Life and Times of Washington, Volume 2 / Revised, Enlarged, and Enriched

by John Frederick Schroeder; Benson John Lossing

After noticing various objects which would require the attention of the Legislature, the President addressed himself particularly to the House of Representatives, and said: "I entertain a strong hope that the state of the national finances is now sufficiently matured to enable you to enter upon a systematic and effectual arrangement for the regular redemption and discharge of the public debt, according to the right which has been reserved to the government. No measure can be more desirable, whether viewed with an eye to its intrinsic importance, or to the general sentiments and wish of the nation."

The addresses of the two Houses in answer to the speech were, as usual, respectful and affectionate. The several subjects recommended to the attention of Congress, were noticed either in general terms, or in a manner to indicate a coincidence of sentiment between the legislative and executive departments. The turbulent spirit which had manifested itself in certain parts of the Union, was mentioned by both houses with a just degree of censure and the measures adopted by the President, as well as the resolution he expressed to compel obedience to the laws, were approved, and the House of Representatives, in the most unqualified terms, declared opinions in favor of systematic and effectual arrangements for discharging the public debt. But the subsequent proceedings of the Legislature did not fulfill the expectations excited by this auspicious commencement of the session.

At an early day in a committee of the whole House on the President's speech, Mr. Fitzsimmons moved "that measures for the reduction of so much of the public debt as the United States have a right to redeem, ought to be adopted, and that the Secretary of the Treasury be directed to report a plan for that purpose."

This motion was objected to by Mr. Madison as being premature. The state of the finances, he thought, was not sufficiently understood to authorize the adoption of the measure it contemplated. The debate, however, soon took a different direction.

On a motion made, directing the Secretaries of the Treasury and of War to attend the House and to give information, severe denunciations were poured forth against the unconstitutionality of subjecting the representatives to the control of the heads of the executive departments. The motions for requiring a report from Hamilton on a plan for redeeming the public debt, and for paying a debt owing to the bank, which were brought in by Mr. Fitzsimmons, renewed the contest, but, although Madison and others opposed the reference to the Secretary of the Treasury, the resolution was carried.

Hamilton's report proposed a plan for the redemption of the debt. But the expenses of the Indian war rendering it unsafe, in his opinion, to rest absolutely on the existing revenue, he also proposed to extend the internal taxes to pleasure horses, or pleasure carriages, as might be deemed most advisable. For the reimbursement of the bank, he recommended that power be conferred to negotiate a loan for two million dollars—the dividends on the shares held by the government to be pledged for the interest, and, as the government paid six per cent, to the bank, he relied on the saving that would be effected by borrowing at a lower rate of interest. The consideration of this report was deferred on various grounds, and a motion was made to reduce the military establishment. The debate was long and earnestly contested, but the motion was rejected on the 5th of January, 1793.

A few weeks later another subject was introduced into the House which absorbed the attention of the members and put an end, for the present session, to every measure connected with the finances.

Mr. Giles, on the 23d of January (1793), moved several resolutions, requiring information, among other things, on various points growing out of the loans authorized by Congress in August, 1790. The object was to inculpate the Secretary of the Treasury respecting the management and application of these loans, and of the revenue generally. Mr. Giles indulged himself in remarks which clearly showed the animus of his proceedings, and it was his determination to prove to the House that there was a large balance in the funds unaccounted for. The resolutions were agreed to without debate, as was only due to Mr. Hamilton, and soon after, three successive and able reports were sent in, containing the information required.

In these reports a full exposition was given of the views and motives of the secretary, in the conduct of the treasury department. It is also evident that Hamilton felt aggrieved at this attack upon his reputation, and he did not hesitate to use language of great plainness and severity, observing in conclusion: "Thus have I not only furnished a just and affirmative view of the real situation of the public accounts, but have likewise shown, I trust, in a conspicuous manner, fallacies enough in the statements, from which the inference of an unaccounted-for balance is drawn, to evince that it is one tissue of error."

But the matter did not end here. Mr. Giles, on the 28th of February (1793), submitted to the House a series of nine resolutions, containing charges against the secretary. The substance of them was, that he had failed to give Congress information, in due time, of moneys drawn from Europe; that he had violated the law of the 4th of August, 1790, by an unauthorized application of money borrowed under it; that he had drawn part of the money into the United States, without any instructions from the President; that he had exceeded his authority in making loans, under the acts; that, without instructions from the President, he had drawn more of the money borrowed in Holland than he was authorized by those acts, and that he had been guilty of an indecorum to the House, in undertaking to judge its motives in calling for information. The debate was continued until the night of March 1st (1793), and was characterized by unusual bitterness. It terminated in a rejection of the resolutions and consequently in an entire exculpation of Hamilton from all just censure. The highest number voting in favor of any one of the resolutions was sixteen.