Category Archives: Public Debt

Item of the Day: Madison’s Papers (1842)

Full Title: The Papers of James Madison, Purchased by Order of Congress; Being His Correspondence and Reports of Debates During the Congress of the Confederation and his Reports of Debates in The Federal Convention; Now published from the original manuscripts, deposited in the Department of State, By Direction of the Joint Library Committee of Congress, Under the Superintendence of Henry D. Gilpin.  Volume I.  Mobile:  Allston Mygatt.  1842.

Letters Preceding the Debates of 1783.

To Thomas Jefferson.  Philadelphia, March 27, 1780.

Dear Sir,

Nothing under the title of news has occurred since I wrote last week by express, except that the enemy on the first of March remained in the neighbourhood of Charleston, in the same posture as when the preceding account came away.  From the best intelligence from that quarter, there seems to be great encouragement to hope that Clinton’s operations will be again frustrated.  Our great apprehensions at present flow from a very different quarter.  Among the various conjunctures of alarm and distress which have arisen in the course of the Revolution, it is with pain I affirm to you, Sir, that no one can be singled out more truly critical than the present.  Our army threatened with an immediate alternative of disbanding or living on free quarter; the public treasury empty; public credit exhausted, nay, the private credit of purchasing agents employed, I am told, as far as it will bear; Congress complaining of the extortion of the people; the people of the improvidence of Congress; and the army of both; our affairs requiring the most mature and systematic measures, and the urgency of occasions admitting only of temporizing expedients generating new difficulties; Congress recommending plans to the several states for execution, and the States separately rejudging the expediency of such plans, whereby the same distrust of concurrent exertions that has damped the ardor of patriotic individuals must produce the same effect among the States themselves; an old system of finance discarded as incompetent to our necessities, an untried and precarious one substituted, and a total stagnation in prospect between the end of the former and the operation of the latter.  These are the outlines of the picture of our public situation.  I leave it to your own imagination to fill them up.  Believe me, Sir, as things now stand, if the States do not vigorously proceed in collecting the old money, and establishing funds for the credit of the new, that we are undone; and let them be ever so expeditious in doing this, sill the intermediate distress of our army, and hinderance to public affairs, are a subject of melancholy reflection.  General Washington writes that a failure of bread has already commenced in the army; and that, for any thing he sees, it must unavoidably increase.  Meat they have only for a short season, and as the whole dependence is on provisions now to be procured, without a shilling for the purpose, and without credit for a shilling, I look forward with the most pungent apprehensions.  It will be attempted, I believe, to purchase a few supplies with loan-office certificates; but whether they will be received is perhaps far from being certain; and if received will certainly be a more expensive and ruinous expedient.  It is not without some reluctance I trust this information to a conveyance by post, but I know of no better at present, and I ceonceive it to be absolutely necessary to be known to those who are most able and zealous to contribute to the public relief.     

 

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Filed under 1780's, American Revolution, Eighteenth century, Letters, Posted by Matthew Williams, Public Debt, Washington

Item of the Day: The State of the Public Debts and Finances (1783)

Full Title: The State of the Public Debts and Finances at Signing the Preliminary Articles of Peace in January 1783. With a Plan for Raising Money by Public Loans, and for Redeeming the Public Debts. By Richard Price. London: Printed for T. Cadell, in the Strand, M.DCC.LXXXIII. [1783]

INTRODUCTION.

IT will appear from the following Tract, that the last Administration, after Saving the Kingdom by giving it peace, intended to proceed to the introduction of measures for preserving it from the calamities with which its Debts threaten it. This was intimated in the King’s Speech, at opening the present Sessions of Parliament; and the King’s Ministers, when they were obliged to withdraw from power, had under consideration the plan for this purpose which is laid before the Public in these papers. —The resolutions moved by Mr. Pitt in the House of Commons on the 7th of this month, for correcting the defects in the Representation, have informed the Public of ANOTHER ESSENTIAL SERVICE to which they had directed their views. —By such services, could they have succeeded, they would have made themselves the best Ministers this country ever saw; for, compared with these, there are no services of any great consequence to the Kingdom. . . .

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Filed under 1780's, American Revolution, Great Britain, Posted by Caroline Fuchs, Public Debt

Item of the Day: An Appeal to the Public, on the Subject of the National Debt (1774)

Full Title: An Appeal to the Public, on the Subject of the National Debt. A New Edition. With An Appendix, containing Explanatory Observations and Tables; and an Account of the present State of the Population in Norfolk. Also an Additional Preface. By Richard Price. London: Printed for T. Cadell, in the Strand, M.DCC.LXXIV. [1774]

PREFACE

TO THE

SECOND EDITION.

IN perusing this Appeal to the Public, it will be found, that one of my chief purposes in it has been to prove the following proposition: “That to alienate a fund, appropriated to the payment of public debts, while it can be avoided, by borrowing money at simple interest on new taxes or savings, is a most pernicious measure.” And it may be depended upon, that, if there is any certainty in numbers, this has been proved beyond the possibility of reasonable doubt.

Dr. Davenant, in the reign of King William, warned the kingdom of the danger which would attend breaking into appropriated funds. He was disregarded; and the public debts increased so much as to be generally thought, in the year 1716, insupportable. This gave occasion to the establishment, in that year, of a general saving under the name of the SINKING FUND; which repeated laws declared should be applied to the payment of the public debts, and to no other purpose whatever. This fund soon became the only hope of the kingdom; and, could it have been defended against alienation, it would, in a few years, have accomplishd all that was expected from it. Notice was given of this, in the year 1726, by a writer of great abilities (a); and the public was a second time warned of the fatal consequences which would follow alientations. But this warning was also neglected; and, in consequence of this, our debts, instead of being annihilated, as they might have been, have increased from 17 millions, their amount in 1699, and from 52 milions, their amount in 1726, to 140 millions, their amount nearly in the present year. —There is now one farther attempt made to bring back the State fo the path of rectitude and safety by a writer indeed of much less weight, but possessed of the same good intentions. he knows that he cannot expect to be regarded. The same measures will be pursued; and it is easy to foresee in what they will terminate.

“In FRANCE the custom of borrowing on Funds, instead of levying money for the necessary supplies within the year, was begun in 1678. M. COLBERT perceived the tendency of it; and after remonstrating against it in vain, he told the ministers who advised it, that they should answer to God for the mischief they would do to the king and the state, by introducing so pernicious a practice (a).” —The managers of our affairs will have more to answer for. They have not only introduced this pernicious practice; but they have defeated the effect of an establishment, which would have preserved us from all the dangers attending it. —The greatest sufferers by this practice will in the end be the moneyed people themselves; or those creditors of the public, who are now maintained by the contributions of the poor, and the labour of the industrious. —It is impossible that debts always increasing, should not in time sink the kingdom. They have already done us unspeakable mischief. A considerable part of our people is lost. By extending the influence of the crown, they have undermined the foundation of our liberties. It is doubtful also, whether they have not turned the balance of trade against us, by raising the price of our manufactures, and carrying out of the kingdom about a million and a half every year, in payments of dividends to foreigners. The late augmentation of the navy, though probably a right measure, has, by taking a large annual sum from the SINKING FUND, removed us to agreater distance than ever from the possibility of discharging them. An unfavourable turn of events in the East-Indies, or any considerable deficiencies in the revenue, might destroy our ability of paying even the interest of them. At least, it is to be feared, that another war would exhaust our resources, and bring our affairs to a crisis.

In these circumstances; some vigorous measures for our own preservation, ought to be entered into immediately More especially, it seems to be time for the public creditors to think of securing their capital. The law once gave them the Sinking Fund as a sacred and unalienable security. Would it be wrong to require a restitution of it; and to make this a condition of future loans?

Upon the whole. It is my sincere conviction, that a policy, too narrow and selfish, has brought us into threatning circumstances. I have written under this conviction; and, if my feelings have drawn from me any language improperly severe, I hope I shall be excused.

I will only add, that I think myself much obliged to the civility of some who have addressed remarks to me. But their objections have not yet led me to any change of sentiments. — Whenever I am made sensible of having fallen into any material mistakes, I shall think myself bound to acknowledge and retract them. In the mean time, I must beg leave to avoid disputes; and to refer in silence all I have written to the decision of the public.

 

(a) I have related this fact from the most respectable authority.

 

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Filed under 1770's, Eighteenth century, Great Britain, Posted by Caroline Fuchs, Public Debt

Item of the Day: Address and Recommendations to the States (1783)

Full Title: Address and Recommendations to the States, by the United States in Congress assembled. Philadelphia: Printed, 1783; Boston: Re-printed, By Order of the Hon. House of Representatives of the Commonwealth of Massachusetts, 1783.

AN ADDRESS, &c.

THE prospect which has for some time existed, and which is now happily realized, of a successful termination of the war, together with the critical exigencies of public affairs, have made it the duty of Congress to review and provide for the debts which the war has left upon the United States, and to look forward to the means of obviating dangers which may interrupt the harmony and tranquility of the confederacy. The result of their mature and solemn deliberations on these great objects is contained in their several recommendations of the 18th instant, herewith transmitted. Although these recommendations speak themselves the principles on which they are founded, as well as the ends which they propose. It will not be improper to enter into a few explanations and remarks, in order to place in a stronger view the necessity of complying with them.

The first measure recommended is, effectual provision for the debts of the United States. The amount of these debts, as far as they can now be ascertained, is 42,000,375 dollars, as will appear by the schedule No. I. To discharge the principal of this aggregate debt at once, or in any short period, is evidently not within the compass of our resources; and even if it could be accomplished, the ease of the community would require that the debt itself should be less to a course of gradual extinguishment, and certain funds be provided for paying in the mean time the annual interest. The amount of it commuted to be 2,415,956 dollars. Funds, therefore, which will certainly and punctually produce this annual sum, at least, must be provided.

In devising these funds, Congress did not overlook the mode of supplying the common treasury, provided by the articles of confederation but, after the most respectful consideration of that mode, they were constrained to regard it as inadequate and inapplicable to the form into which the public debt must be thrown. The delays and uncertainties incident to a revenue to be established and collected from time to time by thirteen independent authorities, is at first view irreconcilable with the punctuality essential to the discharge of the interest of a national debt. Our own experience, after making every allowance for transient impediments, has been a sufficient illustration of this truth. Some departure, therefore in the recommendations of Congress, from the federal constitution was unavoidable; but it will be found to be as small as could be reconciled with the object in view, and to be supported besides by solid considerations of interest and sound policy. . . .

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Filed under 1780's, Congress, Early Republic, Posted by Caroline Fuchs, Public Debt