In addition to this sum, there was an amount of $1,400,000 due to the Bank of the United States on account of the loan from that institution, but this was more than counterbalanced by the value of the stock.[[50]]
It is evident from this statement that a vast mass of state and continental securities was scattered throughout the country in 1787. The degree of its concentration or distribution cannot be determined until the Domesday Books of the Treasury Department have been carefully studied, and their incompleteness makes an absolute statement impossible. The value of this paper in the hands of the holders in the spring when the Convention met cannot be ascertained with mathematical precision, for prices varied from state to state. Furthermore, the prices obtained by the holders of public paper after Hamilton’s funding system had gone into effect can only be roughly estimated, for it depends upon the market in which they were sold. For example, 6 per cents were bringing 17 shillings in the pound on March 5, 1791, and 22 shillings in the pound on October 3, 1792. On these dates, deferred sixes were 9/1 and 13/7, respectively, and 3 per cents were 9/1 and 13/1, respectively.[[51]]
If we leave out of account the foreign debt, it appears that some $60,000,000 worth of potential paper lay in the hands of American citizens in the spring of 1787. This paper was changing hands all of the time at varying prices. The common selling price in good markets before the movement for the Constitution got under way ranged from one-sixth to one-tenth its face value; and some of it sold as low as twenty to one. In fact, many holders regarded continental paper as worthless, as it might have been had the formation of the Constitution been indefinitely delayed. It seems safe to hazard a guess, therefore, that at least $40,000,000 gain came to the holders of securities through the adoption of the Constitution and the sound financial system which it made possible. This leaves out of account the large fortunes won by the manipulation of stocks after the government was established and particularly after the founding of the New York Stock Exchange in 1792.[[52]]
It should be pointed out, however, that this was not all gain for the original holders of public paper, that is, for those who had loaned the Revolutionary government money or had rendered it services during the War. Nevertheless, they would have lost all their continental securities under the prevailing methods of the Congress. As Pitkin points out, “The interest of the debt was unpaid, public credit was gone, the debt itself was considered of little value, and was sold at last by many of the original holders for about one-tenth of its nominal value.”[[53]] From this point of view, the appreciation due to the adoption of the new government was so much clear gain, even to original holders; and in some states more than one-half of the paper had passed into the hands of speculators at low figures.
The significance of this huge national debt and of the enormous gain made in the appreciation of securities can be understood only in comparison with other forms of wealth at that time. Unfortunately, our statistics for the period of the formation of the Constitution are meagre, but under an act of Congress passed in 1798 a valuation of lands was made for the purposes of direct taxation. The surveys were made between the years 1798 and 1804. The following table[[54]] exhibits the value of lands (not including houses, which amounted to more than $140,000,000 in addition) in each of the states at the close of the eighteenth century, and also the amount of money paid out by the loan offices of the respective states for the year 1795 in discharging the interest on the public debt and the payment of 2 per cent towards the reimbursement of the 6 per cent stocks held in the several commonwealths:—
| Value of Lands | Interest, etc., Disbursed[[55]] | |
|---|---|---|
| New Hampshire | $19,028,108.03 | $20,000.00 |
| Massachusetts | 59,445,642.64 | 309,500.00 |
| Rhode Island | 8,082,355.21 | 31,700.00 |
| Connecticut | 40,163,955.34 | 79,600.00 |
| Vermont | 15,165,484.02 | |
| New York | 74,885,075.69 | 367,600.00 |
| New Jersey | 27,287,981.89 | 27,350.00 |
| Pennsylvania | 72,824,852.60 | 86,379.19 |
| Delaware | 4,053,248.42 | 2,980.00 |
| Maryland | 21,634,004.57 | 74,000.00 |
| Virginia | 59,976,860.04 | 62,300.00 |
| North Carolina | 27,909,479.70 | 3,200.00 |
| South Carolina | 12,456,720.94 | 109,500.00 |
| Georgia | 10,263,506.95 | 6,800.00 |
| Kentucky | 20,268,325.07 | |
| Tennessee | 5,847,562.00 | |
| Total | $479,293,263.13 | $1,180,909.19 |
[55]. No table showing the capital amount of the loan office books of the states after the funding was complete was discovered, so that interest payment is given here.
To the total amount of payments made through the loan offices must be added the payments made at the Treasury on the securities registered there, bringing the total annual interest and capital disbursements to $2,727,959.07.
It seems safe to assume from the table that $400,000,000 would cover the total taxable value of all the lands in the thirteen states in 1787.[[56]] Very probably the estimate should be much lower, but letting the figures stand at this amount, it will be seen that an advance of $40,000,000 in securities would have represented one-tenth of the total taxable value of all the land in the thirteen United States at the time of the formation of the Constitution.
To put the matter in another way: The amount gained by public security holders through the adoption of the new system was roughly equivalent to the value of all the lands as listed for taxation in Connecticut. It was but little less than the value of the lands in New Hampshire, Vermont, and Rhode Island. It was about equivalent to one-half the value of the lands in New York and to two-thirds the value of the lands in Massachusetts. It amounted to at least ten dollars for every man, woman, and child in the whole United States from New Hampshire to Georgia.[[57]]