H. OF R.)
State of the Finances.

[JUNE, 1796. expenditures, thus stated, exceeded our receipts, the receipts for the year 1795, he had stated as more deficiency must have been supplied by borrowing than one million, probably $1,500,000, and in the money, by loans, by an increase of debt; whilst printed statement which the gentleman from any redemption, purchase, or payment of the Pub-South Carolina had in his hand, it was ultimately lic Debt, which might have taken place in the estimated at $1,400,000. That gentleman stated mean time, must necessarily have ultimately been that excess as being only $380,000, and he had atpaid out of moneys borrowed, out of other loans, tempted to prove it by subtracting the moneys apand was of course only a shifting of debt, since plied to the payment of the Public Debt for that they could not have been paid out of the receipts year, from the moneys borrowed in the same pein the Treasury from domestic resources, these riod. Although Mr. G. could not recur at once to being less than, and, therefore, altogether absorb- documents in order to controvert that statement, ed by, the current expenditures. The gentleman he would point out three material errors therein: from South Carolina had not attempted to contro- 1st. The gentleman from South Carolina stated vert the principle upon which that statement was the two per cent. paid on the 1st January last, on grounded; and, in order to show that it was erro- the six per cent. stock, at $560,000, instead of neous in its details, he should have proved, either $516,000. 2d. He stated the amount paid on the that Mr. G. had not included the whole of the mo. principal of the French Debt at $453,000, whilst neys received into the Treasury, or that he had in- that was the whole amount paid on account of serted, under the head of expenditures, objects both principal and interest ; and if so much had which related to the payment of the principal of been paid to France, part of the interest due to a debt. That gentleman had done neither; but Holland must have been paid out moneys in Holwhat had he attempted to show? Firstly, he bad land arising from Foreign Loans, and had so far asserted that Mr. G. had made an error of $976,000 diminished our balance in cash in the hands of in his account of the excess of expenditures be our bankers there. 3dly. He had neglected to yond revenues to the end of the year 1794. In mention that the balance in cash in the Treasury order to prove it, he had, by subtracting the whole on the 1st January, 1795, was about $1,150,000 amount of the debt purchased or paid during the and on the last day of the same year did not much year 1794, from the whole amount of the moneys exceed $500,000. The errors arising from those borrowed during the same year, (a mode upon three items added to the deficiency stated by the which Mr. G. said he would forbear observing for gentleman from South Carolina, ($380,000.) the present,) stated the real excess of expenditures made an aggregate of about $1,350,000, which over receipts, for that year, to be $1.723,000, and came very near to his own estimate of the defithe difference between that sum and $2,700,000, ciency for that year. which Mr. Smith asserted had been stated by Mr. G. added, that the comparative view of the Mr. G: as the excess of expenditures to the end Public Debts on the 1st days of January, 1791 of 1794, (being the aforesaid sum of $976,000,) and 1796, as given by the gentleman from South that gentleman called the first error of Mr. Ĝ. Carolina' himself, corroborated his own estimate

Supposing both the statement and the assertion of the excess of expenditures over receipts on the of the gentleman from South Carolina to be cor- 1st January, 1796. * It was impossible for him to rect, the conclusion drawn by him was most ex- controvert the accuracy of that statement, which traordinary. He attempted to show that the ex. he had just heard read, and he must, for the precess of expenditures beyond the receipts, from the sent, take it for granted ; although he might obestablishment of the present Government to the serve, 1stly, that the amount of Domestic Debt , end of the year 1794, was less than $2,700,000, by stated by that gentleman at $64,825,000 on the 1st proving that that excess, during the year 1791, of January, 1791, was the very sum stated by the was only $1,723,000! The only part of his own Secretary of the Treasury as its amount on the [Mr. G.'s] statement which could be invalidated 1st of January, 1795. 2dly. That he had stated as by that position would be the balance which he a set-off, $2,700,000 vested in the Sinking Fund, had represented as deficient for the year 1794; which was $400,000 more than the nominal but the gentleman, by recurring to the statement amount of Public Debt stated by that gentleman in his own hand, would see that Mr. G.'s result for to have been redeemed by purchases, and that, althat year alone, the sum which he had called the though he could not disprove, yet he much doubtexcess of expenditures over receipts for that year, ed whether that item of $400,000 was admissible. was only $1,480,000—that is to say, less by near But, waiving every objection to the statement, its $250,000 than the gentleman made it himself. result was, that on the 1st January, 1796, there But in fact, the member from South Carolina had was an apparent increase of Debt of about $8,100,not attended to Mr. G.'s statement; if he had, he 000, against which should be set off a variety of would have seen that Mr. G. had stated the excess items amounting to $6,100,000, and uncollected of expenditures beyond receipts, from the estab- bonds (which would make part of the receipts of lishment of the present Government to the end of the years 1796 and 1797) to the amount of $4,000,1794, after deducting the moneys applied to the 000, leaving, in the opinioa of the gentleman from redemption of the debt, at only $1,350,000, and South Carolina, an excess, not of moneys in hand, not at $2,700,000, and that, of course, the whole but of means acquired by the Government, of of his observations upons that item fell to the about $2,000,000. "If the bonds, which made no ground.

part of the receipts prior to 1796, and which, thereThe next item, the excess of expenditures over I fore, Mr. G. had not admitted as a set-off, were

JUNE, 1796.]
State of the Finances.

[H. of R. taken from that amount, it left a deficiency of set down, 1stly, because, as he insinuated, the rea$2,000,000, on the very principles of the gentle son why it was larger than the amount of moneys man from South Carolina. He had himself stat- actually applied to purchases, was the judicious ed that deficiency at $2,760,000, and of course the application of the money and the low price at only difference between them was $760,000, which which stock had been purchased; and, 2dly, bearose from his having given credit to Govern- cause Mr. G. had charged Government with the ment, in the account of purchases of Public Debt, whole amount of interest which had accrued on only for the moneys applied to that purpose, the debt during the year 1790. In answer to the whilst that gentleman had set down the whole of first assertion, Mr. G. observed, that the true the nominal amount purchased. This difference cause why the nominal amount of stock purchashad been stated by the gentleman himself at ed was larger than the moneys expended in pur$750,000; and having thus shown, by that gentle- chases, was, that more than two-thirds of the sum man's own statements, that this item constituted redeemed, (by domestic resources,) more than the whole difference between them, so far as re- $1,200,000 consisted of three per cent. and deferlated to the excess of expenditures beyond receipts red stock; and he would leave it to the candor of to the end of 1795, he would now proceed to the the House to decide whether, that being the fact, examination of that item.

that sum should be set down at its nominal value, The purchases of Public Stock by the Commis- or whether it was not a fairer way to value it at missioners of the Sinking Fund, were made with what it had cost ? It would be, to be sure, a most moneys arising from three sources, to wit: mo- extraordinary argument to borrow one million of neys received from Foreign Loans, surplus of re- dollars at six per cent., to purchase with that milvenue of 1790, and moneys arising from the inte lion two millions of three per cent. stock, and rest accruing on the stock purchased and redeem- then to boast that the debt was decreased by one ed. The nominal amount of stock of every de- million of dollars. Mr. G. added, that it was perscription, (six and three per cent. and deferred,) fectly fair in him, on the principles of his own purchased from all three sources, was stated by statement, (where he had charged Government the gentleman from South Carolina at $2,307,000; with the interest which accrued during 1790,) to from which he had deducted the amount purchas- have credited the amount only of moneys expended with moneys arising from Foreign Loans, and ed in purchasing stock, instead of the nominal had stated the balance purchased with our domes- amount purchased ; for, although he had charged tic resources at $1,700,000. The difference be- the whole amount of interest accruing during tween that sum and $957,000, (surplus of revenue 1790, he had valued the whole three per cents. of 1790, applied to purchases,) which last sum Mr. and Deferred Debt created by the non-payment of S. had said to be the only amount credited by Mr. said interest, at only one-half of its nominal value; G. 10 Government, constituted the difference stat- and having gone on that principle in his charges, ed by that gentleman as an error of $750,000 in it was perfectly consistent to preserve it in his Mr. G.'s statement.

credits. Indeed, if he was to make a new stateMr. G., in answer, observed, that in the first ment, upon the principle of the gentleman from place, the gentleman from South Carolina had South Carolina, of setting down the nominal not attended to the whole of his statement; for, amount, instead of the real value, of every species although he had, in his account of expenditures of Debt, either created or redeemed, a larger inand receipts, taken notice only of the said sum of crease of Debt would appear as the result; for the $957,000, he had, in his recapitulation, reduced amount of three per cent. and deferred stock crehis estimate of the increase of Debt from $5,300,- ated by non-payment of interest, during 1990 and 000 to five millions, allowing, as he had expressly 1791, was much larger than the amount of the stated, the $300,000 for sundries he had neglected, same descriptions of Debt purchased by the Comand especially for the proceeds of the interest of missioners of the Sinking Fund. the Sinking Fund. Then he had given full cre- To the next item. estimated by Mr. G. at 1,400,dit for the moneys arising from that interest, 000 dollars, and arising from the interest which amounting to about $225,000, which, added to the accrued during the year 1790 on the Domestic $957,000 abovementioned, made an aggregate of Debt, and created an equal amount of Debt in $1,180,000, for which he had credited Govern- three per cent. stock, and from the interest for the ment, being the total amount of moneys arising same year on the Foreign Debt, which was disfrom domestic resources applied to purchases, charged ont of new loans, there was no objection which aggregate subtracted from the sum of made by the gentleman from South Carolina as to $1,700,000, stated by the gentleman from South fact; but he had given it as his opinion that it was Carolina as the nominal amount of stock pur- not fair to set that sum as an increase of Debt, bechased, left a difference of only $520,000, instead cause the funding system having begun to operate of $750,000. This difference of $520,000 was not, only after the year 1790, the United States could however, a difference as to fact , but only as to not pay that interest

. Such an argument might opinion ; for they both agreed that only $1,180,- have applied, had Mr. G. blamed Government for 000 had been applied to purchases, and that not paying it; but as he had only stated the fact; $1,700,000 had been purchased ; and the only ques- to object ihe inability of the Government did not tion was, which of the two sums should be cre- invalidate, but, on the contrary, was an admission dited. The gentleman from South Carolina in- of his own assertion. It must be remembered that sisted that the whole nominal amount should be it was in answer to what he conceived a fallaH. or R.)

State of the Finances.

(JUNE, 1796.


cious and exaggerated statement, in which it a part of the Debt of the United States, had been had been asserted that we had diminished our charged to the individual States, respectively, by Public Debt since the establishment of the pre- the Commissioners who settled their accounts. sent Government, that he had simply stated what Upon this Mr. G. observed : was our situation on the 1st of January, 1790, 1. That the gentleman could not positively as(that is to say, ten months after the establishment certain the fact; for, although the Commissioners of this Government,) and what it was six years were directed by law to charge to the individual after, on the 1st of January, 1796, it was clear that States the Debts respectively assumed for each by in doing it, he could not annihilate the year 1790, the Union, and although it might be inferred from and that the interest accruing during the year, if thence that they must charge also the interest to not paid at all, or if paid out of the new loans, the 31st December, 1791, (which made part of the must have constituted an increase of Debt, which stock created by the assumption,) yet it was only did not the less exist, because the United States an inference; and, by a subsequent law, those had been unable to pay it. The observations of Commissioners were directed to charge each State the gentleman from South Carolina, on this head, with all advances which had been or might be amounted only to this: that, in order to take a made to it by the United States, with interest fair view of the operations of this Government, thereon only to the last day of December, 1789. we should consider it as having begun only in the All that could be said, was, that the two laws were year 1791—that is to say, near two years after its contradictory with each other. In what manner commencement. But Mr. G., at the same time the Commissioners had reconciled or explained that he had left out the year 1789, which he con- them they did not know; but certain it was, that ceived to have been employed in preparing a re- if they had charged the States with the whole venue for the following years, could not leave out assumption, including the interest to the 31st of also the year 1790, and that for a very palpable December, 1791, as they had credited the States

The revenue system was in l'ull opera- for their advances only with interest to the 31st tion during that year, and had given a surplus of December, 1789, the balances struck to each State, revenue for that very year amounting to about although in conformity to law, were all of them 1,400,000 dollars, out of which 957,000 dollars, as incorrect and erroneous. before stated, had been applied to a redemption of 2. That, if that interest had been actually charged the principal of the Debt. He had given credit for to the respective States, it must certainly have that sum in his statement, and the gentleman from changed all the balances; but how it had finally South Carolina would have been very clamorous operated, and whether it had made those balances if he had not, and it would have been absurd in larger or less, that gentleman could not tell. him, whilst he was crediting that surplus of reve- 3. That, whatever effect that charge might have nue applied to a redemption of the Debt, and show- produced on the balances of each State, it had not, ing, therefore, a decrease of Debt, not to charge abstractedly, made any change in regard to the the increase of Debt which was taking place at United States; for, be the balances what they may, the same time, by the interest accruing during the aggregate amount of those due by debtor States that very year. The United States might have must necessarily have been equal to those due to applied that surplus, either to the payment of creditor States: so that the observations of the the principal or of the interest of the Debt; they gentleman were perfectly irrelevant. had, judiciously in his opinion, chosen the first; But that was not all.' The assumption of the but the natural consequence was, that the last State Debts might be considered under two points remained unpaid, and became as fair an item of of view. Those Debts might, in the first place, Debt increased as the first was an item of Debt be contemplated as Debts due by the Union. redeemed.

In that light, they were only viewed as Debts The same observations would apply, still more Jue by the people of the United States-making forcibly, to the last item, which he had estimated it, therefore, immaterial whether they were paid at 1,050,000 dollars, arising from non-payment of by the Union or by the individual States. In that the interest accrued during the years 1790 and light, they stood unconnected with the settlement 1791 on the same assumed Debt; which was fund- of accounts of the States; and it was as such that ed, part as six per cent., part as three per cent., and Mr. G. had considered them. He had chosen to part as deferred stock; he said more forcibly, be- do it, because he had avoided taking any ground cause one-half of that interest had accrued during which might have the appearance of an objection the year 1791, which year was not ohjected to by to the principles of the Funding System. In that the gentleman from South Carolina himself. But point of view—it being a certain fact that the inthat gentleman had, on this head, taken most ex- terest to the end of 1791 had not been paid to the traordinary ground, indeed. Was not that gen- creditors, either by the States or by the Union, tleman aware that he [Mr. G.] had taken that but that it had been funded by the last-it became view of the subject which was most favorable to a proper item to be stated as an increase of Debt. the opinion that the Debt had decreased ? and But if that assumption was, upon the principle of that, if compelled to take a different view, his con- the gentleman of South Carolina, to be considered clusions would show a far greater increase of the as connected with and operating on the settlement Public Debt during the existence of the present of the accounts of the individual States; if the Government. That gentleman objected to that Debts thus assumed were to be viewed, not as a item, because that interest, although it had become Debt of the Union, but as Debts of the States,

JUNE, 1796.]
State of the Finances.

[H. OF R. charged to them by the Union, then every part of to be debtor States exceeded two millions of dolthat assumption which had not been repaid by the lars. That sum was an increase of Debt arising States, must be contemplated as an increase of solely from the operations of Government, and the Public Debt of the Union; and it was not the which would be eventually lost unless recovered partial effect produced by a specific charge, but the from those debtor States an event which was not whole effect produced by the assumption itselt, on contemplated by many. And here, he would obthe final settlement of the accounts of the several serve, that the remarks made by the gentleman States, which must be taken into consideration. from South Carolina on the subjeet of the recoThey well knew the amount of the Debt incurred very of those balances, if he meant to convey an .by the mode which had been adopted, of assuming idea that they should constitute an item to the before the accounts were settled--about eighteen credit of the United States, were altogether fallamillions and a half assumed, and three millions and cius; for they could be set off only against the a half funded to the creditor States for the balances balances funded to the creditor States; and these due them-made an aggregate of near twenty-two had not been charged, either by that gentleman's millions of dollars, against which they had nothing or by his own statement, as an increase of Debt but three millions and a half, to be recovered from under the present Government. the debtor States. It remained to examine what Mr. G. concluded by observing, that, having would have been the final balances due to and by fully demonstrated that the gentleman from South the several States, if no assumption had taken Carolina, so far from having disproved any of the place. Although the books of the Commissioners facts stated by him, had on the contrary supported were not opened to their inspection, yet they had them by his own statements; and having submitsufficient data to make the calculation. Mr. G. ted to the House his reasons in support of those said he had made it, and found that the aggregate points on which they differed as matters of opinamount of the balances which would have been ion, he would rot object to the resolutions moved found due to the creditor States, (and of course by that gentleman, although there was not a single due by the debtor States, if no assumption had document he asked for which was not already taken plac?,) would have been very little more in the possession of the House, and although the than eight millions of dollars. From whence it sole object of the call on the Treasury Departresulted, that, supposing the balances due by the ment was to procure statements in that shape and debtor States to be lost in both cases, the increase for those periods only which were best calculated of Debt arising from the assumption was fourteen to favor ihe gentleman's opinions, and to give millions of dollars—it being the difference between some support to his systems. For the statements twenty-two millions which had actually been to be given, in conformity to those resolutions, funded, and eight millions which would have been would present a view neither of the interest acfunded for balances due to the creditor States, if crued on the Domestic and Foreign Debt during no assumption had taken place; that, supposing the year 1790, nor of the interest accrued on the the balances due by the debtor States to be reco- Assumed Debt during the years 1790 and 1791, vered in both cases, the increase of Debt arising nor of the expenditures, as compared with receipts, from the assumption was the amount assumed, which were exactly the three points upon which exclusively of the balances, to wit, near eighteen they differed. millions and a half of dollars; that, supposing the Mr. W. Smith admitted that there was one point, balances due by the debtor States to be lost, and and ouly one, in which he and the gentleman agreed; that, in case no assumption had taken place before that was, in vindicating the Administration from the settlement of accounts, the United States had every blame for this supposed increase of debt. He after settlement, in order to equalize the loss aris- was glad to find the gentleman so ready now to ing to the creditor States from the debtor States acknowledge that the Administration had done not paying their balances, assumed four millions everything in their power, with the means in their and a half in addition to the eight millions balances hands, and that if any blame did attach, it was on funded to the creditor States-the aggregate (mak- Congress, for not providing more resources. As ing twelve-and-a-half millions of dollars) would the gentleman disclaimed an intention of censurstill have been less, by a sum of nine millions and ing the Administration, Mr. S. was at a loss to a half, than the twenty-two millions which had discover the motives for his statements. In every been funded according to the plan which had been other respect, the gentleman and himself differed adopted. Thus, a statement made on the princi- altogether. There were four items respecting ples upon which the objection of the gentleman which they differed essentially, the result from from South Carolina did rest, would present, on which was, that the gentleman's statement prothe most favorable position, an increase of more duced an increase of Debt of five millions, and his thao nine millions of dollars for the assumption exhibited an increase of means of two millions. alone.

1. The first item related to the amount of antiMr. G. said that not only he had forborne mak-cipations or expenditures beyond the receipts at ing his calculation on that principle, but that he the end of 1794. Those anticipations must have had not even presented another view of the same arisen from Loans; in order, therefore, to ascersubject, which, although not so correct, in an tain the amount, it was necessary to state the whole abstract point of view, was more simple and amount of Loans to that period, and then deduct practically true. The amount of Debts actually the amount of Debts paid thereout; the balance assumed and funded for States who had turned out constituted the true amount of anticipations. By H. or. R.)

4th Cox. - 19

Sundry Business-Adjournment.

[JUNE, 1796.

this process, it was demonstrable that the true be made in adding up the sums, so as to make the amount at the end of 1794 was only 1,723,615, balance beyond ordinary expenditures $13,900,000, instead of 2,700,000, as stated by the gentleman. instead of $18,400,000.

2. The second item related to the amount of excess of anticipations during the year 1795. By

SUNDRY BUSINESS. pursuing the same process, this appeared to be only Mr. SWANWICK proposed the following resolu382,674, instead of 1,500,000, as stated by the gen- tion, which was agreed to: tleman.

Resolved, That the Secretary of the Treasury be 3. The third item arose from a different view directed to lay before this House a statement of the taken by them as to the interest accruing on the drawback paid on the sundry dutiable articles exported Domestic and Foreign Debt during the year 1790. from the United States in the years 1793, 1794, and This amounted to 1,400,000. On this point, it was 1795, compared with the amount of the duties collected to be remarked, (in addition to his former observa- on the same respectively." tions,) that while the gentleman charged this item Mr. SITGREAVES, from the committee to whom as an increase of Debt, under the present Govern- | was referred the Message of the PRESIDENT rement, he had omitted to credit the Treasury with specting the posts of Detroit and Michilimackinac, the sum actually produced by the surplus revenue reported that he had not been able to get the necesof that year. That surplus, instead of being ap- sary information to make a report; therefore, he plied to the discharge of the interest of the Foreign moved that the committee might be discharged; and Domestic Debt for 1790, was more profita- which was accordingly done. bly employed in buying up, considerably under The Senate, by their Secretary, informed the par, the principal of the Domestic Debt. If, there- House that they had resolved that ihe bill for alterfore, it was right in the gentleman to charge that ing the time of holding the next session of Coninterest as an increase of Debt. it was equally so gress do not pass. to credit the Government with the whole sum pro- The amendments of the Senate to the bill for duced by the fund, which was diverted from the making appropriations for the Military and Naval payment of that interest. This sum was about Establishments for the year 1796 were read and 1,700,000, but the gentleman had only credited the agreed to. One of the amendments was to reduce Treasury for 957,000.

the sum for the purchase of horses from $7,500 to 4. The last item was the interest of the Assumed $3,750; another was to reduce the sum for the deDebt for 1790 and 1791. It was admitted that this fence and protection of the frontiers from $130,000 was a charge against the States. Whether the to $100,000; the other was to conform the whole United States would ultimately recover from the amount to these amendments—making it, instead debtor States the whole of the balances due, was of $1,352,623, $1,318,773. a question not necessary then to be discussed. It The Senate's amendments to the bill indemnicould not, however, be a question whether a part fying the estate of Major General Greene from a would not be recovered. These balances, and the certain bond, were agreed to without debate. interest due thereon, at only four per cent., amount

Sundry resolutions were proposed and agreed to, ed to upwards of four millions. Supposing that making additional a lowances to the Sergeant-atonly 25 per cent should be recovered, it would be Arms, Clerks, and Doorkeepers of the House for a sufficient set-off against this item of $1,050,000 the present session. in the gentleman's statement of the increase of The House then adjourned till five o'clock this Debt.

evening. Mr. S. expressed his satisfaction that he had had

EVENING SESSION. an opportunity, before the recess, of exhibiting a more agreeable view of the finances than had been

The Senate informed the House, by their Secredone by the member from Pennsylvania, who had tary, that they had resolved that the

bill authoriztaken uncommon pains to present a very melan- ing the PresideNT OF THE UNITED STATES to lay, choly one indeed. "Mr. S. concluded with observ- ing recess of Congress, do not receive its third

regulate, and revoke embargoes, during the ensuing. that, when he contemplated the very heavy reading to-day. unforeseen expenses incurred since the year 1793, by the necessary efforts for protection, and by un

Mr. J. Smith, from the committee appointed to avoidable negotiations, the Western insurrection,

wait upon

the PRESIDENT OF THE UNITED STATES, the long and persevering obstructions to the col- to notify him of the intention of both Houses to lection of the excise, and the aversion in that adjourn on this day, reported his approbation House to an augmentation of the revenues, he was

thereof. astonished, as well as delighted, to find that the

The business before the House being finished, a finances were in so flourishing a situation, and that message was sent to the Senate, to inform them the Government had got along so well.

that the House was ready to adjourn. Whereupon, [In Mr. Smith's Statement of the Finances,

after waiting some time to receive any answer that printed at the foot of page 918, ante, the item, might be sent thereto, without receiving any* Paid of Unfunded Debt. $5,000,000," should read first Monday in December next

The SPEAKER adjourned the House until the $500,000; and the corresponding alterations should

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