From Alexander Hamilton
Treasury Department August 9. 1793.
I have the honor to transmit herewith the Copy of a letter from the Comptroller of the Treasury of the 7th instant containing substantially the information requisite to a judgment of the motives, which determined the Treasury to persist in declining for the present the payment of the warrants stated by Mr Fraunces to be in his possession.1
These principally turn upon the following considerations—
I That there appears to have been an extensive and complicated agency on the part of Mr Duer for the late Board of Treasury, respecting the negotiation, exchange and payment of sundry kinds of paper, including warrants of the nature of those in question, which, the various accounts respecting it not having been finally settled at the Treasury, renders it impossible for the present Officers of the Department to pronounce with certainty what of those warrants are rightfully outstanding—and a just claim upon the public.2
II. That there are other kinds of Public paper in a similar predicament.
III That there is a presumption that the particular warrants in possession of Mr Fraunces may have been once taken up and satisfied by Mr Duer as a Public Agent out of Public funds, though afterwards thrown into circulation for private purposes.
IV That Mr Fraunces before he became possessed of them knew the facts, which support that presumption; and consequently became possessed of them mala fide,3 as a speculation upon what he supposed to be the strictness of public obligation.
V That from this state of things, it is unsafe for the public to an unknown extent to continue to take up and satisfy public paper of the description comprized in Mr Duer’s agency; and that in the particular case, it is very questionable whether a Court of Justice would support the claim of Mr Fraunces even on rigid principles of law.
The following circumstances will evince still more clearly the impropriety of Mr Fraunces’s pertinacity on the occasion.
Mr Fraunces was a Clerk of the Board of Treasury during the greatest part, if not the whole period of the transactions in question, and was in a situation to be well acquainted with their Course.
Mr Fraunces being found a Clerk in the Treasury, at the time of the commencement of the present administration of it, was continued in it ’till some time in March last; and well knew before his departure that objections were made at the Treasury to the payment of the still-outstanding warrants, ’till further light could be obtained.
With all this knowledge to guide him, he ventures upon the speculation, and plunges himself into the embarrassment in which he alleges himself to be.4
There is therefore the reverse of reason for a departure from the rule of conduct, which has been a considerable time since adopted at the Treasury, in his favour.
Mr Fraunces endeavours to derive a topic of censure on the refusal to pay the warrants from the circumstance of a very considerable sum of those warrants having been previously discharged by the present Department, which he represents as an inconsistency with its conduct.
A short history of the business will be the best answer to this insinuation.
One of my first acts, upon coming into my present Office, was to ascertain what demands upon the Treasury requiring immediate payment in specie, existed; in order to laying before Congress an estimate for an appropriation. My call for this information was addressed to the Register of the Treasury, who had been in that Office under the old establishment, and whose province it was, both from the nature of his Office and the usage of the Treasury, to furnish information of that sort.5
He accordingly reported to me among other things a statement of warrants which had been issued by the late Board of Treasury and which appeared to be still outstanding and unsatisfied. This statement formed a part of an estimate submitted by me to the House of Representatives on the 19th of September 1789, which was the foundation of an appropriation of 190,000 Dollars for satisfying warrants of the above description.6
On the 28th of July 1790, the Register reported to me, a further statement, which was also communicated to the House of Representatives; from which it appeared that some of the warrants deemed outstanding in the first statement had been satisfied and that others not mentioned in it were outstanding; but as the sum of the warrants omitted was less than that of the warrants which had been included in the first statement though satisfied, the matter was left on the basis of the first appropriation, which appeared sufficient to cover all the warrants really outstanding.7
The reason assigned by the Register for this inaccuracy and which appears to have been the true one was—“That the Accounts of the Treasurer and Receivers of Taxes had not yet been adjusted at the Treasury; which prevented his having a certain guide to ascertain the particular warrants, that formed the agregate of the excess of warrants drawn by the late Board beyond the actual receipts of monies into the Treasury.”
But during this period and for a long time after, I was ignorant of the existence and extent of Mr Duers Agency for the Board of Treasury. No circumstance in the course of the immediate business of my Office led to the discovery, and no person who have been in the way of knowing it had informed me of it.
Of the Officers of the Treasury under the old establishment, none remained but Mr Duer and the Register. Mr Duer probably from the difficulty of rendering a prompt and satisfactory account of his Agency kept it out of sight; and the Register either perhaps not acquainted with it, as having been pretty much seperated from the active operations of the Department, or from a Character naturally reserved and inofficious said nothing about the matter.
One Occurence only led me (some time after my coming into Office but the particular period is forgotten) to a partial knowledge of the transaction. some Certificates of pay due to the Officers of South Carolina were presented at the Treasury for payment and upon enquiry I was told by Mr Duer that the Board had put into his hands funds for the payment of Certificates of that kind, that the greatest part of them had been satisfied and that as the residue occurred the holders might be referred to him and he would take them up.8
But this as stated appeared to be only a particular provision, commensurate with a particular case. The general subject of the Agency was kept out of view until a long time afterwards, as the progressive settlement of Public Accounts unfolded the transactions of the late Board.
The Accounting Officers of the Treasury first and successively acquired the information in the course of official business, which was successiv⟨e⟩ly imparted to me, but it was not till after the present Comptroller came into his present Office, that I became apprized of the extent of the thing.9
Early and great pains were taken to bring the late Treasurer to a settlement of his Accounts;10 but it was for a long time eluded under different pretexts: he continuing in Philadelphia and his papers remaining in a private House at New-York; till owing to an anxiety about their situation and the danger to the Public if an Accident should happen to them, I caused them to be seized under the direction of the then Comptroller and placed in the Bank of New-York carefully packed up and sealed for safe Custody.
It was not however, till after our arrival at this place that a material progress could be made in the settlement of these Accounts. Much has been done in it; but questions connected with Mr Duers Agency still postpone its final completion.
The settlement of the old Accounts of the Commissioners of loans has also been pursued with diligence and with success; though they were unavoidably delayed by their connection with the Treasurers accounts and Mr Duers Agency.
As these settlements proceeded, that Agency became more and more devellopped. But it was not till late in the year 1791, that an adequate idea of it was obtained.
It appears by recurrence to official records—that from the 23d of November 1789 when the Treasury began to be in a situation to make payments on that account to the 23d of November 1790 there had been paid in discharge of warrants issued by the late Board of Treasury 157630 Dollars & 94 Cents; that subsequent to this period there have only been paid of those warrants on the 6th of July 1791 to Abijah Hammond 150 Dollars on the 12th of october 1792 to Henry Knox 33 Dollars & 33 Cents.11
During the whole of the period when the payments were made except the last mentioned trifling one, I was altogether ignorant of the general considerations which have latterly operated against a continuance of those payments; which sufficiently accounts for the difference of conduct.
But those general considerations have been strengthened by the following more particular ones.
The warrants now outstanding lay dormant, from the time the appropriation was made for their payment till after the time of Mr Duer’s late failure (an interval of more than two years) when they began to make their appearance at the Treasury.
Considering that the appropriation for these warrants was so long a matter of general notoriety, and that money during the whole period was in great and universal demand, the reflection naturally pressed itself upon the Treasury, that some great peculiarity must have attended those so long kept back, and no sufficient solution appeared but in the supposition that they might have been taken up by Mr Duer in the course of his agency. The appearance at the Treasury about the same time of paper of other kind which had been understood to be absorbed, served to strengthen and extend the alarm.12
These circumstances at any rate were of a nature to enforce the propriety of caution; and a resolution was accordingly taken to make no further payments till further light could be obtained and further legislative precautions could be established to guard the public, as far as possible, against the danger of suffering by any abuses, which might have been committed.
Accordingly in consequence of suggestions from the Treasury, the law mentioned in the close of the comptrollers letter was passed during the last session; which provides that all claims upon the united States for services or supplies or for other cause matter or thing furnished or done previous to the 4th day of march 1789, whether founded upon certificates or other written documents from public officers or otherwise, which had not already been barred by any Act of limitation, and which should not be presented at the Treasury before the first day of may 1794 should forever after be precluded from settlement or allowance; with the exception only of loan office certificates, certificates of final settlement, indents of Interest, balances entered in the books of the Register of the Treasury, certificates issued by the Register of the Treasury commonly called Registered certificates, loans of money obtained in foreign countries and certificates issued pursuant to the Funding Act.13 Neither of which exceptions covers either of the species of Paper, for the discharging of which Mr Duer’s agency appears to have extended.
The claims presented under this Act are to be received and recorded by the Auditor;14 and the accounting officers of the Treasury are to make Report to Congress upon all such of them as shall not be allowed to be valid according to the usual forms of the Treasury.
The plain design of this act is to fix a period, when all claims which admit a suspicion of abuse shall cease to bind; so that there may be an ultimate term to the dangers to the public in this way, which from the former loose and irregular manner of conducting the public business have been great—that in the interim whatever is doubtful may be held suspended, till the issue shall discover and set bounds to the extent of the mischief, if any, which exists; holding individuals who may have been accessory to any abuse during this time, under the check of that suspence, and of an investigation which is to continue open till the expiration of the term limited for presenting claims; and reserving to Congress the ultimate judgment in those cases where conflicting considerations may render the course which ought to be pursued doubtful.
Under this very necessary and prudent law the Department now asks, and being in the dark about the true situation of the warrants in question refers the holders of them to that ultimate justice, consistently with the security of the public, which this law contemplates.
Other holders more meritorious than Mr Fraunces as well as himself have been referred to this issue. They have acquiesced; he has appealed.
The most scrupulous maxims of good faith will, it is presumed, justify a Government, under circumstances so peculiar, in forbearing to admit claims, till it shall have taken precautions to ascertain the ground. It is probable that the nicety of public credit will require in the end some sacrifices of Interest, which strict justice would not dictate; but prudence requires that the extent of such sacrifices should be first known.
Mr Fraunces refers to a letter as inclosed which shews (says he) that “what is now known at the Treasury has been long since known” I find no other letter inclosed than that from Mr Taylor which only traces the knowlege of the Treasury back to the 26th of last month.15
The circumstance mentioned in that letter proves to be a mistake, as will be seen by a certificate of the Register herewith transmitted.16
But if it had been true, it would have furnished a very strong objection against paying the warrants; for to consider a paper which has been once satisfied and stolen off a public file, as an existing claim will not easily find principle or precedent to support it; and if a practice so alarming had been detected it would have afforded a very powerful motive for additional caution.
Mr Fraunces mentions a conversation with me, in which I had stated that the public might have a claim upon the warrants as Mr Flint had promised a payment in such warrants on account of his Tobacco contract; and it was possible those presented by Fraunces might have been a part of those promised by Flint.17
It is true that something of this Kind was dropped by me in the course of one of the interviews which Mr Fraunces importunately pressed upon me.
The facts are as follow and were referred to in that sense.
Mr Flint owes a sum of money to the united States for a parcel of Tobacco which he purchased of the late Board of Treasury.18 He had in his possession warrants issued by the Board which he produced to the officers of the Treasury, declaring they were reserved for a payment on account of the contract when the monies became due—It was cursorily remarked to Mr Fraunces among other things, but without much stress being laid upon it, that it might appear upon more full inquiry that the warrants he held were part of those promised by Mr Flint and that it might then be a question whether the united States would not have a right to claim a set off against them of an equal sum of their debt from Mr Flint.
I added that this might be the better done as it was a serious question whether the warrants were in their nature negotiable.
To this Mr Fraunces replied that their negotiability could not be objected to as it had been the practice of the Treasury to pay them to the holders upon a blank endorsement—I answered that this was not conclusive, because it was known that Bonds under seal were not in strictness negotiable; yet if an obligee of mine should endorse my bond and deliver it to another I should without scruple pay the amount to him upon the strength of such endorsement if I had no valid set off against it, as the property of the prior owner; but if I had such set off, I should refuse payment and should expect to be justified by law.
But I added withall that this was a circumstance I had only mentioned incidentally; that my reasons for refusing payment were of a more cogent nature, immediately relative to the security of the Public.
The truth is, that I did not care to go into a particular explanation with Mr Fraunces, but chose rather to deal in general expressions. Not Mr Duer only but the members of the late Board of Treasury and the late Treasurer are more or less implicated in the affair. what degree of culpability falls upon either of these parties is not yet definitively ascertained; and I have considered it as most equitable and delicate not to make, what is hitherto supposed, a matter of public eclat; until at least it shall be better understood.19 Another reflection has also had some influence in producing reserve. It is this that Mr Duer if not rendered desperate by a disclosure, may in order still to preserve some public character exert himself to recover paper which may have improperly escaped him as the means of liquidating the demands which the united States at present have upon him, and of avoiding a disgraceful promulgation. Indeed there is reason to infer from some thing which in my last conversation but one with Mr Fraunces fell from him, that this is now the case. Mr Duer was endeavouring to get back the warrants; suggesting that they had been only pledged by him for a part of their value.
I think it proper to observe that my letter to Mr Fraunces which he has recited at length was prior to those disclosures of his which have tended to place his claim in a still more unfavourable light.
As to his having danced attendance at the Treasury for near two months (as he expresses it)20 the blame is wholly with himself—He was told in his first interview with me most explicitly that the warrants would not be paid for the present; and was advised on that ground to notify his claim to the Auditor21—He nevertheless persevered in importuning me hoping perhaps to interest my humanity against my judgment and counting something upon a disposition on my part to serve him which it now clearly appears he never merited.
I thought it incumbent upon me to ask an explanation of that part of his letter in which he seems to impute to me some undue motives;22 but he hitherto evades it. with the most perfect respect I have the honor to be Sir your most obedt & humble Servt
LS, DNA: RG 59, Miscellaneous Letters.
1. For the warrants purchased by Andrew G. Fraunces and his efforts to receive payment for them from the Treasury Department, see his letter to GW of 30 July, and notes. Oliver Wolcott, Jr.’s letter to Hamilton of 7 Aug. was “a statement of such facts” as pertained to the operation of the Board of Treasury, which the Treasury Department replaced in 1789, to the redemption process, and to the warrants owned by Fraunces and whether they merited payment (DNA: RG 59, Miscellaneous Letters; printed in Hamilton Papers description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends , 15:197–203).
2. William Duer was secretary to the Board of Treasury from 1785 until 1789, and Fraunces worked as a clerk for the board during these same years. Duer had resigned from the Treasury Department in April 1790 (Hamilton to Duer, 4–7 April 1790, ibid., 346–47). On the cause of Duer’s subsequent financial difficulties, the suits brought against him by the federal government to recover missing funds, and his confinement in debtor’s prison, see note 2 of Thomas Jefferson to GW, 21 Mar. 1792.
3. Mala fide is Latin for “in bad faith.”
5. For the information provided by Joseph Nourse, who had served as the register of the Treasury since 22 Sept. 1781, see Hamilton’s report to the House of Representatives of 25 Sept. 1789 (JCC description begins Worthington Chauncey Ford et al., eds. Journals of the Continental Congress, 1774-1789. 34 vols. Washington, D.C., 1904–37. description ends , 21:995; Hamilton Papers description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends , 5:400–408).
6. For Hamilton’s estimate, see Schedule III in his report to the House of Representatives of 19 Sept. 1789 (ibid., 379–92). The $190,000 for “discharging the warrants issued by the late board of treasury, and remaining unsatisfied” was appropriated by Congress in “An Act making Appropriations for the Service of the present year,” 29 Sept. 1789 (1 Stat description begins Richard Peters, ed. The Public Statutes at Large of the United States of America, from the Organization of the Government in 1789, to March 3, 1845 . . .. 8 vols. Boston, 1845-67. description ends ., 95).
7. Nourse’s statement of 28 July 1790 appears as Schedule B in Hamilton’s report to the House of Representatives of 5 Aug. 1790 (Hamilton Papers description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends , 6:520–42). Hamilton has paraphrased a portion of Schedule B in the following paragraph.
8. On the warrants issued for the six months’ pay due the officers of South Carolina’s Continental Line, see Hamilton’s report to the House of Representatives of 18 Mar. 1790 (ibid., 305–7).
10. Philadelphia merchant Michael Hillegas failed to retain his position as the treasurer of the United States when the Treasury Department was established in September 1789 (Hillegas to GW, 5 Sept. 1789, and source note).
11. For these payments, see Hamilton’s report “For Discharging Warrants Issued by the late Board of Treasury,” which is contained in his “Report on the Receipts and Expenditures of Public Monies to the End of the Year 1791,” 10 Nov. 1792. This report includes the 6 July 1791 payment of $150 to New York City merchant Abijah Hammond (ibid., 13:42–44). The 12 Oct. 1792 payment of $33.33 to Henry Knox is listed in “For Discharging Warrants Issued by the Late Board of Treasury,” in Hamilton’s “Report on an Account of the Receipts and Expenditures of the United States for the Year 1792,” 18 Dec. 1793 (ibid., 15:498).
12. Hamilton probably is referring to Wolcott’s observation in his letter to Hamilton of 7 Aug. that “drafts on the Receivers of Taxes issued by John Pierce Esqr., late Paymaster General, under authority from the late Board of Treasury, have lately been presented at the Treasury although it has been generally understood, that no such drafts were to be discharged by the existing department.”
13. Hamilton has delineated the provisions found in Section 1 of “An Act relative to claims against the United States, not barred by any act of limitation, and which have not been already adjusted,” 12 Feb. 1793 (1 Stat description begins Richard Peters, ed. The Public Statutes at Large of the United States of America, from the Organization of the Government in 1789, to March 3, 1845 . . .. 8 vols. Boston, 1845-67. description ends ., 301–2). “An Act making provision for the [payment of the] Debt of the United States,” 4 Aug. 1790, is the formal title of the Funding Act (ibid., 138–44).
14. Richard Harrison was the current auditor of the Treasury Department (ASP, Miscellaneous, description begins Walter Lowrie et al., eds. American State Papers. Documents, Legislative and Executive, of the Congress of the United States. 38 vols. Washington, D.C., Gales and Seaton, 1832–61. description ends 1:58).
16. The enclosed certificate from Nourse of 9 Aug. 1793 certifies that Fraunces’s first warrant, “No. 236 drawn the 19th. November 1787 by the late Commissioners of the Board of Treasury on Nathaniel Appleton Esqr. late Commissioner for the State of Massachusetts in favour of Michael Hillegas late Treasurer of the United States for three thousand five hundred Dollars, has never, from the usual Course of Settlement, been brought upon the Files of the Treasury as a dischargd Warrant and therefore the Suggestion that it had been taken out of this Office, and put into Circulation is unfounded.” Nourse added a footnote to this paragraph that reads: “This suggestion was made from a view of a Paper in the Auditor’s Office which related to the Accounts of Treasurer Hillegas, in which the said Warrant appears as a receipt by him (occasion’d by the then mode of an exchange of Warrants) whereas the Paper which should have been referr’d to, is No. 2 which relates to actual Payments by Mr Appleton: There was an irregularity in applying at the Auditors Office: had it been made to me & a Certificate of the Facts obtained it wou’d have been in its proper course.” Nourse concluded the certificate with: “The said Warrant is non-outstanding, and (excepting a previous Examination of the Accounts of William Duer Esqr. late Secretary to the Board of Treasury) is a Claim against the United States” (DNA: RG 59, Miscellaneous Letters). For a another statement by Nourse concerning this warrant’s history, see his letter to Richard Harrison, 2 Aug. 1793, Hamilton Papers description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends , 14:465.
18. Flint had signed a contract on 7 July 1789 with the Board of Treasury to purchase tobacco collected by North Carolina in payment for the state’s tax quota. Flint still owed the federal government over $20,000 on this purchase (DNA: RG 217, Miscellaneous Treasury Accounts, 1790–1894, No. 1570; DNA: RG 217, Ledgers C and D, 1776–1789, Register’s Office).
19. In his letter to Hamilton of 7 Aug., Wolcott wrote: “That the warrants for which Mr Francis claims payment have been discharged by Mr Duer, though they now appear as claims upon the Treasury is rendered indisputable by the following circumstances.
“Since the failure of Mr Duer, the same warrants have been presented for payment by different persons—at one time by a Clerk of a known Agent and Broker of the said Duer; as, considering the long time the Claim had laid dormant, this circumstance taken in connection with others, created a suspicion that the warrants had been improperly put into circulation—special enquiries were made at this Office, when the demand was renewed by Mr Fraunces.
“It was then confessed to me by said Fraunces, that it was well known to him before he made the purchase, that the warrants had been in the possession of Mr Duer, and that they had been pledged by him, in the time of his embarrassment, for a loan of money, that Mr Duer, knowing said warrants to be in the possession of said Fraunces, had requested him to detain them—that he had advised with Council on the subject, and was informed that he could not detain them without being exposed to a suit—that afterwards Mr Duer requested said Fraunces to purchase said warrants and promised to allow him a handsome commission for the service. In the same conversation Mr Fraunces alledged, that he knew of other warrants in a similar predicament, to the amount of about seventeen thousand Dollars, and he then promised to state in writing the foregoing and other particulars within his knowledge, for the information of the Treasury—this promise has not been performed.”
21. According to Section 2 of “An Act relative to claims against the United States, not barred by any act of limitation, and which have not been already adjusted,” 12 Feb. 1793, “it shall be the duty of the Auditor of the Treasury, to receive all such claims” (1 Stat description begins Richard Peters, ed. The Public Statutes at Large of the United States of America, from the Organization of the Government in 1789, to March 3, 1845 . . .. 8 vols. Boston, 1845-67. description ends ., 301–2).
22. In his letter to Fraunces of 3 Aug. 1793, Hamilton wrote: “you seem to insinuate, that some sinister motives, known only to a few, have produced my refusal to pay for the present, the warrants. If this be your meaning, it is incumbent upon you, and I call upon you to declare what those motives are, and the evidence you have of them” (Hamilton Papers description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends , 15:171–72).