From William Short
The Hague Sep. 25. 1792
All the letters which I have had the honor of writing to you for some time will I think have been uniform in shewing you my anxiety on two subjects, namely the settlement of the depreciation to be allowed on the payments which I had had made to the French government since the receipt of your letter of Sep. 2. 91. relative thereto & the retardment of the sums accumulating in the hands of our bankers at Amsterdam destined for France.
I trust Sir you will have seen, that under the circumstances in which I was placed & which I have taken the liberty of so often tracing to you, it was dictated both by a sense of duty & delicacy to have pursued the line I did from the month of January last, the time of my return from Amsterdam to Paris, until Mr. Morris’s1 arrival there in May & I should perhaps be without anxiety on the subject at present if I did not find from your late letters recieved here that it is the intention that this part of the business should continue to be conducted by me2 & therefore fear that you may think I ought to have understood it in this manner (notwithstanding the Presidents instructions3 & other irresistible reasons) & of course place on me the blame, which I should certainly in that case deserve for having allowed to pass so favorable an opportunity of making the settlement advantageously for the U.S.
Every circumstance relative to these two subjects has been successively & repeatedly communicated to you as it occurred, with a minuteness which I was often afraid would be fastidious. I will at present therefore ask leave to take them up only from the time of Mr. Morris’s arrival at Paris.4
I then supposed & so did he that the arrangement of the indemnity to be allowed for depreciation was within the line of his mission. I accordingly put him as fully as I could in possession of the subject— feeling however peculiarly anxious, as it had been formerly confided to me, that it should be settled advantageously for the U.S. & agreeably to the President. I urged Mr Morris to lose no time—stating to him the various reasons which occurred therefore. I mentioned to him the causes which had induced me to delay this settlement. He seemed fully disposed to enter on the business & sensible of the propriety of despatch; mentioning however two causes of short delay, that is to say his having not then been formally installed in his functions & his desire to recieve another letter from the Sec. of State explanatory of the one then in hand relative to the subject of depreciation.5
The settlement of the indemnity on the payments already made, being thus considered as placed in Mr. Morris’s hands, by our government, necessarily gave him the direction in some measure of those to be made—because being more safe for the U.S. & more agreeable to France to recieve the florins in Amsterdam than in bills of exchange remitted to Paris, it became necessary to settle with the French government previously at what rate they would credit the U.S. in livres for these florins—which of course was fixing the depreciation or indemnity to be allowed. Accordingly when I left Paris for this place the business stood thus6—As to depreciation on former payments, to be settled by M. Morris, the most expeditiously possible—As to future payments I was not to order any until he should advise me of his having settled on what footing they should be recieved.
Thus the whole business was in fact placed necessarily in his hands & I became merely a passive agent. Still my desire that no time should be lost (as it became every day more sensible from the situation of affairs in France, how precarious the government which had created & lived on the assignats, was growing) made me take on myself to write from hence to M. Morris urging him with a frequency & importunity which nothing but my desire to see the business conducted advantageously for the U.S. could authorize. Every letter gave me reason to hope that the next would enable me to direct our bankers to pay the monies wch. had been so long detained were accumulating daily in their hands & augmenting my anxiety.
At length on the sixteenth of August I recieved here, after my return from Amsterdam, two letters from M. Morris of the sixth & ninth, mentioning that he had agreed with the commissaries of the treasury for a payment of 1,625,000 florins—which he accordingly desired I would direct Messrs Willinks & Van Staphorst to pay to the French bankers at Amsterdam.7 I recieved at the same time an account of the King’s suspension. It struck me that a payment under these circumstances would be improper & dangerous—but recieving a letter the day after from M Morris, of the 13th. viz. three days posterior to the suspension, in which no hint of a counter-order was given, I directed the bankers to make the payment, taking the precaution to have mentioned in the reciept that it was on account of the debt due by the U S to France & to be held at the disposition of his Most Ch. Maj.8 I concieved that this would be rescuing us from a reproach after the resurrection of a Monarch in France & at the same time would entitle us to take credit for the payment & thereby avoid an interest on that amount to France. I did suppose also that the French bankers would be satisfied to give a reciept of that kind for various reasons. It proved otherwise & they refused recieving the money except with the stipulation as mentioned to you in my last9—or on giving a draught on the treasury as they had been accustomed to do.
My own opinion being that such a payment would be improper if it was to be placed at the disposition of the usurpers in France—& the refusal of the French bankers to recieve it otherwise unless locked up by my stipulation in their hands—occasioned a delay during which I recieved several letters from M. Morris. They were so uniformly positive as to the propriety of the payment that I determined to give up my opinion, which was borne down by the weight of his—by the consideration of the long delay to which these payments had been already subjected—of the sums which were accumulating—of the probability of the time which might elapse before such an order of things should be established in France as would authorize payments to be made them—of the advantage of stopping the interest on six millions of livres (which was the sum M. Morris afterwards informed me we were to have credit for) by a payment of 1,625,000 florins. After weighing well & with anxiety the circumstances & seeing that there was only my individual opinion in opposition to them I could not avoid yielding it—& accordingly on the 4th. of this month directed the payment to be made to the French bankers at Amsterdam & the same day gave notice of it to Mr. Morris. The determination being once taken it became urgent that it should be carried into execution without delay. The payment was made the next day—& the draught of the French bankers on the French treasury endorsed by ours to the commissaries in the usual form was remitted by them, for greater security to M. Morris. The second of the draught they sent to me to be forwarded likewise to him. This was all that could be done here. Reconverting these florins into livres & seeing that they were properly carried to the credit of the U S which was an essential part of the arrangement, lay unavoidably between M. Morris & the commissaries—no other person being privy to the arrangement, & the French bankers being of course unable to express the draught in livres, or any otherwise than in Florins, which indeed was the term M. Morris had desired should be used.
I mentioned that M Morris’s letters posterior to the suspension had been uniform as to the propriety of this payment—mine to him had as uniformly expressed my fears & doubts. In that which I recieved from him the 4th. inst. & after which I immediately gave orders for the payment—he observes “Now as to future questions I am quite tranquil—what was done was done by consent both of King & country so that all is well done let whichever of them get the better which fate or fortune may chuse.” On the 14th. I recd. from him a letter of the 9th acknowleging the reciept of mine of the 4th. (announcing to him the orders I had given for the payment) in which he says “As the six millions are I suppose paid it is not necessary to dilate on that subject” & then goes on to say that on examing his powers more minutely he had found that “the management of what relates to the debt was committed entirely & of course conclusively to you” (me). On the 18th. I recieved from him a letter of the 12th., acknowleging the receipt of mine of the 7th. inclosing him the second of the draught in which he says “I had previously sent to the commissaries of the Treasury the letter from the bankers at Amsterdam. I certainly have taken no step in respect to that payment since my first letter to you desiring that it might be made & certainly I shall not take any for the very good reasons which I am sure will suggest themselves to you & which of course I will not enumerate.” I have chosen to repeat M. Morris’s own expressions because being now to write to you, & having recieved no letter from him of a later date, I cannot know whether he means from thence that he should be considered as not being the author of this payment, as simply sending the draught to the commissaries without seeing that the U.S. were credited therefore in livres would seem to indicate, unless the arrangement wch. he had made with them was such as to effect this purpose previously & therefore render his interference after the reciept of the draught unnecessary. Being unacquainted with the manner in which the arrangement was made I can not know how the matter stood. I hope however & trust that he will see too clearly the importance of this step for the interest of the U.S. not to consummate the measure which he had begun & which being only between him & the commissaries could properly be effected only by him.
All my letters have been uniform on that head & since recieving his of the 9th & 12th I have urged him that whatever scruples he may have as to other measures not to neglect this which was now only within his reach—& which a short time would probably put beyond even his, as the present order of things could have but a momentary existence. Fearing that it might even be too late if I awaited to learn what he had done, I took on me to write to the commissaries of the treasury by way of supererogation10 & in-closed my letter open in my last to him, to be used in the case he had not taken previous arrangements for having the U.S. credited for six millions of livres & persisted in not doing it. My letter to the commissaries was merely to desire they would state the account including this payment according to their agreement with M. Morris. A short time will shew what has been done & I could have wished to have saved you the trouble of these details—but in its present uncertain state I could not avoid informing you of them as far as they are known to me, & shewing that nothing has been left un-done by me to alter my obedience to the will of the President & my zeal for carrying into execution whatever I learn to be his wish.
I have already had the honor of mentioning to you that your letter of the 14th. of June, which shewed that it was his intention that this business should remain with me was not recieved until the 17th. of August, after the arrangement with the commissaries had been made by M. Morris, & after I had learned the King’s suspension. It was evident that the only thing which could be done then, was to complete the measure begun previous to that suspension, & that no new one could be adopted until there should be a change in France.
I cannot convey to you an idea of my regret at the opportunity of settling the depreciation of the assignats with the government which created them, having been thus lost, better than by referring to the uniform contents of my past letters on the subject. The proper way of treating it seems to me at present to be this. Instead of converting the assignats into a given sum (by deducting that which might be considered as the amount of depreciation at the time of each payment & having this given sum carried to the credit of the U.S.) to have the whole nominal sum of assignats paid, carried to their credit & here-after when the business shall be taken up & the debt paid, to pay over & above a given sum in lieu of depreciation. The U.S. may then come forward & offer this indemnity which will be considered at that time as a free gift—& in the mean time they stop the interest on the nominal sum paid instead of the sum reduced by deducting for depreciation at the time of payment. Although this would have been a much more fixed & proper mode of settlement & more agreeable also to the U.S. as I learn from your letters,11 yet the other may be made to secure its advantages also—a future government will unquestionably be much less scrupulous as to the depreciation of assignats & will use various arguments that this could not, yet there will be several to oppose to them also, resulting from the manner in which the U.S. recieved the loan from them—& also from the delays to which they have been subjected from the situation of affairs in France, notwithstanding they have had so large sums lying dead in the hands of their bankers at Amsterdam.
In order that this subject may be brought on in the manner the least liable to question & the most advantageous for the U.S. it seems to me to be desired that the bonds or reciepts of the U.S. constituting this debt & now in the French treasury, should be with drawn as far as they have been extinguished by our payments. It is certain that interest here-after can be claimed only on such as remain in the treasury. Suppose that to be 15. or any other number of millions, all we pay here-after over & above that by way of indemnity will be much more within our discretion & appear a much more spontaneous generosity than if the whole number of bonds remained & were subjected to a future discussion both of interest and indemnity. I have therefore repeatedly & warmly pressed this on M. Morris. The only difficulty which occurred to me arose from a belief that it was expressed in the reciepts constituting this debt (which however were never sent to me as promised in your letter of Sep. 1. 1790.) that the payments should be in equal portions on each reciept until the whole were paid—of this however I was not sure & supposed the difficulty even if it existed might be got over. As soon as I found M. Morris determined to consider his powers as not enabling him to act I begged him to give his instrumentality to this measure in consideration of its advantage to the U.S if it appeared to him in the same light it did to me—& that if he had any scruples he might consider it as my act & under my responsibility.
For his guide I informed him that the charges made in the account of the commissaries relative to the Farmers-general &c. were not [to] be considered, some being questionable & others certainly improper—that the original debt of 34. millions alone with the interest was to be taken into view & I forwarded the statement in-closed in your letter of June 23d. shewing what interest & what part of the principal was exigible. I intreated him after applying the several payments made formerly by Mr. Grand12 of Paris—by the bankers at Amsterdam13—by deWolf at Antwerp14—& lastly the six millions agreed for by him, towards extinguishing the interest & principal due; to extend the surplus to the remaining part of the debt at 5. p. cent & withdraw the bonds of all the principal thus extinguished, in the manner & under the responsibility, if he chose it, as above-mentioned. Should this be done it will be putting the subject certainly on the best vantage ground within our scope at present—& I hope notwithstanding his last letter that this which I have written to him since will induce him as I there mention to give that instrumentality which his geographical position & the present situation of France put within his reach alone.
To avoid confusion in these lengthy details I have postponed mentioning your letter of July 25th. which I had the honor of recieving here on the 10th. inst. You were very right Sir in supposing that no mode of applying the data there mentioned, could be contemplated by which the U.S. were to be subjected to loss. I rather suppose you will have misunderstood the quotation of the exchange there mentioned. I have not the paper of that day before me—but it must have meant that 36 was the course of the exchange with Amsterdam—& not that the exchange was 36 p. ct below par. The 36 which was probably the number there marked (& to which I think the exchange had risen for a few days about that time) after having been for a few days also as low as 26½—means that 36 half sous of Holland were equal to three livres of France. The par is about 54 of these half sous to the petitecu of three livres—of course the gain at Amsterdam was 28 on 54.15 The rate of depreciation which you mention if quoted as in most of the papers did not probably state 60. p. cent—but 100 livres in silver for 160 in assignats—which of course did not mean 60 on an hundred—but sixty on an hundred & sixty.
I have had however formerly the honor of mentioning to you that from the beginning of the circulation of assignats the progress of depreciation & fall of exchange did not continue precisely the same16—several causes contributed to render the advantage of the exchange proportionally less; or in other words to raise the price of specie on particular occasions nearer to the amount of the fall of exchange than it had been in the beginning—a moment of considerable emigration for instance among the ignorant provincial noblesse when many chuse to carry out specie rather than depend on bills, not being accustomed to that kind of remittance & not having confidence in the bankers supposed to be deeply concerned in stock jobbing—a moment of ill humour among the people which prompted them to ill treat & in some instances, execute those concerned in selling the specie. Still I believe in adopting this rule the U.S. would find advantage—& certainly a very considerable one as explained in the beginning. After the fluctuation took place I mentioned to the commissaries that I did not think that that standard taken alone would form a really just measure of depreciation—as it would in fact be making the U.S. pay for the police of Paris not being sufficiently energetic to prevent a mob hanging a moneylender—& indeed no person can doubt that the want of efficacious protection to those concerned in that kind of commerce did raise considerably the price of that article—since they were obliged to take into the account not only the risk of the assignats but the risk of their lives.
The U.S. have in my opinion a perfect right in making up the real depreciation of the assignats to France, which is the term I used with them (& not the course of exchange with which they have nothing to do) to measure it by the price (in the market) of the articles of French production. This would be the most advantageous standard for the U.S. & indeed would secure to them almost the whole gain upon the exchange. It is the standard I should have proposed if the government had been in existence, at the time of learning from you the will of the President as to my ministry17—& fortified by that mark of his confidence I should have considered it my duty to have devoted myself to any responsibility however dangerous rather than that so favorable an opportunity for settling this business honorably & advantageously for the U.S should have been lost. On recieving your letter of Sep 2: 91. relative to this business I desired the Minister & the commissaries, as I had then the honor of informing you, to consider of some means proper for settling it on a basis that should be equally just for both parties18—& was then obliged to leave Paris for Antwerp & Amsterdam. The price of specie would be the most advantageous standard they could have any pretext for proposing—& in fact a compromise between the two standards would be what they could not object to if the U.S. should find it proper to consent thereto, & thus give up in part the advantage arising from the standard of the price of articles of French production alone. In either case there would be a considerable gain.
The statement which I recieved from the bankers the 5th. inst. was as follows—Cash on hand & 1000 bonds to be delivered 5,730,000 florins. Interest between this & the first of March next, together with the late payment of 1,625,000 florins to France and f123,750 of your draughts, they state at 2,670,000 florins—leaving a balance of 3,060,000 florins disponible. For accuracy however you may add 30,000 florins to this balance, as they by error had considered one of the 4. p. cent loans as a 5. p. cent one. The interest on the Antwerp loan of 2,050,000 florins should be deducted as I shall not open a loan there so long as matters remain in this present situation. This will give you Sir a full idea of the cash on hand.
I have also given orders to the bankers to proceed in procuring bills to pay off the debt, which your letter of March 5. 92. told me the reimbursement of would be acceptable. They have procured as many as a rise in the exchange (which they say will be momentary) has allowed them. In the mean time I am expecting an answer which will instruct me, to whom these bills should be addressed.
The letters which I have had the honor of writing to you since my arrival here (you have acknowleged the reciept of those from Paris except one short one of a line, merely to announce to you the opening of the second 4. p. cent loan)19 have been dated June 28 Aug. 6. 30. Those which you have done me the honor to write to me, as mentioned as low down as July 25.—have been successively recieved.
I have now only to ask pardon for interrupting your more important occupations by so long a letter & to beg you to be assured of the sentiments of profound respect & perfect attachment with which I have the honor to be
Sir Your most obedient & most humble servant
Alexander Hamilton Secretary of the Treasury
ALS, letterpress copy, William Short Papers, Library of Congress.
1. Although Gouverneur Morris had been appointed United States Minister Plenipotentiary to France in January, 1792, he did not arrive in Paris until May of that year.
3. In his original instructions to H on the repayment of the foreign debt Washington stipulated that “if any negotiation with any Prince or State to whom any part of the said Debt may be due, should be requisite, the same shall be carried on thro’ the person who in capacity of Minister, Chargé des Affaires, or otherwise, now is, or there-after shall be charged with transacting the affairs of the United States with such Prince or State.” See Washington to H, August 28, 1790. When Morris arrived in Paris to replace Short, it was assumed that he would undertake the responsibility of liquidating the French debt. For the difficulties arising out of this misunderstanding, see the correspondence between Morris and Short, enclosed in Morris to H, September 25, 1792.
5. See Morris to H, September 25, 1792, note 10.
6. Short had left Paris early in June, 1792, to assume his duties as Minister Resident at The Hague.
7. Hoggeur, Grand, and Company were the bankers of France at Amsterdam.
10. Short to the Commissaries of the French Treasury, September 21, 1792 (ALS, letterpress copy, William Short Papers, Library of Congress).
12. Ferdinand Grand, the banker of France at Paris.
13. Willink, Van Staphorst, and Hubbard.
14. Charles John Michael de Wolf, the Antwerp banker who negotiated the 1791 Antwerp loan for the United States.