From William Short
Paris April 9. 1791.
Since my return here questions have been from time to time asked me with respect to the appropriation of the loan lately made in Holland.1 When asked by those to whom it was necessary to give an answer it was made conformable to that given to M. Caillard2 at the Hague, as contained in my letter to him of the 6th of March, of which a copy was sent to you on the 11th from Amsterdam. The ministry of themselves would have said nothing because they are fully disposed to subscribe to the convenience of the US & because it is natural for them to await the decision of the President on the proposals of Schweizer & Jeanneret,3 which they have adopted as far as depended on them. But the committee of finance urged probably by some of its members, who have views on the American debt, or by a patriotic zeal for recieving every thing as soon as possible into the public treasury, express their impatience with respect to this loan whenever an opportunity presents itself. As this has been hitherto done individually it has had no other effect than to shew the dispositions of the committee or some of its members. In the present situation of the assembly the committees & often a few members of a committee have it much in their power to pass a decree through the house. It could not but be disagreeable if a decree relative to the American debt were hurried through the assembly by such means in a moment of impatience & ill humour. The surest means of avoiding it would be to be able to say something certain with respect to your intentions.
I mentioned to you in my letter of the 17th of February what had passed between Mr. G Morris & myself relative to proposals for a loan out of Holland. I learn from him here that the Austrian Netherlands were the place he had in view, & that he has recieved a letter from his correspondents there who urge the business being begun without delay, & that they are fully assured loans might be made successively to a considerable amount. Nothing more can be done in this business until I hear from you. I had always understood & it is the generally recieved opinion that foreign loans were not permitted there by the Imperial government. Still Mr Morris is absolutely certain that it is a mistake; & as he conversed with the bankers on the spot & has taken up his opinion from information collected there with a view to the subject it would seem that he was the least exposed to be misinformed.
I have had an opportunity also of collecting here further & more certain information with respect to Genoa. M. de Spinola,4 the minister of that country at this court & personally interested in the concerns of speculation carried on there, told me that from the present abundance of money & the want of means of placing it he thought it highly probable the U.S. might make loans there if they should chuse it—he sent also to speak with me on the subject a person who is connected with the monied men of Genoa & who M. de Spinola told me was dependent on him—the meaning of which was that he, M. de Spinola, was concerned with him in business of this sort. I found immediately that this person was as ignorant of the present situation of the U.S. as Spinola himself, unacquainted with the change of their government, their commerce, & their revenues, he only had a general idea of a country whose debts had been formerly little attended to, but who began to think more about them at present & whose situation on the whole was ameliorating. I endeavoured to put him in possession of the present state of American affairs & the American government. I mentioned the amount of the last years revenue also—this of course he would consider as the conversation of a person interested in presenting the subject in its most favorable light. I observed to him that it was not my intention to open a loan for the present, but that if after he had satisfied himself by his correspondents at Amsterdam or elsewhere of the present resources of the U.S. & particularly of the state of their credit at Amsterdam, where they were best known, he thought he could procure for them a loan on advantageous terms at Genoa, I would mention the subject to you. He seemed to be persuaded that a loan might be made there & observed that the Genoese would be guided in this business by the value of the American stock at Amsterdam. He observed that 5. p cent would of course be the rate of interest & talked of 5. or 6 p cent as the commission. I told him it was useless to talk about terms at present but that as to commission I could tell him beforehand that the U.S. would not give any thing like that. We separated in this manner a few days ago—he was to write to his correspondents & then to speak with me further on the subject. I have little doubt left that a loan might be made at Genoa for the U.S. at 5 p cent interest—there will be some difficulty perhaps with respect to the commission as the Genoese are remarkable for their avidity & craft in all money negociations.
The Empress of Russia has lately made a loan at Genoa for a million of dollars at 5 p. cent reimbursable I think in ten years. I know nothing of the rate of commission but have no doubt it was high—a second loan on the same terms is now open there. I understand it goes off slower than the first, but will be filled. They will be extended certainly if it can be done.
I understand that the monied men of Geneva have lately made a small loan to the Emperor. I am not acquainted with its conditions & suppose there must be some political view connected with the loan as it is unquestionable that he could have made loans at Amsterdam on as good & probably on better terms than I should imagine the Genevans would place their money with any power.
It is certain however that the present situation of the French government added to the immense reimbursements they are making must leave large sums unemployed as well at Genoa & Geneva. Under such circumstances there is little doubt that the U. S. if their resources were known might make loans there.
Besides the opportunity which is thus presented of making loans in order to pay off the arrears due to France there are other combinations which will necessarily take place & by which the debt due to France might be transferred to the one or other of these countries by means of the stock which they have in the funds here & which they are desirous of withdrawing somewhat on the principals proposed by Schweizer & Jeanneret & which have been submitted to you—or perhaps by waiting the two operations together viz. of a loan opened at Genoa for the money of that country & the translation of our debt from this country to that.
There is another circumstance also which may be found worthy of attention in future although it just now begins to develop itself. The immense quantities of assignats which are now in the hands of the monied people of Paris have reduced accordingly the interest of money. Individuals who were obliged last year to pay six per cent annual interest now borrow easily on the same security for four. They will always borrow cheaper than foreign states; but this fall of interest with them necessarily involves the same with other borrowers. It is possible then that there might be found some who would be disposed to make loans here to the U.S. & particularly on being secured against further depreciation—the government would probably not be opposed to such loans here as they would be for their use, & would take out of circulation the sums of assignats borrowed.
On the whole Sir I have no doubt of the U.S. being able to extend their loans immediately if they chuse it at Amsterdam. There is every reason to believe they might borrow also in the low countries, Genoa, or Geneva, or transfer their debt advantageously from France to one of these countries. It is possible also they might have an opportunity of making loans on good terms here & immediately paying off the arrears, or a part of those due this country.
It is useless to add that in order to derive the greatest advantages from this fortunate position of affairs it would be indispensable to give much latitude to those who have your confidence on this side of the Atlantic; I say those because I take it for granted that no individual would be rash enough to expose himself alone in a business of so much responsability, & particularly of so much delicacy, where there will be so many alternatives left for the exercising of the judgment & of course so much room for disapprobation & censure.
I cannot omit repeating also the necessity of unfolding the U.S. as much as possible to the view of those with whom it is desirable to raise their credit. The perfect ignorance in which all, except a few mercantile houses, are with respect to their present position & resources cannot but be greatly prejudicial. This would be easily removed by constant & authentic information & particularly the publication of authentic papers—such as the amount of duties collected the last year, your report for the establishment of a national bank, the proceedings of Congress thereon, the quantity of domestic debt purchased up &c.
The houses at Amsterdam5 are regularly furnished with such information & papers, but my former letters will have shewn you how far it is from their interest to render them public.6 The following extract of a letter which I recieved the day before yesterday from one of them will shew you to what length this information goes—“Mr Hamilton had received your letter to him of the day previous to our consenting to negotiate the future loans of Congress at 4. p. cent charges advising him you did not doubt of a loan being opened at 4½ p. cent charges or perhaps at 4. p. cent. We therefore expect soon his eventual orders for disposal of the monies of the March loan which being now more than half disposed of we shall be able to make a fine remittance immediately on the arrival of his directions, & we trust be able to conclude for a new loan on your first application to effect it, as well as to raise in a much shorter time than we formerly imagined the needful monies to pay off the arrears of interest & instalments of principal due to France by the U.S. so good is the credit actually enjoyed here by America.”7
As it becomes every day more probable that Russia will be engaged in a war with England, it must necessarily render the lenders more difficult with respect to that country & more willing to lend to the U.S.—the progression of opinion mentioned in the above extract is probably connected with this circumstance.
I have the honor to be with sentiments of the most perfect respect & attachment Sir, Your most obedient humble servant
The Honble Alexander Hamilton Secretary of the Treasury
ALS, letterpress copy, William Short Papers, Library of Congress.
4. Christoforo Vincenzo de Spinola.
5. Willink, Van Staphorst, and Hubbard.
7. Van Staphorst and Hubbard to Short, April 4, 1791 (LS, Short Family Papers, Library of Congress).