To Alexander Hamilton from William Short, 28[–31] January 1790
From William Short
Paris Jan. 28. [–31] 1790
Sir
I had the honor of addressing you a letter on the 30th. of November last in answer to yours of the 7th. of October. In it I mentioned in what manner our debt to France had become an object of ministerial consideration before the arrival of Count de Moustier,1 who was charged with your letter,2 & the influence which his arrival had on some of those who were negotiating with the minister.3 Although I knew from your letter that he was not charged with the powers which he had mentioned to several, yet I did not think proper to contradict it, as he was endeavouring to operate what I thought for the advantage of the United States. Since that time the proposals made by different persons to the minister on the subject of our debt have been of two sorts. I mentioned them in my letters to Mr. Jay4 & begged the favor of him to communicate it to you, not being willing to trouble you before something definitive was done. This however being deferred longer than I had supposed possible after what I had heard M. Montmorin5 say on the proposition now before the minister, & it being not improbable that the delay may still continue I have thought it my duty to inform you of it.
The offer now before the minister is made by Mr. G. Morris & Mr. Parker6 of Boston—it is to pay the full amount of the American debt (capital & interest) in French funds which at present produce an annual interest equal to that of the American debt after the interest in arrear is added to the capital & also to oblige themselves, after they shall have deposited the French funds in the ministers hands to recieve them from him again & give him in their stead for a certain part of them to be agreed on, cash agreeable to their present value. This last article is to enable the minister to raise a certain sum of money on the American debt—or rather on the French funds given for the American debt, in the case of public exigencies requiring it. It is certain the Minister was determined to have accepted the offer, & has been prevented only by the want of confidence in the pecuniary abilities of those who made it. He asked security & they replied that no house could or would give security for a sum of nearly forty millions of livres—they desired that he should retain the American obligations as his security, & should deliver them only as he recieved their value in the French stocks. It seems he did not chuse to commence such a negotiation except with some house of established reputation, & this probably that his own might not be committed in the case of the contract not being carried into full execution. Mr. Morris is I believe now in correspondence with the bankers of the United States7 in order to engage them to join him in this offer—one of them who resides at Paris8 is much disposed to engage in it—the others I believe think differently. Thus Sir stands the affair at present—it comes to my knowledge as a private person. I have thought it best throughout the whole of these negotiations to take the least part possible in them, as it will leave the most entire liberty to the decisions of Congress, whose ratification will certainly be considered as one of the conditions of the contract.
It is useless after what I have said to add that nothing has been done by me on the subject of delaying the installments & arrears of interest agreeably to your desire. As I know Count de Moustier is desirous of doing whatever he supposes agreeable to the United States, & at the same time may prove to the Minister their confidence in him, I think this negotiation better in his hands than any other & also suppose it more conformable to your idea that the arrangement should be effected by his means than mine. He has told me that he had no doubt he should get Mr. Necker to make the offer of delay on the conditions & in the manner you desired.9 He added also, what I think not so certain that he had put a stop to the negotiation for the purchase of the American debt. Since that time I have had a conversation with M. Montmorin which convinced me that if any house of extensive & established credit should make the same offer with that of Mr. Morris, that it would be accepted without hesitation. On the whole however sir I think you may consider it as certain, either that the debt will be purchased by a company who will subscribe to your proposals, or that the minister will make an offer of what you desire.
I have obtained from the farmers general a return of the Vessels & cargoes which arrived in France from the United States under the premium of the last year. Supposing it may contribute as a datum to the calculations which you will necessarily be induced to make on the American commerce I do myself the honor Sir of forwarding it to you. My letters to Mr. Jay long ago, will have made known the continuation of this premium to the first of July next—a like return at that period will be easily obtained. A late letter from Bordeaux informs me that several vessels have already arrived there from the United States with flour & wheat of the last crop.
I beg leave to congratulate you Sir on the return of happiness & unexampled prosperity to our country, & on the effect which it has already produced in the dispositions of Europe towards us. My ardent wishes for their long continuance are as sincere as the assurances of those sentiments of profound respect & attachment with which I have the honor to be Sir, your most obedient & most humble servant
W. Short
P.S. Jan. 31, 1790. In the moment of sending off my letter I recieved the inclosed from the bankers of the United States at Amsterdam10 with a desire that I should read & forward it to you. I think it unnecessary to mention to you Sir my astonishment at the measure they have taken with respect to the loan, as well as the reasons on which they ground it: they go so fully into them that they need no comment on my part; I cannot avoid however taking notice of the paragraph which regards me as they have given an extent to my expressions which change entirely the nature of them, & seemed disposed to make an use of them in which you will easily see they are not warranted. When Mr. Hubbard11 was in Paris he came to explain to me the nature of the proposition he was about to make to Mr. Necker. Our only conversation was in presence of Mr Van Staphorst,12 who recollects perfectly that what I said to him was in answer to his arguments in favor of the plan by which the Minister was to dispose of a part of our debt at a discount of 11½ p Cent. After telling him that my determination was to remain as passive as possible in this business, I asked him whether he thought Congress would like better that their debt should be transferred with that loss to the French court—or at par in the French stocks agreeable to the latter proposal which had been made. He answered after some hesitation that he thought his plan most for the credit & honor of the United States. I added that he was the best judge of that, & that the commissioners of the United States13 should best know what would be most agreeable to Congress in such a case. On the whole what I said must have fully convinced Mr. Hubbard that I should be far from taking on myself to advise so precipitate a measure as that which has been adopted. I suppose further that he must have been apprehensive of my objections to it, as no hint has been given me of it until it was past the season of objections on my part. My letters which will have informed you of the nature of the proposals made to the minister by other parties14 & which are the causes of this precipitation in our bankers, together with the letter here inclosed will put you fully in possession of whatever relates to the subject on this side of the Atlantic. I have no doubt that the loan will be filled as I take it for granted that these gentlemen are too judicious to have risked such an enterprise without having before hand insured its success. In the advertisement for the loan they state that the United States having no minister in Europe authorized to direct such an operation, they have determined to open it for them. It will thus appear that it is their personal credit which has procured the loan, whilst it is certain that those who furnish the money have an ultimate view to Congress.
I have no doubt that this measure will prevent any thing further being done by the minister with respect to the American debt until the sentiments of Congress shall be known. He will not treat but with some house of honor & established credit, & no house of that sort will undertake such an operation against the council of the commissioners of the United States. I shall not be easy until I hear something from you Sir on these subjects. I hope the line of conduct which I have thought it proper to observe respecting them will not be disapproved by you, as by being passive I avoided risking to commit the United States when it was impossible for me to know what would be their wishes.
The Honble. Alexr. Hamilton
ALS, letterpress copy, William Short Papers, Library of Congress.
1. Eleanor François Elie, Comte de Moustier, who had been appointed Minister to the United States in 1787, returned to France in October, 1789.
3. Jacques Necker, French Director General of the Finances.
4. Since Short’s letter of November 30, 1789, to H, Short had written at three different times to John Jay, Acting Secretary of State, about the purchases of the American debt. On December 15, 1789, he wrote:
“I mentioned in my letter to the Secretary of the Treasury accompanying my last to you, the nature of proposals made to the ministry here, by two different companies, for the purchase of our debt to France. They have since united & intend proposing terms more advantageous than those mentioned in my letter—from a conversation I had yesterday with M. de Montmorin, I think it certain their terms will be accepted. Should that be the case I shall lose no time in giving information of it. I will ask the favor of you Sir, to communicate this circumstance to the Secretary of the treasury.” (Copy, RG 59, Despatches from United States Ministers to France, 1789–1869, September 30, 1789–December 30, 1790, National Archives.) On March 20, 1790, Jay sent an extract of Short’s letter of December 15, 1789, to H (Reel 142, Item 127, p. 218, Papers of the Continental Congress, National Archives).
On January 2, 1790, Short again wrote to Jay:
“No decisive measure has yet been taken by the Minister with respect to our debt—there are before him still the two propositions mentioned in a former letter with some slight alterations. The Amsterdam bankers to which are joined those of the United States there, wish to purchase for the present only the loan of six millions. The nature of their proposal is to furnish cash for it to such an amount that it is a loan to the minister at an interest of eleven & two thirds per cent, all the charges of negotiation included. Mr. Hubbard of the house of Van Staphorst has been sent here for the purpose of concluding this affair & is now in negotiation on the subject. The other plan proposed first by Mr. [Daniel] Parker of Boston, & afterwards by Mr. G. Morris in conjunction with him & others was to pay the full amount of the american debt (with the interest & installments accrued) in French stocks due in Amsterdam. The first proposition made by this company was to pay only the amount of the principal of our debt—they afterwards offered to pay the full amount of the principal & interest. The profit which they count on is to arise from the present depreciation of the French funds. Mr. [Jacob] Van Staphorst one of the house of that name at Amsterdam & who resides here at present is a zealous supporter of the latter proposition. The other partners are in favor of the former. They will all however join probably in whichever of the plans the minister prefers. I have thought it proper Sir to give you this account of the present state of these negotiations, which I beg the favor of you to communicate to the Secretary of the Treasury. It has appeared to me that I ought not to interfere further than as mentioned in my letter to him of the 30th. of Novr., the more so, as the United States, not appearing at all in the negotiation, will be left at liberty respecting it. Still if a plan like that which was first proposed & which would have been injurious to the credit of the United States was again to be set on foot I should think it my duty to take the same measure which I then did.” (Copy, RG 59, Despatches from United States Ministers to France, 1789–1869, September 30, 1789–December 30, 1790, National Archives.)
On January 12, 1790, Short wrote:
“I mentioned to you Sir some time ago that there were two propositions before the ministry for purchasing the American debt. One of them has been since rejected. That which is at present under consideration is made by Mr Parker of Boston & Mr Gov. Morris joined by Mr. J. Van Staphorst. The nature of it is to pay the full amount of the American debt principal & interest included, in bonds due by France to the lenders of Amsterdam. The Minister asked a security of these gentlemen for the performance of the contract. The difficulty consists in that at present. Should they be joined by houses of known credit, their offer will probably be accepted. This circumstance comes to my knowlege as a private person. I have thought it best to do nothing in the matter as Congress will by that means be perfectly at liberty respecting it. Their consent will necessarily be considered as one of the conditions of the contract.” (Copy, RG 59, Despatches from United States Ministers to France, 1789–1869, September 30, 1789–December 30, 1790.)
5. Armand Marc, Comte de Montmorin Saint-Herem, French Minister for Foreign Affairs.
6. Gouverneur Morris and Daniel Parker. See note 4 above; Short to H, November 30, 1789; and Morris to H, January 31, 1790.
7. The bankers of the United States were the banking houses of Wilhem and Jan Willink, Nicholaas and Jacob Van Staphorst, and Nicholas Hubbard. See Morris to H, January 31, 1790.
8. Jacob Van Staphorst.
9. See H to Short, October 7, 1789.
11. Nicholas Hubbard.
12. Jacob Van Staphorst.
13. Willink, Van Staphorst, and Hubbard.
14. See note 4, and Short to H, November 30, 1789.