Scope and Content: In order to raise money for the Revolutionary War effort, the Second Continental Congress, in Resolve of Oct 3, 1776, authorized the establishment of a loan office (or Continental loan office) in each of the thirteen states to receive loan subscriptions and to handle other financial matters for the national Treasury. Each state government appointed its own commissioner of loans, although these officials remained agents of the Congress. Commissioners of loans for Massachusetts (also called Continental loan officers) were successively, Nathaniel Appleton (1731-1798) 1777-1798 (cf. [Mass.] Resolves 1776-77, c 859 (Feb. 6, 1777), Resolves 1777-78, c 617 (Jan. 1, 1778)), Thomas Perkins (1758-1830) 1798-1804, and Benjamin Austin (1752-1820) 1804-1816. Per Act of Mar 3, 1817, c 38, the loan offices were closed and their duties and records were transferred to the Second Bank of the United States. –The 1776 resolve offered to the general public 3-year (later extended indefinitely) loan certificates at 4% interest; a second series in Feb. 3, 1777 raised the rate to 6%. A third series was offered on June 29, 1777. During 1777-1778 and 1780-Mar. 1782, interest payments were made with bills of exchange obtained from a loan with France, as American currency was greatly inflated. –With only foreign loans and loan office subscriptions at its disposal, the federal government did not have adequate funds. As the Articles of Confederation did not give Congress power of direct taxation, it had to request funds from the individual states, the amount from each determined by a quota system. This requisition system was ineffective; Congress had difficulty collecting funds from the states, especially in specie. –As a result of high inflation, Resolve of Mar 18, 1780 ordered paper money withdrawn from circulation, and exchanged via the loan offices at a rate of –Public debt (i.e., that owed by the federal government) was consolidated in Feb. 1782, settling accounts with individuals. A commissioner was sent to Massachusetts in 1783 to inspect claims against the government, assign a specie value to them, and enter them on the books of Congress, thus liquidating the debt. Final settlement certificates (or liquidated debt certificates/public debt certificates) were issued to those owed mone –As currency was unavailable and bills of exchange were no longer acceptable, interest payments on the final settlement certificates (and resuming in 1784, on loan office certificates) were made with certificates of interest (also called indents of interest, or indents). Indents of interest were issued from 1782-1787. States were allowed to pay a portion of their requisitions to Congress in indents of interest, as long as a portion was also paid in specie. Per Resolve of Oct 11, 1787, indent and specie payments were separated, making redemption of indents of interest even easier. –With the establishment of the federal government in 1789, Secretary of the Treasury Alexander Hamilton developed an economic program with two key features: redemption–redeeming old securities at face value for new ones, and assumption–the national government taking over the outstanding Revolutionary War debt of the states, thus funding the debt. The resulting Act of Aug 4, 1790, c 34 authorized a loan and established a sinking fund to consolidate and liquidate the domestic, foreign and assumed debt. The old securities and devalued continental currency were accepted (currency at 1% of its value) to purchase loan certificates, now called stock, which received quarterly interest payments. Two thirds of the stock issued was the so-called six percent stock of 1790, which bore interest from Jan. 1, 1791, and one third was called deferred six percent stock of 1790, which carried no interest until Jan. 1, 1800. Indents or accumulated interest on securities were exchanged for 3% stock. The assumption of state debt gave security holders 6% stock for 4/9ths, 6% deferred stock for 2/9ths, and 3% stock for 3/9ths for total of principal and accumulated interest. –The federal government continued to authorize new loans to pay off old loans or for other expenses. Act of Mar 3, 1795, c 45 issued 5 1/2% certificates stock to pay the balance due on French loans from the Revolution. Act of June 30, 1798, c 64 issued a 6% stock to purchase not more than twelve vessels for the Navy. Act of July 16, 1798, c 79 (also see Act of May 7, 1800, c 47) issued an 8% stock to defray expenses for a threatened war with France and for other deficiencies. Act of Nov 10, 1803, c 2 issued 6% stock to pay for the Louisiana Purchase. Act of Feb 11, 1807, c 12 issued 6% stock to refinance the loan of 1790, converting old stock to new issues. Act of Mar 14, 1812, c 41 issued 6% stock to defray expenses for the War of 1812. Act of Feb 8, 1813, c 21 and Act of Aug 2, 1813, c 51 also issued stock for the War of 1812 and other expenses, and Act of Mar 24, 1814, c 29 issued stock for general expenses. Act of Feb 24, 1815, c 56 (repealed by Act of Mar 3, 1817, c 85) established a 7% stock to pay for issuing Treasury notes. A 6% stock was issued for general expenses per Act of Mar 3, 1815, c 87. After closure of the loan offices, loans continued to be established by the Second Bank of the United States.
Arrangement: Arranged chronologically
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