From William Short
Amsterdam Dec. 30. 1790
My letter of the 18th. enclosing a duplicate of that of the 2d. inst. with other papers has been detained until now, because the American vessel by which I have thought it best to send it, has not yet sailed. As her departure seems at length finally decided for tomorrow, I annex this letter merely to inform you that the circumstances of the loan remain as when I last had the honor of writing to you. It is not apprehended that the measures which will be probably pursued by the courts of London & Berlin (& which will be in all likelihood the most influential that will take place on the European stage in the course of the next year) will be prejudicial to the U. States. Should they effect a peace, our loans will become more easy. Should a serious war between them & Russia be the consequence, it seems probable that the U.S. would gain as much by those who would be induced to sell out of the English funds, as they would lose by the excedent of the Russian demand or in other words, their proportion of the money floating here & searching for some place to depose itself, would not be diminished. I mentioned to you in my letter of the 2d inst. that opinions here differed however as to the effect which war issues have on those interested in the English funds. It is probable the losses sustained by selling out of those funds during the last war & soon after the peace may render many who then suffered, very tenacious at present, still I can not help thinking that if they saw England once engaged in a dubious war, they would take the alarm & communicate it to each other. In this opinion I am confirmed by several judicious & well informed people here. Whether they would consider the war with Russia such an one, must depend on future contingencies with which I am not acquainted, & which are probably not yet ascertained even to those cabinets which will take part in the business. My conjecture is however, that a general peace will be effected in the course of the next year—that is, either that Russia will give peace to the Turk during this winter or that she will be forced to do it by the interference of England & Prussia in the Spring.
So much for the European politics which may have an influence on the loans of the U.S. As to the politics of America which may have a similar influence I can only say that the resolution of the committee of the whole in the house of Representatives of Virginia1 is known here to several persons. I do not find as yet that they think it will have any bad influence on the intended loan—indeed I suppose we may be certain it will not, if it is carried no further than a simple resolution of one or of even both the housesenonciatory only of their opinion as to the assumption of the state debts.
Another circumstance which might influence our loans here is the negotiation set on foot at Paris for the purchase of the debt due to France: My last letter will have informed you fully of that business.2 I have since heard nothing further respecting it so that I take it for granted that it will end there as I had desired. Having offered to enter into the negoiations as far as my powers permitted, we shall not appear in the unfavorable light of having absolutely refused an accommodation to the present commissionaries of France; & thus remove a pretext for making loans here on the American debt as a pledge. I have good reason to believe that this idea has been again renewed with the French ministry by some bankers of that nation settled here & that nation’s in Paris. They have probably stated that the U.S. mean to apply the first two millions of dollars of their loans here to the purchase of their domestic debt that consequently the payments to France will be retarded. M. du Fresne3 & the bankers of the French court here have both pressed to know when the next payments will be made. As I am not acquainted with your views I have chosen to say as little as possible on the subject, & have confined myself within the terms of my verbal communication made to M. de Montmorin in consequence of the letter I recieved from the Secretary of State of August 26.4
This communication is probably not fully retained by the minister whose mind averse to occupation is kept in constant employment by the present situation of affairs in France; but the present abundance of assignats will keep them quiet, as to our debt & prevent their adopting measures proposed as to pledging it for a loan. Besides M. de Montmorin has given me assurances that he, & of course the ministry, will adopt no measure respecting the debt without first communicating it to me. But if they should find that we made loans here without making them remittances, they might possibly be prevailed on by the number of speculators who are watching every opportunity of jobbing in the debt, to do something in it which might be favorable to their purposes—they would then probably make use of the assembly, or some of its committees, to force the ministry to this. Still I suppose the loans may be so appropriated as by remitting a part to leave the rest to your operations on the domestic debt; & that without the risk just mentioned.
If the Genoese or other capitalists in the French funds could be induced to transfer their interests there to the American funds here, this would leave the whole of the loans to be made at present, to your disposition to be employed within the U.S. which is much to be desired under the present advantageous circumstances. The French stock is now taking an immense rise; should the exchange not fall in proportion, it would seem probable that many would make use of the present moment for transferring their stock elsewhere without loss. The rise in the funds is owing to the considerable re-imbursements made by the emission of the assignats; it is to be apprehended that the same cause will depreciate the assignats & of course reduce the exchange still lower—otherwise I think it not impossible that some of these may turn their attention to the American debt & wish to make use of it as a medium for transferring their stock, on terms not disadvantageous to the U.S. & of course much to be desired for the reason abovementioned. Should I be able to find that such a disposition was gaining ground I will immediately inform you of it. In a rise of that kind it would be a desirable circumstance for the U.S. to stipulate the alternative (on the new obligations they would give to replace those at present held by France) of paying the interest & re-imbursements either here or at Genoa. This would be the best means of making an experiment for the establishment of a credit at that place. Many advantages might be expected in the future operations of the U.S. from having a credit in more than one place.
I have been endeavouring though in vain as yet, to procure for you a list of all the principal loans made here since our independence—this will be the best means of establishing the rate of interest here since that time which you wished to know. I mentioned in a former letter5 that it might be estimated as being 4. p. cent fifteen years ago: I should rather fix it, on further examination at 3½.—the rapid rise took place here in consequence of the loans made by France on engaging in the war & the advantageous terms she gave.
I have the honor to be with perfect respect & attachment, Sir, your most obedient humble servant
Honble Alexander Hamilton, Secretary of the Treasury
ALS, letterpress copy, William Short Papers, Library of Congress.
1. The resolution adopted on November 3, 1790, reads as follows:
“Resolved, that it is the opinion of this committee, That so much of the act of Congress, entitled ‘an act making provision for the debt of the United States;’ as assumes the payment of the State debts, is repugnant to the Constitution of the United States, as it goes to the exercise of a power not expressly granted to the General Government.” (Journal of the House of Delegates of Virginia description begins Journal of the House of Delegates of the Commonwealth of Virginia … one thousand seven hundred and ninety (Richmond, 1828). description ends , 1790, 35–36.)
3. Bertrand Dufresne.
4. On August 26, 1790, Jefferson wrote to Short:
“You know the situation of the new loan of three millions of florins going on at Amsterdam. About one half of this is destined for an immediate payment of France; but advantage may be gained by judiciously timing the payment. The French colonies will doubtless claim in their new constitution, a right to receive the necessaries of life from whomever will deliver them cheapest; to wit, grain, flour, live stock, salted fish, and other salted provisions. It would be well that you should confer with their deputies, guardedly, and urge them to this demand if they need urging. The justice of the National Assembly will probably dispose them to grant it, and the clamors of the Bordeaux merchants may be silenced by the clamors and arms of the colonies. It may co-operate with the influence of the colonies, if favorable dispositions towards us can be excited in the moment of discussing this point. It will therefore be left to you to say when the payment shall be made, in confidence that you will so time it, as to forward this great object; and when you make this payment, you may increase its effect, by adding assurances to the minister, that measures have been taken which will enable us to pay up, within a very short time, all arrears of principal and interest now due; and further, that Congress has fully authorized our government to go on and pay even the balance not yet due, which we mean to do, if that money can be borrowed on reasonable terms; and that favorable arrangements of commerce between us and their colonies, might dispose us to effect that payment with less regard to terms. You will, of course, find excuses for not paying the money which is ready and put under your orders, till you see that the moment has arrived when the emotions it may excite, may give a decisive cast to the demands of the colonies.” (Ford, Writings of Jefferson description begins Paul Leicester Ford, ed., The Writings of Thomas Jefferson (New York, 1892–1899). description ends , V, 236.)