From Thomas Jefferson
[Philadelphia] June 6. 1793.
I cannot but think that to decline the propositions of mister Genet on the subject of our debt, without assigning any reasons at all, would have a very dry and unpleasant aspect indeed. we are then to examine what are our good reasons for the refusal, which of them may be spoken out, & which may not.1 1. want of confidence in the continuance of the present form of government, and consequently, that advances to them might commit us with their successors. this cannot be spoken out. 2. since they propose to take the debt in produce, it would be better for us that it should be done in moderate masses yearly, than all in one year. this cannot be professed. 3. when M. de Calonne was minister of finance, a Dutch company proposed to buy up the whole of our debt, by dividing it into actions or shares. I think mister Claviere, now minister of finance, was their agent. it was observed to M. de Calonne that to create such a mass of American paper, divide it into shares, and let them deluge the market, would depreciate them, the rest of our paper, and our credit in general. that the credit of a nation was a delicate and important thing & should not be risked on such an operation. M. de Calonne, sensible of the injury of the operation to us, declined it.2 in May 1791, there came, thro’ mister Otto, a similar proposition from Schweizer, Jeanneret & co. we had a representation on the subject from mister Short, urging this same reason strongly. it was refered to the Secretary of the Treasury, who in a letter to yourself assigned the reasons against it, and there were communicated to mister Otto, who acquiesced in them.3 this objection then having been sufficient to decline the proposition twice before, & having been urged to the two preceding forms of government (the antient & that of 1791) will not be considered by them as founded in objections to the present form. 4. the law allows the whole debt to be paid only on condition it can be done on terms advantageous to the U.S. the minister foresees this objection & thinks he answers it by observing the advantage which the paiment in produce will occasion. it would be easy to shew that this was not the sort of advantage the legislature meant, but a lower rate of interest.4 5. I cannot but suppose that the Secretary of the Treasury, much more familiar than I am with the money operations of the treasury, would on examination be able to derive practical objections from them. we pay to France but 5. per cent. the people of this country would never subscribe their money for less than 6. if to remedy this, obligations at less than 5. per cent were offered & accepted by mister Genet, he must part with them immediately at a considerable discount to indemnify the loss of the 1. per cent: and at a still greater discount to bring them down to par with our present 6. per cents: so that the operation would be equally disgraceful to us & losing to them &c. &c. &c.
I think it very material myself to keep alive the friendly sentiments of that country as far as can be done without risking war, or double payment. if the instalments falling due in this year can be advanced, without incurring those dangers, I should be for doing it. we now see by the declaration of the Prince of Saxe-Cobourg on the part of Austria & Prussia that the ultimate point they desire is to restore the constitution of 1791.5 were this even to be done before the pay-days of this year, there is no doubt in my mind but that that government (as republican as the present except in the form of it’s executive) would confirm an advance so moderate in sum & time. I am sure the nation of France would never suffer their government to go to war with us for such a bagatelle, & the more surely if that bagatelle shall have been granted by us so as to please and not to displease the nation; so as to keep their affections engaged on our side. so that I should have no fear in advancing the instalments of this year at epochs convenient to the treasury. but at any rate should be for assigning reasons for not changing the form of the debt.6 these thoughts are very hastily thrown on paper, as will be but too evident—I have the honor to be with sentiments of sincere attachment & respect, Sir Your most obedient & most humble sert
ALS, DNA: RG 59, Miscellaneous Letters; ALS (letterpress copy), DLC: Jefferson Papers; LB, DNA: RG 59, George Washington’s Correspondence with His Secretaries of State.
2. For the financial plan of a Dutch company, probably drawn up in 1786 or 1787 by Jacob Van Staphorst of the Amsterdam banking firm of Willink & Van Staphorst, see 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 , 14:190–200. Charles-Alexandre de Calonne served as Louis XVI’s comptroller general of finance from 2 Nov. 1783 to 8 April 1787. Etienne Clavière served as minister of finance from 23 Mar. to 13 June 1792 and 10 Aug. 1792 to 2 June 1793. He was replaced by Louis Grégoire Des Champs Des Tournelles, who served until 1 April 1794. Jefferson was the U.S. minister to France at the time of this proposal.
3. For background on the proposals from the Paris banking firm of Schweitzer, Jeanneret & Cie, as presented to Jefferson by Louis-Guillaume Otto, the French chargé des affaires, see the editorial note, ibid., 20:175–97. Otto enclosed the proposals in his letter to Jefferson of 10 April 1791, and Jefferson informed Otto of the government’s rejection in a letter of 7 May 1791 (ibid., 198, 203). For William Short’s representation, see his letter to Alexander Hamilton of 18 Dec. 1790, and enclosures, in Hamilton Papers description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends , 7:348–368; Gouverneur Morris to GW, 27 May 1791 (first letter), and notes. Hamilton’s letter to GW, circa May 1791, explaining his reasons for rejecting these proposals has not been found, but these objections are outlined in GW’s letter to Morris of 12 Sept. 1791.
4. See “An Act making provision for the [payment of the] Debt of the United States,” 4 Aug. 1790, 1 Stat description begins Richard Peters, ed. The Public Statutes at Large of the United States of America, from the Organization of the Government in 1789, to March 3, 1845 . . .. 8 vols. Boston, 1845-67. description ends ., 138–44.
5. For the proclamation of 5 April 1793 by the Austrian general Friedrich Josias, prince of Saxe-Coburg-Saalfeld, see the General Advertiser (Philadelphia), 3 June 1793.
6. Later on 6 June, GW apparently passed Jefferson’s comments to Hamilton, who submitted an amended draft later on this date. GW then forwarded this second draft to Jefferson for review. Although Hamilton’s amended draft has not been found, Jefferson copied Hamilton’s additions for his own records, probably on 7 June, and added his own commentary (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 , 26:181–82; JPP description begins Dorothy Twohig, ed. The Journal of the Proceedings of the President, 1793–1797. Charlottesville, Va., 1981. description ends , 163). Jefferson then returned the amended draft to GW with a cover letter of 7 June that included some additional suggestions for changes (DLC: Jefferson Papers; printed 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 , 26:182). The final version of this report was enclosed in Hamilton’s letter to GW of 8 June.