To Alexander Hamilton from William Short, 25 February 1793
From William Short
Aranjuez [Spain] Feb. 25. 1793.
Sir
I had the honor of writing to you on the 5th. inst from Madrid1 informing you that on my arrival there. I was overtaken by a letter sent from our Commissioners at Amsterdam, dated the 14th. of Janry.2 & covering your two letters to me of Nov. 5 & 26. They inclosed at the same time your letter to them of Nov. 5. authorising them in the case of my absence to open that addressed to me which they had done.
As yours to me of the 26th. of Nov. circumstanced that of the 5th. & was consequently also open to them, by which they observed your notification of having passed draughts on them to the amount of f 1,250,000. they informd me with some degree of anxiety that that sum together with the interest payable the 1st. of March would exceed the amount of cash in their hands & that which they were still to recieve in the remaining bonds of the last loan. They had hoped to have found in your letter to me, an authorisation to open a loan at an higher rate of interest than the last which they would immediately have proceeded to have done, conceiving that delay tended to endanger the success of a loan on any terms & at least to render them more disadvantageous. As no mention was made of an increase of the rate [of] interest in your letter, & as they had long ago taken up of themselves, as I have already informed you,3 an idea that your powers had limited it to 4 p. cent. they did not chuse to take on themselves to surpress it.
The object of their letter to me therefore was to present to me the present situation of affairs as to loans—your presumable disposition as to remittances as early as the 1st. of June next—the extreme necessity of punctuality in those payments—& to urge me therefore to authorize them to open a new loan immediately extending the authority to 5 p. cent, relying that their duty & a point of honor would compel their every exertion to obtain the lowest terms possible.
After reflecting on the present state of affairs in Europe & particularly those most influential on the Amsterdam market & being unable to judge of the extent of those which have changed your dispositions as to remittences, & finding even that you would draw for additional sums if on hand, I could not hesitate in determining that it would be your expectation & choice, that provision should be made in Europe for payments up to the 1st. of June inclusive & therefore that not a moment was to be lost in taking measures for securing this provision. It would have given me much satisfaction to have been able to have waited until I could have heard from you, whether from the considerations mentioned in my late letter,4 you would have thought it expedient to make exertions for remitting from America to satisfy the rising demands in Europe, during the present unfavorable state of the market or at least until the U.S. by some delay should have so established their credit, as not to have been subjected to the rise in the rate of interest wch. other powers are obliged to submit to. The time of the next payments at Amsterdam did not admit of my waiting for your advice & it seems to me under the expressions of your letter of Nov. 26. that it would be highly improper to place these payments on that contingency. My letters however from the Hague will have given you my sentiments on this subject & shew how disadvantageous I consider it for the U.S. to be now forced on the markets.5 There is one circumstance also which made me suppose you did not consider the U.S. being forced to make a retrograde step in the rate of interest, in as prejudicial a light as I do. In my letter of Aug. 30. I informed you of Russias having opened a loan at 4½ p. cent. interest & consequently of the difficulty if not impossibility of any other power obtaining one at a lower rate. In your letter of Nov. 26. you acknowlege the reciept of mine of Aug. 30. & still express no determination of efforts by remittances to prevent the U.S. from going on the market, to supply the demands of June next. As it is well known that they have large payments to make then, I had hoped if they could have satisfied them without coming on the market that this would have given such a confirmed idea of that determination never to raise their interest, as to have enabled them in fact to have kept up to it.
Independent of the several reasons given by the commissioners, in their letter6 of which I hope they will have sent you a copy, for losing no time in authorising them to open the loan—there was another which presented itself here from the present critical situation of the post. It was impossible to say how long it might remain open for the conveyance of letters from this country & it therefore became urgent to convey to them my ideas as fully & as expeditiously as possible. Had I been on the spot, or within corresponding distance I should of course have tried every gradation before consenting to the extreme of 5 p. cent. Situated as I was I thought it would be imprudent to risk delay on the possibility of obtaining lower terms. Although the expressions of their letter held out in a faint manner this possibility, yet I was convinced from the reason of the letter that it would not be realized. In this I have not been mistaken, as a letter from them of the 24th. of Jan.7 received since my last informs me that discount on bills of exchange has risen to 5 p. cent & upwards—that the Financier of Holland has opened a loan for twelve millions at 4 p cent & that people keep up their money in the hope of employing it advantageously in the English funds &c. so as to preclude all thoughts of their being able to procure a return for the U.S. under five p. cent interest.
I cannot better explain to you the authorisation I gave them & the occasions in which I desired it to be acted under than by inclosing to you copies of my two letters on that subject of Feb. 4. & 12.8—of the first a copy was also sent in my last of the 5th. inst. I have since then recieved no further information from them—nor shall I be able to know for some time even supposing no interruption in the post, what steps they may have taken in consequence of my letter of the 4th. I still hope you will consider it proper for the reasons mentioned formerly; to give your orders to the commissioners, in some more direct way9—the unsettled state of the post & the possibility of its being interrupted soon between this & the northern parts of Europe by the way of France, render this still more necessary.
The commissioners wrote to me on the 10th. of Jan.10 merely to inform me that they had remitted on acct. of the Spanish debt11 a further sum of £30332.10.10 which has been recieved here. I have not yet been able to get from M. Gardoqui,12 any information respecting our debt. As in conversation he told me it amounted far beyond what you had stated, I observed to him that I supposed there must exist a specified debt of about 170,000 Dollars principal—& that it was that debt alone with the interest on it that I considered myself authorized to pay, not having powers to liquidate unsettled claims. He has promised me to examine into this, but as yet it is only a promise. Mr. Carmichael has been trying for months past to obtain the ascertainment of this—but has never been able to get more than promises to satisfy him. He thinks Mr. Jay did give a receipt for the sum of 170,000 dollars.13 Of course I see no risk in going on with the payment to the amount of that sum with the interest to the present time. As the bankers have found difficulty for some time past in obtaining good bills & on good terms to any amount, it has been my intention ever since being here to make an arrangement with M. Gardoqui for his recieving this money at Amsterdam. I have not as yet been able to settle any thing whatever with him, or even to get an answer from him, so much delay is there here in every thing & so much are they occupied at this moment particularly in more pressing European business.
On my passage through Antwerp I asked M. de Wolf14 what he then thought of US credit & he told me the American credit was still the best, but that the moment was unfavorable for business of any kind—all men’s minds being totally occupied by the unsettled state of affairs. I easily inferred from his manner of speaking that he did not then think a loan at 4. p. cent could be effected. I did not dilate on this subject however & merely observed to him that there was no intention of going on the market, with which he seemed much pleased. This letter will be sent by duplicate by Libson & Cadiz.
I have the honor to be most respectfully sir, your most obedt. servt.
W Short
The Honble
Alexander Hamilton Secretary of the Treasury
ALS, letterpress copy, William Short Papers, Library of Congress.
1. Letter not found.
2. Willink, Van Staphorst, and Hubbard to Short, January 14, 1793 (LS, Short Family Papers, Library of Congress).
5. Short to H, October 27, November 29, December 17, 1792.
6. In their letter to Short on January 14, 1793, Willink, Van Staphorst, and Hubbard wrote: “We have the honor to inclose you, a Letter We received for you under cover of One addressed to us the 26 Novbr last by the Secretary of the Treasury of the United States, Wherein He advises to have directed further Drafts on us to the Amount of … 1,250,000, Which Sum with the Interest payable the First March next, will exceed the Amount of Cash in our hands, and what We have still to receive for the remaining Bonds of the last Loans.
“The Secretary ordering these Drafts upon us, but a very short time indeed, before He would have to make us Remittances for the One Million Guilders of Reimbursement and the Interest due the 1 June next, We were in the fullest persuasion His intention was to provide for said Reimbursement and Interest by a New Loan; Which, combined with the hope of succeeding in a Loan at this Moment for the United-States at 4½ per Cent Interest, while It may be difficult to obtain One at Five per Cent Interest, after Hostilities shall have commenced between Great-Britain and France … The Letter to you, having been eventually destined to be opened by us, could not contain any Information, or direct any Measures, that You would have scrupled to confide unto us; Wherefore, after revolving the Subject in our Minds, and examining it maturely on all Sides, We judged ourselves impelled by the Duty of our Relation towards the United States, to open said Letter, not doubting but We should find therein, the Authority to open a new Loan at a higher Interest, to face the Interest and Reimbursement due the First of June next, and in the determination to execute it if possible immediately, to secure the Money, before the Fall that will take place in the English Stock after the breaking out of the War, shall have attracted the attention of our Money-Lenders, Which You may depend will take place in a considerable degree, by the prejudices People entertain of the Solidity of the English Stocks, and the recent Remembrance of the large profits made by those, who purchased them during the last War; And this Step of Our’s would have been the more prudent, as You well know, the Monies for Loans are not paid down upon the fixing of the Engagement, but are stipulated to be furnished at different Instalments, Which Instalments even are not compulsory upon Recipisse, but solely when Bonds are deliverable, A Circumstance that could happen only after your Return here, So that We should have had to depend, only upon the good Will and the Chance of its being the Interest of the Money-Lenders to receive the Recipisse: A strong Motive, for our wishing the new Loan to commence so early as possible, in order to augment the Number of the Chances for the Money being paid unto us.
“Having in consequence opened the Letter addressed to you … to our Surprize and Regret, altho’ It recommends as adviseable, your endeavoring to contract for a Loan of Two Millions of Florins, there is no fixation of the rate of Interest, or even authority to extend the rate paid for the last Loan, At which however, It is utterly impossible to borrow more Monies; We doubt greatly if It will be practicable to obtain any for the United-States at 4½ per Cent, Money being extremely scarce, and We having some Surmise, that a Loan will soon be offered for Russia at Five per Cent: If so, You may rely that the United-States will be obliged to pay that rate, should We not be able to conclude a Loan for them before Russia comes upon the Market.…” (LS, Short Family Papers, Library of Congress.)
7. LS, Short Family Papers, Library of Congress.
8. Neither of these letters from Short to Willink, Van Staphorst, and Hubbard has been found.
10. LS, Short Family Papers, Library of Congress.
11. For a description of this debt, see H to Short, September 1, 1790, note 19; see also Joseph Nourse to H, October 9, 1792.
12. Diego de Gardoqui, former Spanish envoy to the United States, had been delegated by the Spanish government to negotiate with Short and William Carmichael on Spanish-American problems.
13. Spain’s aid to the United States after the outbreak of the American Revolution had been in the form of secret loans and subsidies because of Spain’s policy of non-recognition of American independence. For this reason the exact amount owed to the Spanish court by the former American colonies was uncertain. In an account of the foreign debt sent on January 4, 1783, by Robert R. Livingston, Secretary for Foreign Affairs, to William Greene, governor of Rhode Island, Livingston placed the amount owed to Spain as a result of a grant to John Jay at $150,000 (Francis Wharton, ed., The Revolutionary Diplomatic Correspondence of the United States [Washington, 1889], VI, 195). This sum is confirmed by an entry in the accounts of the register’s office, Papers of the Continental Congress, National Archives, which is entitled “Loans and Grants from the Royal Treasury of Spain to the U. States” and lists the sum of $150,000 as the amount received by John Jay and 375,000 livres as the sum received by Arthur Lee “through the hands of Gardoqui and Son.” The latter sum was given by Spain as a subsidy, but the $150,000 received by Jay was considered a loan. From Jay’s correspondence it appears that, in addition to the $150,000 loan from Spain, he also secured supplies of clothing from the Spanish government. See Jay to Samuel Huntington, September 16, 1780 (LC, The Huntington Library, San Marino, California); Jay to Huntington, March 22, 1781 (LC, Papers of the Continental Congress, National Archives); Jay to Count Floridablanca, April 2, 1781 (copy, Archives des Affaires Etrangères, Correspondance Politique, Espagne, Paris).
In 1784 when Thomas Barclay, agent for settling the accounts of Congress in Europe, settled this account, his ledgers showed the sum of $174,010 owed to Spain rather than the amount of Jay’s loan of $150,000 (D, RG 39, Foreign Ledgers, Public Agents in Europe, 1776–1787, f. 198). The “Statement of the Account of the Government of Spain with the United States” in the accounts of the register of the Treasury indicates that $174,011 was the amount finally accepted by the United States as the principal of the sum “By Foreign Debt incurred by the late Government… due to the Spanish Nation on the 21st. March 1782” (D, RG 217, Miscellaneous Treasury Accounts, 1790–1894, Account No. 6072, National Archives). The account of the Spanish debt submitted by Nourse to H is printed as an enclosure to Nourse to H, October 9, 1792. Although it is not clear which of the sums enumerated by Nourse were included in the $150,000 dollars borrowed by Jay, it is indicated in William Carmichael’s “Acct. of Money paid his Excellency J. Jay by Mr. Gardoqui,” May 16, 1781 (D, Columbia University Libraries), and in Richard Harrison’s account in Barclay’s books (D, RG 39, Foreign Ledgers, Public Agents in Europe, 1776–1787, f. 188) that the discrepancy of $24,000 between the sum debited to Jay and the amount of final settlement may be accounted for by clothing purchases which had been negotiated through Harrison at Cadiz.
14. Charles John Michael de Wolf was the Antwerp banker who negotiated the 1791 Antwerp loan for the United States.