From William Short
Paris August 23. 1791.
I acknowleged the reciept of your letter of the 24th. of May in my last of the 8th. of August. I have now the honor of acknowleging that of the 30th. of June inclosing one of the 25th. of the same month (both duplicates) which came to my hands yesterday by the way of the French packet.
My former letters will have informed you of the progress & issue of the affair of the reduction of interest.1 Although abandoned for the present I have hopes that this flattering idea may be realized ere long either at Amsterdam or elsewhere. Every preparation should be made for effecting it at latest in June next, when the first reimbursement is to take place on the loans made at Amsterdam. The proper previous steps seem to me to be for the U. S. to get as soon as possible all the money which they are in absolute want of, so as to leave a considerable term without making loans before the month of June. This being done gives time to their bonds to appreciate which will of course happen on the probability of no more loans being made at so high a rate of interest, & particularly if the U. S. shall have been able in the mean time to have established a credit in some other place.
The sums which may be considered as indispensable to the U.S. are those due to France—the interest of the debt to foreign officers2—the interest due on the loans in Amsterdam next february—& as the 2½ million of florins to be sent to America are to be taken out of the loans made, they may be considered of the same description. Supposing these sums to be provided for in the early part of the next winter so that the U. S. may be presented to the view of money jobbers as free of the necessity of making loans for some time, the practicability of reducing their rate of interest for June next at latest seems to me assured. Its being possible sooner will depend on the resources the U. S. may in the mean time find out of Holland. Their aspect is promising at present, but it would be wrong to rely too much on them until the experiment shall be fully made.
I informed you in my last on what footing the intended loan at Amsterdam stood. Since then I have heard nothing from the bankers3 on the subject although I expected it long before this. The only mode I had of attempting to reduce their charges was by leaving them the alternative of doubling the loan in the case of their fixing them at 3½ instead of 4. pc. I expected then to have recieved their answer early enough to have authorized them (as the loan was not to be opened before the beginning of the next month) to extend it even without the reduction of the charges. They know that you were satisfied with the late reduction of them to 4 pr c. They know also the advantages the U. S. derive from the payments they make at present to France, on the purchase of their own funds, by means of these loans: of course I fear much they will refuse the reduction. Still I thought it my duty to try it by every means in my power as well for the interest of the U. S. as my own personal satisfaction. I gave them to understand the possibility which the U. S. had of liquidating their debt to France by arrangements independent of loans at Amsterdam so as to make them suppose that we were not absolutely in their power at present. I did not chuse to say any thing to them about an idea of loans elsewhere. This would be dangerous so long as the U.S. are in the indispensable necessity of procuring so large sums as those at present in arrears. In such a case I should fear the malevolence of a combination of those concerned either directly or indirectly in our loans at Amsterdam, & know not what effect they might produce on our credit in other places. I do not precisely see what they would or could do, but still I should have apprehensions of them if they knew our wants of money to be great & so our credit not firmly established. The more we shall have obtained from them & the less we shall be in arrears with our debt to France, when they come to know our desire of making loans elsewhere the less we shall have to fear from their attempts or their power to injure us.
With respect to the practicability of our making loans in other places I have every reason at present to believe they may be ere long obtained either at Antwerp London or Genoa. It must be observed however that my information on these subjects coming only from persons who are employed in making loans & who of course have hopes of being preferred if the U.S. should determine to make them, must be recieved with much caution & cannot be absolutely & unconditionally relied [upon]. It is however the only source of information that can be opened previous to actual experiment.
I have already put you in possession of this subject as far as it regards Antwerp. I wrote some time ago to a person in London, Mr. Alexander Donald, partner of a rich house4 established there, informing him that it had been hinted to me that it was not improbable that moneyed men of that country would be disposed to place their cash in loans if such were opened there for the U.S. & desiring him to give me his opinion on the subject. Mr. Donald though not personally known to me, seemed the most proper person to be applied to in such a case as well on account of his commercial connexions with the U.S. as the high opinion which I know to be entertained of him by the Secretary of State to whom he has been long known & who will be able to tell you how far his information is to be relied on. I therefore send you in his own words the answer which I have this day recieved from him—it is dated London Aug. 19.
“I have had several conversations with the money brokers upon the subject of a loan to the U.S. From all of which I am inclined to think that the thing is practicable, but this cannot be ascertained unless I was empowered to make some specifick proposal. I said that I had no authority for doing so, nor did I even know if application would be made for a loan, that I was only desired by a friend to enquire if such application should be made whether it could be accomplished & upon what terms. All the brokers I have spoken to are of opinion that the regular payment of the interest must be guaranteed to be paid here—one more shrewd than the rest observed that men who had money to spare would rather purchase into the American funds, which he observed allowed an interest of 6. p. cent p. ann. & could now be purchased for 17. to 18/. in the pound. I could only say in reply to this observation, that if the moneyed men of this country were to turn their attention that way, that the 6. p. cents would soon rise to 120 or perhaps 130. I do think that the credit of Congress stands so well & money is so very abundant in this country that a loan for half a million could be done provided the terms are made agreeable. If any further steps are taken in this business, the first to be adopted here will be inserting an advertisement in the publick newspapers intimating the business & calling a meeting of those who are disposed to lend the money at which time proposals will be laid before them for their consideration. I believe sir that the guarantee of Donald & Burton would be accepted for the payment of the interest which they have no objection to do upon being allowed a reasonable commission for their trouble.”5
I shall write to Mr. Donald & inform him that the U.S. being able to make loans at Amsterdam at the present rate of 5. p. cent interest, the great inducement to make them elsewhere would be a reduction of that rate, & desire him to ascertain whether that can be done at 4½ p. cent p. ann. on a loan inferior to the one he proposes—& also to see if the advertisement he speaks of cannot be dispensed with, as it would be disagreeable in the extreme to take such a measure until the success was insured & then it would be useless. I have no idea of the commission which he would consider reasonable, but it will be necessarily higher than at Amsterdam where there is no guarantee. In England the loans cannot be opened in the name of a foreign power & of course the houses who undertake it must render themselves responsible to the lenders. I shall propose therefore to Mr. Donald in the case of this business being begun to join some other rich banking house with his, as presenting an additional security. If it were not for this security one house alone would be to be preferred for the reasons I have formerly mentioned to you.6
Mr. Grand7 has written also to his correspondent at Genoa to sound him about the practicability of the U.S. making a loan there. He has just recieved an answer which gives hopes that one might be made for about a million of dollars at 5. p. cent interest, the whole of the revenues of the U.S. being pledged in general as well as some sufficient part in particular. This difficulty however I have no doubt might be got over. Should it be possible to effect a reduction of the interest in England or at Antwerp one of course would not be undertaken at 5. p. cent at Genoa. I have wished such inquiries to be made however as well to make us acquainted with the ground, without committing the U.S., as to excite the attention of those concerned in loans who being thus pushed on to be acquainted with the resources of America will necessarily consider them in a more favorable manner. I have formerly mentioned to you the inquiries that would be made by a relation of the Minister of Genoa at this court.8 These circumstances will of course facilitate the business should the U.S. find it for their advantage to open them in that country. I shall take care to keep you progressively informed of these several matters.
It seems difficult to obtain particular information respecting the mint of Holland. It is kept at Dordrecht & carried on by contract. I have as yet been able to get only the inclosed account of the alloy, sent me from Amsterdam with a promise of further lights, which will be forwarded to you when recieved.9
You will have learned from the secretary of State that Drost10 agrees to go to America to establish the mint agreeably to your wishes. You will find him useful I think in other parts of the subject as well as those which are merely mechanical. He seems to have considered it with a good deal of attention both in its theory & practice. I communicated to him the result of your enquiries & reflexions. He approves much the decimal division you propose11 & the values annexed to the several pieces—except the small piece of gold. I mentioned to him your object in adopting it & the small number you purposed having struck. He thought it would be injurious, on account of its extreme diminutiveness, to the beauty & regularity of proportions which might otherwise be observed & that it would be wrong to have dyes made on purpose & as the U.S. have an entirely new ground to begin on he thinks they may with ease by avoiding the errors & abuses of the mints of all other countries, have the most perfect coin that has ever existed. He seems to be well acquainted with these errors & abuses & will be able to point them out.
One which he considers as among the most considerable is the introducing alloy into money. He has fully examined all the arguments on both sides of the question & is well convinced of the propriety of money being struck only of pure metal. I have spoken on the subject with others supposed to be skilled in it. There is variance in their opinion but the soundest among them are in favor of pure metal & say that nothing introduced or has so long supported the doctrine of alloy, but the facility which it gives to those employed in the mints to fraud government. The principal argument which I observe in favor of alloy, is that it hardens the metal & also that the part which is lost by rubbing & usage being mixed the loss is less. You mention doubts on the subject & Drost insists that the loss is less when the metal is pure. In this he is supported as well by his own experience as the opinions of the learned here. The other advantages which he attributes to pure metal are the security against counterfeits (as the eyes of every one, in a simple experiment of putting them in a common fire will immediately discover impurity without affecting the substance) & the superior value of the metal since the same weight when pure is intrinsically worth more than when joined to others. He agrees that an observation which I made to him has weight & that is that our coin, being to be taken from the monies of other countries which are alloyed, the purifying them will be an object of trouble & expence. On the whole I am much too ignorant of this subject to appreciate the various ideas of Mr. Drost, but should your determination be suspended until his arrival you will perhaps find some of them useful.
You seem to be fully convinced of the propriety of attending to beauty in coinage. Mr. Drost observes that it is important before the diameters be fixed that it should be known what are the subjects that are to be represented that they may be proportioned thereto—as well as thickness of the piece. He is much in favor of the idea of representing an eagle on the coins & particularly the large gold piece. This bird all the artists consider as the most proper for presenting a fine form. For that purpose however it would be necessary to remove those heraldic parts which cover the body in the arms of the U.S. It is probable I think you will find it proper to employ Mr. Drost to engrave the dyes of the several pieces of money. He has much merit in this act & has applied himself to study it in its relations to coinage much more than engravers in general. What has happened here lately shews the necessity of the engravers having this kind of knowlege. The artist they have employed as the engraver for their new coinage is considered as the most eminent engraver of medals. By an error which he has committed for want of this practical knowlege the dyes have failed & been obliged to be renewed already several times & it is not yet certain whether the new figures represented on that money by his advice, though handsome & well adapted to a medal, can be executed in coinage, on account of the multiplication of the pieces. On one side is the effigy of the King with his constitutional title—on the other the genius of France in the figure of an Angel writing down the constitution on a table placed perpendicularly before it. The pieces which have been hitherto struck are somewhat better executed than their former coinage (they are of silver only & are of six louis & of fifteen sols) but are infinitely inferior to copper pieces struck by Drost’s machine in England for Bolton & Co.12
I have the honor to be with perfect respect & attachment Sir Your most obedient humble servant
Alexander Hamilton secretary of the Treasury, Philadelphia
ALS, letterpress copy, William Short Papers, Library of Congress.
3. Willink, Van Staphorst, and Hubbard, the bankers of the United States in Amsterdam.
4. Donald had served as Robert Morris’s agent for the purchase of tobacco in Virginia in the seventeen-eighties. Donald and Robert Burton were partners in a banking firm in London.
5. Donald to Short, August 19, 1791 (ALS, letterpress copy, William Short Papers, Library of Congress).
7. Ferdinand Grand, French banker and member of the Paris banking house of Grand and Company.
10. Jean Pierre Droz. See H to Jefferson, April 14, 1791. Short had written to Jefferson on July 20 and again on July 27, 1791, to inform him that Droz was coming to the United States (RG 59, Despatches from United States Ministers to France, 1789–1869, January 16, 1791–August 6, 1792, National Archives).
12. On April 23, 1790, Jefferson wrote to Ferdinand Grand: “You may remember that we were together at the Hotel de la Monnoye, to see M. Drost strike coins in his new manner, and that you were so kind as to speak with him afterwards on the subject of his coming to America. We are now in a condition to establish a mint, and should be desirous of engaging him in it. I suppose him to be at present in the service of Watts and Bolton, the latter of whom you may remember to have been present with us at the Monnoye. I know of no means of communicating our dispositions to Drost so effectually as through your friendly agency; and therefore take the liberty of asking you to write to him to know what emoluments he receives from Watts and Bolton, and whether he would be willing to come to us for the same? If he will, you may give him an expectation, but without an absolute engagement, that we will call for him immediately, and that with himself we may probably take and pay him for all the implements of coinage he may have, suited to our purposes. If he asks higher terms, he will naturally tell you so, and what they are; and we must reserve a right to consider of them. In either case, I will ask your answer as soon as possible. I need not observe to you that this negociation should be known to nobody but yourself, Drost and Mr. Short” (Boyd, Papers of Thomas Jefferson description begins Julian P. Boyd, ed., The Papers of Thomas Jefferson (Princeton, 1950– ). description ends , XVI, 368–69).
Jefferson submitted the draft of this letter to H. See H to Jefferson, April 22, 1790.