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Jefferson Signs the Funding Act,
a Key Part of Hamilton’s Assumption Plan (SOLD)
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“justice and the support of the public credit require, that provision should be made for fulfilling the engagements of the United States, in respect to their foreign debt, and for funding their domestic debt upon equitable and satisfactory terms.”

THOMAS JEFFERSON. Printed Document Signed as Secretary of State. “An Act making Provision for the Debt of the United States,” New York, N.Y., August 4, 1790. Certified a True Copy by Jefferson with his signature and signed in type by George Washington as President, John Adams as Vice President, and Frederick Augustus Muhlenberg as Speaker of the House. 8 pp., 9 x 13¼ in.

Inventory #23219       SOLD — please inquire about other items

Partial Transcript

“Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That reserving out of the monies which have arisen since the last day of December last past, and which shall hereafter arise from the duties on goods, wares and merchandise imported into the United States, and on the tonnage of ships or vessels, the yearly sum of six hundred thousand 600,000 dollars annually for support of government….

Sec. 2. Be it further enacted, That the President of the United States be, and he is hereby authorized, to cause to be borrowed on behalf of the United States, a sum or sums, not exceeding in the whole twelve million of dollars; and that so much of this sum as may be necessary to the discharge of the said arrears and instalments, and (if it can be effected upon terms advantageous to the United States) to the paying off the whole of the said foreign debt, be appropriated solely to those purposes: And the President is moreover further authorized to cause to be made such other contracts respecting the said debt as shall be found for the interest of the said States. Provided nevertheless, That no engagement nor contract shall be entered into which shall preclude the United States from reimbursing any sum or sums borrowed within fifteen years after the same shall have been lent or advanced.”

Historical Background

Treasury Secretary Alexander Hamilton understood the necessity of placing the new nation on firm financial ground and proposed that the federal government assume Revolutionary-era state debts. Larger states such as Virginia (as well as those that had already paid down their deficits) balked, considering it unfair to reward states still in arrears. In a great compromise, the national capital was relocated south, to what is now Washington, D.C., in exchange for adopting Hamilton’s financial plan. The plan resulted in the federal government assuming $21.5 million in debts (the amounts of each states’ debt is listed on page 5), and payments were funded by new securities payable at a robust 6% interest.

In actuality, there was no single “Assumption Act.” Instead, Hamilton’s assumption plan took four acts of Congress to implement. All were passed by the First Congress, Second Session, between August 4 and 12, 1790.  The acts of August 5, 10, and 12, 1790 were designed to settle accounts, reduce the debt, or further address payment details.[1]

This act, approved on August 4, was the first of the set as well as the lynchpin of Hamilton’s plan. It laid out the specific amounts of state debt to be absorbed by the federal government, along with the fiscal scheme making it possible. Most of the debt had originally been held by ordinary citizens, but the payment arrangement was a boon to speculators, who had bought the worthless paper notes for pennies on the dollar. In addition to the impossibility of locating the original note holders, Hamilton’s “rewarding” the speculators had multiple effects. It publicized that the U.S. financial system would honor its bills, reward risk, and give the holders of the now-federal debt a stake in the new government’s success.

Despite their differences, Jefferson and Hamilton reached the agreement over dinner on June 20, 1790. Jefferson agreed to support the Funding Act in return for moving the national capital to Philadelphia for 10 years and thereafter to the Potomac River in a new federal city. The Residence Act (An Act for establishing the temporary and permanent seat of the Government of the United States”) passed on July 16, 1790; this bill in August. Along with the 3 subsequent acts, the “Assumption Plan” assured European governments that the United States’ financial house was in order.

Fellow Virginian James Madison, an ally of Hamilton during the ratification of the U.S. Constitution, was vehemently opposed to the plan and railed against it in Congress, to no avail. Jefferson backpedaled as well, later feeling he had been deceived by Hamilton. Of “all the errors of my political life this has occasioned me the deepest regret,” he later asserted. Ultimately, Alexander Hamilton (and his supporters) was the only person happy with the end result. Nonetheless, the competing political philosophies of two giants of the Revolutionary generation unite in compromise in this document, and the United States and its citizens would benefit, because “A provision for the debts of the respective states by the United States would be greatly conducive to an orderly oeconomical and effectual arrangement of the public finance.”

Congressional Acts Signed by Thomas Jefferson

Following a law passed on September 15, 1789, Thomas Jefferson, as Secretary of State, signed two copies of each law, order, vote, or resolution of Congress for distribution to the executive of every state. By the same law, a single copy was distributed to each U.S. senator and representative, though these did not require Jefferson’s authentication. Surviving copies are unsigned and printed on much smaller paper.

No other directly signed copy of this piece of legislation has come to auction in the last 40 years. (An unsigned format printing was sold, with a Jefferson signed cover letter, at Christie's in 2011.)  Only two copies are noted in institutional collections: the Library of Congress and the South Carolina Archives. Bristol 7573; Shipton & Mooney 46048. Not in Evans.

[1]  August 5, 1790, “An Act to provide more effectually for the settlement of the Accounts between the United States and the Individual States” ; August10, 1790, “An Act making further Provision for the Payment of the Debts of the United States”; August 12, 1790, “An Act making Provision for the Reduction of the Public Debt.” Some scholars include the February  25, 1791 “An Act to Incorporate the Subscribers to the Bank of the United States” as a fifth piece of the plan.