From William Short
Amsterdam Dec. 28. 1791
In my last of the 23d. inst. I had the honor of simply announcing to you a loan being contracted for here on account of the U.S. for f 3,000,000 at 4. p. cent. The departure of the English post by which my letter was sent did not allow me to enter into details, except as to the terms of the loan. An alteration has since been made as to the times of payment from eight to six months. You may accordingly count on f 500,000. being recieved by the bankers monthly, the next month being considered as the first, so that the whole must be paid by the end of June, & will unquestionably be paid sooner, the undertakers having as you know always the facility of shortening the terms.
Until I shall hear from you, the monies arising on this loan will be applied towards the French debt, reserving what may be necessary to complete the two millions & an half of florins you had excepted out of the six million loan & which I had intended should have been kept out of it, having only given orders for 3½ millions.1 I find here however that other dispositions have been made by other orders of two or three hundred thousand florins, so as to leave that deficit on the 2½ millions intended to be kept to answer your draughts. The sums which become due here for interest in february & march will be also paid out of the present loan.
A vessel now lying at the Texel waiting for a wind gives me an opportunity of writing to you by that chanel to inform you of the steps which immediately preceded this loan; which in addition to what I have said in my former letters from Antwerp & this place, will I think stamp the proper value on the offers made from hence with respect to a loan at 4. p. cent.
As soon as I arrived here & found from the conversations of the bankers themselves that the Antwerp obligations of 4½. p. cent were not sold on this market, & also that a loan at 4. p. cent was then impracticable, as it certainly was at that time, I was persuaded that the impracticability could not arise from the Antwerp loan, & as that was the only circumstance which had intervened & the only reason for a change of circumstances I concluded naturally that no change had taken place & of course that the same impractibility which I was satisfied existed then must have existed at the time of their letters. It may be asked why they should have held out the hopes of the 4. p cent loan if they did not think they could be realized? They could not but have known or at least have had the strongest presumptions of the loan being intended at Antwerp, for although they did not recieve the printed prospectus of it until two days after their letter to me, yet the business had been settled between M. de Wolf2 & the undertakers at Antwerp some time before & had been talked of there in a manner not to admit a doubt of its being known at Amsterdam. Supposing therefore a strong desire in the bankers here to prevent such a loan, which they do not deny, the most probable means were certainly to give assurances of a loan here at a lower rate of interest. They know well enough the nature of the loan business to be sure that a check given to it in this stage at Antwerp, would be for some time an obstacle to renewing the loan there in the case of our wishing to do it on finding that the 4. p. cent loan could not be made here. The imputation could be made them, as they could easily have said they held out the hopes of the 4. p. cent loan, from their zeal to the U.S. having reason to believe it could be made, but that circumstances which change here daily & of which no one can be master &c. &c. (according to their constant language) had changed the prospect.
If on the contrary, as took place, the loan was not stopped at Antwerp, they by the hopes thus held out remained on the most advantageous ground, as whilst they could thus demonstrate the impolicy of the loan at Antwerp, they supposed they should proceed equally in making the one that I had authorized them for at 4½. p. cent.
Apprehending however that something of this kind might be possible I immediately withdrew the authority as to the 4½. p. cent & I found on my arrival here full proofs that if I had not done this expressly a loan would have been made without delay at that rate. It was evident that they had had no apprehension that I should put a stop to such a loan here whilst I consented to that at Antwerp. They made use of all kinds of arguments daily to prove to me the propriety, the policy & advantage of renewing the powers I had withdrawn. I refused it constantly, & as they could not concieve that a loan at that rate of interest would be refused by the U.S. without a prospect of some advantageous arrangement of the French debt, & as their correspondents at Paris gave them some intimation of a plan in agitation in the French ministry, they began evidently to be some what alarmed. Agreeably to their example in such cases I did not seek to diminish it—on the contrary it was augmented by my silence and reserve on the subject. In this situation of the business no opportunity was lost by them of exalting their zeal for the service of the U.S: their attachment to their interests &c. of which they always quoted in proof their having not made the loan at 4½ p. cent. whilst they had the power to do it; but in such a manner as left me no doubt of their regret at having lost such an opportunity, at present that they were uncertain of what would be done with the French debt, & of course with future loans.
Under these circumstances I could have no doubt that every effort would be made to effect a loan at 4. p. cent, as well from the hopes of preventing any arrangement of the debt in France, which might derange the business in their hands as because they had every reason to believe I would consent to one on no other condition. The brokers were consulted who were unanimously of opinion in their meeting that it would be improper to propose such a loan at that time. On this their instances became still more pressing for the loan at 4½. p. cent & by way of securing it they urged my consenting to write two loans together that they might propose them to the undertakers coupled, one at 4½ & the other at 4. As this was however nothing more than another way of making a loan at 4½ p. cent. wch I had refused, I refused it also. They had assured me that no hopes could be entertained of doing better. I was closeted with one of the Willinks3 listening to his arguments on this subject & refuting them when one of the other houses came in unexpectedly & with much real joy announced to us, that having got information that Russia was about to propose a loan at 4. p. cent, he had gone immediately to the other Willink to consult on it & that they were both of opinion that it might be made a step to effect one for America. Accordingly the subject was immediately discussed by the partners of both houses, & it was agreed that if I consented to it they would order the brokers to propose the loan the next morning to the undertakers & support it. I observed to them that I consented willingly to the loan at 4. p. cent, provided there was a certainty of its being carried through with éclat, but that I was somewhat surprized to hear their talk of ordering now those whom they had always represented to me as dictators in such cases & would by no means wish that any risk should be run of a defeat by precipitating the business. They said they would be responsible for that, & that there were occasions in which the brokers must not be consulted but ordered.
The next day the loan of Russia was brought on & that of America followed it, & was effected in the manner I have already mentioned to you. The loan of Russia is for f 6,000,000. at 4. p. cent, payable in the obligations of the same power on an old loan at 4½. p. cent, which become re-imbursable in the next year. The interest is calculated at 4½. p. cent to the time of re-imbursement, & recieved for that value in the present loan. Notwithstanding this mode of fulfilling the loan, without which it would not have been attempted I am assured by an authority which cannot be mistaken, that only four millions were undertaken & that Hope4 took the other two millions for his house, without doubt in concert with the Russian government, so that he will risk nothing. The proof that Russia would not have attempted an original loan at 4. p. cent. at present & which I consider as sufficiently satisfactory is that her last at 5. p. cent was made in the month of November, since when nothing of any kind has taken place either here or in Russia to authorize such a diminution.
The inferences which I draw from what has been said above, are that the market here was not ripe for loans at 4. p. cent at the time these hopes were held out by the bankers, that they would not have been held out but for the Antwerp loan, & that my powers to them for making one at 4½. p. cent would have been executed, that the loan at 4. p. cent would not now have been effected if that for Russia had not been brought on the market, & that it would not have been brought on the market, but for the favorable circumstance of the approaching re-imbursement abovementioned & the influence & power of Hope’s house.
The bankers whilst I was at Antwerp & after I had informed them that the loan there could not be stopped, wrote me that they would give me on my arrival here an unequivocal demonstration of the practicability there had been of their making a loan for the U.S. at 4. p. cent.5 It has been reduced simply to an assertion that the abundance of money on the market arising from the sales of English funds, rendered it practicable, & that their having made a loan on the liquidated debt at 4½. p. cent proved it. As to the abundance of money which is a fact, it operated with equal force on the Russian as on the American credit, their obligations, since the presumed peace between Russia & the Porte,6 having been at the same price, & yet this did not enable Russia to make a loan then at 4. p. cent although she had not made one at Antwerp as we had done, which was stated as the only obstacle to ours. With respect to the loan on the liquidated debt, it is certain that heretofore there was a greater difference in favor of the loans of Congress than ½. p. cent interest. But it is certain also that the loans on the liquidated debt have been so successful, so much has been gained by the lenders, & the obligations have always taken & kept such a rise, that these loans had acquired a degree of favor which enabled those who made them to propose them on almost any terms. It is known here with what enthusiasm & ardor the undertakers run into a business which has acquired that kind of favor, & of course it cannot be adopted as a point of comparison much less a conclusive proof. The bankers themselves have been obliged to acknowlege the justice & weight of this observation in general. Still they adhere to their former assertion on this particular instance, in opposition to it.
I have been thus diffuse Sir & wearied you with these irksome & lengthy details because I think it important that you should be able to form a true judgment on the subject of having the faculty, whether exercised or not, of making loans in more than one place. The best guide I can give you is thus furnishing the greatest number of facts possible, so that you may form your own opinion from them, instead of being informed of mine simply which always subject to error, is particularly exposed to be influenced in this instance. The rising credit of America & the increasing confidence which her present administration is acquiring in the monied parts of Europe, will necessarily present such a variety of choice to the U. S. that it is much to be desired that those who act for you should be kept acquainted with your sentiments on the subject.
My letter thus extended does not permit me to say any thing respecting the attempt of the bankers to increase the charges on this loan to six p. cent, but simply to mention that it was by leaving the question without being finally decided until after the loan was made & then to argue from the advantage of giving such an increase of charges for such a diminution of interest. They affirmed & I am persuaded with truth, that besides the usual bankers & undertakers they are obliged to employ others also with extra expences, to push the loan. As I did not suppose they had in doing this gone farther than would have been warranted by the charges of 5½. p. cent mentioned in their former letter,7 I insisted on them & after some days they consented though with reluctance, & are to write me a letter to fix them at that rate.
After all that has been said above I should leave you perhaps an impression with respect to the bankers that is not in my intention, if I were to say nothing further. It is but justice to them that I should add that notwithstanding I am convinced their aversion to our opening loans out of Holland would induce them to use every means in their power for preventing it & that of themselves they would fix their profits on making the loans, probably somewhat above what we should think just, yet I am convinced also fully from what I have seen of them & of the other houses employed here in similar business that none have more zeal for the service of the countries by which they are employed, or act with more propriety & delicacy towards them.
All these houses make a common cause of a power accustomed to borrow here opening a loan in Antwerp, which they consider in this respect as a dependence on Amsterdam. Hope whose partiality for the interests of America nobody will presume has taken uncommon pains repeatedly since my arrival here to demonstrate to me the impolicy of the measure, & that by the most sophistical arguments imaginable. I listened to them with much attention because I was really desirous to be fully enlightened on the subject & particularly to hear what could be said on it by the most able & perhaps best informed man in Europe in that business. I have heard as well from him as others many good reasons for exercising the faculty (of making loans in more than one place) with more reserve than I should have perhaps thought necessary before, but nothing to diminish the advantages which may be expected from shewing that the faculty is in our power if we chuse to exercise it. It is certain that this is a vantage ground from which the borrower is much more enabled to command the lender. What has happened in the present instance is, unless I am very much mistaken, strong proof of its influence.
Mr. Hope as it appears, has stronger arguments to use with Russia. I mentioned to you formerly that he had in undertaking the re-establishment of Russian credit contracted for the monopoly of the loans of that country & lately that M. de Wolf had postponed the American loan he had been treating for because he was authorized to open one for Russia on much more advantageous terms.8 I supposed then either that the monopoly had ceased or that Hope had consented to the loan. The contrary however was the case. The loan projeced for Russia was on a footing which it was thought would evade the engagement wih Hope; that is to say by being opened at Petersburg, & the bonds given there expressed in roubles, which bonds were to be sold at Antwerp & the interest on them paid there. A considerable part of the loan was effected, a part of it remitted to Petersburg, & notwithstanding it has been stopped (supposed to be by the influence of Hope) & the money returned to the lenders.
Previous to my leaving Paris, several of the sufferers by the revolt in S. Domingo had concieved the plan of the French Government coming to their aid by loans of money in order to enable them to rebuild & re-establish their cultivation.9 As they knew the U.S. were paying off their debt they cast their eyes on that supply, & determined to collect it through the ministry of the assembly. It was an affair then in embryo & as it had to pass from the ministry to the assembly & was placing such a sum of money at the disposition of government it was much to be feared, under present circumstances, that it would not be brought to consistence and particularly as it was desired by the ministry of whom a great part of the assembly have really much more apprehension & fear than of the most declared & bitter enemies of the country, regarding them as the fosterers of what they call a counter-revolution, & by which they understand the destroying of the nation by war, plunder, & famine.
Some days ago the minister of the marine brought forward this business in the manner the most favorable to its success.10 He made a general report on the troubles of S. Domingo & the losses which he estimates at a capital of 600,000,000. He considered the colony as a large manufacture belonging to the nation & placed at a distance, in which every member of the society in France was an actionaire, & of course interested in its support. This is the most popular way of considering the subject for the assembly; for the most exagerated lovers of liberty & individual independence among them, are much flattered with the idea of the inhabitants of the islands of all colours being their property & really regard them as such. The minister shewed the profits arising from this great manufacture for all its owners & the advantages to be derived from an immediate re-establishment of it, by advances of money which would be thus placed on the most advantageous terms. He observed that the debt of America was the most immediate succour that could be given & proposed its being thus applied, adding an expression in favour of liberty which was much applauded. They did not however employ their usual mode of acceleration by a décret d’urgence. It was referred to a committee.11 They are to report on it about this time but it is highly probable it will be still delayed. The minister thinks however it will be finally adopted. In that case he will come forward probably with proposals to me for carrying his plan into the earliest execution. Considering my powers as co-extensive with the whole debt at the present rate of interest here,12 I shall co-operate with him most heartily, as it is evident that it must be highly advantageous for the U.S. to have their debt to France vested in their own productions, which is the object the minister has in view.13 You will recieve from Paris in the papers which will have been regularly sent to the Secretary of State during my absence, the report of the minister abovementioned. I shall not fail to keep you acquainted with the progress of the business after my arrival there, & have the honor at present to be, with the highest respect,
Sir Your most obedient humble servant
The Honble. Alexander Hamilton Secretary of the Treasury, Philadelphia
ALS, letterpress copy, William Short Papers, Library of Congress.
3. Wilhem and Jan Willink had joined with the banking house of Nicholaas and Jacob Van Staphorst and Nicholas Hubbard as the bankers of the United States in Amsterdam.
5. Willink, Van Staphorst, and Hubbard to Short, December 8, 1791 (LS, Short Family Papers, Library of Congress).
6. The second Russo-Turkish War was concluded by the Treaty of Jassy, which was signed on January 9, 1792.
10. Antoine François, Marquis de Bertrand de Moleville, who had been appointed Minister of Marine and Colonies on October 7, 1791, addressed the Legislative Assembly on Santo Domingo on December 19, 1791 (Archives Parlementaires description begins Archives Parlementaires de 1787 à 1860 (Paris, 1868– ). description ends , XXXVI, 253–56).
11. With a décret d’urgence the Assembly dispensed with the usual parliamentary procedure by approving a decree without bothering with either committee hearings or a report. Bertrand’s proposal was referred to the Assembly’s Committee on Commerce and Colonies (Archives Parlementaires description begins Archives Parlementaires de 1787 à 1860 (Paris, 1868– ). description ends , XXXVI, 256).
13. Bertrand proposed that the needed goods and commodities be purchased in the United States.