To Oliver Wolcott, Junior
Albany April 10. 1795
I wrote you a few lines by the last Post.14 I sit down to fulfil my promise then made.
The fulfilment of our foreign engagements under the existing circumstances is no doubt a perplexing task—But I hope it will not be found impracticable to effect enough to preserve character and credit.
Every thing must be done to this end, though with considerable sacrifices, provided you do not go so far as to endanger Credit at home. This must at all events be kept sound—since a shock there will be fatal, while the extraordinary situation of the times will furnish an apology for any omissions which may happen abroad, and by eventual indemnification the wounds which may be given to foreign Credit may be healed. The opinion which some entertain is altogether a false one that it is more important to maintain our credit abroad than at home. The latter is far the most important nursery of resources & consequently far the most important to be inviolably maintained. A failure here would be the more material, because it would argue want of means & could not shelter itself under the plea of temporary embarrassments from external causes and because it would derange our whole internal œconomy.
But except the compromitting our domestic credit nothing must be left undone to preserve external credit.
I do not doubt that the means which have been taken down to the 1st of June inclusively will be deemed adequate considering the circumstances. They may however fail of the effect intended. But I do not apprehend any material evil from the delay of reimbursing the installment of principal if the interest is but punctually and honestly paid. I hope our commissioners, with the public and their own resources, will effect this till further provision can be brought into action.
As to sending specie from this country tis out of the question. ’Twould derange every thing and our Commissioners ought to be frankly told that it is impracticable, owing to the interruption by the war of some of the usual channels through which we have derived our supplies of specie.15
But commodities may be remitted on the public account, and this (the resource of Stock failing) must for ought I see be done—unless what I shall now mention can be accomplished with the judgment of our Commissioners in its favour (to wit)
Let them enter into an arrangement with the constituted authorities of Holland or France (preferring the former) to receive at Amsterdam the sums necessary for paying those which we shall owe, giving drafts, upon our Treasury for equivalent sums. This will enable the French or Dutch Government to obtain supplies here which they will want.
But may they for this purpose receive and pay assignats? not so, if assignats are not the general currency of the Country—but if they are, there may be no choice. Gold and silver may not then be obtainable at all. Perhaps the Commissioners may be able to raise funds by the sale of Bills upon this Country otherwise as many may wish to remit from the Netherlands.
Yet our Creditors must not be paid, without a reasonable indemnification, in depreciated paper. Consequently our Commissioners must be authorised, if obliged to pay in assignats, to augment the rate so as to allow an equivalent.
Accordingly if the arrangement I have intimated can be effected the Commissioners may give Bill florin for florin, of gold or silver (or a dollar for 2½ florins) but if they are obliged to receive assignats they ought to secure a premium of exchange equal to the depreciation.
This transaction ought to be managed under the superintendence of our minister.
What I wish you were able immediately to do is this—To ship without delay commodities sufficient, together with the monies certainly in the command of the commissioners independent of sales of Stock, to pay interest to September inclusively; writing them a letter suggesting the above plan and authorising them to act upon it if they approve.
The Stock remitted may be ordered to be sold in England which will furnish a fund upon which you can draw in order to prosecute other methods of remittance.
At the same time I think it may be well to take measures for ascertaining whether some arrangement could not be relied upon for remitting through England to Amsterdam. I know of no impediment even now to sending bullion (including Spanish and other foreign Gold & Silver Coin) in American bottoms to Amsterdam but impediments might arise. Perhaps in this case London might be made an intermediary of remittances to Holland either by sales of Stock or commodities there.
The commodities to be remitted ought to be such as to be liable to as little casualty as possible from war considerations & they ought to be most effectually insured and ought to appear authentically as those of the UStates sent to pay their debts, on their own account and risk. I suspect however the other plan will be found practicable on satisfactory principles—but no agreement ought to be for a longer term than a year.
If you are not able to send immediately commodities for payment of interest to September it may then be of necessity to wait further information, giving full latitude if it has not already been given to sell Stock for payment of interest at any price—suggesting the possibility of doing something through London & proposing the plan of the arrangement which has been suggested.
All the Stock not saleable in Amsterdam ought to be placed in London under due precautions for security to be sold there as a fund.
The cooperation of our Minister in Holland will be proper throughout—& pretty large discretions must be confided.
If a very trusty & a clever fellow could go from hence as Agent for the Treasury with alternative instructions according to circumstances it might be very useful. I believe Wm. Smith of South Carolina16 would go & he would be safe & competent. Would not James Watson17 go? he would also do.
In contemplating a possible course of things I had my eye upon the expedient of issuing Warrants upon the Treasurer payable at future periods from Two to twelve months in nature of Exchequer Bills. This may be a mean of providing for the current service by Credit besides the expedient of loans from the Bank. By being negotiable they may answer the purposes of contractors—though articles may thereby cost something more to the public than on the plan of anticipated or prompt payment.
I mention this because I foresee that from the embarrassment of foreign events there may be a press upon the Treasury.
If any thing further occurs you shall have it. Write me as freely as you please.
Yrs. with great regard
P.S. There is one idea which may deserve attention. A depreciated paper naturally gives to gold & silver an artificial and exaggerated value. This may even occasion an undue loss to a Debtor who is honorable enough to pay in Gold & Silver when a depreciated paper is the general currency. This is more than just. But it may be policy in a Government to submit to it. Yet there may be bounds. The idea may be brought into the view of our Minister & Commissioners for this purpose—to suggest that if such an artificial advancement of Gold or silver takes place, the compensation for depreciation may be adjusted upon some equitable ratio. But a moderate sacrifice for simplicity & proceeding may in this case be best.
I send a letter to The Attorney General18 which you will read seal & deliver. You will easily divine my reason for addressing it to him. The President ought to view this matter as it is, but I do not write to him because I do not wish to appear officious.
Have you taken any arrangement at Amsterdam, to facilitate the change of foreign into Domestic Debt according to the law of last session? The moment is favourable. Facilities on the spot may promote the Object. Our Commissioners & our Minister are worthy of Trust.
ALS, Connecticut Historical Society, Hartford; copy, Hamilton Papers, Library of Congress.
14. Letter not found.
15. In response to a letter from Wolcott dated April 29, 1795 (ADf, Connecticut Historical Society, Hartford), Willink, Van Staphorst, and Hubbard wrote on July 17, 1795: “You ask our opinion in what manner, you can best remit Funds, for future payments, telling us that the exportation of Specie is attended with such disadvantages, as to render it a resource to be employed only in the last extremity.
“We should recommend the Shipment of Flour, Corn, and Rice to this market, where they now bear, and continue to support very high prices, did not the British seize upon all your Vessels laden with these Commodities. That therefore are prevented from operating as remittances, even altho’ they should be fully insured: because in cases of capture, settlements with the underwriters are generally nay almost always long and tedious.
“West India articles, such as Sugar, Coffee &ca: are not liable to the same fear of Seizures, and will probably, if well laid in with you, render advantageous account Sales here. These we should recommend most Strongly.
“Tobacco, Pott and Pearl Ashes, oil &ca: do sometimes answer, but the Demand for them at all times, is not to be relied upon, as for the West India products, that are seldom, if ever, unsaleable.
“Should you be induced to make us any Consignments, we must entreat of you, to give us early directions by different Conveyances, to effect the Insurances, in order that they may securely serve for remittances either by the Proceeds of the Sales, in case of their arrival, or by the recovery of the Insurance, if they should be lost at Sea.” (LS, Connecticut Historical Society, Hartford.)
16. William Loughton Smith was a Federalist member of the House of Representatives from South Carolina from March 4, 1789, to July 10, 1797, when he resigned.
18. H’s letter to William Bradford has not been found.