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
Treasury Department, February 4th, 1793.
[Communicated on February 4, 1793]21
I have lost no time in preparing, as far as has been practicable, consistently with the course of facts, the several statements required by the resolutions of the House of Representatives, of the 23d. of last month,22 and I have concluded to add to them such further statements, as appeared to me necessary to convey fully the information, which is understood to be the object of those resolutions. It was my first intention to submit these statements collectively, with such explanatory remarks, as the occasion might demand, but finding, on experiment, from the extent and variety of the matter, involved in the resolutions, that more time will be requisite for a full developement of it, than I had anticipated, considerations of weight in my mind have determined me to present the different parts of the subject successively. Among other advantages, incident to this course of proceeding, will be that of having it in my power to give a more accurate and mature view of the entire subject, without too great a dereliction of current business of the department. In executing the task I propose to myself, I shall rely on the indulgence of the House, to a latitude of observation, corresponding with the peculiar circumstances of the case.
The resolutions, to which I am to answer, were not moved without a pretty copious display of the reasons, on which they were founded. These reasons are before the public through the channel of the press. They are of a nature, to excite attention, to beget alarm, to inspire doubts. Deductions of a very extraordinary complexion may, without forcing the sense, be drawn from them.
I feel it incumbent on me to meet the suggestions, which have been thrown out, with decision and explicitness. And, while I hope, I shall let fall nothing inconsistent with that cordial and unqualified respect, which I feel for the House of Representatives, while I acquiesce in the sufficiency of the motives, that induced, on their part, the giving a prompt and free course to the investigation proposed—I cannot but resolve to treat the subject, with a freedom, which is due to truth, and to the consciousness of a pure zeal for the public interest.
I begin with the last of the four resolutions;23 because it is that, which seeks information, relating to the most delicate and important of the suggestions, that have been hazarded.
Here, however, I have to regret the utter impossibility of a strict compliance with the terms of the resolution. The practicability of such a compliance would suppose nothing less than that, since the last day of December 1792, all the accounts of the Collectors of the Customs, and other Officers of the revenue, throughout the whole extent of the United States, could be digested, made up, and forwarded to the Treasury, could be examined there, settled and carried into the public books, under their proper heads. In a word, that all the revenues, receipts and expenditures of this extensive country could have passed through a complete exhibition, examination, and adjustment, within the short period of twenty three days.
It was made, (as I presume, from the result) satisfactorily to appear to a Committee of the House of Representatives, who were charged, during the last session, with framing a direction to the treasury for bringing forward an annual account of receipts and expenditures, that the course of public business would not admit of the rendering of such an account, in less than nine months after the expiration of each year; in conformity to which idea, their report was formed, and an Order of the House established.24
I need do nothing more, to evince the impracticability of an exact compliance with the resolution in question, than to observe that it is even more comprehensive, though with less detail, than the order of the House, to which I have alluded.
To evince, nevertheless, my readiness to do all in my power, towards fulfilling the views of the House, and throwing light upon the transactions of the department, I shall now offer to their inspection sundry Statements, marked A, B, C, D, E, F, which contain, as far as is, at this time, possible, the information desired, and with sufficient certainty and accuracy, to afford satisfaction on the points of inquiry involved in the resolution.
The Statement A, shews, in abstract, the whole of the receipts into, and expenditures from the Treasury, commencing with the first of January, and ending with the last day of December 1792, corresponding with the accounts of the Treasurer. These accounts have been regularly settled up to the end of September, and copies have been laid before the two Houses of Congress.25 The account for the quarter terminating with the year has not yet passed through the forms of settlement but it is under examination, and will, no doubt, be settled as it stands, the manner of conducting the business, and the usual care and accuracy of the officer concerned, leaving very little room to apprehend mis-statement or error. A copy of this account is herewith submitted in the Schedule, marked, C.
This Statement takes up the balance of the general account of receipts and expenditures, to the end of the year 1791, as reported to the House of Representatives, within the first week of the present Session,26 and continuing it down to the end of the year 1792, shews a balance then in the treasury, of seven hundred and eighty three thousand, four hundred and forty four dollars and fifty one cents.
The Statement, B, is a more comprehensive document. It is a general account of Income and Expenditure. It shews, not merely, the actual receipts of money into the Treasury, but the whole amount of the national revenues, from the commencement of the present government to the conclusion of the year 1792, as well outstanding, as collected—the proceeds of the domestic loans—the whole amount of the sums which have been drawn into the United States, on account of the foreign loans—and all other monies, for whatever source, which have accrued within the period embraced by the Statement.
Those items form the debit-side of the account, amounting to seventeen millions eight hundred and seventy nine thousand, eight hundred and twenty five dollars and thirty three cents.
The Credit-side consists of two items. 1st. The whole amount of the actual expenditures, to the end of the year 1791, as stated in the general account of receipts and expenditures before referred to. 2nd. The whole amount of the actual expenditures during the year 1792, as specified generally in the Statement A, and particularly in the several quarterly accounts of the Treasurer, amounting to twelve millions seven hundred and sixty five thousand one hundred and twenty eight dollars and eighty three cents.
The balance of this account of income and expenditure is consequently five millions one hundred and fourteen thousand six hundred and ninety six dollars and fifty cents; which corresponds with the excess of the public income (including the proceeds of loans, foreign and domestic) beyond the actual expenditure, or, more properly speaking, disbursement, to the end of the year 1792. This of course, is exclusive of those parts of the proceeds of foreign loans, which have been left in Europe, to be applied there; the amount, application and balance of which are exhibited, as far as they are yet known in the treasury, in the Statement, No. I, of my late report on foreign loans.27
This balance, as noted in the Statement, B, is composed of the following particulars:
|1st.||Cash in the treasury, per Statement A Dollars||783.444.51|
|2d.||Cash in the Bank of the United States, and the offices of discount and deposit of New York and Baltimore, not yet passed to the credit of the Treasurer, per Statement AB28||605.883. 8.|
|3d.||Proceeds of Amsterdam Bills remaining in deposit, in the Bank of North America, including the sum of one hundred and fifty six thousand five hundred and ninety five dollars and fifty six cents, advanced by the Bank without interest, which is credited in the general Account of receipts and expenditures, Statement A||177.998.80.|
|4th.||Proceeds of Amsterdam sold, but not yet received||614.593. 2|
|5th.||Cash in hands of Collectors of customs, per Abstract D||151.851.25.|
|6th.||Bonds unpaid at the end of the year one thousand seven hundred and ninety two, on account of the duties on imports and tonnage, and falling due between that time and May one thousand seven hundred and ninety four, per Abstract E||2.442.069.15.|
|7th.||Uncollected residue of duties on Spirits distilled within the United States, per Abstract F||341.057.19.|
|Making together Dollars||5.116.897.|
This aggregate somewhat exceeds the balance of the account; but in a case where estimates must necessarily supply the deficiency of ascertained results, differences of this nature are of course. It is, at the same time, satisfactory to observe, that the estimates, which have been heretofore communicated, are proved by the official documents, already received, to have been essentially correct.
It will, no doubt, readily occur to the House, that a very small part of the excess, which has been stated, is a real surplus of income. There remain to be satisfied numerous objects of expenditure, charged upon the fund by the appropriations, which have been made, that cannot fail ultimately to exhaust it, probably within four or five hundred thousand dollars; which will be embraced in the appropriations for the service of the year one thousand seven hundred and ninety three. A further explanation on this point is reserved for future communication.
A due comprehension of the Statements now presented must obviate every idea of a balance unaccounted for, in whatever sense the allegation may have been intended to be made.29
If there was before any obscurity on the subject, it was certainly not the fault of this department. ’Till the last resolutions, no call has been made upon it, which rendered it proper to exhibit a general view of the public monies and funds—or to shew the amount and situation of such as were unapplied. Particular calls for particular objects were made, which, as I conceive, were complied with; but they were not comprehensive enough to embrace a disclosure of that nature.
It could not, therefore, with propriety, have been alleged, that there was a balance unaccounted for. To infer it, from documents, which contained only a part of the necessary information, was not justifiable. Nor could it otherwise happen, than that conclusions, wholly erroneous, would be the consequences of taking such imperfect data for guides.
It may be of use, by way of elucidation, to point out some of the most palpable features of the error which has been entertained.
The following items are stated, as the basis of the supposed deficiency:30
|Residue of the proceeds of the foreign bills supposed to be unapplied, after deducting the sums furnished for St. Domingo,31 and the amount of the debt to the foreign Officers32Dollars,||1.668.190.|
|Surplus of the sinking fund, meaning, I presume, that part of the surplus of the revenue to the end of the year 1790, which hath not been applied in purchases||400.000.|
|Surplus of revenue of the year 1792, as reported||277.385.|
|Deduct in Bank, meaning, I presume, the balance of the Treasurer’s Cash Account||790.642.|
|Balance not accounted for||1.554.933.|
It appears, in the first place, to have been overlooked, that in Statement, No 3, of my late report concerning foreign loans,33 mention is made, that on the 3d of January there remained to be received of the proceeds of the foreign Bills, six hundred and thirty two thousand one hundred and thirty two dollars and two cents; consequently, that sum could not be considered, as in the treasury, and ought to be deducted from the supposed deficiency.
Among the official papers, which, it is intimated, were consulted, was an original Account rendered by the Bank of the United States, of the sales of Amsterdam Bills, shewing a sum of six hundred and five thousand eight hundred and eighty three dollars and eight cents, as having been received by the Bank, and two of its Offices of discount and deposit, for the proceeds of those Bills.34 Had that document been understood, it would have been known, that this sum was in bank over and above the balance of the Treasurer’s Cash account; and this also would have served to account for a large part of the supposed deficiency namely, six hundred and five thousand eight hundred and eighty three dollars and eight cents. The course of this transaction will be hereafter explained.
But among the misconceptions, which have obtained, what relates to the surplus of revenue of the year 1792, is not the least striking. The laws inform, (and consequently, no information on that point from this department could have been necessary) that credits are allowed upon the duties on imports, of four, six, nine, twelve months, and in some cases, of two years.35 Reason dictates, that a surplus in such case must be considered as postponed in the collection or receipt, ’till all the appropriations upon the fund have been first satisfied. The account of receipts and expenditures to the end of 1791, in possession of the House, shews, that at that time, no less a sum than one million eight hundred and twenty eight thousand two hundred and eighty nine dollars and twenty eight cents, of the antecedent duties, were outstanding in bonds.36 How, then, could it have happened, that the surplus of 1792 was sought for in the Treasury, at the very instant of the expiration of the year? I forbear to attempt to trace the source of a mistake so extraordinary.
Let me, however, add, that of the surplus in question, one hundred and seventy two thousand five hundred and eighty four dollars and eighty two cents are not payable ’till April and May 1794, as will be seen by the Abstract E.
Thus have I not only furnished a just and affirmative view of the real situation of the public account, but have likewise shewn, I trust, in a conspicuous manner, fallacies enough in the Statement, from which the inference of an unaccounted for balance is drawn, to evince, that it is one tissue of error. In this, I might have gone still further, there being scarcely a step of the whole process, which is not liable to the imputation of misapprehension. But I wish not unnecessarily to weary the patience of the House.
Another circumstance, to which importance has been given, and which was noticed in connection with the suggestion last discussed, is a disagreement between a memorandum in the Treasurer’s Bank book, and the Statement reported by me of the amount of Bills drawn at the treasury upon the foreign fund.37 A disagreement, no doubt, exists, and to the extent of five millions seven hundred and sixty thousand one hundred and thirty eight florins or guilders.
But the following circumstances contain the solution of this disquieting appearance.
There will be found in the Statement A, two several credits, each for two millions of dollars, as for monies received into the treasury, with corresponding debits of equal sums, as for monies paid out of the treasury.
But neither the one nor the other did, in reality take place. The whole is a mere operation to accomplish the purposes of the eleventh Section of the “Act to incorporate the Subscribers to the Bank of the United States,”38 without an inconvenient and unnecessary displacement of funds.
That Section authorizes a subscription to the Stock of the Bank, on account of the Government, not exceeding in amount two millions of dollars, and provides for the payment of it, out of the monies, which should be borrowed, by virtue of either of the Acts of the fourth and twelfth of August 1790, the first making provision for the public debt, the last for reducing it;39 enjoining, at the same time, that a loan should be made of the Bank, to an equal amount, to replace the monies, which were to be applied to the payment of the subscription.
It is evident, that nothing could have been more useless, (at the same time that it would have been attended with obvious disadvantages to the Government) than actually to draw from Europe out of the monies borrowed there, the sum necessary for the payment of the subscription to the Bank, and again to remit out of the loan, which was to be obtained of the Bank, a sufficient sum, to replace such monies, or such part of them, as may have been destined for the foreign object. Loss upon exchange in consequence of overstocking the market with Bills, Loss in interest by the delays incident to the operation; and which would necessarily have suspended the useful employment of the funds for a considerable time. These are some of the disadvantages to the Government. To the Bank alone could any benefit have accrued, which would have been in proportion to the delay in restoring or applying the fund to its primitive destination. Such an operation, therefore, could only have been justified by an indisposition, on the part of the Bank, to facilitate the principal object, without the intervention of actual payment.
But no such disposition existed. On this, as on every other occasion, a temper, liberal towards the government, has characterized the conduct of the Directors of that institution.
It was accordingly proposed by me and agreed to by them, that the object to be accomplished should be carried into effect by a merely formal arrangement. In this, however, it was necessary to consult the injunctions of law, and the principles of the constitution of the Treasury Department.
These points then were to be effected—a payment of the subscription money, to vest the Government with the property of the Stock—possession of the means of paying it, which were to be derived from the foreign fund, and, of course, were first to be in the treasury, before payment could be made—the replacing what should be taken from that fund, by a loan of the Bank.
The following plan for these purposes was devised an executed by previous concert.
The Treasurer drew bills upon our Commissioners in Amsterdam, for the sums requisite to complete the payment on account of the subscription: these bills were purchased by the Bank, and Warrants in favor of the Treasurer upon the Bank served to place the proceeds in the treasury. Warrants afterwards issued upon the Treasurer, in favor of the Bank, for the amount of the subscription money, which was receipted on the part of the Bank, as paid. Other Warrants then issued in favor of the Treasurer upon the Bank, for equal sums, as upon account of a loan to the Government, which Warrants were satisfied by a redelivery to the Treasurer of the Bills which had been drawn upon the Commissioners. In the first place, warrants were drawn upon the Treasurer, to replace the monies supposed by the arrangement, to be drawn from the foreign fund, which perfected the operation. But from the detail, which has been given, it will be seen, that in fact, no monies were either withdrawn from, or returned to that fund. The Bills were cancelled, annexed to the warrants, and are lodged in the treasury, as vouchers of the transaction.
These Bills were for two separate sums, each two millions four hundred and seventy five thousand guilders, equal to a million of dollars; the payment having been divided into two parts, upon certain equitable considerations, relative to the dividend of the first half year.
This transaction explains four millions nine hundred and fifty thousand guilders, equal to the sum, which forms the disagreement, between the memorandum in the Treasurer’s Bank-book, and the Statement reported by me.
The residue is thus explained. The sum of one million two hundred and thirty seven thousand five hundred guilders, directed to be drawn for, on the thirtieth of November, was directed to be comprised in one or more Bills, as the Bank should desire. It was at first placed in one Bill; but this Bill was afterwards returned, with a request that it might be converted into smaller sums. The Bill returned was cancelled, and in lieu of it, there had been furnished, prior to the first of January, of the present year, nine hundred and thirty four thousand five hundred guilders—the balance, three hundred and three thousand, then remaining to be furnished. The sum of nine hundred and thirty four thousand five hundred guilders, consequently appears twice in the memorandum.
These two sums of four millions five hundred and ninety thousand, and nine hundred and thirty four thousand guilders, exceed the difference in question, by one hundred and twenty four thousand three hundred and sixty two guilders.
The Treasurer informs me that there are two bills not included in the memorandum; one for one hundred and twenty thousand seven hundred and fifty, and the other for six hundred and twelve guilders; which make up the above mentioned excess. The former of those two bills was furnished to the Secretary of State, for the purpose contemplated by the third Section of the Act of the last Session, entitled “An Act making certain appropriations therein specified.”40
Is it not truly matter of regret, that so formal an explanation on such a point should have been made requisite? Could no personal enquiry of either of the Officers concerned, have superseded the necessity of publicly calling the attention of the House of Representatives, to an appearance in truth, so little significant? Was it seriously supposable, that there could be any real difficulty in explaining that appearance, when the very disclosure of it proceeded from a voluntary act of the head of this department?
With perfect respect, I have the honor to be, Sir Your most obedient and most Hble Servt.
Secretary of the Treasury.
The Honble. Jonathan Trumbull Esqr.
Speaker of the House of Representatives.
P:S: Another Statement of income and expenditure having been made, which presents the subject under aspect, but agreeing in the result with the Statement (B) is herewith also submitted, marked (Ba).
Copy, RG 233, Reports of the Treasury Department, 1792–1793, Vol. III, National Archives.
22. See the introductory note to this report.
23. There were five resolutions, and the discussion which follows in the text deals with the fifth resolution of the House. See the introductory note to this report.
24. The order to which H is referring was adopted on December 30, 1791. It reads as follows: “Resolved, That it shall be the duty of the Secretary of the Treasury to lay before the House of Representatives, on the fourth Monday of October in each year, if Congress shall be then in session, or if not then in session, within the first week of the session next following the said fourth Monday of October, an accurate statement and account of the receipts and expenditures of all public moneys, down to the last day inclusively of the month of December immediately preceding the said fourth Monday of October, distinguishing the amount of the receipts in each State or District, and from each officer therein; in which statements shall also be distinguished the expenditures which fall under each head of appropriation, and shall be shown the sums, if any, which remain unexpended, and to be accounted for in the next statement, of each and every of such appropriations” (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 484).
25. On November 7, 1792, the Speaker of the House “laid before the House a letter from the Treasurer of the United States, accompanying his accounts of the receipts and expenditures of the public moneys, from the first of January, one thousand seven hundred and ninety-two, to the thirtieth of September following, inclusive” (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 614). The letter was also presented in the Senate on November 7 (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, 611).
26. See “Report on the Receipts and Expenditures of Public Monies to the End of the Year 1791,” November 10, 1792. This report was presented in the House on November 12, 1792 (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 618).
28. Copy, RG 233, Reports of the Treasury Department, 1792–1793, Vol. III, National Archives. “Statement AB” had also been sent to the Senate and is printed in these volumes as an enclosure to “Report on Bank Deposits, Surplus Revenue, and Loans,” January 16, 1793.
29. At this point H is referring to part of the speech which Giles made in the House of Representatives in support of his resolutions. See the introductory note to this report.
30. The items listed by H are taken from the account which Giles presented to the House to prove that the Treasury Department had failed to account for $1,554,851.43. See the introductory note to this report.
31. The United States had supplied France with funds to purchase supplies needed to deal with the insurrection which had occurred in Santo Domingo in August, 1791. See William Short to H, December 28, 1791, January 26, April 22, 25, May 14, June 28, August 6, 1792; H to Short, April 10, 1792; Jean Baptiste de Ternant to H, February 21, March 8, 10, 1792; H to Ternant, February 22, March 8, 1792; H to Jefferson, November 17, 1792; H to George Washington, November 19, 1792.
32. For a description of this debt, see Short to H, August 3, 1790, note 5. Section 5 of “An Act supplementary to the act making provision for 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 [May 8, 1792]) authorized the President “to cause to be discharged the principal and interest of the said debt, out of any of the monies, which have been or shall be obtained on loan.” For the negotiations on the payment of these officers, see H to Short, August 16, September 13, 1792; H to Washington, August 27, 1792; Washington to H, August 31, 1792; H to Gouverneur Morris, September 13, 1792.
34. See “Statement AB” of “Report on Bank Deposits, Surplus Revenue, and Loans,” January 16, 1793.
35. For example, see Sections 41 and 42 of “An Act to provide more effectually for the collection of the duties imposed by law on goods, wares and merchandise imported into the United States, and on the tonnage of ships or vessels” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 168 [August 4, 1790]); Section 3 of “An Act repealing, after the last day of June next, the duties heretofore laid upon Distilled Spirits imported from abroad, and laying others in their stead; and also upon Spirits distilled within the United States, and for appropriating the same” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 199 [March 3, 1791]); Section 1 of “An Act making farther provision for the collection of the duties by law imposed on Teas, and to prolong the term for the payment of the Duties on Wines” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 219–20 [March 3, 1791]).
36. See note 26.
37. In this paragraph H is referring to remarks made by Giles in the House of Representatives in support of his resolutions. See the introductory note to this report.
38. Section 11 of “An Act to incorporate the subscribers to the Bank of the United States” provided “That it shall be lawful for the President of the United States, at any time or times, within eighteen months after the first day of April next, to cause a subscription to be made to the stock of the said corporation, as part of the … capital stock of ten millions of dollars, on behalf of the United States, to an amount not exceeding two millions of dollars; to be paid out of the monies which shall be borrowed by virtue of either of the acts, the one entitled ‘An Act making provision for the debt of the United States;’ and the other entitled ‘An Act making provision for the reduction of the public debt;’ borrowing of the bank an equal sum, to be applied to the purposes, for which the said monies shall have been procured; reimbursable in ten years, by equal annual instalments; or at any time sooner, or in greater proportions, that the government may think fit” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 196 [February 25, 1791]).
40. Section 3 of that act provided that, “to defray any expense which may be incurred in relation to the intercourse between the United States and foreign nations,” the sum of fifty thousand dollars might be “paid out of any monies, which may be in the treasury, not otherwise appropriated” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 285 [May 8, 1792]).