To John Eager Howard
Dec. 5th. 1791.
It appearing to me, that the attention of the Legislature of Maryland may be necessary to the removal of an inconvenience under which the subscribers of the debt of that state now lie, I do myself the honor to make the requisite communication to your Excellency.
The 18th. section of the act making provision for the debt of the United States suspends the payment of interest in respect to the debt of any State which shall have issued its own certificates in exchange for those of the United States, until it shall be satisfactorily made to appear, that the certificates issued for that purpose by such state have been re-exchanged or redeemed, or until those, which shall not have been re-exchanged or redeemed shall be surrendered to the United States.1 It is understood that the measure contemplated in this section was adopted by the State of Maryland, that is, that a sum of state certificates was issued in exchange for an equal sum of certificates of the federal debt, and that although a part of those state certificates has been redeemed, others to a considerable amount have not been re-exchanged or redeemed, but that many of them have been subscribed to the loan of the assumed debt.2 It will conduce as well to the order of the finances as to the convenience of the public creditors, [the payment of Interest to whom must otherwise be suspended,]3 if measures can be taken by the government of Maryland to make the balance unredeemed and unexchanged to appear, and if they should direct the surrender of the amount of such balance in certificates of federal debt in their old form. Should the surrender of them in that form be impracticable from the circumstance of the subscription of federal debt, which was directed by the legislature, an equal sum of six per cent, deferred and three per cent stock, in such proportions as the balance or deficiency would produce on subscription, may be paid in lieu of the certificates in their old form. This will be at the election of the state, and can be affected by no circumstance but their own convenience, as there can be no pecuniary advantage or disadvantage in either mode.
Should this subject require further explanation, the Commissioner of Loans,4 on your signifying your desire to him, can probably possess you of the necessary information, or should any thing occur which he cannot elucidate, it will give me great satisfaction to make the necessary communication.
I have the honor to be with the greatest respect, Sir. Your most obedt. & most humble servant
Secretary of the Treasury
The Governor of Maryland.
LS, from the original in the New York State Library, Albany; copy, RG 56, Letters 2nd Comptroller, 2nd Auditor, Executive of Maryland and Georgia, 1789–1833, National Archives; copy, RG 56, Miscellaneous Letters Sent, “Set K,” National Archives.
1. 1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 144 (August 4, 1790). See also “Treasury Department Circular to the Commissioners of Loans,” May 27, 1791; “Treasury Department Circular to the Governors of the States,” June 27, 1791.
2. Maryland had provided for the exchange of loan office certificates for state certificates in “An Act proposing to the citizens of this state, creditors of congress on loan-office certificates, to accept this state for payment, on the terms therein mentioned” which was passed by the Maryland legislature in 1783 (Laws of Maryland, Made and Passed at a Session of Assembly, begun and held at the city of Annapolis, on Monday the Fourth of November, in the year of our Lord one thousand seven hundred and eighty-two [Annapolis: Printed by Frederick Green, Printer to the State, n.d.], Ch. XXV [January 15, 1783]). An authority on this subject has written:
“When Congress ceased paying interest on loan office certificates in 1782, Maryland at once invited her federal creditors to exchange their securities for state notes. Not all the loan office creditors availed themselves of this offer, but the state assumed $214,712 specie value. In later years the government of Maryland invested in other types of public securities and by 1790 owned $661,000 specie value of the federal public debt.” (E. James Ferguson, “State Assumption of the Federal Debt During the Confederation,” Mississippi Valley Historical Review, XXXVIII [December, 1951], 417.)
3. The bracketed words are in H’s handwriting.
4. Thomas Harwood, commissioner of loans for Maryland.