James Madison Papers

To James Madison from “Foreigner,” 17 February 1790

From “Foreigner”

Feby. 17. 90


I take the liberty to ask your attention to that part of the domestic debt which is registered in the name of foreigners. There are circumstances attending this portion of the debt which, in addition to the usual obligations of justice, give peculiar force & solemnity to the demands of present holders of the Certificates.

It should be observed that the first transfers of the domestic debt to foreigners, ware received by them at par, in the payment of private debts. The mode in which this business was Conducted deserves particular consideration.

Certain Agents offered to contract with Hollanders to furnish a large amount of the domestic debt of the United States. The precaution which the people of Holland are apt to observe with respect to money matters, was never exemplified in a stronger light than in the methods they took to ascertain the validity of the debt. They wished to establish it beyond a possibility of mistake, that the debt was subject to no new liquidation, that it was actually payable in specie, and that the assignees stood on a footing not less eligeble than the original claimant.

For these purposes, the agents obtained copies of all the acts of congress relative to the subject authenticated by the secretary of Congress. Among these, the address published in the year 1783 said to have been composed by yourself had a very important affect.1

A certificate likewise was obtained from Mr. Gorham the President of Congress explaining the principles on which the debt rested.

The secretary of the Board of Treasury under the seal of his office gave attestation to confirm the facts of which the Hollanders wished to be convinced.

Several of the most distinguished characters who were then members of Congress gave certificates to satisfy the minds of foreigners of the obligatory nature of the debt upon the United States.

Many eminent law characters in this Country, among whom was Doctor Johnson, have certified in the most unequivocal manner that the registered debt of the United States, in whatever hands it may be found, must be considered as a bona fide demand against the government.

That the sum expressed on the face of the certificates could not be reduced, or dischar[g]ed any other way than by actual payment, to the legal possessors.

The Ministers & Consuls of foreign Nations who then resided in this Country gave ample testimony with respect to the characters, before mentioned that full faith might be given to the documents which they furnished.

To place the validity of the debt in a still stronger point of light, Mr. Jefferson the American Minister in Paris corroborated all the facts expressed in the certificates I have enumerated. From this representation, you will perceive that the Hollanders reasonably supposes they were acting on safe ground in purchasing our domestic debt.

The Dutch are large holders of our registered certificates. They purchased at an average of fifteen shilling on the pound. The mode in which the debt is negotiated in Holland, is a circumstance that deserves notice. The Bankers at Amsterdam receive a large amount of certificates in trust, and put into circulation a new paper called actions. These are for small sums and are dispersed among the manufactors & farmers who purchase them & retain them on hand to receive their dividend of Interest or principle that may be paid on the certificates lodged as above mentioned. By this means there are perhaps several Thousand persons who hold actions, predicated on the domestic debt. These creditors are principally the same persons to whom we are indebted for foreign Loans. They were taught to believe, from what they supposed unquestionable authority, that the domestic debt of the united state was equelly binding upon the government as the foreign and that Congress had Sanctioned the practice of transfers by frequent & Solemn declarations. The people in Holland who have money at loan, depend on the annual interest for a subsistance. If they are deprived of this source of support they must be beyond comparison miserable. In an old Country, a man deprived of his usual means of maintainance cannot easely find a substitute.

If your amendment should prevail in what light will American faith be viewed in Europe. In what light must you be viewed by foreigners when they compare your address of 1783 with the principles you advanc’d in support of your amendment?

The real injury that has happened by depreciation is not so Considerable as you imagine. There was not one million of Dollars in circulation in any stage of the depreciation.

The original holders taken together have sold for 12/6 on the pound. It can be demonstrated that the Certificates were aleniated on pretty favourable terms. The loss sustained by depreciation has happened principally to the original purchasers & not to the original claimant. Most of the soldiers of the main army transfered their claims before it was conjectured they would be liquidated into certificates. In fact they sold this part of their claims on the same terms, as those that were afterwards paid in actual specie. The army anticipated their pay in general six months before it was due. I do not imagine that more than one Millions of Dolls. of the Certificates have even been alieniated by original holders on such unfavorable terms, as to make their case a hard one. I am sir with Respect


Ms (NN). In the absence of a cover or JM’s docket, it is uncertain whether this is an RC. In the left margin of the last page the writer identified his addressee as “Honorabl[e] Mr. Madison.” The letter may have been intended for publication, though it has not been found in the principal New York City newspapers.

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