From Nathaniel Appleton1
[Boston] February 5, 1791. “I wrote you 26 Ulto. This serves to inclose Duplicate Receipt for Certificates received from the Register dated 22d Jany 1791—also first receipt for Certificates dated 29th. Jany 1791. By this Post I transmitt to the Auditor an Abstract of Certificates Indents & Bills of Old Emission, recd into the Office in the Month of November last for which Certificates of the Funded Debt have been issued agreeably to the Act of Congress 4 August 1790.… The Loaning is so fast & the Transfers so many that I find myself unavoidable much behind hand in my returns & am very apprecencive that the month of April, when there is a universal expectation of Interest, will be upon me before it will be possible to get all the abstracts registered & the Book posted up, unless I have a sessation of business from abroad, longer then the fourteen days mentioned in your instructions. I think the whole month of March will be little enough to get the Books into a readiness to discharge the Interest by the first of April when I am sure of having a croud of applicants. Therefore unless I shall receive your orders to the contray, I propose to inform all applicants to Loan or to Transfer That no Certificates can be Loaned or Transfers made in the Month of March.… I have seen the Secrety of War’s advertisement that Pentions are to be paid at this Office in the month of March. If that should be the case it is an additional reason why Loaning & transfers should be suspended during that month. All which is humbly submitted to your opinion. Permitt me to express my earnest hopes That Congress will speedily make some provision for Clerks otherwise I cannot see how the public buisness can be carried on.…”
LC, RG 53, Massachusetts State Loan Office, Letter Book, 1785–1791, Vol. “259–M,” National Archives.
1. In the course of this letter, Appleton, who was commissioner of loans for Massachusetts, discusses some of the routine problems that he and the commissioners of loans in other states encountered. Although most of the matters in this letter are self-explanatory, some mention should be made of the “Certificates Indents & Bills of Old Emission,” which were the three distinct forms in which the old Continental debt was subscribed to the new Federal loan in each state.
The variety of paper included under the heading “Certificates” is described in Section 3 of “An Act making provision for the (payment of the) Debt of the United States.” Sums subscribed to the new Federal loan were payable in the following types of certificates:
“Those issued by the register of the treasury.
“Those issued by the commissioners of loans in the several states, including certificates given pursuant to the act of Congress of the second of January, one thousand seven hundred and seventy-nine, for bills of credit of the several emissions of the twentieth of May, one thousand seven hundred and seventy-seven, and the eleventh of April, one thousand seven hundred and seventy-eight.
“Those issued by the commissioners for the adjustment of the accounts of the quartermaster, commissary, hospital, clothing, and marine departments.
“Those issued by the commissioners for the adjustment of accounts in the respective states.
“Those issued by the late and present paymaster-general, or commissioner of army accounts.” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 139–40 [August 4, 1790].)
“Indents” were another form of paper issued in the persistent, but futile, effort to solve the financial problems of the Confederation government. Unlike either the certificates or the bills of old emissions, the indents were issued for interest rather than principal on the loan office debt. In addition, although indents were authorized by the Continental Congress and were printed by the Treasury, they were issued under local authority in each state. At the outset Congress stipulated that indents would be accepted in payment of the requisitions of the Continental Congress on the states only if a specified proportion of specie accompanied the indents when they were sent to the Treasury. Eventually even this requirement was removed, and indents were received without qualification. Certificates “issued for the payment of interest, commonly called indents of interest” were included among the certificates described in Section 3 of the act of August 4, 1790, as receivable in subscriptions to the new Federal loan. Section 5 of the act provided for the establishment of an issue of three percent stock exchangeable for the indents and accrued interest (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 140). Under Section 4 of the act two thirds of the value of certificates which were accepted as principal of the old Continental debt were exchanged for the new six percent Federal stock, and the remaining one third of the certificates was exchanged for the new six percent deferred stock (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 140).
“Bills of Old Emission” are described in Section 3 of the act of August 4, 1790, as “bills of credit issued by the authority of the United States in Congress assembled, at the rate of one hundred dollars in the said bills, for one dollar in specie” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 140). The term “old emission” served to distinguish bills of credit issued before 1780 from those issued subsequently. In the spring of 1780 a new system of issuing bills of credit was proposed and passed by Congress on March 18, 1780 (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XVI, 263–67). This measure provided for “new emission” bills to be issued at the rate of two dollars for each forty dollars of the “old emissions” returned by the states to Congress to be destroyed. Because of the financial problems of the Continental Congress other types of certificates were issued in excessive quantities, and bills of the “old emission” failed to come back to the Continental Treasury in quantities sufficient either to reduce the number of “old emissions” in circulation or to issue the new bills in aid of Continental finances.
The number of certificates on the books of the commissioners of loans varied from one loan office to another. Speculation, fluctuations in the securities markets, and the routine purchase and sale of the Federal debt were some of the reasons for these transfers. The provision which a particular state had made for its citizens who were Continental creditors during the Confederation was a major source of variation in the number of transfers among the various loan officers during the subscriptions to the new Federal loan. Many of the states had made some kind of provision for the Continental debts during the Confederation. Where the state had confined these benefits to its own citizens, as was usually the case, there was a tendency for public creditors to hold their certificates in the name of a citizen of the state or to have them recorded with the register of the Treasury in order to receive “certificates in lieu of indents” which were issued by that officer for citizens of all the states. Under the new funding system state citizenship ceased to be important to Federal creditors, and some transfers to the loan offices most convenient to the creditor occurred. In addition, in some states during the Confederation, state certificates had been issued in lieu of Continental certificates. Under the new funding system certificates which appeared in the loan office books to the credit of a state officer were transferred back to the creditor who held the state certificate issued in lieu of the Continental one. Other special conditions in some states placed an additional burden on the work of the commissioners in charge of the loan offices in those states.
For a discussion of the problems of government finance during the Confederation period and the financial difficulties in 1790 which arose from the Revolutionary War debt, see Ferguson, Power of the Purse description begins E. James Ferguson, The Power of the Purse (Chapel Hill, 1961). description ends . For H’s proposals for funding the public debts, see “Report Relative to a Provision for the Support of Public Credit,” January 9, 1790. For the establishment of the loan offices as well as the funding program adopted by Congress, see “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).