JEFFERSON, Thomas (1743-1826), President. Document signed ("Th: Jefferson"), as Secretary of State, a certified copy of An Act making Provision for the Debt of the United States. New York: Francis Childs and John Swaine, 4 August 1790, signed and certified on a covering sheet dated 28 August 1790. Counter-signed by Netherlands diplomat F. P. Van Berckel. Printed signatures of George Washington, Vice-president John Adams and House Speaker Frederick Augustus Muhlenberg. Together 8 pages, 4to, bound with ribbon along left edge, paper seal of State Department at top left, Netherlands seal at lower left
JEFFERSON SIGNS OFF ON HAMILTON'S FUNDING ACT TO ASSUME THE STATES' DEBTS
A great rarity, and a powerful association of the two political giants of the Federal Era, as Jefferson certifies the key Act in the deal that saw Hamilton enact his financial program, and the U.S. capital relocated to the Potomac. In his capacity as Secretary of State, Jefferson transmits an official copy of the Funding Act to the Dutch ambassador in New York, Franco Petrus Van Berckel. "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 finances," the Act reads. The restrained language belies the tumultuous political battle that raged over this legislation, as Hamilton sought to bolster the public credit of the United States by paying off the debts incurred by the individual states during the Revolutionary War. His scheme called for the Federal government to pay off $21.5 million in state debts (the amounts of each states' debt is enumerated on page 5), with these payments being funded by new Federal securities payable at a healthy 6 interest.
James Madison--once Hamilton's friend and ally in the struggle to enact the new Constitution--now turned on his New York colleague and bitterly opposed the plan on the floor of the Congress, calling it a windfall for speculators. Most of the states' debts had originally been held by Revolutionary War veterans or ordinary citizens, who watched these securities turn into worthless paper during the 1780s. Keen speculators snapped these up for pennies on the dollar, and now stood to receive a windfall. Madison wanted the original holders located and paid at the new, higher return--an administrative impossibility. Other Southerners objected to the measure as giving too much power to what Jefferson called the "mercenary phalanx" of Northern bankers and financiers.
Jefferson and Hamilton reached an agreement in their famous dinner on June 20, 1790, with Jefferson agreeing to urge his fellow Virginians to support the Funding Act in return for a Residence Act that moved the Federal capital to Philadelphia for 10 years and thereafter to the Potomac. The Residence Act passed in July, this bill in August. European--especially Dutch--bankers were a crucial source of loans to pay for this scheme, so Jefferson gets a copy in the hands of the Netherlands ambassador, Van Berckel. As for Jefferson, he later confessed to being "duped" into support of this measure "by the Secretary of the Treasury and made a tool for forwarding his scheme." Of "all the errors of my political life this has occasioned me the deepest regret," he said.
RARE. No other signed copy of this landmark piece of legislation has come to auction in the last 40 years. 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.