I. The First1 question is Whether the application of the Executive of France for 3. millions of livres = 544,500 Doll. is to be complied with?

But to be in condition to solve this, some preliminary Queries and Observations are necessary.

Qu. Has the Legislature done their part, by providing the money?

The act of 1790. Aug. 4. c.34. §.2. authorized the President to borrow 12. Millions of dollars, and appropriated them to payment first of arrears and instalments of the foreign debt, and then to the residue of that debt.

The act of 1790. Aug. 12. c.47. authorized the Presidt. to borrow 2,000,000. D. to purchase up the public debt. It appropriated certain surplusses of revenue to the same object, and put the application of the whole under the direction of a board with the approbation of the President.

19,550,000 florins were borrowed under the authority of the two acts, so that any part of them might be applied to either purpose. But the surplusses of revenue having sufficed for the orders of the Board for the sinking fund they never called for any part of the loans. *The whole therefore of their nett produce may be considered as appropriated to the foreign debt.2

The Treasury Report of Jan. 3. 1793. states the application of the whole of this to it’s proper purposes except (page. 3) a balance of 5,649,621f-2s-8d which is carried on to page 5. and there stated as equal to 2,304,769D.13. Part3 of it is stated there to have been applied to purposes4 to which it was not5 applicable by law6 part transferred to the Bank for purposes not explained. We must therefore consider it as a loan by one fund to another, to be replaced afterwards.

There follow however in the same page two Items, fairly chargeable on the Foreign fund. So that on the whole the Account stands thus.

		D
Borrowed from the Foreign for the Domestic funds		2,304,769.13
Paid by the Domestic for the	D
Foreign fund to St. Domingo	726,000
to foreign officers	191,316.90	917,360.90
Balance in favor of Foreign fund		1,387,452.23

It appears then that the Legislature has furnished and appropriated the money, and if it is not in hand, it is by the act of the Executive departments.

The Executive (into whose hands the money is confided) has the power, tho not the right, to apply it contrary to it’s legal appropriations.

Cases may be imagined however where it would be their duty to do this. But they must be cases of extreme necessity.

The paiment of interest to the Domestic creditors has been mentioned as one of the causes of diverting the foreign fund. But this is not an object of greater necessity than that to which it was legally appropriated.7 It is taking the money from our foreign creditors to pay it to the domestic ones, a preference which neither justice, gratitude nor the estimation in which8 these two descriptions of creditors are held in this country, will justify.

The payment of the army and the daily expences of the government have been also mentioned as objects of withdrawing this money. These indeed are pressing objects, and might produce that degree of distressing necessity which would be a justification.

But the possibility that our domestic finances can be in such a state of distressing necessity as to oblige us to recur to borrowed money for our daily subsistence, will be doubted on the ground of the9 communications to the last and present session of Congress.

It will be denied on the ground of the Treasury Report of Feb. 4. pa. 5. and 13. where it appears that 614,593. Dollars of this money has been drawn away, not to furnish present necessities, but to be put out of our power for 3, 6, and 9 months. It was ready money there; it was payable there; it has been drawn here; and the draughts (which are always a ready money article) have been parted with on long credit. Why?

If it should appear that the Legislature has done their part in furnishing the money for the French nation, and that the Executive departments have applied it to other purposes, then it will certainly be desireable that we get back on legal10 ground as soon as possible, by pressing on11 the Domestic funds12 and availing ourselves of any proper opportunity which may be furnished of replacing the money to the foreign Creditors. Does the present application from the French government furnish such an occasion? If it be an arrearage, it does? If it be an advance, we shall be more13 free to calculate our own necessities against theirs. The next Question then is

Are we in arrears for instalments or interest with France? On this head I cannot pretend to accurate information.

From the best I can get at, it would appear that we were in arrears with France at the close of 1792. 668,491. Doll.

But it is possible that certain sums of interest for the years 1786, 7, 8, 9, or some of them, may have been paid. Of this I am not informed.

If they have been all paid, it will make a deduction of	294,666 D.
and will reduce the balance at the close of 1792 to about	373,825
then add instalments and interest payable in 1793 about	628,008
makes the whole sum payable now, and shortly to France	1,001,833

Still this statement may be liable to corrections from the treasury, but I think they cannot be considerable. The next question then is

Have we the money on hand?

	ƒ	D
The balance remaining in Amsterdam [see Report Jan. 3. pa. 3.]	407,287 =	166,153
Cash in the Banks and Treasury [see Rept. Feb. 4. pa. 13.14 first 3. articles]		1,567,325
makes the whole sum actually in hand		1,733,478

But15 if the Treasury from impending calls of more distressing necessity cannot repay to the Foreign fund the sum of 378,347 D. [which with the 166,153. D. in Amsterdam will amount to16 544,500. D.]17 in part of what it has borrowed from that then it becomes a question

Whether the President should not instantly set on foot a loan for the 378,347. D.18 under the authority of the act for borrowing 12. Millions, in order to comply with the application, if it be an arrearage?

A famine is probable in France.

The Ministers there will throw the blame19 on any shoulders to clear their own.

They will shift it20 on us before the tribunal of their own people.

We have interests21 which will be injured by this.

Such a charge on their part, may raise one in this country on the Executive.

To what extent this may be pressed, will depend on the22 events which will happen.

The diversion of this money from it’s legal appropriation offers a flaw against the Executive which may place them in the wrong.

II. The Second Principal question is Whether and How far we may undertake to pay in advance of the exigible part of our debt to France?

The law authorizes the President to pay the whole, if it can be done on terms advantageous to the U.S.-yet it is left discretionary in him, and the point of discretion is the one to be considered.

Before a judgment can be formed as to future payments, it seems necessary to disentangle the Foreign from the Domestic fund, that the balance of the former may be known, and in hand, to be operated on.

This done, we shall see our way clear,23 to judge When and to What extent to open a new loan.

The annual instalments and interest will, for some years to come, be between 5 and 600,000. Doll.

Perhaps it may be found no bad rule (subject however to the circumstances of the time) to borrow the preceding year what is to be paid the next, and to pay as fast as we borrow.

This will keep us part of a year in advance, will be grateful to our creditors, and honorable to ourselves.

Circumstances may arise which may render it expedient to borrow and pay faster, perhaps the whole.

The state and prospect of things in France at the time24 will materially influence this question.

Feb 12. 1793.