To Theodore Sedgwick1
Treasury Department, February 25, 1794.
The following are answers to the questions stated in your Letter of the 22d instant, viz.
Answer to question the first.
All moneys collected on account of the United States, and deposited in the Banks to the credit of the Treasurer, are considered as in the Treasury from the time of the deposite. The steady course with regard to the standing revenue is, that the money deposited in Bank passes immediately to the credit of the Treasurer.
But it is necessary to discharge the payers, that receipts of the Treasurer should be endorsed upon warrants signed by the Secretary, countersigned by the Comptroller, and registered by the Register, which is the course regularly observed.
Answer to question the second.
After moneys are deposited in Banks to the credit of the Treasurer, they are in his control, though they may not legally be disbursed but upon warrants of the above description. If deposited without passing in the first instance to the credit of the Treasurer, the means used for placing them in his custody and disposal are warrants of the like kind.
Answer to question the third.
In respect to any moneys of the United States, deposited in Banks, but not passed to the credit of the Treasurer, the Banks are considered as directly responsible to the United States; in the case of desposites to the credit of the Treasurer, they are responsible in the first instance, to him, ultimately to the United States.
Answer to question the fourth.
Only two cases are recollected, in which moneys of the United States may be considered as having been deposited in Bank without passing, in the first instance, into the account of the Treasurer. These relate, first, to the proceeds of foreign bills sold for the Government and received by the Bank, (all accounts of which are now closed;) second, to the sum of $200,000, being the only sum now so deposited, which arises from the last loan2 had of the Bank. It is left (subject to the eventual decision of the Legislature,) as an offset against the second instalment of the two million loan from the Bank.
The effect of the operation will be this: An interest of six per cent., payable to the Bank upon the instalment, will be extinguished from the 31st December last, by an interest of five per cent., payable to the Bank upon the sum borrowed of itself and left in deposite. And it has been endeavored, thereby, to preserve consistency and regularity in the arrangements of the Treasury. The first instalment, by leaving in deposite an equal sum of the proceeds of foreign bills, was considered as effected on the 31st December, 1792, though there was not power to consummate the payment till some months after. Hence, it becomes regular, that each succeeding instalment should be paid on the last of December of each year. The provisional measure, thus adopted, was the only expedient in the power of the Treasury to reconcile, as far as practicable, considerations relative to the public interest and credit, with the legality of procedure.3 Neither the sum in deposite, on the one hand, nor the instalment payable to the Bank, on the other, is brought into the probable state of cash lately presented to the House of Representatives;4 because they balance each other and leave the result the same.
There are no existing sources from which moneys can come into the Bank on account of the United States, except from the proceeds of the revenue, which, as far as known, are comprized in the statement before the House of Representatives.5 So that there is no resource but a loan which can supply the deficit of receipt in the course of the present and succeeding quarters, compared with the expenditure; without one, a failure in the public payments is inevitable.
If what has been said should not give the Committee the light they desire, it is imagined that personal explanations would lead more fully to their object than the course of written interrogatories and answers, which can only partially embrace the subject, and may procrastinate a right understanding of it.
I am sir, with esteem and regard, &c.,
Theodore Sedgwick, Esq.,
Chairman of the Committee.
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 , IV, 471–72.
1. This letter was read in the House of Representatives on February 28, 1794, as a part of Sedgwick’s speech backing the report of the select committee of which he was chairman. The report proposed that the President be authorized to borrow up to one million dollars if he thought it necessary (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 , IV, 469–74).
2. The loan of eight hundred thousand dollars to which H is referring was arranged on May 31, 1793. See “Agreement with the President, Directors, and Company of the Bank of the United States,” May 31, 1793.
3. See H to the President and Directors of the Bank of the United States, January 1, 1793; H to Edmund Randolph, March 12, 1793; H to George Washington, March 12, 1793; Washington to H, March 13, 1793.
5. See note 4.