Transcriber's Note: Some of the numbers in the above tables do not add up, but reflect the actual numbers given in the original document.
The arrangements being completed, Jefferson called Congress together in October, 1803, for a ratification of the treaty; the commissioners, by virtue of the authority granted them, had already guaranteed the advance by the Barings of ten million livres ($2,000,000). On October 25, 1803, Gallatin made a report to Congress on the state of the finances. It showed a reduction of the public debt in the two and one half years of his management, April 1, 1801, to September 30, 1803, of $12,702,404. The only question to be considered was whether any additional revenues were wanted to provide for the new debt which would result from the purchase of Louisiana.
The sum called for by treaty, fifteen millions, consisted of two items: 1st, $11,250,000 payable to the government of France in a stock bearing an interest of six per cent. payable in Europe, and the principal to be discharged at the Treasury of the United States; 2d, a sum which could not exceed, but might fall short of, $3,750,000, payable in specie at the Treasury of the United States to American citizens having claims of a certain description upon the government of France.
It is interesting here to note Mr. Gallatin's distinction between the place of payment of interest and of principal as a new departure in American finance. The principal and interest of foreign loans had up to that period been paid abroad. But a United States stock was an obligation of a different character and properly payable at home. In the large negotiations which Secretary Chase had in 1862 with the Treasury Note Committee of the Associated Banks,[13] this policy was matter of grave debate. The determined American pride of Mr. Chase prevailed, and both the principal and interest of the loans created were made payable at the Treasury of the United States. These may be small matters in their financial result, but are grave points in national policy.
The only financial legislation necessary to carry out the Louisiana purchase was a provision that $700,000 of the duties on merchandise and tonnage, a sum sufficient to pay the interest on the new debt, be added to the annual permanent appropriation for the sinking fund, making a sum of $8,000,000 in all.
The new debt would, Gallatin said, neither impede nor retard the payment of the principal of the old debt; and the fund would be sufficient, besides paying the interest on both, to discharge the principal of the old debt before the year 1818, and of the new, within one year and a half after that year. In this expectation he relied solely on the maintenance of the revenue at the amount of the year 1802, and in no way depended on its probable increase as a result of neutrality in the European war; nor on any augmentation by reason of increase of population or wealth, nor the effect which the opening of the Mississippi to free navigation might be expected to have on the sales of public lands and the general resources of the country.
In his report of December 9, 1805, Mr. Gallatin reviewed the results of his first four years of service, April 1, 1801, to March 31, 1805.
| Receipts | |
| Duties on tonnage and importation of | |
| foreign merchandise | $45,174,837.22 |
| From all other sources | 5,492,629.82 |
| =========== | |
| $50,667,467.04 | |
| =========== | |
| Expenditures. | |
| Civil list and miscellaneous | $3,786,094.79 |
| Intercourse with foreign nations | 1,071,437.84 |
| Military establishment and Indian department | 4,405,192.26 |
| Naval establishment | 4,842,635.15 |
| Interest on foreign debt | 16,278,700.95 |
| Reimbursement of debt from surplus | |
| revenue | 19,281,446.57 |
| =========== | |
| $49,665,507.56 |
The Louisiana purchase and the admirable manner of its financial arrangement were important factors in Jefferson's reëlection. Mr. Gallatin was now sure of four years, at least, for the prosecution of his plan of redemption of the public debt. Estimating that with the increase of population at the rate of thirty-five per cent. in ten years, and the corresponding growth of the revenue, he could count upon a net annual surplus of $5,500,000, he now proposed to convert the several outstanding obligations into a six per cent. stock amounting, January 1, 1809, to less than forty millions of dollars, which the continued annual appropriation of $8,000,000 would, besides paying the interest on the Louisiana debt, reimburse within a period of less than seven years, or before the end of the year 1815. After that year no other incumbrance would remain on the revenue than the interest and reimbursement of the Louisiana stock, the last payment of which in the year 1821 would complete the final extinguishment of the public debt. The conversion act was passed February 1, 1807, and books were opened on July 1 following. On February 27, 1807, Mr. Gallatin made a special report on the state of the debt from 1801 to 1807, showing a diminution, notwithstanding the Louisiana purchase, of $14,260,000.