Hamilton: Regarding Loan: To the House of Representatives, Feb. 25, 1794



Alexander Hamilton was a Founding Father, soldier, economist, political philosopher, one of America’s first constitutional lawyers and the first United States Secretary of the Treasury.

Alexander Hamilton was a Founding Father, soldier, economist, political philosopher, one of America’s first constitutional lawyers and the first United States Secretary of the Treasury.

Alexander Hamilton: The Works of Alexander Hamilton, Volume 3


Finance: Loan: Communicated to the House of Representatives, February 25, 1794


Mr. Sedgwick, from the committee appointed to report whether any, and what, sum may be necessary to be loaned for the purpose of carrying on the public service for the year one thousand seven hundred and ninety-four, made the following report:

That, in their opinion, it is expedient that the President be authorized to borrow, on the credit of the United States, a sum not exceeding one million dollars, if, in his opinion, the public service shall require it.

Philadelphia, February 22, 1794.

Sir:

A committee of the House of Representatives, having in charge “to report whether any, and what, sum may be necessary to be loaned for the purpose of carrying on the public service for the year 1794,” have directed me to request of you answers to the following questions.

1. Whether money collected on account of the United States, and deposited in banks, is, from the time of deposit, considered as in the Treasury.

2. Are any, and, if any, what, means necessary to subject money, so deposited, to the control of the Treasurer?

3. In case money, so deposited, is not considered as in the Treasury from the time of deposit, who is, from that time, until it passes into the Treasury, responsible to the United States?

4. Is any money now so deposited, and, if any, is the probable amount such as to render a present provision for a loan inexpedient or unnecessary?

With much esteem, etc.

Theodore Sedgwick.

The Honorable the Secretary of the Treasury.

Treasury Department, February 25, 1794.

Sir:

The following are answers to the questions stated in your letter of the 22d instant, viz.:

Answer to question the first.

All moneys collected on account of the United States, and deposited in banks, to the credit of the Treasurer, are considered as in the Treasury from the time of deposit. The steady course with regard to the standing revenue is, that the money deposited in banks passes immediately to the credit of the Treasurer. But it is necessary, to discharge the payers, that receipts of the Treasurer should be endorsed upon warrants signed by the Secretary, countersigned by the Comptroller, and registered by the Register, which is the course regularly observed.

Answer to question the second.

After moneys are deposited in banks to the credit of the Treasurer, they are in his control, though they may not legally be disbursed but upon warrants of the above description. If deposited without passing, in the first instance, to the credit of the Treasurer, the means used for placing them in his custody and disposal are warrants of the like kind.

Answer to question the third.

In respect to any moneys of the United States deposited in banks, but not passed to the credit of the Treasurer, the banks are considered as directly responsible to the United States; in the case of deposits to the credit of the Treasurer, they are responsible, in the first instance, to him; ultimately, to the United States.

Answer to question the fourth.

Only two cases are recollected, in which moneys of the United States may be considered as having been deposited in bank, without passing, in the first instance, to the account of the Treasurer. These relate—

1. To the proceeds of foreign bills sold for the Government, and received by the bank (all accounts of which are finally closed).

2. To the sum of two hundred thousand dollars, being the only sum now so deposited, which arises from the last loan had of the bank. It is left (subject to the eventual decision of the Legislature) as an offset against the second instalment of the two-million loan from the bank. The effect of the operation will be this: An interest of six per cent., payable to the bank, upon the instalment, will be extinguished, from the 31st of December last, by an interest of five per cent., payable to the bank, upon the sum borrowed of itself, and left in deposit. And it has been endeavored, thereby, to preserve consistency and regularity in the arrangements of the Treasury. The first instalment, by leaving in deposit an equal sum of the proceeds of foreign bills, was considered as effected on the 31st of December, 1792, though there was not power to consummate the payment till some months after. Hence it becomes regular, that each succeeding instalment should be paid on the last of December of each year. The provisional measure thus adopted was the only expedient in the power of the Treasury to reconcile, as far as practicable, considerations relative to the public interest and credit, with legality of procedure. Neither the sum in deposit, on the one hand, nor the instalment payable to the bank, on the other, is brought into the probable state of cash, lately presented to the House of Representatives, because they balance each other, and leave the result the same.

There are no existing sources from which moneys can come into bank, on account of the United States, except from the proceeds of the revenue, which, as far as known, are comprised in the statement before the House of Representatives. So that there is no resource, but a loan, which can supply the deficit of a receipt, in the course of the present and succeeding quarter, compared with the expenditure. Without one, a failure in the public payments is inevitable.

If what has been said should not give the committee all the light they desire, it is imagined that personal explanations would lead more fully to their object, than the course of written interrogatories and answers, which can only partially embrace the subject, and may procrastinate a right understanding of it. I am, sir, etc.,

Alexander Hamilton.

Theodore Sedgwick, Esq.,Chairman of a Committee.


Posting the entire Works of Alexander Hamilton is a project of Steven Montgomery. I’m posting these as a way to read and digest the works of Alexander Hamilton. The reader could profit by following along daily.

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