From Edmund Randolph
Philadelphia June 10th. 179.1
In our conversation Yesterday we reduced the substance of your favor of the 7 Instant2 to this question: Whether you ought, under any modification, to suspend the payment of Interest to a State, which is intitled under the 17th. section of the act “making provision for the debt of the United states,”3 to receive interest to the amount of the nonsubscribed deficiency; In trust for the nonsubscribing creditors of the State?
By the Same section it is provided, that this interest shall continue to be paid to a State, until there be a settlement of Accounts between the United States and It.
The loan is however again opened by the act of May the 8th. 1792,4 from the first day of June 1792 to the first day of march 1793, on the same terms with the former loan.
If the first of march 1793 had now arrived, and the sum allotted to any State had been filled up by the subscriptions, that State woud cease to receive an Interest on any part of the allotted sum. For then there woud be no deficiency, nor any person Remaining, for whose benefit the trust was created. Under the Old Act indeed this interest would have been continued until the Settlement of accounts. But as it is manifest that this stipulation was made in contemplation of a deficiency; the very moment when that deficiency shall be removed, the groundwork of a state’s claim to interest is removed also. To suppose, that congress granted this money to the States, whose limited complement was exhausted, would be to charge5 them with a wanton loan from the Federal Treasury.
But I cannot assent to the propriety of Suspending the Payment of interest altogether until the 1st of March 1793. It may happen, that none of the creditors, who have hitherto refused to Subscribe, may be now inclined to Subscribe; and by the nonpayment their situation, which is intended to be equal to that of Subscribers may be renderd worse.
The strict line therefore woud be, as often as a quarters interest becomes due, to diminish the payment in proportion to the progress of the new subscription. But perhaps it would be more adviseable and be more satisfactory, if the deduction was to commence on the payment for the succeeding quarter. A quarter has something of the nature of an Integer; and the fixation of thirty days, the Interval between the Opening of the new subscription and the end of the present quarter, might favour of too much rigor.
I have the honor sir to be yr. mo. ob. serv.
The Secretary of the Treasury
LS, RG 60, Copies of Opinions, National Archives.
1. This letter is misdated “1790.”
2. Letter not found.
3. This section reads as follows: “And be it further enacted, That if the whole sum allowed to be subscribed in the debt or certificates of any state as aforesaid, shall not be subscribed within the time for that purpose limited, such state shall be entitled to receive, and shall receive from the United States, an interest per centum per annum, upon so much of the said sum as shall not have been so subscribed, equal to that which would have accrued on the deficiency, had the same been subscribed in trust for the non-subscribing creditors of such state, who are holders of certificates or notes issued on account of services or supplies towards the prosecution of the late war, and the defence of the United States or of some part thereof, to be paid in like manner as the interest on the stock which may be created by virtue of the said loan, and to continue until there shall be a settlement of accounts between the United States and the individual states; and in case a balance shall then appear in favour of such state, until provision shall be made for the said balance” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 143–44 [August 4, 1790]).
4. “An Act supplementary to the act making provision for the Debt of the United States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 281–83).
5. In MS “change.”