I must premise this letter by begging you a thousand pardons for the error committed in my last1 in stating from an oversight in subtraction that 36 taken from 54 left 28—instead of 18.

According to that quotation therefore which you mention the depreciation that day was more than the fall of exchange & if adopted as the rule of indemnity would occasion a loss to the U.S. which is not the intention of any party. You will have observed in my letter of Dec. 30. 1791. (of which you have acknowleged the rect.) I mentioned having previously informed you “that the depreciation of assignats & fall of exchange in France though clearly connected with each other were not uniform in their progression. In the late unprecedented fluctuation the assignats were even lower than the exchange &c.”

This was about the time of the payments being commenced from Antwerp2 & which was one of the reasons that made me so desirous that they should be made to an agent there on the spot instead of being remitted by bills on Paris. But long before that letter I considered the depreciation as having too nearly gained on the fall of exchange, to be the proper criterion for fixing of itself the indemnity & accordingly I had the honor of mentioning to you in my letter of Nov. 22. (of which also you have acknowleged the rect.) that I did not propose to the commissaries to sell them my bills for specie, as you had mentioned, because their laws &c. had increased intrinsically the value of gold & silver & I add that the difference between assignats & specie has gone on much more rapidly than the difference of exchange. In my letters of Dec 1. from Antwerp, & Dec. 15, from Amsterdam (of which you have never acknowleged the receipt expressly, but which I hope were recieved as they were enumerated to you in my letter of Jan. 26 & their miscarriage not mentioned by you) I repeat the subject & mention, why the course of exchange & depreciation are not the just measure of indemnity for the U.S. but the data on which it should be found. My letters since that time have resumed the same subject & added the reasons for my deferring to fix finally this measure & leaving it until the President should have named the person who was to represent the U.S. permanently at Paris.

You may have observed from my several letters (written before & after receiving yours of Sep. 2. 91. announcing the intention of the President as to the indemnity) that the progress of these duties has been as follows. In the beginning of the assignats the fall in the exchange was much more considerable than the rise of specie. This continued for some time. Several causes then beginning to operate, which it is useless to enumerate—specie went on faster in its rise than the exchange in its fall, still however so as not to overtake it for some time. About the month of Dec. last it overtook & passed it in some of its violent fluctuations, as I then mentioned to you.3 After this again the exchange fell more than the specie rose, & had gone as low I think as 26½ in Amsterdam, when the Jacobin ministry came in & M. de Claviere,4 famous for his skill in agiotage, among them. It was thought he employed artificial means for raising the exchange, in order to confirm the popularity of the ministry—certain it is that an immediate & astonishing rise did take place, I believe as high as 36. for a few days. During this momentary rise in the exchange, assignats probably appreciated also, but I recollect it was not as rapid (the emigrations probably keeping the price of specie nearly the same). Of course if one of those few days were fixed on the standard would be much against the U.S. But even if the price of specie were taken as the measure of indemnity (which I long ago mentioned to you had ceased to be a just.5 2) there could be no reason for fixing on the epoch which was the most unfavorable—& which was of short duration—for the exchange soon after fell down again as low as (& perhaps lower than) 30—the assignats I believe remaining about the same. A mean term taken of the fall of exchange & the rise of specie, would shew the former to be more considerable & of course present a gain for the U.S.—though less than I think they are entitled to.

The repetition which I have here given you of the progress of the exchange & of depreciation, & their alternate & irregular fluctuations, will of itself shew that they cannot be considered as the measure of indemnity, independent of what I have formerly mentioned to you. They must be taken however as the data for finding out this measure & it is in that light I have presented them to you. These data being fixed, I considered a short delay in applying them, as attended with no inconvenience, always supposing however that that delay would not be extended beyond the existence of the government which created the assignats.

The manner of applying these data was simple—the exchange gave the value of the florins paid, in livres tournois. Had gold & silver continued objects of free commerce & had their place been fully supplied by the circulating medium substituted to them, so as that they should have been subjected to no artificial rise of price, then there would have been nothing to do but to subtract from the livres tournois paid the difference between specie & assignats. But as it was; the want of freedom in the commerce of those articles & the want of assignats of small denomination for ordinary purposes & other causes, dependent on the national assembly & not on the U.S. are known to have increased the price of Specie. Of course this artificial rise becomes an article of consideration, if the price of specie is to be taken. Various considerations will suggest themselves. I will mention only one, in addition to what I said on the subject in my last letter—for some time the assignats were of so large a denomination, that specie was indispensable for current uses & this want manifested itself so pressingly that there was a considerably higher value annexed to assignats of a smaller denomination, those of five livres for instance, cost for some time from seven to ten p. cent when purchased with those of a large denomination. This shews that the assignats suffered two kinds of depreciation of which one was owing to their being of such a denomination as was inconvenient, & which depended on the decree of the assembly. This part of the depreciation should not certainly regard the U.S. I will exemplify my idea. Had a decree of the assembly abolished the circulating coin as existing in Louis, crowns &c. converted them into bars of the same alloy of 1000 & 2000 livres (as was the case for some time with the assignats) these bars, having lost the advantage of convenience, would probably have had a small decrease in value or the same number of florins wd. have paid a larger quantity of this matter in bars—still the U.S. would certainly have had a perfect right to have taken the advantage & France would have had no right to have asked an indemnity.

I mention these things merely as arguments which will occur in fixing the indemnity, asking leave to refer you to what was said in my last of Sep. 25th. on the subject. I repeat what I then said also—that had I recieved your letter of June 14. before the abolition of the late government in France, I should have considered it my duty not to have let pass that opportunity, & have acted in compliance with the President’s will. As matters stand at present & which shew that nothing can possibly be done for some time, so that you may give further instructions, I cannot help repeating how much more agreeable it would be to me if I were associated with some other person in this business—the fixing the indemnity becomes a pecuniary operation of so much importance that it involves a kind of responsibility the most painful & disagreeable of all others, & particularly when confined to an individual. This operation might be without inconveniences concerted with the minister at Paris or London, or both—& if there should be no objection, it would add much to my satisfaction if it were authorized. The interests of the U.S. would also be consulted with more advantage by their ministry being employed, as, no doubt, many considerations would occur to them which escape me.

No post has arrived here since my last to you (supposed to be occasioned by the Austrian army) & I therefore can add no information to what I then said respecting the late payment to France; a circumstance which has much prolonged my uncertainty & consequent anxiety. Spain has lately opened a loan of six million of florins at Amsterdam at 4½ p. cent. The bankers are going on procuring bills to pay that debt. The late loans at 4½ p. cent added to an article printed here in a Dutch gazette, under the head of New York; which gives an idea of a system of anarchy being begun there has much depreciated the American obligations. The bankers however suppose the fall will be momentary. I have had the honor of recieving your letters of Aug. 4. & Aug. 16. My late letters will have shewn you that the debt to the foreign officers will take but a small part of what remains on hand.6 I in-close you a valuable work, worthy of confidence. It was written by M. Pitt’s secretary & corrected by Ld. Auckland.7 Your obedt. servt.