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A NATIONAL PAPER, PUBUSHfcD WEDNESDAYS AND SATURDAYS BY JOHN FEMO, No. 3 fUTH. STREET, PHI lAD hi PHIA
[No. 84 of Vol. IV.]
CONGRESS.
HOUSE or REPRESENTATIVES.
FRIDAY, March 1.
in committee of the whole, Mr. Mahleuberg
in the chair, on the Jd, 4fh, Jt'h, 6th, 7th,
and Bth refutations, refpeftiiig the official
conduit of the Secretary of the Treasury,
for which fee Gazette of the 6th iit'ft.
(CONTI N U IB.)
MR. LEE observed, that as he found
himfelf under the neceflky of differ
ing from his friend who had moved the re
foiution, with whom he generally agreed
io opinion—and was accu domed to ast,
lie begged the attention of the committee
for a few minutes.
Mr. Lee ohferved, to deteimine
whether the Secretary of the Tieafury
hadafted legally, it was necessary to ex
amine whether the authority from the
President and his fubkquent inftruftlons,
authorized him -to confolulatf the. loans
under the acts of the 4th and 12th of
Aug. 1790.
On thisqueftion Mr. Leeobfeived that
there seemed to be no objection to such
a conftruftion, except that which arose
from the difference of interest allowed by
those acts. That the firft loan was com
menced without any regular authority by
a company in Amsterdam ; that it receiv
ed its authenticity from the acceptance ro
the Secretary of the Treasury. The in
terest and douccurs on this loan amount
ed to more than an interest at 5 per dent,
which was the only premium contemplat
ed by the ast of the 12th of August. It
could confequent'y be accepted only un
der the ast of the 4th of August, which
gave 00 limitation to the interest which
waato be allowed. This money seemed
therefore solely applicable to the payment
of the foreign delate From his report of
the 24th of Feb. 1791. the Secretary
himfelf seemed to have had this imprefli
on. Congress seemed also to have had
this impreflion, as on the 3d of March
following they pafled an ast authoiifing
the application of this loan to the pbjeft
of the ast of the 12th of Aug. 1790. —
After the 3d of March 1791, therefore,
the Secietary of the Treasury had a right
to bring this money to America for the
purposes of the finking fund. The inter
til of tht foreign debt becoming due, for
which domestic revenues were pledged,
he thought it prudent to pay that interest
out of this loan, relying on the domestic
revenues to replace it, for the purposes of
the finkinqr fuujJ. This was a mode of
bringing the money here, and he was not
limited in his discretion as to the'mode—
and tlrcrefore had-a right to follow that
which appeared to him tnoft advantage
ous. The paying of the foreign interest
out of this loan was made after the 3d of
Marcli 1791.
Mr. Lee had no doubt as to the legali
ty of all the proceedings relative to mo
nies drawn to this country subsequent to
the 3d of March i 79 I—even1 —even the monies
borrowed for the foreign debt, because an
higher intereft'than 5 per cent, was ftipu
laicdfor, on any of the subsequent loans,
and because the President in his inftrufti
ods to the Secretary leaves the mode- of
paying the foreign debt to his discretion.
If he judged it for the advantage of the
United States to bring this money, in the
firft place, to America, the legality of
kicb a meafuiecannot be questioned, tho'
the economy and wisdom of it may nyt
be admitted. On this point Mt. Lei ac
knowledged—that he had not time to ex
amine minbtely all the statements and re
port? of the Secretary, to judge of those
exigencies which induced the drawing of
*11 the money which had been drawn 10
America.
Whether it had been consistent- or not
>*ith the interest of ihe United States—
Mr. Lee was of opinion, that the Secre
tary had legally a right to bring all the
money he had dtawn for to America, ex
cept what was diawn piior to the jd of
Match 1791. This, money was drawn
•*»—<r
Wednesday, March 20, 1795.
out of the firft loan; it was drawn, as
declared, for the finking fund ; —the frrft
loan, foi the reasons before stated, couid
not be applied, and consequently, till the
ast of the 3d of March 1791, this money
could not be legally drawn for to the fink
ing fund. Perhaps this ast caused the ir
regularity of this proceeding.
But is not the Secretary of the Treasu
ry fubjeft to blame ? Mr. Lee obfervsd
he thought he was not altogether free
from it. At the meeting of Congress
on the Bth of Dec. 17QO, the Presi
dent in his speech informed both houses,
that the firft loan had been accepted, and
that the secretary of the treasury had di
rections to lay the particulars before them
—But whdt did he do ?On the 15th of
Dec. following, he began to draw money
on account of this loan to America, for
the finking fund ; though from this re
pott ofl the 24th of Feb. he ap
pears to have had a doubt as to the legali
ty of this proceeding—he delayed giving
information, in conformity to the Presi
dent's speech, till a few days before the
diffclution of Congress. This conduct,
Mr. Lee said, seemed to argue a distrust
of the ligiflative councils. Mr. Lee dila
ted on the neccflity of the purest and
most confidential communication between
the secretary of the treasury and the
legislature; and said, though he could
not agree to the resolution then under
consideration, there was one, fubfpquent
to it, relating to this point, which he
was forty to find himfelf under the necefil
ty of voting for.
MR. BOUDINOT called the attention of
the committee to the chang# in the usual
ficuation of the House. They were no longer
ailing in a legislative capacity, hut were now
exercising the important office of the grand In
quest of the nation : It was necessary he said, to
aivfrt jp this circumstance, to prevent running
into the diffufe mode of argument that lad im
properly been adopted on this occasion. A gen
tleman of this committee had thought proper
to institute an enquiry int« the conduit ©f an of
ficer of the government, in a very important
and highly responsible station. He had exhibit
ed his charges against him in writing—had re
duced them to certain and fpecific fails. To
these, and to these alone he had pointed his evi
dence, and we were bound in honor andconfci
ence to give a just and decisive opinion on each
independent charge.—ln the firft place the truth
of the fa<sls must be fettled and eftablilhed—if
in their favour, the criminality would then
neceflarily require a second confideratfon. The
honor and reputation of the officer thus charged,
as well as the refpe<st due to the gentleman who
had brought forward the accusation. required a
steady, uniform,and disinterested examination of
every quel) ion from us.
Under this view of the fabjefl, Mr. Boudinot
said, he Ihould avoid the defuitory mode of ar
gumentation that had been run into on both
fides, and confine himfelf to the nature of the
ladls charged, and the evidence adduced in fnp
port of them. The ftiort time that yet remain
ed of the session, was too precious to waits in
collateral arguments, or the coniideration of
merely presumptive proofs.
The firft charge in the resolution now before
the committee, was, That the Secretary of the
Treasury has violated the law palled on t'nq
of August 1790, making .appropriations of cer
tain monies authorised to be borrowed by the
lame law, in the following particulars, to wit:
"• ift. By applying a certain portion of the
principal borrowed, to the payment of interest
falling due upon that principal, which was not
authorised by that or any other law."
" 2d. By drawing part of the fame monies
into the United States, without the inftru&ion
of the President."
These fpecific charges make it necefTary for us
to understand determinately the terms of the ait
mentioned in the resolution, and the nature of
the proof offered in its support.
By the ait of the 4th Augufl 1790, fecft. id,
—" The PreGdent of the United States i» autho
rised to cause to be borrowed, a Aim or Turns not
exceeding in the whole ia,600,000 of dollars;
and that/m much of thii sum as may be neeeffary
to the disc harge of the arrears of inteteft onloans
heretofore made by the U. States in foreign
countries, and the lnftalments of she principal
of the said foreign debt, and sis it could be effcß
tdupon termi to the United Statei,} to
the paying off the whole of the laid foreign debt,
be appropriated iolrlv to thefe.purpo"is, and the
President was moreover further authorised tb'caufe
to be made fucb other contract refpeftittg ihe ftitd
debt as should be found for the interest of the
laid dates."
It is asserted by the prosecutor of these charges
that this a& contains an emphatic appropriation
333
of (lie whole of the 11,000,000 of dollars to the
payment of the foreign debt.
(By a letter to Mr. Short of 9th May, 1791,
read in the committee, it appears, that a loan of
3,000,000 ot florins had been made; and that
one half only was appropriated to the payment
of our debt to France ; and that 800,000 florin#
was to be drawn to this country. This was
said to be contrary to the terms of the appropri
ation, and without anthority; and the Secreta
ry's report of Jan. 3d, 1793, sol. j, was referred
to,in proof of the fadt—"that the interest anting
on the principal borrowed under this a<ft, was
paid out of that principal," when by the fame
law, part of the domestic jevenues of the United
States, was appropriated to that purpose : The
words of the report are, "payments on account
of other foreign loans made and to be made to
.the firft Jan. I793,inclufively.
Feb. 1, 1791, 489,783, flor'ns 6 stivers,
with several other payments on the lame terms,
till Jan. ill, 1793, amounting in the whole to
1,833,189 florins, 1 stivers, 8 den. These pay
ments were asserted to be on account of intareft
on the principal borrowed, but without further
proof.
By the?cport,fol. 4,it appearithatonthe ift
Z79o,tJwtt! was borrowed no more than
1,16] ,000 florins, on which was due tke Ift of
Feb 1791, one year's interest, amounting at 5
per cmt. to 58,350 florins j but this evidence
prbvis that 289,783 florins were paid on that
day. Can gentlemen be serious when they as
sert tlat this was for interest on this principal
borrowed being almost 25 per cent, per annnm,
infteaS of five. This certainly is an inattention
to the fubje<S that the serious nature of the
ch.irjc, cannot juftify.
Ml. B. then asserted that on a critical examin
ationof these itemi, they will be found to be
inftahients of the Dutch loans made by the old
Conjfreis; and which this money was expressly
appropriated to discharge.—But lAt. B. said he
did tot mean to avoid the fa&, had it been
provd, but he denied that any evidenee so ita •
roi'efrom thisteftimony.
Tie Prcfident Was generally authorized to
mafci the loans Money arising from a domes
tic find was appropriated to pay the interest. It
happened that this loan was made in Europe, to
the amount of 3 millions of florins :—Part of it
was to be drawn to this country, but before that
efeMiflteteft became tine \ this was paid out of
the monies intended to be drawn into this coun
try, and re-paid by the fund here, to prevent
the unnecessary fending the monies from one
country to the other.
Mr. B. a Iked, if the Secretary of the Treafu
fury hid ailed otherwise, would any man
in his senses have thought him worthy of the
trust committed to him ? But the gentlemanhas
proceeded on this charge, (and has so expressed
himfelf) as if this loan was exclusively made un
der the a<£t of the 4th August, mentioned in the
1 efolution before us, and therefore was wholly
appropriated by law to the payment of the fo
reign debt,and ought not, in any part, to have
been drawn into this country for other purposes.
This brings to consideration the adt of the 12th
August, 1790, pafled eight days after the a eft
1 alluded to. By the 4th fc&ion of this adl, " the
President of the United States is authorised to
causa to be borrowed, a sum or sums not exceed
ing t,000,000 of dollars at an interest not ex
ceeding 5 per cent; and that the fame (hould be
applied to the purchase of the debt of the United
States. The difference between these a<sts was,
by that of the 4th of August, the President had
a discretion as to the application of she sum bor
rowed towards payment of the whole of the fo
reign debt over and above the inftalmentt, de
pending upon terms of advantage t» the United
. States.
By the second ast, there was 110 discretion,
the whole monies being positively direifted by
law to be applied towards the purchasing of the
domestic debt. By the firtl there was no restric
tion in point of interest to be paid, but an in
junflion that the terms of repayment should be
stipulated within 15 years—By the second inter
est was re drifted to J ler cent, and no terms of
repayment enjoined. By the preamble to the
firft law, the object of it appears to be the do
ing of justice, and supporting the public credit
by the payment of the foreign debt"—by that of
the fecund, " the reduction of the public debt,
which would be beneficial to the creditors of the
union by railing the price of their stock, and be
produilive of favingsto the U. States."
% virtue ofthefe a&s the. President thought
pro|ier to conflitute the Secretary of the Trea
sury his agent to make the loans; and according
ly on the 18th August I7yo, by a commission
under hie hand and seal, reciting both the faid
lawe, authorised him, " ty bimjelf or any other
ftrfon or perjens generally, to borrow ivttlin tie
V. Statu or elfnuhere,a sum or films not exceed
ing in the whole 14,000,000 of dollars, subjeCt
to the rellri&ions and limitations in the said fe
ver&l a<9s contained.
Wit h this commission the Secretary received
inftru<ftions retoite to the fa id lom« in thef:
words: borrow or cau e to be borrow
ed, on the bill terms which (hall be found prac
ticable, and within the limitations prcfiriiKd by
law as to the time of repayment, and rate of in
[Whole No. 406~
tereft of filch sum or funu as (h:»ll be fufficient m
discharge as well all instalments orjKirH, of the
principal of the foreign debt, lulnch noir arc due
or (hall becnme payable to the cud ofitc year 179 I,
as all interell and arrears of interest which now
are or Jhall become one in ref|)*<£t to the said deb:
to the fame end of the year 1791—And youjiatt
"fPh or ca "fi to I" a fplied the monies which ihali
be so borrowed, w'ith alt convenient dispatch to
the payment ot the said iuftalments.and parts of
the principal and interefi:, and arrears of the in
terest of the said debt. Ton Jhall not extend the
amount of the faiJ loan beyond the sum ivbicb Jhall he
nrajfary for comfleating fuck payment, unleis upon
terms hiore advantageaus to the United States,
&c. &c.
Thefc institutions related folelyto the a plica
tion of the iz,ooD.ooo, the j,OOO,000 as before
observed, being applied by law without any dis
cretionary power to the reduction of the public
debt.
Under this commission it is ill proof the Secre
tary caused 3,000,600 of florins to be borrowed
in Europe generally, \ ♦bout exprefiing particu
larly under which law, but reciting them both.
He directed half of this lira to be applied to the
payment of the foreign debt and part of the other
naif he appropriated for the piirpbfcs mentioned
towards the reduction of the publit debt. But
it is insisted. that the whole of this money was
borrowed, under the aift of the 4th August, and
therefore if was highly criminal to apply any
part of it to the discharge of the interest ariiing
on the principal so borrowed,' there being ano
ther fund designed for that purpose. But it has
clearly appeared, that the Secretary made tliis
loan in Europe, where the inteteft was to be paid
and had become due ; the fund for its payment
was in this countiy, and therefore if he'was
authorized to draw any part of that principal
into the United States, it was a mere produc
tive and economical operation, to pay the filter
ed there out of those monies on the fp'ot, and
repay them out of nionies here, where they were
to be applied and by that means present the lois,
of insurance and interest, that mat have arose
by any other negociation. This question then
depends wholly ou the fail, whether this mo
ney was borrowed by virtue of both aifts or un
der that of the nth of Aug. exclusively.
The loan was made at 5 per centi fubjeA to
charges and douceurs of 4 and a half per cent, on
the whole. The Secretary thought this within
the a<sl of the ixth of August, limiting him to
an interest not exceeding s per cent.—This was
the opinion of others beiides the Secretary. Mr.
Boudinot himfetf had been of that opinion, and
at the time thought an application to the legifla
tur; unngceflary. But the prudence and caution
of the Secretary led him to state this fail to
Congiefs for their consideration and determina
tion, who by an ail of the 3d March 1791, de
clared their sense of the act of the nth August,
and that the loan was legal]y made under that
a&. The preamble to this a A removes all doubt
on this question : " Whereas it bath been htale
known tv Congre/i, that tho President of the Unit
ed States, in consequence of an aSi making pro
viftonfor the redußian of the public debt, (this is
that of the nth of August) hath canfed a cer
tain loan to be made in 'Holland, on a'ccotifit of
the United States, to the amount of 3 millions
of florins, bearing an interest of 5 per cent.' &c.
And whereas it hath been also stated to Congress,
that the charges upon said loan have amounted
to 4 and an half per cent, whereby a doubt hath
arisen, whether the said loan be within' the
meaning of the said last mentioned ads, which
limits the rate of interest to 5 per cent, per an
num. And whereas it is expedient that the said
doubt should be removed—be it enabled, &c.
that the loan aforefaid fliall be deemed and "con
strued to be within the true intent and meaning of
the said afl, making provijton for the reduction of the
public debt, &c."
This then puts an end to any dispute on this
fubje'A, and if this money w >s borrowed under
both a(Ss jointly or excluiively urtder the a6l of
the Ilth Augud, there can be no propriety or
juflice in the charge, that the Secretary had vio
lated the a<st of the 4th of August, in applying
part of this money to the purposes of the adt of
the nth of August, under which the loan, as to
a greater sum, was certainly made By this ail
also the opinion of the Secretary of the meaning
of the act of the I zth August, as to the reftriai
on of the interest to 5 per cent, was confirmed,
and of coui fe all his proceedings under it. There
can then be no foundation for the charge, and
it remains anliipported by proof.
The next part of the accusation attempted to
be lupported, was the drawing part of the fame
" monies into the United States without iriflruc
tions from the President." The inftruaiont
from the PrefiHent As to the making the loanjß
and applying th«m were only called for, he ha*
therefore only reported these to the houfe—from
this negative testimony it was prefumcd that no
othxr iiiftriiSions have been given. This in
weak support indeed, to a criminal chbrge
nfthis nature. I know it has been urged by one
gentleman (Mr. Mercer) that the Secretary has
been called upon for the in'rudions, and if he
has failed to report them to the houfc, he ought
to fuffi-r—Till , ilio vs how fallible gentlemen'*
memories are. Tnere tus been no cull -Whatever