Part 182

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: