Alexander Hamilton’s Report on a New Foreign Loan
The Secretary of the treasury in obedience to the order of the President of the US. of the 6th. inst. respectfully makes the following report.
The statement herewith transmitted, marked A. shews in the Credit side thereof, the amount of the fund arising from foreign loans transferred to the US. amounting to 2,965,643.47 D. and, on the Debet side thereof, the amount of the sums which have been actually disbursed, and are in a course of disbursement out of that fund for specific purposes, being 2,400,159.19 D.
There of course remains free for and subject to application, according to the laws authorizing the loans, a balance of 565,484.28 D.
To this will be to be added, when ascertained, certain sums of interest subsequent to the year 1790. which will have been included in the payments to France and Spain out of the proceeds of the foreign loans, and which will thereby have been virtually transferred to the US., provision having been made for that object out of domestic funds. The addition however will not be large.
Hence results an answer to the 1st. question stated by the President.
In answer to the 2d. question, the Secretary has the honor to observe that it would be in his opinion expedient for the reason which has governed hitherto, the convenience of which has been fully experienced, namely the power of applying the fund to the purposes of either law according to circumstances, that the proposed loan should be made upon the authority of both acts, and not upon the separate authority of either of them.
The following summary answers the 3d. question proposed.
The sum allowed to be borrowed by the two acts of the 4th. and 12th. of Aug. 90. is 14,000,000.D. The whole amount of the loans hitherto made is 19,550,000. Gilders, equal at 364/11 ninetieths of a dollar per gilder to 7,898,989 Doll. and 88. Cents. Consequently ‘the balance remaining unborrowed of the two sums allowed to be borrowed’ is 6,101,010.12 D. which leaves much more than sufficient latitude for a loan of 3,000,000 of florins in addition to that for 2,000,000. already directed, and probably set on foot.
The immediate main object of this further loan would be the purchase of the debt.
The instalments of the debt to France falling due in Sep. and Nov. next, and the interest for a year upon so much of the debt as by the terms of contract would fall due after the present time, amount to 3,335,000. livres, or Dollars 605,302.50 which, if to be wholly paid will more than absorb the balance on hand of the foreign fund.
Supposing the application of this balance to that purpose, there would remain to be borrowed for the purpose of purchases of the debt, Dollars 1,715,098.11.
The two millions of guilders already directed to be borrowed and the three millions, the loan of which is proposed to be authorised, would amount together to 2,020,202.02 D. which would exceed the sum requisite for purchases of the debt by 305,103.91 D.
But it is so possible that events may arise which would render it desireable to the US. to increase it’s payments to France as in that view alone to make such an excess not inconvenient. Besides that on the 1st. of June 1794. another instalment of the Dutch loans becomes payable, and it is probable if instructions to set on foot the loan should go at this time, the entire payment of the sums subscribed to the loan would not be completed much sooner than June next. Add to this that it is frequently possible to get the periods of payment protracted.
It would have been fortunate in every sense, if the state of the Treasury had permitted the entering the market for purchases, in force; but the detail, which has been given, shews that it could not have been done, under the obstacles which the state of European affairs lately threw in the way of loans, without materially hazarding the credit of the US.
While it is prudent to wait, till it is experimentally ascertained, that these obstacles have been removed by the change of affairs, it is desireable to be provided to the extent of the authority given with means of prosecuting purchases.
It is probable that, for a considerable time to come, the prices of stock will remain at a point which will render purchases extremely advantageous.
The further consideration which has been stated with reference to France and the next instalment of the Dutch loans may not be found unworthy of attention. All which is respectfully submitted.
(signed) Alexander Hamilton Secy. of the Treasy.
Treasury department. June 15. 1793.
Dr. State of monies transferred to the US. out of the proceeds of foreign loans.
|To this sum expended in purchases of the public debt.||284,901.89|
|To this sum pd. & to be paid to France for the use of St. Domingo.||726,000.|
|To this sum pd. & to be pd. to France on acct. of the 3,000,000. of livres promised||544,500.|
|To this sum paid to France for miscellaneous purposes||49,400.|
|To this sum paid & to be paid to Foreign officers.||191,316.90|
|To this sum appropriated to the 1st. instalmt. due to the Bank of the US.||200,000.|
|To this sum remitted to Europe for paying an instalment due the 1st. of June on the Dutch debt 1,000,000 of guilders @ 364/11 90ths. pr. guilder||404,040.40|
|Balance subject to future disposition||565,484.28|
|By this sum drawn for by Saml. Meredith Treasurer||2,305,769.13|
|By this sum applied in Amsterdam to the payment of interest for which provision was made out of domestic funds, & thereby virtually drawn to the US. 1,633,189. guilders 2. stivers @ 364/11 90ths per guildr||659,874.34|