To Jean Baptiste de Ternant
March 8th 1792
I have the honor of your letter of this date, communicating the copy of one to you from the Secretary of State in answer to your application of the 3d. instant.
Assuring you of the pleasure I shall feel, in executing the views of the President, relatively to the accommodation, which is desired, in as efficacious a manner, as the state of our public resources compared with our public exigencies will admit—I am to inform you that you can have from the Treasury of the United States, on account of your Government the following advances viz 100,000 Dollars immediately, a like sum on the first of June, a like sum on the first of September and a like sum on the first of December next. Provision will be made for the punctual payment of these several sums at the Bank of the United States.
It would be more agreeable, if it were practicable to stipulate shorter periods for these advances, but considering the extra-demands, which the operations on foot for the defence of our Western frontier will add to the ordinary demands for the current service,1 it does not appear adviseable to promise earlier payments.
If however in the progress of things, it shall be found compatible with the general arrangements of the Treasury, to anticipate the periods which have been mentioned, it will without fail be done.
It remains more to explain the principles on which these advances, consistently with the authority vested by law in the President, can be made.
From the instructions which have been given to Mr. Short, from the known progress of his operations, and from some passages in a letter which I have received from him of the 12th of November last—I conclude with certainty, that he has discharged all the arrears of interest and installments of principal due to France to the end of the year 1791.2
The sums now agreed to be furnished therefore will be an anticipation of so much hereafter to become due.
The law, which makes provision for the reimbursements to France, contemplates the payment of whatever sums should have actually become due, unconditionally, but restrains the discretion of the Executive as to payments, by anticipation, with this condition—that they “can be effected upon terms advantageous to the United States.”3
It is clear then, adopting the most liberal construction of this condition, that such payments can only be made upon terms which will involve no loss to the United States.
The fund, from which must arise the advances proposed to be made, is a part of the sums borrowed abroad, pursuant to the law which has been referred to.
These monies have been borrowed at an interest of five per Cent, with charges amounting to four per Cent, and are to be reimbursed in six equal yearly installments, the first at the end of ten years. The time between the receipt of the money in Amsterdam from the lenders, and the placing of it in the Treasury of the United States, cannot be stated at less than six months, during which time an interest has been paid by the United States, for which they have not been compensated by the use of the money. As the money was drawn from Amsterdam by bills of exchange, which were sold upon a credit the transfer was effected at par, while private bills, upon that place were at the times of the sales considerably below par in our market.
The United States will consequently avoid loss, and no more, if the advances which shall be made, are so liquidated, as to include an indemnification for the charges of the loan and the interest of the money during the time lost in transferring it from Amsterdam to the United States. The quantum of such an indemnification will be merely matter of calculation upon the data above stated.
If however instead of an allowance for the six months interest, you prefer as a rule the rate of exchange between the United States and Amsterdam you are at liberty to make the option.
The sums, which have been mentioned will of course only operate as payments, from the respective times; when they shall be actually paid, so as thenceforth to arrest the progress of interest on equal sums of the Debt to France.
The intrinsic par of the metals will be the standard of computation, for converting dollars into livres.
When it is considered, that the indemnification, which is sought, is in compliance with an express law, it is hoped that it will obviate all impression of a too minute attention to pecuniary advantage in a case, which is certainly not of great magnitude, and on an occasion, which it is felt claims a liberal treatment.
When also it is considered, that the United States sustained a heavy loss in the first instance, upon their negociations in relation to the aids which constituted their debt to France—on a considerable proportion of not less than 40 per Cent—that by the terms of their contract they are obliged to repay that debt at Paris and consequently were subjected to whatever loss might have been incident to a state of exchange disadvantageous to them—that they in the present case wave the benefit of a state of Exchange highly advantageous to them, and, renouncing gain from that circumstance, are content with merely not suffering loss; it is relied upon, that the terms which have been suggested will appear to you not only equitable but liberal.
Nevertheless, as it is the wish of the President, to obviate all embarrassment on your part and to put the matter upon a footing perfectly satisfactory to your Government and Nation, I am instructed by him to inform you, that if it will be more agreeable to you, he will refer the question of indemnification to a future adjustment with your Court and will cause the necessary instructions for that purpose to be sent to our minister Plenipotentiary there.4
With very great respect and attachment I have the honor to be Sir Your obedient servant
Minister Plenipotentiary of France
ALS, Arch. des Aff. Etr., Corr. Pol., Etats-Unis description begins Transcripts or photostats from the French Foreign Office deposited in the Library of Congress. description ends , Supplement Vol. 20; letterpress copy, Thomas Jefferson Papers, Library of Congress; copy, Columbia University Libraries.
1. See “An Act for making farther and more effectual Provision for the Protection of the Frontiers of the United States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 241–43 [March 5, 1792]).
4. Gouverneur Morris had been appointed Minister Plenipotentiary for the United States at Paris on January 12, 1792.