[Philadelphia, February 4, 1793]
Republican leaders in Congress were determined to demonstrate that Hamilton’s administration of the Treasury Department was at worst corrupt or at best irregular. His opponents in Congress thought that they could discredit him by investigating the way in which he had handled the proceeds from two loans which Congress had authorized in 1790. “An Act making provision for the (payment of the) Debt of the United States”1 provided for a twelve-million-dollar loan, the proceeds of which were to be used for the payment of interest and installments of the foreign debt. “An Act making Provision for the Reduction of the Public Debt”2 provided for a two-million-dollar loan, the proceeds of which were to be used for the purchase of the domestic debt. On the basis of these two acts loans were floated at Amsterdam and Antwerp.3
In using the money obtained through these loans, the Republicans in Congress charged that Hamilton had ignored the congressional stipulation that the first loan should be used exclusively for payment of the foreign debt and the second loan for payment of the domestic debt. In sum, they stated that he had employed a part of the twelve million dollars to pay the domestic debt and a part of the two million dollars to pay the foreign debt.
The Republicans in Congress first became suspicious of Hamilton’s handling of these funds when he proposed that the Government pay its entire debt to the Bank of the United States by floating a new loan abroad.4 On December 24 and 27, 1792, the House of Representatives passed resolutions calling for information on the Government loans.5 Hamilton replied with his “Report on Foreign Loans” on January 3, 1793. The House, however, was not satisfied with this report, and on January 23, 1793, it adopted five resolutions proposed by William Branch Giles, a Virginia Republican, who frequently served as Thomas Jefferson’s spokesman in the House. The famous “Giles resolutions” read as follows:
“Resolved, That the President of the United States be requested to cause to be laid before this House copies of the authorities under which loans have been negotiated, pursuant to the acts of the fourth and twelfth of August, one thousand seven hundred and ninety, together with copies of the authorities directing the application of the moneys borrowed.
“Resolved, That the President of the United States be requested to cause this House to be furnished with the names of the persons by whom, and to whom, the respective payments of the French debt have been made in France, pursuant to the act for that purpose; specifying the dates of the respective drafts upon the Commissioners in Holland, and the dates of the respective payments of the debt. A similar statement is requested respecting the debts to Spain and Holland.
“Resolved, That the Secretary of the Treasury be directed to lay before this House an account exhibiting, half-monthly, the balances between the United States and the Bank of the United States, including the several Branch Banks, from the commencement of those Institutions, to the end of the year one thousand seven hundred and ninety-two.
“Resolved, That the Secretary of the Treasury be directed to lay before this House an account of all moneys which may have come into the Sinking Fund, from the commencement of that Institution to the present time; specifying the particular fund from which they have accrued, and exhibiting, half-yearly, the sums uninvested, and where deposited.
“Resolved, That the Secretary of the Treasury be directed to report to this House the balance of all unapplied revenues at the end of the year one thousand seven hundred and ninety-two, specifying whether in money or bonds, and noting where the money is deposited; that he also make report of all unapplied moneys which may have been obtained by the several loans authorized by law, and where such moneys are now deposited.”6
Giles’s speech to the House of Representatives in support of these resolutions reads as follows:
“The resolutions … have grown out of the embarrassments I have met with in attempting to comprehend the Report of the Secretary of the Treasury, made in pursuance of an order of this House of the 27th of December, 1792, exhibiting sundry statements respecting foreign loans.7 These embarrassments have increased in proportion to the attention which I have bestowed on the subject; and a number of official papers to which I have had reference for information, instead of elucidating, seem rather to obscure the inquiry. To obtain necessary information, therefore, is the object of these resolutions, and no one can doubt the immediate applicability of this information to a bill now lying upon your table, for the purpose of reimbursing the loan of $2,000,000 made of the Bank of the United States, by opening a new loan for that sum abroad, and by changing the application of the like sum already borrowed and appropriated to the discharge of the debt to France from its original destination to the immediate discharge of the debt to the Bank.8
“The first resolution has arisen from that part of the printed Report of the Secretary of the Treasury which exhibits the terms upon which various loans have been made abroad, but neither presents the precise authorities under which those negotiations have been made, nor the precise amount of the sums borrowed for the separate and distinct objects of the two acts mentioned in the resolution.
“Another reason has more strongly suggested the propriety of calling for the information requested by this resolution. The bill now upon your table, which has been before alluded to, contemplates the whole of the moneys borrowed from abroad, and now on hand, as being originally appropriated to the discharge of the French debt, and proposes to change the original destination of these identical moneys; and the reason assigned for this measure has been the unsettled state of affairs in France.
“In the printed Report of the Secretary of the Treasury, he remarks that the same moneys are applicable to the Sinking Fund. It appears strange, that after express and distinct appropriations by law, that any misunderstanding relative to this object should exist, and the information called for may possibly explain this seeming contradiction.
“The second resolution has arisen from that part of the printed Report marked B, and which exhibits the payments made to France, but does not furnish the names of the persons engaged in those negotiations, nor does it present to view the length of time those persons have been possessed of the public moneys, by stating the dates of the respective drafts in Holland, and the dates of the actual application of the moneys to the discharge of the debt; and it is evident that from the time the loans are respectively created, to the times of the actual application of the moneys borrowed, the United States are paying the usual interest upon the debt intended to be redeemed, and the stipulated interest upon the moneys borrowed for the redemption. This remark is equally applicable to the payments of other foreign debts with the payments of the debt to France.
“The third resolution has arisen from calculations drawn partly from the last page of the printed report, and from the original Bank book of the United States, from which it appears that the balances in Bank in favor of the United States were as follows:
|In Bank, Philadelphia, 30th May, 1792, and 16th June, same year, in branch banks||$676,952 55|
|1792, June 30th, in all banks in the United States||555,271 22|
|July 28th and 31st, in all banks in the United States||511,423 91|
|August 25th, 30th, and 31st, in all banks in the United States||740,903 87|
“On the 1st of June, a loan was negotiated with the Bank of the United States on the part of the United States, for $100,000, at 5 per cent. per annum. On the 1st of July, another loan was made upon the same terms for the like sum. On the 1st of August, another loan was made upon the same terms for the like sum. On the 1st of September, another loan was made upon the same terms for the like sum. It appears from the last page of the printed Report, that there had been drawn into America, from the 15th of December, 1790, to the 27th of January, 1792, of the moneys borrowed abroad, the sum of 2,663,621 florins, 2 stivers, and 6 deniers. If this sum were unexpended, and lodged in the bank at the times of making these loans, (and Congress have never yet been informed of any deficiency of revenue,) the United States will, of consequence, have paid upon the moneys borrowed from the Bank of the United States, from 15 to 17 per cent. per annum, to wit: they will have paid 5 per cent. upon the original debt to France, 5 per cent. upon the moneys borrowed for its redemption, exclusive of douceurs and other charges, and 5 per cent. upon the sum borrowed of the bank, which may be deemed part of this deposite made in the Bank by the United States. But, discarding these inferences, it must at least be admitted that the United States are paying 5 per cent. for the loan of moneys from the Bank, when a sum larger than the loan itself, is actually deposited in Bank. It is here to be remarked, that a balance of cash is admitted, by the Treasurer’s return, to have been in his hands on the 31st of December, 1790, amounting to $973,342 43, and in July 30, 1791, the sum of $582,189 54.
“I am informed that bills are often drawn in favor of the Bank for moneys in the hands of the revenue officers in distant parts of the United States, and that credit is entered in the Bank book upon the receipt of such bills, although the moneys may not actually be in Bank for some time after the credit is entered, and hence it is inferred that the Bankbook does not conclusively show the real sum in Bank, not to mention that such bills answer all the purposes of cash, and ought therefore to be credited upon the receipt of them. It is to be remarked that there is a regular and continual influx of moneys into the Bank by the operation of these bills. It is not very material whether a bill lodged in Bank to-day, should be paid to-day, provided something like the same sum should be paid in consequence of a bill lodged in Bank one or two months ago, and the bill of to-day should be paid one or two months hence. The following statement will, in some measure, explain this idea, by exhibiting half-monthly the balances of public money in all the banks, about the middle and end of each month, beginning with May, 1792, and ending with December of the same year:
|December 15||1,020,824 73|
|December 22, and January 5—last returns||790,642 11|
“The fourth resolution has arisen from that part of the printed Report which remarks that the residue of the sum drawn from Holland, amounting to $1,668,188 27 is applicable to the purchase of the public debt. It is known that the sum of $1,374,656 40, being the surplus of the revenue up to the end of December, 1790, was originally appropriated to the Sinking Fund; that the surplus of other appropriations have been applied to this fund, and that the interest of the debt purchased has also been wholly appropriated to its increase. It is also known that between $1,100,000 and $1,200,000, and no more, of the original appropriation, have been really invested in the purchase of the debt; it is, therefore, somewhat unaccountable that so large a sum as $1,668,188 should be drawn from the loans abroad, when the Sinking Fund has always overflowed from domestic resources, and when the probability of purchasing is extremely lessened by the rise in the price of paper and the limitations of the last act of Congress upon that subject.9 It would not be deemed an economical arrangement to make a loan of so large a sum of money upon terms by no means honorable or advantageous, and appropriate it to the purchase of the debt under limitations which would forbid its investiture. The information called for in this resolution may possibly explain these difficulties.
“The fifth and last resolution has arisen from that part of the printed Report … which states the whole sums drawn from Holland to amount to $2,304,769 13; but neither immediately presents to view the balance on hand, nor informs where that balance is deposited. It appears by the Bank-book, that the whole deposite of the United States in Bank at this time, from all resources, amounts to $790,642 11. Hence, it will appear from a statement partly conjectural, and partly founded upon the statements in the printed Report, and some official documents, that $1,554,-851 43 remain unaccounted for, as will appear from the following account:
“Sums which ought to be in the Treasury.
|Whole moneys drawn from Holland, as stated in the printed Report,||$2,304,769|
|Deduct paid for St. Domingo, as stated in printed Report,||455,263|
|Leaves a balance of||1,859,506|
|Deduct to foreign officers, if paid||191,316|
|Leaves a balance of||1,668.190|
|Add surplus of Sinking Fund, conjectural||400,000|
|Add surplus of revenue of 1792, reported at||277,385|
|“Sums not taken into this estimate: First. Any moneys not paid of the $191,316, due to foreign officers. Second. So much moneys in Bank as arose from the revenues. Third. The receipts of the current year.|
|From this aggregate sum of||$2,345,495|
|Deduct in Bank||790,642|
|Balance not accounted for|
“In this last estimate, cents have not been taken into calculation, which makes an inconsiderable variation in some of the sums.
“Another circumstance appears somewhat singular: in the printed Report, 2,986,000 florins are stated to have been drawn from Holland in the year 1792. In the Bank-book, it appears from the list of bills drawn, that 8,695,237 florins were drawn for in the same time. This difference, I presume, may admit of explanation probably from the manner of negotiating this matter, or from some casual mistake. It deserves, however, to be explained.
“It appears from another statement, made up to the 1st of April, 1793, that there ought to be at that time a sufficient sum of money in the Treasury to reimburse the loan of 2,000,000 dollars to the Bank, and to answer all the other purposes of Government.
“The papers from which I have collected these statements may be deceptive in themselves, or may be subject to explanations from others. Candor, however, induces me to acknowledge that impressions resulting from my inquiries into this subject, have been made upon my mind, by no means favorable to the arrangements made by the gentleman at the head of the Treasury Department. But I shall keep myself open to conviction, in case of any sufficient explanation which may be hereafter given, and I now avow that my acknowledgment of mistake shall be at least commensurate to any conviction produced.
“I cannot help remarking, before I sit down, that we have been legislating for some years without competent official knowledge of the state of the Treasury, or revenues; in the course of which time, we have been engaged in the most important fiscal arrangements; that we have authorized a loan of the Bank of the United States for more than $500,000,10 when probably a greater sum of public money was deposited in the Bank; that we have passed a vote this session, authorizing a further loan for $800,000,11 and that we were upon the point of authorizing a loan abroad for $2,000,000,12 without knowing the extent of the authorities at present existing for borrowing, the amount of moneys on hand in consequence of loans already made, or the application of the moneys which may have been used; and I conceive it is now time that this information be officially laid before this House.”13
Although historians of the Washington Administration have devoted considerable attention to the Giles resolutions, less attention has been paid to the fact that on January 23, 1793, the Senate also adopted resolutions similar in content to the five resolutions adopted by the House. These resolutions read as follows:
“Ordered, That the Secretary of the Treasury lay before the Senate a general account, exhibiting the amount of all the public funds and moneys (loans included) up to the end of the last year, and what remains of each appropriation, either in cash, bonds, certificates, or other securities, and stating where the balances are deposited, as far as the same can at present be done. That he particularly state the amount which has been drawn into the United States, of the moneys borrowed in Europe, under the acts of the 4th and 12th of August, 1790, the purposes for which drawn, how any part thereof hath been applied, with the balance now on hand, and where deposited.…
“Resolved, That the President of the United States be requested to lay before the Senate, copies of the powers given by him for the negotiation of the loans authorized by the laws of the 4th and 12th of August, 1790, and of the communications from the Public Commissioners in Holland.”14
The reports submitted by Hamilton to the Senate as a result of its January 23 resolutions are dated February 5 and 14, 1793. In the first of these reports Hamilton also replied to the following section from the first resolution which was deleted from the resolution as passed: “That [the Secretary of the Treasury] … also lay before the Senate a copy of the powers under which he negotiated the loans made under the laws of the 4th and 12th of August, 1790, and the original communications from the Public Commissioners in Holland, stating the difficulties of making separate loans under the same acts, as mentioned in his letter of January, 1793.”15
Hamilton replied to the charges made by the House resolutions in a series of reports that were completed by February 19, 1793. But Republicans in and out of Congress were still not satisfied, and another set of resolutions was drafted criticizing Hamilton’s administration of the Treasury. According to Paul Leicester Ford, the “rough draft” of these resolutions was in Jefferson’s handwriting.16 Giles modified these resolutions somewhat and submitted them to the House of Representatives on February 27, 1793. The resolutions read as follows:
“1. Resolved, That it is essential to the due administration of the Government of the United States, that laws making specific appropriations of money should be strictly observed by the administrator of the finances thereof.
“2. Resolved, That a violation of a law making appropriations of money, is a violation of that section of the Constitution of the United States which requires that no money shall be drawn from the Treasury but in consequence of appropriations made by law.
“3. 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 same 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 part of the same moneys into the United States, without the instructions of the President of the United States.
“4. Resolved, That the Secretary of the Treasury has deviated from the instructions given by the President of the United States, in exceeding the authorities for making loans under the acts of the 4th and 12th of August, 1790.
“5. 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, 1790, and continued till January, 1793; and of the causes of making such drafts.
“6. Resolved, That the Secretary of the Treasury has, without the instructions of the President of the United States, drawn more moneys borrowed in Holland into the United States than the President of the United States was authorized to draw, under the act of the 12th of August, 1790; which act appropriated two millions of dollars only, when borrowed, to the purchase of the Public Debt: And that he has omitted to discharge an essential duty of his office, in failing to give official information to the Commissioners for purchasing the Public Debt, of the various sums drawn from time to time, suggested by him to have been intended for the purchase of the Public Debt.
“7. Resolved, That the Secretary of the Treasury did not consult the public interest in negotiating a Loan with the Bank of the United States, and drawing therefrom four hundred thousand dollars, at five per cent. per annum, when a greater sum of public money was deposited in various banks at the respective periods of making the respective drafts.
“8. Resolved, That the Secretary of the Treasury has been guilty of an indecorum to this House, in undertaking to judge of its motives in calling for information which was demandable of him, from the constitution of his office; and in failing to give all the necessary information within his knowledge, relatively to the subjects of the reference made to him of the 19th January, 1792, and of the 22d November, 1792, during the present session.
“9. Resolved, That a copy of the foregoing resolutions be transmitted to the President of the United States.”17
Of the nine resolutions presented by Giles, seven were incorporated from Jefferson’s draft without substantive change. The sections of the Jefferson draft which were either modified or omitted by Giles read as follows:
“3. Resolved, That the Secretary of the Treasury, in drawing to this country and lodging in the bank the funds raised in Europe, which ought to have been applied to the paiments of our debts there in order to stop interest, has violated the instructions of the President of the United States for the benefit of speculators and to increase the profits of that institution.
“9. Resolved; That at the next meeting of Congress, the act of Sep 2d, 1789, establishing a Department of Treasury should be so amended as to constitute the office of the Treasurer of the United States a separate department, independent of the Secretary of the Treasury.
“10. Resolved, That the Secretary of the Treasury has been guilty of maladministration in the duties of his office, and should, in the opinion of Congress, be removed from his office by the President of the United States.”18
On February 28 and March 1 the House defeated the second set of Giles’s resolutions. Only six of the nine resolutions were committed for discussion, and only five Republicans, including Giles and Madison, voted in favor of all six resolutions.19 On March 2 Congress adjourned sine die.
A word should be added concerning the timing of the two sets of resolutions proposed by Giles. When he introduced his first set of resolutions on January 23, he and other Republicans in Congress undoubtedly thought that Hamilton would be unable to assemble the materials for a reply before Congress adjourned in early March and that voters would, therefore, believe that Hamilton was guilty of the charges implied in the resolutions. This strategy failed when Hamilton by a prodigious effort drew up the necessary reports and submitted them to Congress before the end of February.20 The resolutions of censure proposed by Giles on February 27 were introduced so late in the session that, if they had passed, Hamilton could not conceivably have replied to them before Congress adjourned. But they did not pass, and for the second time Giles and his Republican supporters in and out of the House were thwarted.
3. For an account of the negotiation of these loans, see H’s correspondence with William Short and the Amsterdam banking firm of Willink, Van Staphorst, and Hubbard.
5. Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , III, 753, 761.
6. Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , III, 835–36.
8. “A bill providing for the reimbursement of a loan made of the Bank of the United States” had been introduced in the House on December 21, 1792 (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 652).
9. Sections 6, 7, and 8 of “An Act supplementary to the act making provision for the Debt of the United States” described the conditions under which the commissioners of the sinking fund were to purchase the debt of the United States (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 282–83 [May 8, 1792]).
10. This loan was authorized by Section 16 of “An Act for raising a farther sum of money for the protection of the frontiers, and for other purposes therein mentioned” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 262 [May 2, 1792]).
11. Section 3 of “An Act making appropriations for the support of Government for the year one thousand seven hundred and ninety-three” authorized the President to borrow eight hundred thousand dollars from the Bank of the United States (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 328 [February 28, 1793]). The House had approved the bill and sent it to the Senate on January 9 (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 665).
12. See note 8.
13. Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , III, 836–40.
14. Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , III, 632–33.
15. Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , III, 632. For H’s explanation of the difficulties of separating the loans, see “Report on Bank Deposits, Surplus Revenue, and Loans,” January 16, 1793.
16. Ford, Writings of Jefferson description begins Paul Leicester Ford, ed., The Writings of Thomas Jefferson (New York, 1892–1899). description ends , VI, 168–71. Ford states that the original document was loaned to him by Sarah N. Randolph.
17. Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , III, 900.
19. Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , III, 899–963.
20. Between February 4 and February 19, 1793, H presented the following reports in response to the House and Senate resolutions: “Report on the Balance of All Unapplied Revenues at the End of the Year 1792 and on All Unapplied Monies Which May Have Been Obtained by the Several Loans Authorized by Law,” February 4, 1793; “Report Exhibiting the Amount of All the Public Funds up to the End of 1792 and Statement of What Remains of Each Appropriation,” February 5, 1793; “Report on Foreign Loans,” February 5, 1793; “Report on Foreign Loans,” February 13, 1793; “Report Relative to the Loans Negotiated under the Acts of the Fourth and Twelfth of August, 1790,” February 13–14, 1793; “Report on Revenue, Appropriations, and Expenditures,” February 14, 1793; “Report on the State of the Treasury at the Commencement of Each Quarter During the Years 1791 and 1792 and on the State of the Market in Regard to the Prices of Stock During the Same Years,” February 19, 1793.