Alexander Hamilton Papers

To Alexander Hamilton from William Seton, 20 December 1792

From William Seton

New York 20th Decemr. 1792

My dear sir

It is a long while since I have had the pleasure of a confidential intercourse with you. I forwarded all the Copies of the Letters that past between us upon the subject of the purchase of Stocks;1 since which I received a few lines from you covering a letter to forward by the last Packet, but no dispatches for the Minister:2 my friend in London3 writes me that the first Pacquet had come to hand and was delivered.

I find Mr. Burrall the Cashier of the Branch is purchasing Stock for the Public.4 I trust this change is not owing to any fault found with me by the Commissioners, but only to conform to the Bill establishing the Bank.5

I often recollect your expression, that the Branch must ultimately preponderate. I find this to be the case every day, and indeed it has now such an advantage in its operations over us, that if pusht too far, might be attended with fatal consequences; their Circulation is so great and the reception of their paper so universal, that no one has occasion to drain them of Specie. Our Circulation is so limited, confined merely to the City to pay Duties & discharge Notes in the Branch, the whole almost centers in their hands, & upon every exchange of Bank Notes which we make three times a week, the balance is eternally very large in their favour; we have therefore been obliged to pay them imense Sums in specie, which, and the other great drains we have had for India &ca—has reduced us from upwards of Six hundred thousand Dollars in actual Coin, now down to only Two Hundred thousand; this of course obliges us to cramp our operations, to the very great distress of our Dealers, and in one month to call in near Two hundred thousand Dollars of our Discounts. In the same space of time our Circulation of Bank Notes has lessend Seventy thousand; all the Paper we have now is but a little more than three hundred thousand Dollars, not one third of our Capital; the balance of our Bills Discounted is One Million seven hundred & Ninety thousand, not twice our Capital, & we reduce every week. Yet notwithstanding all this caution, the drain of Specie is so great and we are so much in the power of the Branch (whose direction certainly bear us no good will) that I really at times feel very uneasy. We owe them now Seventy thousand Dollars, the balance of your Treasury account is nearly the same amount. Should these two Sums be suddenly called for, you may easily see from the above detail how distressing & even dangerous it would be to us. Sensible my Dear sir of your attachment to this Institution and desire to serve it, I think it my duty to give you this private and confidential Account of our real situation, and to beg you will at all events prevent our being drawn upon for the Treasurers balance just now, & to save us from the depredations of the Branch if possible. By the 1st. of February I hope our balance of Bills Discounted will be reduced to One Million & an half. If with our Capital we cannot go that length with perfect safety, we might almost as well wind up; however there must be a certain period or extent of business that would infallibly put us upon a par with the other Bank, but what that extent is, must be found out by experience, & when found out it may perhaps be too small an object to be worth an operation.

When your occupations will allow you one moments leisure, it will be My dear Sir a great comfort to me, to have your sentiments on these points, for I must freely confess to you, that I think the Institution is in danger.6

With every sentiment of respect & esteem I am   My dear sir   Your Obliged Obed Hue Servt.

Wm Seton

Alexander Hamilton Esqr.

ALS, Hamilton Papers, Library of Congress.

3Joseph Hadfield.

4See H to Jonathan Burrall, December 14, 1792.

This is a reference to purchases authorized by the commissioners of the sinking fund. In the spring and summer of 1792, purchases of the funded debt by the commissioners had been made through the agency of the Bank of New York.

5The act to which Seton is referring has not been determined. Both the Bank of the United States and the Bank of New York were prohibited from trading in stocks either directly or indirectly. See “An Act to incorporate the stockholders of the Bank of New York” (Laws of the State of New York, III description begins Laws of the State of New York Passed at the Sessions of the Legislature Held in the Years 1789, 1790, 1791, 1792, 1793, 1794, 1795 and 1796, inclusive, Being the Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth and Nineteenth Sessions (Albany, 1887), III. description ends , 237–41 [March 21, 1791]); “An Act to incorporate the subscribers to the Bank of the United States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 191–96 [February 25, 1791]).

6H endorsed this letter “no answer.”

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