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To Thomas Jefferson from Albert Gallatin, 6 March 1801

From Albert Gallatin

Washington 6th March 1801


By an act intituled “An Act to amend the act intituled “An act providing for the sale of the lands of the United States, in the territory north west of the Ohio, and above the mouth of Kentucky river,” passed 10th May 1800, it is provided, that the purchase money shall be paid in four equal payments, the first payable within 40 days & the three last within two, three & four years respectively after the day of sale; that interest at the rate of six per cent a year from the day of sale shall be charged upon each of the three last payments, payable as they respectively become due; and that “a discount at the rate of eight per cent a year, shall be allowed on any of the three last payments, which shall be paid before the same shall become due, reckoning this discount always upon the sum, which would have been demandable by the United States, on the day appointed for such payment” See Sect. 5—

It is agreed that the sum demandable by the United States consists of the principal & interest to that day, & that the discount or deduction, in case of prompt payment, must be calculated on that aggregate sum; but it is understood that, by instructions of the Treasury department to the Receivers of public monies, these are directed, in order to ascertain the sum payable, in that case by the purchaser, to deduct the sum thus ascertained to be the discount, not from the sum demandable by the United States on the day appointed for payment, but from the principal sum alone.

As the clause of the law, in the shape in which it now stands, resulted from a Comee. of conference, of which I was a member, I am enabled to say that the intention of the Legislature was that the discount should be deducted from the sum demandable by the United States including principal & interest; and it appears to me to be the strict & litteral construction of the law.

According to this last principle the difference between the purchaser who makes prompt payment & the purchaser who pays only on the day appointed for payment is precisely at the rate of eight per cent a year: according to the principle said to have been assumed by the Treasury Departt., that difference appears to be at the rate of about 14½ per cent a year.

A bill intended to have removed any existing doubts on that subject passed the House of Representatives during the last session, but being objected to by the Senate, & there not being time for a conference, was postponed on the 3d of March late in the night & eventually lost.

The discretionary powers vested by that law in the Treasury department, being limited, (Sect. 11) to the prescribing such further regulations, in the manner of keeping books & accounts by the several officers as may appear necessary; it may be doubtful whether the several receivers shall think themselves bound by instructions which regulate the mode of settling the accounts of purchasers. And, as the difference to the United States may, in the course of the present year, exceed 50,000 dollars, I have taken the liberty of stating those facts to you. It seems important that the true legal construction of the clause should be ascertained & known to the receivers as early as possible. The land offices at Steubenville & Marietta have been opened since July & the public sales at Cincinnati shall begin on the first Monday in April next. Those at Chilicothe which are the most important will commence on the first Monday in May next.

I have the honor to be with great respect Sir Your most obt. & he. Servt.

Albert Gallatin

RC (DLC); addressed: “The President of the United States”; endorsed by TJ as received 6 Mch. from “Departmt of Treasury.”


On 26 Sep. 1800 Oliver Wolcott, Jr., sent instructions and forms to the land office receivers for implementation of the Land Act of 1800. The House passed a bill designed to remove any existing doubts about “the mode of calculating discounts in case of prompt payment” on 28 Feb. 1801 and sent it to the Senate (JHR description begins Journal of the House of Representatives of the United States, Washington, D.C., 1826, 9 vols. description ends , 3:833, 837; Terr. Papers description begins Clarence E. Carter and John Porter Bloom, eds., The Territorial Papers of the United States, Washington, D.C., 1934–75, 28 vols. description ends , 3:111–13; Malcolm J. Rohrbough, The Land Office Business: The Settlement and Administration of American Public Lands, 1789–1837 [New York, 1968], 23).

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