Thomas Jefferson Papers

From Thomas Jefferson to the Commissioners of the Treasury, 29 March 1788

To the Commissioners of the Treasury

Amsterdam Mar. 29. 1788.


Mr. Adams having notified our bankers here of his approaching return to America, and referred them to consult with me in their future difficulties, they, on the receipt of your letter wherein you informed them that your sole reliance for the June interest was on the progress of the late loan, inclosed me a copy of that letter, informing me at the same time that the loan had ceased to get forward, and desired me to say what could be done. They continued to press this matter on me, and they communicated to me a copy of the proposition they had conveyed to you which was that certain persons who had purchased up a part of our domestic liquidated debt would furnish the balance of our last foreign loan on condition they might retain out of it one year’s interest of their liquidated stock. So far I had the honour, in my last letter of stating this matter to you as the only persons competent to decide on the proposition. But as your decision might be against it, or might come too late, the bankers urged that something should be determined here. One thing I could easily determine which was that the proposition was totally out of my province. I was filled with anxiety however at the approaching crisis which they announced to be insuperable in any other way. Hearing therefore that Mr. Adams was come to the Hague to take leave, I set out immediately for that place to get him to come on here and join in conferences with the bankers to see what could be done to set the loan in motion again. We came here and our first object was to convince them there was no power on this side the Atlantic to accede to that proposition. At length we prevailed to get them and the brokers to abandon this idea. It would be tedious to give you the details of what passed. It was agreed to push the loan on other grounds. But this appeared not enough. Your letter looked forward to the new government as the only resource for remittance. It was evident that for that to be adopted, it’s legislature assembled, system of taxation established, the collection made and remitted, neither this year nor the next would suffice; and that to place the government perfectly at it’s ease till this process could be gone through, the years 1789. and 1790. should be provided for as to all our European demands. You will perceive by the inclosed estimate that this will require another million of florins. The bankers joined us in opinion therefore that as Mr. Adams’s powers to borrow had not been revoked, he should execute bonds for another million, which should be kept up till the ratification of Congress could be received. This being done, Mr. Adams was obliged to return to England, having first concurred in the absolute necessity of paying Fizeaux demand as the first measure which could give a new spring to our credit. This was paid on the spot therefore, and the bankers and brokers thought that if I waited a few days I might see the effect of this and perhaps aid it. I have now waited twelve days since the departure of Mr. Adams; and tho’ the success of this measure has not been as great as was hoped, yet both bankers and brokers from what they learn upon change are become well enough satisfied that the month of June will be provided for. So much so indeed that it was in contemplation to pay out of the monies now on hand, the 2d. to the 7th. articles inclusive of the inclosed estimate, amounting to about 52,000 florins: and we were yesterday to have conferred on this question Whether this paiment could be made without endangering the June demand? One of the houses, and the brokers had given it as their opinion it might be done without danger, and indeed a principal broker had promised me he would raise the money for June on his own account if it should not be raised by the sale of bonds. The other house was hesitating, and your letter of Feb. 20. arrived in the morning of yesterday in time to decide the point, as in that you expressly forbid the applying money to any other purpose till the June interest be provided for. We all hope the delay will not be great. The 2d. article I had before explained to you. You had authorised me as to the 3d. to assure Mr. Grand his advances should be replaced as soon as the bankers should be in condition to do it. The 4th. 5th. 6th. and 7th. articles speak for themselves. As to the last indeed the bankers are of opinion Mr. Dumas will take bonds in lieu of money, as he can obtain it on them from his friends, and that his circumstances absolutely require it; that of course he can be relieved without affecting the object of your instructions, and on this hypothesis I can but think he should be paid with bonds if he will take them. With respect to the 8th. and 9th. articles you will be pleased to consider whether you will order them to take place as soon as the June interest and all the other articles here placed to the year 1788 are secured. I can take no step as to our captives till the money shall be in the hands of such banker as the persons to be employed in the negotiation shall have full confidence in. I shall set out from this place tomorrow, and pursue your future orders as to this last subject, whenever received.

I cannot close my letter without some observations on the trans fer of our domestic debt to foreigners. This circumstance together with the failure to pay off Fizeaux loan were the sole causes of the stagnation of our late loan, for otherwise our credit would have stood on more hopeful grounds than heretofore. There was a condition in the last loan that, the lenders furnishing one third of the money, the remaining two thirds of the bonds should remain 18. months unsold, and at their option to take or not, and that in the mean time the same bankers should open no other loan for us. These same lenders became purchasers of our domestic debt, and they were disposed to avail themselves of the power they had thus acquired over us as to our foreign demands, to make us pay the domestic ones. Should the present necessities have obliged you to comply with their proposition for the present year, I should be of opinion it ought to be the last instance. If the transfer of these debts to Europe meet with any encouragement from us, we can no more borrow money here, let our necessities be what they will, for who will give 96. per cent for the foreign obligations of the same nation whose domestic ones can be bought at the same market for 55 per cent? The former too bearing an interest of only 5. per cent while the latter yeilds 6. If any discouragements can be honestly thrown on this transfer, it would seem adviseable, in order to keep the domestic debt at home. It would be a very effectual one if, instead of the title existing in our treasury books alone, it was made to exist in loose papers, as our loan office debts do. The European holder would then be obliged to risque the title paper of his capital, as well as his interest in the hands of his agent in America whenever the interest was to be demanded whereas at present he trusts him with the interest only. This single circumstance would put a total stop to all future sales of domestic debt at this market. Whether this or any other obstruction can or should be thrown in the way of these operations is not for me to decide. But I have thought the subject worth your consideration.

I have the honour to be with sentiments of the most perfect esteem & respect Gentlemen Your most obedient & most humble servant,

Th: Jefferson

RC (NHi); endorsed. PrC (DLC). Enclosure (PrC in DLC): The text of the schedule enclosed in this letter is essentially the same as Enclosure I in TJ to John Jay, 16 Mch. 1788, q.v. for variations in text.

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