Part 180

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.

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.

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.