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Report on Rules and Modes of Proceeding with Regard to the Collection, Keeping, and Disbursement of Public Moneys, and Accounting for the Same, [4 March 1794]

Report on Rules and Modes of Proceeding with
Regard to the Collection, Keeping, and Disbursement
of Public Moneys, and Accounting for the Same1

[Philadelphia, March 4, 1794]

[To the Select Committee Appointed to Examine the Treasury Department]

I.   As to the Collection.

Public monies have proceeded from six sources.2 The duties on Imports and Tonnage—Duties on Spirits distilled within the United States—Foreign Loans—Domestic loans—Duties on patents and coined cents—Debts from individuals.

In the first instance—The duties on imports and tonnage are received by the Collectors of the Customs. The duties on Spirits distilled within the United States, by the Collectors of Divisions, who pay them over to the Inspectors of Surveys, who pay them over to the Supervisors of Districts. The Foreign Loans, by the Bankers abroad, under whose immediate agency they are made. The domestic loans, duties on patents, coined cents, and debts from individuals, by the Treasurer.

It is the general rule, that the Treasurer is the medium of all receipts and disbursements of public monies, which are received and disbursed within the United States; and that all receipts and disbursements must be sanctioned by Warrants in favor of, and upon that Officer: These Warrants are signed by the Secretary of the Treasury, countersigned by the Comptroller, and registered and attested by the Register. Those for receipts must have an acknowledgment of the Treasurer, in order to the discharge of the payer. Those for disbursements must have an equivalent acknowledgment on behalf of the party receiving, in order to the discharge of the Treasurer. This description of Warrants will apply, as often as the term shall be hereafter used.

This general rule with regard to receipts has been carried into effect, by five modes of proceeding.

1st:   By Bills or drafts drawn by the Treasurer, under the special direction of the Secretary of the Treasury, upon those, who have in their hands public monies, which drafts, before they pass from the Treasurer’s hands, are registered and countersigned by the Register of the Treasury, or by a confidential Clerk designated by him for that purpose.3 This course is applicable, as well to monies drawn from abroad, as to those accruing within the United States; except that foreign Bills are always countersigned by the Register himself.4

2nd   By deposits made by the Supervisors of the revenue and the Collectors of the customs, in the several Banks, pursuant to a general direction from the Secretary of the Treasury;5 which, immediately upon their being made, are passed by the Banks to the credit of the Treasurer; the Officer, who makes the deposit, taking duplicate receipts from the Bank in which it is made, one of which is immediately forwarded to the Treasury; and the Bank making weekly returns, one to the Secretary of the Treasury, another to the Treasurer, which specify the deposits made.

3d   By remittances of the Supervisors and Collectors to the Treasurer. These remittances are generally in Bank-bills,6 though they are sometimes in Bills or Orders on individuals, sometimes by mutual credits, where the Treasurer, as agent for the War department, has a sum to pay to one of those Officers charged with some agency relative to the War deparament, and in two or three very inconsiderable instances in specie. All the modes, except that of Bank bills, are very limited; and they all appear in the weekly returns of the Officers to the Secretary of the Treasury, and to the Commissioner of the Revenue.

4th   By special directions from the Secretary of the Treasury, to the Supervisors and Collectors of the customs, to make advances, provisionally, for certain specified purposes requiring local advances. These are always written, and specify their objects. The course is, for duplicate receipts to be taken of the persons, to whom the advances are made, one of which being sent to the Treasury, is the foundation of a Warrant.7

5th   By Warrants upon the persons who are to pay, in favor of the Treasurer.8 But the four first modes, which all operate as modes of remittance to the Treasury, resolve themselves, eventually, into the fifth. All advances and payments must be finally sanctioned by Warrants, in order to their legal validity. No party, who pays money, can be discharged, but upon a Warrant, and that, as already mentioned, receipted upon by the Treasurer. The Bills or Drafts drawn by the Treasurer, are either deposited by him in Bank, or remitted by him to certain public Officers or Agents, according to directions from the Secretary of the Treasury. These persons are of two descriptions: 1st: The Commissioners of Loans, who are charged with paying interest on the public debt, in the several States, and with the payment of pensions to invalids: 2nd: Agents and Contractors for military supplies.

The Bills deposited in Bank are deposited to be sold by the Banks, according to general instructions from the Secretary of the Treasury.9 Those upon the Supervisors and Collectors of the Customs, are credited by the Bank to the Treasurer, immediately upon their being deposited.10 Those upon the Agents of the United States abroad have not been so credited; but after the monies have been received by the Bank, they have been passed over to the Treasurer, upon Warrants.

Instructions to the Treasurer for drawing, depositing or remitting bills are, generally, if not universally written. Those to the Banks for disposing of them are equally so.11

Weekly returns from the several Collectors of the customs, Supervisors of the revenue, and Banks, enable the Secretary to regulate his directions to the Treasurer for drawing.

II.   As to the keeping

The Treasurer, pursuant to general instructions from the Secretary of the Treasury, keeps the public monies in his custody or controul in the several Banks. Formerly the Banks of North America, New York, Massachusetts and Maryland, were places of deposit. At present, the public monies are kept in the Bank of the United States, and the several Offices of discount and deposit, at Boston, New York, Baltimore and Charleston, and in the Bank of Providence.12 All monies in the Treasury form a common mass.13 The Treasurer has never any public money in his possession or custody, which is not, in fact, deposited in Bank, from the moment his possession or custody commences, till it ceases by the disbursement of it, for public purposes, except in the cases of Bank-bills, orders upon individuals &c. heretofore enumerated as remittances by the Supervisors of the revenue, and Collectors of the Customs to the Treasurer; and these also, immediately after the receipt of them, constitutes deposits in Bank to the credit of the Treasurer.

The Secretary of the Treasury, or any other Officer of the Department, besides the Treasurer, never has, for a moment, the possession or custody of any part of the public monies (except in the cases hereafter specified) and the possession or custody of the Treasurer, is, as already stated, exercised through the Banks. The only exceptions to this observation respect certain inconsiderable sums occasionally placed in the hands of the Commissoner of the revenue, for the service of the light house establishments,14 and certain other small sums, for contingencies of the Offices of Secretary, Comptroller, Commissioner of the revenue, and Auditor, which are, from time to time, in proportion to their expenditure, placed in the hands of the Register, for disbursement, who renders an account of the disbursement, which undergoes a regular and formal settlement,15 as other public accounts. The same is done by the Commissioner of the revenue.

The monies of the United States, which are disbursed abroad, are kept by the Bankers, under whose agency the loans are made, till they are disbursed for the purposes of their destination.

III.   As to disbursement.

1st   Within the United States.

It has been already stated, as a general rule, that the Treasurer is the medium of all receipts and disbursements, within the United States.

This rule, as to disbursements, is carried into effect, by three different modes of proceeding.

1st   By Warrants issuing, in the first instance, upon the treasurer, which is the general course, and the invariable one, where payments are made immediately at the Treasury.16

2nd   By drafts of the Treasurer, under special direction of the Secretary, registered and countersigned by the Register.17

3d   By special directions from the Secretary of the Treasury, to the Supervisors, and Collectors, to make advances of money, provisionally, for certain specified purposes, requiring local advances, as mentioned in a preceding place. These directions never extend to any monies, which have once passed to the credit of the Treasurer.18

The two last modes resolve themselves eventually into the first. Warrants finally issue for the sums paid either upon the drafts of the Treasurer, or under the directions of the Secretary.

There is, besides, an auxiliary mode of effecting public payments in certain cases.

It occasionally happens, that the omission or delay of appropriations by law, renders it impossible, to satisfy, in regular course, demands upon the Treasury, which have been incurred pursuant to law, and the satisfying of which is essential to the public credit and service.

In such cases, the course has been, for the Secretary of the Treasury to request informal advances by the Banks, to the persons, to whom the payments are to be made, to be reimbursed, when provision is made by law. These advances have been made in the confidence, that the Secretary of the Treasury would not request them, but in cases, in which there was a moral certainty of a future provision, and in which, justice and good faith would necessarily oblige the Legislature to make it.19 The accounts of such advances are distinct from that of the Treasurer, and the advances are reimbursed, when provision is made by law, by warrants upon the Treasurer.20 Of a similar nature, are deposits, which have been made with Banks in certain cases. Of these, there have been three examples; one with the Bank of North America, mentioned and explained in my reports of last Session,21 two with the Bank of the United States, as offsetts against the first and second instalments of the two million loan. The two first of these deposits respected the proceeds of foreign bills; the last relates to part of a loan had of the Bank itself.22

All but the last have been closed and carried into the accounts of the Treasurer, by Warrants. The last waits the sanction of the Legislature.

No money once placed to the credit of the Treasurer, in Bank, is touched, but upon his own check or order.23 And his Bank book constantly exhibits his receipts and disbursements according to the course of the public service.

2nd   In foreign Countries

The course of disbursements in foreign countries is particularly explained in my report to the House of Representatives, during the last Session, dated the 13th. of February 1793.24

IV.   As to the duties of the respective Officers.

The duties of the several Officers of the Treasury department, with regard to the collecting, receiving keeping and disbursing of public monies, and regulating and keeping the accounts thereof, are as follow:

The Secretary of the Treasury superintends the collection and receipt, and the disbursement of public monies. In consequence of this, all authorities for transferring them from one public Agent to another, or for the final disbursement of them, originate with him. He directs the drawing of monies into the Treasury, and regulates the time, manner, and circumstances, subject to the sanctions prescribed by law: and judges, exclusively of other Officers of the Department, when and what disbursements are to be made, subject, nevertheless, to the check of the Comptroller, who, in countersigning warrants, is jointly responsible with him, for their being conformable to appropriations by law, and to the further check and settlement of the accounts of all persons, to whom he may have caused advances of public money, by the Auditor and Comptroller. All warrants for the payment of money into the Treasury, or for the payment of money out of the Treasury, are first signed by him. It is also his duty, to decide on the forms of keeping all public accounts.

The Comptroller is to countersign all warrants drawn by the Secretary of the Treasury, as well for the payment of money into the Treasury, as for the payment of money out of the Treasury. To enforce the regular and punctual payment of all monies collected for, or due to the United States, he is to direct prosecutions for all delinquencies of Officers and persons indebted.

He is to prepare for the consideration and decision of the Secretary, the forms of keeping all public accounts; is, in the last resort, to settle all public accounts; and, consequently, to superintend the keeping of them. It is his duty, to see, that all expenditures of public money are according to appropriations by law, and that all persons, who have the handling of them, duly account.

The Auditor, (as auxiliary to the Comptroller) is to receive all public accounts, for the purpose of settling them, to examine and adjust them, in the first instance, to certify the balances, which he finds; and to transmit each adjustment made by him, together with the vouchers and his certificate, to the Comptroller, for final decision.

The Commissioner of the Revenue, under the direction of the Secretary of the Treasury, superintends the collection of the duties on Spirits distilled within the United States. It is a part of his duty to receive returns of the monies, from time to time, in the hands of the Supervisors, from which he makes a weekly abstract for the Secretary of the Treasury, to enable him to direct the drawing for those monies.

The Treasurer receives, keeps and disburses the monies of the United States. All his receipts, as well as his disbursements, are sanctioned by warrants of the description already given. As incident to these duties, he draws, under the direction of the Secretary, all bills which are drawn for public monies, arising from sources foreign or domestic, which bills, as already mentioned, are always registered, or entered and countersigned by the Register: or in the case of domestic bills, by his confidential Clerk, in his stead.

The Register immediately conducts the keeping of all the Accounts of the United States, those for receipts and expenditures included. As incident to this, he records and attests all warrants for the receipt and payment of monies; also all drafts of the Treasurer, for the like purposes, subject to the observation above.

V.   As to the Accounts of Receipts and Expenditures.

These are governed by the following general principles and Regulations.

1st   Every receiver of public monies (except as a creditor of the United States, of the precise sum due to him) is made to account for them immediately to the Treasury Department.

This embraces, 1st: All those Officers, who, in the first instance, collect and receive the revenues of the United States. 2nd The Treasurer of the United States, who is the center of their collections and receipts; 3d All persons, who receive public monies, for any purpose whatever; with the above exceptions.

The Organs of the Department, for bringing persons to account, are the Auditor and Comptroller.

But it results from the constitution of the Department that all expenditures, at some period, pass under the separate consideration of the Secretary, Comptroller and Auditor. In many cases, the accounts are settled before any advances are made, but in those instances where advances are unavoidable, from the nature of the services; as to the Commissioners of Loans, the Contractors and other agents for the War department; the parties, who receive advances, are, by the terms of the Warrants for advances, held accountable until a final settlement.

The general rule is, that all persons are to account quarter-yearly. This rule is observed with great punctuality, as to the Collectors of the duties on imports and tonnage; as to the Treasurer, as well in his capacity, as Agent to the War department, as in that of Treasurer of the United States; and as to the Commissioners of Loans. The Revenue from Spirits distilled within the United States, from causes, which have unavoidably obstructed its regularity, has not gone thro’ an equally regular course of accounting; as to time, with the duties on imports and tonnage. The Accounts of the Contractors for the Army, and some other public accounts, do not admit of a compliance with the general rule. The most protracted class of accounts are, however, generally rendered and settled within a year after the advances.

The accounts of receipts and expenditures are kept at three different Offices of the Treasury, besides that of the Treasurer; more summarily, at the Offices of the Secretary and Comptroller, and more fully and formally, at the Office of the Register. But at each of these Offices, there is a regular record of all Warrants issued, both for receipts and expenditures; and the accounts of expenditure are kept under distinct heads of appropriation. The Treasurer also keeps a regular account of receipts and expenditures,25 but without reference to the particular appropriations.

D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives.

1For background to this document, see the introductory note to H to Frederick A. C. Muhlenberg, December 16, 1793. See also Abraham Baldwin to H, February 26, 1794; H to Baldwin, February 27, 1794.

The first of the specific queries with which the House of Representatives charged the committee to examine the Treasury Department was “Whether the forms of keeping the Accounts be calculated to effectuate the dispositions of the public moneys, as prescribed by law” (Journal of the House description begins Journal of the House of Representatives of the United States (Washington, 1826), I, II. description ends , II, 71).

The minute book of the committee for March 1, 1794, records that the committee resolved that “They will enquire into the mode of transacting the business at the Treasury, as to the collection. keeping and disbursement of the public monies, as to the duties of the respective Officers, and as to the forms of Accounts.… That the Secretary of the Treasury be requested to exhibit to the Committee at their next meeting, a view of the subject contained in the first Resolution” (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

At the next meeting, on March 4, 1794, the minutes state: “The Secretary of the Treasury, Comptroller and Register, attended to give information, as to the mode of transacting business at the Treasury &c.” A note in the minutes at this point refers to a written statement which is presumably the report printed above (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

2The report of the committee on May 22, 1794, gives nine sources. Revenue from the post office and from fines and forfeitures was included, and separate consideration was given to duties on patents and revenue from “coined cents.” A brief description of the receipt of these revenues is also included in the final report of the committee (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

3The importance of this step had become apparent during the attempts to account for warrants issued by the Board of Treasury. The problem had come to the attention of the House in connection with an investigation of the memorial of Andrew G. Fraunces. see Fraunces to H, May 16, 1793.

4The May 22, 1794, committee report added: “The following particular case is furnished as an exemplification.… The Secretary of the Treasury, by letter of the 6th of December 1793, directed the Treasurer to draw, and deposit in the Bank of the United States, for sale, bills upon several persons; among those, upon the collector of Norfolk [William Lindsay].… This bill, drawn … the day after the direction of the Treasurer, was registered in the Register’s Office, on the same day, and was there entered in a book kept for the purpose. It was also entered in the book of draughts and remittances, kept in the office of the Secretary of the Treasury,… in the particular account of the collector of Norfolk for that purpose, on the same day. It appears from the Treasurer’s bank Book, to have been deposited in the Bank of the United States, on the 10th. of December, and then passed to his credit in Bank. The Bill having been paid by the Collector, was returned to the Secretary of the Treasury, with the receipt endorsed of the last holders … the persons to whom the payment was made. The Collector of Norfolk then received credit for the said payment, and the Treasurer was charged with an equal sum, by a regular warrant receipted upon the treasurer …” (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

7For example, see H to Otho H. Williams, June 25, 1791; H to Nathaniel Appleton, March 18, 1791.

At this point the May 22, 1794, committee report inserted copies of the “receipt of Jacob Millert contractor for supplying the recruits at Richmond for money advanced to him by Edward Carrington, Supervisor of Virginia.” The warrants which recorded the transaction at the Treasury were also described (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

8As an example of this method of procedure, the May 22, 1794, report of the committee cited the money which William Cook, a former deputy quartermaster general in Northumberland County, Pennsylvania, owed to the United States and paid on February 18, 1794 (D, RG 233, Papers of the Select Committee Appointed to examine the Treasury Department, Third Congress, National Archives).

11At this point in the May 22, 1794, committee report, the following was inserted: “… and it has always been a part of the instructions, to dispose of all bills drawn on the domestic revenue, at par. These bills are generally sold on credit, and the Bank have a right, in virtue of a contract with the secretary of the Treasury, to deduct the amount not received, from the credits given to the Treasurer, upon the deposit” (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives). The reasons for this procedure and possible alternatives to it are discussed in H to the President and Directors of the Bank of the United States, January 28, 1792.

13In the May 22, 1794, report of the committee this sentence was omitted. This point, which H had attempted to establish several times, was one of the issues between those who admired H’s ability as a financier and those who feared his power (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

14For the origin of this arrangement, see Tench Coxe to H, December 31, 1792.

15In MS, “former settlement.” Examples of the settlements to which H is referring may be found in RG 217, Miscellaneous Treasury Accounts, 1790–1894, Accounts No. 2461, 3380, 3503, 3980, 3934, 7275, 7838, National Archives.

16As an example, the May 22, 1794, report of the committee at this point included a payment to David Lenox, marshal for the District of Pennsylvania (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

17The committee report of May 22, 1794, added as an example a description of the transaction referred to in H to William Gardner, November 23, 1793 (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

18The committee report of May 22, 1794, at this point refers to the example cited in note 7.

19This sentence does not appear in the committee report.

20The example of “informal advances” from the committee report of May 22, 1794, reads in part as follows:

“A Contract was entered into, and concluded on the 22d day of October, 1792, between the Secretary of the Treasury, on the behalf of the United States and William Young & George Dannacker, to furnish clothing for the troops of the United States, for the service of the year 1793.… The contract stipulated, ‘That the Secretary of the Treasury … should pay … to Young and … Dannacker … in proportion, and at the different periods of delivery mentioned in the second article.’ And provision was also made for advancing … any sum not exceeding ten thousand dollars over and above all deliveries which should have been made.

“The Secretary of the Treasury on the 14th. of Novr., 1792, laid before the House of Representatives an estimate of the sums to be provided, for the service of the year 1793.

“On the 25th. of February, the appropriations were made by law. The Secretary of the Treasury, according to the terms of the contract, requested, from time to time, by letter, advances from the Bank of the United States to the Contractors, which were made; amounting together to thirty-nine thousand five hundred dollars. This sum was reimbursed on he 8th. of March, by warrant No. 3543.” (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives.) See also “Contract with George Dannacker and William Young,” October 22, 1792; H to the President and Directors of the Bank of the United States, November 28, December 3, 12, 24, 1792.

21At this point the committee report gives a description of the transaction with the Bank of North America. See “Report on the Balance of All Unapplied Monies Which May Have Been Obtained by the Several Loans Authorized by Law,” February 4, 1793.

22The description of these transactions which the committee gives at this point in its report of May 22, 1794, is taken verbatim from H’s “Report on the Contract Made with the Bank of the United States for a Loan of Two Million Dollars,” April 25, 1794 (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

23At this point the committee report of May 22, 1794, states a thesis which had played a large part in the opposition to chartered banks: “They are, however, auxiliary to the general operations of the Bank, in the same sense with all other deposits” (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

24“Report Relative to the Loans Negotiated Under the Acts of the Fourth and Twelfth of August, 1790,” February 13, 1793. At this point the committee report of May 22, 1794, contains a brief paragraph concerning methods of payment used for disbursements in foreign countries (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives).

25The committee report omits the remainder of this sentence and continues by quoting a report of April 14, 1794, prepared by Oliver Wolcott, Jr., concerning accounting forms established at the Treasury (D, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives). Wolcott’s report may be found in RG 233, Other Records, Third Congress, National Archives.

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