The Debt proper or the original Debt of the UStates in its primary form may be classed under four general heads I the Old emissions of Continental money II The Loan office Debt contracted for monies lent to the Government III the army debt contracted for the pay and commutation of the army IV the debt of the five Great Departments as they are called in the resolution of Congress1 being for services and supplies in the Marine Department, The Quarter Master’s Commissary’s cloathing and Hospital Departments. Emanations from these were the Registered Debt so denominated from new kinds of Certificates issued by the Register of the Treasury in lieu of the former evidences—Indents of Interest, being a species of paper payable to bearer which by different resolutions of Congress2 were issued on account of arrears of Interest on the old Debt. The new emission money is not added to the enumeration because it was issued upon funds of the respective States with only a Guarantee of the UStates and falls perhaps most properly in the class of State Debts.

Of this original debt it appears by a statement of the Register of the Treasury published in   3 not less than   in its first concoction belonged to Citizens of the States from Pensylvania to New Hampshire inclusively the remaining belonging to States from Maryland to Georgia inclusively in nearly the following proportions

• to Maryland
• to Virginia
• to N Carolina
• to S Carolina
• to Georgia

The reasons of this state of things are obvious. Until the   the principal theatre of the War had been in the States from Pensylvania North and after that period to the close of it the principal part of the enemy’s force remained stationed at New York which obliged to the keeping upon the same quarter large bodies of troops, till the termination of the War.4

The natural consequence of this state of things was that a very large proportion of the means for carrying on the war, men money and other supplies were drawn from the States comprehended in the first division. They indeed possessed greater comparitive resources than the more Southern States & with only the same degree of zeal could furnish more to the common cause. Obvious causes always conspire to occasion larger aids to be drawn from the vicinity of the war than from more distant parts of the Country; and the main dependence of the UStates being credit a large debt was created in the scene from which the principal supplies came.

The use of this statement of the original distribution of the debt will appear hereafter.

A leading character of every part of the Debt is, that it was in its origin made alienable. It was payable to the holder, either in capacity of Assignee or bearer; far the greatest part of the latter description. The Contract therefore was, in its very essence, a contract between the Government and the actual holder.

A considerable part of the debt was consequently alienated by the first proprietors at different periods from its commencement down to the time of passing the funding Act.5

But there has been much exaggeration both as to the quantity alienated and as to the rates of alienation. The declamations on the subject have constantly represented far the greatest part of the debt in the hand of alienees and have taken the lowest price at which it ever was in the market, as the common standard of the alienation. The changes have been rung upon Two shillings and 6d. in the pound in all the arguments which have advocated a violation of the rights of the alienees.

Neither the first nor the last supposition is true.

As to the first point, namely the quantity of the debt alienated, there are no documents by which it can be satisfactorily ascertained, which of course gives full scope to imagination.

But there is an important fact which affords strong evidence that the quantity has always been much less considerable than has been supposed.

In the year   the State of New York passed a law6 permitting the holders of Continental securities to bring them in and receive in exchange for them state securities upon certain conditions which were generally deemed for the advantage of the holders to accept. The same arrangement embraced an exchange of old state securities for new.

In the event of this exchange which was completed by the   it appeared that about   of the Debt remained in the hands of the original proprietors.7

It may be stated as a fact that there has always prevailed in the States North of New York a more firm confidence in an eventual provision for the Debt than existed in that state and it may be inferred that the alienation was still less in those states than in the state of New York.

In Jersey and Pennsylvania it is probable that the alienations were not more considerable in their degree than in New York. In Maryland they may be supposed to have been still less on account of that state having made a better provision for its debts than any other & having included in it Continental securities in the hands of its own citizens, by an exchange of Certificates.8

It is probable from information though not certainly known that a more considerable alienation in proportion had taken place in the States South of Maryland.

But making all due allowance for this and taking into the account that the principal part of the Debt was originally owned from Pensylvania North, the probability still is that the progress of alienation has been much less rapid than has been conjectured.

Nothing is more natural than a mistake on this point. The Dealers in the debt in the principal Cities appeared to be continually engaged in buying and selling large sums, and it has not been their fault generally to underrate the extent of their dealings. Thence it came to be imagined that the whole debt or the greatest part of it was in the market; whereas a small sum comparitively was sufficient to satisfy all the appearances. Bandied incessantly from hand to hand a few hundred thousand Dollars appeared like as many millions.

The best inquiries on the subject will lead to an opinion that there never was prior to the funding system three millions of Dollars of floating Debt in all the great Stock-Markets of the U States.

And the whole sum which had been acquired by foreigners was about

From all which it is very questionable whether ⅓ of the Debt in the hands of alienees at the time when Congress began to Deliberate concerning a provision for it would not be an ample allowance.

With regard to the terms of alienation they have varied from 20/ down to 2/6 in the pound.

There are several considerable classes of alienees, who hold the debt at full or high values.

I   Those who advanced monies or furnished supplies to public officers upon Loan Office Certificates issued to those Officers in their own names. [An] example of this exists in the cases of purchases made during the War by public officers. Warrants from the Treasury would frequently be drawn in their favour upon the Commissioners of Loans who would often furnish loan office certificates in their own names in payment of those warrants. For these certificates the officers would sometimes procure the current paper in exchange and would transfer the certificates to those who advanced the money. In other cases they would pay for supplies in the certificates themselves which they would in like manner transfer. This is a very extensive case.

II   Those whose money has been placed in the funds by Trustees or Agents who took out certificates in their own names and afterwards assigned them to the true proprietors.

An instance of this was mentioned in the debates in Congress on the subject of a discrimination between original & present holders, and can be ascertained by any one who will take the pains to inquire. It was that of a Mr. Caldwell a respectable clergyman and zealous patriot in New Jersey, who acted for some time during the war in the capacity of Deputy Quarter Master.9 In that capacity he frequently had money to pay to Individuals; which at their desire he would place in the Loan office for them, take certificates in his own name and afterwards transfer them to the persons whose money he had deposited.

There are likewise instances not a few of Trustees and Agents for absent persons and minors who placed the monies of those whom they represented in the loan offices, took out certificates in their own names and afterwards transferred them to the parties intitled.

III   Those who by laws of particular states were compelled to take certificates at the full value in payment of Debts.

A law of the State of New York passed in the year  10 obliged all persons who had resided within the British lines during the war to receive in satisfaction of their debts from those who had been without the lines, certificates.

IV   Those who at different periods voluntarily received certificates in payment of Debts. This in some states is a very extensive case. From the precarious situation in which all persons were placed by the revolution whose property was merely personal it was no uncommon thing for creditors to receive from their Debtors certificates in payment of debts and this was almost always at high values.

Even since the peace compromises between Creditors and Debtors especially those whose fortunes had been injured by the War, in which Certificates were received at full value