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Letter from Samuel Osgood and Walter Livingston to Richard Caswell
Osgood, Samuel, 1748-1813; Livingston, Walter, 1740-1797
October 25, 1785
Volume 17, Pages 546-551

[From Executive Letter Book.]

Board of Treasury, Oct. 25th, 1785.


Since our Letter to your Excellency of the 10th inst., transmitting the requisition of the 27th September last. Congress have on

-------------------- page 547 --------------------
the 12th Inst., adopted the Resolve, of which we do ourselves the honor of enclosing a Copy. As we conceive it supplimentary to the Requisition, it becomes our duty to make such observations on it, as may evince the necessity of a punctual compliance with it, on the part of the several States. The object which the Resolve has evidently in view, is to preserve the National faith by providing adequate funds for paying the whole interest due on the public Debt, to the end of the year 1784. This will be clearly understood by shewing the connection betwixt the Requisitions with which a compliance is expected, and the estimates on which they are founded. The estimate of the 27th April, 1784, includes the estimate of Interest for which the Requisition was made of the 4th September, 1782, amounting to 1,200,000 Dollars, although it was not provided for in the Requisition of 1784. Of course the two estimates of the 27th April, 1784, and the 27th September, 1785, include all the interest of the Domestic Debt, to the 31st December, 1785. The objects for which the money is wanted are pointed out, and the appropriation made accordingly in the respective Requisitions. We shall therefore connect the Estimates in order to show their aggregate amount, and distinguish the provisions made to answer it.

By the Resolve of Congress of the 27th April, 1784, the estimate
for the Civil, Military and Marine Departments, for the purchase of
Indian rights of soil, and for debts contracted and unpaid amount to
$1,457,525 33-90
By that of the 27th September, 1785, the estimate
for the support of the Federal Government,
amounting to
The estimate of the 27th April, 1784, and 27th September,
1785, for the Interest on the foreign
Debt, to the 31st December, 1785, amounts to
The estimates of the same date include the interest
on the Domestic Debt to the 31st December,
1785, amounts to
-------------------- page 548 --------------------
The Requisitions and Appropriations of Congress
for the above purpose are as follows, viz:
September 4th, 1782,
$ 1,200,000
April 27th, 1784,
September 27th, 1785,
Supposed amount of the Dutch Loan which has
and may be applied to the objects of the
As above.
$ 7,520,867.89

From this statement it appears that the three Requisitions above mentioned, together with the supposed amount of the Dutch Loan, make but a bare provision for the different Estimates. It becomes our duty therefore, to urge the Legislatures of the several States, to a speedy and full compliance with the different Requisitions, that the just demands of the Public Creditors may in some degree be satisfied, and the unavoidable charges of the Federal Government defrayed.

We observed in our last letter, that it could not be ascertained from the Books of the Treasury what, if any payments had been made on the Requisition of the 4th September, 1782, but we trust that the late Regulation of the Loan Office (which we shall do ourselves the honor of transmitting to your Excellency in a few days,) will enable us to obtain such regular and accurate communications from the different officers of the Treasury, as to put it in the power of the Board, to furnish at all times, an accurate state of the Finances of the United States.

The accounts of the Register transmitted with the late Requisition of Congress, will shew the balance due on the Requisitions now in force, according to Entries in the Treasury Books. When the following facts, in addition to what have been before observed, are submitted to the consideration of the Legislature of the State in which you have the honor to preside, a regard to the credit, honor and safety of the Union, will we doubt not give them all the weight to which they are undoubtedly entitled.

At the time the late Superintendent of Finance quitted that office, the balance in the Domestic Treasury was only $21,986.72-90

The anticipation on the Requisition of 1784 was
On the Loan then filling in Holland
$ 242,203,08
-------------------- page 549 --------------------

Since that period to the 1st May last, (a few days after our coming into office) the expense of the Civil and Military departments amounted at least to one hundred and fifty thousand dollars. Exclusive of this, it became necessary to provide for a deficiency in the payment of the Foreign Interest, which had accrued in the last year, and for other demands of an immediate and pressing nature, to the amount of at least of one hundred and fifty thousand dollars, so that the total amount of the Anticipations and Demands for which a Speedy provision was necessary, was five hundred and ninety thousand Dollars. In mentioning the Anticipations of the late Superintendent of Finance, we do not mean to convey the most distant Idea, that the burden he left, was greater than any minister under similar circumstances could have possibly avoided.

To face the engagements we have mentioned, our principal source has hitherto been in the application of the funds arising from the Loans in Holland. For it is no less true than humiliating, that for nine months subsequent to the resignation of the late Superintendent of Finance, sufficient Sums in Specie had not arisen from the operation of taxes to defray the indispensable charge of the Federal Government, and we have been driven (to avoid a worse evil) to the ruinous and disgraceful expedient of applying the principal of Foreign Loans to pay the Interest. But now those funds are entirely exhausted, and no recourse remains, but in the honest and vigorous exertions, of the several States to discharge those obligations, which they owe not only to the Union, but to their own character and immediate welfare.

Before we quit the subject of Foreign Interest it becomes our duty, to inform your Excellency that the most pointed applications have been made to the United States in Congress by the Minister of his most Christain Majesty, in consequence of express instructions from his sovereign, to know what provision had been made for the punctual payment of the Interest and the redemption of the principal of the debt due to the Crown of France; reminding Congress of their Declaration on the 16th April, 1784, to the Minister Plenipotentiary of that power:

“That Congress would with the greatest care adopt subsequent measures for the punctual payment of the Principal and Interest of the Debt due to France by the United States, according to the terms of the several contracts.”
-------------------- page 550 --------------------
What answer could be given to this Representation will be easily judged by the Legislative authorities of the several States from examining the payment made on their respective Quotas, since the 27th April, 1784.

The wisdom of the respective Legislatures will easily discover, that what ever modifidations may at present be admitted for the discharge of the Domestic Interest, that due for the Foreign Debt must be discharged on the Terms, and at the places and periods stipulated in the Contracts. The funds therefore for this object ought to be certain in the collection, and adequate to their object. The ordinary mode of Taxation pursued in consequence of former Requisitions, has been found by sad experience too precarious to depend on for this purpose. If the respective states would provide some certain and adequate Funds (arising either from customs, Excise or some operative system of Revenue,) for their proportionate share of the Interest (which might with sufficient precision be ascertained from their respective Quotas) we presume we should not find much difficulty in entering into advantageous Contracts for the payment of the Foreign Interest with Merchants of reputation, who would export for this purpose, the Commodities of the several States, where the funds are provided.

Solid advantages would not only arise to the United States, but to the several Members of the Union, from such an operation. To the United States, because it would rescue them from the painful dilemma of holding up to their Foreign Creditors assurances of payments which (though made with the purest intentions) prove in the end fallacious for want of adequate and certain funds being provided by the several States and because it would enable them to remit the Principal and Interest of the Foreign Debt, without subjecting themselves to a disadvantageous exchange or engaging in commercial adventures always (if possible) to be avoided by public bodies. To the several States because by preserving through this operation the Coin in their Country, it would facilitate the collection of Taxes, whilst it promoted the sale of their products, and the employment of the shipping necessarily employed in investing these Funds. With the respect to the Domestic Interest and how far the provision made by Congress, will do complete justice to, or satisfy the minds of the public Creditors must depend on a strict compliance

-------------------- page 551 --------------------
with the act of Congress, and a vigorous collection of Taxes. This appears to be the sense of that Honorable Body by fixing the first of May next for the completion of the last Requisition. If the Laws of the several States give the Requisition that efficacy, which we trust will be the case besides answering the purposes of Revenue, the Indents of Interest may probably form a safe and general medium (without the evil of a legal Tender) which by facilitating the commercial Intercourse of the several States, may cement that Union, upon which their common interest and common safety so essentially depend. If the state of facts, and the observations resulting from it make the same impression on the mind of your Excellency which they have on this Board, we flatter ourselves your influence will not be wanting to induce the Legislative Authority of the State, in which you have the honor to preside, to carry the enclosed act, and the late Requisition of Congress with full and immediate effect. We are with the utmost respect

Your Excellency's mo. ob. humbl. Servts.,