To Edmund Randolph
Monticello July 18. 1783.
I am sorry you have been at the trouble of sending an express to me for information as to the transactions between the Executive and Nathan as I am satisfied I do not recollect a single fact that you are not already possessed of. In the winter of 1779. 1780. Mr. Nathen presented us some bills drawn by Genl. Clarke, Colo. Todd and perhaps others, which he said he had taken up at New Orleans or the Havanna and paid a hard dollar for every one named in the bill. At that time I think we had been made to beleive that depreciation had not reached Kaskaskia, and the bills appearing fair, we considered them in the nature of many others taken up by Pollock, and wrote acceptances on the greatest part of them undertaking to pay them in tobacco at 4 ⅙ dollars the hundred. I beleive we rejected some of them, perhaps as drawn by subordinate officers, till we could write to Genl. Clarke and Colo. Todd. We wrote to them and desired a description of the bills we were to pay fully, and the rates of depreciation if depreciation had affected any. They sent us a description of the hard money bills, to wit all drawn on N. Orleans, and a table of depreciation for the others. This shewed we had wrote acceptances for hard money on some bills whereon depreciation should have been allowed. We laid the case before Mr. Pendleton and Wythe intending if they thought us bound by our erroneous acceptances that we would pay them. They differed in opinion. We then informed Nathan of Clarke and Todd’s marks to distinguish the bills, that this had proved we had accepted some in hard money on which depreciation should have been allowed, told him as it was a case in which every man in the state was interested we did not wish to be judges in it ourselves, nor to refer it to any persons within the state but we would refer it to lawyers in Philadelphia whither we knew he was going, and therefore that it would be convenient for him to have it decided there, as it would to us our delegates being on the spot to act for us. He agreed to it. I wrote a state of the case, read it to him at the Council board, he agreed every article was right, we inclosed it to our delegates and that is the last part of the transaction which happened within my knowlege. Our delegates have told me since that he tergiversated a little there, disputing facts, declining the reference &c. but that he had finally come to. But of this they can give more certain information. In every part of the transaction with us he acted candidly enough as far as we could see; and we should certainly have thought ourselves bound to pay the money agreeable to the award.
There was another transaction with him. Colo. Gibson (I beleive it was) came for clothing for the troops at Fort Pitt. We were distressed how to procure them. Nathan offered to go with Gibson to Baltimore, and buy them, and to wait a considerable time for the money. Perhaps he might name a year or some such term. We agreed. He went, bought them and drew on us immediately for the money which we did not like.
I am persuaded there is nothing above but what you know from more certain hands, for indeed my recollection is too faint to be trusted even as to what I have said. Some parts I recollect positively enough, others very faintly or perhaps conjecture steps in the place of memory. I should really be afraid to affirm them positively. If there be however any particular circumstances which you would wish to have sworn to I will endeavor to recollect them with more certainty and send them to you. There is never a day scarcely but Mr. Short, Colo. Monroe, or J. Buchanan can send me a letter, and I can as speedily return an answer. Be pleased to present my compliments to Mrs. Randolph & beleive me to be with much affection Dr. Sir your friend & servt,
RC (Vi); addressed: “Edmund Randolph esq. Atty. General”; endorsed by Randolph: “No. 3. Mr. Jefferson’s letter and Mr. Nathan’s case.” (Ford, description begins Paul Leicester Ford, ed.,The Writings of Thomas Jefferson,“Letterpress Edition,” N.Y., 1892–1899 description ends iii, 335–7, gives the name of the addressee as Gov. Benjamin Harrison.)
If the express that Randolph sent to Monticello bore a letter to TJ from the attorney general, it has not been found. The long and complicated transactions between the executive and Nathan have never been satisfactorily set forth. That Nathan was engaged in part in furnishing supplies and in part in speculating in bills of exchange is very likely, but his claims against Virginia should be considered in the context of several other complicating factors—his ownership of 300 shares in the Indiana Company (CVSP, vi description begins William P. Palmer and others, eds., Calendar of Virginia State Papers … Preserved in the Capitol at Richmond, Richmond, 1875–93, 11 vols. description ends , 2, 17, 34); the fact that purchases for the public in the Illinois country were extraordinarily subject to inflation and fraud—Gov. Harrison thought that “Mr. Nathan’s transactions may be very fair for what I know but so many frauds have been practic’d in that quarter that I am led to doubt every Thing” (Harrison to the Virginia delegates, 2 Nov. 1782, Official Letters description begins Official Letters of the Governors of the State of Virginia, ed. H. R. McIlwaine description ends , iii, 362) and even the commissioners appointed to investigate western accounts reported, after stating at length their investigations of Nathan’s activities, that they would have to decline expressing an opinion as to the validity of his claim since they had not “fully examined the affair” (commissioners to Harrison, 17 Feb. 1783, CVSP, iii description begins William P. Palmer and others, eds., Calendar of Virginia State Papers … Preserved in the Capitol at Richmond, Richmond, 1875–93, 11 vols. description ends , 436); the claims of George Rogers Clark, Oliver Pollock, and others against the state, &c.
A thorough study of such claims and of the extent of speculation in bills of exchange during the Revolution in Virginia is much needed. Even so, a few facts concerning the Nathan case are clear. TJ had accepted each of the bills of exchange, endorsing them: “March 1780, accepted, to be discharged in tobacco at twenty-five shillings the hundred, by advice of Council. Thomas Jefferson” (JHD description begins Journal of the House of Delegates of the Commonwealth of Virginia (cited by session and date of publication) description ends , May 1783, 1828 edn., p. 74; see also TJ to Board of Trade, 18 Mch. 1780; TJ to the judges of the High Court of Chancery, 5 Mch. 1781; Pendleton to TJ, 7 Mch. 1781; Wythe to TJ, 9 Mch. 1781; TJ to Harrison, 22 Sep. 1782; Harrison to TJ, 3 Oct. 1782). The list of bills and their value taken up by Nathan was stated in “an accurate account … by Governor Jefferson,” but this was probably not (though it may have been included in) the state of the case that TJ drew up, read to Nathan in Council, and enclosed in his letter to the Virginia delegates on 15 Mch. 1781 (JHD description begins Journal of the House of Delegates of the Commonwealth of Virginia (cited by session and date of publication) description ends , May 1783, 1828 edn., p. 73). In accordance with these acceptances, warrants for payment to Nathan totaling more than 200,000 pounds of tobacco were issued on 8 June 1780 (same, p. 74). But TJ’s acceptances proved premature, and, according to his own admission, in part mistaken. According to the report of a committee of the legislature, George Rogers Clark and John Todd informed the Governor and Council that the bills drawn on them and on the treasurer of Virginia “were negotiated as paper dollars according to their depreciation at the time of drawing the bills, and that government had received value for them at that rate only” (JHD, description begins Journal of the House of Delegates of the Commonwealth of Virginia (cited by session and date of publication) description ends May 1783, 1828 edn., p. 74; the scale of depreciation regarded by Clark and Todd as fair is printed at p. 73). TJ and the Council, “finding that they had too hastily assumed the payment of the bills, and supposing that Mr. Nathan could not stand on a better footing than the original holders of the bills,” informed Nathan that they did not consider him as “entitled to more than the hard money value of the bills at the time of their being drawn.” Nathan, on the contrary, asserted that he “took up these bills at the Havanna and New Orleans … at the rate of a silver dollar for every paper dollar, without knowing that they had been drawn at a depreciated rate” (same, p. 74; Governor Harrison later quoted him as having “absolutely denied” that the scale of depreciation applied, Official Letters description begins Official Letters of the Governors of the State of Virginia, ed. H. R. McIlwaine description ends , iii, 368). He insisted on the legal obligation arising from TJ’s acceptances. TJ and the Council then proposed arbitration, to which Nathan agreed. TJ laid his state of the case before the delegates in Congress and they immediately set about having the matter arbitrated (TJ to the delegates in Congress, 15 Mch. 1781; Virginia delegates to TJ, 27 Mch. and 3 Apr. 1781).
But Nathan evidently “tergiversated” and the effort at arbitration failed. During the summer of 1781 he also made the mistake of attempting to attach supplies in Philadelphia belonging to Virginia that were needed for the military campaign (David Ross to Gov. Nelson, CVSP, ii description begins William P. Palmer and others, eds., Calendar of Virginia State Papers … Preserved in the Capitol at Richmond, Richmond, 1875–93, 11 vols. description ends , 230). Thus, when Thomas Smith, Nathan’s attorney, applied early in 1782 in behalf of his client, the Council advised that “as Mr. Nathans accounts have been once liquidated and warrants given and the money received they cannot again enter into another settlement of them” (MS Va. Council Jour., 4 Feb. 1782, Vi). This apparently referred to warrants for tobacco issued in June 1780, as noted above, and in consequence Nathan threatened suit against TJ personally; but when Harrison laid TJ’s letter of 22 Sep. 1782 before Council, that body authorized assurances to TJ that the state would sustain all expences in the trial of such a suit or in damages recovered as a result of it (same, 2 Oct. 1782, Vi). Smith then applied to Council in what was a virtual admission of Nathan’s obstruction of earlier proceedings: “Notwithstanding his former imprudence,” Smith expressed the hope that the Council would “throw aside the prejudices against this unfortunate man, altho’ a Jew, and afford him relief, for the sake of his innocent family &c.” (30 Nov. 1782, CVSP, iii description begins William P. Palmer and others, eds., Calendar of Virginia State Papers … Preserved in the Capitol at Richmond, Richmond, 1875–93, 11 vols. description ends , 370). This was in support of a memorial that Nathan had sent to the Governor and Council through the delegates in Congress (22 Oct. 1782; same, 352). On these proceedings, Harrison commented: “if Mr. Nathan had not formerly put a Stop to a similar proposition of his for a reference his balance would have been long since paid”; he admitted that TJ had given acceptances for the bills “to be discharged in hard money” but he added “we have every reason to think it never was intended by Gen: Clarke that they should be paid in it as he Expressly tells us that all his Bills drawn [on] the Treasurer or Governor … were for paper money, and to be accounted for and paid in it according to a scale of depreciation which he sent us” (Harrison to the Virginia delegates, 2 Nov. 1782, Official Letters description begins Official Letters of the Governors of the State of Virginia, ed. H. R. McIlwaine description ends , iii, 362). At the same time Harrison advised the commissioners appointed to study western accounts to investigate the whole matter: “there is just cause to suspect the goods were bought for depreciated money, and that some Advantage has been taken of the drawers either thro’ Ignorance of the method of drawing Bills or from some other cause not known to us. … Nathan is so extremely pressing that I think he is conscious of the unjustness of his demand and hopes to worry me into payment before your report reaches me” (4 Nov. 1782, same, iii, 368).
Nathan appeared in Richmond in Dec. 1782 to press his memorial (Burnett, Letters of Members description begins Edmund C. Burnett, ed., Letters of Members of the Continental Congress description ends , vi, No. 695, note 5) and the Governor and Council decided to offer “the same Terms of arbitration … that were formerly proposed by our Delegates in Congress, which are that you [Nathan] shall make choice of a Gentleman learned in the law, and the Executive of another, to settle the dispute and if they can not agree that they shall chuse an umpire” (Harrison to Nathan, 24 Dec. 1782, Official Letters description begins Official Letters of the Governors of the State of Virginia, ed. H. R. McIlwaine description ends , iii, 411). Again Nathan agreed. Harrison informed the delegates in Congress and asked them to proceed, otherwise “the acceptance of the Bills will … be looked on as binding the State which from what I have heard will not be doing it Justice” (Harrison to the Virginia delegates, 4 Jan. 1783, same, iii, 421). A week later he forwarded “such papers as are necessary respecting the arbitration with Mr. Nathan. I have no other directions to give but to request you to persue the same methods for having the Matter adjusted as were proposed by Governor Jefferson” (Harrison to the Virginia delegates, 11 Jan. 1783, same, iii, 425). These communications were received later that month and arbitration proceedings were begun. Unhappily, Harrison’s letter transmitting the necessary papers had made one crucial omission: the clerk of Council left out an authenticated copy of the statement by Todd and Clark concerning the scale of depreciation. Harrison did not discover the omission for a month. He then sent it off to the delegates in haste, hoping that it would arrive “in Time to prevent his [Nathan’s] obtaining an award in his favor which appears to me manifestly unjust. Surely the arbitrators will never proceed to a final settlement without a Paper of such Consequence which they are assured is being and will soon be sent them” (Harrison to the Virginia delegates, 15 Feb. 1783, same, iii, 451). But it was too late. The delegates and Nathan had referred the matter to Joseph Reed and William Bradford, Jr., agreeing that the award should be final and binding on both parties. Nathan had entered into bond in the amount of £30,000, but the delegates refused to do this “on their part, thinking the faith of the State, plighted by them, a sufficient security.” And on 17 Feb. 1783, before the letter from Harrison with the missing document had got fairly on its way, the arbitrators made their award. They found that the bills drawn on the Governor or treasurer of Virginia “were negotiated at New Orleans, at specie value … that none (as far as we can learn) were negotiated at that place at a depreciated value”; and that “the acceptance of the bills, is binding both in law and equity on the Executive … and that they ought to be discharged accordingly” (text of award, dated Philadelphia, 17 Feb. 1783, in JHD description begins Journal of the House of Delegates of the Commonwealth of Virginia (cited by session and date of publication) description ends , May 1783, 1828 edn., p. 75). Despite the terms of the award, Nathan endeavored to collect his balance through the Virginia delegates. “It appears to me astonishing that Nathan should give you so much trouble,” Harrison wrote the delegates on 19 Apr. 1783, “when he must know his Debt can be paid no where but at this Place. This his Agent has been told, and that there are no funds as yet established for that Purpose. I shall lay the Award of the Arbitrators before the next Assembly, who will no doubt provide for the payment” (Executive Letter Book, Vi). This Harrison did in a letter to the Speaker of the House on 5 May 1783, giving a history of the affair and explaining why the matter had been submitted for arbitration. The Executive, he said, “to give him [Nathan] as little Trouble as possible, and to avoid all complaints of partiality … proposed the Arbitrators should be chosen in Philadelphia, which Nathan at first refused, but seeing he could obtain Payment no other way, he at length came into the Proposal and the dispute was settled accordingly, tho’ I can not say to my satisfaction, as the award turned on the Governor’s acceptance and the deposition of Mr. Oliver Pollock, who swore that his Bills that were of a similar nature were paid by the Assembly for the Honor of the State. Tho’ I am dissatisfied with the Award yet I think we are now bound to pay it” (Harrison to Speaker, 5 May 1783, Executive Letter Book, Vi; Harrison had told the delegates in his letter of 19 Apr. 1783 that he regarded Pollock as “at least the most imprudent Man in the world” since he had continued to take up bills of exchange after Todd had warned him they were drawn by adventurers for private purposes; the letter from the commissioners appointed to settle western debts on which this observation was based was transmitted by Harrison in his letter to the Speaker of 5 May 1783). The House of Delegates appointed a committee to consider the entire matter; the list of bills and values made by TJ, the scale of depreciation set by Todd and Clark, the opinions of Pendleton and Wythe, and the award of Reed and Bradford were all reviewed and set forth in the committee’s report; and the committee recommended that the balance due Nathan ought to be paid with interest at 6 per cent from 8 June 1780 “agreeably to the resolution of the Executive of this State” (JHD description begins Journal of the House of Delegates of the Commonwealth of Virginia (cited by session and date of publication) description ends , May 1783, 1828 edn., p. 75). This recommendation was rejected by the House. Instead a resolution was adopted calling for another arbitration by “any two gentlemen in the State of Maryland” who were to have power to make a final determination “according to the principles of law and equity”; Nathan was required to enter into bond in the sum of £15,000 to abide by the award (same, p. 82). James Madison, who had helped arrange the arbitration, thought that this reversal of the award might “be just in itself,” but told Randolph that “it will require all your eloquence I fear to shield the honor of the State from its effects. The Agency which the Delegation had in the affair will impart no small share of the mortification to them. I suppose the feelings of Mr. Jefferson and Mr. Harrison also will not be much delighted by it” (Madison to Randolph, 8 July 1783; Writings, ed. Hunt, ii, 1). Randolph looked upon his assignment as one “to prop the reputation of Virginia for good faith and to submit to hear just and copious reproaches thrown upon her.” After the first argument, he admitted that TJ’s “assumpsit and the subsequent delay [in renouncing the assumpsit] are indeed thorns in the path,” but concluded that “if right could be made to prevail” he should expect an award in favor of the state. He also informed Madison that Nathan’s accounts had “been the subject of much vehemence in the Assembly” (Randolph to Madison, 28 June, 23 Aug. 1783, Madison Papers, DLC).
Though Harrison had agreed with the opinion expressed by TJ in the present letter that the award of the arbitrators was binding, he acted with his usual promptness by laying the resolution of 24 June before Council as soon as it was approved by the Senate. The Council named Daniel Dulany of Annapolis to act for the state, and Harrison invited him to serve, setting the time and place for the arbitration at Baltimore on 10 Aug. 1783 (MS Va. Council Jour., 27 June 1783, Vi; Harrison to Dulany, 9 July 1783, Executive Letter Book, Vi). Randolph, who was required to attend the meeting of the arbitrators, sent off his express to TJ for additional evidence; presumably the present letter was introduced in evidence at the meeting in Baltimore. That meeting, however, did not suffice to conclude the business and the arbitrators adjourned to meet in Alexandria in December (MS Va. Council Jour., 22 Oct. and 11 Dec. 1783, Vi). Apparently the second meeting was no more fruitful. Nor is the ultimate outcome known. Five years later Leighton Wood, solicitor, asked Gov. Randolph for directions about a bill of exchange for 10,000 livres not previously accounted for by Nathan in his claims against the public, stating that in the absence of such instructions he would have to place this bill “to the Debit of Mr. Nathan’s claim against the Commonwealth for sundry Western accepted bills” (Wood to Randolph, 30 Sep. 1788, CVSP, iv description begins William P. Palmer and others, eds., Calendar of Virginia State Papers … Preserved in the Capitol at Richmond, Richmond, 1875–93, 11 vols. description ends , 492), a statement indicating that the claims were still outstanding. In at least one respect Nathan’s claim seems to have been valid: one of the drafts given Nathan on Penet & Co. in 1780 (see Vol. 3:322–3) for 15,000 livres was paid over to John Donaldson; it was then protested and Donaldson brought suit against Nathan, in which he was given judgment and “received full satisfaction”; in 1791 the agent of the creditors of Nathan petitioned the Governor and Council for the principal, with costs, damages, and interest (8 Feb. 1791, William Alexander to Governor and Council, CVSP, v, description begins William P. Palmer and others, eds., Calendar of Virginia State Papers … Preserved in the Capitol at Richmond, Richmond, 1875–93, 11 vols. description ends 259). The remark made by Gov. Harrison in connection with the case of the unfortunate Oliver Pollock is equally applicable to the history of the Nathan affair: “a difficulty arises as no part of a note can with security be paid till the Assembly shall please to determine whether the Notes shall be taken up according to the tenor of them, or at a depreciation. If the latter should be thought right, a general system should be formed, that the holders of the Notes may have equal justice done them” (Harrison to the Speaker of the House, 18 Oct. 1784, Executive Letter Book, Vi; same, 24 July 1783, 20 Oct. 1783, 29 May 1784).