Foreign  debts  in  1790  amounted  to  $10,070,307,
on  which  the  arrears  of  interest  were  $1,640,-
O7i.62.b  The  unbusiness-like  way  in  which  we
had  managed  this  debt  had  made  us  ridiculous  in
the  eyes  of  European  financiers.  There  was  also  a
domestic  debt  of  $27,383,917.74,  with  an  arrears
of  interest  amounting  to  $i3,O3O,i68.2O.c  This
debt  was  a  disorganized  mass  of  securities,  issued
at  different  times  in  the  name  of  the  Continental
Congress,  to  pay  for  supplies  and  services.  It
had  depreciated  in  value  and  many  of  the  original
holders  had  sold  their  contract  rights  to  specu
lators  for  sums  much  less  than  the  face  of  the
securities.  In  addition  to  the  foreign  and  domes
tic  debts  there  were  the  State  debts.  These  were
of  uncertain  amount.  Hamilton  estimated  that
the  principal  and  interest  would  amount  to  about
twenty-five  millions  of  dollars.d  The  whole  debt,
then,  amounted  to  a  little  over  seventy-five  mil
lions  of  dollars.6  To  the  people  of  that  time  this
seemed  like  an  enormous  debt.  When  Hamilton

a  Works,  vol.  2,  p.  231.  Public  Credit,  1790.
b  Works,  vol.  2,  p.  254.  Public  Credit,  1790.
c  Works,  vol.  2,  p.  254.  Public  Credit,  1790.
*  Works,  vol.  2,  p.  255.
eln    1795   Hamilton   reported  the  whole   funded   debt  to  be
$76,096,468.67.    Works,  vol.  3,  p.  231.
[68]


FINANCE  AND  UNITY


came  to  office,  the  creditors  were  clamoring  for
payment  and  the  treasury  of  the  government  was
empty.  He  proposed  to  fund  the  whole  debt — to
exchange  all  securities  by  whomsoever  held,  for
new  government  bonds.
