National gazette. — Philadelphia [Pa.], 1793-03-06 00:00:00, page 1

Numb. 37 of Vol. ll.]
Report of the Secretary of the Treasury, re
lative to the Loans negotiated under tilt
A!ts of the i,th and \ith of Augujl, 1790.
[Continued from our laft.~\
THF, feconci cafe of delay relates to the
second loan. It was occaftoned by a
determination to suspend the orders for its
application, till information was received,
of its having been contracted for.
One motive to this determination has
been already intimated ; namely, the yet
untried and immature Hate of onr fifcal
arrangements. The general reasoning 011
this head, was strengthened by an occur
rence altogether unlooked for, which dif
clofed-itfelf on the 23d of Atiguft 1790.
eleven days after the ri'ing of Congref:. ;
an occurrence which they had no: con
templated in their pecuniary dispositions.
I allude to the commencement of an Indi
an war ; which was announced in a letter
from governor St. Clair, dated 011 the
above-mentioned day ; the progreiHve ex
tent and conf-.-quences of which could oi
course not be forefeen. Under futh' cir
cumftauces, I judged it f ur the public in
terest and fafety to hold the refourec,
which the proipcft of a loanprefented, un
der the power of the treasury. till advice
Ihould be received of the actual i.ntitution
of the loan ; with intention then to dif'
pose of it as ihould appear advifeable, un
der a better matured view of our pecuni
ary liination and prospects.
Hence the delay \\ inch attended the ap
plication of the second loan ; the firlt in
fact that originated subsequent to the laws
for borrowing. But after advice had been
received of its having been set on foot, no
time was 101 l in converting it will due
dispatch to its proper uses. There was on
ly, not an anticipation of its application.
As early as May 24th, 1791, I wrote a let
ter to Mr. Short (a copy of which is in
pofleffion of the hou(e) empowering him
to apply the proceeds of all future toans,
as they Ihould accrue, in payments to
# f »- tc tS'eretn
were, or afterwards Ihould be privioujfy
and specially reserved. This arrangement
was calculated to obviate the inconveni
cnce of leaving the proceeds of the loans,
for any conliderable time unemployed.
At the period of making it, and not soon
er, the public profpe£ts appeared to me
fufficientiy unfolded, to render a general
and permanent dilpolitiou free from ha
zard. This iftftruction preceded in due
season all the loans subsequent to that of
March 1791.
Whatever delay, therefore may have at
tended fucceedirig inveltirents for paying
the French debt, is not attributable to this
department: And I think it will not ap
pear, that any has been incurred, in res
pect to the funis which were destined for
the public ferviee here. In judging of this
point it will be proper to observe, that a
latitude of fix months, for making thtir
payments, has been reserved to the money
lenders, though with liberty to make
them earlier. It was however neceflary
for the treasury to regulate it's bills ac
cording to the possible delay, kit they
lliould not meet adequate funds. The
general policy adopted was to let them fall
upon the rear of each loan ; this giving a
freer course for early payments to France,
and belt conciliating a certainty of funds
for answering the bills, with as little dou
ble interell as pofiible-
It-will appear, that notWithstanding tile
arrangement which was made, a confidera
bletime intervened between the two lafl
payments tn France, while there were
fundtin hand waiting for employment. It
may be expected, that the causes of this
procrastination, though as I have said not
imputable to this department, Ihould be
Unfolded to the House. Particular circuin
flances however induce me to confine my
' Jelf to slating generally, that the delay pro
ceeded, in the lirlt place, from an expec
tation given to Mr. Short and Kept up from
time to time by the French minilter ol
marine, that a plan would be adopted, tc
which a decree of the National Aflfcmblj
Was requilito, for converting a large fun:
intofiipplies for St. Domingo—which Mr.
Short concluded justly mult come out oi
the foreign fund, and consequently suspend
ed its application in Europe.—ln the se
cond place, from a desire to fettle, previ
onfly to further payments, a definitive rule,
bv which the monies paid, Ihould be liqui
dated and credited to the United States.
Both the one and the other appears tc
have been procraflinated from period tc
period, oy the disordered state of French
By P. FuR ENEAU: Publijhed. Wednesdays and Saturdays, at Three Dollars per annum.
affairs, and to have finally ifined contrary
10 expeilation. It would be an uunecef
fary commitment of my opinion to declare,
how far the delay appears to me to have
beenjuftified by the causes—But being led
by the occasion to take notice oi it, I think
11 improper to fend it abroad, liable per
haps tomifconftruilion, withoutobferving,
that the inducements, appear to me, to
have been weighty—that the delays natur
ally ;:ew out of the circumstances, and
that I am entirely persuaded of the good
ness of the motives which governed The
correspondence before the Senate, con
tains the particulars of the tranfaflion.
Having pointed out the iiiftances of ina
tefial delay which happened, and the caus
es of them, it remains to Orate what cir
cumstances there are to counterbalance the
iofs 011 that account.
These circumstances are of two kind
1. Gain by exchange in the sale of bills
drawn by the treasury and upon the higli
:r rate of intertit on the credit: wifki;
were g'.venfor those bill , than was paya
ble 0.1 the fund upon which they were
drawn.
2. Gain by exchange on the payments to
France.
According to my calculation, founded
Dn the bell information extant', the real
jar of the metals between the United
states and Amsterdam, makes a current
guilder equal to 35 89-100 ninetieths of a
ioilar. The lowift rate which has been
obtained lor the bills has been 36 4-11
linetieths, with an allowance oflix.y days
:redit without interest. Makinga dertnc -
ion for the interest the bills werellili fold
ibove the true- par-: In some inrtances they
lave been fold as high aj 40 cents and 7
ilills per guilder, with interell: for the
.vhole term of the credit given.
The rate of interest for the credits al
owed upon the bills was 6 per cent, the
nean interest paid upon the fund 5 per
.ent. producingconfequently again of one
>er cent.
Witb ti> to ?rA?.ce,
f the current rate of exchange between
?aris and Amsterdam at the moment of
;ach remittance or payment were to gov
ern, a large profit would result to the Uni
ed States. But cei ta : n equitable conlid
■rations will produce deductions, which
vV ill greatly lefi'en this: advantage ; yet mak
ng a liberal allowance for them, therein
ground to calculate that a Paving may be
nade in this particular, more than fuffici
■nt to indemnify for the loss of interclt.
Hence any politive advantage which will
lave been otherwise gained, will probably
3e undiminifhed by hat circurfiftance.
I proceed in the next place, to state the
.'iews which prevailed refpeiling the funis
:hat have been from time to time drawn
"or ; the purposes they have hitherto an
swered, and the further advantages to be
;xpe£ted from r he measure.
The direst object of all the films drnw n
or prior to Juiy 1792, was the purchase ot
:he debt. A collateral consideration which
operated in the firft stages ot drawing, has
ilfo ment'.ined. It has likewise been
luted, that til. purchases of the debt
■re to be ascribed to the inftrnmentnlity
jf the fund d rived from the loans. Tiii:
dea shall low be explained.
Two milt ;kes appear to have influenc
ed the impreflions which have been enter
rained 1 relation, direiUy or indirectly to
this fubjeit. ! irft, it seems to have been
ill alorgforgotten, that a conliderablepart
as the duties is always outstanding, on ac
count of the credits which are given :
whence the afiertion, that the finking fund
iias continually overflowed from domellio
resources. Second, it seems to have been
taken for granted that tiie proct eds of the
Loans have remained apart, r'iftinft fron:
the mass of the money in the Treasury :
while in truth the course of the bufincf;
lias been to turn them over to the Treasur
er by warrants as they have been received
Co as to form a part of the aggregate, fron
time to time appearing in his hands and :i
iiis accounts. The banks have been the
agents employed for felling the bills.
Sometimes warrants on qcconnt have is
sued upon them, for the funis accruing
from the files, at other times the warrant:
have been deferred till the whole proceed:
of any parcel have been received and tlu
accounts of the banks fettled at the treasu
ry; as the state of the treasury has hap
pened to render the one or the other mo!
convenient.
The banks of North America and New-
York, were the agents for the sale of a!
the bills, which were fold prior to Apri
WEDNESDAY, March 6, 1793.
r792. amounting to 1,006,526 dollars and
36 cents. Of this sum 361,391 dollars and
34 cents, were passed over to the Treafnr
er in 1-91—327,136 dollars and 22 cents
1 1 M.-.rch 1792, and 140,000 dollars in June
f >llo\ving—the rehdue having remained as
heretofore [fated, in depolit with the bank
of North America upon a special consid
eration. This is exclusive of certain bills
turnijlv:d for the use of the department of
Stated amounting to 78,766 dollars and 67
cents.
Tht i-om tinder of the bills which have
been fold beginning in April 1792, were
fold by the b.i ik of the United .-tales, and
irs branches at New- V ork and Baltimore-
The kccoi: t . f the files had just been
madaout t I'etrl erne fit, when the present
enqnii v!> 1 but warrants had not yet
1 flu .■ ■ ,»l v; the proceedin the trea
u.-y. It \vi:: be remarked that from the
L'rmi o: redit allowed, they Only began
co be rcce.v. Me in October la I ; the 20th
;lay of which month the firif return made
by tilt* bank (hews a sum of 127,225 dol
lars aid j . cents received ; and that the
caMeftion had not been completed when
the accounts of files were rendered.
Th. . e are dfferent views of the fub
jeft which will enable the House to per
ceive' that the possession of the fund in
que (Hon was neceifary to enable the trea
fliry to furniih the means of making all
the pur chafes which were niaile prior to
July 1702.
It i true, that there was a ftirpius of re
venue to the end of the year 179°* equal
to 1, -4,656 dollars and 40 cents, which
was approp, iited to purchases of the debt;
and from the credits then given upon the
Juties, this surplus would naturally come
into the treasury in the course of the year
'*?!•
Hut the legislature forefeeing that the
revenue of 1791, from the fame cause,
:ould .not actually be in the treasury, with
in that year, to face the appropriations, up
jn it„ which it is to be observed were
if:" ■ -d) '
erted a clause in the law, appropriating
:he surplus of 1790, to the purchase of the
Jebt, which authorized a reservation of so
nuch of that surplus as might be neceifary
:o make the payments of intereit during
1791 ; in cafe of a deficiency in the re
ceipts into the treasury, on account of the
current revenue of the year.
It will appear to t.ie House, upon a re
currence to the Tresfurer's quarterly ac
count, ending the 30th of September, 179 1 '
that the balance of cash then 011 hand was
562,233 dollars and 99 cents.
At that time there had been paid into the
treasury, upon warrants, from the proceeds
us the bills drawn upon the foreign fund
361,391 dollars and 34 cents. Consequent
ly, the balance of cadi, had it not been
for that auxiliary, would have been only
300,842 dollars and 65 cents; conlidering
the whole balance in the treasury as repre
lenting an equal sum ot the proceeds of
the bills.
Even in a time of complete pcace, in a
country where a small extent of monied
capital'forbids a reliance upon large pecu
niary aids to he suddenly obtained—a pru
dent idminiftrator of the finances could
not feel entirely ateafe, with a less sum at
all times in the certain command ot the
treasury, than 500,000 dollars, for meeting
current dema ids and extra exigencies,
which 111 the affairs of a ..nation are every
moment to be expected. Rut with a war
:ictually on hand, and a pofitbility of its ex
tendon to a more serious length, he would
be inexcusable, in leaving himfelf with a
lefsfunh at command ; unlets from an im
practicability of doing otherwise. It would
be always his duty to combine two conli
derations—the chance of extra call's for
money, and a uofiibility of some failure in
the receipts which were expected. De
rangements of various kinds may happen ill
the commercial circle, capable of inter
rupting for a time the pun£fual course of
payments to the treasury. It is neceifary
to a certain extent to be prepared for such
casualties
But during the year 1791, there was a
circumilancp, which operated as an rc!di
tiontd reason for keeping a reipeilabie sum
always on hand. The loans of the domeffic
debt were going on till the lait of Septem
ber of that year; while at the fame time,
theintereli wasin a course of payment —It
was therefore always uncertain what fur.i
would be payable at the end ot a quarter ;
this depending 011 the eagernefi or back
vardnffs. oi the public creditors in bring
ing forward their ftibfcript.ons, or thsir
claims as non-subscribers. The omifJTons,
at the end of a preceding quarter, might t>s
expected to fall upon a subsequent one —
and it was neccifary to be prepared for t Mat
poiiibility ; of course to keep in hand a 1 r.r
ger fund for contingent demands. Thh
necellity extended to the termination of
the period for receiving subscriptions ; be
cause the treasury was to be prepared on
the supposition, that the whole of the ;lo
meftic debt would then be in a (late to re
ceive interelt either as JubJcribed or uvjvb
f'cribei. But this did not in fail happe fi —
A part of the fuins which were prelected
were crouded into the last days of the
quarter and uere too late for a dividend
.i conliderable sum remained ultimately ii*
i farm, which according to the terms of
the provision did not intitlei it to inurelt,
either asJubfcribed or ■&swtjubjcribt:<\ debt.
Hence the cadi in the treasury on the ift
as October 1791. was by a conliderable sum
rreaterthan was to have beep counted up
jn or than might have happened.
The concluiion which results from tlia
7 oregoing observations is this—that ths
jurchafes which preceded the ill of Octo
ber 1-91, and which amounted to $99,984
dollars and 23 cents in specie could not
lave been hazarded, 'put for the aid of the
inns which had actually accrued from the
proceeds of the bills and the expectation of
:!iofe which were to accrue from the yet:
uncollected proceeds of others.
Had it not been f fir this aid, the treasury
would have been Iclt more bare, th,.n was
,'onliUent with the leciirity of public credit
ind the certain e/Xecution et the public
ervice.
There is however a later period inths
date of the treasury, which will more com
pletely illuftra.te the idea intended to be
eltablifiied. This is the 2d <of July, 1792.
On that d-jy, the balance of call) in the
treasury, comprehendi jig theclepofits in all
the banks, and including a sum of 200, cc?
ilollars, received 011 loan of the bank cf the
United States, together with a sum of
10,900 dollars in .bills drawn upon do
iiietKc funds, tlie proceeds of which had
not been received, was 623,133 dollars anJ
61 cents.
Prior to this period a further sum of
545,902 dollars and 89 tents arising from
the sales of foreign bills had been placed in
the treasury, by warrants, making with
the former films placed there from the
fame fiiurce, 907,294 dollars anil 23 cents.
Had it not been for this auxiliary, and
that of the loan from the bank, the treasu
ry would then have been in arrear 484,1(0
dollars and 62 cents. It therefore necei
farily follows, that for the purchases 11
that period, which amounted in specie tn
942.672 dollars and 54 cents, at leaf:
484,160 dollars and cents mult have
come from the foreign fund.
But when it is conlidered, for the rea
sons which have been Hated, and which
will hereafter be fortified by others, tend
ing as I conceive, to give them conc'ufive
force, that the sum in the treasury at the
period in question, was barely w hat ought
to have been there for fafcty, and for a clue
fii'pply to current demands—lt will follow
that the whole or nearly the whole of the
purchases which were made previous to'
[illy 1799, were made by the means or in
fh umentality of the foreign fund.
A (imilar view, extended to the subse
quent quarter, will exhibit this point in a.
(till clearer light. The balance then in
the treasury, including a further loan from
the bank of 100,000 dollars, was ouly
420,914 dollars and 51 cents.
What then, it may be allied, became of
the surplus of revenue to the end of i-qo ?
\\ hat was the office performed by that fund
during the period in queltion ?
The artfwer is, that it served ex.i Sly the
purpose which was anticipated by the le
gifiature. It came in aid of the current;
receipt for fatisfying the current expendi
ture of 1791, with particular reference to
the intcrefi. of the debt- This will ealilv
be comprehended when it is recollected
that tlie appropriations made during 1:91,
upon the revenues of that year, ai .! fume
fm'all furplulfes of antecedent appropria
tions, amounted to three millions fix hun
dred and thirty-seven thousand and.-ftfty
tlgh: dollars and thirty-four tents ; thas?
the revenues themselves amounted to no
more than three million five hundred and
fifty-three thoufard. one hundred und
ninety-five dollars and eighteen cents; a id
that at the end of 1:91, there were Out
ft a tiding iii bond? for tie duties 011 imports,
besides the chiet part of the proceeds of the
duties on (pints Uiftilled wit-lsiatlie Veiui
[Total No. 141.]