Notes on Alexander Hamilton and the Bank of the United States
Mar. 31. Mr. Beckley tells me that the merchants bonds for duties on 6. mo. credit became due the 1st. inst. to a very great amount. That Hamilton went to the bank on that day and directed the bank to discount for those merchants all their bonds at 30. days, and that he would have the Collectors credited for the money at the Treasury. Hence the Treasury lumping it’s receipts by the month in it’s printed accounts these sums will be considered by the public as only received on the last day, consequently the bank makes the month’s interest out of it. Beckley had this from a merchant who had a bond discounted and who supposes a million of dollars were discounted at the bank here. Mr. Brown got the same information from another merchant who supposed only 600,000 D. discounted here. But they suppose the same orders went to all the branch banks to a great amount.
eod. die. Mr. Brown tells me he has it from a merchant here that during the last winter the Directors of the bank ordered the freest discounts. Every man could obtain it. Money being so flush, the 6. percents run up to 21/ and 22/. Then the Directors sold out their private stocks. When the discounted notes were becoming due, they stopped discounts, and not a dollar was to be had. This reduced 6. percents to 18/3 then the same directors bought in again.
MS (DLC); entirely in TJ’s hand; written with “Anas” entry for 30 Mch. 1793 on the other side of a sheet bearing “Anas” entries for 2, 23, and 25 Mch. 1793. Possibly recorded in a torn and virtually illegible entry for this date in SJPL. Included in the “Anas.”
TJ’s interest in the apparent abuses of discounting by Alexander Hamilton and the bank of the United States was shared by other Republicans. The bank’s practice of discounting the notes of merchants purchasing Treasury bills of exchange had been singled out for criticism as a mechanism which generated “a regular and continual influx of moneys into the Bank” by William B. Giles in a speech to the House of Representatives on 23 Jan. 1793 attacking Hamilton’s management of Treasury funds and foreign loans. Hamilton defended discounting—“the great profitable business of a bank”—in a report to the House of 19 Feb. 1793 on the state of the Treasury, explaining that the discounting of merchants’ notes at a credit of 30 days or more was a customary and reasonable practice and that those who criticized the bank’s policy simplistically confused notes with cash, an error which “could not be long acted upon without ruin to the institution” (Syrett, Hamilton description begins Harold C. Syrett and others, eds., The Papers of Alexander Hamilton, New York, 1961–87, 27 vols. description ends , xiv, 106–8; 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, 837–8).