To Henry Lee1
March 22. 1793
It has been communicated to me that the Commonwealth of Virginia, by an act not long since passed, authorized the reissuing of Certain Certificates which had been redeemed by the operations of the Sinking Fund of that Commonwealth and that there is every probability that the certificates so reissued, or a considerable part of them, have been subscribed to the loan payable in the Debt of the Commonwealth, which closed on the first of the present month.2
It has been settled after full deliberation at The Treasury in conformity with the opinion of the Attorney General of the United States, that the Certificates or evidences of debt of any state which had been once paid off or redeemed could not legally be received on Loan; upon the plain principle that they thereby ceased to constitute any part of the existing debt of a State.3
And though a state may by a subsequent act restore to such certificates the quality of debt which they had lost—this would plainly amount to the creation of a new debt, not in existence when the Act of Congress passed, not contemplated by it, and manifestly intended to be excluded by its provisions; particularly that which restricts the Certificates capable of being subscribed to those of a date prior to the 1st of January 1790.4
It is therefore necessary, as well to equal justice, as to a correct execution of the laws of the Union, that it should continue to prevail.
The want of means to discriminate the reissued Certificates causes serious embarrassment. It operates as an obstacle to the granting of new certificates to all those Creditors, who subscribed subsequent to the passing of the Act which authorises the reissuing of redeemed certificates—among whom it is understood there are many who are the proprietors of certificates which had never been redeemed, and which are of course rightfully receivable upon the loan, and who consequently must be prejudiced by a suspension of their rights.
I learn that application has been made by the Commissioner of loans7 to the proper Officer of the Commonwealth to obtain such indications as would enable him to distinguish the reissued certificates, from those of another description, and that a communication of them has been refused.
Feeling as I do an entire confidence, that the Commonwealth of Virginia does not desire to secure to itself an advantage not intended by the laws of the Union, or to impede their operations according to their true intent, I freely indulge a hope that upon mature reflection the Executive will think fit to direct the proper Offices to furnish the Commissioner of Loans with the information of which he stands in need for the execution of his duty in a manner consistent with justice and propriety. And accordingly request that such directions may be given.
If the Executive of Virginia should eventually disagree with the construction of the law, which has been adopted of the Treasury, I shall with pleasure concur in any proper arrangement for revising, and, if found wrong upon further examination for rectifying it. In the mean time however I should be glad that all impediment to the claims of Creditors, who ought not to be affected by the Question, may be removed by the requisite disclosure, on the part of the Commonwealth.
I shall be obliged by as speedy an answer to this application as may be practicable.
With high respect, I have the honor to be Sir &ca.
Copy, Sparks Transcripts, Harvard College Library.
1. Lee was governor of Virginia.
2. This is a reference to “An Act for appropriating the public Revenue” passed by the Virginia legislature on December 26, 1792. Section 4 of this act reads: “That it shall be lawful for the treasurer to pay to the agent of Caron de Beaumarchais, on warrant or warrants from the auditor, military or other certificates of the sinking fund dated prior to the first day of January, one thousand seven hundred and ninety, to the amount of the liquidated claim of the said De Beaumarchais, and in like manner to any other public foreign creditor willing to accept of such payment; and also to exchange certificates of the said fund of a prior date to the said period, for any of the certificates of this commonwealth, dated subsequent to the first day of January one thousand seven hundred and ninety, and bearing an interest of six per centum” (Acts Passed at a General Assembly of the Commonwealth of Virginia. Begun and Held at the Capitol, in the City of Richmond, On Monday, the First Day of October, One Thousand Seven Hundred and Ninety-Two [Richmond, 1793], 6).
3. See Benjamin Hawkins to H, November 26, 1791; H to Hawkins, December 9, 1791; and Edmund Randolph to H, November 9, 1791. See also “Treasury Department Circular to the Commissioners of Loans,” November 1, 1790.
4. Section 13 of “An Act making provision for the (payment of the) Debt of the United States” provided “That a loan be proposed to the amount of twenty-one million and five hundred thousand dollars.… And that the sums which shall be subscribed to the said loan, shall be payable in the principal and interest of the certificates or notes, which prior to the first day of January last, were issued by the respective states, as acknowledgments or evidences of debt by them respectively owing …” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 142 [August 4, 1790]).
6. Oliver Wolcott, Jr., had written as follows to Richard Wylly, commissioner of loans for Georgia, on July 13, 1792, concerning a proposal before the Georgia legislature to reissue certificates: “It is suggested that application has or will be made to subscribe in your office on account of the State of Georgia, a sum of State Certificates which have been absorbed in Tares or otherwise discharged by the State, and that the Treasurer & Auditor of the State, have declared it as their opinion that in case such a subscription should be rejected by the United States, the State would be warranted in taking means to regain an adequate sum, by negociating any of their Funds.
“Though it is confidently presumed that the State Legislature cannot be influenced to adopt a measure so injurious to its dignity & the interests of the public as to permit Certificates which have been discharged to be thrown again into circulation, yet I judge it necessary to apprize you of the opinion which has been expressed by the Audr. & Treasurer & to request your most vigilant attention to this subject.
“In case any Certificates shall be reissued from the State Treasury, you will not fail to reject them as they shall be presented at your Office, and also to transmit immediate notice thereof to this Office.” (ADf, Connecticut Historical Society, Hartford.)
7. John Hopkins.