From William Short
Amsterdam Jan. 15. 1791.
Contrary winds have prevented any vessel leaving the Texel since the month of November. The several letters therefore which I have had the honor of writing you by that may still remain there. This unexpected delay is the more unfortunate as it is in those letters alone that I have spoken fully on the subjects about which you must be impatient to hear. I preferred making use of this chanel for reasons that are obvious. I hope my letters sent from hence by the way of England to yourself & the Secretary of State will have been more fortunate, as they will announce those thus detained. This will be put on board of a vessel bound for New-York which is going down to the Texel to wait only for a change of the wind. I inclose in it a duplicate of that of the 18th. of Dec. It was not sent with my letter of the 30th. of Dec. because that was forwarded to the Texel to go by the same vessel which had recieved here the original. With it I forwarded also a duplicate of that of Dec. 2.
I have the honor Sir of inclosing you also at present a letter from the agents of the U.S.1 here which they sent me open with a desire that I would read it & approving it, forward it to you. It is dated the 23d. of the last month although I recieved it only five or six days ago. I have no observation to make on any part of this letter except the expression which relates to the engagement to negotiate the future five p. cent loans at 4. p. cent commisison. In the rough draught of this letter which these gentlemen communicated to me & begged I would make my observations on, it was expressed in such a manner that it led to a belief that I had stipulated with them that the commission was to be raised whenever the interest was reduced. On my recalling to them the only circumstance which ever passed relative to this subject they agreed without hesitation to change it.
The circumstance was this—after they had proposed the 4. p. cent commission & I had accepted it in this manner already related to you in my letter of Dec. 2. one of these gentlemen observed that if in future there was an opportunity of reducing the interest of the loans of Congress by raising the commission of the undertakers, it would not be expected that that rise was to be made by their sacrifices & of course that it must be by the U.S. I answered that future changes becoming necessarily subjects of future discussion it was useless to examine them at present, & that the U.S. would always decide for themselves when & on what terms it would be for their advantage to attempt to reduce the interest of their loans—here the conversation ended. The change they have made still leaves the expression of five p. cent loans. But it can do no harm as in fact we shall be at liberty at the end of each loan to change the agentsthemselves if we think proper. Permanent arrangements for the continuation of the loans besides that I should not have thought myself authorized to have made them would have been impolitic, as it is evident the U.S. alone would have been bound by them—for should any unexpected event have rendered the augmentation of the premium necessary they would, if they judged it for their interest, have insisted on it & the U.S. would have been obliged to have subscribed to it at the risk of failing in their loans—on the contrary if the premium could be lowered the agents would recieve the benefit of it. As the matter stands at present should an opportunity present itself of lowering the terms of commission (which however I am more & more persuaded every day must be done by diminishing the number, & not the profits, of the persons employed) there is a perfect right to make use of it. The agents also will be on the lookout as well as you or those you chuse to send here, for the moment when it will be proper to attempt a reduction of the interest, & you will be at liberty to negotiate the terms you may think proper.
A few days ago a loan on the American funds for twelve hundred thousand guilders was brought on the market by the house of Van Staphorst & others. I enclose you an original & translation of the scheme of the loan. By it the interest is to be six p. cent—but the funds are rated & sold at par viz. those of the six p. cent stock at 100. p. cent & those of the three p. cent at 50. Hitherto in all cases of these loans they not only gave six p. cent as the rate of interest but a considerable profit also on the sale of the funds. A large part of this loan is already engaged as they tell me. The house of V. Staphorst pretends that this will benefit the future loans of Congress, as it will probably prevent others being made on the liquidated debt of the U.S.; since other houses will aim also now at selling them at par, & in that case the terms being less advantageous to the lenders less will be loaned—the price of those funds being now settled at par here must also necessarily raise them in America & of course benefit the credit of the U.S. The house of Willink is not interested in this loan & wished much to have it postponed. This house thinks that such a loan will be of service in future to the loans of the U.S. for the reasons just mentioned, but will retard that which they are now about to make, by being brought on the market so short a time before it. They wished therefore to have induced the V. Staphorsts to have postponed theirs until after that for the U.S. should be filled. These objected that if they did not bring on the loan they know others that would & persisted in it.
Mr. Willink2 has told me since this loan was public, that in his conversation with the other house respecting it they told him they had communicated it to me & that I had not objected to it. The truth is however that they had never given me to understand that they were to be concerned in such a loan. In a conversation some time ago on the prejudice done to the loans of Congress by those made on the liquidated debt, one of them (Mr. Hubbard)3 told me he knew of another of about 1,200,000 guilders which would be probably brought on the market. This is unquestionably what was alluded to when they spoke to Mr. Willink. It seems that the object of Mr. H’s conversation with me was that he might be able if necessary to say that he had mentioned the subject to me & at the same time to do it in such a manner as to give me no opportunity of making objections to the loans wch. I certainly would have done if I had supposed that its being brought on depended on their house. This is being perhaps less candid than he ought to have been, but there is no remedy for it in this stage of the business. I am glad to find that Mr. Willink thinks from the manner in which this loan is going on that it will be less prejudicial for the present even that might have been expected. My own opinion however is that it will necessarily occasion some delay; because a part of the money vested in it would of course have been placed in the loan of the U.S. & consequently the owners of that money would have been impatient for such a loan & also because some of those who have the bonds of Congress yielding only five p. cent might be persuaded to sell them in order to vest that money at six p. cent. There are only few who will do this, they say, but still these few will contribute to the number of the American bonds in circulation here for sale—or in other words to keep down the price & thus retard the proper moment for a loan.
Of the 325. bonds mentioned to be remaining in their hands several have been since taken up, & the undertakers who subscribed for them at the opening of the loan have recieved notice that they must take up the rest in the course of this month. They have hitherto not been pressed because as you had made no appropriation of the money it was thought as well to save the U.S. the interest which mounts from the times of the bonds being taken up. Besides it is possible from the circumstances under which this loan was made that the undertakers had been provided such delays. These bonds being thus provided for in the course of this month & considerable payments being to be made on account of the U.S. in the beginning of the next will no doubt contribute favorably to the preparation for the new loan. The agents are then to have a meeting with the brokers. They continue to tell me that every thing bids fair for the market being ready for the new loan in the early part of the month. It seems to me however that the brokers are of that opinion, at least as far as I can judge from conversations with them. Stadnitzki4 & Saportas5 who are two of the principals think it will not before the end of the month. The latter thinks that the Van Staphorsts’ loan will render this delay necessary, the former, who is concerned in the loan, says it cannot produce that effect, but that the price of the American bonds having not risen yet as was expected, it would be wrong to percipitate a new loan. We shall see in a short time whether they will retain the same opinion when convened & consulted by the agents. I do not doubt you will enter into the propriety of waiting patiently rather than attempting to force circumstances in a case like this where it can do no good & might do much harm.
You will recieve inclosed a letter written to me by Messrs. Schweizer Jeanneret & Co6 by which you will see sir, that they are disposed to wait for the decision of the President on the proposals they made & which I forwarded to you with my letter of Dec. 18. I suppose it useless to add any thing further on their subject as the several papers already sent will have put you fully in possession of it. An additional reason urged to me lately by Mr. Swan7 of Boston (whom they push forward in this business) in favor of this scheme, is that if it is not adopted, the other company, with whom I believe he is also concerned, will be sure to force the ministry by means of the committee of finance to accept theirs, which is much less advantageous for the U.S. This consideration however appears to me to deserve little weight. Should the minister have written to the French chargé des affaires8 on this subject as these people say, you will be better able to appreciate the real sentiments of the court from what he will tell you. It is possible also that the letter may have been written merely on the sollicitation of this company in order to insure their proposals being properly represented & supported. Mr. Swan urged further that the debt being once transferred to Genoa, the interest & reimbursements might be paid there by merchants recieving the money of the Treasury in America & contracting to replace it at Genoa, which they would do by again contracting with the merchants of Marseilles, Genoa, Leghorn &c for dried codfish; so that the money would remain in the U.S. & the foreign debt be payed by the productions of our industry. I do not see that this advantage is peculiar to the Genoese schemes. Whenever the U.S. proceed to a real payment of their foreign debt in whatever part of Europe it be, it will be done probably by the means of our commerce. This will at the same time add to its activity, by serving as a new medium, & Envite to keep the excedent of our exportations as much as possible above the importations in order to settle the balance in this way.
It is easy to follow this idea & see that the evil of a foreign debt like many others may be made to assist in curing itself. At present however I cannot persuade myself that the advantage to be gained by transferring our debt from France to any other country can be equivalent to that which would be lost on the exchange. For although it is possible that the exchange will not during the whole course of our payments be as much against France as at present yet it seems inevitable that it must for a long time be much against her, as well on account of the assignats as the present state of her commerce & particularly the situation of her islands.
Funds continue rising in France, owing as I mentioned in my last9 to the considerable re-imbursements made by the emission of Assignats. They do not seem yet to have been depreciated as might have been expected by that emission, & the exchange continues the same. Still I do not find that the Genoese or other foreigners who have their money in the French funds are siezing this opportunity of transferring it. They are perhaps waiting in hopes of the relative price of stock & exchange becoming still more favorable for such a transfer.
My inquiries with respect to Italy have confirmed the opinion that no part of that country except Genoa could hold out any prospect of a loan. As to this place I learn by different ways that the money lenders there are rather stock jobbers than real lenders—that their usage is to wait until funds are at their lowest & then buy into them—that it is by this means that they have become deeply interested in the French funds & that their purchases there were many of them made in such a manner as to yield an interest of 10. p. cent—& that they wish to get out of them now because they are alarmed by the paper money—that few foreign original loans have been made in Genoa & these on very high terms. Still it would be so much for the advantage of a power to be able to make loans at more than one place that it seems to me no proper opportunity should be lost of trying to establish a credit for the U.S. at some other place besides Amsterdam. This may be effected at Genoa perhaps at some future period by means of our debt to France & the situation of affairs in that country, when the government & resources of the U.S. shall have been more tried & become better known. At present however I see no probability of success to a loan there; but I must add that my inquiries have been necessarily made in such a manner that I cannot give the result as matter of certainty.
I have just learned from M. de la fayette that Colo. Walker10 had left with him a large packet addressed to me & with the seal of the Treasury office. He understood that its contents were not pressing & has therefore thought it improper to send it to me by post. I suppose it the state of our foreign debt to which you allude in your letter of Sep. 1. & if so I shall have no occasion for it here.
I have the honor to be with sentiments of the most perfect respect & attachment, sir, Your most obedient humble servant
The Honble Alexander Hamilton Secretary of the Treasury
ALS, letterpress copy, William Short Papers, Library of Congress.
1. Willink, Van Staphorst, and Hubbard.
This letter has not been found. On December 23, 1790, Willink, Van Staphorst, and Hubbard wrote to Short:
“We take the liberty to inclose you open, our Letter of this date to the Secretary of the Treasury of the United-States, entreating you to peruse same, and approving the Contents to forward it.
“You will perceive, that so long as the United-States pay Five per Cent Interest, We have engaged at your request, to negotiate their future Loans, for Four per Cent Charges of Commission, Premiums, Brokerage and all other Expences whatever, Which is One Half per Cent less than they paid for their last Loan.
“Should you have any Remarks, to make on the Letter to the secretary of the Treasury, We shall receive them with Thanks, and fulfill your Wishes in whatever We may be able.” (LS, Short Family Papers, Library of Congress.)
2. Wilhem or Jan Willink.
3. Nicholas Hubbard.
5. David and Samuel Saportas, a Dutch banking firm.
6. See enclosure.
7. James Swan to Short, December 26, 1790 (ALS, William Short Papers, Library of Congress).