From William Short
Paris August the 3d. 1790
I have had the honor of recieving both the original & duplicate of your letter of the 29th. of May. Mine of the 4th. of April had not then reached you. In it I mentioned the subject of a conversation I had a few days before with Mr. Necker1—the hopes he had founded on the unauthorized loan made at Amsterdam2 & his impatience, occasioned by the distressing penury of French finances, to know the decision of Congress on that subject. Since that period the situation of finances here has deteriorated, & of course his impatience increased. He is persuaded of the zealous desire which Congress have always manifested to discharge that sacred debt. He knows their possession of the loan in Holland,3 & concludes there can be no doubt that it will be immediately appropriated agreeably to his wishes. It was on this reasoning he founded his expectations, mentioned in my former letter, that I would give him an order on the Bankers4 for its amount. There was no difficulty in shewing him the impossibility of my giving such an order; but it was evident that he counted on it from Congress.
I find from your letter that no decision will be taken relative to the loan until the arrangements of finance in general shall be completed. This would seem to involve a doubt as to its appropriation agreeably to the hopes of Mr Necker. Still as it is only a doubt I have not communicated it to him. Should it be the design of Congress to annul a part of the French debt by this loan the policy of its being done without loss of time is evident, in order to avoid the paying interest both on the loan & the part of the French debt to which it would correspond.
You will think it advisable also perhaps (in case of this loan being adopted to discharge a part of the foreign debt) to appropriate such part of it as may be necessary to the payment of the principal & interest due the foreign officers here.5 There are two reasons in favor it. 1. that the interest on what is due them is greater than on the other debts & 2. because being dispersed in different parts of Europe their complaints of a want of punctuality, are not only more loud, but more disseminated, than those of the other creditors. Besides the sum being inconsiderable, & due for the most part to French subjects, it would not be ill regarded. And particularly if Congress were to shew a disposition to transfer the remaining part of the French debt to Holland. This I still think might be done with very little, perhaps without any pecuniary sacrifice—& the political advantages with which it would be attended, are too evident to need being mentioned.
Complaints have been made to ministry by some merchants of Havre trading to the United States, of the difficulties with which they meet there, relative to tonnage, & particularly in going from one State to another. These complaints have not come to me officially & I do not suppose the present situation of affairs here will admit of their being attended to. Still I think it proper to mention to you that such complaints do exist; because I am persuaded you are fully impressed with the propriety of fostering a commercial intercourse, which though opposed by a variety of obstacles, presents the perspective of great advantages in future to both nations. Time of itself will unquestionably ⟨secure⟩ these advantages; but from the dispositions which prevail here at present I have no doubt such arrangements might be made as would accelerate the event. Our commerce by becoming more generally diffused, would be less dependent on any particular country.
I inclose you a return of the Ships both American & foreign, together with their burthen, coming from the United States to France in 89. Also the quantity of flour &c. imported during the same term. I expect soon a return of these articles from the 1st. of January to the 1st. of July 1790. which I will do myself the honor of forwarding to you.
I have recieved your report on finance,6 which I have communicated to several persons here. They read it as well as myself with infinite pleasure. I am happy to learn that Congress are adopting it, as I am persuaded it will be fixing the credit of the United States on the firmest basis. I know at least that the impression which the report made on those who read it here, was a full persuasion both of the abilities of the author & the competence of the United States to a fulfillment of all their engagements.
I beg you to be assured of the sentiments of respect & attachment with which I have the honor to be Sir, your most obedient servant
The Honble. Mr. Hamilton Secretary of the Treasury.
ALS, letterpress copy, William Short Papers, Library of Congress.
1. Jacques Necker, Director General of Finances.
2. This is a reference to the Holland loan of 1790. Although this loan was authorized in August, 1790, by “An Act making provision for the (payment of the) Debt of the United States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 138–44 [August 4, 1790]) and “An Act making Provision for the Reduction of the Public Debt” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 186–87 [August 12, 1790]), negotiations for the loan had been opened in Amsterdam by Willink, Van Staphorst, and Hubbard early in 1790 without authorization. Rafael A. Bayley describes the 1790 Holland loan as follows:
“Under these acts the Secretary of the Treasury, Alexander Hamilton, authorized the houses of W. & J. Willink, N. & J. van Staphorst, and Hubbard to open negotiations for a loan of three million florins or guilders ($1,200,000), giving them authority to pledge the good faith of the United States for the payment of the interest and the repayment of the principal. The contract for the money has never been printed, but a translation of the original is to be found among the ‘Washington Papers’ in the Department of State. It is dated November 12, 1790. It provided that the loan should be reimbursable within fourteen years, in five annual payments of 600,000 guilders each, the first payment to be made February 1, 1800, and on that day annually until paid.
“Three thousand bonds or obligations of the United States, for one thousand guilders each, were to be issued, and in the December preceding each annual payment the numbers of six hundred of these were to be drawn by lot, in the presence of a notary, the numbers so drawn to be reimbursed in the following February. Coupons for the annual interest at 5 per cent. per annum were to be attached to each bond. For commission and all expenses connected with the loan the United States were to pay 4½ per cent. on the principal.” (Bayley, National Loans description begins Rafael A. Bayley, The National Loans of the United States from July 4, 1776, to June 30, 1880 (Washington, 1882). description ends , 23.)
4. Willink, Van Staphorst, and Hubbard.
5. Rafael A. Bayley states:
“The Continental Congress was unable, when the war closed, to pay the army in full, much difficulty being found in obtaining even enough money to send the soldiers to their places of enlistment. The foreign officers, so far as pay was concerned, probably fared rather better than the American soldiers, a strong effort being made to pay them as large a portion of the amount due them as possible; but to pay them in full, could not be done. An adjustment of their accounts was made in 1782, and a part of their demands was paid in cash. For the balance, certificates of indebtedness were given, bearing an interest of 6 per cent. These certificates, like all paper of the Continental Congress, depreciated rapidly in value, and in January, 1784, under a resolution of Congress, they were called in and new certificates were issued, dated ‘ye 5th April, 1784,’ bearing interest at 6 per cent. from January 1, payable annually at the house of M. Grand, banker, in Paris. No time for the redemption of these certificates was named. The total amount of certificates or bonds issued was $186,988.78. Their redemption began in 1792 under instructions from the Secretary of the Treasury, who directed that a part of the Holland loan of 2,950,000 guilders should be used for that purpose, paying the holders of the bonds in gold or its equivalent, and not in the depreciated paper currency of France. In 1803 the larger portion had been reimbursed, but a small amount remained outstanding, not having been presented for payment. It was not until the year 1828 that all were redeemed.” (Bayley, National Loans description begins Rafael A. Bayley, The National Loans of the United States from July 4, 1776, to June 30, 1880 (Washington, 1882). description ends , 28.)