To George Washington from Alexander Hamilton, 1 June 1796
From Alexander Hamilton
New York June 1. 1796
Sir
Your letter of the 29th was delivered me by Mr King yesterday afternoon.1 I thought I had acknowleged the Receipt of the paper inquired for in a letter written speedily after it—or in one which transmitted you a draft of a certain letter by Mr Jay.2 I hope this came to hand.
I am almost afraid to appear officious in what I am going to say; but the matter presses so deeply on my mind that fearing you may not recollect the situation of the thing and that it may happen not to be brought fully under your eye, I cannot refrain from making the suggestion to you. It regards a Bill which I am told has lately passed the two houses of Congress authorising a sale of Bank Stock for paying off a sum due to the Bank3—You will perceive by the 8th and 9th Sections of the Act intitled “An Act making further provision for the support of public Credit and for the Redemption of the public Debt” passed the 3d of March 1795 that the dividends of the Bank Stock are appropriated to the Sinking Fund with all the force and solemnity of which language is capable4 and that to divert them in the manner proposed (and this too without any substitute in the act which so diverts) will be a formal express and unequivocal violation of the public faith—will subvert the system of the Sinking Fund and with it all the security which is meant to be given to the people for the Redemption of the Public Debt, and, violating the sanctity of an appropriation for the public Debt, will overturn at once the foundation of Public Credit. These are obvious and undeniable consequences, and though I am aware that great embarrassments may ensue to the Treasury, if the Bill by the objection of The President is lost and no substitute for it takes place towards the reimbursement of the Bank—Yet I am sure no consequences can ensue of equal moment from the rejection as from the principle of the Bill going into execution. All the Presidents administration has effected for establishing the Credit of the Country will be prostrate at a single blow—He will readily make all the necessary comments upon this position. It grieves my heart to see so much shocking levity in our Representative Body. Most respectfully & Affecty I remain Sir Yr very Obed. Ser.
A. Hamilton
ALS, DLC:GW; copy, DLC: Hamilton Papers. “(Private)” is written on the cover of the ALS.
2. The paper evidently was the draft of GW’s farewell address transmitted with his letter to Hamilton of 15 May. No previous acknowledgement by Hamilton has been found. John Jay’s draft letter has not been identified, but it most likely was for GW’s letter to Francis II (Holy Roman Emperor) of 15 May. In his letter to Hamilton written on 8 May, GW had asked that he or Jay provide such a document. Hamilton’s letter to GW transmitting Jay’s draft has not been found.
3. Section 3 of “An Act making provision for the payment of certain Debts of the United States” stated that “it shall be lawful for the commissioners of the sinking fund, if they shall find the same to be most advantageous, to sell such and so many of the shares of the stock of the bank of the United States, belonging to the United States, as they may think proper; and that they apply the proceeds thereof to the payment of said debts, instead of selling certificates of stock, in the manner prescribed in this act” ( 488–89). GW had approved the act on 31 May.
Hamilton had written Secretary of the Treasury Oliver Wolcott, Jr., on 30 May: “I perceive Congress are invading the Sinking Fund system. If this goes through & is sanctionned by the President the fabric of public Credit is prostrate & the Country & the President are disgraced. Treasury Bills & every expedient however costly to meet exigencies must be preferable in the event to such an overthrow of system” ( 20:204–5).
4. For this act, see 433–38; especially, 434–35, for sections 8 and 9.