To James Madison from Albert Gallatin, 1 March 1806
From Albert Gallatin
March 1st. 1806
Dear Sir,
I enclose the rough draft of an Article for Spain, which tho’ I have rejected a number of modifications, contains in fact eight distinct modifications or plans vizt.1
1. To pay 2 millions down, 1 million twelve months after ratifications and residue to Claimants under Convention.
2. do. do. & do. to Spain; in which case an additional article is provided for paying the Claimants in Colonial bills.
3. do. and residue to Claimants under Convention.
4. do & do. to Spain with provision of Colonial bills—
5.6.7.8 to pay 2 millions after ratification &c.
The modifications 1 & 2, are on the supposition that Spain may be willing to allow a Sum to the Claimants less than the whole residue after paying her the two first millions.
I think that if left to myself, the proposition to take Colonial bills for the Spoliations, instead of deducting the amount of those spoliations from the purchase money, would be considered as inadmissible. At all events I hope that it may not be resorted to but as an Ultimatum and in case of absolute necessity; and you will perceive that I have omitted altogether the proposition of taking anything short of Colonial bills, or, in other words of paying Spain in full & leaving our Merchants to the mercy of a Commission & to the chance of being paid by Spain.
As the subject is complex I will recapitulate some points relative to the Treasury, to which the negotiators should particularly attend.
1. Payments in Specie must not be stipulated beyond two millions of dollars, unless it shall be found necessary to accept for Spoliations a sum less than the residue; in which case the difference say one million which shall then be payable to Spain, may be stipulated to be paid in Specie but not sooner than twelve months after the exchange of ratifications.
2. The payments in Specie must, exclusively of the million for which credit shall be given in Holland to our negotiators, be made in bills of the Ministers of the U. S. at Paris or Madrid, and at different sights, so that the payments shall not at once fall upon us.
3. If the million now provided for in Amsterdam, shall not be used immediately, it must not be counted upon for future payments, as we will apply it in a different way before the exchange of ratifications can take place.
4. For any payment in Amsterdam, either of that Million, or of interest on Stock to be created, the rate of Exchange must be fixed and not to be more unfavorable to the U. States than par, or one Current Guilder of Holland for every 40 Cents.
5. Any Stock to be created must be of the description stated in the Article, that is to say Six ⅌Cent, and the Principal at least payable in America & not irredeemable for a longer period than four years. It would be better that the Interest should be payable also in America, & the Principal redeemable absolutely at will.
6. Payments by the U. States for Spoliations must be provided in three annual Instalments.
As the importance of the 2d. point may not be perceived, it is proper to State, that a payment in bills drawn on the Treasury, prevents both the inconvenience of making provision for paymts. abroad, & the exportation of Specie, as in the case of the provision for paying 200,000 Stg to Gt. Britain. For when Bills are given, they are negotiated, come to2 America through the usual Commercial Channels and as remittances, so as to produce no kind of inconvenience.3 Yours truly
A. G.
FC and FC of enclosures (NHi: Gallatin Papers); Tr (MeB: James Bowdoin Letterbooks). FC in an unidentified hand. Tr dated “March first 1806” in the code used by John Armstrong. For enclosures, see n. 1.
1. The enclosures (13 pp.; in Gallatin’s hand) are drafts of several articles of a proposed treaty between the United States and Spain describing possible methods of payment of five million dollars to Spain for “territory ceded or purchased.”
2. Tr has “commonly in” in place of “come to.”
3. At 12 and 19 Nov. 1805 cabinet meetings, the administration agreed to offer not more than five million dollars to Spain through France for the Floridas, to cede Louisiana territory from the Colorado River to the Rio Grande, and to come to an agreement with Spain that the latter should pay for spoliations under the Spanish flag agreed to in the unratified convention of 1802, and those occurring since, and to mortgage to the United States the portion of the Louisiana territory from the Guadalupe River to the Rio Grande as guarantee for their payment. The first point was to motivate France, to which Spain was in debt, to help in the negotiations, the second was to appease Spain, and the third point was to appease U.S. merchants. Jefferson sent a message to Congress on 6 Dec. 1805 listing the aggressions Spain had taken against the United States and asking for its advice. Over the strong objections of John Randolph and his supporters, Congress passed, and on 13 Feb. 1806, Jefferson approved, an act appropriating two million dollars for “defraying any extraordinary expenses which may be incurred in the intercourse between the United States and foreign nations” (Malone, Jefferson and His Time, 5:62–63, 75; , 1:308–9, 8:383–84, 397–402; Richardson, Compilation of the Messages and Papers of the Presidents, 1:376–78; , 9th Cong., 1st sess., 266–67, 1226–27).