Report on the Contract Made with the Bank
of the United States for a Loan
of Two Million Dollars
[Philadelphia, April 25, 1794
Communicated on April 25, 1794]1
[To the Speaker of the House of Representatives]
The Secretary of the Treasury pursuant to the Order of the House of Representatives of the 28th. of February 1794,2 respectfully makes the following report:
The paper A, herewith transmitted, is a Copy of the Contract with the Bank of the United States respecting the Loan of two Millions of dollars had of that Institution3 in conformity with a provision for that purpose in the Act by which it is incorporated.4
According to the intent of this Contract as understood by the Secretary of the Treasury and the Bank, the first instalment of 200,000 dollars was payable on the first of January 1793. The Secretary in a report to the House of Representatives of the 30th. of November 1792, submitted a provision for reimbursing the loan to the Bank.5 None was made ’till the time for reimbursing the first instalment as understood between the Treasury and the Bank, had elapsed on the first of January 1793. The Secretary by Letter informed the Bank that he would leave in deposit, as an offset against that instalment a Sum of 200,000 dollars, ’till Legislative provision should be made concerning the Matter.6 An Act of Congress of the 2d of March 1793, authorised the payment of this Instalment out of the proceeds of the Foreign Loans.7 But the then Attorney General8 being of Opinion that upon the legal Construction of the Contract compared with the words of the Act, the payment could not be made ’till the 25th of June 1793; the Completion of the business accordingly remained suspended ’till the 20th. of July following, when a Warrant issued to pay over the proceeds of the Bills in deposit to the Treasurer, and another Warrant to pay an equal Sum to the Bank. Interest upon the Instalment ceased on the 31st. of December 1792, by Virtue of the Deposit.
The foregoing transaction confirmed the principle of paying each instalment on the last day of the year. The Secretary in a report to the House of Representatives of the 21st. of December 1793,9 submitted a proposition for making provision for the second instalment. None having been made, he by a Letter to the Bank of the 31st. December 1793,10 informed that the Legislature not having yet had leisure to provide for the second instalment of the two Million loan, he had concluded to suspend calling into the Treasury the last installment of a Loan of 800,000 dollars which had been contracted with the Bank, and that that Sum would remain in deposit as an offset against the first mentioned instalment ’till provision should be made by Law. This Business still remains in the same situation no provision having yet been made by Law; but the effect is to arrest Interest at the rate of 6 Cent. upon the Sum payable to the Bank, by a fund obtained from the Bank itself bearing only an Interest of 5 Cent.
All which is humbly submitted
Secy. of the Treasury.
April 25th. 1794.
Copy, RG 233, Reports of the Secretary of the Treasury, 1784–1795, Vol. IV, National Archives.
1. Journal of the House description begins Journal of the House of Representatives of the United States (Washington, 1826), I, II. description ends , II, 132. A copy of the communicating letter may be found in RG 233, Reports of the Secretary of the Treasury, 1784–1795, Vol. IV, National Archives.
2. On February 28, 1794, the House “Resolved, That the Secretary of the Treasury be directed to furnish the House with a copy of the contract made by him with the Bank of the United States, for a loan of two millions of dollars, made of the said Bank, in pursuance of the eleventh section of the act for incorporating the subscribers to the said Bank; and also, a copy of any opinions which may have been given by the Attorney General, relative to a construction of the said contract; and that he communicate to the House any provisional measures which he may have taken respecting the payment of the installment of the said loan” (Journal of the House description begins Journal of the House of Representatives of the United States (Washington, 1826), I, II. description ends , II, 76).
This resolution was prompted by remarks made by William B. Giles, member of the House of Representatives from Virginia. Theodore Sedgwick of Massachusetts, chairman of a select committee to inquire into the state of the Treasury and the expediency of a loan, had reported on February 28, 1794 (see Sedgwick to H, February 22, 1794; H to Sedgwick, February 25, 1794). After Sedgwick had made his report, “Mr. Giles said the chairman of the select committee had made a fair, and comprehensive statement of the conduct of the committee as far as he had gone; there were however some facts which he had omitted, that he thought should be communicated. He said that in the course of the committee’s investigation, it had appeared that the contract conte[mpla]ted by the act for incorporating the bank, had been dated either in June or July. It had however been agreed, that it should have a retrospective effect so as to interest the United States in the bank from the commencement of its operations. He thought it also his duty to state to the committee, although not in opposition to the report, that it had been made a question whether the payment of the instalments due to the bank from the United States, should be considered as falling due at the time of the commencement of its operations, or at the time of executing the contract. That this question had been referred to the Attorney General, who had given an opinion in favor of the latter period. That the Secretary notwithstanding had in opposition to this opinion, made the first payment in December, very near the time when the bank commenced its operations, instead of June or July, when the contract was executed. Mr. Giles said he merely stated these facts, believing the committee should be acquainted with them” ([Philadelphia] Gazette of the United States & Evening Advertiser, March 4, 1794).
3. See “Agreement with the President and Directors of the Bank of the United States,” June 25, 1792. The copy of the agreement enclosed with this report is in RG 233, Reports of the Secretary of the Treasury, 1784–1795, Vol. IV, National Archives.
7. “An Act providing for the payment of the First Instalment due on a Loan made of 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 338).
10. Letter not found.