There was something remarkable in the nature of the present allegations

against the Secretary. Taking them all into view, they presented

nothing which involved self-interested, pecuniary considerations; and in

this, they essentially differed from accusations against financiers in

other countries, to whom motives of interest were generally ascribed as

the source of their peculations. To the Secretary, no such motive was

imputed; notwithstanding former insinuations against his integrity, the

sum of all the charges now amounted to nothing more than arrogance, or

an assumption of power, or an exercise of unauthorized discretion.

Mr. S. proceeded next to examine the charge under consideration. It

consisted of two items: the first, the application of a certain portion

of the principal sum borrowed in Europe to the payment of interest

falling due upon that principal, which it was contended was not

authorized by any law; the second, the drawing part of the same moneys

into the United States, without the instructions of the PRESIDENT.

The first item of this supposed violation of law appeared of so

frivolous a nature that it did not merit much discussion; at any rate,

it was more an objection of form than of substance. If he comprehended

well the purport of the charge, it was nothing more than this--that the

Secretary having moneys at his disposal in Europe applicable to the

purchase of stock in this country, and having at the same time moneys in

this country applicable to the payment of the interest abroad, had

substituted the one for the other. He had paid the foreign interest out

of the foreign funds, and he had purchased stock with the domestic

funds. This was the heinous offence with which he was charged, and which

was thought sufficient to remove him from office. If the moneys in

Europe might have been drawn to this country by bills, for the purchase

of the debt, it might have equally been drawn here, by ordering the

application of a sum in Europe, for a purpose which would be represented

by an equal sum here, to be applied to the purchase. The substance, not

the form, is to decide whether this mode of negotiating the matter was

proper. Suppose bills had been ordered to be drawn on the commissioners,

and remitted to them on account of the foreign interest, would not this

have been as regular as to draw them for sale? Did the execution of the

law require that the Secretary, having funds in Europe with which the

foreign interest might be discharged, should nevertheless remit moneys

abroad for that purpose, and then, having funds in this country with

which the purchases of the debt might be made, should draw bills to

bring the foreign funds here? Was there any necessity for this complex

operation, for the expense of remittance, the probable loss on the sale

of bills, the loss of interest while the money was _in transitu_, when

the whole matter could be negotiated by the simple and economical mode

pursued? So far from this arrangement being a ground of censure, Mr. S.

asserted that, had the Secretary pursued the other mode, he would have

been animadverted upon with great severity for such an extraordinary

course. He would have been accused of ignorance of his duty, and every

loss incidental to the transaction would have been charged to his

account.

The second division of the charge, being of more magnitude, required a

more lengthy discussion. This instance of violation consisted in a

supposed deviation from the instructions of the PRESIDENT, or a supposed

acting without any instruction whatever. It was, however, begging the

question; it was taking for granted that which did not appear, and which

ought not to be presumed. And here, Mr. S. observed, the gentlemen on

the other side had entirely reversed one of the fundamental maxims of

criminal jurisprudence, which declared that innocence should be presumed

and guilt proved; whereas they had presumed guilt, and called upon the

accused to prove his innocence.

And what was the slender basis on which the presumption was built? Why,

say the gentlemen, the instructions from the PRESIDENT to the Secretary,

which have been laid before the House, relate only to the payment of the

French debt, and convey no authority to draw any of the foreign loan

into this country for the purchase of stock; and hence they infer, he

had no authority for this latter purpose.

To comprehend the fallacy of the inference, it was only necessary to

recur to the laws, and to the PRESIDENT's commission to the Secretary to

negotiate the loans. Two acts of Congress had passed; one on the 4th of

August, the other on the 12th of August, 1790. The first authorized a

loan of twelve millions of dollars, applicable to the payment of the

French debt; the other, a loan of two millions, applicable to the

purchase of the domestic debt. The PRESIDENT's commission to the

Secretary embraced both acts and both objects, and under that commission

one loan was negotiated applicable to both objects. True it is, that the

PRESIDENT's first instructions were confined to one object, namely, the

French debt; but the inference is not that no other instructions were

given, and that the Secretary acted without authority; but the very

reverse, that the PRESIDENT either left the other object to the general

discretion of the Secretary, who was, _ex officio_, the proper agent and

his representative; or that he reserved it for subsequent and occasional

instructions.

This inference must be the true one; first, because a contrary

supposition would impute to the PRESIDENT an illegal intention, that of

applying all the moneys borrowed under both acts to the object of one

only; secondly, because the commission extending to the borrowing

fourteen millions of dollars, and embracing both objects, and the

instructions being confined to twelve millions of dollars, and to only

one object, it followed that the other either was left to discretionary

management, or to after regulation, for the law enjoined the execution

of both.

If presumption, then, was to govern, the more natural presumption was,

that the officer acted according to some general discretion reposed in

him, or according to instructions from time to time given. These

instructions may have been verbal, as well as written. The written

instructions given in the first instance were evidently confined to the

object of the first act. The necessary conclusion is, that the

application of the moneys borrowed under the second act was not meant to

be included in that instruction, but was left to be regulated by a

general discretion, or by occasional directions, verbal or otherwise.

Having gone through this resolution, Mr. S. observed, that, if there was

as little of criminality in the subsequent charges as in that which he

had just discussed--and from an attentive examination he sincerely

believed it--he was satisfied that, notwithstanding all the severe

animadversions within, and all the virulent calumny without, the walls

of Congress, the conduct of the Secretary would come forth chaste and

unblemished. Instead of any thing being detected which would disgrace

Pandemonium, nothing could be chargeable to him which would sully the

purest angel in heaven. Whatever difference of opinion might exist as to

the wisdom and benefit of his measures, he was confident in saying, that

in every thing the Secretary had done, he had been guided by principles

honorable and patriotic, and he trusted that a very great majority of

the committee would, by their votes, evince the same sentiment. The

sword of justice, it was said, ought at times to be taken from its

scabbard to keep great public functionaries within the pale of the law;

but it should be remembered that if Justice had its sword to punish the

guilty, it had likewise its shield to protect the innocent. If the

Secretary had committed a wanton violation of law, let the sword be

drawn forth for his punishment; but if he has pursued the dictates of an

enlightened patriotism, the committee were called upon to raise the

shield for the defence of a faithful officer.

Mr. FINDLAY addressed the Chair as follows:

Mr. Chairman: Being strongly impressed with the importance of our time,

which is now so near an end, though I had the honor of seconding the

resolutions, I took no part in the debates of yesterday; nor will I now

detain you with replies to many of the arguments which have been offered

against the resolution now under discussion.

Upon one argument frequently introduced by the gentleman last up, viz:

the greatness of the Secretary's character, &c., I will only make a

single remark. There is no character officially known in Executive

departments of this Government, who merits pre-eminence, or to whom a

degree of greatness can be ascribed, but in proportion to his prompt

execution of the laws, and the attention with which he discharges the

duties of his office. From this rule, the PRESIDENT himself is not

exempt, much less a subordinate Secretary, whose appointment is during

pleasure, and the duties assigned him of a changeable and temporary

nature. But to come to the resolution before us. The first questions

that offer themselves, are: Was the money in question appropriated to

special and distinct purposes? Did the Secretary of the Treasury apply

the money to other uses than the law directed?

In answer to the first, it is only necessary to advert to the law

authorizing the loans. The law authorizing the twelve million loan,

appropriates whatever amount may be borrowed solely to the payment of

debts then due to France and Holland. The law authorizing the two

million loan directs the application thereof to the redemption of the

domestic debt, in aid of about ---- dollars, arising from the revenues

previous to the 1st of January, ----. These appropriations are precise,

distinct, and unconditional. With respect to the uses, no room was left

for the exercise of discretion. The will of the Legislature was express

and clearly defined; it left no room for evasion, nor any excuse for

mistake; nor did the PRESIDENT transfer to the Secretary any other

authority or instructions than what the law expressed.

But the gentleman from South Carolina says, that the presumption is,

that the PRESIDENT did give other instructions than he has communicated;

that, in this case, presumption should be admitted as conclusive

testimony, and that neither the Secretary nor the PRESIDENT is obliged

to communicate the instructions or authority to us. The gentleman is a

lawyer: I will appeal to himself; I will appeal to all the professional

members on the floor, whether presumptions can be admitted as proof,

where, in the nature of the case, positive testimony can be procured.

Surely, in courts of justice, positive testimony is always required, and

presumptive is rarely admitted; but in this case, the presumptive is by

the gentleman set in opposition to the positive. However, this is not

the case in fact. The PRESIDENT did give commission and instructions,

and those are fully communicated to us. If he conceived we had no right

to demand them, he would have told us so; if he had kept any part of

them back, he would have informed us, and assigned his reasons for doing

so. I presume that the PRESIDENT has acted the part of a candid, honest

man; the gentleman presumes the reverse. The suggestion that this House,

which has the exclusive right of originating the appropriation of money,

has no right to be informed of the application of it, is so novel and

extraordinary, so inconsistent with every idea of propriety and good

government, that it requires no reply.

Did the Secretary apply the money borrowed in Europe agreeably to the

legal appropriations and the instructions of the PRESIDENT? No, he did

not; though some of the gentlemen do not acknowledge this, yet the

Secretary has clearly acknowledged it himself, and has filled his

reports with labored and ingenious apologies for so doing. He has

suggested a variety of motives, and taken infinite pains to charm us

with the mighty public advantages resulting from his doing so. He

acknowledges combining the loans, and directing the application of them,

in the very offset, in a way contrary to law; he acknowledges having

drawn to this country, and applied in Europe, to uses for which other

moneys were appropriated, near $3,000,000. Out of this he has paid

upwards of $400,000 of the French debt, to St. Domingo. I do not

complain of paying the interest due in Europe out of the money drawn

here. The gentlemen apply the force of their arguments, with great

attention, to support or apologize for this part of the Secretary's

conduct, as if against this only the charge in the resolution lay. But

we do not object to applying that money in Holland, which ought to have

been brought here, if the money which, according to the appropriation,

should have gone to Holland, had been put to the use here for which the

other was intended. A simple exchange of money for the purposes of

conveniency or economy, is properly one of those cases to which

ministerial discretion may safely be extended; but the question before

us is, the money has not been replaced. The amount of money has not been

applied to the uses intended; consequently, the appropriation has been

disregarded. It is acknowledged that though there were upwards of

$1,300,000 of the Domestic Sinking Fund, and upwards of $2,300,000 drawn

from Europe, besides the moneys applied to the relief of St. Domingo;

yet, when these inquiries began, there was not $1,000,000 applied to the

redemption of the public debt, and even yet the whole of the domestic

appropriation has not been applied to the Sinking Fund, notwithstanding

that the public debt is now, and has for some time been under par. We

have it on record that the Secretary never informed the commissioners of

the drafts he made on Europe, although the fund was exclusively to be at

their disposal.

Mr. GILES rose.--He was sensible that he stood in a peculiarly delicate

situation, in which nothing short of the public good could have induced

him to place himself. If a public and highly responsible officer had

violated the laws, it was necessary that he should be called to an

account for it; and to determine whether in the instances before the

House, he had been guilty of that violation, it is necessary to compare

the testimony with the facts alleged in the resolutions before the

committee. He first adverted to the law authorizing the PRESIDENT OF THE

UNITED STATES to borrow twelve millions of dollars for the purpose of

paying the foreign debt. On this, he remarked that the authority of

borrowing was expressly given to the PRESIDENT, no doubt, with an eye to

the personal virtues of the character who fills that office; the loan is

also directed to be made solely for the purpose of paying the public

debt. Here he remarked, that in every appropriation law, the

appropriation is always emphatically mentioned, which is an evidence

that the Legislature intend to remain the sole judges of the

applications of money. He read a letter from the Secretary of the

Treasury, who was employed by the PRESIDENT to negotiate this loan, to

Mr. Short, the Secretary's foreign agent for this purpose, dated the 9th

of May, 1791, in which the Secretary informs Mr. Short, that one million

and a half of the money he had obtained on loan, was destined for

France; of which sum he was authorized to apply immediately one million,

but to reserve eight hundred thousand florins to answer such subsequent

directions as he should receive from the PRESIDENT. He cited this

passage to show that the million and a half which had been obtained on

loan, was destined for France.

To remove any doubt that might remain upon this head, he referred to a

preceding letter from the Secretary to Mr. Short, dated the 13th of

April, in which it is also expressly said, that of the two millions

borrowed, one million and a half is intended for France, the remaining

half million to wait for further directions. Having established this

point, he adverted to the resolution before the committee, which says,

that he applied a portion of the principal borrowed to the payment of

the interest falling due upon that principal, without being authorized

so to do by any law. To show this, he referred to a report of the 3d of

January, containing sundry statements respecting foreign loans. That

part of the report to which he alluded in proof of the fact, stated in

general terms, a sum paid on account of foreign loans, and this sum was

taken from the principal borrowed, and amounted to 1,833,189 florins. If

his statement was accurate, the fact he wished to establish was proved.

He wanted more light, he confessed, than he could collect from the

Secretary's official communications. He should not go into the

examination of what circumstances might have induced the Secretary to

deviate from the positive injunctions of the law, or to make any remarks

upon his conduct, until he had heard what gentlemen would say to

controvert the fact he wished to establish.

Another fact of consequence he wished to prove, viz: that part of the

money obtained on loan in Europe had been drawn over, though not wanted

here for any public purpose. This appeared from other papers. He turned

to the instructions from the PRESIDENT to the Secretary of the Treasury,

authorizing him to borrow $14,000,000, in which the Secretary is

cautioned to keep in view the two several acts authorizing the loans,

and the distinct conditions they contemplate. By the instructions of the

PRESIDENT, the Secretary is authorized to apply the moneys. In the

execution of the trust confided to him, the PRESIDENT generally directs

him to employ Mr. Short to negotiate the loans, to borrow in the manner

prescribed by the acts, and to discharge immediately the arrears of

interest due to the French, to which purpose and to the complete payment

of that debt the twelve million loan was altogether appropriated. If

this money, then, was shown to have been drawn here, it was neither

warranted by law nor by the PRESIDENT's instructions. The Secretary did

begin to draw as early as 1790, and had continued to draw from time to

time, till 1793, without giving notice of this to the Legislature.

Having shown that the Secretary had drawn without authority to draw, he

next proceeded to consider the purpose of those drafts.

The money thus drawn for was not, he stated, applied to the purchase of

the public debt. No money obtained from foreign loans was thus applied

until this year; the domestic resources appropriated to this object were

never exhausted. These were the facts involved in the first resolution,

which he wished to establish. Before he proceeded further into the

discussion, he wished to hear what gentlemen had to say to controvert

them. He wished to see justice done in the matter before the House; he

wished justice, also, to be tempered with moderation and mercy; and if

gentlemen could show the necessity for deviations from positive law,

which he had endeavored to point out, it would exonerate the Secretary

from a very great share of blame.

Mr. BARNWELL called for the reading of certain parts of the two acts

authorizing the loans. One of the 4th of August, authorizes a loan of

$12,000,000, to be obtained without limitation as to the interest, for

the purpose of paying the foreign debt; the other is of the 12th of

August, for $2,000,000, the interest to be not more than five per cent.,

and for the purpose of reducing the domestic debt.

Mr. SEDGWICK, to disprove that the drafts alluded to have been made

without the knowledge of the Legislature, called for the reading of the

PRESIDENT's Speech to both Houses on the 8th of December, 1790, and a

subsequent report of the Secretary of the Treasury to the same point. By

this, it appeared that the power of borrowing, having been exercised

under the joint authority of the two acts, the Secretary states a

difficulty that had occurred to him on the subject of the drafts alluded

to. The money having been obtained on an interest of five per cent.,

exclusive of douceurs, he wished the Legislature to determine whether it

might strictly be considered as borrowed under the second act, which

limited the interest at five per cent. This was sufficient, he

conceived, to show that the Legislature were not ignorant of those

drafts, and an act was passed solving the Secretary's doubt, and

sanctioning his construction of the law.

Mr. GILES remarked that he had drawn before that sanction was obtained.

Mr. FITZSIMONS observed, on the first charge in the resolution, that, as

the interest of the money borrowed in Europe is payable where borrowed,

it was economical in the Secretary to pay that interest with moneys

there, which were to be drawn here, and replace the sum by taking the

amount from the funds here destined for that payment. A financial

operation of this nature is simple, and saves the trouble of drawing

with one hand and remitting with the other. He conceived there was no

just foundation for the first charge.

Mr. LAURANCE said, that when the resolutions calling for information

from the Treasury Department were first brought forward, the public mind

was impressed with an idea that there were moneys unaccounted for. This

charge is now dropped, and it is honorable to the officer concerned

that, after much probing, nothing is found to support it. The inquiry

now is, whether a debt was paid out of this or that fund. He did not

admit the fact, that it was paid out of any other moneys than what law

strictly warranted. He went into a history of the subject from its

origin. He stated the nature and purposes of the loans. There was

nothing to prevent the PRESIDENT from consolidating the two loans,

provided such an arrangement did not interfere with the purposes

intended by them. The PRESIDENT employed the Secretary to obtain the

loans under the joint authority of both acts, as it was found that the

object could best be carried into effect by such an arrangement. The

money thus borrowed became subject to the appropriations of both acts,

and not exclusively for the payment of the foreign debt. Then, as part

of that money was subject to be drawn here for the redemption of the

domestic debt, and the interest of the loan was to be paid with domestic

funds, it was perfectly reasonable to avoid further drafts and

remittances to pay the debt there with money there, and replace it here

with money already here. The fact stated in the first part of the

resolution is, by this plain statement of the case, substantially

refuted, and appears altogether unfounded; but if the fact is proved,

what is implied? No injury to the interests of the community; the

intention of the Legislature has been in every point fulfilled. If the

Secretary had acted differently, he would have been guilty of an

absurdity, and to blame for sacrificing the public interest and

neglecting the spirit of a law for a strict and unprofitable observance

of its letter.

Mr. SEDGWICK, by adverting to the Speech of the PRESIDENT and Report of

the Secretary, had shown that the Legislature had been made acquainted

with the drafts, and sanctioned future ones on the same principles. The

latter part of the first resolution criminates the Secretary for making

them without instructions from the PRESIDENT. Even if this was the case,

he did not know whether this was really reprehensible. He defended it on

the ground, that the Secretary is the officer appointed by law to

superintend the finances and apply all moneys agreeably to

appropriations. He took a view of the subject, as stated by Mr.

LAURANCE, and concluded by asking, whether, if the Secretary was found,

on a critical examination, to have deviated in a trifle from the letter

of the law, such a deviation was sufficient to warrant the alarm's being

sounded from St. Croix to St. Mary's, and whether the precious time of

the House, at the close of the session with a vast variety of business

on their hands, should be taken up in so unprofitable and frivolous an

investigation?

Mr. GILES said, the transaction alluded to by the gentleman to

controvert the fact laid down in the first part of the resolution before

the committee was not immaterial, as they had endeavored to show it. It

was not merely a financial operation to avoid the necessity of drawing

and remitting. The truth was, that the Secretary had drawn over nearly

$3,000,000. The PRESIDENT's authority was limited to $2,000,000.

Mr. LAURANCE was of opinion, that if the PRESIDENT, or his agent, had

drawn the whole amount of the money obtained under both loans, he could

not be said to have gone beyond his authority. He was authorized to

borrow $12,000,000 to pay the arrears on the foreign debt, and to modify

the whole. In the execution of this trust, he might have found it

advisable to draw to the country the whole of that sum. It had been

found advisable to draw for part, and to pay the French by shipping

produce to St. Domingo. If the money expended for supplies to St.

Domingo is deducted, the balance will be found less than $2,000,000.

Mr. L. contended, that the interest of the moneys borrowed was not paid

out of the principal of the loan, as set forth in the first charge of

the resolution before the committee. If gentlemen would attend to the

history of the transaction, they would find this strictly true. This

interest was paid out of the moneys borrowed for the reduction of the

public debt, and not out of those intended to pay the French, and the

funds appropriated for the payment of that interest were here to replace

the former and be applied as those were appropriated. He referred to the

PRESIDENT's Speeches at the commencement of the two last sessions, to

show that the loan was obtained under the joint authority of both acts;

and adverted to the act of Congress, in consequence of a doubt suggested

by the Secretary, explaining that the moneys first obtained might be

considered as borrowed under the act authorizing the two million loan.

Having shown the first charge in the resolution to be unfounded, he

turned to the second.

The Secretary is accused of drawing moneys to this country without

instructions. In this transaction the PRESIDENT must be considered as

the principal, and the Secretary the agent, or the Secretary must be

looked upon as the principal. If the PRESIDENT is the principal, and he

be authorized to obtain the loans, as soon as the money is obtained it

naturally falls under the direction of the financier; but if it be

contended that the PRESIDENT was to have applied the moneys as well as

to borrow them, then we have nothing to do with the agent; that agent is

accountable to his principal, and as this principal is not called to an

account by the Legislature for any improper exercise of discretion, he

must be considered as having acted strictly within the law. If the

Secretary is considered as the principal, (and by a strict attention to

the law, he believed, it would be found so, for the PRESIDENT is by it

authorized to borrow, and it is not expressed who shall apply the

money,) then it was not one of the duties of the Secretary to procure

the instructions of the PRESIDENT; being the principal, and consequently

having the direction of the money borrowed, he is made the judge of the

time of drawing, to fulfil the intention of the law. Was the money, he

asked, to have remained in the hands of the banker in Europe? Since it

was borrowed for the purchase of the public debt, the sooner it was

drawn over the better, and the Secretary having the direction of those

moneys, could do it without consulting the PRESIDENT. He proceeded to

show, however, that the Secretary had by no means acted entirely without

regard to the PRESIDENT's instructions. His letter to Mr. Short, which

had been read, expressly says, that he is waiting for instructions from

the PRESIDENT, and the only instructions brought forward clearly show,

that he did not act without them. On this occasion it was not necessary,

he conceived, that all the private communications between these two

officers should be brought forward; indeed, many of the instructions

might have been verbal, and of a private nature. Another proof lies

before the committee, to show that the Secretary did not act independent

of instructions. A report of the Secretary mentions that some matters

relative to the loans were under consideration of the PRESIDENT OF THE

UNITED STATES. This document, the gentlemen were in possession of when

they framed the resolutions; and it, in his opinion, left very little

ground indeed to suppose that the Secretary had acted without

instructions.

Mr. MERCER next rose. None of the communications from the Secretary of

the Treasury had removed his suspicions relative to the transactions of

that department. What had fallen in the course of the discussion, had

not removed his doubts. He confessed himself more at a loss than ever to

account for the conduct of that officer. To judge of the propriety of

his conduct, it was necessary to consider what his duties are, and

investigate whether a necessity existed to justify the drawing

complained of. Gentlemen, in their arguments, had alluded to some

observations that had fallen from him on other occasions expressive of

his opinion, that there had been corruption in that department. This

opinion he still entertained. He suggested that some irregularities had

taken place as to the money appropriated to the Sinking Fund. This might

be the fact, and his suspicions were sufficiently urgent to warrant him

in suggesting that it might be possible. At the close of 1792, he stated

there was a balance of cash in the Treasury of $2,331,182, and the bonds

due in the course of the present year would produce a sum of about

$2,269,000. Yet a proposition was made in the House, predicated on a

total want of money in the Treasury, to borrow $800,000 in addition to

the $400,000 already borrowed of the bank.

[Here Mr. BOUDINOT interrupted the member, as being out of order. The

Chairman, conceiving Mr. MERCER's remarks to be introductory to, and

connected with the observations he intended to make on the resolution,

declared him in order.]

Mr. MERCER proceeded to show, by sundry statements and calculations,

that there was no necessity for this loan of $800,000. The House, he

said, to discharge their duty, should be satisfied how the money

appropriated was applied, before they consented to repeated additional

appropriations. When calls for information had been made by the House,

with a view to comply with this their indispensable duty, the Secretary

had thought it sufficient to balance money actually received, by

calculations of sums that would probably be wanted agreeably to

appropriations. Were dollars, he asked, to be balanced by absolute

appropriations? Can things certain be balanced by things uncertain?

Actual expenditure would alone balance actual receipt. Appropriations

founded only on uncertain calculations could not show the money actually

laid out. He adverted to some calculations made to ascertain the

probable expenses of the War Department.

[Here the member was again called to order, and was declared out of

order by the Chairman.]

Mr. M. confined his observations more immediately to the resolution

before the committee. It had been said, that the interest paid was paid

out of moneys that were to be drawn to this country, and were replaced

here by funds from the domestic resources originally appropriated for

that object, and that the dead letter of the law, if any part of it, had

alone been violated. He contended there had been an essential violation.

The sums drawn for and appropriated to reduce the public debt, were not

applied to that purpose; the domestic resources appropriated to that

object, never were exhausted. If this is the case, conclusions surely

unfavorable to that officer must naturally follow.

He proceeded to make some remarks on the question, whether the Secretary

had acted under instructions from the PRESIDENT. It was disagreeable, he

premised, to criminate the character of any officer. He bore a great

respect for the PRESIDENT, for his virtues, talents, and services, but

however grating to his feelings it might be to find fault with any part

of his conduct in this matter, he was unable to discharge his duty under

his present impressions, unless he avowed that he conceived that officer

had violated the law, though he allowed, without intention, by not

inquiring into the subject, while transacting, as it was his duty to do.

He must declare that he saw no proof that the Secretary had acted under

the PRESIDENT's instructions. On the contrary, he saw the reverse,

there was even no presumptive proof of the fact. The House has called

for information as to the extent of the authority delegated by the

PRESIDENT to the Secretary. Either the Secretary has produced the proof

of this authority, or he has not complied with the order of the House;

it does appear that he has gone beyond it in making the drafts

complained of. The PRESIDENT directed that the proceeds of the loan be

immediately applied to pay the French; yet a great portion of that money

was brought over here. It was said that he might have brought the whole

here if he chose and paid it to the French here. This argument goes on

the presumption that the PRESIDENT might do wrong without incurring

blame. But the PRESIDENT expressly directed it to be paid immediately to

France; and the House had no right to presume that he did direct the

money to be drawn here, when proof to the contrary appears. Upon the

whole, he concluded that the law had been broken in letter and

substance, and that the Secretary had acted without proper instructions

from the PRESIDENT.

Mr. LIVERMORE observed, that the charge against the Treasury Department

was at first well calculated to beget serious alarm. When

misapplications of the public money are sounded in the public ear, all

feel interested, knowing, that what affects the public purse, must in a

degree affect the purses of each private individual. In the present

stage of the subject, he was happy in being able to felicitate himself

and his fellow-citizens, that even should the whole of the charges

contained in the resolutions be proved, it would not appear that they

had lost a farthing by the conduct so loudly complained of. What is the

charge? That the Secretary has paid an interest that was justly due; why

then, he presumed we should not have it again to pay. If the Secretary

has paid what was due, what then is the complaint? It was surely not

intended that it should not have been paid. This was not the intention

of Congress; for they passed an act providing funds for its payment. The

Secretary was then right to pay it. But, it is said, he paid with the

wrong money. He saw no harm in not paying it with the very dollars

appropriated, and approved of the operation, which saved drawing with

the one hand and remitting with the other; in this there was no crime

committed, no loss incurred. It appears, on the contrary, that something

was gained by it. So far, then, he was clear, no law had been violated,

nor was any rule of propriety departed from. He then touched upon the

Secretary's disputed right to draw. He contended, that he had that

right. The loans were obtained under the joint authority of the two

acts. It was said that more than two millions, the amount appropriated

for the Sinking Fund, were drawn over; but, he insisted, he might have

drawn the other twelve millions, if it had been for the public interest

so to do. The French wished to be paid here, and it being no loss, but

rather a profit, to comply with their wish, where was the harm in so

doing? If any public loss had been incurred owing to these drafts, then

blame would lie. He concluded, by expressing his hearty approbation of

the conduct of the officer who is criminated by the resolutions, and

declared it as his firm intention to give them his negative.

Mr. HILLHOUSE argued, that the interest paid, was not paid out of the

$2,000,000 loan, and that the drafts were made agreeably to the

directions of the PRESIDENT. He showed this by the documents which had

been already referred to. He put in a clear point of view the propriety

of avoiding the expense and risk of drafts and correspondent

remittances, and concluded by giving his approbation to the conduct of

the Secretary in the transactions complained of, and by expressing it as

his firm belief that a majority of the committee, from the evidence

before them, would undoubtedly be of opinion that the charges brought

forward are unfounded.

Mr. SEDGWICK rose to correct a mistake of Mr. MERCER's. The gentleman

had asserted, that the Secretary had drawn on Europe, before the loan,

obtained by the commissioners under the old Government, was ratified.

This was not the case. The loan had been ratified in pursuance of the

provisions of the act authorizing it. The PRESIDENT in his Speech,

December 8, 1790, says, "that agreeably to the powers vested in him at

the last session, the loans in Holland had been completed."

By existing acts of the Legislature, and from express communications

from the Secretary of the Treasury, it appears, that all the moneys

borrowed were deemed borrowed under the joint authority of both acts,

and not to be solely appropriated for the payment of the foreign debt.

Mr. MERCER explained, that he had said, that the Secretary had drawn

from the loan obtained under the authority of the old Government, before

said loan was legalized by law. If the Legislature had the right to

legalize it, they had the right to reject it.

Mr. LEE next rose. He observed that as he found himself under the

necessity of differing from his friend who had moved the resolution,

with whom he generally agreed in opinion, and was accustomed to act, he

begged the attention of the committee for a few minutes. To determine

whether the Secretary of the Treasury had acted legally, it was

necessary to examine whether the authority from the PRESIDENT and his

subsequent instructions authorized him to consolidate the loans under

the acts of the 4th and 12th August, 1790.

On this question Mr. L. observed, that there seemed to be no objection

to such a construction, except that which arose from the difference of

interest allowed by those acts; that the first loan was commenced

without any regular authority by a company in Amsterdam; that it

received its authenticity from the acceptance of the Secretary of the

Treasury. The interest and douceurs on this loan amounted to more than

an interest of five per cent., which was the only premium contemplated

by the act of the 12th of August. It could consequently be accepted only

under the act of the 4th of August, which gave no limitation to the

interest which was to be allowed. The money seemed therefore solely

applicable to the payment of the foreign debt. From his report of the

24th of February, 1791, the Secretary himself seemed to have had this

impression; Congress seemed also to have this impression as on the 3d of

March following they passed an act authorizing the application of this

loan to the object of the act of the 12th of August, 1790. After the 3d

of March, 1791, therefore, the Secretary of the Treasury had a right to

bring this money to America for the purposes of the Sinking Fund. The

interest of the 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 Sinking Fund. This was a mode of bringing the money here, and he was

not limited in his discretion as to the mode; and therefore had a right

to follow that which appeared to him most advantageous. The paying of

the foreign interest out of this loan was made after the 3d of March,

1791.

Mr. L. had no doubt as to the legality of all the proceedings relative

to moneys drawn to this country subsequent to the third of March, 1791;

even the moneys borrowed for the foreign debt, because a higher interest

than five per cent. was stipulated for, on any of the subsequent loans,

and because the PRESIDENT, in his instructions 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 first

place, to America, the legality of such a measure cannot be questioned,

though the economy and wisdom of it may not be admitted. On this point,

Mr. L. acknowledged, that he had not time to examine minutely all the

statements and reports of the Secretary to judge of those exigencies

which induced the drawing of all the money which had been drawn to

America.

Whether it had been consistent or not with the interest of the United

States, Mr. L. was of opinion, that the Secretary had legally a right to

bring all the money he had drawn for to America, except what was drawn

prior to the third of March, 1791. This money was drawn out of the first

loan; it was drawn, as declared, for the Sinking Fund; the first loan,

for the reasons before stated, could not be applied, and consequently,

till the act of the 3d of March, 1791, this money could not be legally

drawn for the Sinking Fund. Perhaps this act caused the irregularity of

this proceeding.

But is not the Secretary of the Treasury subject to blame? Mr. L.

observed, he thought he was not altogether free from it. At the meeting

of Congress on the 8th day of December, 1790, the PRESIDENT in his

Speech informed both Houses, that the first loan had been accepted, and

that the Secretary of the Treasury had directions to lay the particulars

before them. But what did he do? On the 15th of December following, he

began to draw money on account of this loan to America, for the Sinking

Fund; though from his report on the 24th of February, 1791, he appears

to have had a doubt as to the legality of this proceeding. He delayed

giving information, in conformity to the PRESIDENT's Speech, till a few

days before the dissolution of Congress. This conduct, Mr. L. said,

seemed to argue a distrust of the Legislative Councils. Mr. L. dilated

on the necessity 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, subsequent to it, relating to this point, which he was

sorry to find himself under the necessity of voting for.

Mr. BOUDINOT considered it as the duty of the committee in the

discussion of the charges brought forward to confine themselves strictly

to the points in question. The present examination differed from

ordinary Legislative business. Specific charges are brought forward

against a highly responsible officer; the facts brought forward to

support those charges should be understood and considered, to form a

right judgment on them. The Secretary is charged with having violated a

law, by paying the interest due on a loan out of the principal of that

loan. He went into some statements and calculations to show that the

money paid on account of foreign loans, as stated in official documents,

could not have been paid on account of interest of the late loans, from

the disproportion of the sums.

He need say nothing more, he conceived, to show that the first charge in

the resolution immediately before the committee is unfounded. If what he

said was not sufficient to disprove it, he asked where is the evidence

to support it?

He next turned to the second charge in the resolution, viz: that the

Secretary had made the drafts complained of without the PRESIDENT's

instructions. Here he noticed a mistake some gentlemen had fallen into,

when speaking of the call of the House for information. This was a

request to the PRESIDENT, and not an order to the Secretary. From the

information communicated in consequence of this call, it did not appear

that the Secretary had acted without, or contrary to instructions, and

he insisted, that he ought to be presumed innocent till he was proved

guilty.

He argued that the authority given to the PRESIDENT in the subject put

it in his power to draw the whole fourteen millions to this country, if

he thought fit; it could not, therefore, he contended, be insisted, that

the amount of the drafts had passed the limits of the authority given.

It is not denied, he proceeded, that there was a right to draw for the

two millions appropriated for the reduction of the public debt. Well, it

has appeared, on a certain occasion to the House, that our Minister in

France negotiated a contract with the National Assembly, or their

officers, for the payment of $800,000 of the debt due them, here; then

certainly, the exigency of the case required that this sum should be

drawn here for the purchase of provisions for St. Domingo, in which this

payment was to be made. Here then was a positive necessity of drawing

for $2,800,000 and as a discretionary power in the subject had been left

to the Executive, they might have found it advisable, perhaps, under an

expectation of additional payments in the same manner to have drawn over

as much more as they might have thought prudent.

He adverted to the application of the Secretary to the Legislature to

declare whether the loan obtained, for an interest of five per cent.,

exclusive of douceurs, might be considered as borrowed under authority

of the $2,000,000 act. It was his (Mr. BOUDINOT's) opinion at the time,

that no explanatory law was necessary; and that the Executive had power

to construe the act in that sense. This was also the Secretary's

opinion, and in consequence of that opinion he had drawn bills. He

thought it however right to apply to the House and have every doubt

removed, and the Legislature sanctioned his construction of the law.

It had been said, that if the Legislature had a right to confirm, they

also had a right to reject the construction put upon the law by the

Executive. This, he conceived, they would not have been warranted in

doing, after a contract agreeably to that construction had been made;

such a proceeding must have involved a breach of contract.

It had been repeatedly asserted and strenuously insisted on, that the

Legislature were totally in the dark, as to the drafts from Europe. To

disprove this assertion, he read several items from sundry reports of

the Secretary, where sums received on account of loans are specified. It

had also been said, that there was no evidence that any part of the loan

was applied to or intended for the purchase of the public debt.

This also appears unfounded, from a note dated 25th of August, 1790,

laid before the Trustees for purchasing the public debt, which expressly

mentions, that a loan had been negotiated, part of which was destined

for the purchase of the public debt, and that some points relative

thereto were before the PRESIDENT for his approbation. This also showed

that the PRESIDENT had knowledge of such intentions. His Speech, and the

Report of the Secretary, in consequence of part of that Speech, which

had been so repeatedly referred to, also unequivocally prove this point.

He recapitulated the heads of his arguments, and concluded, that if

nothing further could be brought in support of the charges now before

the committee, they should have his decided negative.

Mr. MADISON.--He wished not, he said, to waste a moment of the small

portion of time left, by regretting its insufficiency for a full

discussion of the subject before the committee. But he thought it due to

truth, and to the honorable and independent motives of his colleague

(Mr. GILES) in proposing the resolutions, to remark, that the lateness

of the day to which they had been postponed did not justify the

strictures which had been made on it. If the delay was not to be

considered as unavoidable, some blame, at least, would fall elsewhere.

The inquiries in which the whole matter originated, had been moved by

his colleague, and passed the House some weeks ago. The reports in

answer to these inquiries had not been finally made and printed a single

day before the present resolutions were submitted to the House. He

admitted that it might have been impracticable to report the information

called for, as early as was desired by the House. He was sensible of the

anxiety that would be naturally felt by the officer called upon, to

present every consideration that might place his conduct in the most

favorable point of view; yet, with all these allowances, it was

impossible to deny that the reports contained things which did not

belong to them, and therefore consumed time which, belonged to the

period for discussion. He would mention one instance on which there

could not possibly be a difference of opinion, viz: the vindication,

formally undertaken by the Secretary, of the policy of borrowing money

abroad. Whether his policy was right or wrong, the Legislature had

themselves decided in favor of it; and it was the duty of the Secretary,

in complying with the orders of the House, to inform the House how the

law had been executed--not why it had been made; to explain his own

conduct,--not to justify that of the Legislature.

It had been asked why the call for information had not been sooner made?

The answer was obvious and simple. It was not sooner perceived by the

House, that there was such a necessity for it. The want of information

was first suggested by the bill for paying $2,000,000 to the Bank,

although $200,000 only were immediately due, and for authorizing another

foreign loan to the amount of $2,000,000. From the dawn of light thrown

by some circumstances incident to the occasion on the darkness in which

the House had remained, proceeded those doubts and inquiries which had

led to the information now possessed. His colleague had great merit in

having brought about this development. He had rendered a service highly

valuable to the Legislature, and no less important and acceptable to the

public. One good effect of the information had been, that it prevented

the passage of the bill for borrowing $2,000,000 as an anticipated

payment to the Bank. The bill had dropped from the hand of its patron

with the first light that broke in upon the House. What other measures

would have been prevented or varied, if a like knowledge of our funds

and finances had been sooner obtained, was matter of serious

consideration.

Another consequence of the reports, taken together, was, that the face

of them presented to his colleague an evidence of the charges contained

in the resolutions. Whether, at so late a day, it was best to leave the

subject as exhibited by the various documents in print, for the

examination and opinion of the public, or to press it on the

consideration of the House, was a point which every member had a right

to decide for himself. His colleague had viewed the positions stated in

his motion as too important to be suspended, and as supported by such

clear and authentic proofs, that a small portion of time would suffice

for the subject. Under this impression, what was his right became his

duty; and he had discharged it by offering his resolutions to the House.

As the House had refused to commit the two introductory resolutions,

which established the rule of judgment to be applied to the case, and

the last also, which declared the inference to be drawn, the task of the

committee was limited to a simple inquiry into the facts stated. They

were to make out and report a special verdict of these, and leave it to

the House to pronounce the proper judgment arising from them.

The resolution immediately before the committee imported, "that the

Secretary of the Treasury had violated the law passed on the 4th of

August, 1790, making appropriations of certain moneys," first, "by

applying a certain portion of the principal borrowed to the payment of

interest on that principal;" secondly, "by drawing part of the same

moneys into the United States, without the instruction of the

PRESIDENT."

The questions here are questions of fact; and whatever quality may be

attached by different gentlemen to the several facts, it would seem as

if the facts themselves are too clearly supported by the Reports of the

Secretary, and the documents attending them, to be denied or

controverted.

The law of August 4, 1790, authorized the PRESIDENT to cause to be

borrowed $12,000,000, to be applied to the Foreign Debt of the United

States. A subsequent law of August 12, 1790, authorized another loan of

$2,000,000, to be applied to the Domestic Debt of the United States. A

power to make these loans was delegated, on the 28th of August, 1790, to

the Secretary, by a general commission, in the usual form, referring to

the several acts above mentioned, but without any further discrimination

of the loans to be made. As the law, however, for applying loans to the

foreign object was prior in date, the presumption would rather be that

it was to have a priority of execution; that the first money borrowed

was to belong to the first object provided for. It was unnecessary,

however, to dwell on this consideration, because the PRESIDENT had

removed all uncertainty by the precise explanations and instructions

which accompanied the power to the Secretary, and which ought, in truth,

to be deemed a part of the commission. The instruction having been more

than once read to the committee, he would content himself with referring

to it.

The part referred to is in the following words:

"I do hereby make known to you on the execution of the said

trust, you are to observe and follow the orders and

directions following, viz: Except where otherwise

especially directed by me, you shall employ in the

negotiation of any loan or loans which may be made in any

foreign country, William Short, Esq.; you shall borrow, or

cause to be borrowed, on the best terms which shall be

found practicable, and within the limitations prescribed by

law as to time of repayment and rate of interest, such sum

or sums as shall be sufficient to discharge, as well all

instalments or parts of the principal of the foreign debt,

which are now due, or shall become payable to the end of

the year 1791, as all interest and arrears of interest

which now are, or shall become due, in respect to the said

debt, to the same end of the year 1791. And you shall

apply, or cause to be applied, the moneys which shall be so

borrowed, with all convenient despatch, to the payment of

the said instalments, and parts of the principal and

interest, and arrears of interest of the said debt. You

shall not extend the amount of the loan which you shall

make, or cause to be made, beyond the sum which shall be

necessary for completing such payment, unless it can be

done upon terms more advantageous to the United States,

than those upon which the residue of the said debt shall

stand or be. But if the said residue, or any part of the

same, can be paid off by new loans, upon terms of advantage

to the United States, you shall cause such further loans as

may be requisite to be made, and the proceeds thereof to be

applied accordingly. And for carrying into effect the

objects and purposes aforesaid, I do hereby further empower

you to make, or cause to be made, with whomsoever it may

concern, such contract or contracts, being of a nature

relative thereto, as shall be found needful and conducive

to the interest of the United States."

By this formal act, issued along with the commission to the Secretary,

the PRESIDENT designated the object to which the loans to be made were

to be applied; and by declaring the object to be that provided for by

the act of August 4, 1790, he expressly placed the loan under the

authority and provision of that act; so that the moment the money should

be borrowed, it was to stand legally appropriated to its specified

object--as much as if another law authorizing another loan for another

purpose, had not existed.

This arrangement of the PRESIDENT was the more proper, not only because

provision for the payment of the foreign debt had been the primary

object of the Legislature, and the payment of the French debt the

anxious wish of their constituents, but because payments to France were

no longer matter of option, but of strict and positive obligation on the

United States. In proof of this, he stated that the debt of France,

calculated to the end of 1791, and computing the livre at 5 4-10 to a

dollar, amounted to $4,814,814, whilst the payments actually made,

computing the florin at 2-1/2 to a dollar, amounted to more than

$3,372,717, leaving, as a balance, at the end of 1791, $1,442,097.

Adding to this balance the instalments due for 1792, amounting to

$638,888, there were to be paid within that year $2,080,985. The entire

payments, however, composed of $656,500 in Europe, and $726,000 put to

the account of St. Domingo, (although $444,263, 83 were actually paid,)

amounted to $1,382,500, leaving due at the end of 1792, a balance of

$698,485.

Here Mr. M. adverted to and read a paragraph in the Report of the

Secretary, page 16, where in allusion to the measure of drawing bills in

the latter part of 1792, he says: "I feel myself the more at liberty to

do it, because it did not interfere with a complete fulfilment of the

public engagements in regard to the foreign debt. It could be done

consistently with a full reimbursement of all arrears and instalments

which had accrued on account of that debt."

Mr. M. observed, that, as he could not reconcile this paragraph with the

calculations which he had stated, and which were drawn from official

documents, he must regard it as an unquestionable error, produced by

some hasty view of the subject.

Returning to the commission, Mr. M. repeated that all the money which

that instrument, defined and qualified by the instruction annexed to it,

authorized the Secretary to borrow, was actually and specifically

appropriated to the payment of the foreign debt, and under circumstances

particularly urgent, in relation to a part of it.

In what manner had this trust been carried into execution? It was to be

observed, with regret, that, on the very day on which the commission and

instruction issued from the President, the Secretary commenced his

arrangement for diverting part of the loan, accepted and ratified by

virtue of his commission, to a purpose different from that specified and

required by his instruction. That a fact of so extraordinary a

complexion might be grounded on the most unexceptionable proof, Mr. M.

said he should take the liberty of supporting it by the authority of the

Secretary himself. Here he read from the Secretary's letter, dated

August 28, 1790, to the Dutch houses from whom the loan had been

accepted, the following passages, viz:

"I should also wish, for particular reasons, that the

business may be so regulated as to give it the form of two

loans--one for two millions under the first act, and the

other for one million under the second. But neither about

this am I so solicitous as to be willing that it should

constitute an embarrassment."

"I destine a million and a half of this sum as a payment to

France, under the direction of Mr. Short, our Chargé

d'Affaires at that Court, whose orders for that purpose you

will please to follow."

The aspect here presented by a comparison of the several documents, was

singular and remarkable. The subordinate officer appeared in direct

opposition to the Chief Magistrate. The agent was seen overruling, by

his own orders, the orders of his principal. The language of the

President was, "By virtue of the power vested in me by law, I destine

the money to be borrowed to the discharge of the instalments and

interest of the foreign debt." The language of the Secretary was: "I

destine a part of the money only to that purpose, and a part to be

brought to the United States for other purposes." He left every member

to make his own reflections on the subject. He would only observe, in

general, that it demonstrated the truth asserted in the proposition,

that the Secretary had violated both the law of August 4, 1790, and the

instruction of the President relating to it.

He then proceeded to a more distinct view of the two points particularly

stated in the resolution. The first was, "That a certain portion of the

principal borrowed under the act of August 4, 1790, had been applied to

the payment of the interest falling due on that principal." As the fact

would not, he presumed, be denied, he forebore to quote that part of the

documents which admitted and authenticated it. He would, however,

premise to any observations on it, a cursory view of the nature of

appropriations.

It was unnecessary to repeat the emphatic remarks on this subject, which

had fallen from the member from Pennsylvania, (Mr. FINDLAY.) It was

sufficiently understood. He concluded that appropriations of money were

of a high and sacred character; that they were the great bulwark which

our constitution had carefully and jealously established against

Executive usurpations. He meant only to take notice of the different

plans into which appropriations might be moulded, and of the particular

operation which ought to be given to them.

One of the plans was that of appropriating specified funds to specified

objects, in which the supposed certainty of the funds was adjusted to

the supposed importance of the objects.

The other plan formed all the branches of revenue into an aggregate

fund, on which the several objects should have a priority of claim

according to their superiority of importance. It was evident that in

both these cases, the Legislature alone possessed the competent

authority. The exclusive right of that department of the Government to

make the proper regulations, was the basis of the utility and efficacy

of appropriations.

There was a third question incident to the doctrine of appropriations,

viz: Whether, under specific appropriations, such as had been adopted by

Congress, the Executive authority could, without special permission of

the law, apply the excess of one fund to the aid of a deficient one, or

borrow from one fund for the object of another. On this question, there

might perhaps be a difference of opinion. He would only remark, that,

admitting such a discretion to be implied in the trust of executing the

laws, it would still be requisite that the due sanction of the Executive

should be given, that a regular account should be kept between the

different funds, and that all advances from one to the other should be

replaced as soon as possible. This was equally necessary to the

preservation of order in the public finances, and to a proper respect

for the authority of the laws.

In the present case, it did not appear that the moneys taken at

different times from the loans designated by the President, and thereby

placed under the appropriation of the act of August 4, 1790, to the

foreign debt, had ever been replaced. It did not appear that any such

replacement was regularly planned or provided for. It was particularly

worthy of observation, moreover, that the only use within the United

States for which any loan in Europe could be assigned, was that of the

Sinking Fund; that the Trustees of this fund had never been even

informed of the drafts; that if the moneys drawn had been carried to the

Sinking Fund, the limited sum of $2,000,000 would have been exceeded;

and that the statements and accounts had, in fact, been so wound up, as

mentioned by the Secretary, that not a single dollar of the money laid

out in purchasing the public debt had been charged on loans drawn into

the United States, although such was the only purpose to which they were

legally applicable, and such the principal reason assigned for making

the drafts.

He did not go into a particular proof that the sum drawn into the United

States, after subtracting the whole sum placed to a foreign account,

exceeded the sum of $2,000,000, because the fact had been conceded on

the other side, particularly by the statement of the member from

Connecticut, (Mr. HILLHOUSE.)

Thus it appeared clearly, in confirmation of the first point, that the

application of a certain portion of the principal borrowed in Europe, to

payment of the interest, was not a mere transposition of moneys, to

prevent the sending them backwards or forwards, nor an advance of money

from an overflowing fund in favor of a deficient one; but an absolute

diversion of appropriated money, and consequently a violation of the law

making the appropriation.

The second point in the resolution related to the drawing of moneys into

the United States without the instruction of the President. This point

had been fully established by the documents and explanations applied to

the first. They had done more: they had demonstrated that the

instructions of the President, which dedicated the loans to be made

under his commission to a foreign object, were an express prohibition of

drafts for any domestic object. It was sufficient, therefore, to refer

to the instructions of the President, and to the contradictory steps

taken by the Secretary. Two attempts had been made to elude the force of

these official proofs. The first appealed to the President's Speech at

the opening of the session in 1790; to the Report of the Secretary, made

in consequence of it, to the House; and to the supplementary act of

Congress passed in conformity to the Report.

Had the circumstances involved in this transaction been attended to by

those who seemed to rely on it, Mr. M. was persuaded that a reference to

it would never have been made by gentlemen on that side. As they had

thought fit, however, to draw arguments from that source, it was proper

to give an answer to them; and the best answer would be a naked

statement of facts.

The instruction of the President to the Secretary was given, as has been

seen, on the 28th of August, 1790. The letter of the Secretary

contravening this instruction, was dated, as has also been seen, on the

same 28th day of August, 1790. The actual drawing of bills by the

Secretary commenced the 15th of December, 1790. The law now pleaded in

justification of the conduct of the Secretary, passed on the 3d of

March, 1791.

There are other facts material to a correct and full view of the

subject. The Speech of the President was delivered on the 8th of

December, 1790. It briefly informed the two Houses that "a loan of

3,000,000 of florins, towards which some provisional measures had

previously taken place, had been completed in Holland," and "that the

Secretary of the Treasury had discretion to communicate such further

particulars as might be requisite for more precise information." The

consequent Report of the Secretary, recommending the provision in the

supplementary act, was not received till the 25th of February, 1791--six

days only before the constitutional dissolution of the House. In the

interval between the Speech of the President and the Secretary's Report,

he had proceeded to draw bills to the amount of 793,392 florins. His

report, notwithstanding what had been said of it, contained not a word

from which it could be known that a single florin had been actually

drawn over to the United States.

The other attempt to elude the evidence before the committee, recoiled

with equal force on the gentlemen who had hazarded it. In the report

lately made by the trustees of the Sinking Fund, is a statement laid

before them by the Secretary, in which it is noted "that the acceptance

of the loan of 3,000,000 of florins, and the application of one-third of

it to the purpose of that fund, was under the consideration of the

President." From this fact, it had been inferred, not only that the

Secretary had withheld no proper information from the Trustees, but that

the result of the President's deliberations on the subject had varied

the purpose signified by his first instructions to the Secretary.

It happened, however, most unfortunately for the gentlemen who exulted

in this argument, that they had entirely overlooked the dates of the two

papers. The paper laid before the Trustees, and alleged to have

explained the final purpose of the President, was dated on the 25th of

August, 1790. The paper relied on by the other side, as the final, as

well as the most formal, designation of the will of the President, was

dated the 28th of August, 1790. The gentlemen, therefore, instead of

the inference they had made, should have reversed their premises, and

joined with their opponents in concluding that the President was led by

a consideration of the subject, not to do what the Secretary, in his

note to the Trustees, seemed to anticipate, but what had been evinced by

the President's own act of posterior date.

The second point, then, as well as the first, rests on the most solid

proofs, taken from a collective view of authentic documents.

Much has been said on the necessity of sometimes departing from the

strictness of legal appropriations, as a plea for any freedoms that may

have been taken with them by the Secretary. He would not deny that there

might be emergencies, in the course of human affairs, of so

extraordinary and pressing a nature, as to absolve the Executive from an

inflexible conformity to the injunctions of the law. It was,

nevertheless, as essential to remember, as it was obvious to remark,

that in all such cases, the necessity should be palpable; that the

Executive sanction should flow from the supreme source; and that the

first opportunity should be seized for communicating to the Legislature

the measures pursued, with the reasons explaining the necessity of them.

This early communication was equally enforced by prudence and by duty.

It was the best evidence of the motives for assuming the extraordinary

power; it was a respect manifestly due to the Legislative authority; and

it was more particularly indispensable, as that alone would enable the

Legislature, by a provident amendment of the law, to accommodate it to

like emergencies in future.

In the proceedings falling under the present inquiry, no necessity

appeared for the liberties which had been taken, the money appropriated

in Europe being more wanted there than at home. It appeared that the

instructions of the Supreme Executive, instead of warranting those

liberties, had precluded them; nor had the proper explanations been

disclosed in due time to the Legislature. To place the subject in a more

distinct point of view, it was proper to advert to the precise

authorities and duties of the Secretary, as his office is defined by the

act establishing the Treasury Department. For this purpose, Mr. M. read

the second section of that act, which is in the words following:

"That it shall be the duty of the Secretary of the Treasury

to digest and prepare plans for the improvement and

management of the revenue, and for the support of public

credit; to prepare and report estimates of the public

revenue and the public expenditures; to superintend the

collection of the revenue, to decide on the forms of

keeping and stating accounts and making returns, and to

grant, under the limitations herein established, or to be

hereafter provided, all warrants for moneys to be issued

from the Treasury, in pursuance of appropriations by law;

to execute such services relative to the sale of the lands

belonging to the United States as may be by law required of

him; to make report and give information to either branch

of the Legislature, in person or in writing, (as he may be

required,) respecting all matters referred to him by the

Senate or House of Representatives, or which shall

appertain to his office; and generally to perform all such

services relative to the finances as he shall be directed

to perform."

This establishment of the office evidently had no reference beyond the

case of superintending the regular and ordinary collection of the

revenue, and granting warrants for moneys issued from the Treasury, in

pursuance of appropriations by law. The case of loans, as an occasional

and extraordinary resource, was left to be provided for by particular

laws for the purpose. The authority, with respect to the loans in

question, was accordingly committed to the PRESIDENT, in order to secure

for so special a trust, the highest responsibility to be found in the

Government. And when it was considered that the whole sum contemplated

was no less than fourteen millions of dollars, and when the latitude as

to the terms and contracts was combined with the vastness of the sum, it

might well be questioned whether so great a power would have been

delegated to any man in whom the Legislature and the people of America

had less confidence than they so justly reposed in the existing Chief

Magistrate, and whether an equal power will ever be committed to a

successor. This distinction between the case of ordinary revenue and

that of loans is not only consonant to the actual policy of our laws,

but is founded in obvious and solid considerations. In the collection

and disbursement of the ordinary revenues arising from taxation, the

business flows in official channels, is subject in every stage to

official checks, and the money, being in constant influx and efflux,

nowhere accumulates in immense sums. The case of loans is, in all these

respects, different. In settling the terms and arranging the

negotiations, there is always an important discretion involved. When the

loans are foreign, as well as great, regulations concerning the bills of

exchange form another occasion where great latitude is implied in the

trust; whilst the magnitude of the sums, falling under the same

direction at the same moment, present a further and material variance

between the two cases. The tendency of these observations is to show

that, as the permanent law establishing the Treasury Department does not

extend the authority of the Secretary to the case of loans and as the

law authorizing loans exacts, for special reasons, a responsibility from

the PRESIDENT himself, the authority of the Secretary, in executing the

loans, and the appropriation of them, must be derived from the

PRESIDENT; and, consequently, where that authority fails, there can be

no resort to the law establishing the department, much less to any

general discretion incident to his official character. It is evident

that the PRESIDENT, although no doubt guided by the most proper

considerations in employing the agency of the Secretary of the Treasury

in the business of the loans, might, if he had judged fit, have

substituted the agency of another; and that, whatever agency he might

prefer, his own instructions would always regulate the extent and

exercise of the power conferred. The want of any apparent authority from

the PRESIDENT had led several gentlemen to insist on presumed

authorities, superseding the instructions joined with the commission to

the Secretary. But here, again, the fair inference was to be reversed. A

communication of the authorities given by the PRESIDENT to the

Secretary, as to the application of the foreign loans, had been

expressly requested by the vote of the House. It was not to be supposed

that the Secretary, if he had received further authorities or

instructions, would have failed to produce them, or to refer to them, in

the justification of his conduct. Far less could it be presumed that the

PRESIDENT, if he had given any superseding authorities or instructions,

would not have caused them to be communicated to the House, or that he

would have suffered a partial communication to mislead the House into an

error as to so important a fact. The PRESIDENT was the last man in the

world to whom any measure whatever of a deceptive tendency could be

credibly attributed.

Thus far (said Mr. M.) his observations had departed as little as

possible from the question in its strictest sense. He should now avail

himself of the opportunity afforded by the terms of the last clause,

which spoke of drafts generally, to take a more particular notice of

those recently made; in doing which, he considered himself safe within

the Rules of the House, which were so rigorously enforced against the

affirmative side of the question. The whole amount of foreign loans

transferred directly or indirectly to the United States appeared from

the several statements to be about $3,000,000. The amount of the direct

drafts was $2,304,769 13. Of the drafts made since the 16th of April,

1792, and sold by the bank, the proceeds now in the bank, or payable

into it, before the 1st of April next, amount to $1,220,476 01. Of this

sum $510,000 have been drawn in the course of the present session in

Congress. With respect to the times and the amount of these drafts,

hitherto absolutely unknown to the Legislature, because the account of

them had remained in the books of the bank without ever appearing in the

books of the Treasurer, Mr. M. confessed that he had found no

explanations that were satisfactory to him. He had looked through all

the reports and all the communications before the House, without

discovering either that they had been made by the authority or with the

knowledge of the PRESIDENT, or had been required for, or applied to the

purchase of, the public debt, or had been ever communicated to the

Trustees of the Sinking Fund, who had the direction of such purchases,

or that they were the effect of any necessity that could justify them.

And if there was no evident necessity for the proceeding, it was the

more to be lamented that, whilst we were every where sympathizing with

our allies in their arduous struggles for liberty, and echoing, from

every part of the Union, our congratulations and good wishes, the

pecuniary succors so critically necessary to their cause, and the most

substantial proof of the sincerity of our professions, should be

silently withdrawn across the Atlantic from the object for which they

were intended--succors, too, which were not merely a tribute of

gratitude, of generosity, or of benevolent zeal for the triumph of

liberty, but a debt moreover of strict and positive obligation, for

value acknowledged and received. In contemplating the subject in this

point of view, he felt a pain which he could not easily express, and to

which, he persuaded himself, the breast of no other member could be a

stranger. Laying aside, however, all these unfavorable considerations,

the important question still remained, why the Legislature had been

uninformed of the moneys so unexpectedly drawn into the bank, and to so

very great an amount? If the drafts had received every requisite

sanction, if they had been produced by the most justifiable causes, the

existence of $1,220,476, in a situation so different from what had been

contemplated, was a fact which the Representatives of the people had a

right to know, which it was important to them and their constituents

that they should know, and which it was the indispensable duty of the

officer charged with it to have made known. This omission was the more

remarkable when considered in relation to the measure above mentioned,

of paying off at once the whole sum of $2,000,000, payable to the bank

by instalments in ten years. A bill for this purpose had been

introduced, and was on its passage; the object of it had been patronized

by a report of the Secretary not long since made. In one of his last

reports he expressly states, among the inducements to such extensive

drafts of money from Europe, that they were made "with an eye to placing

within the reach of the Legislature" the means necessary for this

object. Was it not extraordinary, was it not unaccountable, that so

important a measure should be recommended, and be actually introduced,

and that money otherwise appropriated in Europe should be transferred to

this country and deposited in the bank, in order that it might be within

the reach of being applied by the Legislature to that measure, and yet

that no disclosure should be made to the Legislature of that fact that

the money was so drawn and lay at the bank, within their reach, to be so

applied? If any thing could heighten astonishment on this occasion, it

must be the reason assigned by the Secretary for any obscurity that

might have hung over our finances--"that, till the last resolutions, no

call had been made on the department which rendered it proper to exhibit

a general view of the public moneys and funds, or to show the amount and

situation of such as were unapplied." Mr. M. would not decide that the

Legislature was free from blame in not using more full and efficacious

means of obtaining such information as would have removed all obscurity.

But, whatever degree of blame might fall on them, it never could be

admitted that their calls on the department had furnished no proper

occasion for exhibiting a full view of the public finances. He referred

generally to the various resolutions, which, without the least force of

construction, would have extended to every proper article of

information. He reminded the committee of the latitude of reports under

certain other orders of the House, and asked whether less freedom of

construction was to be allowed when information was to be given, than

when power or discretion was to be exercised? But independently of this

view of the matter, Mr. M. held it to be clear and palpable that the

very situation of the money afforded an occasion which rendered it

proper that the House should be informed of it. If a liberty could be

taken of removing money from Europe, where it stood appropriated by law,

to this country, where there was no legal object that required it, and

with an eye, as was stated, to an object to which no money was

applicable, without the authority of the Legislature, how could it

possibly be supposed improper to take the further liberty of

communicating what was done to the Legislature? He concluded with

recurring to the particular form in which the subject presented itself

to the committee, and repeating that, whatever quality might be attached

to the facts charged, or however improper it might be thought by some to

proceed in haste to any affirmative decision on them, it appeared

irreconcilable with the evidence which had been produced, to decide, by

a negative vote, against the truth of the facts.

Mr. AMES prefaced his remarks on the subject before the committee by

some observations on the nature of the charges brought forward. He was

happy that they were determinate, and conceived that the defence could

be crowded in a nutshell. As to the first charge in the resolution

immediately before the committee, he had seen no proof in support of it

brought forward. It is founded only on assertion, and he conceived that

contra-assertion was sufficient to meet it. No authority, it was said,

was given to the Secretary to obtain the loan under the blended

authority of both acts. This is not one of the charges included in the

resolutions before the committee, and therefore this is not the time to

answer it. However, if this were fact, nothing criminal could in

consequence be imputed; and, since the purposes of both laws were

carried into execution, there could be no ground for saying that either

was violated. He said much on the impracticability of the line of

conduct which some gentlemen appeared to think ought to have been

followed by the Secretary. It was impossible to keep different funds,

differently appropriated, so inviolably separate as that one might not

be used for the object of the other; all was right, he conceived,

provided what was taken was to be replaced. He was also of opinion that

the overflowing of one fund could be applied to make up the deficiency

of another; and that all that is necessary is to give priority to the

appropriation. The money paid in Europe for interest on the loan was

said to have been improperly applied, because the fund appropriated for

the purpose was here. He insisted that that money was absolutely

represented here by an equal sum: and he contended that, though the

interest was not paid in the identical coin appropriated, yet, by

allowing a very reasonable latitude of expression, it could be said that

the interest was paid with the money appropriated, for the applicability

of the sums there depended on the existence of the fund here. He next

turned to the second charge in the resolution; and, after showing that

the natural presumption was, that the Secretary either was instructed or

had a discretionary power, he then vindicated his conduct in respect to

the drafts of money to this country. He did honor to the motives of the

gentlemen who had instituted the inquiry, and concluded an elegant

speech, by a contrasted picture of our former and present situation as a

country, dwelling upon the importance of preserving harmony, and

insisting on the danger of giving rise to suspicions against a highly

responsible officer, and of bringing forward charges not to be supported

by proof.

Mr. FINDLAY.--If my hopes respecting the Government have not been

equally elevated with those of the gentleman from Massachusetts, (Mr.

AMES,) neither are my apprehensions so much depressed with fears. But I

hope I am equally anxious for the stability and prosperity of the

Government; and though we differ in opinion on this question, yet I am

firmly persuaded that the part I take is the best calculated to promote

the necessary confidence in Government, and secure the virtue of its

administration. As the gentleman, in an elegant discourse, has explained

no difficulties, nor adduced any proofs in support of his opinions, I

will only add, that I believe the Government to be so well established,

and so much beloved by the citizens, as not to be endangered by the

House of Representatives' examining how the laws have been obeyed in the

application of public money, and giving their opinions upon the result

of that examination.

That the Secretary has not reported fully to this House, in due time, is

so much within the knowledge of every member, that it is impossible to

doubt of the truth of the fact, however we may differ about the

propriety of the conduct. To go no further back than last

session--besides the references to the Secretary to report upon the Ways

and Means, and inform the House what revenues were necessary, on the

20th of February, 1791, a standing order was resolved, directing that he

should report to the House, within a few days after the meeting of the

next session, "an accurate statement and account of the receipts and

expenditures of all the public moneys, in which shall be distinguished

the expenditures which fall under each head of appropriation, and that

it shall be shown the sums, if any, which remain unexpended," &c. Were

not the moneys drawn upon loan, _public moneys_, and were not those

loans appropriated? Undoubtedly, they were strictly so. It is a strange

evasion to say, that by these expressions only the current revenue is

intended. Arguments must be scarce when this becomes necessary. It

requires no refutation.

On the 19th of January last, he was called upon to "lay before the House

such information with respect to the finances of the United States, as

will enable the Legislature to judge whether any or what additional

revenues will be necessary." In consequence of the recommendations of

the PRESIDENT, and the wishes of this House, to commence the discharge

of the redeemable part of the Funded Debt, a reference was made to the

Secretary, requiring him to report a mode for the application of the

public money for that purpose; the House being assured, by the gentleman

who moved the resolution, that no new tax was intended or necessary. But

the Secretary, so far from informing the House how much money he had

subject to his discretion, in the bank, in notes, &c., proposed a new

and partial tax, as the foundation of a new system of loans. When the

memorable bill to authorize another loan of $2,000,000, was before the

House, a few weeks ago, we were told by gentlemen on this floor, that

there was not time for argument; that the bill must be passed in three

or four days, &c.; and when we wanted information, we were told by some

of the friends of the bill that it was not convenient to give

information there--that we might procure information elsewhere, as they

had done. I confess I did not comprehend this method of legislating; but

the Secretary has since explained it, in one of his reports, by

complaining of the House, because the members did not go to his office

and ask information, instead of requiring it to be publicly reported.

Even when this favorite bill for a new loan was before the House, the

Secretary did not condescend to inform us that he had, without

authority, provided near a million and a half of dollars for that

purpose; he did not inform us how obligingly he had drawn bills upon our

bankers in Holland, to have the money put in our way. Thus, in order to

anticipate the payments due to the bank, he did what he could to induce

Congress to break the public faith, by repealing the existing

appropriation made for securing the discharge of a debt of justice and

gratitude to the French nation. From this and other instances, it

appears, that however high the Secretary's regard for public credit may

be, there are other considerations which have obtained a higher degree

of his attention than obedience to the laws. The gentleman from Virginia

(Mr. MADISON) has so clearly explained the nature of that discretion

with which the Secretary is vested, and so fully proved that there was

no necessity to justify a departure from the appropriations made by law,

that it is not necessary for me to explain further on this head.

However, I cannot help remarking, that the discretionary powers were

pretty freely exercised. The drawing of bills began early indeed, and

was continued to a recent period. The times of drawing fortunately

corresponded with the necessities of the bank, and the power of

employing agents was pretty freely used. The same agents were frequently

both the sellers and the purchasers of the bills. Perhaps this was

necessary: no doubt it was convenient. Probably it was safe; but who can

say it will be always so.

I have not said so much to prove the truth of the facts expressed in the

resolution, for of this there can be no doubt--it is as clear as the

sun, shining in daylight,--but, in order to prove the propriety of this

committee expressing its disapprobation of a conduct so unjustifiable.

That information was withheld unduly, is evident, from the lateness of

this discussion; that it was obtained with difficulty, is evident, from

the numerous applications we were obliged to make in order to obtain it.

The House then adjourned until seven o'clock post meridian.