From William Short
Paris Aug. 8. 1791.
The letters which I have lately had the honor of writing to you are of the dates of July 8.—19—24—26—27. In them I informed you of what had been done with respect to the intended loan. Since then I have recieved your letter of the 24th. of May, which increases my powers both as to the repetition of the loans & the disposition of the sums arising from them. At the time of its receipt a sudden & unexpected fall had taken place in the bonds of the U.S. at Amsterdam, & previously to that, as already mentioned to you, the house at Antwerp had declined undertaking a loan at 4½. p. cent interest.1 Our bankers have since informed me that the fall was owing to local circumstances,2 which they do not explain, & not to any discredit of the bonds which are again on the rise.
Thus situated I had to chuse between the certainty of a loan at Amsterdam & the experiment of one at Antwerp.3 I should have preferred the latter, for the reasons formerly mentioned to you,4 if it had not been that I were advised to put off opening a loan there until that for Russia should be completed, so as not to enter into competition with a power which gives such high premiums,5 & also informed that I must begin with small sums at first so as to insure success. The sums on the market of Antwerp being inconsiderable when compared with those at Amsterdam seemed to render such precautions proper. When I considered therefore the amount of those which the U.S. stood in need of & the advantageous mode of their present employment either at home or abroad I thought it most for their interest at this moment to secure them at Amsterdam where they were offered with certainty & without delay, on the terms of the last loan.6 As the bonds were above par it seemed to me just & reasonable that the charges should be somewhat reduced, but the bankers refuse it absolutely & say that the bonds will immediately fall to par as soon as a new loan is brought on the market. I am exceedingly sorry not to have been able as I expected, to reduce these charges; but the bankers, undertakers &c. are all so well acquainted with our position & the advantages we derive from the loans made there, & know so well that they depend on them in a great measure that I apprehend they would hold out against any attempt to reduce them lower.
I have thought it therefore, after an examination of the business in all its parts, most for the interest of the United States to subscribe to those terms for the present, & have accordingly authorized the bankers at Amsterdam to open a new loan7 in the beginning of the next month for three millions of florins on the conditions of the last loan.
In their last letter they state that time as the proper one8 & add a desire that I should leave them at liberty to extend it as far as six millions in case the moment should be favorable.9 I have not done this as yet because I thought it best to make it the condition of their abating ½ p. cent on their charges in which case I have told them that I should have no objection to extending the loan, & added at the same time that it was to be understood that I allowed the 4. p. cent charges only on the condition that the undertakers still exacted 2. p. cent. I did not know but that they might have reduced them to 1½ p. cent as in the loan they formerly made, without allowing the U.S. the benefit of this reduction. If however I find that they persist in the 4. p. cent charges I shall probably authorize them under your last letter to go as far as the six millions & this as well because it will be easier, if the moment is favorable, to push it then to that amount than to make a new loan soon after, as because it will leave a greater space of time between this & the next loan at Amsterdam which I should hope might be made, with a sufficient interval, at 4½. p cent interest. The balance which will remain due to France after the payment arising from this loan, may perhaps be provided for elsewhere either at Antwerp or Genoa. I leave Paris out of the question at present because I find from enquiry that although loans might be made here, they would afford less advantage to the U.S. in the payment to their debt to France than is derived from the rate of foreign exchange. Besides the foreign officers being not paid their interest here would of course prejudice the business of loans. I think it a misfortune the bill did not pass for re-imbursing them as it might have been done with much advantage on account of the exchange,10 & the application which M. de Ternant11 is to make in the names of the officers have been thus avoided.
I will take care Sir to keep you regularly informed of what is done with respect to the loan & shall desire the bankers also to announce it to you immediately on its being brought on the market, that no time may be lost with respect to the part which you intend to draw for. I suppose you find it most advantageous to receive these sums by drawing, otherwise there would have been less time lost perhaps in having the specie sent out.
I do not go to Amsterdam previous to the loan being made because it is not impossible that my presence there which would be known to the whole class of brokers & undertakers, by proving the want of a loan, might make them rise in their terms or render delay necessary in order to beat them down—or at least might furnish a pretext to the bankers for playing a game of that sort. Besides I do not see that any inconvenience can possibly arise from not being there at present. I shall go there to sign the bonds & at the same time stop at Antwerp in order to examine with more accuracy into the real situation of affairs at that place.
An offer has been lately made me indirectly, through Mr. Swan12 of Boston & of course I suppose it comes from Schweizer & Jeanneret,13 of furnishing the U.S. with all the money they want for paying off the French debt due & to become due & of taking their obligations in Amsterdam. The source & chanel of this offer rendered it impossible for me to have any confidence in it & as the terms they offered were less advantageous than those found in borrowing at Amsterdam to pay off this debt, I did not think it worth while to go into a particular enquiry. They proposed to allow the U.S. 10. p. cent for the exchange & 4. p. cent for the commission & asked charges on the re-imbursement of their bonds. The exchange at present procuring an advantage of 20. p. cent, this offer was of course inadmissible, besides that they insisted on the debt to become due being included, which was beyond my powers. I mentioned among other things that I would not give the bonds payable at Amsterdam where our credit was already established & where it might be injured by such an operation. Mr. Swan said the persons in question would consider whether they would take the bonds payable at Genoa & London. I mention this to you merely that nothing may be omitted, & have no idea that any thing can be done in that way with the persons in question as I suppose it merely an enterprize of some adventurers who have nothing to lose may risk any thing—who would be supported by people of capital if this bargain was advantageous & abandoned if it should turn out the contrary. It is possible however as I have formerly mentioned that in the crisis of the affairs of this country, the moment may arrive when many may be disposed to withdraw their fortune from the funds here by means of the American debt & thus put it in the power of the U. S. to derive advantage from anticipating the payment of their debt not yet due; as could be the case if such a change should take place as should threaten bankruptcy, & render the circulation to specie alone. In this situation the stockholders would be glad to get out of the funds with the present rate of exchange, which would be much more advantageous probably for the U.S. than that which would prevail after the abolition of the assignats. Such a crisis & such a turn in affairs is by no means impossible though I cannot undertake to assert its probability, as it depends on foreign as well as domestic operations.
The Honble. Alexander Hamilton Secretary of the Treasury—Philadelphia
AL, letterpress copy, William Short Papers, Library of Congress.
1. Short did not write about Charles John Michael de Wolf and Company’s refusal to make a loan until July 27, 1791.
7. Short did not send final orders for a new loan until August 11, 1791. On July 29, 1791, he discussed the terms but did not specifically order a new loan (Short to Willink, Van Staphorst, and Hubbard, July 29, August 11, 1791, ALS, letterpress copies, William Short Papers, Library of Congress).
8. See Willink, Van Staphorst, and Hubbard to Short, July 21, 1791, printed as an enclosure to Short to H, July 26, 1791.
9. On July 8, 1791, Willink, Van Staphorst, and Hubbard wrote to Short: “We have good hope We should succeed to carry it [the loan] even to the extent of Six Millions of Florins” (LS, Short Family Papers, Library of Congress).
11. Jean Baptiste de Ternant presented his credentials as French Minister Plenipotentiary to the United States on August 2, 1791.
13. The Paris banking firm of Jean Gaspar Schweizer and François Jeanneret.