Statement on Remarks by John F. Mercer, [April 1793]
Statement on Remarks by John F. Mercer1
[April, 1793]
Mr. Mercer after amusing with his financial reveries the House of Representatives, during the last session, has thought fit to serve them up a second time, for the entertainment or instruction of the electors of Prince Georges and Anne Arundel counties, in the State of Maryland.2 And as if the Editors of certain Gazettes thought doctrines worthy of propagation in proportion to their absurdity, we have seen the wild paradoxes of that Gentleman handed from paper to paper with no less attention than would be due to the most precious truths.
To follow Mr. Mercer, through all the incoherent ravings of a sublimated and excentric imagination, that often indulges itself in more than poetic fiction, would far exceed the leisure I have to bestow upon him. But he shall be examined in a few palpable particulars—the result of which will serve to shew his entire ignorance of the subject he undertakes to speak and write about, and his total incapacity to be the reformer of the public administration and the instructor of his fellow Citizens.
To effect this, in the clearest and simplest manner, I shall state each suggestion meant to be examined distinctly and shall connect with it its answer.
1 Suggestion The present advantageous rate of the loans made abroad is not to be attributed to prudent management: For the old Congress, without the command of any fund whatever, in the midst of an unequal war, on the doubtful event of which all payment depended, borrowed of the Dutch once at four per Cent, and never at more than five per Cent. While the Secretary of the Treasury, in full possession of all the productive funds of the Continent has borrowed at five ⅌ Cent and never till lately so low as four.
Answer The low rates of the loans made under the old government were for the most part nominal; those made under the present government are real. The only four per Cent loan made by the UStates on their own Credit of Individuals under the former government was in fact a 3 per Cent loan. This arose from
The 4 ⅌ Cent loans made under the present government4 are incumbered with nothing but a charge of 5 ⅌ Cent for brokerage and commissions and upon strict calculation allowing for the deduction to satisfy this charge, they will actually cost the United States per Cent and no more. The difference is nearly per Cent in favour of the present Government.
From the manner of expression used by Mr. Mercer, it would be supposed by one unacquainted with facts, that much time had been spent in bringing the reduction to this point. Whereas the provision for borrowing was only made the 5 and as early as a loan was effected at Antwerp6 at 4½ per Cent in one was effected at Amsterdam at four [per] Cent and a subsequent one has been made at the same place, at the same rate.7 So that this important point was accomplished in
And from the facts stated it is evident that the present advantageous rate of loans is a consequence of the sound credit established by the measures of the present Government; contrary to the ignorant or deceptive assertion of Mr. Mercer. Now is there a truth which every channel of correspondence between this country and Europe conforms.
2 Suggestion. Were it not for the irredeemable quality of the debt, we might at this moment reduce the interest upon it to 4 ⅌ Cent by borrowing the money in Holland at that rate.
Answer 1 The thing asserted is not practicable. Exertions have been making for to borrow money abroad to pay of the arrears of our foreign debt and change the form of the residue advantageously; and in all that time the total amount of the loans effected does not exceed8
ADf, Hamilton Papers, Library of Congress.
1. For background to the Mercer-Hamilton dispute, see the introductory note to H to Mercer, September 26, 1792. The details of the controversy may be found in the following documents: H to Mercer, September 26, November 3, December 6, December, 1792, March 1, 14, 1793; Mercer to H, October 16–28, December, 1792, January 31, March 5, 26, 1793; H to David Ross, September 26, November 3, 1792; Ross to H, October 5–10, November 23, 1792, March 13, April 8, 25, July 23, August 30, 1793; Uriah Forrest to H, November 7, 1792.
It is uncertain when H prepared this document, but presumably it was written sometime before or shortly after the end of the direct correspondence between H and Mercer. If H had originally intended to publish this document, he apparently thought better of it, for the MS is endorsed in his handwriting: “This matter is dead. I will not revive it.”
2. At the beginning of this document H wrote and crossed out: “Mr. Mercer, whose imagination delights in more than poetic fiction.”
3. This and following spaces left blank in MS. This is a reference to the 1784 Holland loan. This loan carried only four percent interest but provided for additional premiums and “gratifications” which raised the real rate of interest. See William Short to H, September 1, 1790, note 22.
4. H is referring to the Holland loan of December, 1791, and the Holland loan of 1792. See Short to H, December 23, 28, 1791, June 28, 1792, note 17.
5. The foreign loans were authorized by “An Act making provision for the (payment of the) Debt of the United States” ( 138–44 [August 4, 1790]) and “An Act making Provision for the Reduction of the Public Debt” ( 186 [August 12, 1793]).
6. For a description of the Antwerp loan of 1791, see Short to H, November 8, 1791, note 4, and November 12, 1791.
7. See note 4.
8. The MS is incomplete.