Civis to Mercator, [11 September 1792]
Civis to Mercator1
[Philadelphia, September 11, 1792]
For the National Gazette
Civis to Mercator
Little other notice of the futile reply of Mercator to Civis is necessary than merely to put in a clear light the erroneousness of the standard, which he has adopted for calculating the arrears of interest to the end of the year 1790.
He takes for his standard the present annual interest on the whole amount of the public Debt, as provided for under the funding system—that is I upon the former principal of the foreign and domestic debt II upon the arrears of interest of that principal, which on the 1st of January 1791 and not before became principal by the provisions of the funding law2 III upon the whole amount of the assumed debt that is 21500000 Dollars.
Now the fact is, that the only arrears, which can colorably be computed, are those on the principal of the foreign and domestic debt, according to the terms of Interest, which they actually bore, up to the 1st of January 1791. I because in fact the arrears of interest on that principal did not bear interest till the 1 of Jany 1791, & consequently no interest whatever accrued upon them. And IIdly—because the Governt. of the United States took up the state debts as they stood, at the end of the year 1791. If arrears of interest accumulated in the mean time, ‘twas the affair of the state Governmts. which were the debtors and alone responsible for a provision for it, not of the Government of the UStates, which only became responsible by virtue of the assumption from the time it took effect, that is from the 1st of January 1792; from which period the interest has been punctually paid. This is the true view of it, unless it can be shewn that the Governt of the UStates is answerable for the neglects and omissions of the state Governments. But What arrears may have really accumulated on this part of the debt is unknown, as it is understood, that there were in some states a provision for the interest.
Calculating then the arrears which did actually accrue, that is on the principal of the foreign and domestic debt, the former, according to the various rates which were stipulated upon it, and the latter at 6 ⅌ Cent, the rate which it then bore, from the 1st of August 1789 to the 1st of January 1791, from which period interest has been paid—the amount is 3.003.378.47 dollars that is 1,032,980,72 Dollars less than the amount of the arrears stated for the same period by Mercator. This statement is not made from any secret sources of information but from documents long since in possession of the public. If Mercator has been inattentive to the means of information, he ought not to have come forth, the instructor of his fellow Citizens.
In a mere question of the increase or decrease of the public Debt, if the arrears of interest which accrued on the assumed debt, up to the period, from which the UStates began to pay interest upon it be placed on one side of the account—the saving or reduction, by the nature of the provision for it, ought to be placed on the other side—and the ballance will be in favour of the UStates.
Had Mercator stated an Account with the Treasury Department on his own principle candidly applied, namely that of setting off the surplus of Revenue to the end of the year 1790, against the amount of the Debt redeemed by purchases and payments—the Account would have stood thus—
| Credit-side3 | ||||
| By the amount of sum which appears by the statement of the Register of the Treasury to have been redeemed & paid off | ||||
| Dolls | 1,865,217.42 | |||
| By sum remaining to be applied | 397.024.13 | |||
| Debtor side | ||||
|
1,338,874.84 | |||
| Ballance | 903.366.71 | |||
being the amount of the Public Debt actually reduced, beyond the amount of the fund4 remaining on hand at the commencement of the operation of the Funding System in virtue of antecedent provision and exclusive of reductions on the rates of Interest.
As to the concluding remarks of Mercator they depart from the question. Tis no matter, in referrence to that, whether the items which were mentioned are circumstances of temporary expedient, or results of the soundest policy. They constitute positive savings and gains to the Nation.
But it was not sufficient for Mercator to assert, he ought to have shewn what sacrifice of Justice or principle was involved in them. Not having done it, tis sufficient to observe that one good effect of the measures of Finance, which have been adopted by the present Government, is at least unequivocal. The public Credit has been effectually restored. This may be in the eyes of Mercator of little moment. There are certain theorists who hold both private and public Credit to be pernicious.5 But their disciples are not numerous; at least among sober and enlightened men.
The actual benefits or actual evils of the measures connected with the Treasury Department present and future would be cheerfully submitted to the Test of Experience. Happy would it be for the country, honorable for human nature, if the experiment were permitted to be fairly made.
But the pains which are taken to misrepresent the tendency of those measures, to inflame the public mind, to disturb the operations of Government are a decided proof, that those to whom they are attributable dare not trust the appeal to such a Test. Convinced of this, they have combined all their forces and are making one desperate effort to gain an ascendancy, in the public councils, by means of the ensuing election, in order to precipitate the laudable work of destroying what has been done.
Civis
for Nat Gazette of Sept 12. 1792.
ADf, Hamilton Papers, Library of Congress; [Philadelphia] National Gazette, September 12, 1792.
1. For background to this article, see “Civis,” September 5, 1792.
“Civis to Mercator” was written in reply to “Mercator to Civis,” which was printed in the National Gazette, September 8, 1792. “Mercator to Civis” reads as follows:
“When you, Civis, avow and declare the object of the Treasury Department in making the publication alluded to, I presume you speak from that intimate, accurate, and precise knowledge of the intention which the Secretary himself can alone possess. Would it not have been candid then, to have come forward in propria persona, and, under the official sanction of office, declared what the real intention was? To attempt a public deception through indirect means, may avoid personal impeachment, but can seldom escape detection. You say, that Mercator ‘has endeavored to shew that the contrary of what was intended, is true.’ Now Mercator, has simply supposed that it was intended to impress the public mind with a belief that under the present administration of its fiscal concerns, the public debt has been actually reduced: This supposition then, as you declare, was contrary to the real intention, and, as Mercator, is not disposed to doubt your knowledge of what the real intention was, he rests satisfied in the admission that the public debt has not been diminished. But Mercator has unluckily suggested that the public debt, instead of being diminished one farthing, has, under your administration, been augmented to a considerable amount. This you regard as a deliberate act of hostility, a malicious endeavor to lessen the public confidence in you, to drive you from office, and, in the true spirit of a certain junto, to grasp all the powers of the government into their own hands. Indeed, my good Civis, you discover too much anxiety, fear, and passion—your zeal betrays you, and in the apprehensions for the reputation and continuance in office of the Secretary of the Treasury, manifestly shews the inseparable connection between you and him. Do not, however, elevate Mercator beyond his views; give him an importance that he does not seek, or rank him with men that he does not know. Humble and moderate in his wishes, with no avidity or desire for the loaves and fishes of office, unconnected with any junto, if any there be, and disdaining the use of any power but that of truth and reason, Mercator came forward to examine a plain fact, and to assist the public investigation of it, by a reference to other authentic documents of the treasury department itself. Wherefore then do you impeach the purity of his motives, and accuse him of want of accuracy and candor? You have surely forgotten the scriptural admonition, ‘to cast the beam from your own eye before you pluck the mote from a brother’s.’ Remember that an accuser should never be guilty of the thing he condemns. You accuse Mercator of charging you with the arrears of interest from the day the public revenue commenced, that is, on the 1st of August, 1789, until your department was organized on the 13th of September following, and complain that this arrearage of interest accrued prior to the existence of your department; and yet you have no scruple to avail yourself of the use of the whole public revenue from the said first day of August. I leave it to a more [plausible] sophistry than you exhibit, to reconcile this absurdity. Your next complaint is, that Mercator’s standard of calculation is erroneous, because he charges you with the arrears of interest made principal, and the amount of the assumed debt. Now, as to the arrears of interest made principal, was there not allowed an interest upon it equal to that of the original principal? Did not this operate as compound interest, or interest upon interest? And have you not the unballanced claim of merit with the public for the proposition, which such an operation demands? In respect to the assumed debt, I ask to know at what period, prior to the assumption, the interest upon that ceased? If then, Mercator has kindly taken a lower standard of calculation than he might have done, or if instead of estimating upon the present rate of interest on the public debt, equal to about four and a half per cent. he had charged a full rate of six per centum upon the principal of the foreign and domestic debt, the arrears of interest and the assumed debt, thereby adding to the statement he made two or three millions more, what becomes of this charge of inaccuracy and want of candor? Mercator’s design was, to expose a plain and obvious principle to the public view, without regard to nice calculation or fractional certainty: that he has been under, and not over the mark, is pretty certain, and may be easily demonstrated by figures. You can best ascertain the precise amount of the addition that has been made to the public debt.
“Whether the language and conceptions of Mercator justify the idea, that ‘to provide for a debt, and to reduce it, amount to the same thing,’ will be left to the public to determine: to whom also it is referred, how far, in the principles and practice of Civis and of the Secretary, to reduce the public debt and to add to it, are synonymous?
“The review of certain leading facts respecting the establishment of the funding system, is too tedious and unimportant for the pursuit of Mercator: he has little time, and less inclination to remark upon them; like another elaborate report of the Secretary of the Treasury, time and truth will discover their fallacy. The boast that is made of benefit to the public, first, in the saving by purchases in the public debt at the market price; secondly, by the advanced price given by foreigners in their purchases of the public debt; thirdly, by the reduced rate of the new loans for paying off the foreign debt; and lastly, by the institution of the national bank, may be regarded as so many circumstances of little and temporary expedient, producing partial or insignificant advantage or convenience to the government, and which like all temporising expedients predicated on the sacrifice of justice and of principle, leave behind them the bitter sting of future, extensive, and permanent evil. The benefits, if any, are nearly passed away; the evil but begins to be felt and understood. What may be the issue of the public mind upon them, is left for Civis to verify.
September 5. Mercator.”
2. “An Act making provision for the (payment of the) Debt of the United States” ( 138–44 [August 4, 1790]).
3. In the margin at this point H wrote: “Invert the Debtor first & Creditor side 2d.” In the National Gazette the printer followed these instructions.
4. In the National Gazette this word is “funds.”
5. The remainder of this draft is in an unidentified handwriting.