Alexander Hamilton Papers

Enclosure E: View of Sinking Fund According to Plan Proposed, January 1795

E
View of Sinking Fund According to Plan Proposed in the Report

Present annual amount of Sinking Fund supposing the investment of the residue of the surplus of Revenue to the end of 1790 & of the arrears of interest on the debt to foreign Officers in the purchase of six ⅌ Cent Stock at par and exonerating the fund from the charge to which it is subject by the last Section of the Act making provision for the Reduction of the Public Debt Vizt159

Interest for a year on Stock actually purchased and redeemed to the last of december 1794 & carried to the Credit of the fund 68,225.55
Interest for a year on the principal & arrears of Interest to the end of 1790, on the Debt to Foreign Officers 11,892.44
Interest for a year on subsequent arrears of Interest not included in the above 1,547.05.
Interest for a year on 411,659 Dollars & 49 Cents being the unexpended Balance of surplus to the end of 1790  24,699.56
106,364.60.
Interest for a year on the Loan Office Certificates bearing interest on the nominal principal which (those certificates being paid off as proposed) would accrue to this fund 1,911.  
 
Add this sum to be appropriated out of the Revenue from Imports & Tonnage for the redemption of Stock bearing a present Interest of 6 ⅌ Cent according to the Vth. Proposition in the Report 408,134.64
The Amount of 2 ⅌ Cent on 25,820.512 Dollars & 20 Cents being the Amount of Stock unredeemed bearing a present Interest of 6 ⅌ Cent exclusive of State Balances Dollars 516,410.24
Dividends on Bank Stock deducting interest on such installments of the Loan of the Bank as had not accrued in the Year 1794 62,500.  
Sum to be paid in addition thereto on the 1st. of January 1796. out of the Revenue from Imports & Tonnage for reimbursment of the 4th Installment of the above Loan 137,500.  
Amount of Annual Installments of 2,000.000 had of the Bank of the United States pursuant to the 11 Section of the Act of Incorporation 200,000.  
The Surplus of the Dividends on Bank Stock will increase each year 12,000 Dollars, the interest liberated by payment of each annual Installment of Principal and the sum to be paid out of the Revenue will annually decrease in the same ratio.
It will be after the first Year on the 1st. of January 1797
on the 1st. of January 1798
on the 1st. of January 1799
on the 1st. of January 1800
on the 1st. of January 1801
on the 1st. of January 1802
125,500   
113,500   
101,500   
89,500   
77,500   
65,500   
The yearly average of the Sums successively payable out of the Revenue from Imports and Tonnage towards reimbursing the Two Million Loan will be 101,500  
And the whole Loan being discharged on the 1st. of January 1803 the annual dividend on Bank Stock will be liberated from the future payment of Interest on the Loan and will thenceforth yield to the Sinking Fund an annuity liable to the redemption of the deferred Stock 152,500  
Two ⅌ Centum of 12,478,837 Dollars & 93 Cents the Amount of unredeemed Stock which on the 1st. of January 1801 will bear Interest at 6 ⅌ Centum ⅌ Annum exclusive of State Balances, and which will be payable on the 1st. of January 1802 is 249,576.76
 
Yearly interest which on the first of January 1801 will begin to accrue to the sinking fund in the deferred Stock standing to its credit is 52,319.97
Further sum necessary for payment of the above 2 ⅌ Centum 197,256.78 249,576.75
This sum of 197,256 Dollars & 78 Cents will in the Year 1802. 1803 be payable out of the Revenues from Imports & Tonnage.
But the Yearly dividends on Bank Stock free from charge after the first of January 1803 being 152,500.  
The Sum thenceforth payable out of the Revenues from imports and Tonnage for payment of said two ⅌ Centum will be 44,756.78
Which together with the yearly interest on deferred Stock being 52,319.97
Is equal to the Amount of Redeeming annuity of deferred Stock being Dollars 249,576.75

Hence the permanent appropriations out of the Revenue from Imports & Tonnage for the Redemption of the whole of the unredeemd funded Stock which now bears and hereafter will bear an interest of 6 ⅌ Centum ⅌ Annum exclusive of the Stock standing to the Credit of certain States pursuant to the Report of the Commissioners, is

for that bearing a present Interest 408,134.64
for that bearing a future Interest 44,756.78.
Total annual extra appropriation to sinking fund out of the Revenues exclusive of Bank dividends 452,891.42
The whole of the Stock bearing a present rate of Interest will by this fund be redeemed in some thing less than twenty three years, and the interest then set free (to wit) in the year 1818 will be Dollars. Cts.
1,631,259.72
To which add the further appropriation towards principal as above 408,134.64
2,039,394.36

This annuity applied to payments or purchases of the foreign Debt on a calculation of 5 ⅌ Ct. Interest would by the 1st. of January 1824 extinguish that debt and yield a surplus of 122,502 Dollars & 29 Cents.

The whole of the Stock bearing a future Interest of 6 ⅌ Cent will by the fund to be applied to it as above be also redeemed in some thing less than twenty three years from the time of commencing the Redemption, that is by the year 1824 and the Interest then set free on that Stock will be 801,050.24
The sum appropriated towards the Redemption then also set free is 197,256.78
To which add the sum liberated by the redemption of the present 6 ⅌ Ct. Stock 2,039.394.36
And the Interest on 13,745,379.35 being the amount of the foreign Debt extinguished as above 638,480.58
There will therefore be an Annuity of Dollars 3,676,181.96
 
Thus will the whole of the foreign Debt be extinguished by the Year 1824, and the Sinking fund will then possess an annuity of Dollars 3,676.181.96
And a sum in Gross of 122,502.29
Together Dollars 3,798,684.25

Which in two years would more than pay off the whole of the Balances to Creditor States, & the whole of the unfunded debt, if not sooner discharged.

So that supposing the proceeds of the Western Lands to be sufficient by the same time to redeem the three ⅌ Cent Stock the whole of the present Debt of the United States, Foreign & Domestic, Funded & Unfunded may be redeemed by the operation of the provision proposed by the Vth. Proposition by the Year 1826.

And there would revert to the United States a yearly Revenue of Dollars 4,435,320.89 Cents.

Treasury Department 17th. January 1795

Alexander Hamilton
Secy of the Treasy

Note—The calculations in this Statement would require to assure their perfect accuracy a revision; but it is certain that any errors it may contain will be too inconsiderable to affect any important result.

A H

159. See note 29.

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    Hamilton Papers
    Title
    Enclosure E: View of Sinking Fund According to Plan Proposed, January 1795
    Author
    Hamilton, Alexander
    Date
    January 1795

    Reference

    Cite as
    “Enclosure E: View of Sinking Fund According to Plan Proposed, January 1795,” Founders Online, National Archives, https://founders.archives.gov/documents/Hamilton/01-18-02-0052-0007. [Original source: The Papers of Alexander Hamilton, vol. 18, January 1795 – July 1795, ed. Harold C. Syrett. New York: Columbia University Press, 1973, pp. 141–144.]