From George Joy1
London 16th. Octr: 1791
I know not how far the documents I requested from you before I left America (Vizt. pr my letter 20th Octr: 1790)2 might have enabled me to obtain such information respecting any arrangements forming here or in Amsterdam, for speculations &ca. in American Debt, as would be worth your attention. Without them, however, little information has occurred wch I was not pretty well assured you must receive advices of from other Channels (or the witholding those documents under an Idea of Impropriety in such Communications would not have prevented my writing you); and the Communication of the opinions I have met with on your financial arrangements were not alone sufficient to warrant my troubling you with a letter wch could not arrive with you until the Effect of your plans should constitute a higher panegyrick than the Encomiums of the best skilled and most experienced in subjects of this Nature; or I might have informed you that on the subject of your Bank Report3 the Gentn: I have conversed with both here and in Amsterdam have expressed a full approbation and admiration, of that sound Judgement wch could hazard an opinion that the irredeemable quality of the 6 pr Ct stock should be consider’d an equivalent for taking a lower rate of Interest than the Contract entitled the holders to, when the Debt itself was to be bought for less than half it’s nominal value, which opinion the Event has verified; and that the same person who under those Circumstances would hazard such an opinion, wch had so much the appearance of a sanguine and immature disposition, should exhibit such wariness and precaution not to commit himself on the Subject of establishing a plurality of Branches; the Utility of wch will probably be dictated by Experience, but which will grow more naturally and with less danger to the root from being gradually cherished.
The recommendation to the Maintenance of the Inviolability of property and Contracts and the truly valuable Consequences expected to be derived therefrom are register’d among the number of Instances of your opinion of the necessity and good policy of literally maintaining the public faith—hardly have the United States escaped the Censure, the most expensive as well as most destructive of all Governments—that of a breach of the public faith. The operation of the funding Bill4 by new modelling the Debt and particularly by placing the Indents on a three pr Ct. Interest must have been considered compulsory, were it not for the provision in the Bill that the Contracts of those who should not subscribe should not be impaired but remain in full force and virtue; and as it is it has been attended with immense difficulty to Individuals who were so circumstanced that they could not retain their property of this kind until the presumed Ability of the Country should be so fully ascertained by Experience that they could with Confidence make a demand according to the express tenor of their Certificates. I know an Instance in wch principal to a large Amount (say 140 M Dollars) was given in Exchange for Interest upon the terms of 1⅔ rds Dollars Principal for one dollar Indents; so fully confident was one of the Parties, from the attempts made under the old Government to make an early provision for calling in the Indents, and the common Ideas, that pending the Ability of the Public to pay the Principal they would exert their first Efforts to discharge the Interest. I say I know this fact and ’tis to my cost I know it, as the Loss thus sustained by the Party has render’d him incapable of paying his Creditors among whom I myself stand the most formidable and to a very alarming Amount. By loaning more than fifty thousand pounds sterling in the Month of March last at an Interest of 5 pr Ct: free of all Charges I have prevented a sacrifice of near 300 M Dollars of this species of Debt, and a large amot: of the foreign Debt of So: Carolina on wch I have an hypothecation, wch have since risen very much in value; but on the Justice of the Public by making this debt equal to the specific Contract on wch it stands, either by an actual payment or by funding it at such rate of Interest as will bring it up to it’s nominal value, I depend for the means of re-imbursing the sums for wch I am thus Creditor to the Public. You may remember, sir, (if your very important avocations have not intervened to prevent it) a suggestion I once took the liberty to make to you that on a presumption that the revenue granted would pay 4½ @ 5 pr Ct: on the full amount of the Debt; as much might be hired in Europe for 3 @ 5 Years as would make up the deficiency, under Condition, that, if it should be ascertained by an average of that number of years that the revenue was competent to the payment of that Interest without risque of deficiency, you should be intitled to receive such sum from the Parties on a similar Interest as would pay the whole Debt, if required, or such part thereof as the present holders would not choose to subscribe on the same Conditions. In this opinion I am fully confirmed, with this addition that if no Infringement had been made upon existing Contracts, or if the Ability of the Government being now ascertained those who have waited the Event, render an Assurance that their Contracts should not be infringed, should meet that Justice wch the Constitution and the funding Bill, as well as the specific Tenor of their demands entitle them to; the Money might in all probability be hired at a lower rate of Interest even than 4½ pr Ct:
There is now an attempt making in this City to loan Money on American security at 4½ pr Ct: I have not yet ascertained whether ’tis an accot: of our Government or private speculation and am apprehensive I cannot know until after the sailing of this ship. If it is for Government you will know it of Course; if not such information as I may obtain shall be at your service. The Object, I understand, is either to purchase or pay off the french Loans. ’Tis pity that an opportunity for paying that Debt at so very favorable an Exchange as the present should be lost. ’Tis probable that the Reflux of Money to France in Consequence of the Completion of the Revolution which is now pretty generally acknowledged to be beyond any material Controversy, will soon induce an alteration in the Exchange favorable to that Country tho’ the general Market Rate of Interest in Europe may not be materially or for any length of time alter’d thereby.
It would render me very essential service to be informed by you of any measures adopted or likely to be pursued for the early discharge of the unsubscribed Debt; or for admitting any proportion thereof in payment of Loans of Money at the same or a less rate of Interest than what the U.S. have lately paid; being confident that such a plan might be pursued with advantage to the Character of the U.S. as a people, with a certain ultimate benefit to the finances of the Country and perhaps an immediate diminution of the annual Expenditure or, at all Events, of the just annual claims upon the public. I pretend not to any Claim to such information but such as arises from a sincere disposition to repay the Obligation by any personal services; or (which I know to be more acceptable to you) by any services wch it may be in my power to render you in your official Capacity by the Communication of facts that may come within my knowledge. Were the sum larger I might with Confidence urge such information being early conveyed to me as an Object of Policy. Circumstanced as I am an early arrangement or an early assurance under the Authority of your opinion of the probability of such arrangement may make the difference between 300 M Dollrs (say three hundred thousand Dollars) of this debt and more than £30 M stlg (say thirty thousand pounds sterling) of the foreign Debt of So: Carolina being held by foreigners or a Citizen of the U.S. I have so large a sum to pay in Holland on the first day of April next (for wch I must be providing myself some Weeks before) that in the fullest Confidence and satisfaction that no dishonorable advantage will be suffer’d by you to be taken of my situation to purchase for the Government at an under value I will frankly confess to you that it will not only be impossible for me to hold them unless such arrangement be, at least in a train of formation; but I shall be obliged to abandon them to foreigners at a very low rate perhaps, under the fetters in wch they are held, not more than 10/. pr £, not only suffering thereby the loss of those benefits wch from an unshaken Confidence in the Magnanimity of the Government, even in the most trying times, and my consequent speculations in the funds, I had a reasonable right to expect; (for any part of wch my prospects of payments are very much clouded) but the loss of very heavy Sums for which I am actually in advance without the prospect of re-imbursement but from the above source. I say were the sum larger I should with Confidence urge this Argument; as it is you may not perhaps think it unworthy your attention. If so, knowing as I do your opinion of the difference in a political View between paying a larger annuity* abroad or a smaller at home, it would be a needless waste of your time to bring before you any Arguments on the subject. You will readily conceive from what I have written above that I should be able in Case the Funds were put on a more respectable footing to loan such sums on an hypothecation of them as would prevent the necessity of a sacrifice by Sale.
I have confined myself above to the promise of furnishing you with any information that may occur to me. A cordial aversion from the imputation of having led any of my friends to expect from me what in the Event I may find myself unable to perform prevents my making you a tender of more important services; and I do not feel warranted to assure myself of the Ability to raise large loans for the public (tho’ some Connections I am now forming make it presumeable). I would, however, gladly bring forward in the line of a Co-adjutor such powers as I may possess in aid of such plan; being very desirous of establishing a precedent wch would prevent the advantage naturally taken of your having given a large Interest to ask a large Interest—a Circumstance wch however trifling it must appear to a reasoning mind does actually occasion (especially when combined with the Circumstance of an apparent, magnified by the Money lenders into a real, breach of Contract) a demand for a larger Interest than is paid by States less able to pay their debts and subject to numerous evils operating a greater risque of the Capital than can be supposed to exist with us; and such Precedent I presume may be successfully established by Loans at a lower rate of Interest tho’ the unsubscribed Arrears of Interest or even the 3 pr. Ct. Stock were receivable for a large proportion of the Amount.
I mention the modification of the unsubscribed Debt in some such way, as perhaps more likely to meet the Concurrence of the Legislature; tho’ for my own part I am clearly of opinion that to fund it according to the express tenor of the Contract redeemable ad libitum would be most profitable as well as on all other accounts the best mode that could be pursued. It would effectually preclude any just Complaint of a breach of Contract and therefore must meet the Concurrence of the Creditors; it would enhance the Credit and respectability of the U.S. and enable them to loan Money in future at as low Interest as any State in Europe; and they might in a very short time avail themselves of the Consequence of those pacific principles resulting from the enlightened and improving State of Society to loan at a much lower rate than your prudence would suffer you to hazard a Conjecture of in your report of Janry 1790.5
Any Apology for the length of this letter would only add to what is already extended far beyond what I intended troubling with. I therefore finish it with the Assurance that I am with perfect Esteem and Respect,
Sir, Your obedt. & very hble servt.
Address No. 56 Hatton Garden.
ALS, Hamilton Papers, Library of Congress; LS, Hamilton Papers, Library of Congress.
1. Joy had been a merchant in New York City from 1787 to 1790. At the end of 1790 he settled in London.
2. Letter not found.
4. “An Act making provision for the (payment of the) Debt of the United States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 138–44 [August 4, 1790]).