Albert Gallatin to Alexander J. Dallas3
[Philadelphia, January 14, 1793]
I have read with attention the letter of the Secretary of the Treasury of the U. S. dated 21 December, 1791,4 and the two letters of the Comptroller-General dated 24th December, 1791,5 and 29th of February, 1792,6 relative to the construction of the 18th section of the Act of Congress making provision for the debt of the U. S.7 It appears to me that the word “those” in the enacting part of the clause can only apply to the certificates issued by the State, but as that never could be the meaning of the Act of Congress, I agree that the construction given by the Secretary is the only rational one. Be that as it may, it is very certain that neither the New-Loan certificates of Pennsylvania, remaining in circulation, nor the Continental certificates in exchange for which these New-Loans had been issued, have been surrendered to the U. S. It is not less certain that the payment of interest, whether to the state or to individuals has not been suspended, the present suspension to the state is but temporary, and arises merely from the extension of the former law of Congress by their Act of last May, and will of course cease on the first of March next, (if the former objections are not revived) and of course it must have appeared to the satisfaction of the Secretary of the Treasury that all the New-Loan certificates have been reexchanged or redeemed. To have considered them as such is I suppose, what the Comptroller means by the “equitable decision”8 of the Secretary. It is however of importance to us to know what were the real grounds of that decision, as it is possible that the subscription made lately in New-Loan certificates to the loan of the U. S. may affect it materially. For if the Secretary considered the whole of the New-Loan certificates as actually re-exchanged or redeemed, it must have been, because the state law which entitled the holders to such an exchange might been supposed to have been altogether carried into effect, since not a single of those certificates had been offered for subscription to the loan of the U. S. But as some have been offered since the extension of the loan took place, that circumstance may induce him to alter his opinion, and indeed I cannot well understand how he may suppose himself justifiable in looking upon the whole amount as being actually re-exchanged, whilst he has got it in proof, that some of them are not so. Upon the first impression I should be led to think that the Secretary having once declared (by his allowing the interest not to be suspended) that the whole amount was re-exchanged (and that upon the information of the state officer) will now look upon them in the same light and return them as not assumable, an opinion which I think, may also be supported on different ground both from the nature of the certificates themselves and from the state law of 1789,9 which declared the state not to be liable for the payment of the principal.
However as the whole of this reasoning is mostly conjectural, as the decision of the Secretary may, under the present circumstances, lead him to suspend the payment of interest to the subscribers to the loan (since it was extended at least) unless some legislative measures can prevent that inconvenience, permit me to suggest to you the propriety of procuring as soon as possible the necessary information on that subject, as I have no doubt the House or the committee of ways and means will soon apply to you in an official manner for the same. The questions which appear to me the most necessary to be solved are the following—
1st. What were the grounds of the decision of the Secretary of the Treasury relative to the intended suspension of interest in Feb. 1791, and what construction did he give to the 18th section of the funding Act of Congress?
2d. Does he look now on the New-Loan certificates offered for subscription to the loan of the U. S. as assumable, if so, upon what ground? if not, upon what grounds also? and will he return them soon to the subscribers?
3d. Will his decision relative to the suspension of interest be the same now as last winter, and if it is not, what measures on the side of the Legislature of Pennsylvania, will remove the difficulties that may in his opinion now prevent the payment of interest?
I have chosen to communicate to you my ideas on that subject as an individual, rather than to wait for the formalities of official application taking place, in order to prevent delays; which I hope will be a sufficient apology for this letter.
With sincere esteem, &c.
A. J. Dallas, Esq.
3. Hogan, Pennsylvania State Trials description begins [Edmund Hogan], The Pennsylvania State Trials: Containing the Impeachment, Trial, and Acquittal of Francis Hopkinson, and John Nicholson, Esquires … (Philadelphia, 1794). description ends , 74–76.
7. Section 18 of “An Act making provision for the (payment of 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 138–44 [August 4, 1790]) reads as follows: “Be it further enacted, that the payment of interest whether to states or to individuals, in respect to the debt of any state, by which such exchange shall have been made, shall be suspended, until it shall appear to the satisfaction of the secretary of the treasury, that certificates issued for that purpose by such state, have been re-exchanged or redeemed, or until those which shall not have been re-exchanged or redeemed, shall be surrendered to the United States.”
9. Gallatin is referring to the Pennsylvania act of March 27, 1789, “An Act to Repeal so Much of Any Act or Acts of Assembly of This Commonwealth as Directs the Payment of the New Loan Debt or the Interest Thereof Beyond the First Day of April Next, and for Other Purposes Therein Mentioned” (James T. Mitchell and Henry Flanders, eds., The Statutes at Large of Pennsylvania from 1682 to 1801 [Harrisburg, 1908], XIII, 263–67).