Notes on Alexander Hamilton’s Report on Foreign Loans
[after 4 Jan. 1793]
The most prominent suspicion excited by the Report of the S. of the T. of Jan. 3. 1793. is that the funds raised in Europe and which ought to have been applied to the paiment of our debts there, in order to stop interest, have been drawn over to this country and lodged in the bank,1 to extend the speculations and increase the profits of that institution.
To come at the truth of this, it becomes necessary to2 arrange the articles of this Report into two accounts. viz.
- 1. An account of the funds provided in Europe, for which the treasury is to be debited: while it is to be credited for the application of these funds to such disbursements as they were by law appropriated to. The balance remaining on hand there, must still belong to the same purposes.
- 2. An account of the funds provided in America for the objects which are entered in this report, or may be brought forward to support it; which are to be Debited to the Treasury, while it is Credited for the applications of them to the purposes to which they have been appropriated by law.
The two following Accounts are raised on these principles.
|The Treasury, for Receipts & Disbursements in Europe, in account||Dr.||with the U.S. of America||Cr.|
|(pa. 2.)||To nett amount of monies borrowed in Amstdm. & Antwerp.||By disbursements for the purposes to which the loans were appropriated by law. vz (bank law §.11.) To the bank for the subscription of the US.|
|florins ƒ D||D||D|
|Note.||We have here admitted that the whole 2,000,000 D subscribed to the bank might have been paid out of the funds in Europe. Whereas in truth their subscription being on the 1st. Jan. 1792. there should have been paid on that day the first instalment only of 500,000 D. and before any other instalment became due, there was the loan of 2,000,000 D. from the bank, on the same day, which might have been applied, so as to spare the European fund. There would then have remained 1,500,000 D. more in Europe to pay off the French debt and stop it’s interest, instead of lying dead in the bank.3 But wave this, because it admits some cavil.||(pa. 2.)||To France||10,083,116–9|
|(pa. 3.)||for other foreign loans||1,733,189–2–8|
|postage, & advertizing||613–8–8|
|interest to foreign officers||105,000|
|balance stated to be in hands of the Commissioners 407,287–7–8 =||164,544 =|
|Deficit not found in their hands||7,545,912|
|The Treasury, for Receipts & Disbursements in America in Account||Dr||with the U.S. of America||Cr.|
|To Deficit in the European fund as per contra||282,447.24||(pa. 5.)||By Departmt. of state for Barbary & foreign transactions [acts 90. July 1. c.22. 92. May 8. c.41.]||D
|To loan from the bank||2,000,000||By paid to France for St. Domingo||445,263.83|
|To Surplusses of revenues approprd to Purchase of Public debt. (suppose)||3,250,268.89||By paid in purchase of Public Debt [see Report of Commrs. of Nov. 17. 92. pa. 4.]||1,541,852.15|
|Balance remaining in bank ought to be 1,708,416.74. but if to avoid cavil, we admit the 191,316.90 D rightly drawn from Europe into the hands of the bank to pay certain foreign officers in Europe as by contract, then we must credit that sum||191,316.90|
|the Balance in bank will then be 1,517,099.84||4|
|The only possible deduction which could be made from5 this balance further would be so much of the 967,821.65 D paid in purchase of the public debt as exceeds the Surplusses of Revenue applicable to that purchase. If there has been no surplus at all then from||1,517,099.84|
|we must deduct the whole|
|which would leave a balance in the bank still of||549,278.19|
There being certainly then a balance of 549,278.19 D. and probably much more in the bank, there must have been a balance of 39,278.19 D. before6 the last draughts for 510,000 D. were made in it’s favor. Why then were they made? But to put these matters out of question two further statements are requisite. viz
- 1. The account of the U.S. with the bank, from which we may see whether the state of the account was such as to require this paiment?
- 2. a statement of the surplusses of revenue which actually arose, and might have been applied to the purchase of the publick debt. The amount of these surplusses are to be added to our balance against the bank.
MS (DLC: Madison Papers); entirely in TJ’s hand; undated; brackets in original except in dateline; consists of one long sheet folded to make four pages, with notes on first page and accounts on second and third pages, the fourth being blank. PrC (DLC: TJ Papers, 96: 16478–80). PrC of Dft (same, 16481–2); undated; consists of two pages of entries forming a worksheet for accounts.
These notes, obviously intended for James Madison, consist of TJ’s analysis of Alexander Hamilton’s 3 Jan 1793 report on foreign loans; the House of Representatives received the report on the following day. TJ’s references indicate that he used the text of the report printed by order of the House (Evans, description begins Charles Evans, Clifford K. Shipton, and Roger P. Bristol, comps., American Bibliography: A Chronological Dictionary of all Books, Pamphlets and Periodical Publications Printed in the United States of America from … 1639 … to … 1820, Chicago and Worcester, Mass., 1903–59, 14 vols. description ends No. 26350; Syrett, Hamilton description begins Harold C. Syrett and others, eds., The Papers of Alexander Hamilton, New York, 1961–87, 27 vols. description ends , xiii, 451–62). At Washington’s direction, Hamilton drew up the report in response to a 27 Dec. 1792 resolution of the House requesting a detailed statement of the disposition of foreign loans negotiated under presidential authority. The resolution had been prompted by debates over a Hamilton-inspired bill to pay the government’s debt to the Bank of the United States (Annals description begins Annals of the Congress of the United States: The Debates and Proceedings in the Congress of the United States … Compiled from Authentic Materials, Washington, D.C., Gales & Seaton, 1834–56, 42 vols. All editions are undependable and pagination varies from one printing to another. The first two volumes of the set cited here have “Compiled … by Joseph Gales, Senior” on the title page and bear the caption “Gales & Seatons History” on verso and “of Debates in Congress” on recto pages. The remaining volumes bear the caption “History of Congress” on both recto and verso pages. Those using the first two volumes with the latter caption will need to employ the date of the debate or the indexes of debates and speakers. description ends , iii, 753–61). TJ’s most prominent suspicion that Hamilton was guilty of misapplying foreign loans in the interest of the Bank of the United States was aroused by Hamilton’s revelation in this report that he had drawn to America and lodged in the bank some of the funds negotiated in Europe to discharge the foreign debt. Hamilton’s subsequent explanation and defense of his action (Syrett, Hamilton description begins Harold C. Syrett and others, eds., The Papers of Alexander Hamilton, New York, 1961–87, 27 vols. description ends , xiv, 46–57) failed to convince TJ and led to his involvement with House Republicans in the preparation of censure resolutions which severely criticized the Secretary of the Treasury on this issue. For the hypothesis that TJ set down and transmitted these notes to Madison sometime before 23 Jan. 1793, see Editorial Note on Jefferson and the Giles resolutions, at 27 Feb. 1793. report of commrs.: Report of the Commissioners of the Sinking Fund, [17 Nov. 1792].
1. TJ first completed the sentence with “to enable them to extend their speculations and increase their profits” before altering the passage to read as above.
2. Here TJ canceled “divide the.”
3. TJ appears to have added the following sentence after first ending the paragraph here and drawing the line underneath.
4. Reworked from “1,541,852.15.”
5. Preceding six words interlined in place of “obligation which might discount.”
6. Word interlined in place of “when.”