cent. We have, indeed, a proof, not very acceptable, perhaps, to the bank, but conclusive of the fact, that it has performed the office required of it in that respect. The general complaints on the part of many of the State banks, that they are checked and controlled in their operations by the Bank of the United States, that, to use a common expression, it operates as a screw, is the best evidence that its general operation is such as had been intended. It was for that very purpose that the bank was established. We are not, however, aware that a single solvent bank has been injured by that of the United States, though many have undoubtedly been restrained in the extent of their operations much more than was desirable to them. This is certainly inconvenient to some of the banks, but in its general effects is a public benefit to the community.

The best way to judge whether, in performing that unpopular Edition: current; Page: [335] duty, the Bank of the United States has checked the operations of the State banks more than was necessary, and has abused, in order to enrich itself at their expense, the power which was given for another purpose, is to compare their respective situations in the aggregate. In order to avoid any erroneous inference, we will put out of question those banks of which we could only make an estimate, and compare with that of the United States those only of which we have actual returns.

The profit of banks beyond the interest on their own capital consists in that which they receive on the difference between the aggregate of their deposits and notes in circulation and the amount of specie in their vaults. We have given the aggregate situation for the end of the year 1829 of 281 banks, with a capital of 95,003,557 dollars, the deposits and circulating notes of which amounted together to $71,706,033
from which deducting the specie in their vaults, 11,989,643
leaves for the said difference $59,716,390

or 62.8 per cent. on their capital.

The notes in circulation of the Bank of the United States (adding one million for its drafts in circulation) amounted, in November, 1829, to $14,042,984, and together with the deposits to $28,827,793
from which deducting the specie in its vaults, 7,175,274
leaves for the difference $21,652,519

or 61.8 on its capital.

It is clear that those State banks, taken in the aggregate, have no just reason to complain, since that of the United States imposes no greater restraints on them than on itself. It will also be perceived that it had in specie more than one-fifth part of the aggregate of its notes in circulation and deposits, whilst the State banks had little more than one-sixth; and the Bank of the United States had in addition a fund of about one million of dollars in Europe. The difference would have been more striking had we taken a view of the situation of all the State banks, including those on estimate; for the difference between the aggregate of their notes and deposits and their specie is 67¼ on their capital.

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This view of the subject applies to the present time, when the Bank of the United States has surmounted the difficulties which it had in its origin to encounter, and has reached a high degree of prosperity. It did not go into operation till the commencement of the year 1817, and such were the losses which it first experienced that its dividends during the first six years of its existence fell short of 3½ per cent. a year. The dividend has since gradually increased from 5 to 7 per cent.; but the average during the thirteen years and a half ending on the 1st of July, 1830, has been but 488/100 per cent. a year. An annual dividend of about 9 per cent. during the residue of the time to which the charter is limited would be necessary in order that the stockholders should then have received, on an average, 6 per cent. a year on their capital. The dividends of the State banks vary too much, and our returns are too imperfect in that respect, to enable us to estimate the average; but it has certainly far exceeded that of the Bank of the United States.

The manner in which the bank checks the issues of the State banks is equally simple and obvious. It consists in receiving the notes of all those which are solvent and requiring payment from time to time, without suffering the balance due by any to become too large. Those notes on hand, taking the average of the three and a half last years, amount always to about a million and a half of dollars; and the balances due by the banks in account current (deducting balances due to some) to about nine hundred thousand. We think that we may say that on this operation, which requires particular attention and vigilance and must be carried on with great firmness and due forbearance, depends almost exclusively the stability of the currency of the country.

The President of the United States has expressed the opinion that the bank had failed in the great end of establishing a uniform and sound currency, and has suggested the expediency of establishing “a national bank, founded upon the credit of the government and its revenues.” He has clearly seen that the uniformity of the currency was a fundamental principle derived from the Constitution, and that this, unless the United States reverted to a purely metallic currency, could not be effected Edition: current; Page: [337] without the aid of a national bank. But it appears to us that the objection of want of uniformity, which may be supported in one sense, though not in the constitutional sense, of the word, applies generally to a paper currency, and not particularly to that which is issued by the Bank of the United States. And although we are clearly of opinion that the United States at large are entitled to the pecuniary profit arising from the substitution of a paper for a metallic currency, we are not less convinced that this object cannot be attained in a more eligible way and more free of objections than through the medium of a national bank constituted on the same principles as that now existing. On both those topics we will make but few observations, those branches of the subject having been nearly exhausted in their report by the committee of the House of Representatives.

It has already been observed that the substitution of paper to gold and silver is a national benefit, in as far as it brings into activity an additional circulating capital equal to the difference between the amount of paper and that of the reserve in specie necessary to sustain the par value of that paper. But it is clear that the community derives no other immediate benefit from the substitution than the accommodations which the banks are thereby enabled to afford, and for which the borrowers pay the usual rate of interest. The immediate profit derived from the paper currency is received exclusively by the banks,—about three-fourths by the State banks, and one-fourth by that of the United States. So far as relates to profit, it is only to that one-fourth part of the whole that the measures of the general government are intended to apply. Several of the States, by levying a tax on the capital or on the dividends of their own banks, receive the public share of those profits. Other States have resorted to the mode suggested by the President, and have established banks of the State exclusively founded on its resources and revenue.

The proposition has not been suggested to resort to a third, though the most simple, mode: that of issuing, without the aid or machinery of any bank whatever, a government paper payable on demand in specie. We unite in considering it altogether inadmissible. Government may put its paper in circulation by Edition: current; Page: [338] lending it, like banks, to individuals; and this is, in fact, the proposition which has been suggested. But unless this mode is adopted, to issue paper in any other way is to borrow money; and the United States at this time wish to discharge and not to contract a debt. Nor would such a paper, without a mixture of banking operations, control in the least the issues of State banks and assist in establishing a general sound currency.

The general objections to a paper issued by government have already been stated at large. Yet it must be admitted that there may be times when every other consideration must yield to the superior necessity of saving or defending the country. If there ever was a time or a cause which justified a resort to that measure, it was the war of the independence. It would be doing gross injustice to the authors of the Revolution and founders of that independence to confound them with those governments which, from ambitious views, have, without necessity, inflicted that calamity on their subjects. The old Congress, as the name purports, were only an assembly of plenipotentiaries delegated by the several colonies or States. They could only recommend, and had not the power to lay taxes; the country was comparatively poor; extraordinary exertions were necessary to resist the formidable power of Great Britain; those exertions were made, and absorbed all the local resources; the paper money carried the United States through the most arduous and perilous stages of the war; and, though operating as a most unequal tax, it cannot be denied that it saved the country. Mr. Jefferson was strongly impressed with the recollection of those portentous times when, in the latter end of the year 1814, he suggested the propriety of a gradual issue by government of two hundred millions of dollars in paper. He had, from the imperfect data in his possession, greatly overrated the amount of paper currency which could be sustained at par; and he had, on the other hand, underrated the great expenses of the war. Yet we doubt whether, in the state to which the banks and the currency had been reduced, much greater issues of Treasury notes, or other paper not convertible at will into specie, would not have become necessary if the war had been of much longer continuance. It is to be hoped that a similar state of things will not again occur; Edition: current; Page: [339] but, at all events, the issue of a government paper ought to be kept in reserve for the extraordinary exigencies.

The proposition then recurs to issue a paper currency payable on demand in specie through the medium of a bank founded on the revenue of the United States; or, in other words, to convert the general government or its Treasury Department into a banking institution. The experiment has been made in four of the States, and may have succeeded on a smaller scale, and where all the agents are personally known to government and are not merely in name but in reality under its immediate superintendence. But if thirty-five millions of dollars are to be placed at the disposal of three hundred bank directors selected by the government of the United States and living in twenty-five different States or Territories, with the authority to contract debts in behalf of the public to an equal amount and to lend the whole to individuals at their discretion, we must inquire how and over whom that enormous power will be exercised. However they may have differed with respect to removals from office, the various Administrations, with some exceptions commanded by the public interest, have all preferred, in appointing to office, their friends to their opponents; and in making the selections at a distance there is not perhaps, out of ten officers who are appointed, one who is personally known either to the President or to any of the heads of the Departments. It is morally impossible that the direction of the branches of the proposed bank should not fall into the hands of men generally selected from political considerations, often of a local nature. Without salary or any personal interest in the concern intrusted to their care, they would also be altogether irresponsible. The duties of the other officers of government may always be, and always are, defined by law; for any wilful official misconduct, for any act of oppression towards individuals, they may be prosecuted and punished. But the power vested in a bank director is in its nature discretionary, and error of judgment may always be pleaded for having improperly granted or withdrawn an accommodation. The exercise of that arbitrary power over the property and private concerns of individuals would be so odious that, if the attempt was made, we are confident that it would not be Edition: current; Page: [340] long tolerated. Considered as a source of profit, which is its only recommendation, it is equally obvious that the plan could not succeed; that whenever there was a temporary pressure and what is called a want of money, the debtors would ask and obtain relief, and that the same measure of indulgence would gradually be extended to every quarter of the Union. It seems indeed self-evident that a government constituted like that of the United States cannot by itself manage and control a banking system spread over their extensive territory; and we know, on the other hand, that the same object may be attained through the means of a bank governed and controlled as that of the United States. It may be added that, if an objection is raised against that institution because the power to incorporate a bank is not expressly granted by the Constitution, it appears to be equally applicable to the plan that has been suggested; since there is no clause in that instrument that expressly authorizes the government of the United States to discount the notes of individuals or to become a trading company.

The United States are, however, justly entitled to participate in the advantages which the bank derives from its charter, by being permitted to issue paper and to extend its operations over the whole country; and that institution must also be allowed, in addition to the usual interest on its capital, a reasonable profit, since it incurs all the risks and is liable for all the losses incident to those operations. The government receives already a portion of the profits in the shape of those services which are rendered here gratuitously, and form in England no inconsiderable part of the benefit allowed to the bank. But for the residue we would prefer to a bonus either a moderate interest on the public deposits or a participation in the dividends when exceeding a certain rate. There can be no doubt that, independent of perfect security, the United States would in that way derive greater pecuniary advantages than from any bank managed by its own officers.

In order to attain perfect uniformity, the value of a paper currency should in the United States be always the same as that of the gold and silver coins of which it takes the place. It is impossible to fulfil that condition better than by making Edition: current; Page: [341] that currency payable on demand in specie and at par. This cannot be done but at certain places designated for that purpose. The holder of a bank-note cannot at any other place give such note in payment of a debt, or exchange it for specie, without the consent of another party. Strictly speaking, it is not, therefore, at any other place of the same value with specie. This is equally true of any bank-note or convertible paper in any other country. A note of the Bank of England, being only payable in London, will not be of the same value with gold or silver in Scotland, Ireland, or even at Liverpool, unless the exchange between those places respectively and London should be at par. This defect is inherent to every species of paper currency, even when payable on demand. There were three hundred and twenty-nine State banks and twenty-two offices of the Bank of the United States in operation on the 1st of January, 1830. We had, therefore, three hundred and fifty-one distinct currencies, all convertible into specie, but each at different places. A note of the Bank of the United States or of the Bank of North America, both payable at Philadelphia, was no more exchangeable for gold or silver at Bedford, in Pennsylvania, than at Cincinnati; the only difference consisting in the greater distance from the place of payment, which renders a fluctuation in the rate of exchange more probable. When, therefore, it is objected as a want of uniformity that the notes issued by the Bank of the United States and its several offices are not indiscriminately made payable at every one of those places, the objection does not go far enough. In order to attain perfect uniformity, or to render those notes everywhere precisely equal in value to specie, they should be made payable at every town or village in the United States. But although it may be admitted that the notes of the Bank of the United States now consist nominally of twenty-four currencies, each payable at a distinct place, they still fulfil the condition of uniformity required by the Constitution; and the defect complained of is not peculiar to them, but would equally attach to any other possible species of bank-notes or paper currency.

Those notes, wherever made payable, are, by the charter, receivable in all payments to the United States; and as the bank Edition: current; Page: [342] is obliged, without any allowance on account of difference of exchange, to transfer the public funds from place to place within the United States, any loss arising from that cause falls on the institution. For that purpose, therefore, all the notes issued by the bank constitute but one uniform currency, with which all the duties, taxes, imposts, and excises may be paid. Not only the condition of uniformity imposed by the Constitution is strictly fulfilled, but by far the greater part of the notes which may happen to circulate out of the States in which they are made payable is also absorbed by that operation. The objection is reduced to the simple fact that individuals who may still hold such notes cannot always exchange them at par at a place distant from that where they are payable. In answer to this it must, in the first place, be observed that notes are never found in that situation but by the act of the parties themselves. The banks and its officers never issue or make payments in notes payable at another place than that of issue but at the request of individuals whose convenience it may suit to apply for such notes. Through whatever channel a man residing in New Orleans may have come in possession of ten thousand dollars in notes payable at Charleston, it has always been with his own consent, and never by the act of the bank. When this objection is made, what in fact is complained of is, that the bank will not, or cannot, transfer the funds of individuals, as well as those of the public, from place to place gratuitously,—an operation which has no connection with the uniformity of currency. Supposing there were no bank-notes in circulation and there was no other but a uniform metallic currency, the man who had taken a cargo of flour from Louisville to New Orleans must, in order to transfer the proceeds back to Louisville, either have purchased a bill of exchange or transported the specie. This he may still do since the institution of the bank; and he has no more right to ask from the office at New Orleans to give him in exchange for the specie bank-notes payable at Louisville, than to require that it should pay the freight of his flour from Louisville to New Orleans.

But supposing there was any weight in the objection, it is inherent to the nature of a paper which cannot, in that respect, Edition: current; Page: [343] be made better than a metallic currency. If A contracts to pay a certain sum to B, it must be at a certain specified place. He cannot engage to do it at five or six different places at the option of B, since it would compel him to provide funds at all those different places, and therefore to five or six times the amount of his debt. It is true that the Bank of the United States has, through its extensive dealings in exchange, facilities to give accommodations in that respect which no individual can have. But it is its interest to extend, as far as is safe and practicable, the circulation of its notes, and one of the best means to effect that object is to pay everywhere their notes, wherever issued, whenever that is practicable. The five-dollar notes are already made thus payable; and, in reality, payment of notes of every denomination, wherever made payable, is rarely refused at any of the offices. The bank may be safely relied on for giving the greatest possible extension to a species of accommodation which it is its interest to give; but the condition can never be made obligatory either on that institution or on any other bank, by whatever name designated or on whatever principle constituted, without endangering its safety. It is obvious that no bank which has branches can have funds at every place sufficient to meet a sudden demand for the payment of a large amount of notes payable elsewhere which may fortuitously or designedly have accumulated at some one place. Even supposing this to be practicable, the condition imposed must necessarily occasion an additional expense, much greater than the benefit derived from it; and if this was done through the means of a bank founded on the public revenue, it would be a tax laid on the community for the advantage of a few individuals.

A similar objection has been made with respect to the dealings in domestic exchange of the bank. These consist of two correlative but distinct operations. The bank purchases at Philadelphia and at every one of its offices bills of exchange payable at different dates and on all parts of the United States where there are such offices, and the bank and its offices sell their drafts on each other payable at sight. The amount of both has been progressively increasing to the great convenience of the public. That of bills of exchange was 29,335,254 and that of Edition: current; Page: [344] bank drafts 24,384,232 dollars during the year 1829. In the same year the transfers of public moneys which are effected by Treasury drafts, analogous to bills of exchange at sight, have amounted to 9,066,000 dollars. The three items together make a total of 62,785,486 dollars transmitted by the bank in one year through the medium of bills and drafts, which are thus substituted to the transportation of specie to the same amount. The purchase of bills of exchange is an operation similar, as relates to interest, to the discounting of notes. The interest accruing from the time of purchase or discount to that when they become due is equally allowed in both cases. Deducting this, the gross profit on the purchase of bills, arising from the rate of exchange at which they were purchased, amounted, in the year 1829, to 227,224 dollars, or less than three-fourths per cent. The premiums on the sale of bank drafts amounted to 42,826 dollars; but to this must be added the interest accruing on the drafts actually in circulation, and which, estimating, as before stated, the time during which, on an average, they remain so, at fifteen days, amounts to near sixty-one thousand dollars. The profit on those drafts is therefore near one hundred and four thousand dollars, or about three sevenths per cent. The interest lost by the bank on the Treasury drafts is from fifteen to twenty thousand dollars, and the charges for transportation of specie, postage, and incidental expenses amounted, in the year 1829, to 49,847 dollars. The net profit of the bank on the aggregate of those transactions is, therefore, about two hundred and sixty-four thousand dollars, or a fraction more than two-fifths per cent. on the whole amount.

There is not, it is believed, a single country where the community is, in that respect, served with less risk or expense. It is obvious that no one will sell his bills to the bank unless that institution purchases them at a higher or at least as high rate as any other person, and that no one will purchase its drafts unless they are as cheap as any others at market or are considered safer. There is no other ground of complaint, unless it be that the bank can afford to purchase bills dearer and to sell its drafts cheaper than anybody else. This is certainly a public benefit, and the only consideration which has been urged Edition: current; Page: [345] with some degree of plausibility is, that one of the reasons which enables the bank to obtain a higher price for its drafts is the greater degree of security which they offer, whilst at the same time its peculiar situation would enable it to sell them cheaper than other persons. Without admitting the validity of this observation or denying that the current rate of exchange ought to regulate the price of those drafts, we would wish that they might be sold at par whenever it happens that the operation, from the situation of its funds, is in no degree inconvenient to the bank. Government receives its full share of the profits on those operations. As its business is done gratuitously, it not only saves the interest, as above stated, but also the premium which it would otherwise have to pay on the sale of its drafts. This, calculated at the same rate as for other bills of exchange, would amount to more than seventy, and together with the interest to about ninety, thousand dollars a year.

We have also heard complaints made against the purchase of foreign bills by the bank at the South, and the sale of their own bills on Europe at the East. That this may interfere with the business of capitalists who deal in exchange is true; but the principal public consideration seems to be whether the bank confers a benefit on the Southern planters or merchants by entering into competition for the purchase of their bills, and on the public by offering for sale cheaper or safer means of making remittances abroad. Another great advantage is found in the facility thereby afforded to the bank of having a fund in England on which it receives interest, and which, on an emergency, answers the same purpose as specie. That branch of business, either for the year 1829 or for the average of that and the two preceding years, amounted to 3,580,000 dollars.

The principal advantages derived from the Bank of the United States, which no State bank and, as it appears to us, no bank established on different principles could afford, are, therefore, first and principally, securing with certainty a uniform and, as far as paper can, a sound currency; secondly, the complete security and great facility it affords to government in its fiscal operations; thirdly, the great convenience and benefit accruing to the community from its extensive transactions in domestic Edition: current; Page: [346] bills of exchange and inland drafts. We have not adverted to the aid which may be expected from that institution in time of war, and which should, we think, be confined to two objects:

First. The experience of the last war has sufficiently proved that an efficient revenue must be provided before or immediately after that event takes place. Resort must be had for that purpose to a system of internal taxation not engrafted on taxes previously existing, but which must be at once created. The utmost diligence and skill cannot render such new taxes productive before twelve or eighteen months. The estimated amount must be anticipated, and advances to that extent, including at least the estimated proceeds of one year of all the additional taxes laid during the war, may justly be expected from the Bank of the United States.

Secondly. It will also be expected that it will powerfully assist in raising the necessary loans, not by taking up on its own account any sum beyond what may be entirely convenient and consistent with the safety and primary object of the institution, but by affording facilities to the money-lenders. Those who in the first instance subscribe to a public loan do not intend to keep the whole, but expect to distribute it gradually with a reasonable profit. The greatest inducement in order to obtain loans on moderate terms consists in the probability that, if that distribution proceeds slower than had been anticipated, the subscribers will not be compelled, in order to pay their instalments, to sell the stock, and, by glutting the market, to sell it at a loss; and the assistance expected from the bank is to advance, on a deposit of the scrip, after the two first instalments have been paid, such portions of each succeeding payment as may enable the subscribers to hold the stock a reasonable length of time. As this operation may be renewed annually, on each successive loan, whilst the war continues, the aid afforded in that manner is far more useful than large direct advances to government, which always cripple the resources and may endanger the safety of a bank.

Edition: current; Page: [347]



It has already been observed that the intrinsic value and average market price of current coins are greater than those of bullion of the same weight and standard, and that the difference is, on account of the greater comparative expense of coinage, greater with respect to silver than to gold coins. The ratio of 15.7 to 1 is nearly that of gold to silver bullion in France, and it has been found to correspond, during a long period, with the market price in that country; whilst the average price of the gold and silver coins has been in the ratio of about 15.6 to 1, making a difference of about ⅝ per cent. between the two ratios. The English market is, with respect to silver, much more uncertain, from the want of a constant demand and uniform mint price. Silver is accordingly exported in preference to France, and gold to England. The respective prices, as quoted in England, give the ratio of gold coins to silver bullion. If this average ratio is taken at 15.85 to 1, and the average English market price of standard gold bullion at 77|7½, the ratio of gold to silver bullion will be found to be less than 15.8 to 1; and, making the above-mentioned allowance of ⅝ per cent. for the difference between the two ratios, that of gold to silver coins, as declared from the British average market prices, does not exceed 15.7 to 1. It is in order to guard against any exportation of silver in preference to gold coins, and any possible danger of altering the present standard of value, that we are desirous that this ratio should not be exceeded. The premium on gold coins in France has, in the text, been generally rated at one-half per cent. The true average taken for six years was only one-third per cent.

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Chiefly extracted from the Report of the Select Committee of the House of Commons on Promissory Notes of Scotland and Ireland, May 26, 1826.


“There are at present thirty-two banks in Scotland, three of which are incorporated by Act of Parliament, or by royal charter, viz., the Bank of Scotland, the Royal Bank of Scotland, and the bank called the British Linen Company.

“The National Bank of Scotland has 1238 partners.

“The Commercial Bank of Scotland has 521.

“The Aberdeen Town and County Bank has 446.

“Of the remaining banks, there are three in which the number of partners exceeds 100, six in which the number is between 20 and 100, and seventeen in which the number falls short of 20.

“The greater part of the Scotch banks have branches in connection with the principal establishment, each branch managed by an agent acting under the immediate directions of his employers, and giving security to them for his conduct.

“The Bank of Scotland had, at the date of the last return received by your committee, sixteen branches, established at various periods between the year 1774 and the present.

“The British Linen Company had twenty-seven branches.

“The Commercial Banking Company in Edinburgh, thirty-one.

“The total number of branches established in Scotland from the southern border to Thurso, the most northerly point at which a branch bank exists, is one hundred and thirty-three.

“Speaking generally, the business of a Scotch bank consists chiefly in the receipt and charge of sums deposited with the bank, on which an interest is allowed, and in the issue of promissory notes upon the discount of bills, and upon advances of money made by the bank upon what is called a cash credit.

“The interest allowed by a bank upon deposits varies from time to time according to the current rate of interest which money generally bears. At present the interest allowed upon deposits is four per cent.

“It has been calculated that the aggregate amount of the sums deposited with the Scotch banks amounts to about twenty or twenty-one millions. The precise accuracy of such an estimate cannot of course be relied on. The witness by whom it was made thought that the amount of deposits could not be less than sixteen millions nor exceed twenty-five millions, and took an intermediate sum as the probable amount.

“Another witness, who had been connected for many years with different Edition: current; Page: [349] banks in Scotland, and has had experience of their concerns at Stirling, Edinburgh, Perth, Aberdeen, and Glasgow, stated that more than one-half of the deposits in the banks with which he had been connected were in sums from ten pounds to two hundred pounds.”

* * * * * * * * * * * * *

“On sums advanced by the banks on the discount of bills of exchange and upon cash credits an interest of five per cent. is at present charged.

“A cash credit is an undertaking on the part of a bank to advance to an individual such sums of money as he may from time to time require, not exceeding in the whole a certain definite amount, the individual to whom the credit is given entering into a bond with securities, generally two in number, for the repayment on demand of the sums actually advanced, with interest upon each issue from the day on which it is made.

“Cash credits are rarely given for sums below one hundred pounds; they generally range from two to five hundred pounds, sometimes reaching one thousand pounds, and occasionally a larger sum.

“The bank allows the party having the cash credit to liquidate any portion of his debt to the bank at any time that may suit his convenience, and reserves to itself the power of cancelling, whenever it shall think fit, the credit granted.”

The amount of deposits on which the Scotch banks allow interest may be estimated at about £18,000,000 sterling. One-half is said to consist of small sums deposited by mechanics, fishermen, and laborers, and that part of the system may be considered as analogous to that of the saving banks and as having the same beneficial effect.

The cash credits are generally for sums from 200 to 500 pounds, sometimes as high as £1000, and sometimes as low as £50. The total amount for which credits are opened is estimated at six, and the average amount actually drawn and due to the banks at four, millions sterling. They are generally granted to shopkeepers commencing business, and to tradesmen generally. The great advantage of this system, which is thus far substituted to the discounting of notes, is, that the borrower never draws more from the bank than what is absolutely necessary for the purposes of his business. The banks require that the capital loaned should be actively and constantly employed. One of the witnesses says, “I would say that no cash account is at all well operated upon unless, at the close of it in a year, the amount of the transactions on each side is, at the very least, five times the amount of the grant. When the account continues stagnant for any length of time we intimate to the holder that, at a fixed period, he must pay it up.”

The total amount of the notes in circulation is stated for 1825:

In notes of £5 and upwards 1,230,000
In notes of under £5, never lower than £1 2,080,000
at £3,310,000
Edition: current; Page: [350]

The great and efficient method of preventing the over-issuing of bank-notes and the depreciation of their value consists in the practice, rigorously adhered to by all the banks, of exchanging each other’s notes twice a week, and paying immediately the balances. For that purpose “all the banks of Scotland have agents at Edinburgh, who exchange their notes twice a week,—Monday and Friday, . . . and the balances (are) paid by short-dated bills (ten days) on London. The state of those balances is looked at by the banks with the utmost jealousy and attention: . . . if anything in any degree wrong were to appear, the banks would instantly correct it, and force a bank acting improperly to alter its mode of conduct.” This method is the same which, though with less rigor and uniformity, is successfully used by the allied banks of Boston, and by the Bank of the United States, for preventing excessive issues of paper.

It is asserted that the whole loss sustained in Scotland by the public by bank failures through more than a century has amounted to no more than £36,344; and this result seems to be altogether ascribed to the peculiar features briefly noticed in this note.


It is also provided by a law of the State of New York (1818) that “no person, association of persons, or body corporate, except such bodies corporate as are expressly authorized by law, shall keep any office for the purpose of receiving deposits or discounting notes or bills, or issuing any evidence of debt to be loaned or put in circulation as money; nor shall they issue any bills or promissory notes or other evidences of debt as private bankers for the purpose of loaning them or putting them in circulation as money, unless thereto specially authorized by law.”

The prohibition to issue any species of paper that can be put in circulation as money is perfectly proper, and indeed necessary; but that to receive deposits or discount notes or bills must have had some special and temporary object in view, and does certainly require revision. Why individuals should not be permitted to deposit their money with whom they please is not understood. In such cases interest is generally allowed, and this practice promotes frugality, and should rather be encouraged than forbidden. So long as credit is deemed essential to commerce, the discounting of notes or bills by private individuals creates competition and is a public benefit. Incorporated banks cannot conveniently alter either the rate at which they discount or the time at which the notes discounted must be paid or renewed. Private capitalists may and do modify their loans in both respects according to the state of the money market and to Edition: current; Page: [351] the wants of the community. They will discount at the rate of four or five per cent. when the use of capital is worth no more; and, being still controlled by the general law of the land, they never can legally receive more than the legal rate of interest. And they may, to the great benefit of commerce, discount business notes due at three and six months’ date. The advantages, if not the necessity, of this accommodation are such that it is understood that the law in question is, in that respect, daily disregarded. The prohibition alluded to has no other effect than that of deterring some prudent capitalists from engaging in that business, and of enhancing the premium which those who, in order to meet their engagements, negotiate the evidences of debt due to them, must pay for the discount.

Edition: current; Page: [352]

STATEMENT I.: A List of the State Banks in operation on the 1st of January, 1830.

Massachusetts 800,000
Union 800,000
Phœnix 200,000
Gloucester 120,000
Newburyport 210,000
Beverly 100,000
Boston 900,000
Salem 250,000
Plymouth 100,000
Worcester 200,000
Marblehead 120,000
Pacific 200,000
State 1,800,000
Mechanics’ 200,000
Merchants’ (Salem) 400,000
Taunton 175,000
New England 1,000,000
Hampshire 100,000
Dedham 100,000
Man. & Mechs’. (Boston) 750,000
Springfield 250,000
Lynn Mechanics’ 100,000
Merrimack 150,000
Pawtucket 100,000
Suffolk 750,000
Commercial (Salem) 300,000
Bedford Commercial 250,000
Agricultural 100,000
American 750,000
Andover 100,000
Asiatic 350,000
Atlantic 500,000
Barnstable 100,000
Blackstone 100,000
Brighton 150,000
Bunker Hill 150,000
Cambridge 150,000
Central 50,000
City 1,000,000
Columbian 500,000
Commonwealth 500,000
Danvers 120,000
Eagle 500,000
Exchange 300,000
Fall River 200,000
Falmouth 100,000
Farmers’ 100,000
Franklin (Boston) 100,000
Franklin (Greenfield) 100,000
Globe 1,000,000
Hampden 100,000
Hampshire Manufact. 100,000
Housatonic 100,000
Leicester 100,000
Lowell 100,000
Man. & Mechanics’ (Nantucket) 100,000
Mendon 100,000
Mercantile 200,000
Merchants’ (New Bedford) 250,000
Milbury 100,000
Norfolk 200,000
North Bank 750,000
Oxford 100,000
Sunderland 100,000
Sutton 75,000
Washington 500,000
66 banks 20,420,000
Portland 200,000
Saco 100,000
Cumberland 200,000
Bath 100,000
Lincoln 100,000
Augusta 100,000
Kennebunk 100,000
Gardiner 100,000
Waterville 50,000
Bangor 50,000
Casco 200,000
Canal 300,000
Manufacturers’ 100,000
Merchants’ 150,000
South Berwick 50,000
Thomaston 50,000
Union 50,000
Vassalborough 50,000
18 banks 2,000,000
Union 150,000
Concord (Lower) 80,000
Portsmouth 100,000
Exeter 100,000
Strafford 100,000
Cheshire 100,000
New Hampshire 165,500
Rockingham 100,000
Commercial 100,000
Piscataqua 150,000
Dover 128,070
Merrimack Co. 100,000
Farmers’ 65,000
Winnepisogee 83,100
Pemigewasset 50,000
Grafton 100,000
Claremont 60,000
Connecticut River 60,000
18 banks 1,791,670
Burlington 63,000
Windsor 80,000
Brattleborough 50,000
Rutland 60,000
Montpelier 30,000
St. Alban’s 20,000
Caledonia 30,000
Vergennes 30,000
Orange County 29,625
Bennington 40,000
10 banks 432,625
Providence 500,000
Rhode Island 100,000
Exchange 500,000
Bristol 150,000
Washington 75,000
Warren 105,350
Smithfield Union 60,000
Newport 120,000
Roger Williams 499,950
Rhode Island Union 200,000
Narragansett 50,000
Commercial (Bristol) 150,000
Manufacturers’ 220,000
Union (Providence) 500,000
Pawtuxet 87,858
Burrillville Ag. and Man. 37,360
Cranston 25,000
Eagle (Providence) 300,000
Eagle (Bristol) 50,000
Franklin 38,000
Freeman’s 67,000
Kent 20,000
Landholders’ 50,000
Merchants’ (Newport) 50,000
Merchants’ (Providence) 500,000
N. E. Commercial (Newport)} 75,000
Phœnix (Westerly) 42,000
R. I. Central 66,275
Scituate 15,660
Warwick 20,000
Bank of N. America 100,000
Mechanics’ 394,600
Mech. and Man’g (Prov) 103,990
Hight St. Bank 70,000
Smithfield Exchange 60,000
Village Bank 40,000
Smithfield Lime Rock 100,100
Cumberland 65,750
R. I. Agricultural 50,000
Mount Vernon 40,000
N. E. Pacific 83,750
Union (Bristol) 40,000
Hope (Warren) 100,000
North Kingston 44,485
Centreville 25,000
Woonsocket Falls 51,269
Mount Hope (Bristol) 75,000
47 banks 6,158,397
New London 146,437
Norwich 150,000
Hartford 1,252,900
Phœnix 1,218,500
Bridgeport 100,000
Union (New London) 100,000
Windham Co. 104,390
Thames 153,500
Fairfield Co. 133,000
Mechanics’ of N. Haven 333,850
Middletown 400,000
New Haven 339,600
Stonington 53,000
13 banks 4,485,177
State Bank at Albany 369,000
Geneva 400,000
Utica 500,000
Mech’s and Farm., Albany 312,000
Catskill 110,000
Phœnix 500,000
New York 1,000,000
Merchants’ 1,490,000
Mechanics’ 2,000,000
Farmers’ (Troy) 278,000
Albany 240,000
Mohawk 165,000
Union 1,000,000
America 2,031,200
City Bank 1,000,000
Troy 352,000
Ontario 500,000
Chenango 100,000
Auburn 184,000
Central (Cherry Valley) 86,000
Jefferson County 74,000
Tradesmen’s 480,000
Dry Dock Co. 200,000
North River 500,000
Commercial 225,000
Dutchess County 75,000
Rochester 250,000
Long Island 300,000
Franklin 510,000
Newburgh 120,000
Orange County 106,000
Lansingburgh 220,000
Manhattan Co. 2,050,000
Delaware and Hudson 700,000
Fulton 750,000
Chemical 500,000
36 banks 19,677,200
State Bank, Camden 266,050
State Bank, New Brunswick 71,984
State Bank, Elizabetht’n 132,550
State Bank, Newark 280,000
State Bank, Morris 93,700
Farmers’ Bank N. Jersey 100,000
New Brunswick 90,000
Newark Bank’g & Ins. Co. 350,000
Sussex 27,500
Trenton Banking Co. 214,740
Cumberland 52,025
Commercial 30,000
Far’s. & Mech’s, Rahway 30,000
Orange Bank 50,000
People’s Bank 75,000
Salem Banking Co. 30,000
Salem and P. Man’g 30,000
Washington Bank 93,460
18 banks 2,017,009
Pennsylvania 2,500,000
Philadelphia 1,800,000
North America 1,000,000
Farmers’ and Mechanics’ 1,250,000
Chambersburgh 247,228
Chester County 90,000
Delaware County 77,510
Gettysburgh 125,318
Pittsburgh 346,155
Carlisle 171,466
Easton 187,380
Farmers’ of Bucks Co. 60,000
Farmers’ of Lancaster 400,000
Farmers’ of Reading 300,000
Harrisburgh 158,525
Lancaster 134,235
Monongahela Bank of Brownsville} 102,123
Northampton 112,500
Westmoreland 107,033
York 168,720
Germantown 129,500
Montgomery County 133,340
Northern Liberties 200,000
Commercial 1,000,000
Mechanics’ of Phila. 529,330
Schuylkill 500,000
Southwark 249,630
Kensington 124,990
Penn Township 149,980
Columbia Bridge 395,000
Miners’ B’k of Pottsville 40,000
Erie 20,000
Girard’s 1,800,000
33 banks 14,609,963
Delaware B’k, Wilming’n 110,000
Farmers’ Bank of Del. 500,000
Wilmington and Brandywine} 120,000
Bank of Smyrna 100,000
Commercial Bank of Del. not known
Wilmington not known
4 banks 830,000
2 not known.
6 banks.
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Bank of Baltimore 1,197,550
Union 1,500,000
Mechanics’ 384,000
Commercial & Farmers’ 318,400
Farmers’ and Merchants’ 414,045
Franklin 406,500
Marine 235,000
Hagerstown 250,000
Farmers’ of Maryland 820,000
Susquehanna Bridge 175,000
Westminster 175,000
Frederick County 175,000
Bank of Maryland 200,000
13 banks 6,250,495
Washington 479,120
Union (Georgetown) 478,230
Alexandria 500,000
Potomac 500,000
Mechanics’ of Alexandria 372,544
Farmers’ of Alexandria 310,000
Metropolis 500,000
Farmers’ and Mechanics’ of Georgetown} 485,900
Patriotic 250,000
9 banks 3,875,794
Bank of Virginia 2,740,000
Farmers’ of Virginia 2,000,000
Bank of the Valley 654,000
North-Western Bank of Virginia} 177,100
4 banks 5,571,100
Cape Fear 795,000
Newbern 800,000
State Bank 1,600,000
3 banks 3,195,000
Bank of State of S. C. 1,156,000
Planters’ and Mechanics’, Charleston} 1,000,000
State Bank 800,000
South Carolina 675,000
Union 1,000,000
5 banks 4,631,000
Bank of State of Georgia 1,303,436
Planters’ Bank of Georgia 566,000
Marine and Fire Insur’e not given
Augusta 600,000
Darien 484,276
Central 922,817
Augusta Insurance 110,000
Macon 75,000
Merchants’ and Planters’ 142,000
9 banks 4,203,029