Thomas Jefferson Papers
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Opinion on a New Foreign Loan, 5 June 1793

Opinion on a New Foreign Loan

Instructions having been given to borrow 2. Millions of florins in Holland, and the Secretary of the Treasury proposing to open a further loan of 3. millions of florins, which, he says, ‘a comprehensive view of the affairs of the US. in various relations, appears to him to recommend,’ the President is pleased to ask Whether I see any objections to the proposition?

The power to borrow money is confided to the President by the two acts of the 4th. and 12th. of Aug. 90. and the monies when borrowed are appropriated to two purposes only: to wit, the 12. millions to be borrowed under the former are appropriated to discharge the arrears of interest and instalments of the foreign debt; and the 2. millions under the latter to the purchase of the public debt under direction of the Trustees of the sinking fund.

These appropriations render very simple the duties of the President in the discharge of this trust. He has only to look to the payment of the foreign debt, and purchase of the general one. And in order to judge for himself of the necessity of the loan proposed, for effecting these two purposes, he will need from the Treasury1 the following statements.

  • A. a Statement of the Nett amount of the loans already made under these acts, adding to that the 2,000,000. florins now in a course of being borrowed. This will form the Debet of the trust.

  • The Credit side of the account will consist of the following statements, to wit.
  • B. Amount of the Principal and Interest of foreign debt, paid and payable, to the close of 1792.
  • C. do. payable to the close of 1793.
  • D. do. payable to the close of 1794. (For I think our preparations should be a year before hand.)
  • E. Amount of monies necessary for the Sinking fund to the end of 1794.

If the amount of the 4. last articles exceeds the 1st. it will prove a further2 loan necessary, and to what extent. The Treasury alone can furnish these statements with perfect accuracy. But to shew that there is probable cause to go into the examination, I will hazard a statement from materials, which tho’ perhaps not perfectly exact, are not much otherwise.

[Report of]3
Jan. 3. 1793. The Trust for Loans   Dr.
new edition.
Page. 4. A. To nett amount of loans to June 1. 1792. as stated in the
    Treasury report, to wit 18,678,000. florins @ 99
    florins to 40.D. the treasury-exchange 7,545,912.
  To loan now going on for 2,000,000. florins 808,080.

So that instead of an additional loan being necessary, the monies already borrowed will suffice for 387,474.64 D. to cover charges & errors. And as, on account of the unsettled state of the French dead interest & risk.—Perhaps it might be said that new monies must be borrowed for the loan for this purpose.—If it should be said that the monies heretofore borrowed are so far put out certainly I would rather borrow than fail in a payment. But if borrowing will secure a payment time, then we cannot get an additional sum in time.

The above account might be stated in another way, which might perhaps be more satisfactory

The Trust for loans   Dr.
To the nett amount of loans to June 1. 1792 Dollars
  18,678,000. florins @ 99. ƒ to 40.D. 7,545,912.
The Trust for loans   Dr.
To balance as per contra 1,688,581.10
To 2. millions florins new loan when effected 808,080.  
florins s
page 4. B. By charges on remittances to France 10,073–1
5. By reimbursement to Spain 680,000.  
By Interest paid to Foreign officers 105,000.   Dollars
 795,073–1 = 321,239.46
7. By Principal paid to Foreign officers 191,316.90
By amt. of French debt, Principl. & livers
Intt. payable to end of 1791. 26,000,000.  
By do. for 1792.  3,450,000.  
29,450,000    5,345,171.  
C. By do. for 1793. 3,410,000    618,915.  
D. By do. for 1794. 3,250,000    [589,875.]4
E. By necessary for Sinkg. fund @ 50,000. D. a month from July 1. 93. to Dec. 31. 94. 900,000.  
  Balance which will remain in hands of the Trust at end Dollars
    of 1794. 387,474.64 8,353,992.

all the purposes to which they can be legally applied to the end of 1794. and leave a surplus of government, it is not proposed to pay in advance, or but little so, any further sum would be lying at a current domestic service of the year. To this I should answer that no law has authorised the opening a of our power that we cannot command them before an instalment will be due: I should answer that in time, the 2. millions of florins now borrowing are sufficient to secure it: if we cannot get this sum in

To wit:

Report. florins s
page. 4. By charges on remittances to France 10,073–1
5. By reimbursement to Spain 680,000.  
By Interest paid to Foreign officers 105,000.  
795,073–1 321,239.46
7. By Principal paid to Foreign officers 191,316.90
florins s Dollars.
4. By paiments to France 10,073,043.8 4,069,918.54
7. By do. to St. Domingo 4,000,000.  726,000.  
By do. to do. 3,000,000.  544,500.  
By do. to M. Ternant [I state this by memory] 24,000.   4,356    5,344,774.54 dollars
  Balance in hand to be carried to new Debet 1,688,581.10 7,545,912.
By the following payments when made, to wit.
  Balance due to France to close the year 1792. Dollars
    (5,345,171 D – 5,344,774.54) 396.46
  Instalments & Interest to close of the year 1793. 3,410,000. 618,915.  
  do. 1794. 3,250,000. 589,875.  
  Necessary for Sinking fund from July 1. 93. to Dec. 31. 94. 900,000.  
    Balance will then be in hand to be carried to new Debet 387,474.64 2,496,661.10

By this statement, it would seem as if all the paiments to France, hitherto made and ordered, would not quite acquit the year 1792. so that we have never yet been clear of arrears to her.

The amount of the French debt is stated according to the Convention, and the Interest is calculated accordingly.—Interest on the 10. million loan is known to have been paid for the years 84. 85. and is therefore deducted. It is not known whether it was paid on the same loan5 for the years 86. 7. 8. 9. previous to the payment of Dec. 3. 1790. or whether it was included in that paiment. Therefore this is not deducted. But if in fact it was paid before that day, it will then have lessened the debt so much, to wit, 400,000. livres a year for 4. years, making 1,600,000livre tournois = 290,400.D. which sum would put us in advance near half of the instalments of 1793.6—Note: livres are estimated at 18 15/100 cents proposed by the Secretary of the Treasury to the French ministry as the7 rate of conversion.

This uncertainty with respect to the true state of our account with France, and the difference of the result from what has been understood, shews that the gentlemen who are to give opinions on this subject must do it in the dark; and suggests to the President the propriety of having an exact statement of the account with France communicated to them, as the ground on which they are to give opinions. It will probably be material in that about to be given on the late application of Mr. Genet, on which the Secretary of the Treasury is preparing a report.

Th: Jefferson
June 5. 1793.

PrC (DLC: TJ Papers, 87: 15064, 15067–9); entirely in TJ’s hand; brackets in original except where noted; letterpressed from one large sheet folded to make four pages, with the statement of account spread across the second and third pages. PrC of Tr (same, 87: 15065, 86: 14842–3, 87: 15066); in TJ’s hand; with one variation in wording (see note 7 below) and minor differences in punctuation and capitalization. Tr (Lb in DNA: RG 59, SDC); wording and punctuation follow PrC. Enclosed in TJ to George Washington, 5 June 1793, and TJ to James Madison, 9 June 1793.

With this opinion TJ resumed his attempt to persuade the President that the Secretary of the Treasury’s handling of foreign loans would not bear close scrutiny (Editorial Note and documents on Jefferson’s questions and observations on the application of France, at 12 Feb. 1793; Editorial Note on Jefferson and the Giles resolutions, at 27 Feb. 1793). On 3 June Alexander Hamilton had requested the President’s special authorization to open a further loan of 3,000,000 florins in Holland because the interest and charges would be higher than those obtained for recent borrowings. Despite his caution in the aftermath of the Giles resolutions, Hamilton did not tell the President how the loan was to be grounded on, nor how the proceeds were to be applied in accordance with, the two acts of the 4th. and 12th. of Aug. 1790 under which Congress had authorized the President to borrow abroad. Perhaps mindful of the reflections that the earlier controversy over Hamilton’s management of the Treasury had cast on his own stewardship, Washington immediately passed the Treasury Secretary’s proposal to TJ (Washington to TJ, 4 June 1793, and enclosure). After TJ responded with the opinion printed above, the President asked Attorney General Edmund Randolph to review both documents. On 8 June, two days after Randolph submitted his “opinion & remarks,” which have not been found, Washington, desiring “to make the subject clear to my mind” before any further steps were taken, asked Hamilton to indicate whether all the money already borrowed under the two August 1790 acts of Congress had been expended for the purposes authorized and to state the unexpended balance if it had not, to designate under which of the two acts he proposed to open the new loan, to give the balance remaining unborrowed under the acts, and to identify how the proceeds of the new loan were to be applied (Syrett, Hamilton description begins Harold C. Syrett and others, eds., The Papers of Alexander Hamilton, New York, 1961–87, 27 vols. description ends , xiv, 521–2; Washington, Journal description begins Dorothy Twohig, ed., The Journal of the Proceedings of the President, 1793–1797, Charlottesville, 1981 description ends , 160, 161, 163). For Hamilton’s response and the Secretary of State’s reaction, see Washington to TJ, 16 June 1793, and enclosure, and Second Opinion on a New Foreign Loan, 17 June 1793, and note.

1Preceding three words interlined.

2Word interlined.

3Supplied from PrC of Tr.

4Supplied from Tr. PrC and PrC of Tr: “569, 875.”

5Preceding eight words interlined in place of “to have been paid.”

6Remainder of paragraph interlined.

7PrC of Tr here adds “par of the metals, to be the.”

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