To Alexander Hamilton
Philadelphia Mar. 27. 1793.1
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. and 12th. of Aug. 1790. when it was proposed to adopt it under those acts. I am encouraged to do this by the degree of certainty with which I can2 do it, happening to possess an official paper3 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 general5 plan presented to view, according to my comprehension of it, in your Report and Draught of instructions, was 1. to borrow, on proper terms, such a sum of money as might answer all demands for principal and interest of the foreign debt due to the end of 1791. 2. to consider two of the three millions of florins already borrowed, as if borrowed under the act of Aug. 4. and6 so far an execution of the operation beforementioned.7 3. to consider the third million of florins so borrowed, as if borrowed under the act of the 12th. of Aug. and8 so far an execution of the powers given to the President to borrow two millions of Dollars for the purchase of the public debt. I remember that the9 million of Dollars surplus of10 the Domestic revenues, appropriated to the purchase of the public debt,11 appeared to me12 sufficient for that purpose here,13 for probably a considerable time. I thought therefore,14 if any part of the three millions of florins were to be placed under15 the act of the 12th. of Aug. that it should rather16 be employed in purchasing17 our foreign paper at the market of Amsterdam. I had my self observed18 the different degrees of estimation in which the paper of different countries was held at that market, and 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, and 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, and therefore19 having no occasion afterwards to pay attention to it,20 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. (two days later than the paper beforementioned) as printed in your Report of Feb. 13. 1793. 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;21 but had directed the application of the whole to the foreign debt: and I inferred that he had done this22 on full and just23 deliberation, well knowing he would have time enough to weigh the merits of the two opinions, before the million of dollars would be exhausted here,24 or the loans for the foreign debt would25 overrun their legal measure there.26 In this inference however27 I might be mistaken; but28 I cannot be29 in the fact that these instructions gave a sanction to neither opinion.
I have thus, Sir, stated30 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, Your most obedt humble servt
RC (DLC: Hamilton Papers); addressed: “The Secretary of the Treasury”; several words torn away supplied from PrC; endorsed by Hamilton. PrC (DLC). Dft (DLC: James Madison Papers); originally dated “Mar. 1793” (see note 1 below); lacks final page with signature sent to Edmund Randolph; contains numerous revisions, based in part on Randolph’s comments of 26 Mch. 1793, as noted below; enclosed in TJ to Madison, 31 Mch. 1793. PrC (DLC); signed; lacks all revisions except those recorded in notes 1, 11 and 21 below; at head of text by TJ in ink: “not sent.” Tr of PrC of Dft (DLC); 19th-century copy.
Carefully amended in light of Edmund Randolph’s suggestions (see Randolph’s Notes on Jefferson’s Letter to Alexander Hamilton, [ca. 26 Mch. 1793]), this letter was TJ’s response to what amounted to an effort by the Secretary of the Treasury to undermine one of the most serious accusations against him in the resolutions of censure offered to the House of Representatives exactly a month before by William B. Giles—that Hamilton had exceeded his authority from the President by applying to the domestic as well as to the foreign debt a loan of 3,000,000 florins for partial payment of the American debt to France provisionally arranged in January 1790 by Willink, Van Staphorst & Hubbard, our bankers in Amsterdam. For a discussion of Hamilton’s retrospective approval of this loan under the authority of the acts of the 4th. and the 12th. of Aug. 1790, which authorized the President respectively to borrow up to $12,000,000 for the payment of the foreign debt and $2,000,000 for the redemption of the domestic debt, and TJ’s sanction of Hamilton’s action at the time, see note to Notes on Alexander Hamilton’s Report on Foreign Loans, [ca. 20 Feb. 1793]; see also Editorial Note on Jefferson and the Giles resolutions, at 27 Feb. 1793.
Although the House overwhelmingly defeated the Giles resolutions, Jefferson and other Republicans refused to allow the issue of Hamilton’s alleged misuse of the 1790 loan to die. Writing as “Franklin,” the Virginia Republican leader John Taylor of Caroline raised it in an essay published in the National Gazette early in March 1793, as did John Beckley five weeks later in an anonymous pamphlet charging that Hamilton’s administration of the Treasury Department was rife with corruption (“Franklin,” National Gazette, 2 Mch. 1793; TJ to Jean Baptiste Ternant, 25 Feb. 1793, and note; Beckley’s pamphlet is discussed in note to Notes on Stockholders in Congress, 23 Mch. 1793).
In the meantime Hamilton became convinced that TJ planned to raise the issue at a special meeting of the Commissioners of the Sinking Fund, the body responsible for supervising the redemption of the domestic debt. To counter this move, as well as to prepare himself for an anticipated resumption of the Republican assault on his management of public finances during the next congressional session, Hamilton apparently took advantage of their joint attendance at what proved to be an abortive Cabinet meeting on 25 Mch. 1793 to press the Secretary of State for a statement of his original understanding of the intended use of the 1790 loan. Hamilton justified this request by informing TJ that he wished to use this statement to satisfy “some friends” about the disposition of the loan and to assist his plan “to revive this subject”—a veiled reference to his intention of calling himself for another congressional investigation of his administration of the Treasury in order to rebut once and for all Republican allegations of official misconduct, a strategy he actually followed soon after the Third Congress convened in December 1793 (Editorial Note on Jefferson and the Giles resolutions, at 27 Feb. 1793; TJ to James Madison, 31 Mch. 1793; see also Hamilton to TJ, 24 Mch. 1793, and note). Hamilton’s approach to TJ suggests that he either knew or suspected that the Secretary of State had originally approved his proposal to apply the 1790 loan to the foreign and domestic debts and that he hoped by this stratagem to elicit an admission that would serve to undermine Republican attacks on him. In any event, TJ parried Hamilton’s maneuver by distinguishing between his original approval of the Treasury Secretary’s proposed application of the 1790 loan and his subsequent conviction that the President’s instructions had confined the use of the loan to the foreign debt. As a result, there is no evidence that Hamilton sought to make use of TJ’s letter in the continuing polemics over his handling of this loan.
1. TJ originally dated the Dft “Mar. 1793.” After Randolph returned the Dft with his comments, TJ filled in the blank with “27” and inserted the same date in ink on the PrC of Dft.
2. Word interlined in Dft in place of “am enabled to.”
3. In Dft TJ first wrote “a paper” and then altered the phrase to read as above.
4. In Dft TJ originally did not begin a new paragraph at this point, but during revision he inserted a paragraph symbol.
5. Word interlined in Dft.
6. Dft: “if … and” interlined.
7. In Dft TJ first wrote “this operation under the act of Aug. 4.” and then altered the phrase to read as above.
8. Dft: “if … and” interlined.
9. Preceding eleven words interlined in Dft in place of “under the act of the 12 of August. This I thought expedient if this third million of florins were to be employed in buying up our foreign paper on the exchange of Amsterdam. The surplus of a.”
10. Preceding two words interlined in Dft in place of “from.”
11. In Dft TJ first wrote “to purchases of that debt” before reworking the phrase to read “to purchases of the public debt.” After Randolph returned the Dft, TJ altered the wording of the passage to read as above.
12. Preceding three words interlined in Dft in place of “being.”
13. Word not underscored in Dft.
14. “I thought it better” in Dft before TJ altered the passage to read as above.
15. Preceding two words interlined in Dft in place of “allotted to.”
16. Word interlined in Dft.
17. Preceding two words interlined in Dft in place of either “on” or “in.”
18. Preceding four words interlined in Dft in place of “I was disposed to think this from having seen.”
19. Paragraph to this point interlined in Dft.
20. Word interlined in Dft in place of “this subject as being out of my department.”
21. Preceding six words interlined in Dft and PrC of Dft.
22. Here in Dft TJ canceled “of design, and.”
23. Preceding two words interlined in Dft.
24. Word not underscored in Dft.
25. Word interlined in Dft.
26. Word not underscored in Dft, where TJ canceled “But,” the first word in the next sentence.
27. Word interlined in Dft.
28. Word interlined in Dft.
29. Here in Dft TJ canceled “however.”
30. In Dft remainder of letter is added to foot and right margin of verso. PrC of Dft contains final page with remainder of TJ’s original ending: “to you my view of the destination of these monies in 1790. and have the honour to be with sentiments of due respect, Sir, Your most humble servt. Th: Jefferson.”