Before I shall make a formal report on Gen. Dearborn’s application, I enclose the papers for your information. The facts he had stated & on which his claim is grounded, vizt. that Shell castle Island was not a real Island, but a shoal left bare only at low water; and that he was detained both there & at Cape Hatteras, by the non attendance of the Superintendent, Collector Treadwell, appear to be sufficiently substantiated. The Comissr. of the revenue, however, objects, that the saving made by Gen. Dearborn, in not being obliged to dig as deep and to build to that depth a solid stone foundation, as had been contemplated by the contract, is a sufficient compensation for the additional expense incurred by Gen. Dearborn on the other accounts. This Mr Dearborn denies, and insists that there was no comparison between the saving of the foundation to the contemplated, and the unforeseen expense actually incurred. Of this I am not a competent judge; but feel satisfied that the representation of Gen. Dearborn is correct, as he states facts, and Mr Miller merely draws an inference from conjectural estimates.

With me the great objection to the claim is the introduction of a new principle that of Govt. making, in case of contracts, an additional allowance; and that objection is stronger in the present instance, because Gen. Dearborn had originally made conditional propositions which were rejected by the President for the very reason, that nothing should, in Government contracts, be left uncertain.

If you shall agree that an allowance shall be made, the power of making the contract having originally been vested by law in the President, it will be necessary that you should give your official sanction to such allowance; and, the appropriation being exhausted, it will be also necessary to bring the subject before Congress, for the purpose of obtaining an appropriation.

With respectful & sincere attachment Your obedt. Servt.