APRIL, 1796.] Debt due Bank of the United States. The gentleman from Pennsylvania [Mr. GALLATIN] had yesterday declared, that, at the commencement of the present session, the Secretary of the Treasury did not expect that any such Loan would have been proposed; nor did the Bank then expect the payment of the Loans with which it had accommodated the Government. In support of his declaration, the gentleman read a passage from the first report made the present session by the Secre tary. That passage declared, that the anticipations of the revenue which might exist at the close of the present year must be continued the next. The gentleman had from hence inferred, that those anticipations were to continue in their present form. The report imported no such idea, but only that the Secretary did not expect any measure would be adopted this session for the extinguish ment of those Loans by payment. This was not only the meaning of the Secretary, but that meaning was perfectly well known to the gentleman himself at the moment he made this declaration. To prove, at the same time, the meaning of the Secretary, and that that meaning was well known to the gentleman, he would take the liberty to state some facts which he certainly would not deny. Soon after the appointment of the Committee of Ways and Means, and, he believed, at the very first meeting of that committee, and at which meeting the gentleman was present, an interview took place between the committee and the Secretary. At that time the Secretary made the proposal, the object of which was detailed in the bill, with this only difference, that his proposal extended to the sum-total of the amount of the Debt due to the Bank. This was about the time that the report was made. The gentleman then did know, at that time, that the Secretary's report did not mean what he had declared it did. This conclusion was irresistible. This, however, was not all. Very early in the session, a report of a committee of the Bank was put into the hands of the gentleman: he read this report, and considered its contents. This report commented on this very proposition. It was, too, in consequence of a proposition made to the Bank by the Secretary a proposition in which the Secretary and the committee of the Bank perfectly concurred. It was not true, then, that the Secretary of the Treasury, at the commencement of the present session, expected that the Loans for anticipations were to continue in their present form, but that they were to be exchanged for the Loan which was proposed by the bill. In this idea the Bank perfectly concurred. With all these facts, the gentleman was well acquainted: it was then incumbent on him to reconcile his declarations with the state of facts which be perfectly knew. Here Mr. S. read the following passages from the report of the Committee of the Bank: "It is very interesting to the Bank to devise some practicable means of liquidating their obligations, which have grown to such an enormous and disproportionate size as to paralyze its operations, by depriving it of so large a portion of its capital." "It is therefore recommended that a committee be appointed to confer with the Secretary on the subject of this letter, to press on H. OF R Those terms, the gentleman from Pennsylvania well knew, were precisely the same as those detailed in the bill. The gentleman had made a very serious charge against a number of gentlemen in this House: He said that it was "an object to perpetuate and increase the Public Debt." This charge was justified neither by the general tenor, nor by any one act of the political lives, of those gentlemen. Notwithstanding they had, in every instance, and under the weight of an embarrassing and powerful opposition, exerted, on every occasion, all their faculties to improve and enrich the public revenues. The same gentleman had, during the last session, under the weight of the same opposition, carried through an act which was intended to, and he believed would, ultimately annihilate the Debt. Yet, those who had never attempted to propose any measure to improve the revenue, or decrease the Debt-who had never proposed any system of their own-but, on the contrary, constantly opposed and embarrassed every measure, had the boldness to charge the men who were endeavoring to support the Public Credit and diminish the Public Debt, with designs which they neither avowed nor entertained. He would declare that men of pure and honorable intentions did not lightly impute impure motives to others. If, indeed, the gentlemen against whom this foul charge was made had been known to have combined, "in every measure which might obstruct the operation of law" or Government; if they had publicly declared to the world, "that the men who would accept of the offices, to perform the necessary functions of Government, were lost to every sense of virtue;" "that, from them was to be withholden every comfort of life which depended on those duties, which, as men and fellow-citizens, guilty of such nefarious practices, there would we owe to each other;" if the gentleman had been have been a sound foundation for the charge of the gentleman. But they, it was known, had been innocent of such actions; and it was also well known that they were equally so of the intentions which the gentleman had unjustly imputed .o them. It would certainly, with every man who viewed the subject of Public Credit as he did, be of little importance whether the finances had or had not been wisely administered. It would, however, be proper, after what had been said on this occasion, to state generally what had been done by himself the other day in detail--that the extraordinary expenses which had been sustained and discharged since the commencement of this Government, had $10,000,000 amounted to at least That there has been paid in purchases 2,500,000 5,000,000 2,000,000 4,500,000 H. OF R.J Debt due Bank of the United States. Paid in pursuance of the reduction act of. last session For this there was due to the Bank (including $1,400,000, due for our stock in that institution) the sum of (excluding the Loan of 400,000, to pay the instalment due in Amsterdam) Leaving a balance, beyond ordinary expenditures, of 600,000 24,600,000 6,200,000 18,400,000 He believed no man, at the commencement of the Government, would have predicted that such success, and under such circumstances, could have attended its administration. Mr. S. then proceeded to a particular statement of the several Loans which had been made of the Bank. By which it appeared that $2,500,000 had been loaned at five, and the residue at six per cent. That one million of this was advanced for the suppression of the insurrection, and another million (including $200,000 had of the Bank of New York) for the peace with Algiers. That, in the former instance, the Government had been enabled, by the aid it received from that institution, to quell without bloodshed an insurrection raised by misrepresentation and falsehood-an insurrection which threatened the peace, liberty, and happiness of this country, and to deluge our land with the blood of contending brethren. In the latter instance, the assistance we had received had been the means of unchaining our citizens held in cruel and savage slavery. [APRIL, 1796. vernment to obtain the necessary supplies ?— Not from Europe, it was agreed. Nct from private individuals, because the enterprising capitalists in this country could more profitably employ their capital than by Loans to the Government; not from other banks, because their capitals were inadequate to supply the demands of individuals, which was a more lucrative branch of their business. Besides, did none of these objections exist, who would intrust their property in the hands of a Government which made its own convenience, and not the stipulations of its contracts, the rule of its conduct in fulfilling, or more properly violating its promises? What, then, were to be the circumstances of this country in the event of an unforeseen demand, for which every Government ought to be prepared? If war, or insurrection, or captured citizens, should require our aid, would our Government be in the situation to grant that relief. and protection for which the guardians of its security and happiness ought always to be prepared? But the gentleman had said, that this measure would protract the period of the ultimate extinguishment of the Public Debt. This was a circumstance which he thought no honest man ought to take into consideration. We ought only to inquire into the amount and terms of the public contracts, and, without hesitation or further inquiry, to perform them with good faith. But he did not believe this measure would in the least degree shackle the public faculties. It had already been stated, by his friend from South Carolina, [Mr. SMITH,] that, until the year 1800, besides the $600,000 required by the reduction law, another $600,000 would be necessary to It ought to be recollected that the whole specie perform the public engagements. It was known that stock of the Bank amounted to no more originally after that time another annual demand of $1,200,than $2,000,000. To this had been added $600,- | 000 would occur. We had, besides a considerable 000, paid by the United States. From this state- amount of Foreign Debt, $1,200,000 of unfunded ment, it was obvious that the Bank must, to afford debts, (he had spoken in round numbers,) and the the accommodation which it had to Government, whole three per cents. to operate upon. Was have disposed of a considerable portion of that there not here, in the opinion of the most sanpart of its capital which consisted of funded stock-guine man, sufficient subjects for the existing faca stock bearing an interest of six per cent., with ample funds mortgaged for its security. This security had been relinquished; the proceeds had again been intrusted to the Government, and for a considerable part at a lower rate of interest. For their security they had relied alone on the public faith, the result of this question would decide the value of the pledge. They now demanded a fulfilment of the public engagements. Money we had not. They were willing to receive pay ment of the same nature, substantially, as that which they had disposed of, to obtain the money which they had loaned, and would negotiate the sales of it without any expense to the United States. Under these offers, the most fair and reasonable which could be expected, the question was whether we would violate the public faith by rejecting the demand? It had been agreed, and was indeed most evident, that the Bank could not, consistently with its interest or safety, make any further advances, whatever the public exigencies might be. Should any unforeseen pressure occur, where was the Go ulties of the community, or for any which could be created? If, then, no injury could accrue to the public, it would seem to him mere wantonness to reject the proposition. But it had been said that the public had a right to expect accommodation from the Bank, because we were large depositors and large stockholders. How, he asked, were those accommodations to be obtained? By contracts, or without them? We had been accommodated by mutual agreement, and might be again if we honestly performed our engagements. Were we to obtain those accommodations by a violation of public faith? He hoped and believed not. Having received the property of the institution by contract, and refusing to perform our engagements, from what source was the Bank to expect reimbursement? It was answered, by taxes. Indirect taxes, however, the gentleman had constantly resisted. No taxes had been imposed the present session; none to any considerable amount probably would be. On these the gentleman did not depend; he had at all times opposed them, as a member of the APRIL, 1796.J Debt due Bank of the United States. [H. OF R. Committee of Ways and Means. These Loans first items no provision had been contemplated, then, were to be satisfied by direct taxes. It would except new loans. The taxes appropriated for become proper, then, to consider whether at all the repayment of the last had proved insufficient. and if at all, when payment might be expected These several sums, of $1,200,000, had or would by those means? Direct taxes, he said, had for- become due during the course of the present year, ever been considered as the substitutes for every and must be provided for. Even if they were of tax which had been proposed. He could not help opinion to raise new revenues, those could not be observing that it was well known that every productive during the course of the present year, House previous to the present, and he did not be- and no resource was left but to borrow; and if lieve this would be found an exception, had been money could not be got except upon the terms decidedly opposed to laying direct taxes. On the contemplated by the bill, however averse he was Committee of Ways and Means it was found that to the funding of a debt and postponing the time direct taxes, in the opinion of some gentlemen, of its payment to so remote a period, he saw at were to be resorted to. A sub-committee was present no alternative, and they were forced to appointed to consider the subject, who, after ma-acquiesce in the measure. But this was not the ture deliberation, reported that the laying and col-case with the $3,800.000 anticipations. The Bank lecting a direct tax was practicable, but that they had heretofore continued their loans in anticipahad not, and could not obtain, the present session, tion of our revenues from year to year; there the materials necessary for that purpose. The was no official paper before them to show that business finally resulted in the direction to the they meant to do so no longer, and that that instiSecretary of the Treasury to report a plan for tution had required that that sum should be paid consideration at the next session. at once during the present year. It was not contemplated by the Secretary of the Treasury, at the opening of the session; for, in his report to the House, of the 4th of December, he says: "But as a great proportion of the revenue arising from imports is subject to long credit, the customary anticipations, by means of loans, will continue to be necessary." And again, after having stated the deficiency of $1,200,000 for the same objects above mentioned, he says: "There are other loans detailed in the annexed statement which will also fall due to the Bank of the United States in the course of the ensuing year; but as they are merely anticipations of the revenue, for refunding which there exist legal provisions, they are introduced to show the course of receipt and expenditure, an the extent to which future anticipations will be requisite." And finally gives as a conclusion, "that the anticipations of the revenue which may exist at the close of the present year, must be continued for the year ensuing." He did not believe that any plan which could be devised would meet the approbation of the two branches of the Legislature. Although he should always be willing to consider the subject with candor, yet he much doubted if he, even in a time of tranquility, should assent to a mode of taxation which would be so burdensome and oppressive. But should it obtain the next session, he asked, would it be productive to the amount necessary to discharge those demands which ought now to be satisfied? It would, doubt less, with every degree of success which could be supposed to attend the measure, be some years before the payment which is now demanded in the terms of contract, could be made. In the mean time the operations of the Bank are to be crippled, and the Government left without any resource in case of the most pressing emergency. He had made these observations from a sense of public. duty, from a regard to the preservation of public faith, and without any personal interest, never having had the least property in the Bank. Mr. GALLATIN said that the question now before them was, whether they should fund the anticipations on the revenue, which had been advanced by the Bank, and amounted to $3,800,000, or whether they would, by refusing to fund that sum, declare their intention to provide means for discharging those anticipations? It was agreed on all hands that they were pressing hard on the Treasury; that they must render the situation of the gentleman at the head of that Department precarious and unpleasant; that they were a dear mode of procuring money, and that some means must be devised to get rid of them. Upon the $1.200,000 (which together with the $3,800,000, anticipations, made the sum of five millions contemplated by the bill) there was no difference of opinion. This last sum consisted of the following items: instalment due to Holland, $100,000, two instalments due to the Bank of the United States, for the Bank Stock Loan. $400,000; and due to the Banks of New York and the United States, for the Algiers Loan, $400,000. For the two Indeed the gentlemen who press the measure of funding these anticipations, seem to do it from a belief that it will be a measure advantageous to the United States. He would therefore consider the subject at present only in regard to the interest of the public, and upon a supposition that the Bank were willing, provided the instalments of the other loans were regularly paid, to continue the loans in anticipation of the revenue, and would be satisfied provided a gradual and certain mode of repayment were adopted. It was, therefore, on this ground that he differed in opinion with the gentlemen who wished the whole of the five millions to be funded. The plan of those gentlemen, in order to get rid of these anticipations, is to fund them, that is to say, in order to pay them, to borrow money by creating a stock irredeemable for twenty-three years; in other words, to postpone their payment for twentythree years. His plan was, to provide means for paying them in four or five years, and to raise a revenue, either by increasing the taxes or diminishing the expenditure sufficient for that purpose. His plan was to pay; the plan of those gentlemen H. OF R.] Debt due Bank of the United States. not to pay, but to borrow, to continue the debt for twenty-three years longer; and he would not hesitate to repeat that the effect of that plan would be to perpetuate the debt. He would not be deterred by any personal abuse, and no more by that of the gentleman from Massachusetts [Mr. SEDGWICK] than by that of any other person, from expressing his sentiments on that subject as well as on any other; and conscious as he was that personal abuse would have no influence upon him, and never could prevent his doing what he thought to be his duty, he would, without remarking on what had fallen from that gentleman, proceed to that part of the subject which seemed to be the most important. [APRIL, 1796. $957,770 65 only shifting the debt, borrowing with one hand 450,000 00 $1,407,770 65 Total amount of debt reduced by the application of the actual resources of the United States, which sum being deducted from the above sum of $2,759,282 56, leaves an actual debt of about $1,350,000 on this score. As far as he could judge from the official accounts of the year 1795, he was of opinion that the excess of expenditures over receipts for that year had created an increase of debt of at least $1,000,000, but which he thought would be found to amount to $1,500,000. A question had naturally arisen whilst those anticipations were under consideration: How had they accumulated to that amount? Some gentlemen had been at great pains to prove to the House that they were not a proof that the Debt Those two sums made a total amount of about of the United States had increased; some, indeed, $2,800,000, being the excess of expenditures over had gone so far as to attempt to prove that they the receipts, from the establishment of this Gowere no debt at all. He would beg the Commit-vernment to the 1st of January, 1796. To prove tee to recollect that neither himself nor any other his assertion he produced the following statement, member of this House had said that the Debt had abstracted from the official yearly documents: increased; they had not touched that subject upon SUMMARY STATEMENT, exhibiting the receipts the present occasion. It might be supposed that into the Treasury from Domestic resources, it was not strictly in order to discuss it, but as the question was started by the gentlemen in favor of other than the proceeds of Domestic Loans; the measure now under consideration; as their and also the expenditures of the United States charged to the said Funds other than for the intention was, by representing our financial situation in the point of view they had, to persuade repayment of Domestic Loans. this House that there was no danger in going on, anticipating and funding, spending money, and borrowing; and as the gentleman last up [Mr. SEDGWICK] had given them a statement of ten millions of dollars debt actually redeemed and extinguished, not to speak of some other millions operated upon, he found himself impelled to take up the subject, and to state what appeared to him to be our present situation. He first stated that he would compare the whole amount of actual receipts in the Treasury, as arising from the resources of the country, and excluding whatever had been received by means of Domestic or Foreign Loans, with the whole amount of actual disbursements for the current expenditures of Government and the interest on the Public Debt, excluding whatever had been applied to the payment on redemption of the principal of the Public Debt. If the expenditures had exceeded the receipts, the difference must have been supplied by borrowing money, by creating a debt. He then stated $2,759,282 56, as the excess of expenditures over the receipts, from the establishment of this Government to the 31st December, 1794, the latest period to which complete statements have been laid before the House. But from that sum must be deducted the following sums, which were applied by the Sinking Fund to the redemption of the Domestic Debt, out of the actual resources of the United States. For. he observed, he ought not to take into account what might have been redeemed by the application of moneys drawn from loans; as this was From the commencement of the present Government From sundries From duties on imports and tonnage ment $4,399,472 99 334 82 11,001 11 4,410,808 92 $719,823 25 835,617 91 14,733 33 56,401 19 293,013 84 RECEIPTS. From duties on imports and tonnage From duties on imports and tonnage - $3,579,499 06 From duties on stills and other internal From duties on stills and domestic dis $4,843,707 25 duties 231,447 65 72,514 59 Balance of Bank dividend 55,500 00 52,584 47 7,520.21 Balances arising from the late Govern ment 693 50 Balance deficient 1,480,575 05 4,702 82 1,517,650 70 $6,664,507 92 |