Sources of Revenue. 31 



Amount of 6% stock Deferred 



(real capital) 6% stock 3% stock 



Transferred by President & 



Fellows of Yale College, 13,726.39 



Transferred for debt due 



from late Sheriff Fitch, 682.20 



Purchased up to April 30, 



1801, 6,186.79 15,548.75 42,461.93 



$258,131.76 $153,527.95 $43,466.33 



Redeemed by U. S. and 

 money not yet reinvested 

 on April 30, 1801, 38,160.56 



$219,971.20 



When congress authorized the issue of its six per cent stock, it 

 reserved to the federal government the right to make annual pay- 

 ments for interest and principal to the extent of eight per cent of the 

 face value of the certificates.^ Under this provision, as the yearly 

 payments of interest decreased, the payments on the principal corre- 

 spondingly increased. This may be shown graphically by the for- 

 mula $8 — i — V, in which $8 is the maximum amount that the federal 

 government could pay in one year on every hundred dollars of the 

 face value of the stock, i represents the interest due on the unpaid 

 portion of the principal, and r the amount applicable to the redemp- 

 tion of the debt. Consequently as i was a constantly diminishing 

 quantity, r became a constantly increasing quantity. In his report 

 for May, 1802, the comptroller informs the general assembly that 

 the state will soon have considerable difficulty in reinvesting the pay- 

 ments made on the principal of the six per cent stocks by the United 

 States. The full exercise of its right by the federal government was 

 causing these payments to increase yearly at a rate of a little more than 

 six per cent. This normal increase was enhanced by the fact that the 

 state was reinvesting the amounts so received from the United States 

 in the purchase of more six per cent stocks, thus augmenting the 

 amount which the United States could pay annually on the principal. 



1 Cf. p. 14. 



