In an Unpublished Letter to Creditors of the Newly Formed Government, Secretary of the Treasury Alexander Hamilton Works to Get His Men on the Ground the Funds They Need

During the Revolutionary War, it was a widely understood defect in the Articles of Confederation that the Federal government was virtually powerless to raise monies. A main goal of the new U.S. Constitution was the correction of that defect, and with the support of advocates like Alexander Hamilton and James Madison, it established a means to fund the country by authorizing Congress to collect taxes to raise revenue.  This revenue would come mainly from tariffs and tonnage duties on goods coming into the U.S., which would be collected at customs houses at the ports of entry. On July 4, 1789, an act was passed formalizing this, allowing for the collection of import duties. The Collectors of these customs houses were appointed by President George Washington, and were men of substance who could be relied on (for example, Signer of the Declaration of Independence William Ellery was the first Collector in Newport, R.I.). In September of 1789, in one of the first substantial Acts of Congress passed and signed by President Washington, the U.S. Treasury was formed. That same month, Alexander Hamilton became the first U.S. Treasury Secretary. This put in place an agency to handle the nation's finances.

Hamilton turned to creating a system that would stand the test of time.  The customs houses scattered in the many port towns throughout the states were the front lines, assessing and measuring cargo, determining value, and collecting the taxes, as well as disbursing funds.  
In the wake of the onset of war in Europe in 1793, 1794 was a major year for the bolstering of American defenses, when major fortification of ports and harbors in the United States was first undertaken in 1794. On March 20, 1794, Congress enacted “An Act to provide for the Defence of certain Ports and Harbors in the United States.” Hamilton's agents were given funds to disperse up to a certain amount, Boston for instance receiving $2,000.

With regard to a subsequent bill funding this work, as Hamilton noted in a letter to Washington on June 10, "I need only observe as to the necessity of making the loan, that the objects for which the Act provides will call for immediate expenditures—and that the funds contemplated will only accrue from revenues to be collected in future."

The Naval Act of 1794 was passed by the United States Congress on March 27, 1794 to reactivate and establish a permanent standing naval force, which eventually became the United States Navy.  However, funds for this Act were not appropriated until June of 1794.  At that time, the government gears moved swiftly to find supplies and men to build the first six frigates up and down the coast.  There are many, many letters from late June through early July to collectors and agents aiming to kickstart this work.  On the 16th of June, a letter was written by Tench Coxe, Treasury's Commissioner of Revenue, to Jedediah Huntington, Collector at New London, CT, a larger customs house than New Haven, to procure 60 Axemen & 30 Ship Carpenters in the Ports of Connecticut, Rhode Island & the Western Coast of Massachusetts…"  Likewise on the 5th and 7th of July, Coxe wrote his naval agents requesting "all the White oak, yellow pine & treenails" they could find.  These are just two examples.

But with the appropriations bill lagging far behind the establishment bill, some of funds needed by the latter would likely need to be dispersed before the checks could be written by the Treasury.  How would Hamilton accomplish this?

In March of 1794, Hamilton issued the "Report on Rules and Modes of Proceeding with Regard to the Collection, Keeping, and Disbursement of Public Monies…"  In it, he wrote, "It occasionally happens, that the omission or delay of appropriations by law, renders it impossible, to satisfy, in regular course, demands upon the Treasury, which have been incurred pursuant to law, and the satisfying of which is essential to the public credit and service.  In such cases, the course has been, for the Secretary of the Treasury to request informal advances by the Banks, to the persons, to whom the payments are to be made, to be reimbursed, when provision is made by law. These advances have been made in the confidence, that the Secretary of the Treasury would not request them, but in cases, in which there was a moral certainty of a future provision, and in which, justice and good faith would necessarily oblige the Legislature to make it."

Letter signed, July 7, 1794, on his Treasury Department letterhead, to the President and Directors of the Office of Discount and Deposit at New York.  "Gentlemen, I have authorized David Austin Esquire, Collector of New Haven, to draw upon your institution for any sum not exceeding Two Thousand Dollars.  If Mr. Austin therefore should make any use of this credit, you will be pleased to honor his draughts within the limitation mentioned and transmit them to this office. Upon receipt of which the Treasurer will be directed to remit you a check for the amount thereof."  This letter has been with the same family for generations and appears in none of the many publications of Hamilton's known letters  It is unpublished and its existence has been unknown.

On the 7th of July, Tench Coxe had separately written to two other agents to hire help for the building of frigates.

While the precise context of this letter cannot be known with certainty, given that nearly all of Hamilton's communication with his Collectors and agents during this time related to the fortification of ports, wood and supplies to be acquired for this purpose, and the building of frigates for the new Navy, this letter very likely relates to supplying one of these efforts.  Given Coxe's letter of the 16 of June, along with the letters of the 5th and 7th of July, we believe Austin was part of this process of supplying men and tools for the Naval Act.  It is important to remember that only expenses requiring immediate dispersal would have been the subject of this form of borrowing.