To Rufus King1
Philadelphia April 2d 1793
My Dr Sir
When you are acquainted with all the facts, I think you will alter the opinion you appear to entertain. My application comes literally within your rule. The loan is necessary for the current expenditure independent of any new advance to France or of purchases of the Debt. This has arisen from my having been under the necessity of remitting to Holland for a payment in June of 1000,000 of Guilders as an installment of the Principal, and 470 000 Guilders for interest, of the Dutch Debt. Late advices rendering it problematical whether a loan could be obtained for the purpose of the installment, it became necessary to make this remittance to avoid danger to the public Credit. Hence without a loan from the Bank, I ought to calculate upon a deficiency in the present Quarter (remember we are in April) of 672023 Dollars and 26 Cents and in the next of 325447 Dollars & 28 Cents.2
This is the result of as accurate a view of receipt and expenditure as can now be taken. You will anticipate, that by all the expenditures not falling actually within the periods, to which they are applicable, the real deficiency would not be as great as the calculated; but you will at the same time perceive that the view given supposes a state of the Treasury which renders an auxiliary indispensable.
At the same time, I cannot think but that you apply your principle too rigorously. I ought not to be forced to divert for a length of time funds appropriated for other purposes to the current expenditure. To compel this, would be in substance to withold the means necessary for the current service. For it would oblige the Treasury to employ an adventitious resource, which ought not to be so employed, and that too at a time when it could be employed advantageously according to its original and true destination. I therefore think, independent of the real exigency, the Bank ought to make the loan.
The loans to the Government stand on very different considerations from those to Individuals. Besides the chartered privileges, which are the grant of the Government—The vast deposits constantly in hand, and which ordinarily exceed the loans from the Bank, frequently very greatly, are an advantage which generally speaking bear no proportion to the advantages of the dealings between Individuals & the Bank.
Consider what has been the state of things for some time past—and the real sacrifices which have been made not to distress the Institution.
If for such accommodations equivalent services are not to be rendered they could not easily be defended.
Besides, from the necessity of having a considerable sum on hand in the Treasury and the natural course of the business The Bank is pretty sure of having always, in deposit a large part of what it lends to the Government. This does not exist, in any thing like the same degree in the case of Individuals.
You seem to calculate that the past advances will not be replaced. On the contrary it is my intention pursuant to stipulation to repay as fast as the funds come in applicable to it & in the last Quarter of the year I hope to make a considerable progress in the reimbursement. Till then it will not be practicable.
I do not know, whether Mr Kean3 stated to you the nature of my proposal. It was that the payments should be made in 4 equal Monthly installments—the first on the 1st of June and that each installment should be reimbursed in six months. The real advance of the Bank will be very temporary indeed before greater sums will come into its vaults from the duties. In the last quarter of the present & the 1st of the ensuing year very large Receipts may be expected.
You are sure that while I seek to put myself in a proper posture, I shall not fail to have a due regard to the safety & interests of the Institution.
It is much to be wished that I could be enabled to make some purchases though this will not be the case with the loan in question unless a loan shall also have been obtained in Europe.
A meeting of the Commissioners has lately been called by Mr. Jefferson4 out of the course heretofore practiced, in which I have been pressed to declare whether I had or had not funds applicable to purchases. I answered so as to be safe. But you readily perceive the design of this movement. There is no doubt in my mind that the next session will revive the attack5 with more system and earnestness. And it is surely not the interest of any body or any thing that a serious handle should be furnished.
On the whole I am persuaded that the Bank can do what I ask without real inconvenience to itself and my situation is such that I shall be compelled to find an auxiliary.
All the cry here is for Peace. How is it with you? Adieu
Truly & Affecy Yrs
R King Esq
ALS, New-York Historical Society, New York City.
1. This letter was written to King in his capacity as a director of the Bank of the United States. For background to this letter, see H to George Washington, March 18, second letter of March 20, 1793; Washington to H, March 20, 21, 1793; H to the President and Directors of the Bank of the United States, March 26, 1793.
3. John Kean, cashier of the Bank of the United States.
5. For the 1793 “attack” on H’s fiscal policy, see the introductory note to “Report on the Balance of All Unapplied Revenues at the End of the Year 1792 and on All Unapplied Monies Which May Have Been Obtained by the Several Loans Authorized by Law,” February 4, 1793.