Thomas Jefferson Papers

From Thomas Jefferson to John Jay, with Enclosure, 12 November 1786

To John Jay, with Enclosure

Paris Nov. 12. 1786.


In a letter which I had the honor of writing you on the 26th. of Sep. I informed you that a Dutch company were making propositions to the Minister of finance here to purchase at a discount the debt due from the U.S. to this country. I have lately procured a copy of their memoir, which I now inclose. Should Congress think this subject worthy their attention, they have no time to lose, as the necessities of the minister, which alone has made him listen to this proposition, may force him to a speedy conclusion. The effect which a paiment of the whole sum would have here, would be very valuable. The only question is whether we can borrow in Holland, a question which cannot be resolved but in Holland. The trouble of the trial, and expence of the transaction would be well repaid by the dispositions which would be excited in our favor in the king and his ministers. I have the honor to be with sentiments of most perfect esteem and respect Sir Your most obedient & most humble servant,

Th. Jefferson


The United States have borrowed a large sum of money from France for which they pay an interest untill they reimburse it at the rate of Six per cent per annum. It is not known whether the periods of this reimbursement are fixed or whether they are left to the convenience of the Ud. States; the quota of this sum is also unknown. It is supposed that it cannot be less than Twenty four Millions and that the period of reimbursement is not near. It is thought that the two nations consider their mutual benefit and upon this supposition an arrangement of the debt of the Ud. States is proposed, which appears to suit the interest of both these powers.

On the part of France, the want of money to facilitate its reimbursements and improvements should induce her to fix a certain price for the actual return of so large a sum.

On the part of the Ud. States the scarcity of money which they experience and the want of it which the natural extension of their situation occasions must render every measure precious that will bring into circulation the sum they have borrowed; and under such a form that this circulation will take place as well in the Ud. States as elsewhere.

This mode offers of itself. It consists in converting the American debt in Bills payable to the bearer in sums from Five Hundred to a Thousand French Livres and annexing dividends to these Bills for receiving the interest in such places as shall be agreed and fixed on. It is by no means to be doubted but that Commerce and the Europeans who would settle in the Ud. States would carry there great number of these Bills which would probably be reimbursed there. The Ud. States would find two great advantages from this operation. The first by acquiring in their circulation at home, a paper which by the full credit it would have, would answer all the purposes of cash. Secondly, being able to pay at home a part of the debt and the interest, and to reduce it by degrees, by means of the purchase of lands with these Bills payable to the bearer; for the speculators in land could pay for them in this way with advantage, both on account of their being able to procure these Bills in Europe on better terms than specie, and that it would particularly suit the Ud. States to encourage the exchange of uncultivated lands which they have to sell for Bills which they must reimburse and which in the mean time cost them an annual interest.

These instances will serve to prove the great benefit which France would procure for the Ud. States by converting the credit she has given them into Bills payable to the Bearer which might be brought into circulation.

With respect to the benefit France would reap, it is very probable that she might dispose of all these bills at once, to a company who would take them up in consideration of some sacrifice and facilities that are customary in transactions of such magnitude. It must be observed here that this arrangement is determined upon the presumption as far as the nature of the case will admit, that this debt is recoverable.

It will therefore follow that France will obtain for the purposes of government a speedy return of a sum of money which will proportionably lessen the loan that may be otherwise necessary.

On the first reflection it might appear that France ought not to sell her debt with the Ud. States especially on terms favorable to the purchasers but on condition of not being obliged to guaranty the same against accidents which may render it doubtful, as this might occasion a distrust against the credit of the Ud. States which might be prejudicial to them, and which would be impolitic on the part of France and inconsistent with the reciprocal friendship between her and the Ud. States. This objection will be removed by France continuing to be guaranty for the payment of the Bills with interest. This guaranty therefore is not only necessary to the success of the proposed arrangement, but the dignity of France also requires it; less hazard will attend this, than the risk that attended the losing the sum lent to aid a revolution which she judged important; the solvability of the Ud. States depending upon their independance, France ought not to expect any premium for guarantying the solvability, the basis of which it is her interest to support. Should the removal of this objection be opposed by observing that the speedy benefit of Twenty Millions is not of sufficient consideration to determine France to make a change when she would not thereby free herself at least from risk with the Ud. States, We answer that the Advantage of restoring these Twenty Millions into circulation and thereby preventing the borrowing of this sum, is not the only one.

The Ud. states are not yet free from all apprehension of danger: there appear some difficulties between them and England with regard to fulfilling the treaty of peace. The policy as well as the inclinations of the Ud. States require their firmness in every thing they have to transact with that power. They may therefore be under the necessity of demanding further pecuniary aid. The circumstances that may render this necessary may likewise render it difficult to obtain, especially should they defer asking them untill these circumstances are made public. This arrangement then may facilitate this aid; should it require promptness and should it be impolitic or too hazardous to seek it elsewhere than in France, she may then grant it without being obliged to increase her taxes, by means of the actual product of her debt. If this consideration has any weight, it follows that the proposed arrangement should be delayed as short as possible. The English funds fall, which can only be attributed to the apprehensions that a dangerous contest may be occasioned by the refusal of the Court of London to evacuate the Forts.

The proposed arrangement requiring His Majesty’s Arret, the following sketch of one is offered.

Sketch of an Arret. Lewis &c.—Upon representation made unto us that the sum we have lent to the Ud. States our dear Allies, will not be reduced untill a distant period; and that by turning our debt into negociable bills they will enter immediately into circulation and will afford the said States advantageous opportunity of discharging the same, both by means of removing the necessity of remitting to Europe the necessary funds for the payment of the interest and capital of part of their debt represented by the bills which their circulation shall have brought among them, as also by the opportunities that this circulation may offer of exchanging lands for these bills which will thereby give a new spring to the cultivation which the Ud. States desire to extend and accelerate, and upon being assured that such an operation would really produce those advantages to the Ud. States without the least inconveniency which suggested the measure, especially by guarantying the payment of said bills to the possessors, we have therefore &c. &c.

Another preamble. Lewis &c.—Ever considering what may be advantageous to the Ud. States and facilitate to them the means of extracting themselves from a debt which they have been obliged to contract as well with us, as with other powers and particularly their liberation from the loan of the year   the period of reimbursement being near at hand, we have conceived that it will be a fresh proof of our good will, by giving a form to this loan which will bring it into circulation by making it negotiable. It appears to us that by converting this sum of   into bills payable to the bearer to the amount of   Livres each with terms of interest payable at fixed places, we should furnish the Ud. States with a simple mode of reimbursing successively within themselves and without any distress these bills which will be thrown into commerce. In operating this conversion, we have thought it incumbent on our justice, the dignity of our crown and our affection for our dear allies, to guaranty the Security and the payment of these bills with their interest. This guaranty will moreover afford a fresh proof of the value we fix on preserving our alliance with the Ud. States. We have been the more inclined to adopt this advantageous method for the Ud. States as it is perfectly reconcileable with the interests of our subjects with the circumstances and disposition we are in to free our State by degrees of all its debts and charges. For these reasons &c. &c.

The Articles of the Arret will have in view. (1st) To create Bills payable to the bearer to the amount of the sum lent to the Ud. States in the year   the first period of whose reimbursement falls in   which Bills shall each be of   and Amounting to   Numbers from No. 1 to No.   agreable to the model annexed to the Arret. (2dly) To fix the periods of reimbursement and the number of Bills which shall be reimbursed at each period, this must be determined by lot. The reimbursements to be made in Paris, Amsterdam, Philadelphia, Boston, New York, Charleston, with Bankers who shall be appointed. (3dly.) The Numbers of Bills which by lot are to be reimbursed shall be published four months before the date of the reimbursement by means of the public prints most generally known in Europe and America. (4th) To determine where the Lots shall be drawn. This would appear to be most proper in one of the cities of the Ud. States. (5th) Untill the reimbursements, the bills shall draw an annual interest of 6 percent which shall be paid every year commencing from   in the cities marked out in the   article and by the Bankers to be appointed. This payment shall have effect on presentation of the original bill to which shall be annexed the dividends of interest agreable to the model &c. (6th) The reimbursed Bills shall be withdrawn as being extinguished as also the interest not due. The Bankers who shall have paid them shall account for the same with the Ud. States by representing them, and these shall successively forward the list to His Majestys Ambassador to serve as a discharge for His Majesty guaranty, in proportion as the Ud. States shall reimburse them.

N.B. It appears indispensable to prevent counterfeits and remove all obstacles in the way of the circulation of the bills that they be stamped by the Ambassador of the Ud. States, an operation which as well as the others mentioned in the arret, only to be announced in concert with the Ud. States.

Faithfully translated from the Original by

John Pintard.

RC (DNA: PCC, No. 87, i); written with TJ’s right hand, and—despite the use of literary license in his letter to Mrs. Cosway of 19 Nov. 1789—evidently the first to be so written after his injury. PrC (DLC). Tr (DNA: PCC, No. 107). Enclosure: Translation by John Pintard (DNA: PCC, No. 87, i, from a Tr in French in the hand of William Short; PrC of Short’s Tr in DLC and Tr of Pintard’s translation in DNA: PCC, No. 107).

It is not certain how TJ PROCURED A COPY of the memoir of the Dutch company, but it was possibly through the intermediation of Clavière, who was known to TJ and who was negotiating for the purchase of the French loan (see TJ to Osgood, 5 Jan. 1787 and Etienne Clavière to TJ, 9 July 1788).

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