To Wilhem & Jan Willink, Nicolaas & Jacob
van Staphorst, and De la Lande & Fynje
The Hague Feby: 23d: 1784.
I receiv’d with Pleasure, your Favour of the 16th. which informs me of the Engagement of the Undertakers for a Million.
I have receiv’d Letters from Some respectable Gentlemen, at Amsterdam, containing a Remark upon the Plan, which I beg Leave to transmit you in the Words of one of the Letters.1 “Il me semble que selon la teneur dudit Plan, il ne convient guere, pour ne pas dire, point du tout, a un Négotiant, d’y placer des Fonds puisqu’il serait possible, qu’il en fut privé pendant 13 Ans, et cela par la Raison que le dernier tirage n’aura lieu qu’a l’Expiration de ce terme. J’ai donc pensé que si les 7. tirages differens pourroient avoir lieu la 1re: année; tout Négotiant tant soit peu à son aise seroit dans le cas de tenter la fortune. Si pour ƒ :10,000: par exemple qu’il y aura mis il n’avoit d’autre sort, que d’en sortir, avec ses dix Obligations; sans aucune prime, il ne tiendrait qu’a lui de les vendre, d’employer de nouveau cette Somme dans son commerce: et quoique d’aprés cette maniere seule il convient aux Negotians d’y placer des fonds, cela ne conviendra pas moins aux Rentiers.” “plusieurs de mes Amis m’ayant demandé mon Avis, ont declarées ne vouloir s’y interesser si le susdit changement n’avait lieu. Au reste le Plan est trés bien Combiné et generalement gouté. et je ne doute pas que si le léger changement que je prens la Liberté de vous proposer avoit lieu, la Négotiation ne fut bientot remplie.”
I answered the Gentlemen that I would communicate the Observation to you in whose Experience & Judgment I confide.
A Gentleman here at the Hague, sent me a Message that he would be glad to take 75 Obligations instead of 50 which had been promised him
very respectfully &c.
LbC in JQA’s hand (Adams Papers); internal address: “Messrs: Wilhem & Jan Willink / Nicholas & Jacob van Staphorst / & de la Lande & Fynje.”; APM Reel 107.
1. Only one letter to JA commenting on the loan plan has been found and that was from J. Franc van den Corput, dated 21 Feb. at Amsterdam (Adams Papers), which Antoine Marie Cerisier had forwarded to JA with his letter of 21 Feb., above. What follows are verbatim extracts from Corput’s letter of 21 February.
Translation: It seems to me that according to the terms of the aforementioned plan, it would be hardly suitable, not to say absolutely unsuitable, for a merchant to place his funds there as it is possible that he would be deprived of them for thirteen years, because the final drawing will not occur until the expiration of that time. I therefore thought that if the seven different drawings could take place during the first year, then any merchant who was reasonably well-off would be in a position to try his luck. So if he put in ƒ 10,000, for instance, he would have no other way out but with his ten obligations. Without any premium, the choice would be his to sell them to use that sum anew in his business. And although in this manner alone it would be suitable for merchants to invest their funds, it would be no less appropriate for other investors. Several of my friends, having asked my advice, declared that they would not be interested unless the abovementioned change were made. As for the rest, the plan is well put together and generally well received, and I do not doubt that the transaction would soon be complete if the slight change that I take the liberty of proposing to you was made.
Corput’s objection revolves around the lottery drawings for additional loan obligations to be held in 1785, 1787, 1789, 1791, 1793, 1795, and 1797, for which see the consortium’s 4 Feb. 1784 letter and the letters from Wilhem & Jan Willink of 4 and 16 Feb., all above, and the loan contract of [9 March], below. Thus premiums would be ƒ 50,000 at the first drawing in 1785, rising to ƒ 200,000 in 1797, and totaling ƒ 690,000 through all seven drawings. Depending on his luck, or lack thereof, an investor could wait thirteen years to learn whether or not he would be receiving a premium on his investment. If the investor did not win additional obligations in the lottery, his principal would be tied up in the obligations that he had purchased, and his only return during that period would be the 4 percent yearly interest. If, however, all of the drawings were held in a single year, but with the payment of the premium being in the year designated for the drawing, then at the end of the twelve months the investor would know if he had won a premium and, if he had not, sell his obligations to another investor, thereby being without his principal for only one year rather than thirteen. For the consortium’s rejection of Corput’s proposal because it was seen as favorable only to speculators, and also because the loan had already been opened under the terms to which Corput objected, see its letter of 25 Feb. 1784, below.