From William Short
Paris March 24. 1792
It has been some time since I have had the honor of writing to you, owing to no material event having taken place—& to my being in constant expectation from day to day that there would be occurences which would render it necessary for me to trouble you.
Being very much indisposed I took the liberty of asking the Secretary of State to communicate to you from his letter the intelligence respecting the Antwerp loan, & the delay of the assembly here, in voting the succours to the islands, towards which the minister of Marine had proposed applying the American debt.1 The delay still continues, but a decision must inevitably take place ere long.
I have formerly mentioned to you that the Antwerp loan would be continued to be paid here as fast as recieved—as well as the manner in which these payments were paid, & my reasons for consenting to the reciepts given at Antwerp being expressed in florins,2 their value in livres tournois being to be regulated in future, viz the indemnity which you purpose allowing for the depreciation on the assignats. You authorize me in your letter to fix this indemnity by the rate of exchange in specie.3 I have thought it most advisable, however to leave this indemnity open to future consideration, as no inconvenience could arise to the U.S. from this circumstance, & as it left the discussion to the person who, being to be named here in a permanent character,4 would necessarily have a greater degree of the confidence of the government of the U.S., than if in a temporary one only, & of course do this business as well as every other of a delicate nature more satisfactorily both to them & to himself.
As you informed me that you had on M. de Ternant’s application mentioned to him that the U.S. did not intend taking advantage of the depreciation of the assignats,5 & as I was sure he would inform ministry of this intention I thought it proper in every account to make them the same communication.6 I have been fully satisfied since that he had no authority for making such an application to you. You will probably find that there were several motives for this volunteer step.
The Antwerp loan as you have been informed was to be paid at the rate of 600,000 florins monthly. M. de Wolf7 had assured me & authorized me to assure you also that it would be paid much sooner. I found however it began to go more slowly owing probably to the sum being too large for the market. I had frequently mentioned to him my desire that it should be stopped at 1,500,000 or two millions, but he always replied that this did not depend on him, without the consent of the undertakers & that I might rest assured that the loan would be completed in the time agreed on. Fearing however he might be too sanguine & judging that it would be more advantageous for the credit of the U.S. to have a loan opened there at a reduced rate of interest as he had always assured me was practicable,8 I made him the offer of authorizing him to open a loan there at 4. p. cent interest, for the amount of the sum he could suppress of the present loan9—& in order to induce the undertakers as well as himself to come into the plan I added that I would consent for this diminution of the interest to increase the premium—without fixing this increase I knew it would be a very small one, which would be much more than compensated by the reduction of the interest, besides that it wd. have the advantage of preventing the risk of the present loan going more slowly than was agreed on, from its being too heavy for the market. I could not help having my fears on this subject notwithstanding the positive assurances of M. de Wolf to the contrary. I considered myself sufficiently warranted in these fears from what had passed & particularly from the payment of the month of febry not being fully completed until the 5th of this month.
In answer to my offer he informed me10 that he had found means of suppressing 700,000 florins of the present loan & had hopes of suppressing 300,000 more so as to stop it at two millions. He was taken ill a few days after as he informed me by one of his clerks, being confined to his bed & his life considered as in danger by the physicians, he has done nothing further in this way. I hope however it will be stopped at two millions in which case there will remain only the trifling sum of 200,000 florins to be disposed of.
You will readily concieve that the first time of opening a loan at any place whatever, there are several circumstances depending on locality which cannot be known & for which reliance must necessarily be placed on the banker. A short experience persuaded me that it would have been better to have opened a smaller loan at Antwerp, but it was then too late. I had been guided in this business by M. de Wolf, recommended to me & supported with much warmth by Mr. Morris as having a perfect acquaintance with him, & by Mr. Morris himself who having resided some time at Antwerp, had an opportunity of knowing the place.
I have frequently mentioned to you that the increasing credit & confidence in the administration of the U.S. would present them necessarily to their choice a variety of alternatives for liquidating & ameliorating the conditions of their foreign debt. I have good reason to believe since my return from Amsterdam that the debt to France might be immediately paid off by one stroke by a contract with the first banking house in Paris, Boyd & Kerr,11 who would engage to pay into the public treasury the amount of the balance of the American debt to France as well due as to become due & recieve in payment the obligations of the U.S. at 4. p. cent interest, either in London or Amsterdam, according to the rate of exchange at present.
The advantages of such an operation would be considerable—1. it would place the U.S. beyond any future reproach on account of delay & would reduce the interest of this debt from five to four p. cent. 2. the sum on which they would have interest to pay would be but more than half what it is at present, as the exchange is about that rate. 3. they would be still more perfectly masters of the indemnity they purpose offering to France, & even if they were in future to add the half gained at present by way of exchange, still they would in the mean time avoid the interest on that half, because the debt to France being considered as completely discharged at the moment of the nominal amount in assignats being delivered here. An interest of course would be expected on the additional sum which the U.S. should prefer to give in future as an indemnity for the depreciation of assignats. 4. their obligations for this operation being given payable in London, would leave the Amsterdam market free for other purposes & particularly for immediately reducing the interest on all their bonds there to 4. p. cent. The banking house here wch. would make this contract having in their hands & at their disposition the funds of La Borde,12 the richest individual in France, & being connected closely in their operations with Hope of Amsterdam13 & his correspondent in London & becoming thus stock holders in the American funds to so great an amount would be powerful auxiliaries enlisted in support of their credit.
The only possible objection I see to such an operation is that which was formerly made by the commissioners at Amsterdam, when Mr. Morris & Mr. Parker had an idea of purchasing up the French debt14—viz. that it would be dangerous for the U.S. to have so large a sum in the hands of a few individuals, as it would render their credit dependent, on the speculations & resources of those individuals. This objection however loses its force in the present instance in a very great degree, as the sum due now is considerably smaller & as the value of obligations would be in reality not more than half the amount of the nominal balance remaining—& also as the contractors in the present instance are fully masters in themselves of such sums whereas the others were to raise them by such aid as they should find or by future speculation, & of course might have been found to make sacrifices on these bonds injurious to the credit of the U.S.
I am aware that it would have been a matter of much delicacy to have settled the rates of exchange, at which these sums should have been paid to the contractors by the obligations of the U.S. as they would not probably have furnished the whole amount in assignats at once & as the exchange varies daily. It was this consideration alone which prevented my pressing an operation which appeared to me to promise so many advantages to the U.S. & made me desirous that it should remain open if time & circumstances would admit of it, until the will of the government of the U.S. should be more completely represented here, determining however if it became absolutely necessary to act, not to let pass so favorable an opportunity of serving their interests. I considered my powers fully competent thereto, as it was in fact nothing more than borrowing in London a certain sum, much within my limits, to pay off the French debt.
Under these circumstances I learned through the public papers & also from Mr. Morris in London, that the President had nominated him, to represent the U.S here as minister plenipotentiary. I expected of course that he would arrive here without delay in that character—& consequently determined on no consideration to act further, previously to his arrival. Although I learned afterwards that the Senate had not yet confirmed the nomination, yet you will no doubt, Sir, readily concieve that delicacy & propriety forbad my proceeding after having learned that the President’s will was thus pronounced in favor of another, & as by his instructions to you, of which you sent me a copy,15 arrangements respecting the French debt were to be made by the person resident here. I still remain in daily expectation of the delay to the Senate’s confirmation ceasing, & of Mr. Morris’s arrival here. I dont doubt that he will consider the plan abovementioned in the same light that I have done & that he will pursue the interests of the U.S. with more intelligence, efficacity & success in this as well as every other instance, than has fallen to my share.
As it is probable that their general interests have been less advanced in this country, whilst confided to my care, than might have been hoped for, I flatter myself you will excuse me, for taking the liberty to arrest your attention an instant on the peculiarly unfavorable circumstances which seem to have begun with the moment of my having been employed & to have ceased also with the expiration of my term.
The revolution here carried with it a spirit of innovation in the whole organisation of their system, & of hostility to every thing that existed under the former government. The moment for organizing their commercial system came soon after I was charged with the affairs of the U.S. & was taken absolutely into the hands of the committee of the assembly, where the influence of the ministry was not only without weight, but their opinions in favour of any plan were prejudicial to it. They were constantly in favor of treating the productions of the U.S. with marked favor & on the most liberal footing. My letters will have shewn how the nature of the revolution, private intrigues & private interests formed a current against such a system which unquestionably no person here from the U.S. of what talents, virtue & merit soever could have resisted. I have never ceased announcing that changes such as we wish would be made in time, & as soon as the government should be formed & really in action. Although that term is not yet arrived, yet the present state of ministry is such as to give the fullest hopes of the change being now possible. The majority of the assembly have by various means at length obtained a ministry of their choice, & in whom they place their confidence—the plans of ministry will accordingly be adopted, & the minister who will have the direction of all commercial matters M. Claviere16 is a man much known for his writings in favour of a liberal system of commerce & particularly of encouragement to that with the U.S. He published a work express[ly] on the subject some years ago17 & will now attempt to realize his ideas. This accidental circumstance takes place at the moment of my being withdrawn from hence & leaves Mr. Morris nothing to do but to call the attention of government to this object in order to affect the changes desired by the U.S. I mention this by no means with the intention of taking from the merit of the efforts which will certainly be made by that gentleman, but merely to explain the circumstances, that government may not attribute absolutely to me, a commercial system which begun as it were & will end with the term of my being employed. I may flatter myself with a just & enlightened administration, well acquainted with the principles of this revolution & weighing their influence in the present case, ascribing the effects to their true causes. I have no right to hope that the public who judge of actions by the event, should make an exception in my favor; & of course as it has been my misfortune to reside here during the adoption of a system of commerce prejudicial to the U.S. & as it will cease with the time of my residence, I must submit to the fault being in their mind attributed to me & will sincerely rejoice in a change, by whomsoever effected, that I am persuaded will be advantageous to the United States. I have now Sir only to beg your pardon for so long & tedious a digression, into which I have been involuntarily led by the high value I place on your opinion with respect to my conduct in every instance—& if I have been wrong in thus troubling I hope you will consider the motive as a sufficient excuse & allow me to add assurances of the profound respect with [which] I shall ever have the honor to be, Sir, your most obedient & most humble servant
Alexander Hamilton Secretary of the Treasury, Philadelphia
ALS, letterpress copy, William Short Papers, Library of Congress.
1. For a description of the Antwerp loan, see Short to H, November 8, 1791, note 4, and November 12, 1791. For the plan to apply portions of the French debt on supplies for Santo Domingo, see Short to H, December 28, 1791, and January 26, 1792.
On February 29, 1792, Short wrote to Jefferson on these matters as follows:
“There has been daily expectation of the National Assembly allowing a part of our debt to be employed in advances to the sufferers in St. Domingo & I have for that reason as yet suspended the payment of the sums arrising on the last loan at Amsterdam in hopes of its being employed in that manner. The Antwerp loan is paid here as fast as received. I have already receipts from the French Agent at Antwerp for near 1,800,000 florins & that sum will be compleated by to day agreeably to the engagement of the undertaker of the loan. I will ask the favor of you to communicate these circumstances to the Secy. of the Treasury, who I hope will excuse my not writing by the present conveyance, my last to him was by the way of Havre & I shall write to him again by the same way very shortly.” (LC, RG 59, Despatches from United States Ministers to France, 1789–1869, January 16, 1791–August 6, 1792, National Archives.)
A copy of this section of Short’s letter was sent to H by Jefferson on May 30, 1792 (AL, letterpress copy, Thomas Jefferson Papers, Library of Congress).
On March 15, 1792, Jean de Lacoste had been appointed French Minister of Marine. Short, however, is probably referring not to Lacoste but to a former Minister of Marine, Antoine François, Marquis de Bertrand de Moleville. Bertrand was among the chief proponents of the plan for using the American debt to France to send supplies to Santo Domingo.
4. Gouverneur Morris’s appointment as United States Minister Plenipotentiary to France had been confirmed by the Senate on January 12, 1792 (Executive Journal, I description begins Journal of the Executive Proceedings of the Senate (Washington, 1828). description ends , 96).
9. Short to De Wolf, February 27, 1792 (ALS, letterpress copy, William Short Papers, Library of Congress).
10. De Wolf to Short, March 5, 1792 (ALS, letterpress copy, William Short Papers, Library of Congress).
11. Walter Boyd, an English financier, was the chief member of this Paris banking firm.
12. Jean Joseph, Marquis de Laborde, banker to Louis XV.
14. In 1789 Gouverneur Morris had formed a combination with Daniel Parker to purchase the French debt. See Short to H, November 30, 1789, and January 28–31, 1790. Parker, in association with John Holker, William Duer, and others, had been among the most important of the contractors for supplying the Continental and French armies in the United States during the American Revolution.
16. This is a reference to the Girondist Ministry under the control of Charles François Dumouriez and Jean Marie Roland de La Platière which came into power in March, 1792. Etienne Clavière was appointed Minister of Finance in the new ministry.
17. Etienne Clavière and J. P. Brissot de Warville, De la France et des Etats-Unis, ou de l’importance de la Révolution de l’Amérique, pour le bonheur de la France, des rapports de ce royaume et des Etats-Unis, des avantages réciproques qu’ils peuvent retirer de leurs liaisons de commerce, et enfin la situation actuelle des Etats-Unis (London, 1787).