Part 181

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.