[Sec'y at War] Navy Department October 31^st 1798 Sir, I am honored with your Letter of the 27^th Instant, enclosing a reference of the 26^th arising out of an act of the Legislature of New York, directing a Sum not exceeding 150,000 Dollars to be laid out in Fortifications, for the defence of the City of New York, in confidence that such expenditure would be indemnified and allowed by the United States— Gov^r Jay's Letter to the President on the Subject of the said act— The President's reply— And also his Letter to General Hamilton.— The acts of Congress of the last Session, not being to be had at this place, I cannot have reference to them. If I understand your detail of the acts, on this particular Subject, there is one condition required by them, before credits can be admitted in favour of Debtor States, for sums laid out by such States in Fortifications. The condition I mean is this,— That the Fortifications so erected, with their privileges & Appurtenances, shall be, and shall be declared & established as the property of the United States, while maintained by them.— But perhaps this matter ought to be thus understood,— That tho' the President may properly authorize the expenditure of money on Fortifications by a debtor State, yet such expenditure is not to be admitted to the credit of the State, until the Fortifications so erected be declared and esta— as the property of the United States, while maintained by them. In this view of the subject, which, under all other circumstances, and the propriety of erecting without delay, Fortifications for the defence of New York, I deem the proper one, I am of opinion that the act of the President ought to be confirmed officially by the Secretary at War, that the Instructions as proposed by the Secretary at War, should be given to General Hamilton.— 1^st That the act of the President ought to be confirmed officially by the Secretary at War. 2^ndly That the Instructions as proposed by the Secretary at War be given to Gen^l Hamilton. 3^rdly That the Governor of New York be informed of the premises, and that the sums expended under the Superintendence of General Hamilton or with his approbation, not exceeding 150,000 Dollars, will be considered as coming within the meaning of the 2^nd Section of the act of the 3^d of May 1798, and be passed to the Credit of the State of New York, on account of the balance found, and reported against the said State, by the Commissioners for settling the accounts between the United States [& the Individual States] when ever the Fortifications &c— shall be declared and established as the property of the United States, while maintained by them.— I have the honor re—