Enclosure Thomas Jefferson’s First Opinion on a New Foreign Loan
[Philadelphia] June 5. 1793.
Instructions having been given to borrow 2. millions of florins in Holland,1 & 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 U.S. in various relations, appears to him to recommend,” the President is pleased to ask Whether I see any objections to the proposition?2
The power to borrow money is confided to the President by the two acts of the 4th & 12th of Aug. 90.3 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 & instalments of the foreign debt; & 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, & 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 Treasury 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 & Interest of foreign debt, paid & 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 beforehand.)
- 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 further loan necessary, & 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.4
By this statement, it would seem as if all the paiments to France, hitherto made & 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,5 & 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 loan for 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 1,600,000 = 290,400. D. which soon would put us in advance near half of the instalments of 1793. note: livres are estimated at 18 15/100 cents proposed by the Secretary of the Treasury to the French ministry, as the6 rate of conversion.
This uncertainty with respect to the true state of our account with France, & 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; & 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 mister Genet, on which the Secretary of the Treasury is preparing a report.7
ADS (letterpress copy), DLC: Jefferson Papers; ADS duplicate (letterpress copy), DLC: Jefferson Papers; LB, DNA: RG 59, George Washington’s Correspondence with His Secretaries of State. The ADS duplicate is a letterpress copy of a document that Jefferson enclosed in his letter to James Madison of 9 June 1793 (Jefferson Papers description begins Julian P. Boyd et al., eds. The Papers of Thomas Jefferson. 40 vols. to date. Princeton, N.J., 1950–. description ends , 26:239–42). The letter-book copy follows the wording of the first ADS.
1. In his letter to William Short, the U.S. minister at The Hague, of 5 Nov. 1792, Alexander Hamilton had given instructions for Short to seek a loan for two million florins (Hamilton Papers description begins Harold C. Syrett et al., eds. The Papers of Alexander Hamilton. 27 vols. New York, 1961–87. description ends , 14:280–82).
2. Jefferson is quoting Hamilton’s letter to GW of 3 June.
3. See “An Act making provision for the [payment of the] Debt of the United States,” 4 Aug. 1790, and “An Act making Provision for the Reduction of the Public Debt,” 12 Aug. 1790, 1 Stat description begins Richard Peters, ed. The Public Statutes at Large of the United States of America, from the Organization of the Government in 1789, to March 3, 1845 . . .. 8 vols. Boston, 1845-67. description ends ., 138–44, 186–87.
5. For the contract between the United States and France of 25 Feb. 1783 for the payment of the American debt to France, see Miller, Treaties description begins Hunter Miller, ed. Treaties and Other International Acts of the United States of America. Vol. 2, 1776-1818. Washington, D.C., 1931. description ends , 115–22.
6. The ADS (copy) has “par of the metals, to be the” added here.