Sunday, February 28, 2010

Did President Washington Lie in Office?

Last Monday, Brian Tubbs at the American Revolution & Founding Era authored a post entitled Did President Washington Lie in Office?. Although Brian did not answer the question directly, the suggestion was that he did not.

Now I am a tremendous admirer of George Washington, but the historical evidence seems fairly clear that on at least one occasion during his presidency he was not, let us say, entirely forthcoming. The following comes from Stanley Elkins's and Eric McKitrick's wonderful book, The Age of Federalism: The Early American Republic, 1788-1800.

The story begins on July 16, 1790, when President Washington signed into law An Act for establishing the temporary and permanent seat of the Government of the United States. Among other things, the Act authorized the president to locate the ten-mile square Federal District along the Potomac River.

Six months later, on January 24, 1791, President Washington issued a Proclamation Defining the Boundaries of the District of Columbia, in which he announced the location he had selected.

The Act empowered three commissioners, to be appointed by the president, to "purchase or accept" land in the District and directed the commissioners to "provide suitable buildings for the accommodation" of the government before the 1st Monday of December 1800. The Act did not, however, provide funding for these activities. To the contrary, Section 4 stated that, "for defraying the expense of such purchases and buildings, the President of the United States be authorized and requested to accept grants of money," suggesting that funds would be obtained from sources other than Congress.

President Washington did not request funds from Congress or even mention funding in his Proclamation, nor did he seek funding thereafter. This omission was intentional. At the urging of Secretary of State Thomas Jefferson, Washington determined that financing would not involve the use of funds obtained from Congress. "Asking Congress for an appropriation, or for any other kind of assistance, might reopen the entire question of the residence."

Virginia and Maryland had promised to contribute funds totaling $192,000, but these would clearly be insufficient for the grandiose plans that Jefferson was developing. To defray anticipated costs, Washington adopted a two-part plan.

First, to acquire the land at the end of March 1791 Washington personally worked out a deal with local landowners. They would cede thousands of acres to the United States.
[U]pon its being laid off in lots the proprietor of each tract would retain every other lot. Such land remaining in private hands as might be taken for public purposes (excluding streets) would be paid for at a stipulated rate. The benefit to the proprietors, of course, was that the land they retained would be steadily enhanced in value with the unfolding of the golden future.

Second, to pay for the land to be taken for public purposes, and to fund construction, the government would auction off those lots it determined it did not need as soon as possible.
It would not be prudent to start borrowing money, at least until a sale should determine the value of the lots, and not without legislative authority. The proprietors should not be paid for public squares taken out of their property until the money for it should be raised from the sale of their own lands.

"It was at about this point, however, that everything began falling to pieces." Although Washington, Jefferson and Rep. James Madison personally attended, the first auction, held in October 1791, was a disaster. Only thirty-five of ten thousand lots were sold, "four of them taken by the Commissioners themselves in order to keep up the bidding; and the actual cash receipts came to little more than $2,000."

Faced with a result that cast serious doubt on the viability of the District of Columbia project, "Washington in his annual message to Congress referred to the affairs of the Federal City in a manner that was anything but candid":
Pursuant to the authority contained in the several Acts on that subject, a district of ten miles square for the permanent seat of the Government of the United States has been fixed, and announced by proclamation; which district will comprehend lands on both sides of the River Potomack, and the towns of Alexandria and George Town. A City has also been laid out agreeably to a plan which will be placed before Congress: And as there is a prospect, favoured by the rate of sales which have already taken place, of ample funds for carrying on the necessary public buildings, there is every expectation of their due progress.

A second sale, held a year later in October 1792, was likewise "a failure, and Washington knew it." This time he told Congress nothing in his annual message.

A third auction held in September 1793 "fared even worse than had the previous two." Washington "suspended all further public sales," but "not a word to Congress."

Facing disaster, Washington apparently approved what seems to have been an extra-legal scheme to avoid having to go to Congress:
[T]he Commissioners with Washington's approval furtively began borrowing money, or rather trying to borrow it, though not authorized by law to do so. A syndicate was formed by three men of acknowledged standing in financial circles . . . to purchase several thousand lots, pay for them in seven annual installments, sell a portion to private buyers at the enhanced prices which would presumably be created by their activities, provide the Commissioners with a monthly sum for operating expenses, and negotiate a large loan abroad, using the lots (title to which had been transferred to the syndicate before they were paid for) as collateral. The promoters, however, could not sell their lots, could not meet their installments, and could not interest any investors, foreign or domestic, in a loan of any such nature. Their entire structure collapsed, and by the fall of 1797 all three were in debtor's prison.

Having run out options, Washington "finally faced the bitter choice early in 1796 of asking Congress for authority to borrow money openly on the security of public property." Elkins and McKitrick characterize Washington's message as "a true masterpiece of evasion." Washington
transmitted a memorial from the Commissioners praying that an act to this effect be passed, and he told the House and Senate that in such an enterprise as the building of a capital "difficulties might naturally be expected; some have occurred; but they are in a great degree surmounted, and I have no doubt if the remaining resources are properly cherished, so as to prevent the loss of property by hasty and numerous sales, that all the buildings required . . . may be compleated in season, without aid from the Federal Treasury." But Washington and the Commissioners understood full well that what they were asking for was not really a loan after all, but "aid from the Federal Treasury," and the reason was the same as that for which all the other schemes had failed.

The key phrase in the memorial was the final one: "that, in case the property so pledged shall prove inadequate to the purpose of repayment, the United States will make good the deficiency." . . . The question was dragged out for four months before a loan of $500,000 [sic; the statute states $300,000] was finally authorized.

About the illustration:
In July 1790 Congress decided to move the seat of the federal government from its original site in New York to Washington, with Philadelphia as an interim capital. The unidentified satirist gives a cynical view of the profit opportunity which this presented for Philadelphians. A three-masted ship with a smaller boat in tow sails toward a fork in a river. It is being lured by a devil toward the lower fork (eventually leading to Philadelphia), which falls precipitously in a rocky cataract, and away from the fork which leads to the "Potowmack" river. A devil beckons them on, saying, "This way Bobby" (referring to Robert Morris, the alleged instigator of the move). A man in the bow of the ship remarks of the figurehead, "This looks more like a goose than an eagle's head." Behind him another says through a bullhorn, "Starboard your helm Coffer-- don't you hear your friend on the Rock." Another passenger waves a hat and shouts "Huzza for Philadelphia." A man (possibly Morris) holding the helm says, "I will venture all for Philadelphia." In the boat in tow the following conversation is in progress: "Cut the Painter [tow line] as soon as you see the Ship in danger." "I wonder what could have induced the Controller to sign our Clearance." "Self gratification I suppose for it cannot be any advantage to the owner." "If they had come round in the S. Union the constitution would not have been lost." "They might have known that the Ship would have been in danger by comeing this way." "Ay, Ay, I had best do it [cut the rope] now for I believe she is going to the devil." Below the falls, three men in a dinghy say, "If we can catch the cargo never mind the Ship," "Keep a sharp look out for a majority and the treasury," and "Ay, Ay that's what we are after."

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