From Gouverneur Morris
Paris 27 May 1791
I have the Honor to enclose a Letter and sundry Papers from Messieurs Schweizer Jeanneret and Company. I have referred these Gentlemen to Mr Short telling them that it is most fitting in many Respects that they should apply to him.1
As it is possible however that this Business may come before you, I think it a Duty to convey Some Observations which occur to me and which may not perhaps strike you because Matters of that Sort have not I beleive much occupied your Attention. Previous thereto I beg Leave however to give you a History of my Acquaintance with it. In a Letter to Colonel Hamilton of the 31st of January 1790 I mentioned what had passed between Mr Necker and me respecting the Debt due by the United States to France, and I hinted at the Means of turning to useful Account a very precipitate step of the public Agents in Holland.2 About this time I received your Orders to communicate with the british Ministers and altho’ I did by no means consider that in the Light of an Appointment to Office, yet from Motives of Delicacy I determined to extricate myself from the Affair of the Debt as speedily as I could with Propriety.3 Various Applications were made to me from different Quarters to which I replied evasively but on my Arrival in this City last November I informed the Parties that I had Reasons of a private Nature which deterred me from holding any Share in their Speculation. I conversed with Mr Short on the same Subject and communicated to him confidentially my Reason for declining an Interest as well as my Opinion respecting the Use which might be derived from such Negotiation.4 A few Days after the President of the Committee of finance happening to meet me at the Count de Montmorins mentioned some Proposals then before them which to the best of my Remembrance were extravagant. I declined giving an Opinion without previously seeing and considering the Terms; upon which he and Mr de Montmorin agreed together that before any thing was concluded the various Propositions which might be made should be submitted to my Examination.5 There the Thing dropt and the enclosed Papers shew the Reason why; for it appears from them that a Bargain was made shortly after by the Controleur general with a different Company. Mr Short mentioned this to me on his Return hither in the End of March telling me that the Parties concerned were (as he was informed in Amsterdam) Men of no Credit nor Capital. I of Course agreed with him in Opinion that if so it was not worth while to listen to them.6 A few Days after one of them called on me and after giving a History of the Affair begged me to make Use of my good Offices. I told him at once that it was ridiculous to ask a Commission of 5 % on changing the Nature of our Debt. That it was quite as convenient to owe France as to owe the Subjects of France, and further that before any Treaty was offered Persons of Credit and Capital should appear. As soon as I had made this last Observation he drew out the Letters of the Comptroller general and shewing me the second Clause of it replied that after what was there contained no Man had a Right to question the Solidity of the Society: he then added that for my private Satisfaction he would prove that People of the first Fortune were connected therein and indeed he gave me such Proof. I told him upon this that they must apply to Mr Short or to their own Ministry whose Support would be much more efficacious than the Sentiments of any private Individual. I ment⟨ioned⟩ nevertheless to Mr Short the Substance of this Conversation. While h⟨e⟩ was in the Country the enclosed Letter was received. He returned to Town Yesterday and called on me in the Evening when I communicated to him the Purport of it.7
I have ever been of Opinion that as we are not in Condition to pay our Debt to France a Bargain by which the Period can be prolonged without Loss to either Party is desirable. I say with⟨out⟩ Loss because the Conduct of this Nation has been so generous to us tha⟨t⟩ it would be very ungrateful indeed to take Advantage of those Necessities which the Succor afforded to America has occasioned. Suc⟨h⟩ a Bargain must be either with the Government or with Individuals⟨.⟩ But after the repeated Delays on our Part to ask longer Time now would not look well. Indeed no such Treaty could be made withou⟨t⟩ the Consent of the Assembly and their Observations would not be pleasant. A Bargain with Individuals has the Advantage of bringing in the Aid of private Interest to the Support of our Credit, and what is of very great Consequence it would leave us at Liberty to make Use of that Credit for the Arrangement of our domestic Affairs. And on this Head I must mention that it has been my good fortune to prevent some Publications which would have been particularly injurious to us. Their Object was to complain of the United States for speculating in their own Effects with the Funds of France. Urging that while we owe heavy Installments already due here all the Loans we obtain in Holland ought to be applied to the Discharge of them and therefore that the Speculations in our domestic Debt were a double Violation of good faith &ca &ca &ca—The present State of Things here has occasioned so great a Fall in the Exchange that Money borrowed in Holland is remitted with great Gain; consequently Loans made there just now answer well and it is evident that the Parties who are endeavoring to contract count on a considerable Profit from that Circumstance. Much however is to be said on this Part of the Subject. First it is questionable whether our Reputation may not be a little affected for you will recollect that about one third of our Debt to France arose from a Loan made on our Account in Holland of five Million of florins for which the King paid us here ten Million of Livres without any Deduction for Charges of any Sort.8 The Nation is now obliged to pay those five Millions in Holland, and for us to borrow that Amount there and then squeeze them in an Exchange which distresses both their Commerce and Finances looks hard. There was a good Deal of Murmuring about it when the last Operation of 1500000 Guilders took Place and I should not be at all surprized if some Patriot by Way of shewing his Zeal should make a violent Attack in the Assembly when the next Payment is made. There are many of these patriots who if they can inculpate Ministers and distress those of different Sentiments don’t care a Jot for Consequences. But supposing this not to happen it is not possible for a Nation to make the Advantages which Individuals do in such things because they must employ Individuals each of whom will be too apt to look a little to his own Advantage. There is a Difference also between the Gain made upon Parts and that which would arise on the whole for even if we could borrow all at once so large a Sum there can be no Doubt that the Remittance of it hither would greatly alter the Exchange. But it is not possible to borrow it speedily, and the present unnatural State of Things will in all Probability be changed. In fact the leading Characters are very seriously alarmed at it. If their Paper Currency should be either redeemed or annihilated or abolished Tomorrow the Exchange would immediately turn in Favor of France and then we should loose on Remittances. So much for this Affair in its little Details but there is a great View of it which forcibly strike my Mind. If we were at Liberty to turn all our Efforts towards our domestic Debt we should by raising its Value prevent Speculations which are very injurious to the Country if not to the Government. Millions have already been bought at low Price and afterwards negotiated in Europe; neither is that all for if we can borrow at five per Cent and buy up our six per Cent Debt at Par we gain at once by that Operation one fifth of the Interest or twenty per Cent which besides all the other good Consequences is much more than ever we shall get by any Management of our Debts on this Side of the Water.
I have given you my dear Sir these Hints in Abridgement because my Time will not permit of dilating them attribute them I pray you to the true Cause and beleive me always very sincerely yours9
ALS, DNA: RG 59, Miscellaneous Letters; LB, DLC: Gouverneur Morris Papers. Material in angle brackets is taken from the letter-book copy.
1. For background to William Short’s agency in negotiating new American loans in Holland, see Alexander Hamilton to GW, 26 Aug. 1790 (second letter) and 3 Sept. 1790. For Gouverneur Morris’s involvement in attempts to purchase the American debt to France and the schemes of the Paris banking firm of Jean Gaspar Schweitzer, Francois Jeanneret, et Compagnie, see editorial note in Jefferson Papers, description begins Julian P. Boyd et al., eds. The Papers of Thomas Jefferson. 40 vols. to date. Princeton, N.J., 1950—. description ends 20:175–97.
The enclosed letter from Schweitzer, Jeanneret, & Cie to Gouverneur Morris, dated Paris, 15 May 1791, reviewed the firm’s contacts with Short and the French government, stated that their investors agreed to renounce their commission on their proposed loan of 40 million livres to the United States, and requested the sanction of the deal by the American government (in French, DNA: RG 59, Miscellaneous Letters). The letter covered copies of: Schweitzer, Jeanneret, & Cie’s proposal of 22 Nov. 1790; Schweitzer, Jeanneret, & Cie to Charles-Guillaume Lambert, 22 Nov. 1790; Lambert to Armand-Marc, comte de Montmorin Saint-Hérem, 26 Nov. 1790; Montmorin to Lambert, 29 Nov. 1790; Lambert to Schweitzer, Jeanneret, & Cie, 30 Nov. 1790; Schweitzer, Jeanneret, & Cie to Short, 14 Dec. 1790; Short to Schweitzer, Jeanneret, & Cie, 17 Dec. 1790; Schweitzer, Jeanneret, & Cie to Short, 27 Dec. 1790; Schweitzer, Jeanneret, & Cie to Montmorin, 10 Jan. 1791; Montmorin to Schweitzer, Jeanneret, & Cie, 20 Jan. 1791; and Montmorin to Louis-Guillaume Otto, January 1791 (all in DNA: RG 59, Miscellaneous Letters). Short sent different copies of Schweitzer, Jeanneret, & Cie to Lambert, 22 Nov., Lambert to Montmorin, 26 Nov., and Short to Schweitzer, Jeanneret, & Cie, 17 Dec., to Hamilton on 18 Dec. 1790. See Syrett, Hamilton Papers, description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends 7:357–61, 367–68.
2. For Morris to Hamilton, 31 Jan. 1790, see ibid., 6:234–39.
3. Morris received on about 21 Jan. 1790 GW’s letter of 13 Oct. 1789 enclosing authorization of his private mission to London to discover the disposition of the British ministry toward the United States (see GW to Morris, 13 Oct. 1789 [second letter] and note 1, and Morris to GW, 22 Jan. 1790 [first letter]).
4. Morris recorded on 9 Nov. 1790: “Converse with Short on general Matters. He is going to see Montmorin and I tell him that I have declined an Interest and assign in Confidence the Reason. I find that his Mission is for the Purpose of borrowing the two Million of Dollars only. He agrees with me in Opinion that it will be useful to the United States that Individuals should contract for the French Debt, but thinks the french Government ought to be apprized of the true Situation of Things. I fully accord in this Sentiment and add that they should know also as nearly as possible what they have to depend on in Regard to the future” (Morris, Diary of the French Revolution, description begins Beatrix Cary Davenport, ed. A Diary of the French Revolution by Gouverneur Morris. 2 vols. Boston, 1939. description ends 2:53–54).
5. Morris noted on 21 Nov. 1790: “After Dinner I converse a little with Montmorin about his own Situation. He feels himself very aukward, not knowing whether to stay or go, or staying what to do. [Anne-Pierre, marquis de] Montesquiou[-Fézénsac] comes up and asks Information from me respecting the Debt from America to France. In the Result of his Enquiries it is agreed between him and Montmorin that no Proposition shall be accepted without taking first my Opinion on it” (ibid., 67).
6. In forwarding to Hamilton Montmorin’s letter of 24 Jan. 1791 to Short, the chargé wrote on 11 Mar. 1791: “I have learned lately what I had before reason to suspect that Jeanneret & Co. are entirely without capital or credit & further of a character which shews it would be unsafe to treat with them their offers being supported by the minister is the only circumstance which entitles them to any kind of attention” and concluded that it showed the French ministry was “in the disposition you would desire with respect to this affair” (Short to Hamilton, 11 Mar. 1791, Syrett, Hamilton Papers, description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends 8:170–76). During “a long Conversation on American Finance” on 9 April 1791, Morris endeavored to convince Short “that the Proposition made in Name of Schweitzer Jeanneret and Co: is a good one for the United States, provided they abate the Commission. This is my sincere Belief. I tell him also that from what the Parties have said to, and shewn to, me I am convinced that they have great Strength both with the Court and in the Assembly. That an Operation of this Sort would be so much the more useful as the United States might make Use of all their Credit to support their Domestic Operations. The Conversation is long, and he is a little changed in his Opinions” (Morris, Diary of the French Revolution, description begins Beatrix Cary Davenport, ed. A Diary of the French Revolution by Gouverneur Morris. 2 vols. Boston, 1939. description ends 2:157–58).
7. Morris recorded in his diary entry of 26 May 1791 that Short “does not come till near ten and stays with me till one. We converse a good Deal about various Affairs but particularly Loans for the United States, and the Offers made for the french Debt. I give him my sincere Opinion that a Bargain in the Lump would be the best Mode of treating that Affair” (ibid., 192).
9. GW had Tobias Lear on 15 Aug. 1791 “transmit to the Secretary of the Treasury a letter from Mr Governr Morris to the President respecting the Debt of the United States in France; which the President requests the Secretary to take into consideration, and to draft such an answer as will be proper for the President to give to Mr Morris on this subject” (Lear to Hamilton, 15 Aug. 1791 [first letter], DLC:GW). For GW’s reply, see GW to Morris, 12 Sept. 1791.