James Madison Papers

Public Debt, [10 March] 1790

Public Debt

[10 March 1790]

Secretary Hamilton’s report on the means of providing funds for the assumption of state debts was sent to the House on 4 March (Syrett and Cooke, Papers of Hamilton description begins Harold C. Syrett and Jacob E. Cooke, eds., The Papers of Alexander Hamilton (26 vols.; New York, 1961–79). description ends , VI, 286–89). Debate resumed on 8 March; the next day the assumption resolution, as amended by JM’s motion of 24 February, passed by a vote of 31 to 26. The fifth of FitzSimons’s resolutions (first presented on 8 February), recommending a modification of the domestic and state debts by a new loan, passed without a debate. The sixth resolution proposed that for every $100.00 subscribed to the new loan, the subscriber should have five options: (1) to have two-thirds of the amount funded at 6 percent and one-third in western lands at twenty cents per acre; (2) to have the whole amount funded at 4 percent irredeemable by any payment exceeding $5.00 per year, and to receive $15.80 payable in lands; (3) to have $66.67 funded at 6 percent irredeemable by any payment exceeding $4.67 per year, and to have after ten years $26.88 funded at the same interest and rate of redemption; (4) to have a lifetime annuity, contingent upon living at least ten years, at 4 percent; and (5) to have a lifetime annuity, contingent upon the survivorship of the younger of two persons, at 4 percent. The second alternative (the first having been approved) was now under consideration.

Mr. Madison said it was of the utmost importance to ascertain, as soon as possible, the amount of the debt to be provided for. He said that, from the examples furnished by other countries, he could not find any corresponding with the proposition in question. Instead of being a medium, the public debt will here become a subject of commerce. With respect to the principle, it appeared that amongst all the propositions, there was only one that was justifiable. How far a multiplicity of alternatives will affect the public credit, ought to be considered. It was evident that an inconvenience would follow, which would bring the debt into a kind of use very injurious to the country, and he doubted whether it would have the beneficial tendency which had been mentioned. Foreigners, said he, calculate differently from the gentlemen who advocated this measure. He was for retaining the first alternative, and part of the third; but was for rejecting the second and fourth. The term of 35 years had been mentioned for the extinguishment of our debts, but he did not wish for so long a term; neither did he approve of retaining the word,1 as it would indicate a long continuation of the debt. He said propositions might be diversified, and a large scope given to the fancy of subscribers: the advantages, however multiplied from these propositions, if more than the two he had mentioned were adopted, would not balance the injuries that might arise from such a variety.

N.Y. Daily Gazette, 12 Mar. 1790. For the fullest account of the debates of 8, 9, and 10 Mar., see N.Y. Daily Advertiser, 9, 10, and 11 Mar. 1790, and N.Y. Daily Gazette, 10, 11, and 12 Mar. 1790.

1Stone had objected to the word “irredeemable.”

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