To George Washington from Alexander Hamilton, 10 April 1791
From Alexander Hamilton
Treasury Department [Philadelphia] April 10th 1791.
Sir
I have the honor of your letter of the 4th instant addressed to the Secretary of State the Secretary at War and myself; to which due obedience shall be paid on my part.
A letter from Mr Short dated at Amsterdam the 2d of December has just come to hand giving me an account of his proceedings to that period; a copy of which will be forwarded by the tuesday’s post. He informs me, among other things, that he had concluded with the Bankers of the United States to open a loan in February for two millions and a half of Guilders, at five per Cent interest and four per Cent charges, which is a half per Cent less than the last. The term of reimbursment fifteen years, begining at the end of ten, with liberty to the United States to reimburse at any time sooner.1
You will recollect that by a particular instruction from you to me, no succeeding Loan is to be opened, until that preceding has been submitted to you, and received your approbation.2 As it is very desireable that no delay may attend the progress of the business, both as it regards payments to France and the domestic operations, to which the loans may be applied; I have concluded to submit Mr Shorts letter tomorrow to the Vice President, and the heads of Departments, that they may consider how far the case is within the purview of your letter; and whether it will not be expedient to authorise Mr Short to proceed upon a further loan to the amount of three millions of guilders, which is the sum to which the money lenders have been accustomed, and that recommended by our Bankers as the most proper to consitute each Loan.3
I request nevertheless to receive your instruction as soon as possible upon the subject—And I submit whether it will not be adviseable to change the restriction above mentioned so as to leave Mr Short at liberty to open his loans successively for three millions of Dollars each; no new one to commence till after the preceding one has been filled; but without waiting for a ratification from this Country; provided the terms be not in any case less advantageous than those now announced. There is always danger of considerable delay in waiting for approbation from hence, before a new loan can be undertaken; and favourable moments may be lost; for there are periods more or less favourable.
I think there is no probability for sometime to come that loans can be obtained on better terms. And I may add that as far as I can judge, Mr Short has conducted himself in the affair with judgment and discretion; and there will be safety in allowing him the latitude proposed. I believe also it will be adviseable to apply the present loan in the same manner as the former, that is to say one half, or perhaps 1,500,000 guilders to the use of France, and the residue to the purchase of the Debt here; on this point also I request your direction. I have the honor to be with the most perfect respect Sir Your most Obedient & humble servant
Alex: Hamilton
LB, DLC:GW; copy, DNA: RG 233, Third Congress, 1793–1795, Records of Legislative Proceedings, Committee Reports, and Papers.
1. Alexander Hamilton is referring to the Holland loan of March 1791, negotiated by the firm of Willink, Van Staphorst & Hubbard, the bankers of the United States in Amsterdam. Hamilton authorized William Short, the American chargé d’affaires in Paris, on 1 Sept. 1790 to open a new loan for the United States in Amsterdam, instructing him to borrow “on the best terms which shall be found practicable” the sums needed to pay the principal and interest due on the foreign debt to the end of 1791. Short was not to engage for additional sums unless it could be done on terms more advantageous to the United States than the terms upon which the debt now stood. See Hamilton to GW, 3 Sept. 1790, n.2; 7:6–14. Short’s letter to Hamilton of 2 Dec. 1790 announcing the new loan described in detail the Amsterdam money market, the terms upon which foreign loans were negotiated, and the bankers who negotiated them in the city. Since it was an inauspicious time for opening loans there, Short warned that filling the new loan of 2,500,000 guilders, or one million dollars, would proceed slowly and suggested that it might be best to postpone opening the loan until February 1791, which would create no inconvenience, as payments on the American debt to France could continue as planned (ibid., 175–87).
2. Hamilton is probably referring to the injunction GW suggested incorporating in instructions to the United States bankers in Amsterdam: “That the Agent shall never . . . open a new loan ’till the old one has been expressly approved of by the President of the United States” (Tobias Lear to Hamilton, 26 Aug. 1790, DLC:GW).
3. The cabinet, in what was probably its first formal meeting, met at Jefferson’s residence on 11 April. See Thomas Jefferson to GW, 10 April, n.1, and Hamilton to GW, 14 April. See also GW to Hamilton, Jefferson, and Henry Knox, 4 April; Hamilton to John Adams, and Adams to Hamilton, both 9 April, in 8:258.