Gouverneur Morris to George Washington3
Paris 27 May 1791
I have the Honor to enclose a Letter and sundry Papers relating to it from Messieurs Schweizer Jeanneret & Co.4 I have referred these Gentlemen to Mr. Short telling them that it is most fitting in many Respects that they should apply to him.
As it is possible however that this Business may come before you, I think it a Duty to convey some Observations which occur to me, and which may not perhaps strike you because Matters of that Sort have not I believe much occupied your Attention. Previous thereto I beg Leave however to give you a History of my Acquaintance with it. In a Letter to Colo. Hamilton of the 31 of January 1790 I mentioned what had passed between Mr. Necker5 and me respecting the Debt due by the United States to France and I hinted at the means of turning to useful Account a very precipitate step of the public Agents in Holland.6 About this Time I received your orders to communicate with the british Ministers7 and altho I did by no Means consider that in the Light of an Appointment to office yet from Motives of Delicacy I determined to extricate myself from the Affair of the Debt as speedily as I could with Propriety. Various applications were made to me from different Quarters to which I replied evasively but on my Arrival in this City last November I informed the Parties that I had Reasons of a private Nature which deterred me from holding any share in their Speculation. I conversed with Mr. Short on the same Subject and communicated to him confidentially my Reason for declining an Interest as well as my Opinion respecting the use which might be derived from such Negotiation. A few Days after the President of the Committee of Finance8 happening to meet me at the Count de Montmorin’s9 mentioned some Proposals then before them which to the best of my Remembrance were extravagant. I declined giving an Opinion without previously seeing and considering the terms upon which he and Mr. de Montmorin agreed together that before any thing was concluded the various Propositions which might be made should be submitted to my Examination. Here the thing dropt and the enclosed Papers shew the Reason why, for it appears from them that a Bargain was made shortly after by the Controleur general10 with a different Company. Mr. Short mentioned this to me on his Return hither in the End of March telling me that the Parties concerned were as he was informed in Amsterdam Men of no Credit nor Capital.11 I of Course agreed with him in Opinion that if so it was not worth while to listen to them. A few Days after one of them called on me, and after giving a History of the Affair begged me to make Use of my good Offices. I told him at once that it was ridiculous to ask a Commission of 5 % on changing the Nature of our Debt. That it was quite as convenient to owe France as to owe the Subjects of France and further that before any treaty was offered Persons of Credit and Capital should appear. As soon as I made this last Observation he drew out the Letter of the Comptroller general and shewing me the second Clause of it replied that after what was there contained no man had a Right to question the Solidity of the Society. He then added that for my private Satisfaction he would prove that People of the first Fortune were connected therein, and indeed he gave me such Proof. I told him upon this that they must apply to Mr. Short or to their own Ministry whose support would be much more efficacious than the Sentiments of any private Individual. I mentioned nevertheless to Mr. Short the Substance of this Conversation. While he was in the country the enclosed Letter was received. He returned to Town Yesterday and called on me in the Evening when I communicated to him the Purport of it.
I have ever been of Opinion that as we are not in Condition to pay our Debt to France a Bargain by which the Period can be prolonged without Loss to either Party is desirable. I say without Loss because the Conduct of this Nation has been so generous to us that it would be very ungrateful indeed to take Advantage of those Necessities which the Succor afforded to America has occasioned. Such Bargain must be either with the Government or with Individuals. But after the repeated Delay on our Part, to ask longer Time now would not look well. Indeed no such Treaty could be made without the Consent of the Assembly, and their Observations would not be pleasant. A Bargain with Individuals has the Advantage of bringing in the Aid of private Interest to the Support of our Credit, and what is of very great Consequence it would leave us at Liberty to make Use of that Credit for the Arrangement of our domestic Affairs. And on this Head I must mention to you my dear Sir that it has been my good fortune to prevent some publications which would have been particularly injurious to us. Their Object was to complain of the United States for speculating in their own Effects with the Funds of France; Urging that while we owed heavy Installments already due here, all the Loans we obtain in Holland ought to be applied to the Discharge of them and therefore that the Speculations in our domestic Debt were a double Violation of good faith, &ca. &ca. &ca. The present State of things here has occasioned so great a fall in the Exchange that Money borrowed in Holland is remitted with great gain consequently Loans made there just now answer well, & it is evident that the Parties who are endeavoring to contract count on a considerable Profit from that Circumstance. Much however is to be said on this Part of the Subject. First it is questionable whether our Reputation may not be a little affected for you will recollect that about one third of our Debt to France arose from a Loan made on our Account in Holland of five Millions of florins for which the King paid us here ten Million of Livres without any Deduction for Charges of any Sort.12 The Nation is now obliged to pay these five Millions in Holland and for us to borrow that Amount there and then squeeze them in an Exchange which distresses both their Commerce and Finances looks hard. There was a good Deal of murmuring about it when the last operation of F 1.500,000. Guilders13 took Place and I should not be at all surprized if some Patriot by way of shewing his zeal should make a violent Attack in the Assembly when the next Payment is made. There are many of these patriots who if they can inculpate Ministers and distress those of different Sentiments don’t Care a Jot for Consequences. But supposing this not to happen it is not possible for a Nation to make the Advantage which Individuals do in such Things because they must employ Individuals each of whom will be too apt to look a little to his own Advantage. There is a Difference also between the Gain made upon Parts and that which would arise on the whole for even if we could borrow all at once so large a Sum there can be no Doubt that the Remittance of it hither would greatly alter the Exchange. But it is not possible to borrow it speedily and the present unnatural State of Things will in all Probability be changed. In fact the leading Characters are very seriously alarmed at it. If their Paper-Currency should be either redeemed or annihilated or abolished To Morrow the Exchange would immediately turn in favor of France and then we should loose on Remittances. So much for this Affair in it’s little Details, but there is a great View of it which forcibly strikes my Mind. If we were at Liberty to turn all our Efforts towards our domestic Debt we should by raising it’s Value prevent Speculations which are very injurious to the Country if not to the Government. Millions have already been bought at low Price and afterwards negotiated in Europe. Neither is that all, for if we can borrow at five per Cent and buy up our six per Cent Debt at Par we gain at once by that operation one fifth of the Interest or twenty per Cent which besides all the other good Consequences is much more than ever we shall get by any Management of our Debts on this Side of the Water.
I have given you my dear Sir these Hints in Abridgement because my Time will not permit of dilating them. Attribute them I pray you to the true Cause and believe me always very sincerely yours
3. LC, Gouverneur Morris Papers, Library of Congress.
5. In 1790 Jacques Necker was Director General of Finances.
6. The Dutch bankers, Willink, Van Staphorst, and Hubbard.
7. In two letters dated October 3, 1789, Washington instructed Morris to open informal discussions with the British ministry on various problems existing between the two countries (GW description begins John C. Fitzpatrick, ed., The Writings of George Washington (Washington, 1931–1944). description ends , XXX, 439–42).
8. Theodore Vernier, Comte de Montorient.
9. Montmorin was French Minister for Foreign Affairs.
10. Presumably Morris is referring to Charles Guillaume Lambert, who was Controller General of the Finances of France at the time of the Schweizer, Jeanneret, and Company proposals.
12. For a description of the 1782 French loan of ten million livres, see Willink, Van Staphorst, and Hubbard to H, January 25, 1790, note 3.