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Din PAR Y Of THE TREAS Uy, 


LO tHE 


CHAIRMAN 


OF ‘THE 


COMMITTEE OF WAYS AND MEANS. 


PUBLISHED BY ORDER OF 
THE HOUSE OF REPRESENTATIVES, 


THE 12th oF MARCH, 1796.. 


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Treasury Department, 


MARCH 8, 1796. 
SIR, 


HAVE the honor to tranfmit herewith four {tatements exhibiting the fums 

neceflary to difcharge one hundred dollars of fix per cent. ftock, upon the 
principles aflumed in the following propofitions tranfmitted to me by the com- 
mittee. 

Firft.—Suppofing one and half per cent. to be paid on the laft days of March, 
June, and September, and three and one half per cent. on the laft day of De- 
cember of every year, till the annuity is redeemed. 

Second.—Suppofing one and half per cent. to be paid on the laft days of 
March, June and September 1796, and three and one half per cent. on the laft 
day of December 1796, and that from the laft day of March 1797, inclufive, 
till the annuity is redeemed, two per cent. fhall be paid every quarter. 

Third.—Suppofing one and one half per cent. to be paid on the laft days 
of March, June, September and December 1796, and from the laft days of 
March 1797, inclufive, till the annuity is redeemed, two per cent. fhall be paid 
every quarter. 

Fourth.—Suppofing that one and half per cent. be paid on the laft days of 


March, June, and September 1796, and from thence forward two per cent. 
per quarter. 


To difcharge one hundred dollars, principal ftock, agreeably to the firft 


propofition, there would be wanted, 


Dollars, 188,52600 
Agreeably to the fecond propofition, = BAe dD OSEALTO 
Agreeably to the third propofition, - - 191,725,448 
Agreeably to the fourth propofition, _- - 190,548,336 


Upon the principles aflumed in the communication which I had the honour 
to make to the committee on the 26th of January 1796, the reimburfement 
of one hundred dollars principal, would require, dollars, 190.369. 

It now remains to determine the true meaning of the public {tipulation with 
the creditors, as expreffled in the aét making provifion for the debt of the 
United States, paffed on the fourth day of Auguft 1790. 

The contract is expreffed in thefe words, ‘‘ the fubfcriber fhall be entitled 
to a certificate ‘‘ purporting that the United States owe to the holder a fum 
to be expreffed therein, bearing an intereft of fix per centum per annum paya- 
ble quarter yearly and fubject to redemption by payments not exceeding in one year on 
account of both principal and intere/t the proportion of eight dollars upon a hundred 
of the fum mentioned in fuch certificate.” 

The general principle afflumed in the communication fubmitted by me to 
the committee, was this: 

That the capital due at the commencement of any given year, is fixed during the 
whele of the faid year, and that the public by including in the quarterly divi- 
dends fums exceeding tho/e actually due for intere/?, do not acquire a right to have 
the fame applied to the reduction of principal, until the commencement of the 

_ fucceeding year. In other words, my idea is this, that the dividends for inte- 
refe muft for every quarter of a given year be uniform, in order to fatisfy the con- 
tract. | 

The propofitions tranfmitted by the committee proceed upon a fuppofition 

that @ new principal upon which to calculate intereft may be fixed, quarter 
yearly, and of courfe, that in cafe greater fums are included in the quarterly 
dividends than thofe actually due for intereft, the public may immediately 
apply them to the diminution of capital, and thus arreft the growth of future 
intereft. 


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I continue to be of opinion that the conftruétion laft mentioned cannot be 
{upported, and my reafoning on the fubje& is as follows : 

The ftock, as created by. the at of Auguft 4th 1790, can be no otherwife 
defined than as an annuity of /ix per centum per annum for an indefinite term, 
convertible, at the pleafure of the United States, into an annuity of eight per 
centum per annum of equivalent value. 

The ftock fuppofed by the propofitions may be properly defined to be an 
annuity for an indefinite term of one and an half per centum for every three months, 
convertible into an annuity of two per centum for every three months. 

The refults prefented in the calculations now tran{mitted, fhew that thefe 
defcriptions of ftock are not of the fame value, the latter being fufceptible of 
extinguifhment with a leffer fum of money than the former. — 

That the definition affumed in the propofitions tranfmitted by the committee, 
is inapplicable to the {tock created by the act of Auguft 1790, is in my opi- 
nion evident from the following confiderations : 

Firft.—The at of Auguft 4th 1790, fpeaks of a capital bearing an intereft 
of fix per centum per aunum, [ubject to redemption by payments not exceeding in one 
year the proportion of eight dollars upon a hundred, and as thefe words are de- 
{criptive of the contract they muft be conftrued to fupport fome precife 
meaning. 

Second.—The conftruétion affumed in the propofitions defeats and renders 
nugatory thofe expreflions in the contract which relate to a yearly rate of inte 
reft and yearly payments. : 

Third.—The conftrudtion taken by the Treafury avoids this difficulty by 
affigning to every part of the contract fome definite fenfe, to wit : that though 
the Intere/t is required to: be adjufted guarter yearly, the payments on account 
of Principal, are to be eftimated only in reference to an entire year. 

Fourth.—That admitting the meaning of the contraé to be doubtful, which 
however does not appear to be the cafe, the conftrution moft beneficial to the 
creditors is to be preferred. . 

If however the legiflature fhould over-rule the conftruction which has been 
given, it is conceived that the firft propofition is the moft eligible of the 
four which have been mentioned, and for the following reafons : 

Firft.—Many of the public creditors may be prefumed to have formed ar- 
rangements under an expectation of receiving one and one half per centum 
quarter-yearly ; by continuing this dividend thefe arrangements will be lefs 
difturbed than in either of the other modes. — 

Second. It is poffible that the public exigencies may render it neceflary 
to have recourfe to loans; if this fhould be the cafe, it will be more con- 
venient, as well as ceconomical to borrow the whole fum wanted at one time, 
than at different times in the fame year. 

A draft of a bill purfuant to certain refolutions of the Houfe of Repre- 
fentatives of the 18th of February is herewith tranfmitted. 


I have the honor to be, 
With perfect refpeci, 
SIR, 
Your moft obedient fervant, 
OLIV: WOLCOTT, jun. 
Secretary of the Treafury. 


Chairman of the Committee of Ways and 


The Honorable Wituiam Situ, E/quire, 
Means, of the Hou/e of Reprefentatives. 


I ec ee 


pense tye Kh ob 


