Part 183

"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.

EVENING SESSION--7 P.M.

An engrossed bill making certain appropriations therein mentioned was read the third time, and passed.

The bill sent from the Senate entitled "An act providing for the compensation of Ebenezer Storer," was read twice and committed.

Official Conduct of the Secretary of the Treasury.

The House again resolved itself into a Committee of the whole House on the third, fourth, fifth, sixth, seventh, and eighth resolutions contained in the motion of Thursday last, respecting the official conduct of the Secretary of the Treasury. The third resolution being still under consideration, in the words following, viz:

"Resolved, That the Secretary of the Treasury has violated the law passed the 4th of August, 1790, making appropriations of certain moneys authorized to be borrowed by the said law, in the following particulars, viz: First, by applying a certain portion of the principal borrowed to the payment of interest falling due upon that principal, which was not authorized by that or any other law. Secondly, by drawing a part of the said moneys into the United States, without the instructions of the President of the United States."

A motion was made, and the question being put, that the House do agree with the Committee of the whole House in their disagreement to the resolution, it was resolved in the affirmative--yeas 40, nays 12, as follows:

YEAS.--Fisher Ames, Robert Barnwell, Egbert Benson, Elias Boudinot, Shearjashub Bourne, Benjamin Bourne, Jonathan Dayton, Thomas Fitzsimons, Elbridge Gerry, Nicholas Gilman, Benjamin Goodhue, James Gordon, Christopher Greenup, Samuel Griffin, William Barry Grove, Thomas Hartley, James Hillhouse, William Hindman, Philip Key, Aaron Kitchell, John Laurance, Amasa Learned, Richard Bland Lee, George Leonard, Samuel Livermore, Frederick Augustus Muhlenberg, William Vans Murray, Nathaniel Niles, Theodore Sedgwick, Jeremiah Smith, Israel Smith, William Smith, John Steele, Samuel Sterrett, Jonathan Sturges, George Thatcher, Thomas Tudor Tucker, Artemas Ward, Hugh Williamson, and Francis Willis.

NAYS.--John Baptist Ashe, Abraham Baldwin, William Findlay, William B. Giles, Andrew Gregg, Nathaniel Macon, James Madison, John Francis Mercer, Andrew Moore, Alexander D. Orr, John Page, and Josiah Parker.

A motion was then made, and the question put, that the House do agree with the Committee of the whole House in their disagreement to the fourth resolution, in the words following:

"Resolved, That the Secretary of the Treasury has deviated from the instructions given him by the PRESIDENT OF THE UNITED STATES, in executing the authorities for making loans, under the acts of the fourth and twelfth of August, one thousand seven hundred and ninety."

It was resolved in the affirmative--yeas 39, nays 12, as follows:

Another motion was then made, and the question being put, that the House do agree with the Committee of the whole House in their disagreement to the fifth resolution, in the words following:

"Resolved, That the Secretary of the Treasury has omitted to discharge an essential duty of his office, in failing to give Congress official information, in due time, of the moneys drawn by him from Europe into the United States; which drawing commenced December, one thousand seven hundred and ninety, and continued until January, one thousand seven hundred and ninety-three; and of the cause of making such drafts:"

It was resolved in the affirmative--yeas 33, nays 15, as follows:

YEAS.--Fisher Ames, Robert Barnwell, Egbert Benson, Elias Boudinot, Shearjashub Bourne, Benjamin Bourne, Jonathan Dayton, Thomas Fitzsimons, Elbridge Gerry, Nicholas Gilman, Benjamin Goodhue, James Gordon, Thomas Hartley, James Hillhouse, William Hindman, Philip Key, Aaron Kitchell, John Laurance, Amasa Learned, George Leonard, Samuel Livermore, Frederick Augustus Muhlenberg, William Vans Murray, Theodore Sedgwick, Jeremiah Smith, William Smith, John Steele, Samuel Sterrett, Jonathan Sturges, George Thatcher, Thomas Tudor Tucker, Artemas Ward, and Hugh Williamson.

NAYS.--John Baptist Ashe, Abraham Baldwin, William Findlay, William B. Giles, Samuel Griffin, William Barry Grove, Richard Bland Lee, Nathaniel Macon, James Madison, John Francis Mercer, Andrew Moore, Nathaniel Niles, John Page, Josiah Parker, and Israel Smith.

Another motion was then made, and the question being put, that the House do agree with the Committee of the whole House in their disagreement to the sixth resolution, in the words following: