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expenditures, thus stated, exceeded our receipts, the deficiency must have been supplied by borrowing money, by loans, by an increase of debt; whilst any redemption, purchase, or payment of the Public Debt, which might have taken place in the mean time, must necessarily have ultimately been paid out of moneys borrowed, out of other loans, and was of course only a shifting of debt, since they could not have been paid out of the receipts in the Treasury from domestic resources, these being less than, and, therefore, altogether absorbed by, the current expenditures. The gentleman from South Carolina had not attempted to controvert the principle upon which that statement was grounded; and, in order to show that it was erroneous in its details, he should have proved, either that Mr. G. had not included the whole of the moneys received into the Treasury, or that he had inserted, under the head of expenditures, objects which related to the payment of the principal of a debt. That gentleman had done neither; but what had he attempted to show? Firstly, he bad asserted that Mr. G. had made an error of $976,000 in his account of the excess of expenditures beyond revenues to the end of the year 1794. In order to prove it, he had, by subtracting the whole amount of the debt purchased or paid during the year 1794, from the whole amount of the moneys borrowed during the same year, (a mode upon which Mr. G. said he would forbear observing for the present,) stated the real excess of expenditures over receipts, for that year, to be $1,723,000, and the difference between that sum and $2,700,000, which Mr. SMITH asserted had been stated by Mr. G. as the excess of expenditures to the end of 1794, (being the aforesaid sum of $976,000,) that gentleman called the first error of Mr. G.

Supposing both the statement and the assertion of the gentleman from South Carolina to be correct, the conclusion drawn by him was most extraordinary. He attempted to show that the excess of expenditures beyond the receipts, from the establishment of the present Government to the . end of the year 1794, was less than $2,700,000, by proving that that excess, during the year 1794, was only $1,723,000! The only part of his own [Mr. G.'s] statement which could be invalidated by that position would be the balance which he had represented as deficient for the year 1794; but the gentleman, by recurring to the statement in his own hand, would see that Mr. G.'s result for that year alone, the sum which he had called the excess of expenditures over receipts for that year, was only $1,480,000-that is to say, less by near $250,000 than the gentleman made it himself. But in fact, the member from South Carolina had not attended to Mr. G.'s statement; if he had, he would have seen that Mr. G. had stated the excess of expenditures beyond receipts, from the establishment of the present Government to the end of 1794, after deducting the moneys applied to the redemption of the debt, at only $1,350,000, and not at $2,700,000, and that, of course, the whole of his observations upon that item fell to the ground.

The next item, the excess of expenditures over

[JUNE, 1796.

receipts for the year 1795, he had stated as more than one million, probably $1,500,000, and in the printed statement which the gentleman from South Carolina had in his hand, it was ultimately estimated at $1,400,000. That gentleman stated that excess as being only $380,000, and he had attempted to prove it by subtracting the moneys applied to the payment of the Public Debt for that year, from the moneys borrowed in the same period. Although Mr. G. could not recur at once to documents in order to controvert that statement, he would point out three material errors therein 1st. The gentleman from South Carolina stated the two per cent. paid on the 1st January last. on the six per cent. stock, at $560,000, instead of $516,000. 2d. He stated the amount paid on the principal of the French Debt at $453,000, whilst that was the whole amount paid on account of both principal and interest; and if so much had been paid to France, part of the interest due to Holland must have been paid out moneys in Holland arising from Foreign Loans, and had so far diminished our balance in cash in the hands of our bankers there. 3dly. He had neglected to mention that the balance in cash in the Treasury on the 1st January, 1795, was about $1,150,000, and on the last day of the same year did not much exceed $500,000. The errors arising from those three items added to the deficiency stated by the gentleman from South Carolina, ($380,000.) made an aggregate of about $1,350,000, which came very near to his own estimate of the deficiency for that year.

Mr. G. added, that the comparative view of the Public Debts on the 1st days of January, 1791 and 1796, as given by the gentleman from South Carolina himself, corroborated his own estimate of the excess of expenditures over receipts on the 1st January, 1796. It was impossible for him to controvert the accuracy of that statement, which he had just heard read, and he must, for the present, take it for granted; although he might observe, 1stly, that the amount of Domestic Debt stated by that gentleman at $64,825,000 on the 1st of January, 1791, was the very sum stated by the Secretary of the Treasury as its amount on the 1st of January, 1795. 2dly. That he had stated as a set-off, $2,700,000 vested in the Sinking Fund, which was $400,000 more than the nominal amount of Public Debt stated by that gentleman to have been redeemed by purchases, and that, although he could not disprove, yet he much doubted whether that item of $400,000 was admissible. But, waiving every objection to the statement, its result was, that on the 1st January, 1796, there was an apparent increase of Debt of about $9.100,000, against which should be set off a variety of items amounting to $6,100,000, and uncollected bonds (which would make part of the receipts of the years 1796 and 1797) to the amount of $4,000,000, leaving, in the opinion of the gentleman from South Carolina, an excess, not of moneys in hand. but of means acquired by the Government, of about $2,000,000. If the bonds, which made no part of the receipts prior to 1796, and which, therefore, Mr. G. had not admitted as a set-off, were

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taken from that amount, it left a deficiency of $2,000,000, on the very principles of the gentleman from South Carolina. He had himself stated that deficiency at $2,760,000, and of course the only difference between them was $760,000, which arose from his having given credit to Government, in the account of purchases of Public Debt, only for the moneys applied to that purpose, whilst that gentleman had set down the whole of the nominal amount purchased. This difference had been stated by the gentleman himself at $750,000; and having thus shown, by that gentleman's own statements, that this item constituted the whole difference between them, so far as related to the excess of expenditures beyond receipts to the end of 1795, he would now proceed to the examination of that item.

The purchases of Public Stock by the Commismissioners of the Sinking Fund, were made with moneys arising from three sources, to wit: moneys received from Foreign Loans, surplus of revenue of 1790, and moneys arising from the interest accruing on the stock purchased and redeemed. The nominal amount of stock of every description, (six and three per cent. and deferred,) purchased from all three sources, was stated by the gentleman from South Carolina at $2,307,000; from which he had deducted the amount purchased with moneys arising from Foreign Loans, and had stated the balance purchased with our domestic resources at $1,700,000. The difference between that sum and $957,000, (surplus of revenue of 1790, applied to purchases,) which last sum Mr. S. had said to be the only amount credited by Mr. G. to Government, constituted the difference stated by that gentleman as an error of $750,000 in Mr. G.'s statement.

Mr. G., in answer, observed, that in the first place, the gentleman from South Carolina had not attended to the whole of his statement; for, although he had, in his account of expenditures and receipts, taken notice only of the said sum of $957,000, he had, in his recapitulation, reduced his estimate of the increase of Debt from $5,300,000 to five millions, allowing, as he had expressly stated, the $300,000 for sundries he had neglected, and especially for the proceeds of the interest of the Sinking Fund. Then he had given full credit for the moneys arising from that interest, amounting to about $225,000, which, added to the $957,000 abovementioned, made an aggregate of $1,180,000, for which he had credited Government, being the total amount of moneys arising from domestic resources applied to purchases, which aggregate subtracted from the sum of $1,700,000, stated by the gentleman from South Carolina as the nominal amount of stock purchased, left a difference of only $520,000, instead of $750,000. This difference of $520,000 was not, however, a difference as to fact, but only as to opinion; for they both agreed that only $1,180,000 had been applied to purchases, and that $1,700,000 had been purchased; and the only question was, which of the two sums should be credited. The gentleman from South Carolina insisted that the whole nominal amount should be

[H. OF R.

set down, 1stly, because, as he insinuated, the reason why it was larger than the amount of moneys actually applied to purchases, was the judicious application of the money and the low price at which stock had been purchased; and, 2dly, because Mr. G. had charged Government with the whole amount of interest which had accrued on the debt during the year 1790. In answer to the first assertion, Mr. G. observed, that the true cause why the nominal amount of stock purchased was larger than the moneys expended in purchases, was, that more than two-thirds of the sum redeemed, (by domestic resources,) more than $1,200,000 consisted of three per cent. and deferred stock; and he would leave it to the candor of the House to decide whether, that being the fact, that sum should be set down at its nominal value, or whether it was not a fairer way to value it at what it had cost? It would be, to be sure, a most extraordinary argument to borrow one million of dollars at six per cent., to purchase with that million two millions of three per cent. stock, and then to boast that the debt was decreased by one million of dollars. Mr. G. added, that it was perfectly fair in him, on the principles of his own statement, (where he had charged Government with the interest which accrued during 1790,) to have credited the amount only of moneys expended in purchasing stock, instead of the nominal amount purchased; for, although he had charged the whole amount of interest accruing during 1790, he had valued the whole three per cents. and Deferred Debt created by the non-payment of said interest, at only one-half of its nominal value; and having gone on that principle in his charges, it was perfectly consistent to preserve it in his credits. Indeed, if he was to make a new statement, upon the principle of the gentleman from South Carolina, of setting down the nominal amount, instead of the real value, of every species of Debt, either created or redeemed, a larger increase of Debt would appear as the result; for the amount of three per cent. and deferred stock created by non-payment of interest, during 1790 and 1791, was much larger than the amount of the same descriptions of Debt purchased by the Commissioners of the Sinking Fund.

To the next item, estimated by Mr. G. at 1,400,000 dollars, and arising from the interest which accrued during the year 1790 on the Domestic Debt, and created an equal amount of Debt in three per cent. stock, and from the interest for the same year on the Foreign Debt, which was discharged out of new loans, there was no objection made by the gentleman from South Carolina as to fact; but he had given it as his opinion that it was not fair to set that sum as an increase of Debt, because the funding system having begun to operate only after the year 1790, the United States could not pay that interest. Such an argument might have applied, had Mr. G. blamed Government for not paying it; but as he had only stated the fact; to object the inability of the Government did not invalidate, but, on the contrary, was an admission of his own assertion. It must be remembered that it was in answer to what he conceived a falla

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cious and exaggerated statement, in which it had been asserted that we had diminished our Public Debt since the establishment of the present Government, that he had simply stated what was our situation on the 1st of January, 1790, (that is to say, ten months after the establishment of this Government,) and what it was six years after, on the 1st of January, 1796, it was clear that in doing it, he could not annihilate, the year 1790, and that the interest accruing during the year, if not paid at all, or if paid out of the new loans, must have constituted an increase of Debt, which did not the less exist, because the United States had been unable to pay it. The observations of the gentleman from South Carolina, on this head, amounted only to this: that, in order to take a fair view of the operations of this Government, we should consider it as having begun only in the year 1791-that is to say, near two years after its commencement. But Mr. G., at the same time that he had left out the year 1789, which he conceived to have been employed in preparing a revenue for the following years, could not leave out also the year 1790, and that for a very palpable reason. The revenue system was in full operation during that year, and had given a surplus of revenue for that very year amounting to about 1,400,000 dollars, out of which 957,000 dollars, as before stated, had been applied to a redemption of the principal of the Debt. He had given credit for that sum in his statement, and the gentleman from South Carolina would have been very clamorous if he had not, and it would have been absurd in him, whilst he was crediting that surplus of revenue applied to a redemption of the Debt, and showing, therefore, a decrease of Debt, not to charge the increase of Debt which was taking place at the same time, by the interest accruing during that very year. The United States might have applied that surplus, either to the payment of the principal or of the interest of the Debt; they had, judiciously in his opinion, chosen the first; but the natural consequence was, that the last remained unpaid, and became as fair an item of Debt increased as the first was an item of Debt redeemed.

(JUNE, 1796.

a part of the Debt of the United States, had been charged to the individual States, respectively, by the Commissioners who settled their accounts. Upon this Mr. G. observed:

1. That the gentleman could not positively ascertain the fact; for, although the Commissioners were directed by law to charge to the individual States the Debts respectively assumed for each by the Union, and although it might be inferred from thence that they must charge also the interest to the 31st December, 1791, (which made part of the stock created by the assumption,) yet it was only an inference; and, by a subsequent law, those Commissioners were directed to charge each State with all advances which had been or might be made to it by the United States, with interest thereon only to the last day of December, 1789. All that could be said, was, that the two laws were contradictory with each other. In what manner the Commissioners had reconciled or explained them they did not know; but certain it was, that if they had charged the States with the whole assumption, including the interest to the 31st of December, 1791, as they had credited the States for their advances only with interest to the 31st December, 1789, the balances struck to each State, although in conformity to law, were all of them incorrect and erroneous.

2. That, if that interest had been actually charged to the respective States, it must certainly have changed all the balances; but how it had finally operated, and whether it had made those balances larger or less, that gentleman could not tell.

3. That, whatever effect that charge might have produced on the balances of each State, it had not, abstractedly, made any change in regard to the United States; for, be the balances what they may, the aggregate amount of those due by debtor States must necessarily have been equal to those due to creditor States: so that the observations of the gentleman were perfectly irrelevant.

But that was not all. The assumption of the State Debts might be considered under two points of view. Those Debts might, in the first place, be contemplated as Debts due by the Union.

In that light, they were only viewed as Debts The same observations would apply, still more due 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 objected 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,

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charged to them by the Union, then every part of that assumption which had not been repaid by the States, must be contemplated as an increase of the Public Debt of the Union; and it was not the partial effect produced by a specific charge, but the whole effect produced by the assumption itself. on the final settlement of the accounts of the several States, which must be taken into consideration. They well knew the amount of the Debt incurred by the mode which had been adopted, of assuming before the accounts were settled-about eighteen millions and a half assumed, and three millions and a half funded to the creditor States for the balances due them-made an aggregate of near twenty-two millions of dollars, against which they had nothing but three millions and a half, to be recovered from the debtor States. It remained to examine what would have been the final balances due to and by the several States, if no assumption had taken place. Although the books of the Commissioners were not opened to their inspection, yet they had sufficient data to make the calculation. Mr. G. said he had made it, and found that the aggregate amount of the balances which would have been found due to the creditor States, (and of course due by the debtor States, if no assumption had taken place,) would have been very little more than eight millions of dollars. From whence it resulted, that, supposing the balances due by the debtor States to be lost in both cases, the increase of Debt arising from the assumption was fourteen millions of dollars-it being the difference between twenty-two millions which had actually been funded, and eight millions which would have been funded for balances due to the creditor States, if no assumption had taken place; that, supposing the balances due by the debtor States to be recovered in both cases, the increase of Debt arising from the assumption was the amount assumed, exclusively of the balances, to wit, near eighteen millions and a half of dollars; that, supposing the balances due by the debtor States to be lost, and that, in case no assumption had taken place before the settlement of accounts, the United States had after settlement, in order to equalize the loss arising to the creditor States from the debtor States not paying their balances, assumed four millions and a half in addition to the eight millions balances funded to the creditor States-the aggregate (making twelve-and-a-half millions of dollars) would still have been less, by a sum of nine millions and a half, than the twenty-two millions which had been funded according to the plan which had been adopted. Thus, a statement made on the principles upon which the objection of the gentleman from South Carolina did rest, would present, on the most favorable position, an increase of more than nine millions of dollars for the assumption alone.

Mr. G. said that not only he had forborne making his calculation on that principle, but that he had not even presented another view of the same subject, which, although not so correct, in an abstract point of view, was more simple and practically true. The amount of Debts actually assumed and funded for States who had turned out 4th Cos-19

[H. of R.

to be debtor States exceeded two millions of dollars. That sum was an increase of Debt arising solely from the operations of Government, and which would be eventually lost unless recovered from those debtor States-an event which was not contemplated by many. And here, he would observe, that the remarks made by the gentleman from South Carolina on the subject of the recovery of those balances, if he meant to convey an idea that they should constitute an item to the credit of the United States, were altogether failacus; for they could be set off only against the balances funded to the creditor States; and these had not been charged, either by that gentleman's or by his own statement, as an increase of Debt under the present Government.

Mr. G. concluded by observing, that, having fully demonstrated that the gentleman from South Carolina, so far from having disproved any of the facts stated by him, had on the contrary supported them by his own statements; and having submitted to the House his reasons in support of those points on which they differed as matters of opinion, he would rot object to the resolutions moved by that gentleman, although there was not a single document he asked for which was not already in the possession of the House, and although the sole object of the call on the Treasury Department was to procure statements in that shape and for those periods only which were best calculated to favor the gentleman's opinions, and to give some support to his systems. For the statements to be given, in conformity to those resolutions, would present a view neither of the interest accrued on the Domestic and Foreign Debt during the year 1790, nor of the interest accrued on the Assumed Debt during the years 1790 and 1791, nor of the expenditures, as compared with receipts, which were exactly the three points upon which they differed.

Mr. W.SMITH admitted that there was one point, and only one, in which he and the gentleman agreed; that was, in vindicating the Administration from every blame for this supposed increase of debt. He was glad to find the gentleman so ready now to acknowledge that the Administration had done everything in their power, with the means in their hands, and that if any blame did attach, it was on Congress, for not providing more resources. As the gentleman disclaimed an intention of censuring the Administration, Mr. S. was at a loss to discover the motives for his statements. In every other respect, the gentleman and himself differed altogether. There were four items respecting which they differed essentially, the result from which was, that the gentleman's statement produced an increase of Debt of five millions, and his exhibited an increase of means of two millions.

1. The first item related to the amount of anticipations or expenditures beyond the receipts at the end of 1794. Those anticipations must have arisen from Loans; in order, therefore, to ascertain the amount, it was necessary to state the whole amount of Loans to that period, and then deduct the amount of Debts paid thereout; the balance constituted the true amount of anticipations. By

H. OF. R.J

Sundry Business-Adjournment.

this process, it was demonstrable that the true amount at the end of 1794 was only 1,723,615, instead of 2,700,000, as stated by the gentleman.

2. The second item related to the amount of excess of anticipations during the year 1795. By pursuing the same process, this appeared to be only 382,674, instead of 1,500,000, as stated by the gentleman.

3. The third item arose from a different view taken by them as to the interest accruing on the Domestic and Foreign Debt during the year 1790. This amounted to 1,400,000. On this point, it was to be remarked, (in addition to his former observations,) that while the gentleman charged this item as an increase of Debt, under the present Government, he had omitted to credit the Treasury with the sum actually produced by the surplus revenue of that year. That surplus, instead of being applied to the discharge of the interest of the Foreign and Domestic Debt for 1790, was more profitably employed in buying up, considerably under par, the principal of the Domestic Debt. If, therefore, it was right in the gentleman to charge that interest as an increase of Debt. it was equally so to credit the Government with the whole sum produced by the fund, which was diverted from the payment of that interest. This sum was about 1,700,000, but the gentleman had only credited the Treasury for 957,000.

4. The last item was the interest of the Assumed Debt for 1790 and 1791. It was admitted that this was a charge against the States. Whether the United States would ultimately recover from the debtor States the whole of the balances due, was a question not necessary then to be discussed. It could not, however, be a question whether a part would not be recovered. These balances, and the interest due thereon, at only four per cent., amounted to upwards of four millions. Supposing that only 25 per cent should be recovered, it would be a sufficient set-off against this item of $1,050,000 in the gentleman's statement of the increase of Debt.

[JUNE, 1796.

be made in adding up the sums, so as to make the balance beyond ordinary expenditures $13,900,000, instead of $18,400,000.j

SUNDRY BUSINESS.

Mr. SWANWICK proposed the following resolution, which was agreed to:

"Resolved, That the Secretary of the Treasury be directed to lay before this House a statement of the drawback paid on the sundry dutiable articles exported from the United States in the years 1793, 1794, and 1795, compared with the amount of the duties collected on the same respectively."

Mr. SITGREAVES, from the committee to whom was referred the Message of the PRESIDENT respecting the posts of Detroit and Michilimackinac, reported that he had not been able to get the necessary information to make a report; therefore, he moved that the committee might be discharged; which was accordingly done.

The Senate, by their Secretary, informed the House that they had resolved that the bill for altering the time of holding the next session of Congress do not pass.

The amendments of the Senate to the bill for making appropriations for the Military and Naval Establishments for the year 1796 were read and agreed to. One of the amendments was to reduce the sum for the purchase of horses from $7,500 to $3,750; another was to reduce the sum for the defence and protection of the frontiers from $130,000 to $100,000; the other was to conform the whole amount to these amendments-making it, instead of $1,352,623, $1,318,773.

The Senate's amendments to the bill indemnifying the estate of Major General Greene from a certain bond, were agreed to without debate.

Sundry resolutions were proposed and agreed to, making additional a lowances to the Sergeant-atArms, Clerks, and Doorkeepers of the House for the present session.

The House then adjourned till five o'clock this evening.

EVENING SESSION.

Mr. S. expressed his satisfaction that he had had an opportunity, before the recess, of exhibiting a The Senate informed the House, by their Secremore agreeable view of the finances than had been done 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 obsery-regulate, and revoke embargoes, during the ensu ing that, when he contemplated the very heavy ing recess of Congress, do not receive its third unforeseen expenses incurred since the year 1793, reading to-day. by the necessary efforts for protection, and by unavoidable negotiations, the Western insurrection, the long and persevering obstructions to the collection of the excise, and the aversion in that House to an augmentation of the revenues, he was astonished, as well as delighted, to find that the finances were in so flourishing a situation, and that the Government had got along so well.

[In Mr. SMITH's Statement of the Finances, printed at the foot of page 918, ante, the item, "Paid of Unfunded Debt. $5,000,000," should read $500,000; and the corresponding alterations should

wait upon the PRESIDENT OF THE UNITED STATES, Mr. J. SMITH, from the committee appointed to to notify him of the intention of both Houses to adjourn on this day, reported his approbation

thereof.

The business before the House being finished, a message was sent to the Senate, to inform them that the House was ready to adjourn. Whereupon, might be sent thereto, without receiving any— after waiting some time to receive any answer that

first Monday in December next. The SPEAKER adjourned the House until the

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