From William Short
Paris August. 31 1791
I had the honor of announcing to you yesterday by the way of the English packet the loan contracted for at Amsterdam for six millions of florins.1 I thought it best to give you the details of what has happened with respect to the charges & commission by this conveyance which is a person going to embark at Havre.
My several letters will have informed you of the several attempts I made to bring the bankers to undertake the loan at a rate of commission lower than the last.2 As I was unable to persuade them by arguments drawn from the interests of the U.S. I endeavoured to prevail on them by considerations of their own advantage & therefore making use of the authority given me in your late letters3 of repeating the loans, I agreed they should extend it to six millions, as they had asked to do; provided they would reduce the commission ½. p. cent—adding that if they refused this they must confine the loan to three millions only. It was possible that apprehending the U.S. might find other means of liquidating their debt to France through those who they knew wished to speculate in it, they might consider it more advantageous to make a loan of six millions at 3½. p. cent commission, than one of three at four p. cent. This was the only means left me of attempting to reduce them & I intended as I mentioned to you, that if they continued to refuse the reduction, then to authorize the extension of the loan to six millions, as I was persuaded at that time that it was the most advantageous measure that could be adopted for the U.S.
The bankers however, making use of their knowlege of the present situation of the U.S. & the advantages they derive from monies borrowed at Amsterdam, counting from past experience on the approbation of government, & supporting the measure by reasons of a local & momentary nature which they observe were necessarily unknown to me, have made this loan for six millions of florins & insist absolutely on the commission of four p. cent for the whole, notwithstanding the express condition of the contrary in the authority I gave them.
They have written me a voluminous letter4 to prove their right to this commission in consequence of their agreement as mentioned in their letter to you of Dec. 23. 90.5 approved & forwarded by me & also to shew that their present conduct cannot fail to be applauded. I do not send you a copy of this letter on account of its immense length & because I am persuaded they will have forwarded it to you as it contains all the reasons they could collect for their approbation.6
It is dated the 25th. of August & came to my hands by the last post so that I have not yet answered it. They assert that they acquired a right to insist on 4. p. cent commission on all future 5. p. cent loans & produce the clause of their letter of Dec. 23 to you, & my forwarding it as evidence of this right. My letter to you of Jan. 15. will explain that circumstance & shew that I did not suppose myself authorized to make any contract for any other loan than the one immediately undertaken. I even had the clause of their letter changed & forwarded it in the form you received it (as mentioned in my letter to you of Jan. 18.)7 because what they told me was their reason for inserting it was to shew that they had not engaged to accept 4. p. cent commission on loans at a lower rate of interest. I made the less difficulty in forwarding their letter in the corrected form because as was understood necessarily between us every future loan was to be an object of future discussion & the more so as I could not know whether I should be employed to negotiate them. I own however I had no idea at that time of the commission’s being reduced as it appeared to me certain that the profits of those employed were reduced as low as the usage of that place could admit of. Still I thought it useful to leave the subject open, that the U.S. might take such advantages as experience or their improved situation might give them & proper, that if any other person should succeed me in this business he might have the free exercise of his exertions for serving the U.S. in attempting to reduce the charges. Besides, a permanent engagement for the rate of commission wd. have been impolitic as it would have been binding on government & not on the commissioners, & of course never would have been consented to by me under any circumstance & particularly when I did not know how long I should continue to negotiate these loans for the U.S.
All the right which they claim therefore under their letter of the 23d. of Dec. I consider as groundless & their conduct in thus extending the loan contrary to the authorization contained in my letters, as by no means justifiable.
The reasons which they give for thus precipitating the loan as derived from local circumstances unknown to me, & which they say would have removed all their doubts of being approved if those mentioned above had left any, are 1. that the Province of Holland is to bring a loan immediately on the market for eight or ten millions of guilders for the service of the East India company & that it was therefore necessary to contract previously with the undertakers. 2. that it is now certain a tax is to be laid of 1. p. cent on all loans negotiated in Holland by foreign powers & that it will probably commence about the beginning of the next year, & of course it was to be desired to commence this loan immediately so as to make another before the new tax takes place. 3. that experience has shewn that a loan for six millions can be filled in nearly the same time as one of half of that sum.
These considerations add to my former persuasion that it is much for the advantage of the U.S. to push their loans at present, on the terms of the last8 as to charges, if they cannot be reduced (the probability of success in London not being yet so established as to authorize the abandoning the resources of Amsterdam)9 yet they will not prevent me from still endeavouring to bring the bankers as to the present loan to the conditions proposed in my letters.10 I fear much however they are too fully masters of our situation to consent to the reduction, being fully persuaded the wants of government would prevent their disapproving a loan otherwise agreeable, on account of ½ p. cent commission. They will certainly have taken their precautions with the undertakers in the case of my accepting the loan only for three millions, or if they have recieved or should recieve the money they would pay it to the French government probably counting on your approbation, which they would see you in the impossibility of refusing under those circumstances.
Thus it would be imprudent for me to reject altogether the latter three millions of this loan; besides that would prevent me from announcing to you at present the sums at your disposal, since if the loan were three millions only, 1½. would be the part you destine for your service at home & if the whole six millions are accepted it will be 2½. And farther as matters stand at present, the question whether it is for the interest of the U.S. to accept the whole of this loan on the terms proposed, if they cannot be reduced, leaving no doubt I have thought it best to announce to you that you may consider 2½. millions of florins at your disposal as soon as you shall recieve this information, & without informing the bankers of this endeavour, by all the means in my power to bring them to the conditions of my letters, finally assenting to those they insist on, if they persevere. In the mean time the cash as recieved by them will be immediately paid to this government that there may be no double interest. I will inform you regularly of the progress of this business.
The bonds for this loan will be the same as those for the last, the conditions of re-imbursement &c. being the same. I shall go to Amsterdam to sign them. The bankers recommend it to me to go there towards the end of this year for that purpose as they observe that by then signing the bonds for a new Loan, the tax may be avoided. I shall defer my journey until I know fully what may be hoped for in London or Genoa11 as our proceedings in Amsterdam will of course be directed by the prospects elsewhere. The undertakers have until the end of January to complete their engagements, being obliged however to pay an equal proportion of the sums they have contracted for, in each month. The bankers are persuaded that they will for their own advantage anticipate the epochs agreed on.
I omitted mentioning to you in my letter of the 23d. inst. that the f 350,000 balance in the hands of the bankers had been paid to this government under your order for extending the payments out of the last loan, to 1½. million of florins12—this payment in addition to the f 1,000,000 already paid out of the same loan making f 1,350,000. I formerly mentioned to you the amount in livres of that million of florins.13 The f 350,000 produced agreeably to the exchange agreed on with the commissaries of the treasury 941,175. 9s.
I have the honor to be with sentiments of the most perfect ⟨respect⟩
Alexander Hamilton Secretary of the Treasury, Philadelphia
AL, letterpress copy, William Short Papers, Library of Congress.
1. A copy of the contract for this loan may be found in RG 59, Records Relating to Foreign Accounts, 1782–1797, Letters, Accounts, and Contracts, National Archives.
4. Willink, Van Staphorst, and Hubbard to Short, August 25, 1791. See enclosure.
5. Letter not found, but see extract quoted in the enclosure.
6. If the letter of August 25, 1791, from Willink, Van Staphorst, and Hubbard to Short was sent to H, no copy has been found among his papers. Since the contents of this letter are of importance in understanding the remaining portion of Short’s letter, it has been printed below as an enclosure.
10. Short to Willink, Van Staphorst, and Hubbard, July 29, August 11, 12, 14, 1791 (ALS, letterpress copies, William Short Papers, Library of Congress).