From William Short
Paris Nov. 30. 1789
The letter of Octob. the 7th. which you did me the honor to write me was delivered two days ago by Mr. McCartey,1 & yesterday I received the duplicate by Count de Moustier.2 Some time before, the debt of the United States to France3 had been brought into view by Mr. Necker in a memorial4 which he delivered to the national assembly on the subject of their finances, & which I inclosed in my No. 10 to Mr. Jay.5 Although it is stated there that a proposition was on foot for negotiating a loan in Amsterdam on the security of our debt, I was informed that it was in agitation also to sell the debt. Knowing well that if a sale did take place it would be on terms onerous to France and injurious to the credit of the United States, I thought myself authorized by the circumstance to present this matter to the view of the minister6 in a light in which I know he had not seen it. He then told me what were the reasons which had induced him to listen to this proposition from Amsterdam, let me see clearly that the rise of our credit there was unknown to him, & gave me reason to believe that he should do nothing further in that business. As the effect of that negotiation would only have been for the advantage of the house in Amsterdam & prejudicial to the interests of France & credit of the United States I hope the measures I took will not be disapproved. Soon after Count de Moustier arrived & about the same time a renewal of the proposition from Amsterdam in which the houses there had united the bankers of the United States7 in hopes by that means of carrying their plan into execution. The bankers however withdrew as soon as they learned from those who had seen Count de Moustier “that he was instructed by Congress to oppose any negotiation of that kind”. They had from the beginning been averse to the negotiation & gave into it only from an apprehension that it would otherwise be effected without them.
Another company of which Mr. Parker of Boston is the organ, presents itself & made a day or two ago, another proposition to the Minister.8 The nature of it is to pay the amount of our debt in bonds due by France to the lenders of Amsterdam. As they pay bonds already due & are to receive our debt which is not yet demandable they require that the arrears of interest which we owe should be ceded to them by France. They offer me in this case to subscribe to the condition of putting off the installments due & to become due for five or six years—interest to begin from the present time. As this would square perfectly with your wishes & would not injure the credit of the United States since they pay their full debt to France (the interest which she yields being considered as a rediscount for ready money) I shall not oppose the negotiation if the Minister thinks proper to enter into it. I rather think however he will not as the extreme & pressing exigencies of the present crisis may induce him to keep our debt as the best means & perhaps the only means of commanding cash in a foreign country. By it he is sure of raising money at Amsterdam should he be induced to make the sacrifices wch. he is asked. Nothing but necessity however will induce him to do it.
In the case that no negotiation should take place then I think it probable that Count de Moustier will be able to effect what you desire.9 As he enters into it with zeal, & as you desire, with much propriety, that the proposition should come from France, rather than be solicited by us, it will be best to let him act in it. I shall take care however to lose no opportunity of inducing the minister to come into your views as of himself. M. de Moustier tells me he has already spoken to M de Montmorin10 on the subject who has referred him entirely to Mr. Necker.
Long before you receive this letter you will have seen Mr. Jefferson,11 & received from him information that may induce you perhaps to accept other views respecting our debt to France. The bankers of the United States still repeat to me the same assurances which they gave Congress in their letter of August last, & which they re-iterated to Mr. Jefferson before his departure.12 It is useless to add observations on the effect which that measure would operate in our favor on the minds of an assembly who are now modelling this country & must soon influence its political & commercial relations with others. An assembly who whilst they feel a real distress in their finances are told by different members in the course of debate that the debt of the United States cannot be counted on with any certainty either for present or future relief.
As soon as I see what turn the negotiations mentioned above, or the proposition to be made by M. de Moustier, in which the Marquis de la fayette will do whatever shall be required of him, will take, I will do myself the honor of writing you again. In the mean time I beg you to be assured Sir of the readiness with which I shall at all times be disposed to carry into execution your views & of the sentiments of profound respect & attachment with which I have the honor to be
Sir, your most obedient & most humble servant
The Honble. Mr. Hamilton
ALS, letterpress copy, William Short Papers, Library of Congress.
1. William Macarty, a Philadelphia merchant who settled in L’Orient, France, in 1784.
2. Eleanor François Elie, Comte de Moustier.
3. The debt under discussion was the French loan of 1783 for six million livres. Rafael Bayley states:
“On the 14th of September, 1782, Congress resolved: ‘That a sum not exceeding $4,000,000, exclusive of the money which Mr. Adams may obtain by the loan now negotiating in Holland, be borrowed in Europe on the faith of the United States of America, and applied toward defraying the expenses which shall be incurred, and those which during the present year have been incurred, for carrying on the war.’
“The superintendent of finance and secretary for foreign affairs were directed to take means for carrying this resolution into effect, and to transmit it to the United States ministers plenipotentiary at Versailles and the Hague.
“The minister at the court of Versailles was instructed to communicate to his most Christian majesty the foregoing resolution, and to assure him of the high sense which the United States, in Congress assembled, entertained of his friendship and generous exertions, and their reliance on a continuance of them; also, the necessity of applying to his majesty on this present occasion.
“No information respecting the negotiations for the loan is accessible. By the contract dated February 25, 1783, it appears that ‘his majesty determined, notwithstanding the pressing necessities of his own service, to grant to Congress a new pecuniary assistance, which he fixed at the sum of 6,000,000 livres Tournois ($1,089,000) under the title of a loan.’ The money was to be paid to the United States, from the funds of the royal treasury, in sums of 500,000 livres monthly for twelve months. For its use the United States were to pay an interest of 5 per cent. per annum, to be reckoned from January 1, 1784, and to refund the principal in six equal portions of 1,000,000 livres each, the first to be paid January 1, 1785, and the payments to be made thereafter annually until the entire loan was reimbursed. These repayments were not made as provided for by the contract. The debt remained unpaid until the year 1795, when the agent of the French government accepted a new 5 1/2 per cent. stock in lieu of the money.…” (Bayley, The National Loans of the United States from July 4, 1776, to June 30, 1880 [Washington, 1882], 14).
4. Jacques Necker, Director General of the Finances of France. Necker delivered this memorial to the French National Assembly on November 14, 1789 (Archives Parlementaires description begins Archives Parlementaires de 1787 à 1860 (Paris, 1878). description ends , X, 56–65). The relevant passage reads as follows:
“On pourra faire aussi quelque usage de la créance sur les Américains: l’on est en pourparlers d’un commencement de prêt sur ce gage, et il vous en sera donné connaissance lorsque les négociations commencées auront acquis plus de consistance. C’est de Hollande qu’on donne quelques espérances de réussite, et si vous faites attention, Messieurs, à la défaveur des changes, occasionnée par la réunion combinée de l’étendue de nos besoins au dehors et de la rareté du numéraire effectif avec lequel nous pourrions acquitter cette dette, vous sentirez de quelle importance il serait pour l’Etat de trouver à faire quelques emprunts dans l’étranger, et je prévois que l’on pourrait être aidé a cet égard par la Banque nationale.” (Archives Parlementaires description begins Archives Parlementaires de 1787 à 1860 (Paris, 1878). description ends , X, 64.)
5. John Jay was Acting Secretary of State. Thomas Jefferson had been appointed Secretary of State on September 25, 1789, but did not assume this appointment until March, 1790. Short’s letter to Jay is dated November 19, 1789 (William Short Papers, Library of Congress).
6. I.e., Necker.
7. The two Dutch banking houses of Wilhelm and Jan Willink, and Nicholaas and Jacob Van Staphorst and Nicholas Hubbard, were the bankers of the United States at Amsterdam.
8. Daniel Parker, an American speculator, was the leading figure in a combine formed in 1788 to purchase the debt due to France from the United States. Associated with him, at one time or another, were Andrew Craigie, Massachusetts financier; William Duer, the New York financial promoter; Etienne Clavière, Geneva banker; and Jacques Pierre Brissot de Warville, traveler and author. Early in 1789 Gouverneur Morris, who had recently arrived in Paris, joined forces with Parker who by this time was working closely with Le Couteulx de Cantaleu, the Rouen banker. Morris and Parker, by January, 1790, were the principals in the negotiations for the purchase of the debt. Those negotiations are described in Short to H, January 28–31, 1790.
10. Armand Marc, Comte de Montmorin Saint-Herem, succeeded Vergennes as French Minister of Foreign Affairs.
11. Jefferson had been in France in the capacity of American Minister to France. He arrived in the United States on November 23, 1789.
12. The “assurance” to which Short is referring is presumably that contained in the following extract from a letter that Willink, Van Staphorst, and Hubbard wrote to Jefferson on August 13, 1789:
“Impressed equally with us of the propriety of our Views, and the probability of their speedy Realisation, They [the dealers in loans] readily consented, and We have now publickly declared We have no more Bonds for sale; Which will We trust, so enable them to better the Price and to establish the Credit of the United States, as to render practicable at a more reasonable rate, the Negotiation of any future Loans, the United States may think it their Interest or wish to open here, The success whereof can be but little if at all doubted, after the Organisation and Operation of their New Federal Government, Which We experience to have given already great Strength and Stability to their Credit.…” (Julian Boyd, ed., The Papers of Thomas Jefferson [Princeton, 1958], XV, 343.)
If Short meant that Willink, Van Staphorst, and Hubbard also had sent this information directly to Congress rather than to Congress through Jefferson, the letter from the bankers to Congress has not been found.
13. In a letter to Jefferson, Short discussed the same matter in greater detail. See Short to Jefferson, November 30, 1789 (Thomas Jefferson Papers, Library of Congress).