To William Short
July 25th. 1792
Your letters of the 25th of April and 14th of May have duly reached me; since the receipt of that of the 22nd of April which was acknowleged in mine of the 30th of June.
In consequence of your letter of the 14th of May I have directed drafts on the Commissioners1 for five hundred thousand Guilders, and as soon as these are sold, I shall cause further drafts to be made to the extent of [five hundred thousand]2 Guilders in addition to the above mentioned five hundred thousand. The residue of the monies hereto-fore announced [to have been borrowed,] will be left subject to your disposition towards payment of interest on the Dutch and Antwerp loans, during the present year, and of the Debt to France, with the surplus.
In speaking of the Interest on the Dutch and Antwerp loans, I wish to be understood that I rely for the payment of this interest during the present year on the funds which are or shall be in the hands of the Commissioners, arising from loans that have been or may be made. Whether you will leave unemployed in their hands, monies equivalent to the interest for the intire year, or will rely upon a further loan to be made, applying a greater proportion of the monies already obtained in payment to France, ought to be regulated upon the degree of certainty of effecting such further loan on admissible terms. This therefore is left to your discretion.
The statements A & B3 herewith transmitted will shew you the view which I have of the monies that would remain in the hands of the Commissioners on the loans hereto-fore known to have been effected, after paying all the bills hereto-fore drawn and deducting the interest on the Dutch and Antwerp loans to the end of the present year—namely [2120477 Guilders and 15 stivers]. From this sum you will only have to deduct, to satisfy any further disposition on my part the sum of [Five hundred Thousand Guilders,] still intended to be drawn for.
This statement however ought not to be acted upon by you as definitively accurate. It will be proper that you ascertain with the Commissioners with greater certainty what will remain at your disposal.
Mr. Morris must have misapprehended the tenor of the Secretary of State’s letter, from which he inferred, that it was the intention of [this] Government to transfer to France the loss by depreciation [on] the Assignats.4 It has been determined by the President that the United States will not take advantage of the depreciation, but will make an equitable adjustment of the affair.
You observe “that the rate of exchange and the current differences between specie and paper being known here (that is at Paris) furnish the basis for regulating the business.”5 I remark that much will depend on the manner of applying these data. They may be so applied as to create a positive loss to the United States; as if the rate of exchange below par should be less than the rate of depreciation, and the former should be added, the latter deducted.
For example. By a French paper of the 20th of April, if I understand it aright, exchange between Paris and Amsterdam was about 36 Cent against Paris, the depreciation of the Assignats about 60 Cent.
If then the computation were made by adding the rate of exchange and deducting the rate of depreciation there would be a loss upon [every] hundred Guilders in Amsterdam paid in Paris of 45 Guilders and ⁶⁰⁄₁₀₀ of a Guilder.
|Thus, add to 100 Guilders 36 Cent for the rate of exchange the product is||136||Guilders|
|Deduct for depreciation 60 Cent or||81.||60|
|There would remain||54.||40|
as the equivalent for 100 Guilders in Amsterdam, which would involve a loss of 45. ⁶⁰⁄₁₀₀ Guilders per hundred.
I take it for granted that this method of applying the data cannot have been contemplated, as it would throw upon the United States a heavy real loss in consequence of the disorders which exist in the affairs of France. Though the United States are not disposed to take any undue advantage, they cannot be supposed to be willing to suffer a loss.
You will have perceived from my letter of the 4th of June last,6 that it was the Presidents pleasure, that your Agency in the whole of the pecuniary affairs, originally committed to you, as well respecting [the] debt to France as otherwise, should continue; and that Mr Morris as representative of the United States, at the Court of France, would be instructed to co operate. I understand the Secretary of State that this instruction has been forwarded; though I feel full confidence that the requisite co operation will have been afforded independently of any instruction.
With very great consideration and Esteem, I have the honor to be Sir Your obedt Servant
PS. A Copy of the report of the 23d of January last is here enclosed.7
[William Short Esquire
LS, William Short Papers, Library of Congress; LS, marked “Duplicate,” William Short Papers, Library of Congress. A copy of this letter was enclosed in H’s “Report on Foreign Loans,” February 13, 1793; LS, marked “Triplicate,” Widener Library, Harvard University.
2. All bracketed material in this letter is in the handwriting of H.
3. See enclosures.
6. The date is incorrect. H is referring to his letter to Short of June 14, 1792.
7. “Report on the Public Debt and Loans,” January 23, 1792. H had sent his other report dated January 23, 1792, the “Report on Estimates of Receipts and Expenditures for 1791–1792,” to Short on January 28, 1792.