The 6% stock was divided into a stock which paidinterest
and also a stock which
interest payments. For the sum subscribed (specie value)
of the old loan principal, two-thirds of that amount wasissued in stock certificates which paid current interest atsix percent per annum (interest payable quarterly). Theremaining one-third was paid in 6% deferred stocks, which began paying (6%) interest after the year 1800.Up to eight percent of the initial amount of thecertificate could be paid off in any one year (6% ininterest; therefore 2% in principal, initially).
The third type of stock issued was the
given for overdue
payments. Section 5discussed the 3% stock certificates given in exchange forthe "IOU" certificates (Indents of Interest) earlier givenin lieu of interest payments.
These new certificates were subject to redemption at the pleasure of Congress(in the interim they paid 3% interest, payablequarterly).Section 6 appointed a Commissioner in each Stateto issue the stock certificates and keep track of the stock
and interest payments.Section 9 allowed any of the original lenders whodid not desire to give up their old debt claims to keepthem rather than to subscribe to the new securities(under different terms). Section 10, however, yetrequired them to obtain new certificates offering thesame old terms. The stated purpose for this latter action was to confirm the authenticity of the certificates againstcounterfeits. A major benefit of this action wasverification of the amount of the old outstanding certificates, which was then in question.Section 12 required the financial officers keeping track of the government securities take an "oath oraffirmation for the diligent and faithful execution of their trust" prior to entering upon the execution of theiroffices, as well as a requirement to become "bound withone or more sureties…not less [than] five thousand, normore than ten thousand dollars, with condition for theirgood behaviour".The 1790 Act also proposed a loan of $21,500,000for assumption of State debts.
limited the scope of this loan only tothe State debts associated with fighting the war, reading that:
"no such certificate shall be received, whichfrom the tenor thereof, or from any public record, act,or document, shall appear or can be ascertained tohave been issued for any purpose, other thancompensations and expenditures for services orsupplies towards the prosecution of the late war, andthe defence of the United States, or of some partthereof during the same."
The amount allowed for each State was as follows:Section 15 provided that the loan certificates which would be given in payment of the State debts also bedivided into 6% (interest payable and deferred) and 3%stock. The difference from the previous stock issued was that the stock issued here (for the State debts) didnot vary due to whether it was in payment of principalor interest (they were combined for a total dollar figureowed). From this total dollar figure, two-thirds of thisamount was for stock which paid 6% interest. Of the6% stock, two-thirds of this two-thirds was also dividedinto
and one-third into
.The other third of the total dollars owed was issuedin stock which paid 3% interest quarterly untilredemption was provided by law.
B.O.L. Volume III:Issue 6:Page 2
2. Many people wanted to invest; i.e., they did not want to part withtheir stock. The Act was written which gave the government the
but not the
, to buy back stock annually to the dollar amountequal to 8% of the initial certificate amount, less interest owing.3. Any workable definition of a
would have to includethose individuals or entities which were not even able to payinterest, but instead gave vouchers for interest owed. Here IOU'swere initially given, then discounted, and later replaced.4. Just as one may
to a newspaper or magazine andoften either pay for the subscriptions up front or in (monthly,quarterly, or in semi-annual) payments, so too could lenderssubscribe to stock but then give partial payment for it at regularintervals.
$21.5 Million Assumption of State Debts
New Hampshire$300,000Massachusetts$4,000,000Rhode Island &Providence Plantations$200,000Connecticut$1,600,000New York$1,200,000New Jersey$800,000Pennsylvania$2,200,000Delaware$200,000Maryland$800,000Virginia$3,500,000North Carolina$2,400,000South Carolina$4,000,000Georgia$300,000Total
Assumption of State Debts
5. Overall, the 6% stock of the United States consisted of previously-incurred debt principal of the United States and amixture of both principal and interest of the war debts of theStates. The 3% stock of the United States consisted of the overdueinterest of the United States, as well as a portion of the principaland interest of the State's war-related debts.