From William Short
Paris July 19. 1791
I had the honor of writing to you on the 8th. of this month by the French packet & of acknowleging the reciept of your letter of the 9th. of May.
The commissioners at Amsterdam have since then informed me1 that all difficulties being removed they have consummated the payment of the million of florins to the French bankers there & recieved their bill on this government for its amount 2,696,629 . 4. This you will find a much more advantageous rate of exchange than that of the payment made last fall, which was also advantageous.
In consequence of your letter of the 9th. of May which authorized me after leaving f800,000 in the hands of the commissioners, to complete the payment of the million & an half of florins of the last loan destined for France I wrote to them2 informing them of this disposition—adding that before the intended payment was made known I would settle with the present commissioners of the treasury (who have succeeded to the Director general)3 a basis for fixing the rate of exchange. I had no knowlege of the late loan being otherwise disposed of than as to the f800,000. mentioned in your letter. In answer to mine I have just recieved one from them of which I send you an extract. It is dated Amsterdam July 14. 1791.
“Your calculation of our having funds in hand to discharge this order of f800,000 is erroneous, the disposals of the Secretary of the Treasury having absorbed the balance of the U.S. up to about f350,000. Thus we shall be in advance about f150,000—besides which there will be due for interest in
|February next on||loan of||2. mills||80,000|
so that the U.S. will have to provide here in a few months f505,000—
which considering the employ there appears to be yet in America for monies negotiated here, we presume the Secretary would desire to face by a loan, preferably to making us remittances for it.”4
As it appears to me from your letter5 that you expected the payment of f500,000 to be made out of the loan I shall write to the commissioners that such appears to me to be your wish & of course that I do not direct a payment beyond what the loan furnishes viz. about f350,000. I have not fixed any term of payment or any sum with the commissioners of the treasury but have desired them to authorize their bankers to recieve such sums as may be offered them by the commissioners in proportion as they may have monies in their hands & to fix the rate of exchange agreeably to that which prevails at the time of payment. The commissioners of the treasury like M: Dufresne6 desire the payment to be made at Amsterdam, but proposed that the exchange should be fixed according to a mean rate taken on eight days prior & eight days posterior to the payment. I have told them that this was inadmissible because it subjected us to the loss accruing from any artificial rise which might be occasioned in consequence of such payments & remittances being made known. They have agreed individually that the observation was just & have promised to settle it otherwise at their first meeting. I am waiting only for the result in order to give orders to our commissioners.
In answer to my letters with respect to a loan at 4½. p. cent interest & also a diminution of the charges in case of the interest being continued at 5.p.cent, they7 continue to say that the reduced interest can be hoped for only from delaying the loan & augmenting the commission. And as to the loan on the same interest they persist in assuring that no diminution of the charges can take place. They say that the bonds will inevitably fall to par on such a loan being proposed, the rise to 101 having taken place only from its having been believed that no other 5. p. cent loans would be proposed & that the bonds may be now had [at] 100½ in parcels. They add that it would be highly impolitic to sink the goodwill of the undertakers by reducing them ½ p.cent on their commission as I proposed. I own I am not of the same opinion & am persuaded that if they pleased, they might carry through a loan at 3½ p.cent commission. I have not informed them of my intention to open soon a loan either there or elsewhere, but only have given them to understand, which they know however full as well as I do, that Congress will soon have occasion for further loans: & so the matter stands with respect to them.
Mr. Morris is in correspondence with his friends at Antwerp respecting a loan as mentioned to you in a former letter.8 He shewed me a letter from them in which they say that they think a small sum might be raised at 4½. p. cent by allowing sufficient time, but that the commission must be 6. p. cent. I have authorized Mr. Morris to propose to them a commission of 4. p.cent. & to say that in that case I would contract with them. He is now waiting for their answer though I have little hopes they will take so low a commission. As it would be highly advantageous however to make such a loan even as they offer, I may perhaps be tempted to accept it if nothing better can be done—but in that case, as the solidity of the house would be much less known to me than that of the houses at Amsterdam I should think it most advisable to have the sums remitted here in proportion as they recieve them, taking it for granted you would approve such precaution although you have not given orders for the payment. By it the U.S. will reduce the interest of their debt & will also gain considerably by the advantage of the exchange on making the payment.
I have had a further conversation with Mr Grand on the subject of paying off a part of the French debt by loans here.9 He thinks now that it will be necessary to fix the interest at 5. p. cent & also to recieve the assignats at 10. p. cent depreciation, although in fact it is 14. He has taken up this opinion from an idea that the holders of assignats think they will appreciate & of course would not place them for eight or ten years at their full depreciation. If so it will be much more advantageous to make loans abroad for the payment of the French debt, as the exchange which in that case operates as depreciation is much more considerable.
Under these circumstances I shall wait somewhat before opening a loan unless it should be that at Antwerp at 4½ p. cent interest. The probability of peace taking place to the north increases: should it be realized it may perhaps enable the U.S. to make a loan also at Amsterdam at a reduced rate of interest. If however I were authorized to complete the payment of the whole sum due France I should prefer the certainty of doing it immediately by 5. p. cent loans abroad to waiting for the smaller sums to be raised by degrees at 4½. p. cent, because the present advantageous rate of exchange would counterbalance the ½. p. cent interest.
The bankers at Amsterdam have written to me that they have no doubt that a loan opened there the middle of next month might be pushed to six millions of florins, at 5. p. cent.10 The same interest would unquestionably procure loans also at Antwerp & perhaps at Genoa. These resources being used, the French debt as far as due might be immediately paid & large sums remitted you for purchasing up the American funds, which bearing an higher interest & selling considerably below par present great advantages for the public credit. The benefit of such measures depending on a general combination of your plans, no steps of course can be taken towards it but by your orders. The view however in which this subject has long presented itself to me makes me regret that such advantages should be lost or delayed. It is useless to mention to you the effect which our domestic funds being at par would have on the credit abroad.
I have never known the reason why the Senate threw out the bill for paying off the foreign officers.11 It would certainly have had an happy influence on our credit & particularly here. Its not being done could thwart much any design of borrowing money in Paris to pay off the French debt or at least would render the terms less advantageous.
I have thus made you acquainted Sir with the present position of affairs & shall take care to inform you of every step that is taken respecting them.
Various circumstances have prevented the directors of the mint here giving me as yet the information they promised. As soon as obtained it shall be forwarded to you.12
In the mean time I beg you to be fully persuaded of the13
AL, letterpress copy, William Short Papers, Library of Congress.
1. Willink, Van Staphorst, and Hubbard to Short, July 11, 1791 (LS, Short Family Papers, Library of Congress).
2. Short to Willink, Van Staphorst, and Hubbard, July 8, 1791 (ALS, letterpress copy, William Short Papers, Library of Congress).
4. LS, Short Family Papers, Library of Congress.
6. Bertrand Dufresne, director of the Public Treasury of France.
7. Willink, Van Staphorst, and Hubbard.
10. Willink, Van Staphorst, and Hubbard to Short, July 8, 1791 (LS, Short Family Papers, Library of Congress).
11. On February 11, 1791, the House passed a bill “authorizing the President of the United States to cause the debt due to foreign officers to be paid and discharged” (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826). description ends , 375). On February 23 this bill was rejected by the Senate (Annals of Congress description begins The Debates and Proceedings in the Congress of the United States; with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , II, 1807). See also Short to H, August 3, 1790.
13. The remainder of this letter has not been found.