To Jeremiah Olney1
October 12th 1792.
In answer to your letter of the 4th instant I cannot but express my regret and disappointment, that you should have considered my letter of the 19th Ultimo as not sufficiently explicit to induce you2 to receive entries in case of collusive transfer. I have revised my letter, and to me it appears very explicit and very decisive.
What more could I do, than give my opinion, that the appearances stated by you afforded the presumption of a design to evade the law sufficiently strong to justify an Officer in refusing the credit; and that if an action should be brought against an Officer for such refusal, in the event of damages against him, if he should appear to have acted with due caution, and upon sufficient ground of probability, it would be incumbent on the Government to indemnify him?
Suppose a law were to be passed prohibiting such collusive transfers, under penalties, and authorising the Officers to refuse entries, when there appeared probable cause of their having been made, would it not still be necessary, in order to his justification and indemnity, that he should appear to have acted with due caution and upon sufficient ground of probability? Ought he not, so far, to act at his own peril, as a guard against capricious and causeless obstructions to the Merchant?
In the event therefore of the law you mention, the same necessity of due caution would be a condition of your indemnification, as is made such by my letter.
In similar cases, an Officer is bound to act with circumspection, and acting with prudence, it is proper he should confide in the justice of the Government.
It was foreseen that after due caution, from the difficulty of adducing proof inherent in similar trans-actions, it might happen that the decision would be against the Officer and he subjected to damages; in which case the expectation of indemnity is given.
I trust that should fresh instances occur of similar collusive transfers warranted by circumstances equally probable with those which have attended Mr Arnold’s case, that you will refuse to receive the entries. The practice which appears to have been introduced by him is of the most pernicious tendency, contrary equally to the interest of the Merchant and of Government; for should it become prevalent, it would inevitably put a stop to the allowance of Credit. It is consequently in my view essential, that it should be withstood in its infancy.
With consideration, I am, Sir, Your Obedt Serva⟨nt⟩
Jere. Olney Esqr.
LS, Rhode Island Historical Society, Providence; copy, Newport Historical Society, Newport, Rhode Island.
1. For background concerning Welcome Arnold’s “collusive” transfers, see William Ellery to H, September 4, October 9, 1792; Olney to H, September 8, second letter of September 13, October 4, 1792; H to Olney, Septem 19, 24, 1792.
2. A note at this point in the copy states: “The word not appears to have been omitted here in the letter.”