Report on Principles and Course of Proceeding
with Regard to the Disposition of the Moneys
Borrowed Abroad by Virtue of the Acts of the
Fourth and Twelfth of August, 1790,
as to the Point of Authority1
[Philadelphia, April 1, 1794]
[To the Select Committee Appointed to Examine the Treasury Department]
Principles and course of proceeding, with regard to the disposition of the monies borrowed abroad, by virtue of the Acts of the 4 and 12 of August 1790,2 as to the point of authority.
It was conceived by the Secretary of the Treasury, to be a clear principle resulting from the constitution of the Treasury Department, and from the several provisions of that act,3 collectively taken, that all public monies, once obtained, and destined for disbursement within the United States, came, of course, under the direction of the officers of that Department, according to their respective functions; and that no special authority, extrinsic to the Department, was, in strictness, necessary to enable them to draw money, from whatever source originating, into the Treasury, or to issue it thence, for the purposes designated by Law.
It was also conceived by him, to be, tho’ a less clear principle, one most agreeable to the true spirit of the constitution of the Department, as well as essential to the preservation of order and due accountability in the money-transactions of the Country, that even monies procured abroad, and to be disbursed abroad, were, as to their application, to be under the direction of the same Department.
Under the influence of these principles, thus entertained with different degrees of assurance (the President having determined to place the procuring of the loans under the direction of the Secretary of the Treasury) the following course of proceeding was pursued.
The Secretary obtained from the President, in the first place, a general commission to him to make the Loans authorised by the two Acts of the 4th & 12th of August. A copy of this Commission was communicated to the House of Representatives in the last session, No. 1. and is dated the 28. of August.4
He also obtained from the President, an instruction, dated the same day, to guide and justify him;5 1st. with regard to the person to be employed in Europe in negotiating the Loans, and 2dly. with regard to the extent, to which, the loans under the first Act, and payments on account of the foreign debt, should be carried, at all events, exclusively of the consideration of the advantagenessness of the terms of the loans.
But under the influence of the first mentioned principle, he neither asked, nor obtained any general instruction from the President, as to the sums to be drawn to the United States, for the purpose of the second Act.
Nevertheless, from the special connection of the President with the subject, owing to the authority to borrow being immediately vested in him; from the circumstance of the existence of a particular discretion to be exercised by the President, as to anticipated payments of the foreign debt; and from the official relation of each head of a department to the President; The Secretary of the Treasury considered it, as his duty, from time to time, to submit the disposition of each Loan to the consideration of the President, with his reasons for such disposition, & to obtain the sanction of the President, previous to carrying it into effect, which was always had.
The communications to the President and his sanctions were, for the most part, verbal. Two exceptions appear from letters (herewith shewn) of the Secretary to the President, of the 10 and 14 of April, and 22d. of September 1791; and from the President to him of the 7 of May ’91, relating to a case of absence from the seat of Government. These Letters are evidence of the course and spirit of proceeding.
It is to be understood, that the sanctions of the President were always bottomed upon the representation of the Secretary, and were always expressly or tacitly qualified with this condition—that whatever was to be done, was to be agreeable to the Laws.6
Secy. of the Treasy.
April 1. 1794.
LC, George Washington Papers, Library of Congress; two copies, RG 233, Papers of the Select Committee Appointed to Examine the Treasury Department, Third Congress, National Archives.
1. For background to this report, see the introductory note to H to Frederick A. C. Muhlenberg, December 16, 1793. See also H to the Select Committee Appointed to Examine the Treasury Department, March 24, 1794; H to George Washington, March 24, April 1, 1794; Abraham Baldwin to H, March 29, 1794.
2. “An Act making provision for the (payment of 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 138–44 [August 4, 1790]) and “An Act making Provision for the Reduction of the Public Debt” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 186–87 [August 12, 1790]).
4. Washington to H, first letter of August 28, 1790. This document was the first in a series which H submitted to the House of Representatives in “Report on Foreign Loans,” February 13, 1793. H’s report of February 13, 1793, was borrowed by the select committee from the files of the House of Representatives on April 8, 1794.
6. On April 1, 1794, Washington sent this report to Edmund Randolph for his opinion. Randolph replied on the same day as follows: “… The seven first paragraphs appear unexceptionable, so far as respects the President.
“I am extremely dissatisfied with the manner of the three last clauses. The first of those three, which is the eighth in order, states that he always had the President’s Sanction for disposing of the money, as he did. So far he had the sanction, ‘I approve If it be agreeable to law.’ At first sight, it would seem that the last line in the paper was tantamount to this idea. But the positive assertion, that your sanction was always given to the disposition, including the drawing of the money over here, implies, that you considered this act as lawful.
“Permit me to suggest this mode of answer, to be given verbally. ‘I have read the paper, but not distinctly recollecting all the circumstances, I can only say, that I do not discover any thing which I am to object to as to myself, unless the manner in which you speak of my sanction in disposing of the loans, implies that I meant to give an opinion how far it might or might not be lawful. I presume however, that you do not mean this, as you say at the close, that my sanction was always expressly or tacitly qualified with the condition that whatever was to be done was to be agreeable to the law. I imagine that you sent me the paper, only to determine, what related to myself, and therefore I did not undertake to judge of other parts.’” (ALS, RG 59, Miscellaneous Letters, 1790–1799, National Archives.)