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.