REFUNDING? THE NATIONAL DEBT. 



cipal and interest, the proportion of eight dol- 

 lara upon a hundred of the sums mentioned in 

 the certificates of stock issued. This part of 

 the loan was commonly known as the " six per 

 cent, stock of 1790." 2. Stock in an unspeci- 

 fied amount bearing interest after the year 1800 

 at 6 per cent, per annum, and subject to re- 

 demption in the same manner and at the same 

 rates as the preceding class. This stock was 

 known as the "deferred six per cents." 8. 

 Stock also in an unspecified amount bearing 

 interest at 3 per cent, per annum, subject to 

 redemption whenever provision should be made 

 by law for that purpose. This was known as 

 the " three per cent, stock." It will be seen 

 that the six per cent, stock and the deferred 

 stock were each in fact an annuity of eight ' 

 dollars for a period of twenty-three years and 

 some months. Of such suras as were sub- 

 scribed to the loan, and paid in government 

 certificates and bills of credit representing the 

 principal of the domestic debt, subscribers 

 were to receive two thirds in the " six per 

 cent, stock of 1790," and one third in the 

 11 deferred six per cents." For such sums as 

 were subscribed to the loan and paid in the in- 

 terest of the domestic debt computed to Decem- 

 ber 31, 1790, or in indents of interest, subscrib- 

 ers were to receive " three per cent, stock " 

 in the full amount so subscribed and paid. For 

 the payment of the assumed State debts a loan 

 of $21,500,000 was authorized, payable by the 

 subscribers in the principal and interest of the 

 State certificates to the amounts set forth in the 

 table below, which shows the amount author- 

 ized to be issued in the redemption of the debt 

 of each State, and the amounts actually issued. 

 Of sums subscribed to the last-mentioned loan 

 and paid in the principal and interest of the 

 State certificates, the subscribers were to re- 

 ceive four ninths in "six per cent, stock of 

 1790," two ninths in " deferred six per cents," 

 and three ninths in "three per cent, stock." 

 The law also provided that books for subscrip- 

 tions to the stock issued for the redemption 

 of the domestic and assumed debt should be 

 open for one year from October 1, 1790, and 

 fixed a limit (stated in the table below) to which 

 the assumed debt of each State would be re- 

 ceived for the new stock issued. 



The conversions authorized were rapidly 

 made, and thus were completed the first fund- 

 ing operations of the Government ; and while 

 perhaps in the assumption of the State debts 

 exact justice was not done in every instance, 

 the plan is generally conceded to have been as 

 equitable as any proposed. The honorable and 

 satisfactory adjustment of these debts raised the 

 credit of the country at home and abroad, and 

 gave the young republic an enviable reputation 

 for a far-seeing and honest public policy. 



Under this authority there were issued of 

 the several stocks amounts as follows : 



Of six per cent* $80,0&S,89T 73 



Of deferred six per cents 14,649.833 76 



Of three per cenu 19,718,751 01 



ToUl $64,436,47763 



VOL. XIX. 48 A 



The following table shows the amount au- 

 thorized to be assumed in the redemption of the 

 debt of each State, and the amount assumed : 



While the stock issued under this act was ex- 

 changed at par for the several issues mentioned, 

 the holders of the domestic debt and debts of 

 the States did not in fact obtain par in coin 

 for the stocks converted by them into the new 

 issue, as the market value of the latter did 

 not at once reach par. From the purchases 

 which were made from time to time by the 

 Sinking Fund Commissioners, the following 

 table has been prepared, showing the approxi- 

 mate market value of $100 of these issues from 

 1790 to 1795 inclusive : 



It will be noticed that of the amount of $12,- 

 000,000 of foreign loan authorized to be issued, 

 only $9,400,000 was sold, and that was sold at a 

 discount, as has been stated, of from 3 to 5J per 

 cent. As a considerable portion of the proceeds 

 was necessarily applied to the extinguishment 

 of accumulated interest, they were not sufficient 

 to complete the redemption of the amount out- 

 standing ; and on January 20, 1795, the entire 

 foreign debt was found to be $13,745,379.53 

 an increase since 1790 of $1,837,221.51. Mr. 

 Hamilton, therefore, asked authority to issue an 

 additional loan for the purpose of funding that 

 amount, which authority was given by Con- 

 gress in an act approved March 3, 1795. Thii 

 act authorized the issue of a loan receivable by 

 way of exchange in equal sums of the principal 

 of the foreign debt, and provided that any sum 

 so subscribed and paid should bear interest 

 equal to the rate of interest which was then 

 payable on the principal of the foreign debt so 

 exchanged, together with an addition of one 

 half per centum per annum, this extra interest 

 being added for the purpose of inducing par- 

 ties to surrender the certificates of indebted- 

 ness which they then held. 



It appears that no arrangement could be ef- 

 fected for refunding the portion of the debt 



