From Thomas Jefferson1
Philadelphia Mar. 27. 1793.
In compliance with the desire you expressed, I shall endeavor to give you the view I had of the destination of the loan of three millions of florins obtained by our bankers in Amsterdam previous to the acts of the 4th. & 12th. of Aug. 1790. when it was proposed to adopt it under those acts.2 I am encouraged to do this by the degree of certainty with which I can do it, happening to possess an official3 paper whereon I had committed to writing some thoughts on the subject, at the time, that is to say, on the 26th. of Aug. 1790.4
The general plan presented to view, according to my comprehension of it, in your Report & Draught of instructions,5 was 1. to borrow, on proper terms, such a sum of money as might answer all demands for principal & interest of the foreign debt due to the end of 1791. 2 to consider two of the three m⟨illions⟩ of florins already borrowed, as if borrowed under the act of Aug. 4. and so far an execution of the operation beforementioned. 3. to consider the third million of florins so borrowed, as if borrowed under the act of the 12th. of Aug. and so far an execution of the powers given to the President to borrow two millions of Dollars for the purchase of the public debt.6 I remember that the million of Dollars surplus of the Domestic revenues, appropriated to the purchase of the public debt, appeared to me sufficient for that purpose here, for probably a considerable time. I thought therefore, if any part of the three millions of florins were to be placed under the act of the 12th. of Aug. that it should rather be employed in purchasing our foreign paper at the market of Amsterdam. I had myself observed the different degrees of estimation in which the paper of different countries was held at that market, & wishing that our credit there might always be of the first order, I thought a moderate sum kept in readiness there to buy up any of our foreign paper, whenever it should be offered below par, would keep it constantly to that mark, & thereby establish for us a sound credit, where, of all places in the world, it would be most important to have it.
The subject however not being within my department, & therefore having no occasion afterwards to pay attention to it, it went out of my mind altogether, till the late enquiries brought it forward again. On reading the President’s instructions of Aug. 28. 1790.7 (two days later than the paper beforementioned) as printed in your Report of Feb. 13. 1793.8 in the form in which they were ultimately given to you, I observed that he had therein neither confirmed your sentiment of employing a part of the money here, nor mine of doing it there, in purchases of the public debt; but had directed the application of the whole to the foreign debt: & I inferred that he had done this on full & ⟨just de⟩liberation, well knowing he would have time enough to weigh the merits of the two ⟨opini⟩ons, before the million of dollars would be exhausted here, or the loans for the foreign debt would overrun their legal measure there. In this inference however I might be mistaken; but I cannot be in the fact that these instructions gave a sanction to neither opinion.
I have thus, Sir, stated to you the view I had of this subject in 1790. and I have done it because you desired it. I did not take it up then as a Volunteer, nor should now have taken the trouble of recurring to it, but at your request, as it is one in which I am not particularly concerned, which I never had either the time or inclination to investigate, and on which my opinion is of no importance. I have the honor to be with respect, Sir,9
Your most obedt humble servt
ALS, Hamilton Papers, Library of Congress; ALS, letterpress copy, Thomas Jefferson Papers, Library of Congress; ADf, James Madison Papers, Library of Congress. A second ADf, letterpress copy, marked “not sent” and varying in some details from the draft and the receiver’s copy, is located in the Thomas Jefferson Papers, Library of Congress. The draft sent to Madison was the original of the letterpress draft in the Thomas Jefferson Papers marked “not sent.” Jefferson made a number of alterations and deletions on this copy before forwarding it to Madison. The amended copy sent to Madison agrees substantially with the version sent to H.
1. This letter can be understood only when placed in the context of the orders of the House of Representatives and the Senate directing H to submit information on his handling of the finances of the United States and of the resolutions of censure introduced in the House by William B. Giles. See the introductory note to “Report on the Balance of All Unapplied Revenues at the End of the Year 1792 and on All Unapplied Monies Which May Have Been Obtained by the Several Loans Authorized by Law,” February 4, 1793.
2. Jefferson’s account of H’s request for a letter from the Secretary of State is contained in the following extract from a letter that Jefferson wrote to James Madison on March 31, 1793: “I inclose you the rough draught of a letter I wrote on a particular subject on which the person to whom it is addressed desired me to make a statement according to my view of it. He told me his object was perhaps to shew it to some friends whom he wished to satisfy as to the original destination of the 3. mill of florins, and that he meant to revive this subject. I presume however he will not find my letter to answer his purpose” (AL, letterpress copy, Thomas Jefferson Papers, Library of Congress). Jefferson apparently also requested Edmund Randolph’s views on this letter. The Attorney General’s opinion, dated March 26, 1793, may be found in the Thomas Jefferson Papers, Library of Congress.
The “three millions of florins” mentioned by Jefferson constituted the first loan made by the new government under the Constitution. Bearing five percent interest, the loan commenced on February 1, 1790, but was not authorized until August, 1790, when Congress passed “An Act making provision for the (payment of the) Debt of the United States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 138–44 [August 4, 1790]) and “An Act making Provision for the Reduction of the Public Debt” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 186–87 [August 12, 1790]). For a discussion of the terms of this loan, see Willink, Van Staphorst, and Hubbard to H, January 25, 1790; H to Willink, Van Staphorst, and Hubbard, November 29, 1790. For H’s defense of his conduct respecting this loan, see “Report Relative to the Loans Negotiated Under the Acts of the Fourth and Twelfth of August, 1790,” February 13–14, 1793.
3. The word “official” was omitted in the letter marked “not sent” in the Thomas Jefferson Papers.
4. A copy of “Jefferson’s Opinion on Fiscal Policy,” August 26, 1790, may be found in RG 59, Copybooks of George Washington’s Correspondence with the Secretaries of State, 1789–1796, Vol. 21, National Archives. It is printed in Boyd, Papers of Thomas Jefferson description begins Julian P. Boyd, ed., The Papers of Thomas Jefferson (Princeton, 1950– ). description ends , XVII, 425–27.
5. See H to George Washington, August 26, 1790. See also “Report on Foreign Loans,” February 13, 1793, and “Report Relative to the Loans Negotiated Under the Acts of the Fourth and Twelfth of August, 1790,” February 13–14, 1793.
6. In the letter marked “not sent” this paragraph is worded somewhat differently.
9. The last paragraph was omitted in the letter marked “not sent.”