Thomas Jefferson to Virginia Delegates
FC (Virginia State Library). Written by a clerk.
In Council March 15th 1781
A Difference of opinion having taken place between the Executive of this State and Mr Simon Nathan as to the rate at which certain Bills of exchange should be discharged in paper money—we have agreed with him to refer it to such Gentlemen of Knowledge in the Laws, of established Character & of any other State as yourselves shall mutually agree on with him. Their award shall be performed by the State, which means to stand in the place as well of the Drawer as Drawee.1 Mr Wilson & Mr Serjeant had been consulted by Mr Nathan.2
I inclose to you Mr Pendleton’s & Wythe’s Opinion. You will be pleased to observe that the State of the Case3 requires from Mr Nathan actual proof that he took up the Bills at par Mr Nathan having agreed with us all the facts as stated, I am to suppose nothing contrary to them will be received.4 as his Signature here was omitted perhaps it would be best for you to require it before submission. It is not our Desire to pay off those Bills according to the present Depreciation but according to their actual value in hard money at the time they were drawn with Interest. The state having received value so far it is just it should be substantially paid. All beyond this will be plunder made by some Person or other. The Executive in the most candid manner departed from the advantage which their Tender law gave them in the beginning. It seems very hard to make this the means of obtaining an unjust Gain from the State
I have the Honor to be &c&c
1. The long story of the efforts of Simon Nathan (1746–1822), a trader and moneylender of Philadelphia, to receive his alleged financial due from the government of Virginia begins with a factual controversy, from which the truth cannot now be sifted, and ends without a known conclusion of the matter at issue. If Nathan can be believed, he had accepted at face value in specie (silver), during the course of his business in the winter of 1779–1780, thirteen bills of exchange originally given by General George Rogers Clark and other officials of Virginia in the Northwest Territory for military supplies. Whether these supplies were of a quantity or quality equivalent to the face value of the bills in specie or only to their value in depreciated Virginia paper currency, and whether Nathan had accepted them from his debtors as equal to specie or as worth only about 5 per cent of their face value in specie, were the basic matters in dispute between him and the government of Virginia. In other words, about 95 per cent of the face value of the bills of exchange was at issue shortly after Nathan presented them early in 1780 to Governor Jefferson for payment. Nathan undoubtedly was handicapped by the facts that he was a speculator in depreciated currency and a stockholder in the Indiana Company, which opposed the legality of Virginia’s title to a considerable area of her western lands. Probably his claim also appeared to be less tenable because the outfitting and supplying of General Clark’s troops in the Northwest Territory had been patently attended by frauds. Governor Jefferson in Council, after initially agreeing with Nathan that he should be paid the specie equivalent of the bills of exchange, issued warrants in June 1780 in Nathan’s favor for 200,000 pounds of tobacco as a partial discharge of the obligation. About three months later, the executive learned from Clark and John Todd, the head of Virginia’s civil government in the Northwest Territory, that they had drawn the bills with Virginia’s depreciated paper currency in mind and that New Orleans merchants had so accepted them. Hence in all likelihood Nathan had received them at no greater a value. Governor Jefferson in Council informed Nathan that he would be paid only “the hard money value of the bills at the time of their being drawn” (Journal of the House of Delegates description begins Journal of the House of Delegates of Virginia, March 1781 Session in Bulletin of the Virginia State Library, XVII, No. 1 (January 1928). description ends , May 1783, p. 74). Nathan at first protested against this reversal of decision and declared that he would hold the executive to the original agreement. Shortly before the present letter was written, Nathan consented to submit the matter to arbitration. Either he was convinced that his position was impregnable or he had come to realize that, in an unequal contest with a sovereign commonwealth, his only chance of success depended upon the submission of the issue to impartial referees. On the other hand, viewed from the standpoint of the commonwealth, the pledge of its Governor in Council to abide by the decision of non-Virginia arbitrators reflects a willingness to deal justly with Nathan and to extend to an individual a privilege which had been denied a few months earlier to the Indiana Company (Papers of Madison description begins William T. Hutchinson, William M. E. Rachal, et al., eds., The Papers of James Madison (2 vols. to date; Chicago, 1962——). description ends , II, 188, 191). Boyd, in Papers of Jefferson, VI, 321–24, provides an excellent summary of the Nathan case from its beginning in 1780 to 1791. See also Virginia Delegates to Executive Council of Pennsylvania, 9 July 1781.
2. Probably Jonathan Dickinson Sergeant (1746–1793), attorney general of Pennsylvania, 1777–1780, and James Wilson (1742–1798), also of that state, who in 1780 was a militia brigadier general and advocate general for France in America. Wilson, of course, became one of the most influential members of the Constitutional Convention of 1787 and one of the first associate justices of the Supreme Court of the United States. By pointing out their relationship to Simon Nathan, Jefferson probably meant that they must not be considered by the delegates as possible arbitrators.
3. The enclosures are missing. The Governor in Council had submitted “a State of the Case” to Edmund Pendleton and George Wythe, judges of the High Court of Chancery of Virginia, and asked them to express their opinion about the merits of Nathan’s claim, with the understanding that the issue would never come before their tribunal for decision. Pendleton, on 7 March 1781, advised Governor Jefferson that Nathan “has the law on his side, is in no fault at all.” Wythe, on the contrary, informed the governor two days later that, until Nathan produced convincing proof “that he had taken [the bills of exchange] up at par,” there were reasonable grounds for charging him with “a culpable suppression of the truth.” Unless Nathan could demonstrate that he had held back no pertinent facts, Wythe said, there seemed to be “a good foundation for contravening his demand” (Boyd, Papers of Jefferson description begins Julian P. Boyd et al., eds., The Papers of Thomas Jefferson (16 vols. to date; Princeton, N.J., 1950——). description ends , V, 61; Journal of the House of Delegates description begins Journal of the House of Delegates of Virginia, March 1781 Session in Bulletin of the Virginia State Library, XVII, No. 1 (January 1928). description ends , May 1783, pp. 72–75). In a letter of 8 July 1783 to Edmund Randolph, attorney general of Virginia, JM would comment that “The reversal of the award in the case of Nathan may possibly be just in itself; but it will require all your eloquence I fear to shield the honor of the State from its effects” (Madison, Writings [Hunt ed.] description begins Gaillard Hunt, ed., The Writings of James Madison (9 vols.; New York, 1900–1910). description ends , II, 1).
4. Jefferson’s “State of the Case” (n. 3, above) required from Nathan the incontrovertible proof which Wythe had advised the governor to demand of him. The effort to settle the matter failed in 1781, apparently because Nathan sought to alter the terms of his agreement with Governor Jefferson in Council by insisting “that he may be indulged in the Choice of Merchants to arbitrate th[e dis]pute” (Virginia Delegates to Jefferson, 10 April 1781). For resolutions in regard to the arbitration, see Journal of the House of Delegates description begins Journal of the House of Delegates of Virginia, March 1781 Session in Bulletin of the Virginia State Library, XVII, No. 1 (January 1928). description ends , May 1781, pp. 81–82, 84.