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To James Madison from Albert Gallatin, 28 May 1810

From Albert Gallatin

May 28th 1810

Dear Sir

I enclose for your signature an authority1 in the usual form empowering me to negotiate a loan with the Bank of the United States, if you approve of the terms which I had proposed & which have been accepted.2 The correspondence with the Bank is enclosed.3

If the Charter is not renewed, a loan to the same amount (3,750,000 dollars) must be negotiated in 1811, to repay this.

If the Charter is renewed, nothing more will be necessary than annually to renew the loan (to which there will be no objection on their part) whilst our finances continue in their present situation. It is presumable that if we remain both as to receipts & expenditures in statu quo, no other measure will be necessary to enable us to go on. As this would simplify & facilitate the subsequent annual operations of Government, I have preferred that mode to that of issuing new stock by sale or subscription. To which must also be added that as the sum borrowed will be applied to the payment of 3,750,000 dollars exchd. six per cent stock, the amount of stock at market being diminished by that sum, & no new stock being issued in lieu thereof; the operation will tend to enhance the prices of stock, & thus facilitate the means of obtaining another loan on good terms next year, if that should be necessary. With great respect Your obedt. Servant

Albert Gallatin

RC (DLC). Docketed by JM. For enclosures, see nn. 1 and 3.

1A copy of the authority, dated 28 May 1810, permitting Gallatin to borrow up to $3,750,000, is located in the Senate records (DNA: RG 46, Legislative Proceedings, 11A-F2; see also ASP description begins American State Papers: Documents, Legislative and Executive, of the Congress of the United States ... (38 vols.; Washington, 1832-61). description ends , Finance, 2:449).

2In his annual report on the state of the finances, submitted to the House of Representatives on 8 Dec. 1809, Gallatin had reported that the budget for the coming year, including repayments on the public debt, could not be balanced unless Congress either cut military and naval expenditures by nearly 50 percent or authorized a loan to make up the deficit. In response, Congress passed a bill on 1 May 1810 authorizing the secretary of the treasury to negotiate a loan not exceeding the amount of public debt to be repaid in 1810, a sum that Gallatin had estimated at about $3,750,000 (ASP description begins American State Papers: Documents, Legislative and Executive, of the Congress of the United States ... (38 vols.; Washington, 1832-61). description ends , Finance, 2:373–75; Annals of Congress description begins Debates and Proceedings in the Congress of the United States ... (42 vols.; Washington, 1834-56). description ends , 11th Cong., 2d sess., 1762, 1947, 1955; U.S. Statutes at Large description begins The Public Statutes at Large of the United States of America ... (17 vols.; Boston, 1848-73). description ends , 2:610–11).

3See Gallatin to the president and directors of the Bank of the United States, 3 May 1810 (reproduced in Papers of Gallatin [microfilm ed.], reel 21).

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