ment under his contracts, through the agency of Messrs Goldsmids. This produced an interview the next day between the Comptroller of the Navy, Messrs. Goldsmids, and Mr. Glenny, and the plan of drawing navy bills for the purpose of raising money was thereupon concerted. -The first set of these bills for 100,000l. was drawn on the 23d of Oct, 1800, (App. No. 1.) payable to Mr. Cornwall Smalley; but he disapproving of his name being made use of, these bills were destroyed, and others for the same amount were made out in the name of Mr. George Glenny. (App. No. 3.) It was afterwards thought right to make such bills payable to Messrs. Donaldson and Glenny, the firm of the house to which Mr. Glenny belonged.--The total amount of these bills, issued between the 24th of Oct. 1800 and the 5th of May, 1802, (App. No. 4.) when the practice of drawing such bills was discontinued, was 4,300,0001., besides ninety days interest, which was added to give them the semblance of regular bills.-There was, however, this essential difference between them; the regular bils stated the particular kind of stores, or services, for which they were given in payment; these bills expressed only, that they were for "sundry naval services." (App. No. 5.)---Not being aware of any power in the Navy Board to draw bills of this description for the purpose above-mentioned, we sought information from the Comptroller of the Navy on the subject, (App. No. 1.) but he declined to answer the question put to him, under that clause of the act of parliament by which we are appointed, which provides, that no person shall be obliged to answer any ques tion which may tend to criminate him, or expose him to pains or penalties; referring us for the authority under which he and the Navy Board had acted, to his Majesty's order in council in June, 1796, for regulating_the duties of the several members of the Navy Board, and to the patent by which they are appointed. From these documents no such authority is derived, nor do zve conceive the Navy Board can, without the express authority of Parliament,-issue bills to raise money to be applied to the service of the navy, or any other service.It is not meant by the observations which our duty requires us to make on this transaction, to intimate, that it was undertaken with any indirect view, or to charge any abuse in the execution of the plan, after it was resolved upon; it is the measure itself which we have to notice. It is proper likewise to state, that these bills were issued under the directions of the Lords Commissioners of the Treasury, signified: at

the time of each issue by letters from their secretary to the Navy Board, which were inclosed confidentially to the Comptroller, and the produce of the bills was paid to the Treasurer of the Navy; the letters entered in the Appendix shew how this business was conducted. (App. Nos, 6, 7, and 8.)--We inquired whether the difficulties in obtaining money for the service of the navy, stated to have existed in the years 1800, 1801, and 1802, arose from any unusual deficiencies in the navy estimates for those years; the Comp troller could not speak to the estimates, (App. No. 1.) but informed us, that the difficulties which led to the adoption of this plan were owing sometimes to a deficiency of money in the Treasury, and sometimes to the naval supplies being exhausted, which he be lieved to have been the case in Oct. 180). The Paymaster of the Navy stated (App. No. 9.) the general occurrence of official difficulties in applications for money, and that such difficulties might have occurred at the period when these bills were issued; although he did not recollect any correspon dence of the Treasurer of the Navy with the Treasury or Navy Board, which led or related to the issue of these bills.--It was certainly proper that the public credit should be supported, but we cannot admit that this measure was indispensably necessary for that purpose; nor can we allow the validity of the reason given for it by the Comptroller, (App. No. I.) namely, that no funds were exclusively set apart for the payment of ninety-day bills, the amount being uncer tain; it is in the nature of the thing that an estimate should be uncertain. All the supplies for the navy are annually voted by par liament on estimate, and the amount paid by ninety day bills, forming no inconsidera. ble part of the navy expenditure, must of course be included in the general provision for navy services.--We were led by the examination (App. Nos. 1 and 5.) of the comptroller and chief clerk in the office for bills and accounts, to imagine that the advantage which might accrue by the interest on the bills, from the time of their date to the time of their being, negotiated, was to be the remuneration to the brokers for their trouble; (App. No. 10.) but by an account afterwards laid before us, we found, that they had made the usual charge of one-eighth per cent. commission, and had given credit to government for the interest on the days elapsed before the bills were negotiated. The amount of Messrs Goldsmid's coimnission on the negotiation of these bills was 5,3751.

On examining Messrs. Goldsmid's account, it appeared in the first.emity, that

6051

they had not given credit to the public for the full amount of the produce of the bills at the time of negotiating them. But this is stated by Messrs. Goldsmids (App No. 11.) to have arisen from their having advanced the money before the bills were actually ne gotiated. This circumstance could not be discovered from any thing on the face of the account. We are of opinion, that all accounts rendered to the public boards, should be made out with such particularities as may be necessary to a clear exhibit of each item, which will greatly facilitate the examination of the accounts.

LOSS ARISING FROM THE MODE OF PAYING THE INTEREST ON NAVY AND TRANSPORT BILLS.

By an act of the 34th of his present Ma jesty, cap. 21, it is enacted, that after the 5th day of April, 1794, all navy and victualling bills shall be made payable on a certain day, not later than fifteen months from the date of each bill; and that the interest on such bills as shall carry interest, shall commence from the day on which the said bills shall be registered. And by a subsequent act of the 37th year of his present Majesty, cap. 26, it is directed, that all navy, victualling, and transport bills, shall be payable on a certain day, to be expressed in each bill, which day shall not be later than three calendar months from the day of the date thereof; and that every such bill shall carry an interest after the rate of three pence and one halfpenny per centum per diem, to commence from the day of the date of each bill. --Upon the passing of the last act, the commissioners of the victualling transmitted to the Navy Board an account of victualling bills payable in course, which had been registered in the month of Jan. 1797, noting them to become due in ninety days from the day of the date, which day was not included.

-The Navy Board, on receipt of the account, stated their objections to this method of computation in a letter to the Victualling Board, (App. No. 12.) in which they observed, that all bills made out under the same act, should be uniform in all their terms; that on all occasions dependent on time, it was customary to include both the first and last day; that this mode of compating interest on the navy bills had prevailed during the late act, was followed in the Transport Office, and was in conformity with the present act. The commissioners of the victualling, in reply, (App, No. 13.) forcibly controvert these positions. They state, that it had always been the custom of their office not to include the first and last

[605

days in the calculation of interest, that until rule had been departed from in reckoning the interest on the bills issued under the 34th of his present Majesty, and which was done at the suggestion of the officers of the Navy Board; hat the rule now again adopted in the Victualling Office was consistent with that universally observed in respect to bills of exchange; to which, except in the instance of the three days grace usually taken, they understood these bills were, as nearly as possible, to be rendered similar: that they conceived their mode to be conformnăble to the act of parliament, and that it had not occasioned the slightest remonstrance from any persons, receiving or holding their bills. To this letter no answer appears to have been returned.---In pursuing different lines of conduct on the same occasion, both the boards could not be right; and, as the interest of the public was committed in the question, it might have been expected that a reference would have been made to the superior board for a decision, particularly by that board whose conduct, if erroneous, subjected the public to a loss.--It does not, however, appear (App. No. 14.) that this difference produced either reference or inquiry; and the rule adopted by the Navy Board, of making the ninety-day bills payable on the eighty-ninth day from the date, continued in practice in that and the Transport Office until the month of Dec. 1801.On the 12th of that month a minute (App. No. 15.) from the committee of accounts (one of the committees into which the Navy Board is divided) stating, that doubts had been suggested of the propriety of the mode in which ninety-day bills issued from that office had been made out, was referred to the board at large. In this minute the committee set forth the propriety of their present mode of proceeding, grounded on the established practice of their office, and the necessity of keeping faith with the merchants, who had been used to this mode of computing the interest on their bills. They also express their doubts whether any saving would accrue to the public from the day's interest in question, on a presumption that the contractors reckon upon it in the terms of their contracts; yet, notwithstanding these reasons offered in favour of the existing practice, the committee refer to the conside ration of the board, whether it might he proper at that time to depart from the an"cient usage of the office, and make an al"teration in the computation of the time, "the ninety-day bills are made out to run, in "conformity with the Vacid Ring Office, Viciushing " and the custom of merchants in discount

ing bills."--In consequence of this minute the Navy Board, upon the 18th of the same month, came to a resolution, that the navy bills issued in future should not bear interest for the day on which they are dated, agreeably to the practice with regard to exchequer bills, and bills made out at the Victuallingffice, and direct this change to commence on the following day---Previcusly to our having any knowledge of the above minute and resolution, we had desired information of the Navy Board as to the causes of the rejection, and subsequent adoption, of the mode in use at the Victualling Office, of excluding the day of the date in reckoning the interest on the ninety-day bills. The rejection of that mode is no otherwise accounted for, (App. No. 16.) than by observing that they did not see reason, on receiving the letter from the commissioners of the victualling, to change the constant practice of their office since the first establishment of navy interest bills, and which extended to all payments of salary, pensions, full or half-pay, and all other allowances issued from that department. The reasons assigned for the subsequent alteration, are, that an uniformity might pervade the several public boards from which bills of a similar description are issued; and that when the time arrived at the conclusion of the late war, that many contracts were put up, and many more were intended to be so, it was thought a good opportunity for making an alteration in the mode of paying the interest on navy bills, which could not, without imputation of departing from an universally understood custom, be altered whilst the contracts were pending. It is likewise intimated to be immaterial whether the bills were paid one day sooner or later, the sum paid for the interest being the same in one case as the other. We shall now make some remarks on the above proceedings of the Navy Board, and afterwards observe on the bills drawn by the Commissioners of Transports.

Although the Navy Board might have been uninformed of the general practice of computing the discount on bills of exchange, and the mode of calculating interest on exchequer bills, yet, when the Victualling Board so strongly pointed out to them that they were in error, and that error injurious to the public, we think they should have instituted an inquiry: had they done so, they must have come to the same conclusion then which they did afterwards and on the same grounds; for the method of computing interest on exchequer bills was the same in, 1797 as in 1801, and the practice of the

The

Victualling Board they were before fully ac quainted with, and had rejected, ——It is certainly the rule in the paying of wages, salaries, &c. as observed by the Navy Board, to include both days, but nothing is gained by this to the person receiving such payment, as his time is afterwards reckoned from the day next to that included in the former ac count, so that in the course of the year he is only paid for three hundred and sixty-five days; but by the Navy Board's mode of making the ninety days interest payable on the eighty-ninth day, a person might obtain three hundred and sixty-nine days interest in the course of the year; or, by following up that mode, a day's interest might be gained every time individuals changed their security, provided the money was again lent on the day of its being received. faith to be preserved with persons whose contracts were pending, is a circumstance much insisted upon in the Navy Board's let ter to us, and in the minute of the. Committee of Accounts. In order to judge what, influence that consideration could have had upon the resolution of the Board at the time it was carried into execution, we called for an account, shewing what standing contracts had determined between the 1st of October and 19th of December, 1801, (the day on which the alteration took place) and an account of such as were then in force, and continued to be so for twelve months. By the return made to our precept. (App. No. 17.) it must appear how little the consideration of keeping faith with the con tractors could have influenced the decision of the Navy Board, as only two contracts, of small consequence, had terminated with in the first-mentioned period; and one hun dred and twenty-three contracts were remaining in force a year after the change, beyond which time we thought it useless to earry our inquiries; and the change being ordered to take effect the day after the resolution, operated immediately upon all these contracts, contrary to what was alleged to be the common understanding of the parties. It further appeared, by the examination of the Secretary to the Navy Board, that although the contractors were not consulted on the alteration, they did not object to or complain of it, confirming in this respect what had been observed in the Letter of the Victualling Board, The Commissioners of Transports, (App. No. 18.) in answer to our application to them on the subject, informed us, that they had allowed interest both for the day on which the bills were dated, and that on which they became payable, because the persons to whom pay

ments were made by ninety day bills were, in strictness, entitled to their money upon the completion of the services performed; but that an interval of several days almost invariably occurred whilst their accounts were under investigation, and the bills preparing; and because, according to their construction of the act of parliament, they conceived it to have been intended that the bills should be so paid.If the Transport Board thought themselves justified in their practice by their construction of the act, they should not have departed from it without legal advice, or proper authority. If a compensation, in proportion to the delay, was looked for by the contractors, one day's interest was not sufficient. It would seem that this Board followed the course taken by the Navy Board, and altered their practice when they found that the Navy Board had resolved upon a change. We rather think the contractors did not look for any anticipation of payment, as a compensation for the loss of time whilst their accounts were passing, some delay in which must necessarily occur, and that it had not then, nor has since had, any weight with them in regulating the prices at which they made their tenders to government.The following is the amount of ninety-day bills, issued between the 26th of Dec. 1799, and the 19th of Dec. 1801, at an interest of three-pence halfpenny per cent. per day, allowed both for the day of the date and the day of the payment of the bills: Issued by the Navy Board

(App. Nos. 19 & 20) £19,747.835 11 11 Transport Board 6,305 976 11 7

£26,053,812 3

Loss of one day's interest

6

on the above sum £3,799 10 3 Although the loss of between 7 and soul. per annum adds little to the amount of the national expenditure, yet it is because the necessary expenditure is so great, that all possible care should be taken to avoid any improper increase of it, such as we think this to have been. To the public, one day's interest on ninety, operating on so many millions, was a consideration; to each individual it was not.We think it right to observe, whenever a difference of opinion may arise between the Naval Boards on the construction of an act of parliament, or any other general regulation, that such diflerence of opinion should be laid before the Lords Commissioners of the Admiralty, for their decision thereon, as the pursuing of different lines of conduct must tend to pro;

duce dissatisfaction, and will in general be found to be injurious to the public interest.

MONEY IMPRESTED BY THE NAVY BOARD,

FOR SECRET NAVL SERVICES.

On examining the book containing the registry of bills issued by the Navy Board, we discovered that considerable sums had been advanced, by way of imprest, during the late war, for the performance of secret naval services. The imprest against one of these parties, amounting to 100.000). having been taken off, and the account closed in the books of the Navy Office in a manner which appeared to us irregular, we enquired into the circumstances of the transaction.-From the examination of the Comptroller of the Navy, (App. No. 1.) we learned that this sum had been advanced by the Navy Board, in consequence of directions given by the Lords Commissioners of the Treasury to the Comptroller, which were marked "Most Secret;" that 5,0001, had been repaid into the hands of the Treasurer of the Navy, and that the remaining imprest of 95,000l. had been cleared, or taken off, by the direction of the Lords Commissioners of the Treasury, signified by their secretary's letter to the Navy Board, (App. No 21.) dated the 1st of May, 1801. ---By His Majesty's Order in Council for regulating the Navy Office, dated the Sth of June, 1796, the Comptroller of the Navy is authorized to execute such secret naval services as may be directed by the First Lord of the Admiralty for the time being; and, after the services are performed, the Comptroller is required to communicate his orders, and his proceedings thereon, to the Navy Board for their concurrence. In case a majority should disapprove of any part of his conduct, they are to submit the whole, with the reasons for such disapprobation, to the First Lord of the Admiralty, whose decision thereon is to be considered as final. Upon this order in council, instructions were drawn up by the Lords Commissioners of the Admiralty for the conduct of the Navy Beard. and they were directed to conform thereto by their lordships order of the 17th of Aug. 1790, in which there is an omission that we think it right to notice. It is not stated in that order, under whose directions or authority the Comptrolier is to perform the secret services therein-mentioned; the order runs thus: "All contracts are to be made by the "Board at large, those for s cret services only excepted, which are to be entrusted "to the Comptroller, who is hereby authorized to execute such duty." Whereas

i.

in the order in council, after stating that contracts of every kind are to be made by the Board at large, those for secret services excepted, which are to be entrusted to the Comptroller, it is expressed, "That the "secret services above mentioned should be σε "performed under the authority of the First "Lord of the Admiralty for the time being." This omission should be rectified, as we are of opinion, it is of considerable importance that the several subordinate Boards should have precise information not only of the extent of the authority vested in them, but of the authority under which they are to act.

The Navy Board, by their patent of appointment, are required to follow such orders and instructions as they may from time to time receive from the Lord High Admiral, or the Commissioners for executing the office of Lord High Admiral for the time being; and it does not appear that they are authorised to follow directions which may be given to them by any other department of government. It is, however, stated by the Comptroller and the Secretary, (App. Nos. 1 & 14) that the Board have been in the constant practice of receiving and following directions from the Lords Commissioners of His Majesty's Treasury, in certain cases, which they have enumerated. It also appears, by the account entered in the Appendix, No. 4. that 16,0001. have been advanced by the Navy Board to Messrs. Hammersley and Company for the performance of a secret naval service, which was directed by one of His Majesty's principal Secretaries of State. If it be judged expedient that the Navy Board should follow the directions of any other department of government than that under which they are placed exclusively by their patent, we think they should be furnished with specific authority to that effect; and that they should in no case depart from their instructions without the sanction of the Lords Comrs. of the Admiralty.It is stated by the Comptroller, that the services for which the sum in question of 100,000l. was advanced, were not performed under his orders, but under the directions of the Lords Commissioners of the Treasury, by whose authority the imprest was cleared, without any account of the expenditure of the money being rendered to the Navy Board.--It is most pro bable that a communication of the circom. s'ances of this transaction was made to the First Lord of the Admiralty at the time of advancing the first part of this money; it does not however appear, from his Lordship's examination, that he directed the measure; (App. No. 22.) and the First

Lord of the Admiralty, at the time the last advance was made, and when the imprest was taken off, (App. No, 23.) was altogether uninformed of the transaction.——— Notwithstanding the time which has elapsed since the advance of the money, and the injunctions of the order in council, to find that the Comptroller has not communicated to the Navy Board his proceedings, in this business, or even made them acquainted wiź the nature of the service performed. The reason given by the Comptroller for this departure from his instructions is, that the service is of so delicate a nature, that he does not think it prudent to make the cir cumstance public.--After this declaration we forbore to inquire into the purposes to which this money had been applied, and, of course, have no evidence of the nature of the services performed; yet we bare reason to believe, that they were of such a nature as to come within the description of naval services. There are circumstances, connected with the public interest, which have induced us to with hold the names of the parties to whom the money was ad vanced, and the nature of the service to which we apprehend it had been applied; but, as the only security which the public have for the propriety of the disbursements of public money by the Comptroller of the Navy, which may be considered of a secret nature, is the ultimate investigation of the Navy Board, to which all transactions of this nature are directed by the order in council to be submitted, upon the comple tion of the services, we think so salutary a regulation ought not to be departed from.

-By the account entered in the App. No. 4, it will be seen that other sums have been advanced by the Navy Board for the performance of secret naval services; but as these services are not yet terminated, we can only recommend, that as soon as they are completed, the communication, directed by His Majesty's Order in Council, be made to the Navy Board. (Signed) CH. M. POLE.

EWAN LAW.

JOHN FORD.

HENRY NICHOLLS.

(4.5)

(L.S.)

WM.MACKWORTH PRAED. (L.S.)

Office of Naval Inquiry,

No. 24, Great George Street, 4th March, 1805.

APPENDIX.

No. I.
THE EXAMINATION OF SIR AN-
DREW SNAPE HAMMOND, BT. COMP.
TROLLER OF THE NAVY'; TAKEN UFO
OATH, THE ÔTH OF JUNE, 1804.