From Edward Church
Bordeaux, 16 Dec. 1791. Although he has only considered the matter for two days, he feels impelled by rapidly changing conditions in France to suggest the propriety and expediency “of improving this critical opportunity, to make the present substitute for money, now circulating in France under the denomination of Assignats, an instrument in the hands of his Excellency the President of the United States, for liquidating their debt due to France.”—A French livre in assignats, “the only currency here,” has depreciated to 6½d sterling in bills of exchange on London, Amsterdam, and Hamburg as a result of France’s unfavorable balance of trade with England and Holland “and the consequent necessity of remitting the ballance in bills of Excha. or hard money.” This circumstance offers the U.S. an opportunity, by placing funds in England or Holland, to pay their debt to France “with a saving of seven parts in twenty; and it may probably be done in a few months to much greater advantage.” French citizens are selling bills at this rate to public agents for the use of government, and the French government is glad to receive assignats in the public treasury at par. Were it not for his doubts about the inability of the U.S. to place funds in Europe at this time, he would undertake to prove that it is in the nation’s interest to reduce its debt to France in this fashion. The assignat’s rate of depreciation, though not so great “when we compare a livre in paper to the former fixed prices of certain manufactures, and other produce of this Country,” is still supposed to be 25%.
The sources of currency depreciation in France are many and varied. They include the “amount of assignats now in circulation, said to be fourteen hundred millions of livres; a recent decree for the immediate emission of five hundred millions more; the great, and increasing exigencies of the State, and comparative impotence of the revenues; the large sums in the hands of Individuals; the facility and rapidity with which they are accumulated; the extreme avidity of the Possessors to transmute them; the doubts and fears of some Individuals of their ultimate success, or rather of an event, on the fortunate issue of which, they suppose, their validity depends; the want of a vent, or outlet, to reduce the excess; the total disappearance of every species of gold and silver; the prospect of an invasion the ensuing Spring.” The same causes that have deflated the value of assignats will continue to operate until the “uncontested triumph of liberty, that can tend to appreciate them.”
The U.S. should not hesitate to take advantage of these financial conditions to reduce the burden of their debt to France. “The unappropriated Stock, or Funds of the U.S., if there are any such, is the object, which, under the present promising prospect, and universal favorable impression of the solidity of the American Funds, I have conceived might be commuted for Assignats, greatly to the advantage of the U.S., with the Merchants, Bankers, Brokers, and Speculators, in this Country, who possess more of that kind of property than they can employ to advantage, and wou’d eagerly seize the opportunity of dividing it, rather than risk all in one bottom.” There is no need to fear that this plan would enable foreign investors to exercise undue influence over the American government because they would be too far away “to form cabals, or plots against the State.” Assignats exchanged by foreign purchasers of American “Stock, or other publick property,” should be immediately paid into the French Treasury “on account of the debt due from the United States. They are at this time eagerly received into the Treasury at Par, nor is it easy to conceive that a property funded upon immovable, and acknowledged ample security, will ever be offered to, or received by the Government, at a reduced value; the loss which Govt. may be supposed to sustain by receiving any quantity, more or less, in a depreciated State, is merely ideal, for many cogent reasons, which your superiour understanding, as well as past experience, will readily furnish.” This plan will also lessen the French government’s need to emit more assignats and thus stabilize the currency, preventing “the murmurs and discontents of the people, which never fail to break out with every new emission.”—If in future assignats are not receivable at the French Treasury except at a depreciated rate, it would still be in the interest of the French government to accept them at more than the prevailing market rate. Such debt payments would benefit France during the current crisis and “be a pleasing reflection to the Citizens of America, that they had contributed to support a glorious struggle for liberty, and at the same time had cancelled a debt, which, if they had not done, must hereafter have been paid to some Tyrant.” He presumes his plan would encounter no opposition in France but has been careful to disclose it to no one else lest the Legislative Assembly adopt it “and thus become themselves the Creditors of the United States.” He thinks the plan would have special appeal for the many monied men here who “seem totally at a loss where or how to place their paper.” If only the U.S. could place funds in Holland, Hamburg, or England and purchase assignats with bills of exchange, “the operation and the advantages are simple and evident; nor is there a doubt of equal or greater advantages 6 months hence, i.e. that the debt due from the U.S. to France, might then be reduced, or discharged, with a certain advantage of present purpose.”
He is willing to serve wherever he might be considered useful and asks that this be brought to the attention of the President. In the event of war, Bordeaux will be more quiet and secure than many other parts of France.—“The people, at least those whom I have seen of every class, and description, discover great zeal in the cause, but it seems to border on enthusiasm, and it may perhaps not be difficult to assign a probable cause of the different effects of liberty upon Frenchmen, and the Americans when in somewhat similar circumstances. There was no period anteriour to the American revolution, in which the Americans did not justly consider themselves a free people, and when their rights were invaded, they soberly united to repel the Invaders. It was not to obtain freedom, but to preserve their birthright. They therefore were taught by nature and habit to support liberty with moderation, decency, and dignity. The French were born Slaves, and having just gained that first, and greatest blessing, Liberty, the sudden possession of this invaluable treasure seems to have elevated and transported them to such a degree as to render them incapable of supporting their happy reverse of fortune with tolerable temperance:—Some excesses have been the effects of this ebullient ardour, but generally, tho’ not in all cases, they have been of the venial kind; their vif savours too much of the extravagant; how it may operate in a Camp remains yet to be proved; it will doubtless be necessary to appoint Officers of great experience, abilities, equanimity, address, firmness, and sincere attachment to the cause in which they are engaged, to conciliate, subdue, organize, and transform into good soldiers, such an heterogeneous, and combustible compound.”
By express from Paris he has just learned that the king appeared before the Legislative Assembly and proposed to raise an army of 150,000 men to subdue the emigré forces led by his brothers and cousins. The king also assured the Legislative Assembly that the emigrés could expect no support from the Emperor or any other crowned head. This news raised the exchange rate by 2½%, but it is doubtful that this improvement will continue unless the threat of war disappears. The Legislative Assembly has published an estimate of the value of the clerical estates pledged for the redemption of the assignats, by which it appears that “the Amount of the value of the Estates transcends the amount of the Assignats, fourteen hundred millions of Livres; and the valuation may be considered very moderate, as the Estates hitherto sold, have in general far exceeded the appraisement, frequently 40 or 50 per Cent.”—He has received TJ’s letter of 13 May and is pleased by its flattering description of conditions in the U.S. J. Vernes plans to write TJ by this opportunity. “He is a leading Patriot in this City.”
RC (DNA: RG 59, CD); 14 p. Not recorded in SJL.
Church’s suggestion that the United. States pay its debt to France in depreciated assignats was ill-calculated to appeal to TJ since he had already expressly assured the French minister that the government of the United States was opposed to such an expedient (TJ to Ternant, 1 Sep. 1791).