1793.

dian war, the relative merits and expensiveness of militia and of regular troops, and the danger to liberty from standing armies, were elaborately discussed. It was not until the fourth of January that the motion was rejected. While that question remained undecided, the report of the secretary was unavoidably postponed, because, on its determination would depend, in the opinion of many, the necessity of additional taxes. It would seem not improbable that the opponents of the American system of finances, who constituted rather a minority of the present congress, but who indulged sanguine hopes of becoming the majority in the next, were desirous of referring every question relating to the treasury department to the succeeding legislature, in which there would be a more full representation of the people. Whatever might be the operating motives for delay, neither the extension of the law imposing a duty on spirits distilled within the United States to the territory northwest of the river Ohio, nor the plan for redeeming the public debt, which was earnestly pressed by the administration, could be carried through the present congress. Those who claimed the favour and confidence of the people as a just reward for their general attachment to liberty, and especially for their watchfulness to prevent every augmentation of debt, were found in opposition to a system for its diminution, which was urged by men who were incessantly charged with entertaining designs for its excessive accumulation, in order to render it the corrupt instrument of executive influence. It might be expected that the public atten. tion would be attracted to such a circumstance. But when party passions are highly inflamed, reason itself submits to their control, and becomes the instrument of their will. The assertion that the existing revenues, if not prodigally or corruptly wasted, were sufficient for the objects contemplated by the President in his speech, would constitute an ample apology for the impediments thrown in the way of a system which could not be directly disapproved, and would justify a continuance of the charge that the supporters of the fiscal system were friends to the augmentation of the public debt.

Soon after the motion for the reduction of the military establishment was disposed of, another subject was introduced, which effectually postponed, for the present session, every measure connected with the finances of the nation.

An act of congress, which passed on the fourth of August, 1790, authorized the President to cause to be borrowed any sum not exceeding twelve millions of dollars, to be applied in payment of the foreign debt of the United States.

A subsequent act, which passed on the 12th of the same month, au

5

thorized another loan not exceeding two millions, to be applied maid of the sinking fund, towards the extinguishment of the domestic debt.

A power to make these loans was delegated by the President to the secretary of the treasury by a general commission referring to the acts. This commission was accompanied by written instructions, directing the payment of such parts of the foreign debt as should become due at the end of the year 1791; but leaving the secretary, with respect to the re sidue, to be regulated by the interests of the United States.

Under this commission two loans were negotiated in 1790, and others at subsequent periods.

As many considerations of convenience opposed such an arrangement as would appropriate all the monies arising from either of these loans to one object, to the total exclusion of the other; and no motive was perceived for thus unnecessarily fettering the operations of the treasury; each loan was negotiated under both laws; and consequently the monies produced by each were applicable to both objects, in such proportions as the President might direct. It has been already observed that his written instructions had ordered the payment of those instalments of the foreign debt which should become due before the first of January, 1792; but no further sums on that account were to be borrowed until supplemental orders to that effect should be given, unless a loan could be made on such terms as would render it advantageous to the United States to anticipate the payments to their foreign creditors. It being the opinion of both the President and secretary that the official powers of the latter authorized him to draw the monies borrowed for domestic purposes into the treasury, where they would form a part of the sinking fund, and be applicable to the objects of that fund in conformity with the laws of appropriation, no written instructions were given respecting that part of the subject; but in the progress of the business, every material step which was taken was communicated to the President, and his directions obtained upon it. While the chief magistrate remained at the scat of government, these communications were verbal; when abscnt, they were made by letter.

At this period, the domestic debt bore a low price in the market, and foreign capital was pouring into the United States for its purchase. The immediate application of the sinking fund to this object would consequently acquire a large portion of the debt, and would also accelerate its appreciation. The best interests of the United States, and his own fame, thus impelling the secretary to give the operations of the sinking fund the utmost activity of which it was susceptible, he had, with the approbation of the President, directed a part of the first loan to be paid in

discharge of the instalments of the foreign debt which were actually due, and had drawn a part of it into the public treasury in aid of the sinking fund.

In May, 1791, instructions were given to the agent of the United States in Europe, to apply the proceeds of future loans, as they should accrue, in payments to France, except such sums as should be previously and specially reserved. In the execution of these instructions, some delay intervened, which was to be ascribed, among other causes, to representations made by the French minister of marine that a plan would be adopted, to which a decree of the national assembly was requisite, for converting a large sum into supplies for St. Domingo: and to a desire on the part of the agent to settle, previously to further payments, a definitive rule by which the monies paid should be liquidated, and credited to the United States. The disordered state of French affairs protracted both the one and the other of these causes of delay, to a later period than had been expected; and, in the mean time, the secretary' continued to draw into the United States such portions of these loans, as were destined to be brought in aid of the sinking fund. Such was the state of this transaction, when the commencement of those calamities, which have finally overwhelmed St. Domingo, induced the American government, on the urgent application of the French minister, to furnish supplies to that ill fated colony, in payment of the debt to France. This being a mode of payment which, to a certain extent, was desired by the creditor, and was advantageous to the debtor, a consequent disposition prevailed to use it so far as might comport with the wish of the French government; and a part of the money designed for foreign purposes, was drawn into the United States. In the course of these operations, a portion of the instalments actually due to France, had been permitted to remain unsatisfied.

A part of the money borrowed in Europe being thus applicable to the extinguishment of the domestic debt, and a part of the domestic revenue being applicable to the payment of interest due on the loans made in Europe, the secretary of the treasury had appropriated a part of the money arising from foreign loans to the payment of interest due abroad, which had been replaced by the application of money in the treasury arising from domestic resources, to the purchase of the domestic debt.

The secretary had not deemed it necessary to communicate these operations in detail to the egislature: but some hints respecting them having been derived either from certain papers which accompanied a report made to the house of representatives early in the session, or from some other source, Mr. Giles, on the 23d of January, moved several re

30.utions, requiring information, among other things, on the various points growing out of these loans, and the application of the monies arising from them, and respecting the unapplied revenues of the United States, and the places in which the sums so unapplied were deposited. In the speech introducing these resolutions, observations were made which very intelligibly implied charges of a much more serious nature than inattention to the exact letter of an appropriation law. Estimates were made to support the position that a large balance of public money was unaccounted for.

The resolutions were agreed to without debate; and, in a few days, the secretary transmitted a report containing the information that was required.

This report comprehended a full exposition of the views and motives which had regulated the conduct of the department, and a very able justification of the measures which had been adopted; but omitted to state explicitly that part of the money borrowed in Europe had been drawn into the United States with the sanction of the President. It is also chargeable with some expressions which can not be pronounced unexceptionable, but which may find their apology in the feelings of a mind conscious of its own uprightness, and woundea by the belief that the proceedings against him had originated in a spirit hostile to fair inquiry.

These resolutions, the observations which accompanied them, and the first number of the report, were the signals for a combined attack on the secretary of the treasury, through the medium of the press. Many ano. nymous writers appeared, who assailed the head of that department with a degree of bitterness indicative of the spirit in which the inquiry was to be conducted.

On the 27th of February, not many days after the last number of the report was received, Mr. Giles moved sundry resolutions which were founded on the information before the house. The idea of a balance unaccounted for was necessarily relinquished; but the secretary of the treasury was charged with neglect of duty in failing to give.congress official information of the monies drawn by him from Europe into the United States; with violating the law of the 4th of August, 1790, by applying a portion of the principal borrowed under it to the payment of interest, and by drawing a part of the same monies into the United States, without instructions from the President; with deviating from the instructions of the President in other respects; with negotiating a loan at the bank, contrary to the public interest, while public monies to a greater amount than were required, lay unemployed in the bank; and with an indecorum to the house, in undertaking to judge of its motives in calling for infor

mation which was demandable of him from the constitution of his office; and in failing to give all the necessary information within his knowledge relative to subjects on which certain specified references had been previously made to him.

These resolutions were followed by one, directing that a copy of them should be transmitted to the President of the United States.

The debate on this subject, which commenced on the 28th of February, was continued to the 1st of March, and was conducted with a spirit of acrimony towards the secretary, demonstrating the soreness of the wounds that had been given and received in the political and party wars which had been previously waged.* It terminated in a rejection of all the resolutions. The highest number voting in favour of any one of

them was sixteen.

On the 3d of March, a constitutional period was put to the existence of the present congress. The members separated with obvious symptoms of extreme irritation. Various causes, the most prominent of which have already been noticed, had combined to organize two distinct parties in the United States, which were rapidly taking the form of a ministerial and an opposition party. By that in opposition, the President was not yet openly renounced. His personal influence was too great to be encountered by a direct avowal that. he was at the head of their adversaries; and his public conduct did not admit of a suspicion that he could allow himself to rank as the chief of a party. Nor could public opinion be seduced to implicate him in the ambitious plans and dark schemes for the subversion of liberty, which were ascribed to a part of the administration, and to the leading members who had supported the measures of finance adopted by the legislature.

Yet it was becoming apparent that things were taking a course which must inevitably involve him in the political conflicts which were about to take place. It was apparent that the charges against the secretary of the treasury would not be relinquished, and that they were of a nature to affect the chief magistrate materially, should his countenance not be withdrawn from that officer. It was equally apparent that the fervour of democracy, which was perpetually manifesting itself in the papers, in invectives against levees, against the trappings of royalty, and against the marks of peculiar respect† which were paid to the President, must soon include him more pointedly in its strictures.

These divisions, which are inherent in the nature of popular govern

* See note, No. VIII. at the end of the volume.

† On the 22d of February, the birth day of the President, a motion was made to adjourn for half an hour. It was perfectly understood that this motion was made to